This is lovely. Both Bobo and Prof. Krugman have addressed the same problem today. And Bobo thinks he has a thing or two to say about the economics of health care… He asks “Do Markets Work in Health Care?” and says that there’s psychology as well as economics in a consumer-based system. “Gemli” from Boston will have something to say about that. Prof. Krugman, who actually KNOWS a thing or three about economics, addresses “Donald Trump’s Medical Delusions” and says magical thinking won’t work on health care. Here’s Bobo:
Believe it or not, we’re not really going to have to spend the next four years wading through wonky drudgery of Russian spy dossiers and hotel sex cameras. At some point we’re going to have a thrilling debate over the most scintillating question in health care policy.
The Republicans are going to try to replace Obamacare. They’re probably going to agree to cover everybody Obama covered, thus essentially granting the Democratic point that health care is a right. But they are going to try to do it using more market-friendly mechanisms.
As you know, the American health care system is not like a normal market. When you make most health care decisions you don’t get much information on comparative cost and quality; the personal bill you get is only vaguely related to the services; the expense is often determined by how many procedures are done, not whether the problem is fixed.
You wouldn’t buy a phone this way.
The Republicans are going to try to introduce more normal market incentives into the process. They are probably going to rely on refundable tax credits and health savings accounts so everybody can afford to shop for their own insurance and care.
This would still be nothing like a free-market system — it would still be a highly regulated, largely public benefit — but it would rely more on consumer incentives.
The crucial question is: Do market incentives work in health care?
This is really two questions. The economic one: Would market mechanisms improve quality and reduce costs? The psychological one: Do people want the extra cognitive burden of shopping for health care, or would they rather offload those decisions to someone else?
Most progressives say markets don’t work. They point back to a famous essay the economist Kenneth Arrow wrote in 1963, which is the same year the Beach Boys had a huge hit with “Surfer Girl.”
Arrow argued that there are several features that make health care unlike normal markets. People’s needs for health care are unpredictable, unlike food and clothing. The doctor-patient relationship is unique and demands a high level of trust, empathy and care. Providers know much more about medicine than patients do, so the information is hopelessly asymmetric. Patients on a gurney can’t really make normal choices, and payment comes after care, not before.
These are all solid points, especially the doctor-patient one. But health care has become less exceptional over time. The internet and other mechanisms help customers acquire a lot more information. Sophisticated modeling helps with unpredictability in a bunch of fields.
We put our lives in the hands of for-profit companies all the time. I spent part of my week learning from an aviation mechanic how hard manufacturers work to prevent pieces of metal from shredding through the cabin if an engine explodes. Airplanes are ridiculously safe.
Proponents of market-based health care rely less on theory and more on data. The most fair-minded review of the evidence I’ve read comes from a McKinsey report written by Penelope Dash and David Meredith. They noted that sometimes market forces lead to worse outcomes, but “we have been most struck by health systems in which provider competition, managed effectively, has improved outcomes and patient choice significantly, while at the same time reducing system costs.”
There’s much research to suggest that people are able to behave like intelligent health care consumers. Work by Amitabh Chandra of Harvard and others found higher-performing hospitals do gain greater market share over time. People know quality and flock to it.
Furthermore, health care providers work hard to keep up with the competitors. When one provider becomes more productive, the neighboring ones tend to as well.
There are plenty of examples where market competition has improved health care delivery. The Medicare Part D program, passed under President George W. Bush, created competition around drug benefits. The program has provided coverage for millions while coming in at 57 percent under the cost of what the Congressional Budget Office initially projected. A study of Indiana’s health savings accounts found the state’s expenses were reduced by 11 percent.
Laser eye surgery produces more patient satisfaction than any other surgery. But it’s generally not covered by insurance, so it’s a free market. Twenty years ago it cost about $2,200 per eye. Now I see ads starting at $250 an eye.
There’s a big chunk of evidence that market incentives would work in health care, especially in non-acute care. The harder problem for Republicans may be political. This is a harried society. People may not want the added burdens of making health care decisions on top of all the others. This is a distrustful society. People may not trust themselves or others to make decisions. This is an insecure society. People may not want what they perceive as another risk factor in their lives.
The policy case for the Republican plans is solid. Will they persuade in this psychological environment? I doubt it.
Bobo doesn’t seem to grasp the fact that Lasix surgery is optional, and can be considered in the same camp as plastic surgery. I doubt that many cancer patients will defer treatment until the price comes down… But then again, Bobo is a maroon. Here’s what “gemli” had to say:
“The reason we have Obamacare is because the market-friendly days of old were not friendly to sick people. They were friendly to the markets at the expense of the sick. John Boehner went into a purple-tongued apoplectic rage when Obamacare was passed, not because it would help millions of the uninsured sick, but because it would inconvenience the ability of the free market to prey on them.
Health care is not a commodity, and it’s not a luxury. It’s a necessity, and the richest nation in the world should have found a way to provide medical care to the people whose lifetime of labor made it so. Instead of worrying about how health care will impact insurance companies, we should wonder how other advanced nations manage to provide low-cost, quality care to their citizens, and why we can’t.
Martin Shkreli is the poster boy for the free-market approach to health care. He may have seemed like an extreme example, but he was a piker when it came to robbing people blind for what were inexpensive drugs. How does his strategy differ from our current system, in which the U.S. isn’t allowed to negotiate drug prices?
There is one definitive and fool-proof test for determining the most compassionate and cost-effective health-care system that will support the needs of all our citizens: if Paul Ryan and the Republican Congress are for it, run screaming in the other direction. You’ll always be right.”
Now here’s Prof. Krugman:
The Justice Department’s inspector general is now investigating the way the F.B.I. director conveyed the false impression of an emerging Clinton scandal just days before the election, even as he said nothing about ongoing investigations into Russian intervention and possible collusion with the Trump campaign. That action very probably installed Donald Trump in the White House. And it’s already obvious that the incoming commander in chief will be a walking, tweeting ethical disaster.
On the other hand, he’s also dangerously delusional about policy.
Some Republicans appear to be realizing that their long con on Obamacare has reached its limit. Chanting “repeal and replace” may have worked as a political strategy, but coming up with a conservative replacement for the Affordable Care Act — one that doesn’t take away coverage from tens of millions of Americans — isn’t easy. In fact, it’s impossible.
But it seems that nobody told Mr. Trump. In Wednesday’s news conference, he asserted that he would submit a replacement plan, “probably the same day” as Obamacare’s repeal — “could be the same hour” — that will be “far less expensive and far better”; also, with much lower deductibles.
This is crazy, on multiple levels.
The truth is that even if Republicans were settled on the broad outlines of a health care plan — the way Democrats were when President Obama took office — turning such an outline into real legislation is a time-consuming process.
In any case, however, the G.O.P. has spent seven years denouncing the Affordable Care Act without ever producing even the ghost of an alternative. That’s not going to change in the next few weeks, or ever. For the anti-Obamacare campaign has always been based on lies that can’t survive actual repeal.
A prime example is the pretense that health reform hasn’t helped anyone. “Things are only getting worse under Obamacare,” declared Paul Ryan, the speaker of the House, last week. Yet the reality is that there has been a dramatic reduction in the number of Americans without insurance since reform went into effect — and an overwhelming majority of those covered by the new health exchanges are satisfied with their coverage.
How have Republicans nonetheless been able to get away with this lie? Part of the answer is that many of the newly insured don’t know that they’re being covered via Obamacare, or at any rate don’t realize that they will lose coverage if it’s repealed.
But that will change if repeal proceeds. For example, the percentage of nonelderly white adults without insurance fell by almost half from 2010 to 2016, from 16.4 to 8.7, a gain surely concentrated in the Trump-supporting white working class. Repeal would send that number right back up, and there would be no hiding the damage.
Meanwhile, Republicans have made hay over this year’s increase in insurance premiums. But this looks very much like a one-time adjustment; and the broader picture is that health costs have actually gone up much more slowly since Obamacare was enacted than they did before, in part due to the law’s cost-control features, which have worked far better than most expected.
And if the Affordable Care Act is killed, myths about its costs will be replaced by the reality of soaring bills for millions of Americans who don’t realize how much the act has helped them.
But won’t Trumpcare solve all these problems, by offering something much better and cheaper? Not a chance.
Republicans don’t have a health care plan, but they do have a philosophy — and it’s all about less. Less regulation, so that insurers can turn you down if you have a pre-existing condition. Less government support, so if you can’t afford coverage, too bad. And less coverage in general: Republican ideas about cost control are all about “skin in the game,” requiring people to pay more out of pocket (which somehow doesn’t stop them from complaining about high deductibles).
Implementing this philosophy would deliver a big windfall to the wealthy, who would get a huge tax cut from Obamacare repeal, and it would mean lower premiums for a relatively small number of currently healthy individuals — especially if they’re rich enough that they don’t need to worry about high deductibles.
But the idea that it would lead to big cost savings over all is pure fantasy, and it would have a devastating effect on the millions who have gained coverage during the Obama years.
As I said, it looks as if some Republicans realize this. They may go ahead with repeal-but-don’t-replace anyway, but they’ll probably do it because they believe they can find some way to blame Democrats for the ensuing disaster.
Mr. Trump, on the other hand, gives every impression of having no idea whatsoever what the issues are. But then, is there any area of policy where he does?
No. This has been another installment of SASQ.