health care reform

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Financing Reform…with Taxes on Tanning Salons?

December 21, 2009 in Current Events | No comments

The N.Y. Times reports that Democrats in the Senate are nearing the 60 votes needed to pass a health reform bill.  To do this, Democrats have made a number of concessions.  These include: abandoning a public option, prohibiting abortion coverage, and of course, long-term-care insurance to people with severe disabilities, new services for pregnant teenagers, financial breaks to nonprofit insurance companies, and of course extra Medicaid money to Nebraska.

How will the government pay for these additions?  There are new sources of revenue.  This include taxes on high income individuals, taxes on profitable health insurance companies, and taxes on tanning salons.  The tax on tanning salon replaces a proposed tax on cosmetic surgery.

People in favor and against a single payer system should be disturbed by these developments.  Single payer advocates likely are disturbed that there is no public options and that there are so many giveaways to special interest groups.  Those against a single payer option will be upset that at the seeming inevitability that government involvement in health care will increase.

Your lowly Healthcare Economist is also perturbed. A single payer system could work efficiently, lower cost and expand coverage.  Despite lots of ideological rhetoric, having a government bureaucrat reviewing your claims for reimbursement would not be much different than having a health insurance bureaucrat doing the same.  As I predicted, however, getting to the single payer system will inevitably involve handouts to interest groups.  Even if a single payer or government regulated health insurance system was ideal at the outset, lobbying would likely corrupt the system.  

The major problem with the current system is that if you lose your job (possibly because you are sick), then you also lose your health insurance.  The proposals on the table have the benefit of expanding health insurance to more individuals.  However, these same proposals offer little to decrease–or even slow the growth–of the cost of health insurance.  Proposals to tax tanning salons isn’t the type of real reform that is needed.

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The birth of the N.H.S.

January 23, 2009 in International Health Care Systems, Public Policy | 3 comments

Why did the British decide to have the government pay for health care?  Are they socialists by nature?  Were they just ahead of their time?  Did some lobbyist win the favor of government?

Actually, it was done out of practicality.  World War II shifted the provision of health care from the private to the public sector.  As Atul Gawande explains in the New Yorker:

“ …in the days before war was declared, the British government oversaw an immense evacuation; three and a half million people moved out of the cities and into the countryside. The government had to arrange transport and lodging for those in need, along with supervision, food, and schooling for hundreds of thousands of children whose parents had stayed behind to join in the war effort. It also had to insure that medical services were in place—both in the receiving regions, whose populations had exploded, and in the cities, where up to two million war-injured civilians and returning servicemen were anticipated.

As a matter of wartime necessity, the government began a national Emergency Medical Service to supplement the local services. Within a period of months, sometimes weeks, it built or expanded hundreds of hospitals. It conducted a survey of the existing hospitals and discovered that essential services were either missing or severely inadequate—laboratories, X-ray facilities, ambulances, care for fractures and burns and head injuries. The Ministry of Health was forced to upgrade and, ultimately, to operate these services itself.”

Like many “temporary” government programs, this one had sticking power.  

“By 1945, when the National Health Service was proposed, it had become evident that a national system of health coverage was not only necessary but also largely already in place—with nationally run hospitals, salaried doctors, and free care for everyone. So, while the ideal of universal coverage was spurred by those horror stories, the particular system that emerged in Britain was not the product of socialist ideology or a deliberate policy process in which all the theoretical options were weighed. It was, instead, an almost conservative creation: a program that built on a tested, practical means of providing adequate health care for everyone, while protecting the existing services that people depended upon every day. No other major country has adopted the British system—not because it didn’t work but because other countries came to universalize health care under entirely different circumstances.”

Based on this evidence, Dr. Gawande gives a profound insight.  Any health care reform necessarily will be built out of the existing health infrastructure.  This is true both for individuals who want more or less government involvement.  The U.S. has significant experience with private health insurance and expanding private health insurance would not be difficult.  Expanding public insurance would also be feasible through expansions of the V.A., Medicare, or Medicaid systems.  

Whatever reform path we choose, we must take into account the capabilities and infrastructure already in place when we propose these reforms.  

No country designs their health care system from scratch.

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