24.5.17

LIVE LONGER, PAY LESS.

An obscure radio talker called Pat LaMarche thinks that ought to be the tag line for universal Medicare.  Her reasoning:  California's proposed statewide single payer bill costs out as less than her estimate of the current cost to Californians under the muddle that existed long before the misnamed Patient Protection and Affordable Care Act compounded the muddle.  Perhaps, although perhaps the Californian legislators, with the lessons of Colorado's Amendment 69 in mind, are concealing what the bill is really likely to cost Californians in taxes.  (The estimates of businesses and residents leaving California, or Colorado, don't figure in my story today, as those knock-on effects, while likely to be present, aren't what interest me.)

But if you want to live longer and pay less, mightn't the proper policy response be to bring in more trade-tested betterments?  Start, as Edward "Captain Ed" Morrissey suggests, by recognizing that "commodification" is not a nasty word, it's simply reality.
Health care consists of goods and services produced and delivered by highly specialized providers in exchange for monetary compensation. Overall, it’s a commodity, for which the terms “right” and “privilege” are largely meaningless. In an economic sense, health care is no different than markets for other commodities, such as food, vehicles, fuel, and so on. The ability to purchase goods and services depends on the resources one has for compensation for their delivery in most cases.

Progressives insist that health care is so critical to existence that it must be considered a right, and that government has to guarantee access to it regardless of the ability to pay for it. That, however, doesn’t make it a right, nor is health care the only commodity for which that argument applies. For instance, water is even more critical to existence than health care, but even while most water systems are run by the government, people who don’t pay their bills will get it turned off. Grocery stores are not required to distribute food without proper compensation, and those who take without paying get prosecuted for theft.
Yes, and "guaranteed access" becomes a license to rent-seek and avoid price discovery until the government runs out of other people's money.  Puerto Rico is Greece is Venezuela is Zimbabwe.  Those public water authorities?  How in the name of Donald Trump did they let the bottled water people poach their business, even with street-corner bubblers and chilled water fountains in public buildings?

Never mind that the Jacobin folks want to double down on becoming Venezuela.
The particularly bizarre thing about many of these attacks on single payer from prominent liberals and Democrats is that they’re fundamentally conservative arguments: single payer is too radical and far-reaching a change; it’s too expensive; it’ll mean raising taxes; it’ll involve giving the federal government too much power.

Do Democrats and liberals really want to be making these arguments? After all, they can be (and have been) used against virtually any policy favored by progressives and the Left more broadly, which typically do cost a lot of money, necessitate extra taxes to pay for them, require a great deal of government involvement to successfully implement, and tend to temporarily disrupt people’s lives as new rules, regulations, and systems are put in place. Go ahead and look up conservatives’ attacks on Obamacare as it was cobbled together — virtually every liberal complaint now made about single payer was launched by the Right against Obamacare.
Yes, and how correct were those complaints with respect to the two-lies-for-the-price-of-one Patient Protection and Affordable Care Act?

Perhaps the best thing for the government to do is to back off.  Consider this recent American Interest column.
Whether insurance is bought by private individuals or paid for by the government, healthcare simply costs too much. In the short run, we can argue about exactly how much insurance should be subsidized; in the long-run, the only way out of this trap is to find sustainable ways to bring down the price of delivery, whether through expanded federally-funded research initiatives, regulatory changes, targeted immigration policies, or tort reform.
We'll know improvements are on the way when the conversation turns away from the current focus on insurance and liability, and begins to treat the practitioners and the producers of medicines and medical tools as entrepreneurs and innovators rather than as cost curves to be bent down or as devices to be taxed.

We'll know improvements are on the way when the conversation goes beyond argumentum ad misericordiam.  "You May Like Obamacare, But Don’t Forget About The People It Has Hurt," and the stories of people who benefit from their subsidized insurance, don't get to the main challenge, which is ... expanding the set of important operations people can perform without having to think about them.

A Heat Street essay that might take some stick for appearing to minimize the importance of insurance coverage in fact gets at the heart of the matter.
Health insurance just isn’t a top priority for healthy individuals and families.

Democrats can argue the point day after day that it should be, but this isn’t a priority that is aligned with many day to day voters. What people care about is not having the $700 to fix their car or house, or take a vacation or improve the quality of day to day life for their family, that they are simply pissing away to an Obamacare fine or for a premium or deductible they can’t afford.
Civilization advances by increasing the set of important operations and all that ...  Moreover, when we contemplate trade-tested betterments, the benefit to consumers is part of the testing of the betterments.  Compelling healthy people to buy a crappy insurance policy looks too much like adding complexity for little good at the margin.

Thus, as Reason's Peter Suderman puts it, "[I]mproved affordability and accessibility is an outcome, not a system." Consider consumer electronics, or motor vehicles, or, for that matter, designer bottled water at north of two bucks a bottle.  Start, perhaps, with this Market Ticker manifesto.  It's long.  Score it yourself, dear reader, but consider the logic of the proposal.
This bill will make customer choice not just a function of price but also of outcomes. Today there is no accurate way for a person seeking a procedure to compare the success rate between various providers of a given procedure. This must be fixed immediately if we are to have true competition as some doctors are outstanding, some are excellent, many are average and some are poor. There is literally no way for a customer today to know, other than by anecdote, which category a physician falls into.

The bill will also destroy PBMs and the outrageous extraction of funds they commit by forcing price transparency and decoupling price from "insurance." You will be able to call or go online to look up drug prices from any pharmacy and they will in turn have to honor the same price for all retail buyers. Competition will return at the retail level and the practice of "gagging" pharmacists, which is arguably illegal as it is done for anti-competitive purposes, will end immediately.
There's still the challenge of inferring the ability of the practitioner from the fee, as there's a lot of asymmetric information in medicine, on both sides of the transaction.  And yet, the current hodge-podge of insurance networks and recognized providers and the rest provides patients with precious little in the way either of price discovery or of assessing outcomes.

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