As usual, the comments to Jay's riposte were excellent and basically allow this Wrap Up to write itself. In response to Jay's unhappiness with my use of the term Obamacare, I partially agree with his criticism. It would be nice if each time we addressed an issue ont he "left" or "right" that we specified where partisans stand on the issue, how the issue is presented and framed, and refrained from such shorthand as "left" and "right." However, that would lead to posts that are book length and unwieldy and both jay and I already write long enough posts. besides, as Wacky Hermit noted, we have to call "it" something and whatever healthcare bill emerges from Congress, it will belong to President Obama as his legacy.
Shrink Reader thought we were discussing apples and oranges:
You believe that every individual is absolutely entitled to full health care – that should something degrade the health of a citizen, every feasible option must be pursued to restore it.
ShrinkWrapped, near as I can tell, would not argue that everyone should be allowed health care – but he stops short at making others pay. His argument seems to be that while everyone should be able to exhaust every option available to them to restore their health, it is a step too far to demand that others pay to make these options available to them.
SR almost gets it but misses something crucial. I would like everyone to have access to the finest medical care our nation has to offer. Unfortunately we cannot afford to make such care available. As Neil notes:
When you argue for universality rather than letting market forces increase the supply, you are implicitly saying that it is better that we all make do with less, rather than let anyone have more. People will die from this. Almost certainly more people than will be saved by universality.
The next best option is to create a system which allows "good enough" care for the maximum number of people while also enabling the innovation that will continually make such care cheaper and better over time. The current iterations of Obamacare will do neither.
As usual, MaxedOutMama lays out the problems in our healthcare financing better than anyone (and why isn't she in Congress writing this bill?) and her comment should be read and appreciated in full:
Jay, you say you want to examine fundamental assumptions, but some of your own seem to be terribly flawed.
First, most insurance is not gambling. It is a means of saving which allows individuals to save less by spreading risks across a group than those individuals would have to save if they had to save enough to deal with just their own likely risks. As such, it is economically efficient. When insurance programs become a method of providing access to care that most of the insured can pay for without insurance, insurance becomes economically inefficient and wasteful. Because insurance is not at all a gamble but an actuarially determined savings program, it serves a function. Currently we do not save (provide adequate resources) for any of our federal public programs.
You state that insurance can be used as a method of managing risk for those who are wealthy in poor societies. Actually, that is not true. When you are wealthy in a poor society without any mechanism of funding medical care for the poorer majority, the impact of the price-demand function is such that YOU WILL HAVE ACCESS TO WHATEVER MEDICAL CARE EXISTS REGARDLESS. The problem often is that you could pay for care which does not exist, which is why the Saudis keep showing up at hospitals in Europe and the Americas. There is never medical insurance in societies with a small middle class. The wealthy do not need it, the poor cannot afford it. The only group that benefits from health insurance (without welfare) is a middle class which can save for medical care but cannot save enough for all the medical care they might need individually without spreading the risk across a group.
Widespread insurance programs and/or subsidization of high-end medical care for the poor do work for the wealthy, but only because they increase the amount and variety of services available. But widespread insurance or even an ethic requiring provision of services will always increase medical costs for persons with significantly higher incomes, because no matter the method of paying for the care, a significant amount of the cost is shifted to those who are able to pay – whether it is taxation, private insurance combined with welfare, a private/public mix or an ethic requiring the provision of free care by professionals and institutions.
Further, because it is such a high burden, the majority of the cost is shifted to the middle class. The more uniform the standard of care, the more burden is shifted to the middle class, and the higher the overall spending level per capita. You appear not to grasp this, but in fact the standard of care provided to poorer people in the US is on average much higher than in countries with “universal” care. The young, the injured and the relatively healthy receive generally excellent services under these systems, but the old, disabled and the chronically ill are extremely shortchanged in comparison to the US.
That is because there is no such thing as universal care. The wealthy can always exit. The middle class can often exit, and usually do if their circumstances become pressing enough. The poorer people live with whatever is generally available. The standard of “universal” care in each society evolves to match the resources devoted, and there is a breaking point at which the middle class simply cannot afford to pay for care for everyone.
There are a number of other awful economic errors in your post, but just the two above show that insurance and medical care systems are not a zero-sum game. There is some X range of funding which will generate more medical resources and cheaper overall access because the cost per service is related to the number of accesses/fixed cost. There is another X level of funding which will generate superb medical resources but a growing pressure on the middle class. That is where we now are, and the reason is the massive cost-shifting onto the private sector from Medicare/Medicaid.
German insurance rates are currently set at 15.75% of payroll (cut as a stimulus measure on a temporary basis to 14.75% of payroll), which is not very different from what we would require to institute Medicare across the board. However, to do that, individuals now on Medicare would have to accept a lesser standard of care, and so would people on Medicaid, and so would people now on private insurance.. Because of the disproportionate payments coming from the 50% of society covered by private insurance, our standard of care has evolved to meet their high demands as well as the high demands of those getting a free ride (Medicare and Medicaid). When you have 40% of the population paying 80% of the costs for the entire population, a very high incentive exists for the rest of the population to demand good medical care.
But German medical standards include not treating a number of conditions we treat, especially terminal or severe chronic disease. Just as public plans in say, Oregon, have totally different standards of care (and much lower) than those pertaining to most privately insured persons, or NHS standards of care.
You also seem to have completely missed the point of SW’s writings on this topic. The US has created a bizarre mixture in which the bulk of medical care provided is paid for by others, PRECISELY BECAUSE OUR GOVERNMENT MEDICAL INSURANCE PROGRAMS DO NOT INCLUDE ADEQUATE FUNDING.
So if we switch to a public single-payer option (which is not used by the majority of western countries which have universal care – most use insurance funds) under our current system, we won’t have access to care at all. That is his concern. If we jack up taxation rates to fund it, the general level of care will absolutely have to drop. The way this will be accomplished will be by cutting care provided to the most vulnerable, which is not exactly a progressive option.
Your point about the taxation of high-end plans is good and economically sound. Both employers and employees already have a strong incentive to cut costs, and the steady shifting in the private sector towards higher deductibles, etc, is proof of it. There is nothing such a tax can effect except injustice upon smaller groups with disproportionate risks and thus higher premiums.
As to why Obamacare is all about insurance and avoids the issue of public insurance like the plague, it’s because the average college professor would pay very much more for his medical insurance under such a system than he or she does now. The upper middle class now votes disproportionately Dem, and it is a demographic group the Dem leadership does not want to lose. Under such a plan, a person earning 100K would be paying from 17.5K to 20K a year for his or her coverage, whereas that Walmart worker would be paying at most 4K.
So since you favor single payer, are you willing to pay 17.5% to 20% of your salary for it? If your answer is no, you are not really in favor of single payer. The rich cannot pay for it, the companies cannot pay for it. The only group that has the money to pay for it is the upper middle class. Mind you, on top of that payroll tax you would also be covering 20% copays.
The reason it would cost more than in Germany or France is that we have such a high percentage of recent immigrants working low-pay jobs.
This is not a knock on Jay, but academics (and Psychiatrists) typically have no clue how economies and markets work. We cannot indefinitely pay less than the true cost for goods and services, artificially held below market by government edicts, and expect our system to function long term. We should all spend some time at Maxed Out Mama's and John Opie's sites, among others, and learn something about how the real world works.
Finally, Jay reports some "facts" that continually wend their way around the MSM and the blogosphere:
I don’t know what long-term studies have been done specifically focusing on variant aspects of care between the U.S. and universal systems demonstrating a clinically supportable cause and effect relationship between those variant aspects and outcomes, but the U.S. has a long cultural, political, business, and philosophical tradition of pragmatism: nose around at length among the Organization for Economic Co-Operation and Development statistical reports (Health Consumer Powerhouse is a good site for only EU comparisons) where varied comparisons are made among the members, and note the glaring deficiencies of the U.S. in life expectancy, infant mortality, obesity (cultural, indeed – an aspect of a health system). The U.S. not only ranks low, but often below the mean, above, sometimes only nations like Russia and China or former Eastern Bloc countries such as the Czech Republic or former Third World countries such as Brazil.
The only problem with these "facts" are that they are wrong. For example, most countries count premature babies who die shortly after birth as stillborn; they do not make efforts to rescue such infants and do not count them in their statistics for infant mortality. In the United States, on the other hand, all efforts are made to rescue such infants (at tremendous expence) and even the most premature are counted as live births. Needless to say this makes our statistics look much worse than other nations. Please note, there are far more neonatal ICU beds in America per capita than any other country in the world, which should be clarifying. As well, life expectancy, once accidents and murder are removed, is higher in the United States than almost everywhere else. In fact, if you are an 80 year old, you have a much better chance making it to 90 in America than anywhere else in the world. And that doesn't even take into account the cultural variants that increase mortality among many sub-populations and skew our statistics.
There is a reason that wealthy people (and middle class Canadians) come from all over the world to America for medical care, not least that a very high percentage of medical innovation comes from America. (It used to be 90% of all medical innovation came from America; with Israel making major efforts in biotech, they are making some inroads in our lead in this area, exact figures are unavailable to me.)
There are lots of problems with our healthcare system and there are many ideas out there for making it work more efficiently and responsively. The problem is that Obamacare will address none of the major problems and will worsen the system for almost everyone, despite the claims of its proponents, most of whom understand neither medicine nor economics.
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