Inside the Asylum
Frustrating are the responses to Sarah Palin’s nutty claim about “death panels.” Howard Dean, for instance: “My wife and I have practiced medicine for over forty years combined. There is no truth now, nor has there ever been any truth to the idea that the government encourages euthanasia or infanticide.” “No truth to the idea”? But Palin’s claim was lunacy; it hardly merits empirical disconfirmation.
And here’s the New York Times reporting on the rumors of “death panels”: “Conservative critics say the legislation could limit end-of-life care and even encourage euthanasia. Moreover, some assert, it would require people to draw up plans saying how they want to die…. These concerns appear to be unfounded.” “Appear to be unfounded”? The Times can’t simply report the truth, which is that the claims are lies?
And this is the problem. A band of lunatics on the right (Beck, Hannity, O’Riley, Limbaugh, Coulter, Malkin, Savage, Boehner, DeMint, Palin, Morris, Gingrich, etc.) has gained a space in the public discourse. As trusted commentators they can say whatever they like and be believed by part of the public—claims that, even if completely crazy, must be taken seriously.
How has this occurred? Well, nothing guarantees that the people who run the major media—and who decide what is and isn’t serious discourse—aren’t glib and woefully ignorant about issues of importance. And they have perverse incentives to (a) find controversy where there’s none or should be none (global warming being the most egregious example) and (b) pose as “neutral” in the “debates” they fabricate. Thus on one side are policymakers, peering into the economic abyss, and proposing a modest, necessary reform that will expand health care coverage to millions, make existing coverage more secure, and address rapidly rising health care costs. On the other side is lunacy, sheer lunacy: comparisons of Obama to Hitler, rumors of “death panels,” people carrying firearms to Town Hall meetings, people crying over the “loss” of their country, etc.
The method of rightwing sabotage is to make outlandish claims on the assumption that the major media, rather than examining, debunking, and dismissing them (its job), will amplify them, enabling the claims to worm their way into the public consciousness. The effects can be devastating. Here are results from a Wall Street Journal/NBC poll released Wednesday:
(For the record, the first, third and fourth “criticisms” are nonsense, since no version of the health care reform bill contains any such provisions. And the reform can’t very well be a “government takeover of the health care system” if it doesn’t involve a government takeover of the health insurance and/or health care delivery industries.)
There is a legitimate debate to be had, but it’s about cost, not about whether the government is “taking over” health care, or whether government bureaucrats will get “between” patients and their doctors (as insurance companies do now), or whether there will be “death panels.” Much of the major media, however, are unable to focus on the boring facts of health care reform: that its effects for most people will be indiscernble, that if anything it will help people (by prohbiting insurers from denying coverage and by lowering insurance premiums in the long run), that reform is absolutely essential if we are to avoid a long-term economic catastrophe, and that the serious debate isn’t about Hitler or “death panels,” but cost.
Reasons for Reform
The prime motivation for health care reform is economic. In 2009 Americans will spend $2.5 trillion on health care, three times as much as in 1994 and about 17.5 percent of GDP. And in 2018 health care spending is projected to be 20 percent of GDP ($1 of every $5 spent). Health insurance premiums have risen 119 percent since 1999, more than four times the rate of inflation during that period (28.5 percent). And premium costs are projected to rise by 9 percent next year, an increase that 42 percent of employers say they will pass on to their employees.
Although health care costs have risen faster than inflation in all industrialized countries, nowhere have they risen faster than here:
(Chart from Paul Krugman’s blog; percentage of GDP.)
So other rich countries spend less than us and get health care that’s at least comparable (though see below).
Some would argue that richer countries should pay more for health care since richer populations are likely to demand more health care services. We might, for example, expect an approximately linear relationship between per capita GNP and per capita health care spending. Here’s what we find:
(Data: W.H.O.)
A straight-line relationship graphed from (approximately) Spain to (approximately) Norway fits the data reasonably well (adjusted R2 = 0.67), but reveals the U.S. as an outlier, paying $427 billion more annually than should be inferred from its wealth..
Rapidly rising health care costs are, of course, an ever-growing burden on individuals, families, and businesses. But they’re also, as President Obama says, a “ticking time bomb for the federal budget.” No need to do the math. Just follow the graph of CBO projections of the federal budget as a share of GDP:
Obviously if trends continue debt will pile up, the dollar will weaken, interest rates will rise, and we may wind up without much of an economy to speak of. Opponents of health care reform need to grasp that failure to get control of runaway health care costs is not an option.
Morality
There are also, of course, moral issues. Almost 50 million Americans now lack health insurance, up from 40 million when the Clinton plan failed in 1994. Some of these are the young and “immortal,“ uninsured by choice. But the vast majority are simply priced out of the market. In any case it’s no good having anyone uninsured, since society just winds up paying their emergency bills, and exclusion of low-risk individuals from insurance pools makes everyone else’s insurance premiums higher than they would otherwise be.
Perhaps the most egregious practice of the insurance industry is rescission: the practice of retroactively canceling—often on dubious grounds that patients hadn’t disclosed their full medical histories—coverage of policyholders with expensive medical conditions. As Lisa Girion reported in the Los Angeles Times, the insurers Assurant, UnitedHealth Group, and WellPoint over a five-year period “canceled the coverage of more than 20,000 people, allowing the companies to avoid paying more than $300 million in medical claims.” The companies thus avoided paying for treatments of “policyholders with breast cancer, lymphoma and more than 1,000 other conditions” (quoted in Marmor and Oberlander, cited below). Amazingly—in what should have been a public relations disaster—in congressional testimony on June 16 executives of these companies refused to end this practice. As Theodore R. Marmor and Jonathan Oberlander observed (in an excellent article),
| There is no stronger indictment of American private insurers
or better
example of the profit motive’s corrosive influence on medicine
than
rescission. That insurers, even with political pressure for reform,
would not forswear this practice in public hearings is stunning. It
also illustrates how difficult a task it will be to transform the
business practices of an industry that profits from discriminating
against sick people. |
Insurers claim that rescission affects only a small percentage of policyholders. But the vast majority of health care coverage claims are made by a small percentage of policyholders. So among this group, rescission looms relatively large.
In any case, all versions of the health care reform bill before Congress would end rescission (though arguably if the public option isn’t in the final bill such prohibitions may lack teeth).
Two other points about morality:
- The Institute of Medicine estimates (2004) that about 18,000 Americans die every year for lack of health insurance.
- A Harvard study found that over 60 percent of all bankruptcies are caused at least partly by medical expenses.
“Best Health Care System in the World”?
One argument opponents of health care reform can’t make (but will) is that the American health-care system is the best in the world. How good is American health care? Plausibly, for those with full access to it, it’s relatively good. But for those with little or no access to it, it’s almost certainly the worst in the industrialized world. Let’s examine some of the (admittedly tired) statistics about health outcomes. First, the World Health Organization’s “healthy life expectancy” statistic, i.e., average number of years a person lives in “full health” (a measure of the resources devoted to reducing the impact on people’s lives of major diseases):
Then there are our famous achievements in infant mortality:
But it isn’t just infant mortality, but mortality throughout life, that distinguishes the U.S.:
(Source: W.H.O.)
And here’s something interesting. Disproportionately large percentages of Americans, compared to citizens of other industrialized countries, die at every age level until after age 65, at which time the differences converge towards statistical insignificance. 65, of course, is the age at which access to health care finally becomes secure for Americans (as it is for citizens of other industrialized countries throughout life):
(Source: W.H.O.)
Some have argued that our poor health outcomes aren't the fault of our health-care system, since lifestyle factors may play a role—what Ezra Klein called the “we eat more cheeseburgers” argument. Our diets may on average be poorer than those of comparable societies (though I'm not sure about this). We also certainly have more homicides. On the other hand, we smoke less than most:
So lifestyle factors may be a wash. In any case the argument of most health care reform advocates is not that our health care outcomes are worse than those of other countries, but that they’re no better, even though we spend more than twice as much per capita as most others do. Something is clearly greatly amiss.
And what about consumer satisfaction? In surveys the U.S. system doesn’t stack up well against those of other countries. The 2008 Commonwealth Fund International Health Policy Survey of Sicker Adults (p. 3), for example, asked heavy health care users in eight countries to rate their satisfaction with their health-care systems. There were three choices: highly positive (“works pretty well”), intermediate (“some good things” but “fundamental changes are needed to make it work better”), and strongly negative (“has so much wrong with it”). Here are the percentages of respondents that chose the highly positive and the strongly negative responses:
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Components of Proposed Reform
The type of system the Democrats have in mind is fairly simple (all obfuscation aside). It has four components (or pillars; see Krugman):
1. Regulation, so that no one can ever be denied coverage, whether because of pre-existing conditions, rescission, lifetime limits on payments, or anything else.
2. Subsidies, so that everyone can afford health care coverage.
3. Mandates on individuals and families to buy insurance, and on businesses to provide insurance to employees or pay a fee to help subsidize coverage for lower-income people.
4. Competition through local and/or national insurance exchanges and possibly a competing public option.
The parts fit together coherently. Regulations that require insurance companies to insure all comers would be unworkable without mandates, since people would otherwise game the system, buying insurance only when they’re sick. Mandates would be unworkable unless there are subsidies to relatively low-income people so they can afford the insurance they’re mandated to buy. Subsidies would be unworkable unless there are cost control measures, including mandates, which lower premiums by expanding insurance pools, and competition, whereby insurance companies would compete through organized exchanges and possibly against a public option, pushing down premiums.
Most media coverage leaves the impression that Congress is mired in controversy over health care reform. To a degree, yes. But the broad parameters of the proposed reform, outlined above, are non-controversial. The main differences concern (a) whether there will be a public option, and (b) how to pay for the subsidies portion of the bill, i.e., cost.
Where the Economy is and Where It's (Apparently) Going
Some Reality about Deficits
Armageddon: The Aftermath
The Hype
How to Explain It
Is Health Care Reform Popular?
The Point of the Public Plan
The Context of Health Care Reform
Addendum
Is Low Life Expectancy the Fault of Our Health Care System?
What Americans Believe
American Health Care: Best in the World?
Is 76.5 Large?
NBC-WSJ Poll
More About Bubbles
Why Did Economists Miss the Housing Bubble?
Why Has Monetary Policy Been so Ineffective?
The Geithner Plan
Is 22.2 Large?
Economics: A Theoretical Divide
The New Deal and the Great Depression
Stimulus By the Skin of Our Teeth
The Interregnum
Postmortem
Obama and McCain on Tax Cuts and Health Care
Religion and the New Atheism
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