Sunday, March 14, 2010

The Emperor Strikes Back (on health care)

Now that President Obama is going to bat to get Obamacare passed this year, I may start posting relevant articles on the issue. Though I'm not an expert on health care reform, I've studied health economics at the layperson level enough to be convinced that Obamacare — though slightly missing the mark on a few points — is a far better option than doing nothing, which is essentially what the other party ultimately wants to do.

And in that vein, here's a neat op-ed by Nobel laureate Paul Krugman, whose Nobel is in economics, not one of those sissy, intellectually wimpy categories like peace or literature, so listen to him:
Polling on reform — which was never as negative as portrayed — shows signs of improving. And I’ve been really impressed by the passion and energy of this guy Barack Obama. Where was he last year?

But reform still has to run a gantlet of misinformation and outright lies. So let me address three big myths about the proposed reform, myths that are believed by many people who consider themselves well-informed, but who have actually fallen for deceptive spin.
Amen, brother. Democrats need not be so umbrophobic (afraid of their own shadow), and to help them see the light, maybe they can look to Dr Krugman for some talking points.

The first myth that the good doctor addresses is that "Obama is proposing a government takeover of one-sixth of the economy," which is a stretch of language and logic that simply does not hold water:
Well, if having the government regulate and subsidize health insurance is a “takeover,” that takeover happened long ago. Medicare, Medicaid, and other government programs already pay for almost half of American health care, while private insurance pays for barely more than a third (the rest is mostly out-of-pocket expenses). And the great bulk of that private insurance is provided via employee plans, which are both subsidized with tax exemptions and tightly regulated.

The only part of health care in which there isn’t already a lot of federal intervention is the market in which individuals who can’t get employment-based coverage buy their own insurance. And that market, in case you hadn’t noticed, is a disaster — no coverage for people with pre-existing medical conditions, coverage dropped when you get sick, and huge premium increases in the middle of an economic crisis. It’s this sector, plus the plight of Americans with no insurance at all, that reform aims to fix. What’s wrong with that?
Okay, then. The second myth is that Obama's proposals do nothing to control costs:
To support this claim, critics point to reports by the Medicare actuary, who predicts that total national health spending would be slightly higher in 2019 with reform than without it.

Even if this prediction were correct, it points to a pretty good bargain. The actuary’s assessment of the Senate bill, for example, finds that it would raise total health care spending by less than 1 percent, while extending coverage to 34 million Americans who would otherwise be uninsured. That’s a large expansion in coverage at an essentially trivial cost.

And it gets better as we go further into the future: the Congressional Budget Office has just concluded, in a new report, that the arithmetic of reform will look better in its second decade than it did in its first.
You don't say? Dr Krugman goes on to say that the CBO's analysis is — by design — pessimistic on the prospect of cost-saving methods, policies and procedures that may in fact make things cheaper in the long run but which prudent bean counters must consider, until they're actually put in practice and we see the real results, to be "test holes" that "will probably come up dry."

The third myth is that health reform is fiscally irresponsible, which Dr Krugman skewers by pointing to the pessimistic CBO estimates that say nonetheless that "reform would actually reduce the deficit."

He doesn't even go into other aspects of reform-versus-status quo that are an inherent part of health care reform. By expanding the pool of insured to all in the population, we can keep costs for the older and potentially sicker down while making sure that the generally younger, poorer, or very sick uninsured get insurance and don't end up being a costly burden on our emergency health system when they eventually do get care that is too late and too much for them to afford. (Some say this is a kind of Ponzi scheme — making the young pay for the old — but the young will eventually be old, so the point is moot.)

Fundamentally, the problem lies in that opponents in the GOP are ideologically opposed (e.g., they don't want major expansion of government services on principle or they believe government is inherently more inefficient than the private sector) or they are beholden to private sector players like the insurance industry or others for donations and their jobs (some Democrats, too).

But health economists — even the more conservative ones — talk about how the health care market is intrinsically an example of market failure, that competition is a way for insurance providers to cherrypick healthy customers out of the pool, thus leaving the less healthy to be covered by the government (and therefore us, the taxpayers), and competition itself tends to lead not to better quality of health care but to expensive but redundant capital outlays for expensive equipment that ends up underused unless a need can be invented for it.

There are ways to improve health care, make it cheaper, make it cover everyone, and still guarantee that those who have health coverage will keep getting quality care, and the Obama plan goes a very long way toward achieving that. I leave you with Dr Krugman's final thoughts:
So what’s the reality of the proposed reform? Compared with the Platonic ideal of reform, Obamacare comes up short. If the votes were there, I would much prefer to see Medicare for all.

For a real piece of passable legislation, however, it looks very good. It wouldn’t transform our health care system; in fact, Americans whose jobs come with health coverage would see little effect. But it would make a huge difference to the less fortunate among us, even as it would do more to control costs than anything we’ve done before.

This is a reasonable, responsible plan. Don’t let anyone tell you otherwise.
Exactly. And Democratic leaders in Washington should themselves read this. Don't get hung up on the bill not supporting full abortion rights or lacking a public option, etc. If those things are meant to be, get them done later: For you, this bill goes much further in achieving universal coverage than anything we will likely get if you vote it down and try to get a new package that has everything (which won't work the second time).

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