Reform

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The Baucus Plan: Increasing Access…to the same old Healthcare System

September 22, 2009 in Current Events, Public Policy | 2 comments

Many people have asked me, what do you think about the Baucus health reform plan?  Taking the bird’s eye view, the Baucus plan does a very good job at expanding insurance coverage.  Eligibility limits for public plans (i.e., Medicaid and SCHIP) are more generous.  Lower middle class and middle class individuals qualify for health insurance subsidies to purchase private insurance.  The Health Insurance Exchange should diminish the fear of losing one’s insurance when you switch jobs.  Overall, Baucus has built on existing health infrastructure to expand health access.  

By building on existing infrastructure, what he will do is basically expand the same health care system–that everyone is now complaining about–to more people.  There is little sincere effort to reform Medicare.  Although a white paper claims that he would cut physician compensation in Medicare, Baucus unsurprisingly decided to raise Medicare physician payment rates.  Pledges to reduce ‘waste and fraud’ are uttered by every President and Congressman in recent history but this is difficult to accomplish.  What about the promise to “reward Medicare providers who deliver care more efficiently and penalize those who don’t.”  This is good in theory, but difficult in practice.  Can we adequately risk adjust to make up for the fact that some physicians have sicker populations?  Will physicians have an incentive to not treat the sickest patients in order to improve their bonuses from Medicare?

Other points

I am not in favor of an individual mandate.  Most people want insurance and will buy it if they can afford it.  Will the government really fine lower middle class individuals for not buying health insurance?  What if they are using their limited income towards shelter, food, or their children’s education?

The “free rider” problem is a serious problem and has been addressed nicely here.

The Health Insurance Exchange is an interesting idea.  On the one hand, standardizing health plans makes comparison shopping between insurers easier.  However, the standardization may hurt innovation in the health insurance industry.  Further, how will these standard evolve as new technologies are invented?  I would guess that these ‘standardized’ plans will be slower to cover newer technologies.

Taxing ‘cadillac’ insurance plans does not make sense to me.  Let us say that two people earn $50,000 per year.  One person decides to buy a fancy flat screen TV while the other buys a small TV and saves the rest.  Should we tax the person who likes TV more than the a non-TV loving person?  Similarly, some people will prefer to spend more money on comprehensive health insurance.  Others might forego a cadiallac plan and instead buy exercise equipment, organic food, cars or any other item.  A progressive tax to fund health insurance for poorer individuals makes sense.  Taxing those who want comprehensive health insurance does not.  In fact, Baucus is reconsidering the excise tax on high-end insurance plans.

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Obama’s Address to Congress

February 25, 2009 in Current Events, Public Policy | No comments

While President Obama’s speech to Congress had many components, I’m going to focus on those related to health care.  I will also comment on the Republican response.

OBAMA ADDRESS

I applaud the President for specifically addressing the need for health care reform.

“…we can no longer afford to put health care reform on hold. We can’t afford to do it.”

Of course, Obama applauded his the health care changes made already (i.e., expanding SCHIP eligibility, and extending COBRA benefits).

The President mentioned the high cost of health care.  Health insurance premiums put a burden on small businesses.  Small businesses have smaller pooling groups and thus have higher average premiums than for large firms.  Further, if one employee gets has a catastrophic illness, this will have a large impact on health insurance costs for small businesses, but not for large.  Obama also mentions that many people file for bankruptcy due to large medical bills.

So what is Obama going to do about it?  Does he claim he can cure cancer?  Actually, yes.

“Our recovery plan will invest in electronic health records and new technology that will reduce errors, bring down costs, ensure privacy, and save lives.  It will launch a new effort to conquer a disease that has touched the life of nearly every American, including me, by seeking a cure for cancer in our time…and it makes the largest investment ever in preventive care, because that’s one of the best ways to keep our people healthy and our costs under control.”

Let’s look at Obama’s 3 suggestions:

  • EMR:  Electronic medical records (EMR) are of course a good thing.  The question is one of implementation.  If the government establishes one standard for electronic medical records, this will create a unified platform that can be used by all health care providers.   Sharing information across providers is essential.  However, there are privacy issues to be managed whenever a database is centralized.  Further, mandating one EMR standard will hinder the ability of innovators to improve the quality of the EMR.
  • Preventive Care.  Preventive care is generally a good thing, but I do not believe this is an important health reform issue.  First, preventive care will not reduce costs significantly and may even increase costs.  The Congressional Budget Office states that any gains from reducing obesity would be concentrated in the short and intermediate period “because some of the savings will be offset by increased longevity and the cost of disease that are most prevalent during old age.”  Secondly, if individuals are not getting preventive care and it is not saving money, then this does not seem to be a public policy issue.  An exception may be vaccines; however, since poor patients who can not pay for vaccines can get subsidized or free vaccines, the problem is one of education, not of health insurance.
  • Cure Cancer.  This idea will enrage the pro-cancer lobby.

Although President Obama realizes that “we must also address the growing cost in Medicare and Social Security,” he does not address how this will be done.

REPUBLICAN RESPONSE

Gov. Bobby Jindal’s comments related to health reform were the following:

“To strengthen our economy, we also need to address the crisis in health care. Republicans believe in a simple principle: No American should have to worry about losing their health care coverage, period. We stand for universal access to affordable health care coverage.

What we oppose is universal government-run health care. Health care decisions should be made by doctors and patients, not by government bureaucrats…if we put aside partisan politics and work together, we can make our system of private medicine affordable and accessible for every one of our citizens.”

Gov. Jindal theme was this: the government will help pay for your health insurance premiums, but does not support a single payer plan.  Although Gov. Jindal was vague, the Republican worldview might support a voucher system.  In a voucher system, individuals receive subsidies to buy private health insurance based on their income and illness level.  I believe that Republicans would oppose the creation of a public health insurance plan that could compete with private insurers (see 24 Feb 2009 post).

SUMMARY

Like most speeches, the Obama Address and Republican Response were long on rhetoric and short on details.  As all policy wonks know:

“Le bon Dieu est dans le détail” (God is in the details)

Gustave Flaubert

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China and Universal Health Care

October 21, 2008 in International Health Care Systems | No comments

The Wall Street Journal reports that China is aiming for Universal Health Care.  The Chinese hope to cover 90% of the population within 2 years, and provide health coverage for all Chinese by 2020. 

“This all stands in contrast to China’s current system, which provides little government funding to government hospitals and requires patients to pay heavy out-of-pocket expenses. The WSJ notes that out-of-pocket payments made up more than 60% of health spending in China at the end of the 1990s…The plan doesn’t address how the government would pay for its nationalization program if hospitals are restrained from earning more and tax collection mechanisms remain weak.”

Are you craving more detailed information about health care in China?  The Lancet, Peking University Health Sciences Centre and the China Medical Board have conducted an in-depth study of health system reform in China.  The series examines topics such as preventive care, public health identification of communicable diseases, health insurance, and patient cost sharing.  The full collection of articles is available here or you can check out the a BBC News summary of The Lancet’s China series.

China is a country of great inequality.  The International Herald Tribune reports that “While life expectancy in Shanghai is 78.1 years, that figure is 66.1 in Gansu, one of the poorest provinces.”  Physicians are often poorly compensated and secure most of their income by over-prescribing lucrative pharmaceuticals to their patients.  ”While the country was plagued by infectious diseases before 1990, chronic illnesses are now the main health problem and accounted for 74.1 percent of all deaths in 2005, up from 47.1 percent in 1973.”

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