Is it too late to reform health care reform?
Finishing up Krugman's book The Conscience of a Liberal I was again disappointed by his superficial and haphazard treatment of a number of topics. In particular, he has a chapter on The Health Care Imperative in which he discusses health care reform for the USA. But this isn't a book report, it is an attempt to wrap my mind around health care reform as a proximal political activity. Harry Reid says a bill will occur this summer. There doesn't seem to be a consensus about health care reform, so a good debate would be healthy politics. However, I get the impression that there won't be important debate. Sure there will be Congressional quibbling and grandstanding, but I suspect the momentum for Obama-like reform is too great. It's a cake accompli except for the icing. So I'm a pessimist in my initial answer to the title question, "Is it too late to reform health care reform?" But that doesn't mean I despair of any participation beyond critique of the "icing" or posting whiny blogs. Being pessimistic doesn't make me anti-progressive. It means it might not be easy.
Some general thoughts on reform: Reform is a kind of transformation. Rational* transformation starts with understanding both the status quo and the desired result or end. In addition, rational transformation considers the means and the costs, not just the benefits. And it's not just about final costs but about transition costs. Finally, pragmatic rational transformation isn't merely idealistic, it also considers extant political factors such as pre-existing reform ideas and movements.
The main roadblock I have in dealing rationally with health care reform is my ignorance. Krugman left major gaps in his "health" coverage. For instance his table shows annual per capita costs (2004) in the US at $6K with other countries at $2.5K (fully socialized Britain) to $3.1K (other major countries). He explains less than half of the difference. He doesn't discuss hidden costs such as subsidies. He alludes to transition costs but doesn't get into them. He does say that 1% of recipients cost over $150K/yr (when sick), and that most people need barely any medical care year after year. That struck me as similar to the income inequality which drives much of the debate on taxes. He says over 16% of GDP went to health care in 2005.
So if anyone has an excellent and accessible guide to health care economics, that would be great. 'Excellent' means largely non-partisan objectivity covering all the bases.
I can suppose a sort of spectrum of options for reform outlined by:
laissez-faire
Obama-like reform
Single payer
Others?
One conundrum, or perhaps paradox, to consider: Health care spending is a big part of the economy. If we were to convert from $6K to $3K annual per capita spending, would that knock roughly 8% out of the economy in a time where government is actively calling for economic stimulus?
[24hrs later] Since nobody has taken this on, let me try: Likely cost cuts aren't going to be that great, and they likely won't hit us for a year or two, or longer. The economy could be stronger then, not needing stimulus. Also it now seems to me that the 6 to 3 is rather overoptimistic, that is, even a single payer system would not reduce spending nearly that much. But this then reduces one impetus to make a change, leaving me to look at other rationales.
Some general thoughts on reform: Reform is a kind of transformation. Rational* transformation starts with understanding both the status quo and the desired result or end. In addition, rational transformation considers the means and the costs, not just the benefits. And it's not just about final costs but about transition costs. Finally, pragmatic rational transformation isn't merely idealistic, it also considers extant political factors such as pre-existing reform ideas and movements.
* There are also a- and irr-rational considerations. Arational transformation occurs more or less as pointed to by the quip "Shit happens." It's hard if not impossible to debate that however one values shit. I consider the irrational as merely perverse, but if anyone can show how perversion or shooting in the dark would net out as a good here, I'm open to discussion.
The main roadblock I have in dealing rationally with health care reform is my ignorance. Krugman left major gaps in his "health" coverage. For instance his table shows annual per capita costs (2004) in the US at $6K with other countries at $2.5K (fully socialized Britain) to $3.1K (other major countries). He explains less than half of the difference. He doesn't discuss hidden costs such as subsidies. He alludes to transition costs but doesn't get into them. He does say that 1% of recipients cost over $150K/yr (when sick), and that most people need barely any medical care year after year. That struck me as similar to the income inequality which drives much of the debate on taxes. He says over 16% of GDP went to health care in 2005.
So if anyone has an excellent and accessible guide to health care economics, that would be great. 'Excellent' means largely non-partisan objectivity covering all the bases.
I can suppose a sort of spectrum of options for reform outlined by:
laissez-faire
Obama-like reform
Single payer
Others?
One conundrum, or perhaps paradox, to consider: Health care spending is a big part of the economy. If we were to convert from $6K to $3K annual per capita spending, would that knock roughly 8% out of the economy in a time where government is actively calling for economic stimulus?
[24hrs later] Since nobody has taken this on, let me try: Likely cost cuts aren't going to be that great, and they likely won't hit us for a year or two, or longer. The economy could be stronger then, not needing stimulus. Also it now seems to me that the 6 to 3 is rather overoptimistic, that is, even a single payer system would not reduce spending nearly that much. But this then reduces one impetus to make a change, leaving me to look at other rationales.
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You might get some of the things you seek from Maggie Mahar's blog:
http://www.healthbeatblog.org/
She is a writer/reporter with expertise in both health care economics and in finance. (Her two books: Money-Driven Medicine: The Real Reason Health Care Costs So Much in 2006, and Bull! A History of the Boom and Bust, 1982–2004, in 2004. In looking that up, I noticed the latter got a rave review from none other than Paul Krugman.)
If you go further back in the archives of her own blog, you will find posts like this
April 04, 2008: Health Care Spending: The Basics; How Much Do We Spend on Hospitals? Part I
She posted here at TPMCafe a lot during the early primary, with lots of interesting threads on the candidate's plans, and spent a lot of time conversing with commenters (I learned a great deal from those threads!) She has thoroughly studied what has happened with state plans like in Massachusetts, she really knows her stuff. Unfortunately, since she has not posted here since the software change, I just found that her many past posts are not easily accessible, when you click on her user name, all you get is a full reader archive and not her many past posts!
http://tpmcafe.talkingpointsmemo.com/talk/blogs/maggie%20mahar
You have to find them through google! I think I am going to do a post on this for management.
February 26, 2009 4:34 PM | Reply | Permalink
Thanks for the suggestion. Curious that the link you gave for her here does seem to go to a page for her. I've noticed that the URLs at TPM are case sensitive and that sometimes the username is not the same in the URL as it is in the text view, but neither of those explains this datum.
February 26, 2009 4:53 PM | Reply | Permalink
While there might be a complicating factor in that her user name has the "%" in it,
Looks to me like her posts were never transfered over with the software change, which manager Al Shaw explained once happens with regular users if they haven't made a new blog post in the new system (Such members, besides not having an archive list, don't get their comments listed the same way, if you look at their coments, they don't have the full set of links to the thread title, etc. You don't get full membership features until you post a blog under the new system.)
I thought they fixed that for most of the invited contributors, so that their archive posts would be available here, but certainly looks like they didn't.
By the way, I tried the "_" substitute for the "%"for the new system urls and got nothing.
Looks to me like her past posts are in some kind of "holding" database. I found one on google by searching for "Maggie Mahar" and "artappraiser":
http://ec2-67-202-52-64.compute-1.amazonaws.com/cafe/2007/09/16/clintons_new_health_care_plan/
The comments are not in chronological order and her avatar is not synched in either, it is not really uploaded into this system. I am suspecting that it works that if she posted a new blog here, that stuff would then be picked up?
I did a new blog post on it here:
http://tpmcafe.talkingpointsmemo.com/talk/blogs/artappraiser/2009/02/tpm-management-can-you-get-hea.php
If it gets enough recommends, maybe management will see it and do something.
February 26, 2009 6:00 PM | Reply | Permalink
She says with my emphasis:
"The Commonwealth Fund’s 90-page report deserves a close reading. But before I begin to analyze it, let me stress that whatever objections I may raise about the Commonwealth proposal only illustrate just how hard it is to devise a plan that will deliver high quality, affordable, sustainable health care to all Americans."
Also I should have mentioned in the blog that Krugman says that Medicare and Medicaid already cover 44% of health care costs. I had no idea it was that much. And I wonder how that fits in with the nominal $6K (spending per person) he mentioned.
February 26, 2009 5:00 PM | Reply | Permalink
Her _Money Driven Medicine_ starts out (Page xi) with a pie chart which differs from Krugman's 44% for Medi+, but shows private insurance covering only 30% of costs.
Is that really what is at issue? If so, and if private insurance overhead is 25% more than Medicare, the savings of getting rid of private insurance is a pretty small fraction of total current costs, about 7.5%. Not nothing, but not a big chunk.
Her next page has another chart, which says that private insurance profit+overhead is only 4.5% of total. If so, that's hardly worth messing with.
So the stories clearly vary a lot.
February 27, 2009 4:43 AM | Reply | Permalink
I'm worried about this too. I'm concerned that like the stimulus the point seems to be to pass a bill, any bill, good or bad. That was tolerable with a one time thing like the stimulus but not for a major change in our health care system.
February 26, 2009 5:18 PM | Reply | Permalink
Last six months of life biggest cost factor in health care refers to a study in Canada that said that "30 to 50 per cent of total lifetime health care expenditures occur in the last six months of life."
What Is Known About the Economics of End-of-Life Care for Medicare Beneficiaries? states that "In the United States, the proportion of Medicare spending attributable to beneficiaries in the last year of life has remained stable at approximately 25% over the past two decades" although it also states that "A 1984 study showed that 28% of Medicare expenditures in 1978 was attributable to the approximately 6% of beneficiaries who died in that year". The latter would be more like 28% being spend during what is on average the last 6 months of life.
I recall seeing a statistic that roughly half of medical expenses are incurred during the last 18 months of life. This is probably more than is spent on the elderly -- the longer you live, the less is spent on your terminal illness/decline. Younger patients who lose their battle with terminal disease or neonatal problems cost way more.
The lions share of medical costs are associated with terminal disease/decline and with coping with chronic diseases and disabilities.
Relatively little is spent on curing the sick and healing the injured.
February 26, 2009 6:07 PM | Reply | Permalink
I believe I've seen similar stats posted at TPM in the few months I've been here.
Does this "inequality" call for a change of expectations?
I think most everyone would agree that costly chronic diseases and disabilities which are preventable, should be prevented by a combo of better lifestyle and better early health care, no matter who pays the bills.
More later...
February 26, 2009 6:53 PM | Reply | Permalink
I have to come back and review these comments. I have no answer. I am impressed that you read his book and noted inconsistencies. Well done. Important blog that I will cite the next time we get a wave of health care blogs. Maybe you started one.
February 26, 2009 8:56 PM | Reply | Permalink
Thanks, DD. I found Krugman frustrating in his biases and carelessness, but on the other hand being able to notice those in his presentation did give me food for thought. btw, I don't intend to pan the book, sometimes he does explicitly show up fallacies and errors in arguments rather than merely demonstrating them himself.
February 27, 2009 2:52 PM | Reply | Permalink
I think that the inequality makes it difficult to have a healthcare system with multiple private insurers. Competition between the insurers will result in their attempting to insure the low-cost segment and avoid the high-cost segment of the population. Therefore, strong regulation of premiums and plan services would seem to be essential, which obviates much of the rationale for multiple private insurers. If the premiums are relatively uniform, the currently healthy and short-sighted part of the population would tend to opt out. Therefore, the system must be set up to be universal with no opt-out (that includes you, Congress).
The other sticky issue is cost control. Going to a single-payer universal health care system can reduce a lot of administrative overheads through electronic record keeping, claims processing and payments. But that is a one-shot savings. Ultimately we have to address the questions of cost-effective treatment and of "rationing".
An example of the cost effective treatment issue is the story Genentech Provokes Doctors’ Ire With Avastin Trial wherein Genentech is criticized for structuring its trial only to prove the effectiveness of Avastin when taken in the one-year, $50,000 protocol, and not to collect data on whether a 6-month, $25,000 protocol would be equally effective. Indeed, side effects could make the outcomes of the one-year use worse than the 6-months use.
The rationing issue is perhaps most clear in the use of intensive care units to care for dying patients. When should this expense be continued, and when is it not worthwhile?
February 26, 2009 9:38 PM | Reply | Permalink
"When should this expense be continued, and when is it not worthwhile? "
That might not be the most effective frame, but that is a valid issue.
How do you figure reduced admin costs is a one-shot deal? I'd think that admin would be ongoing overhead, so there would be ongoing savings. Also, I am not a big fan of spending 10s of billions to go to electronic records, or at least it wouldn't be a high priority.
I understand the standard issue of competing insurers aiming for their own bottom line at the expense of some insureds. The larger issue this raises for me is the question of values. Competition is a subordinate good, not an end in itself. It is good to the extent that it represents different value systems coming together in a market place; this is in principle the essence of a trade economy. It's not so good if it's just a horde of hungry ants all trying to get at the same honey.
People may well have different health care values in two ways, intrinsic and extrinsic. The former is purely about judgments of what kind of health care (eg, you don't want to be kept on a respirator if in a coma, or you don't believe in invasive surgical procedures), the latter is for instance about allocation of scarce resources from say housing costs to health care costs, or availability of specialist services.
A one-size fits all health care system could deny both values issues.
February 27, 2009 2:40 AM | Reply | Permalink
You are right that the electronic records benefits continue in future years.
The point that I should have made was that it puts us from one curve of increasing health costs, which I think were 16% of GDP increasing at about 2% of GDP per decade to a lower curve. It doesn't control the expansion of costs due to higher costs for drugs, devices, supplies, labor, etc. These have to be controlled as well, but they are harder to address.
February 27, 2009 9:16 AM | Reply | Permalink
On the micro level I am definitely in favor of cutting costs relative to benefits (reducing overhead), whether going electronic or not (there are legit privacy and integrity issues with electronic records). But on the macro level, when you cut costs you take away from people who were making a living, whether they were merely parasitic or largely symbiotic. So I would hold out for a good analysis on both levels, considering the virtual "ecological" consequences.
It's not that one-time savings are totally irrelevant, but unless large they do pale with accumulated savings even over a few years. Ditto costs. Transition costs might be high, but if they move us to a significantly "cheaper" trajectory, it's just a good investment (as well as a socio-cultural shift similar to a paradigm shift).
February 27, 2009 3:10 PM | Reply | Permalink
As for cost control and single payer, this brings up the distinction of diversity and uniformity.
Uniformity amounts to a monopoly. While utilities have a virtual monopoly to some extent (modern large utilities are now divided into source and transmission, but delivery remains almost exclusively a monopoly for watern natural gas and electricity). While it might seem novel to consider the question of payer monopoly, I think it's a valid concern, whether it's well-regulated or not.
That is, there could be value differences which call for payer diversity.
February 28, 2009 5:47 PM | Reply | Permalink
.
Just wondering here . . .
Hey Eds ... I read where you went to Maggie Mahar's blog. Did you ever go and check out the Commonwealth Report?
Here's some resources that will keep you quite busy:
I've been digging through that report since it was released over a week ago.
My eyes are killing me.
Enjoy ...
~OGD~
February 27, 2009 4:14 AM | Reply | Permalink
I might try reading her analysis first... but I did skim the Preface of the report.
February 27, 2009 4:59 AM | Reply | Permalink
Amy Goodman: Do you support single-payer healthcare?
Joseph Stiglitz: I think I’ve reluctantly come to the view that it’s the only alternative. You know, we’ve tried a lot of other things. And we’ve been — you know, I was in the Clinton administration, and we debated a lot of alternatives, and I’ve watched things as they’ve emerged and, you know, evolved over the last twelve, sixteen years, and I think there’s a growing consensus that the private market exclusion is not going to work.
cited at http://www.pnhp.org/blog/2009/02/26/nobel-laureate-joseph-stiglitz-on-single-payer/ thanks to AD
February 27, 2009 4:59 PM | Reply | Permalink
.
Hey hey . .
The following is a cross post from what I had left at artappraiser's blog starting here...
There is not a balanced competition to be found between Medicare and private insurers when the private insurers are operating the Medicare Advantage program. Do you even know what Medicare Advantage is? Nor is there competition with the Medicare Part D prescription drug plan when the pharmies are embedded with the interests of the insurance corporations. There are no checks and balances to be found.---begin crosspost---
Here, the following GAO report may help you to get a better overall understanding on the costs of operating the Medicare Advantage system by private firms versus the original Medicare parts A and B through government operation:
As you said here Eds:
I fully agree. If you don't know the basics of these parts of the Medicare vs. corporations for profit run health plans then it makes it pretty tough going to have any further discussions on the issue without having specific basic background understanding of the overall subject matter.
Thanks for responding though.
~OGD~
Oh and uh . . .
One more thing: Here's an additional resource that I have had on my desk since it was made available November 12, 2008.
At this stage of the game, it's a wee bit late to get in on the nuts and bolts of what's best for the nation as a whole.
But, that report is invaluable if one wishes to have a wide perspective on the immense nature of this issue.
Bye Bye
~OGD~
---end crosspost---
February 28, 2009 11:33 PM | Reply | Permalink