5.4.17

SNEAK SOME TRADE-TESTED BETTERMENTS INTO HEALTH CARE.

The Great Congressional Flop of last month was the failure of the House of Representatives to put together a replacement for the two-lies-for-the-price-of-one Patient Protection and Affordable Care Act.  House Democrats, predictably enough, would not be voting to replace the deal they so carefully put together, complete with surprises still to be sprung on taxpayers.  But the replacement wasn't that great, writes Mark J Warshawsky of Real Clear Policy.

The more libertarian elements of the Republican coalition see Mr Trump's threat of a primary challenge as not credible, and the bill that was being whipped through as two less egregious lies for the price of one, but lies all the same.
[Kentucky Representative Rand Paul] said the bill would "do nothing" to bring health care costs down or to restrict the steady rise of premiums and took to Twitter to issue a beat-by-beat takedown of the proposal attacking it for keeping several elements of the Affordable Care Act intact, including subsidies for buying insurance (which would become a refundable tax credit in the House GOP plan) and the so-called "Cadillac Tax" on top notch insurance plans.
I'm sure the tax form for the refundable credit will be easier to fill in than the form for returning part of your insurance subsidy to the Feds.

A Federalist essay by Scott Ehrlich recognizes that in deal-making, the person most desperate to make a deal just for the sake of making a deal gets hosed.  Robert Ringer's self-help books of years ago suggested that walking away is a sound strategy.  I've never read The Art of The Deal, but the impression I get is that Mr Trump thinks similarly.  Scared money makes bad deals.  The Obamacare exchanges are tottering, and it's the Democrats who are going to own their collapse.  Let them do the compromising.
There was no urgency, no huge demand, no extenuating circumstances that forced them to rush a bill like this through. They could have just repealed and replaced later, fulfilling their promises to conservatives; or put together a well-thought-out, collaborative replacement bill later this year that reflected a great amount of research and consensus.

Or they could have done nothing, content that Obamacare would continue to implode on its own. Choosing none of these paths is baffling.
Are Chris "Tingles" Matthews and Chuck "Chipmunk" Todd and George "Chihuahua" Stephanopoulos and Martha "Whiney" Raddatz so scary that nobody is going to tell them to stuff it with their questions about consensus and compromise and all their dog-whistles that scan as "Donks Win?"  Why not just come out and say "We're not going to make a bad deal just to say we have a deal."

Mr Ehrlich goes on to suggest three steps forward.
  1. Repeal Obamacare Completely, Effective in 2020. 
  2. Immediately Stop Obamacare's Medicaid Expansion.
  3. Vote Through Popular, Bipartisan, Single-Issue Fixes.
He bases that third suggestion on the possibility that some Donks will be on board with interstate sales of health insurance, and with tort reforms.  With the trial lawyers being the most influential bunch of rent-seekers in the Democrat machinery?  To quote a past Speaker of the House: Are you kidding me?
Therefore, things such as keeping people younger than 26 on their parents’ insurance plan should be included. While definitely infantilizing, it is lower-cost and probably wouldn’t be the hill most conservatives or insurance companies would be willing to die on.

Despite likely raising conservative and insurance company ire, it would likely be necessary to push three longtime themes of Democratic health-care dreams: guaranteed issue, no lifetime limits, and community rating. All are budget busting. All are extremely popular. None is particularly conservative. But not getting behind them in some way guarantees a political disaster in 2018/2020 akin to what Democrats went through a decade earlier. Who knows what new health debacle they will try to foist on the country if returned to power.
On the other hand, a clean repeal will put the Democrats in a position of having to foist single payer on the country from scratch. And make no mistake, that is what they want. Never mind that Illinois is  Greece is Venezuela is Zimbabwe.  Medicare for all may well be the slogan.  It's easy to explain.  And Illinois is not yet Zimbabwe.  But what is it about setting up government monopsonies, which is what "Medicare reimbursement rate" means, that appeals to health care reformers?
The health system in America has devolved into a multi-sided market of competing monopolies seeking negotiating advantage. But you cannot get bigger than everyone. The government has a unique opportunity to clarify the system and use its bargaining power to give everyone the right to health care — at a more affordable cost.
Perhaps the challenge, dear reader, is in providing for trade-tested betterments to erode those monopolies and oligopolies.
There are lots of ways to get to what a single payer system offers — a coherent market for health care that more affordably covers everyone than our current Rube Goldberg contraption. Standing on principles of true universal coverage is important and heartening. Whether it’s called single payer or just something that is consistent with those principles shouldn’t be a deal-breaker. But if Democrats think they can just talk up single payer to obtain power and then shuffle it off, they’re playing with fire.
It's unlikely that Democrats would talk up single payer and then antagonize their base, which is on board with the idea, despite owning Illinois.

But perhaps the best thing for the government to do is go away.  In City Journal, Tom Coburn and Paul Howard summarize their case thusly. "State and federal mandates hamstring competition in the name of protecting consumers and providing charity care, but they don’t do either job particularly well."  The details are complex in places, but the political economy is straightforward.  Why should a medical cartel be different from any other cartel?  The purpose of a cartel is to generate monopoly rents for insiders and then dissipate them in ways that get spun as in the public interest but in a full analysis generate deadweight losses.  Where there's a fear of rationing by price meaning the poor people die, it's an easy sell.
Unless government regulated the supply of health care, the thinking went, hospitals would build excess capacity, resulting in overcharging or unnecessary hospitalizations. The hospitals also argued that barring competitors was necessary to protect charity care for uninsured and indigent patients. If profits for high-margin services were reduced through competition, they said, fewer funds would be available to pay for indigent care.
Maybe there's a hospital bubble the way there was once a South Sea Bubble or a Railway Mania or a dot.com investment frenzy.  But maybe third-party payers, possibly including government agencies, are providing the incentives to invest in excess capacity.  So you restrict capacity to jack up prices to paying customers, and then you dissipate the rents as indigent care.

What happens next, notes John Stossel, is not amusing.
Someone else paying changes our behavior. We don't shop around. We don't ask, "Do I really need that test?" "Is there a place where it's cheaper?"

Hospitals and doctors don't try very hard to do things cheaply.

Imagine if you had "grocery insurance." You'd buy expensive foods; supermarkets would never have sales. Everyone would spend more.

Insurance coverage -- third-party payment -- is revered by the media and socialists (redundant?) but is a terrible way to pay for things.

Today, 7 in 8 health care dollars are paid by Medicare, Medicaid or private insurance companies. Because there's no real health care market, costs rose 467 percent over the last three decades.

By contrast, prices fell in the few medical areas not covered by insurance, like plastic surgery and LASIK eye care. Patients shop around, forcing health providers to compete.
In public-subsidized health, the use of either "price" or "cost" misleads. We cannot properly speak of either until we know price discovery is at work.  Mr Stossel suggests, let price discovery work.
Our employers don't pay for our food, clothing and shelter; they shouldn't pay for our health care. They certainly shouldn't get a tax break for buying insurance while individuals don't.

Give tax deductions to people who buy their own high-deductible insurance.

Give tax benefits to medical savings accounts. (Obamacare penalizes them.)

Allow insurers to sell across state lines. Current law forbids that, driving up costs and leaving people with fewer choices.
Single payer, or the Conrail Option? Fuhgeddabouddit!  Just check the price tag on Colorado's Amendment 69.  (Did its presence on the ballot contribute to Colorado's electoral votes going to Mr Trump?)

Perhaps the work-around is emerging while the politicians wrangle.  Mark "Carpe Diem" Perry introduces readers to a subscription-based, fee-for-service clinic with transparent pricing.
[T]he clinic accepts no insurance, and it will not submit insurance claims on patients’ behalf. If patients have insurance, they can easily take the paperwork the clinic provides and file an insurance claim on their own. Reducing the costly, time-consuming mountain of paperwork associated with insurance, Medicare and Medicaid is one of the main reasons that cash-only medical clinics can keep their costs down and prices so low and affordable.
It's possible that a person can purchase catastrophic care coverage, pay the fine tax penalty for carrying non-conforming insurance, the monthly dues at this clinic, and still come out ahead compared to buying an expensive high-deductible policy that covers all the conditions a person will not be subject to (in the name of horizontal equity, of course) on the exchange.
A 40-year-old unsubsidized bronze Obamacare plan patient will pay slightly more than $350 per month this year for their “health coverage” with a deductible of more than $6,000. And that’s supposed to somehow be “affordable” health care? In contrast, spending $350 per month out-of-pocket at Clinica Mi Pueblo, instead of going toward an Obamacare plan that provides almost no actual medical care, would actually purchase quite a lot of actual medical services.
It's market-based, it's not illegal (yet), and it offers people a better option than simply paying the tax penalty and relying on emergency room charity.  Insurers don't like it, but it's in the nature of cartels not to like the work-arounds people come up with.

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