What sort of health care reform do conservatives actually support?

Great Debates
121

The problem with information asymmetry is that it creates risk for the insurance company. Since insurance companies are in the business of buying risk, any risk you add to your plan increases your price. Catastrophic insurance caps the downside risk the insurance company faces, which means the risk premium charged will be significantly lower - maybe even trivial. It all depends where the cap is set.

My daughter gets a form every year from school, for optional insurance against broken bones, loss of limbs, loss of life, etc. The payouts are fixed, and not all that high - up to a few thousand dollars. The insurance is cheap - a few dollars - and there is no screening, no filtering of students by past risky behavior or anything like that. The insurance company can do this because their downside risk is small, and because when the price of insurance is very low, a lot of people decide to buy it regardless of whether they are risky or not. There’s still an informational asymmetry, but in practice it doesn’t matter.

No, it works like this - they know that the average person over 40 may cost them maybe $3500 in payouts in a given year. But the distribution isn’t normal. 80% of the insured will cost them close to nothing. 18% might cost them $5,000. But 2% will cost hundreds of thousands. It’s those 2% that are the big risk, and it’s those the insurance company would like to exclude or at least identify so they can charge more. If they can’t, then when they quote you a price for insurance, part of the price is going to be the 2% chance that you cost them $100,000 in the next year, and a .1% chance that you cost them a million bucks. So your ‘risk premium’ might be $3,000 out of a $3500 plan.

Now, if the government caps their risk at $50,000, suddenly your $3500 plan becomes a $1500 plan. Same information asymmetry, different risk. (I just made up the numbers for illustration, btw. I don’t know what their actuarial numbers are).

Well, some proposals would require businesses to put at least part of your health benefit into an HSA. Consider this possibility: Let’s say your employer currently pays $3000/yr for your coverage. The government caps liability, and saves the business $1500/yr, which the government then says the company has to put in an HSA on your behalf.

But even without that, you’re missing the two-prong effect here. Ending the tax subsidy is one force that loosens the bond between employer and health insurance, but the government cap lowers the risk premium, which makes the advantage of a job risk-pool much lower, which should make employer health plans less desirable. But more to the point, even if you have an employer plan, losing your job no longer means you’re screwed, because things like pre-existing conditions are no longer a show-stopper for getting new insurance, because the government is protecting the health insurers from the major costs associated with taking on a client who has heart disease or diabetes or whatever. Your insurance may be more, but not that much more. And we could even talk about special government subsidies for those with pre-existing conditions who lose their insurance.

You have to understand how bad incentives infect a system over time. We’re not talking about people saying, “I’m bored. I think I’ll go in for a free cardiogram!”. What happens when an incentive structure is changed is that overtime the market becomes biased in insidious ways. Maybe because there is no customer pressure, a doctor is just slightly more inclined to order another test. After a while, enough doctors do this that a lawyer can show that such tests are ‘common practice’, and sue a doctor who doesn’t do them. Now everyone has to do them. In the meantime, there are people on the margin who will go to the doctor who otherwise wouldn’t. In general, and over time, the culture changes to reflect the incentives that people work under.

This is not theoretical. For example, in countries where the government pays doctors a flat fee per consultation rather than paying them by the hour, doctors tend to do a lot more consultations per day. Here in Canada, our doctors offices run like an assembly line - four or five patients might go into rooms at once, and the doctor skips from one to the other, stopping for a few minutes to make a note or tell the patient to do something, then moving to the next room. Doctors in Canada do 2200 consults per year, vs about 1500 in the US. This isn’t because Canadian doctors are evil or because they are intentionally trading patient care for more money - it’s just the way the culture develops when you put certain incentives in place.

Except that it’s not the case. Read the link I posted earlier - it’s a survey of the results of a number of programs and health systems that require patients to fund their own health care through HSAs. It turns out, they do MORE preventative tests. When you’re responsible for the cost of your own health, it turns out that you might actually take better care of yourself. What a concept.

In similar breaking news, people who have to pay for their own car maintenance tend to care for their own cars better than they do rental cars. What a surprise.

Of course I did. By making patients responsible for part of the cost, they have an incentive to question the tests, and doctors who do more tests than they should find themselves without customers, or with only the worst customers.

We had an auto-lube chain that was notorious for claiming that various things were wrong with the vehicle during their ‘free’ inspections, then charging to replace perfectly good parts. They’re no longer in business. Once customers figured it out, they stopped going to them.

Rich people in Canada theoretically have no choice. We have a single payer system. If the U.S. gets one, rich people will not have a choice either. Of course, our rich people simply go to the US for treatment. If the US goes single payer, where will your rich go? I predict a boom in ‘free health zones’, maybe in the Carribbean, where excellent doctors will go to practice medicine without the government yoke around their neck, and rich people will go there. Then everyone else will whine about how the rich are stealing all the good doctors, and the government will be told to ‘do something’ about the problem.

Gee, and why do you think that is? Last I checked, Dentists go to school just as long as doctors. Their X-ray machines cost just as much money, and their dental assistants make almost as much as nurses. So how come I can get a dental X-ray for $30, and a hospital X-ray costs $500? How come I can sit in a dentists chair and get his undivided attention for two hours, along with that of a dental assistant, and come out with a bill for maybe $300-$400, when 10 minutes with a doctor in a hospital and a single X-ray cost me $850?

Is there something magical about dentistry that makes it so easy to book a dentist and so readily affordable that almost everyone gets good dental care, despite the fact that dentistry is private? Or maybe it’s because dentistry is private, and so dentists have learned to cut costs, compete with one another, and innovate. Maybe without the massive intrusion of government and the red tape that goes with it, an hour of dental care does not come with five hours of accounting.

I have posted lots of OECD stats, and read through them many times. The U.S. is decidedly NOT average. It’s almost always near the top of each category. The U.S. simply does a lot more for the average patient. It does more procedures, more tests, it tries harder to keep premature babies alive, it tries harder to keep old people not just alive but more comfortable. The U.S. spends a lot on health care in part because the U.S. is wealthiest major country on the planet. It also spends more on pet supplies and speedboats. This is not a surprise. Americans have more disposable income than anyone else.

But yes, reform is needed. I’m not sure how you get from, “the U.S. spends too much” to, “the government needs to take over”. There are many other reforms which do not require government to become the single payer for health care or to impose a whole host of new regulations on the industry.

And which system would that be? Canada’s? Guess what? The new head of the Canadian Medical Association says Canada’s health care system is imploding. Maybe the NHS in the UK? the NHS is responsible for some of the worst outcomes in the OECD? Who else did you have in mind?

122

But how popular is it with actual notorious right-wingers in the non-sarcastic sense? It is, after all, a form of government-run socialized medicine. Worse, it’s supported by Ted Kennedy.

123

The fact that Milton Friedman and Arnold Kling and Tyler Cowen and other right-wing economists support it will give it lots of credibility. The fact that it makes people more responsible for their own care is very appealing to conservatives. If the government catastrophic cap is set such that the majority of routine health care is managed through HSA’s and individual choice, and the basic market incentives in health care are improved, it will be a winner.

At the very least, you’d manage to fracture Republicans, and get enough support in Congress to pass it without having to resort to extremes like passing a bill through the reconciliation process. Guaranteed.

Republicans know health care reform is needed. I guarantee you’d get wide support. Perhaps not universal support, or even the support of a large majority, but what reforms ever do?

124

The repubs stated the fact when they were running in 2000 and 2004 that health care reform was a necessity. They saw that leaving it alone was impossible because with present trends , health care would consume 40 percent of our national wealth by 2050. They were well aware that something had to be done. Their resistance now is political ,just political. They think they can damage the dems and the administration by fighting changes that they know are absolutely necessary. They risk the country for a potential political gain.

125

Yep.

“If we’re able to stop Obama on this, it will be his Waterloo. It will break him.” - Sen. Jim DeMint, R-SC

“I hope Obama fails.” - Rush Limbaugh

That’s what it’s about. If it takes lying, then so what, it’s for a good cause and it works, right?

126

Yes, I fully understand this. To use your example, if the government caps risk to 50,000, my employer based health care might go from 2500 to 750 leaving me still with a significant cost savings by getting health care through my employer. All you do by instituting government run catastrophic insurance is limit the market insurance companies compete in. In other words, instead of selling products insuring people from 0 to 5 million dollars they simply sell products insuring people from 0 to 50,000. The market forces will still be towards employer based health care.
Well, some proposals would require businesses to put at least part of your health benefit into an HSA. Consider this possibility: Let’s say your employer currently pays $3000/yr for your coverage. The government caps liability, and saves the business $1500/yr, which the government then says the company has to put in an HSA on your behalf.

See this is where you are wrong. Capping doesn’t change anything about risk profile. All it changes is that insurance companies will be worried about picking up customers that will charge up to the government maximum.

This is completely wrong. Read the CBO piece I cited. Reducing liability through tort reform will not have a significant effect on “defensive medicine” i.e. frivolous tests. The main driver behind unnecessary tests is that the person recommending the test is usually the one being paid to perform it. While it is true that having patients pay for a test or medicine will reduce utilization of those procedures, that is an across the board issue. Patients are just as likely to skip a medically necessary test because of cost as they are a frivolous one simply due to the fact that patients have virtually no ability to discern between a medically necessary and frivolous test.

What are you talking about? Doctors in the U.S. are paid on a consultation/service based system. None of them charge hourly.

You completely miss the salient point here. HSAs come with high deductible health care plans that almost always provide preventative tests and care free of charge to the patient. Seriously, read your own cite:

You’ve totally proved my point. Removing even the small cost of a deductible increased the rate of people using preventive services. Since these preventive services are medically indicated, this shows that people were not having recommended and cost saving tests done because it cost them a copay.

I still maintain that it is unlikely that people will question frivolous tests specifically. My experience, and they evidence you provided, show that they question and skip tests period when they have to pay for them.

Excuse me? Are you suggesting that there are no private doctors/clinics in Canada?

No one anywhere ever suggested banning private clinics. Elite doctors will still have their private clinics where they will charge rich people a crapload of money.

Incorrect. Doctors have several years of residency to complete after they finish school.

Huh? The x-ray machine at a dentists office is small, wall mounted, and takes a tiny picture. A body x-ray machine is big, often comes with a table, and takes a big picture. Of course the second is going to be much more expensive.

The simple answer is that you can’t or you have a really cheap dentist. I had a cleaning yesterday that I believe cost my insurance company 80 bucks. For that I had a hygienist take x-rays and work on me for ~30 minutes. The dentist came over for about 45 seconds looked at my x-rays poked a few teeth and declared everything ok.

Dentistry is readily affordable because it is affordable. Most people will spend <30k for their entire lives on dental care. Almost everyone will spend many times that amount on health care.

Yeah, I’m going to need a cite for any of this.

Yes, there are other reforms that could take place, but none of them show the promise of moving towards single payer health care. We can fine tune our system, but it is like trying to modify a harley to compete with a sportbike.

Canada and the UK provide comparable health care than the United States for much less. No country is perfect, but the overriding theme is that they are all pretty comparable in terms of outcome and treatment with the glaring difference being that the U.S. pays 50-75% more for their system.

127

I have a question about this state-lines thing. Many of these insurance companies have subsidiaries in each state because of the differences in each states laws. Each state has passed legislation on minimum coverage requirements, that the company be based in the state etc. Are conservatives really arguing to do away with the individual requirements that each state has imposed on their local insurance companies? How do you make insurance purchasable across state-lines without negating regulations that the states themselves have put on the insurance companies. It doesn’t seem to match up with the conservative philosophy.

128

And again, how does this benefit anyone but the insurance companies? Your cites, by and large, call for compulsory catastrophic insurance. While that with spread cost over a larger pool, the effect is not different than having a single-payer system. In fact, it’s worse for a number of reasons:

  1. You don’t have insurance companies advocating preventative care because they are not on the hook for excessive costs.

  2. You have more administrative work due to people essentially having two insurance policies, and having the government investigate thousands of expensive claims.

  3. There is no incentive to cut costs for 50k+ cases since the government is on the hook for the excess.

Your solution does nothing but shift the costs from the consumer at the point of sale, to the tax payers via compulsory taxation All you are taking advantage of is the government’s ability to force compliance. Why not just extend that leverage further by having a single-payer system which would further reduce costs by eliminating the profit margin?

Shifting costs doesn’t save money; it increases transactional costs. Second, there isn’t an information asymmetry in 99.9% of real world cases. Again, let’s go over this slowly. Those cases that end up costing hundreds of thousands of dollars are generally not foreseeable on an individual level. All you, or your insurance companies can do is examine the averages. You don’t know how likely you are to have a stroke do you? How likely are you to have an aortic dissection? Do you know what shape your kidneys are in? Didn’t think so. All anyone knows is that a person of your age, background, etc. has x chance of said things happening. At an insurance company, they have people who study this to evaluate the risk. The average person does not study it at all. More importantly, they have a fail-safe. If it turns out that you do have a stroke while covered, but you forgot to mention your uncle died of cancer at 38, then they will just rescind your coverage. Win-win for Goliath.

Which will promptly be taxed from your actual income to cover your government mandated catastrophic insurance coverage.

In theory this makes sense, but do you have any evidence of the extent to which this inflates real world health care costs? Plus, your proposed solution assumes there will be consumer pressure when there, in all likelihood, will not be. The problem is that I don’t know whether I need an echo test or a stronger, patented antibiotic. The pressure the consumer would apply will be far less than the pressure an insurance company with trained doctors on their side can. You make the erroneous assumption that being in the room, and having a direct financial stake, would lead to more prudent, cost-effective decisions.

Do you have a cite for any of that?

Nonsense. All that means, assuming it holds true, is that you do more tests and utilize more services. It doesn’t mean these people would be healthier, or that shifting responsibility to the consumer would lower costs or rein in unnecessary testing. Plus, it completely undercuts your previous argument that having the patient responsible for costs would result in less waste.

You said the following: " Maybe because there is no customer pressure, a doctor is just slightly more inclined to order another test." - Sam Stone

Your site seems to indicate that even when there is consumer pressure, doctors still order more tests. Why is this happening? Could it be that it’s far easier to sell an ignorant consumer on the need to do a test than it is an insurance company?

And yet that didn’t happen according to your cite. More importantly, medical privacy laws make it difficult to discern how often a particular physician does anything. It’s not like a rogue surgeon performing unnecessary hysterectomies will be discovered by an individual consumer. At least an insurance company can analyze billing and diagnostic frequencies to determine irregularities. How am I supposed to know if my doctor gives out antibiotics like candy?

First, doctors here have 3 years of residency, so they go to school for a longer. It’s also much harder. Second, you are comparing a hospital which has far higher overhead and more personnel to a single dentist’s office. A single routine visit to a GP will not cost much more than one at a dentist. Third, medicine advances at a much faster, and more expensive pace than dentistry. Fourth, dentistry isn’t cheap in the US which is why most places now offer credit. Fifth, dentist aren’t forced to raise their rates to account for all the free and emergency care they are obligated to give to those who cannot pay.

The WHO begs to differ.

Do you really think that’s a logical comparison? Besides, much of this spending is not disposable income. This is bankrupting thousands every year, and slowly destroying the competitiveness of our economy.

129

If this is true, then shifting the cost to the taxpayer hardly addresses the issue.

Especially since, as you point out,

and

If the taxpayer is on the hook, then there is no incentive to cut costs, and health care will continue to inflate and thus, according to your allegations, destroy the competitiveness of the economy.

Regards,
Shodan

130

It clearly does if the government uses their bargaining power to lower costs, and if they more effectively ration care based on cost effectiveness.

My concern was in reference to the plan posted that called for the government to cover all costs over 50k per individual without having any other say or control. Those same concerns would not apply to a single-payer system, or a public option.

131

Or use them to pay out obscene bouses to themselves, whichever.

132

Auto insurance is licensed state by state. There are large insurers that issue coverage in all 50 states, but there are also many single state insurers, especially Farm Bureaus.

133

It is becoming increasingly obvious that Republicans will not support any health care reforms whatsoever. If someone could package a health reform bill that is entirely based on tax cuts for the wealthy, then maybe, if it also includes a provision for tax cuts for the well-to-do.

You know, this has got me wondering. Where do the insurance companies put their money, so that is accrues some interest while its just sitting around waiting to help? Did they, by any chance, have the foresight and intelligence to invest massively in such stalwarts as AIG, or Lehman Bros.? Might that be the source of their panic? That “reform” would force them to reveal a shaky situation?

I am not familiar enough with the Dark Arts, so I pose the question.

134

So then, if I understand you, the government would have to pay to investigate all cases (with a single payor system). They would, IOW, spend money on this just as the insurance companies do, with the added costs that they would not be allowed (I presume) to decline to cover anything.

So the government would have no “say or control” over all cases, not just ones over $50K, or else would have 'say or control" over those cases, and we would not save any money on overhead like investigation.

So, AFAICT, those same concerns would apply. If they did not, then costs would rise due to lack of accountability.

Regards,
Shodan

135

There are 2 ways to approach this thread: One is what we’ve mostly been doing which is for posters who are ostensibly conservative to give their recommendations and for all of us to debate them.

The other is to determine what positions are widely held or supported among conservatives in general, as Sam Stone is addressing here, albeit a bit more dubiously. Centrist that I am, I’m all in favor of your plan (so long as, in addition to HSAs, there are other schemes to help the needy get the routine care that they need). But if Obama and the Dems were proposing universal, single-payer, socialized “catastrophic” health care, I can envision some pretty intense opposition on the right, yessir.

Conservatives may acknowledge the need for reform in a vague sense, but a lot of us don’t see them seeing through any truly meaningful reform, least of all in the current political climate. They see their job as making Obama fail.

I want to quibble with this a little. Making people more responsible or their own care sounds great, but see, if there one thing people hate worse than going to the doctor, it’s getting sick or injured.

We all agree that people should live healthier lifestyles, but the main deterrent against not doing so is how bad it will feel-or that you sill die–rather than how much money it will cost now that you no longer have full coverage. Of course, most Americans have coverage for routine care that comes with their jobs, that being the responsibility-free status-quo that’s being defended.

But another way to define “more responsible for their own care” is *going to the doctor more often!". Isn’t that what we’re constantly being told? “See your doctor.” Get that annual physical. Take those prescription drugs. Doctors order.

And if you’re female, give birth early and often.

136

Conservatives like the feel of the masses being responsible for much of their own health care as long as they keep their own kick ass big time company provided policies. They are so much more deserving of quality health care. It is wasted on the poor who are poor because of their own terrible decisions,.They don’t eat properly . They are fat and if you bump into a poor person. they will give you warts.

137

They invest it in the stock market, so when ever the market tanks, there is a new push for tort reform and premium increases. The phenomenon even has a name; it is called the "insurance cycle"and it is responsible for steep rate increases during bad economic times, as insurance companies throw good money after bad in an attempt to recoup their losses:

138

So, they had their money out there when the trajectory of the shit intersected the locus of the fan? Any reason to believe they didn’t have megabucks at risk with mortgage backed securities? Of course, being fiduciary actuarial guys, they put their money in those investments with a Triple A rating. Smart move, kind of thing you expect from pros.

Is there a web site where we can go look and see if they reported getting hosed by AIG? And how much? Or would that be some of that intrusive governmental regulation what stifles innovation and entrepreneurship?

They’d almost have to have done, wouldn’t they? Otherwise, you’re left wondering how they didn’t get screwed when everybody else did, what did they know that the other rats in the race didn’t?

139

New angle to the topic:

We need to have a serious conversation in this country about end-of-life issues.

Nobody thinks that we can sustain a system where there are more and more old people running up higher and higher medical bills, being kep alive just long enough to run up even higher medical bills.

Nobody’s a fiendish geezer-killer either. But it’s a lot easier to spin this issue in a way that demonizes your politial opponents that it is to stand up and advocate a solution to the problem.

How can we have that conversation after the Sarah Palin/Glenn Beck crowd has poisoned the well like that?

This also calls into question once again what conservartism is all about: Are they hard-nosed economic realists? Or are they Bleeding Hearts, Christian Style?