And the truth is that we know a lot about how to do that — after all, every other advanced country has much lower health costs than we do, and even within the US, the VHA and even Medicaid are much better at controlling costs than Medicare, and even more so relative to private insurance.
The key is having a health insurance system that can say no — no, we won’t pay premium prices for drugs that are little if any better, we won’t pay for medical procedures that yield little or no benefit.
Though the truth is most policy questions have elegantly simple solutions that no one likes.
Tyler Cowen pointed to this article in The New England Journal of Medicine, which I am a little skeptical of since it focuses on “healthcare spending growth over potential GDP.” Still there are some interesting questions raised in the graph below.
The article suggests potential causes for the slowdown in growth, saying:
Spending for physician and clinical services has grown particularly slowly since the curve bent in 2005. In the pre-recession period, we trace this slowdown to slow growth in physician-payment rates relative to overall prices in the economy. In the post-recession period, payment-rate increases have remained low and the growth in the utilization of physician services has diminished. Although many observers expect utilization to bounce back once the recovery becomes more robust, new payment methods discouraging high levels of utilization are also spreading. Of course, utilization will increase in 2014, when millions of uninsured Americans gain coverage under the Affordable Care Act (ACA).
Priorities USA, an Obama-supporting SuperPAC, recently launched this ad implicating Mitt Romney in the death of the wife of a laid-off steelworker, Joe Soptic. By Soptic’s own telling, his family lost their health insurance when Bain Capital closed his Kansas City plant in 2001. His wife couldn’t afford to visit the doctor, so by the time they discovered her cancer, it had advanced to terminal Stage 4. (As the late Christopher Hitchens was fond of saying of his own Stage 4 prognosis, “There is no Stage 5.”) She died weeks later.
The fired workers from Romney’s private equity dealings have become familiar subjects in Obama ads, but this latest Priorities USA spot — produced without the president’s knowledge — took the attack to an excessively morbid level. What the ad portrays as a simple cause-and-effect (cause: Romney fires the steelworker; effect: his wife dies) is anything but. Mrs. Soptic died six years after her husband’s layoff, and for at least one year she was covered by her employer’s insurance. It’s not even clear that Romney was involved in the decision to close the plant, which happened after he had left his day-to-day duties at Bain to run the Salt Lake Olympics (though his campaign has never been able to clarify the extent of his involvement during those years.)
The Romney campaign has every reason to be outraged. Priorities USA took a legitimate critique about the human cost of Romney’s business practices and turned it into a scurrilous personal assault. Priorities should pull the commercial and apologize for the insinuation that Romney’s actions were responsible for Mrs. Soptic’s death.
They should then recut the ad to make the point they missed the first time: Mrs. Soptic died because of the policies that Mitt Romney supports. Not the universal health plan he enacted as governor (as Romney spokeswoman Andrea Saul helpfully pointed out) but rather the retrenchment in coverage he would support as president: no insurance mandate, no free preventative care, no one-stop online insurance marketplaces, no subsidies to purchase private coverage, no Medicaid expansion, no ban on abuses such as the denial of coverage for preexisting conditions or lifetime expense caps… All are included in the Affordable Care Act, which Romney has pledged to repeal as his first act of office.
An estimated 45,000 Americans die annually from lack of health insurance, which, not coincidentally, is 45,000 more than the combined total of every other industrialized country in the world. The ACA, when fully implemented, will extend coverage to most of the 44 million Americans without insurance, like the Soptics, and prevent the denial of care for the rest of us.
Mitt Romney’s opposition could not be more emphatic. Even taking him at his word — not always the easiest thing to do — to replace the ACA with his own plan, tens of millions of Americans would be left without insurance. Romney led the nation by implementing universal coverage in Massachusetts. He shares no such goal for the country; the plan on his website makes no mention of universal care or the expansion of access. Any decrease in the ranks of the uninsured would come indirectly through his vague promises of “increasing efficiency” and “lowering costs.”
Perhaps Romney thinks that’s good policy. He definitely thinks it is good politics. Regardless of one’s opinion of the ACA, fewer Americans will have health insurance without it. Some of those Americans, like Mrs. Soptic, will die as a result. Mitt Romney may not be personally culpable, but his policies certainly will be.
[T]hat as a result of the upheaval, over the two days following the ruling, the cumulative average abnormal return of managed care stocks was -6.7% (equal to -$6.9 bn in market capitalization), while the same metric was -1.2% (-$1.5 bn) for biotechnology companies. We believe this to be the case due to the elevated regulatory impediment imposed by the mandate requiring new customers to come through a more regulated channel, lowering expected future profits. We also find that health insurers companies in the Medicaid market had their losses mitigated or experienced positive abnormal returns we believe resulting from the section of the Supreme Courts opinion limiting the federal government from stripping all Medicaid funding that opt out of Medicaid expansion as part of the Affordable Care Act.
Similarly, we find that over the period, cumulative abnormal returns were 3.2% ($0.4 bn) for hospitals and other healthcare facility companies, 1.9% ($1.6 bn) for healthcare services, and 0.5% ($4.8 bn) for pharmaceutical companies. We believe the intuition behind the increase in abnormal returns is that an individual mandate requiring that Americans maintain a certain level of health insurance or face a monetary penalty should increase the demand for inpatient and outpatient stay, expanding the client base of hospitals and health care service companies and increasing overall revenue. In the case of pharmaceutical companies, we believe we see positive abnormal returns since an individual mandate to carry an insurance plan (likely to cover prescription drugs at some level) would increase the demand for prescription drugs.
We also find that health care equipment, distribution, and technology stocks had relatively flat cumulative abnormal returns over the period. This suggests that there is a lack of evidence supporting that the demand for these inputs changed in response to the individual mandate.
The pointer for this comes from Marginal Revolution.
Beginning today, most new and renewing health insurance plans must begin offering a broad array of women’s preventive health services, most notably coverage of birth control, at no upfront cost.
The Republican Party, by the way, still doesn’t have a coherent alternative for health care reform, nor do they seem willing to embrace many of better parts of ACA, such as (partially) deregulating dentistry or the Medicare Advisory Board. Romney seems to want to replace the mandate with more expensive tax credits. Furthermore, I believe that many Republican legislators would rather run against an unpopular Obamacare than to have to craft an actual, legislate-able alternative.
As is probably clear from the post this morning, I am having trouble seeing the individual mandate as being constitutional. While I remain skeptical, I will say that this guest post at Modeled Behavior by Sean Rust makes some interesting points. Sean writes:
The entire constitutionality of the mandate rests on the above question because if it is economic activity then there appears to be no tangible difference between the individual mandate and the restrictions in Wickard. The difference between demanding an individual to purchase a service or product, and demanding an individual not produce a good appears insignificant; as long as it can be determined the restricted action is an economic activity that affects interstate commerce.
Jake
Tyler
