I'm impressed by the fact that the response so far to my post on cost overruns in the Massachusetts health care program has so far been met by . . . changing the subject. "Well, what are you planning to do to cover the uninsured?!" or "Private health care costs have grown even faster than public costs!"
These are spectacularly irrelevant to the question of whether covering the uninsured will cost much, much more than estimates. Every major health care program we've put in place has cost much more than promised. This, presumably, matters. The first step to assessing the costs and benefits of something is, well, knowing the costs. Obviously, the budgetary cost is only one cost, but it is a component of the larger pricetag we should hang on any national health care program. It is therefore important to know what that actual cost will be. The answer appears to be "Vastly higher than whatever its advocates are promising."
When you respond to this point by saying "But look at all the benefits!" the message you are sending is "I like this program, and I don't care whether the numbers used to sell it are wildly inaccurate." That's not exactly a stunning rebuttal of my point.
And yet the architect of this plan has, according to your endorsement, has "instincts [that] strike me as more libertarian."
Fascinating.
I suspect that there would be cost overruns to any program that attempts to cover more people. Which is to say making a budget for a program would include only the early impacts of a program.
Health care is expensive because cost management is just a game where insurance companies, hospitals and doctors (three players to be simple) try to pass cost onto the other players.
To solve the cost passing process we need to have everyone covered and a small number of insurance programs - universal care.
I'm not trying to change the subject but to say its the dynamics that lead to more cost; its not a budgeting issue. Okay, maybe thats a little different.
I'm worried about single payer nationalized care but if conservatives wont talk about big change its all we'll have.
MM wrote: When you respond to this point by saying "But look at all the benefits!" the message you are sending is "I like this program, and I don't care whether the numbers used to sell it are wildly inaccurate." That's not exactly a stunning rebuttal of my point.
That only works if the arguer doesn't have +47M Moral Imperative as a basis for liking the program. Besides, we can always start a Trust Fund to pay for it!
Kim wrote: Health care is expensive because cost management is just a game where insurance companies, hospitals and doctors (three players to be simple) try to pass cost onto the other players.
This analysis is a bit less than just simple. The "cost management" you speak of is due, in no small part, to crippling government regulations intertwined throughout the entire industry like ivy, severely limiting the ways in which healthcare may be offered and paid for.
Healthcare isn't going to cheaper, better, or more widely available under "universal care" without the same kinds of widespread reforms that would also fix many of the weak points in the current system. You just won't have a clue what you're actually paying for or how much it costs because it will be obscured behind another layer of 100,000 civil servants and 50 million square feet of new office space at various IRS and Medicaid/Medicare administrative facilities.
You took the words right out of my mouth.
It makes it very hard to apply pressure on a crucial specific point and keep the discussion there. People want to squirm and go around it.
Very good point. The implications of this behavior of greater than you imply. Which I think you know. :)
You took the words right out of my mouth.
It makes it very hard to apply pressure on a crucial specific point and keep the discussion there. People want to squirm and go around it.
Very good point. The implications of this behavior are greater than you imply. Which I think you know. :)
Oh!!!! I get your point now! You're simply saying we need better estimates.
That is a bold and daring proposition, Megan. I would think that sentiment alone would be hefty enough to be addressed without people assuming that you saying something negative about a plan for universal health coverage was an attack on it. People are such morons! Megan, I feel for you. When will people learn to understand your writing style?
Cards on the table! says Megan McArdle. I love it.
Well, my position would be that its costing us the same amount anyway. Will Massachusetts pay more overall for health care because of the increased inefficiency and corruption entailed in Romney's plan? That's the important question. If there's a lot of hidden costs that just tells us the problem was bigger than we suspected.
The big problem with the current US system is that the cost is being pinned on the corporations making them less competitive. If the healthy non-subscribers were forced to support the system, it would lower the costs for corporations. The current system does keep down costs for healthy non-subscribers who get unexpectedly sick and are then unable to pay for appropriate procedures. I'm not sure, though, that that's the way we want to save money.
This analysis is a bit less than just simple. The "cost management" you speak of is due, in no small part, to crippling government regulations intertwined throughout the entire industry like ivy, severely limiting the ways in which healthcare may be offered and paid for.
Yes, the regulations cause the cost passing, but its because the regulation is partial and piece-meal.
To get better cost management, we need the players to co-operate instead of go thru the motions.
Having a few big payers would give them the right incentives. I'm concerned like you that we may end up with one big payer, the Feds, which leads to different problems.
IMO, having 5 or 10 payers would work, health professionals would compete to get the patients of the 10 programs. BCBS has "national accounts", these people get good care at good prices.
Buyer power works.
It is, in fact, a rebuttal of your point, if the position is "cost overruns are rendered irrelevant by the net good done by the program." That is a debatable claim; it is not an irrelevant one. Appeals to irrelevance are simply a way to leverage your argument without improving it.
Strangely enough, Democrats who excoriate Republicans for advocating tax cuts, without truthfully representing what their fiscal impact will be, find it much more acceptable to advocate health care programs without truthfully representing what their fiscal impact will be. Shocking!
To get better cost management, we need the players to co-operate instead of go thru the motions.
How will this reduce the amount of skill needed to operate an MRI, the quantity of metal, plastic, and silicon in said MRI, or the amount of time an (expensive) doctor needs to spend looking at the films? It might reduce admin costs, but not the real underlying price of a particular treatment.
Costs are convenient stand-ins for the resources required to deliver a product or service. We can put pressure on them in various ways, and maybe there are areas of major waste where resources are thrown at some therapy which has dubious benefits. But you can't just declare that henceforth, fewer economic resources will be required to render service X.
It is, in fact, a rebuttal of your point, if the position is "cost overruns are rendered irrelevant by the net good done by the program."
Hey, I agree with Freddie for once! But this is a cost-benefit argument, to which he has proven somewhat allergic in the past. And it only works if the benefits are so great as to defeat the extra costs--in which case honest and accurate numbers should be enough to sell the program.
Freddie,
If you're trying to sell a proposal to the American people using false information (in this case, cost amounts), and someone points out your false information, you can say "okay, you're right, I did lie to you a bit there, but it was for your own good, my programs is still a good idea even if it costs twice what I told you it would..."
But that doesn't appear to be the argument the mainstream progressives are voicing, nor is it really a rebuttal of the charge that you lied about the cost of the program. I can *still* hear people yelling about how "Bush lied!" and convinced those poor unsuspecting Democratic congresspeople to go to war with false information. So it's not particularly impressive to hear the new cry is "so what if we sold you the proposal using false information, it's a REALLY IMPORTANT proposal..."
I'm reminded of the amusingly recursive Hofstadter's Law, which is defined "It always takes longer than you expect, even when you take into account Hofstadter's Law."
Maybe you can coin your own McArdle's Law: "Health care programs will always cost more than estimated, even when estimates account for McArdle's Law."
"Appeals to irrelevance are simply a way to leverage your argument without improving it."-Freddie
And what is Freddie's argument? I just don't see one. He makes a claim about morality without any justification, implies that there are 47 million Americans who can't afford health insurance, conflates a lack of insurance with a lack of care, and then accuses others of "bad faith" for pointing out his error in citing the 47 million figure.
Does anyone know what Freddie's argument is? Evidently Megan can't figure it out either, and she's fairly bright.
Now he says:
But where's the evidence? What reasoning lies behind this claim? Does Freddie really not realize that it isn't sufficient to make groundless assertions?
I don't want to get drawn into any more exchanges of insults, but surely its fair to ask someone to provide some semblance of an argument for his position.
Actually, Megan, I didn't see any that any point could be made one way or the other without more data.
If these over-runs are caused by greater-than-expected numbers of people signing up, just how is that supposed to mean that 'socialized medicine is more expensive in the U.S.'?
If, otoh, the people signing up are you using far more services than was anticipated, you might be on to something.
So which is it? Or is it something else?
Kim, you left the biggest entity passing costs around in your analysis. The government. If you have private insurance, you are overbilled(relative to the true cost of your care) to compensate for the underpayment on Medicare/Medicaid patients. I know it's an article of faith about the heralded 'overhead savings'* that are generated thru M/M, but it just isn't true. M/M says 'we ain't paying', and the provider sticks it to the entity without a police force.
*It's the virgin birth of health care.
There is a lot that could be learned by Massachusetts' experiment. One argument that you see both sides make is that people without insurance are often covered anyway, but their costs are passed onto those with insurance. As this pool of uninsured is drawn down, one should expect to see costs on those that were always insured come down in a relative sense.
The cost of health care in any state is probably paid almost entirely by the people in that state. Salaries are adjusted to compensate for the cost of benefits. Goods and services are priced to cover the remainder. Likewise, the overall cost is probably pretty fixed no matter how the payments are arranged. People, for the most part, find a way to get the health care they need. The payment structure can encourage fairness, efficiency and integrity -- or not. Those are important issues, but to say the cost is actually increased is hard to justify. A bad payment system can serve as a transfer payment by honest to dishonest people, or by the poor to the wealthy. All government programs have that kind of leakage. Another kind of bad system might force service providers into such a low revenue environment that they move to other states. Whatever. The money will be extracted from some citizens and paid to other citizens who will spend most of their income within the state.
In Massachusetts we are just discovering that the hidden costs are higher than we thought and the commonwealth's payment will be higher through taxes than we expected. To the extent that it helps some people get health care that weren't getting it at all, then that's a very good thing indeed, and will probably provide a net positive benefit for Massachusetts.
Since the MA program is not any kind of governmment single payor program, government as such is not the problem here. Unless I have miusundersyood it, the MA porgram has two main features: a mandate that everyone buy health insurance and subsidies for people whose income is inadqeuete to afford the premiums. So if there are serious cost overruns these must be due to A) insurers jacking up the premiums beyond what was expected and/or B) miscalculation of the residents' income so that more people require the subsidies than expected. If the latter is the main culprit then we have a far deeper problem than we thought since it means that our economic statistics in general are severely suspect.
Re: I know it's an article of faith about the heralded 'overhead savings'* that are generated thru M/M, but it just isn't true. M/M says 'we ain't paying', and the provider sticks it to the entity without a police force.
Private insurers (at least the big boys) do the same. They tell the provider, "This is how much we are paying-- this much and no more." If you have insurance hecl out an EOB sometime and note the difference between what was billed and was what was paid. There is usually a yawning gap, and it isn't accounted for by your copay either.