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A lot of people think you have no right to criticize a bill unless you propose a better bill. I don't agree (if the aforementioned bill is bad on net), but in any case I will give this a try. These are not my first best reforms or even my second best reforms. They're my "attempt to work with some of the same moving pieces which are currently on the table" set of reforms. I would trade away the Obama bill for these in a heart beat. Keep in mind people, with a "no insurance" penalty of only $750, the current bill isn't going to work (and that's ignoring the massive implicit marginal tax rates on many individuals and families, or the "crowding out" of current low-reimbursement-rate Medicaid patients), so we do need to look for alternatives.
Here goes:
1. Construct a path for federalizing Medicaid and put it on a sounder financial footing; call that the "second stimulus" while you're at it. It's better and more incentive-compatible than bailing out state governments directly and the program never should have been done at the state level in the first place.
2. Take some of the money spent on subsidizing the mandate and put it in Medicaid, to produce a greater net increase in Medicaid than the current bill will do, while still saving money on net. Do you people like the idea of a public plan? We already have one!
2b. Make any "Medicare to Medicaid" $$ trade-offs you can, while recognizing this may end up being zero for political reasons.
3. Boost subsidies to medical R&D by more than the Obama plan will do. Establish lucrative prizes for major breakthroughs and if need be consider patent auctions to liberate beneficial ideas from P > MC.
4. Make an all-out attempt to limit deaths by hospital infection and the simple failure of doctors to wash their hands and perform other medically obvious procedures.
5. Make an all-out attempt, working with state and local governments (recall, since the Feds are picking up the Medicaid tab they have temporary leverage here), to ease the spread of low-cost, walk-in health care clinics, run on a WalMart sort of basis. Stepping into the realm of the less feasible, weaken medical licensing and greatly expand the roles of nurses, paramedics, and pharmacists.
6. Make an all-out attempt, comparable to the moon landing effort if need be, to introduce price transparency for medical services. This can be done.
7. Preserve current HSAs. The Obama plan will tank them, yet HSAs, while sometimes overrated, do boost spending discipline. They also keep open some path of getting to the Singapore system in the future.
8. Invest more in pandemic preparation. By now it should be obvious how critical this is. It's fine to say "Obama is already working on this issue" but the fiscal constraint apparently binds and at the margin this should get more attention than jerry rigging all the subsidies and mandates and the like.
9. Establish the principle that future extensions of coverage, as done through government, will be for catastrophic care only.
10. Enforce current laws against fraudulent rescission. If these cases are so clear cut and so obviously in the wrong, let's act on it. We can strengthen the legal penalties if need be.
11. Realize that you cannot tack "universal coverage" (which by the way it isn't) onto the current sprawling mess of a system, so look for all other means of saving lives in other, more cost-effective ways. If you wish, as a kind of default position, opt for universal coverage if the elderly agree to give up Medicare, moving us to a version of the Swiss system and a truly unified method of coverage. But don't bet on that ever happening.
Separate issues:
12. If you can tax health insurance benefits and cut a Pareto-improving deal overall, fine, but I am considering this to be too politically utopian and it's not clear what the rest of that deal looks like. The original tax break makes no economic sense but you don't want to end up with a big tax increase and a lot more people on the public books with little in return.
13. If the current bill were voted down, you can imagine some version of the above happening, although not necessarily all at once in one big bill.
14. Commission a study of how much the Obama plan is spending per QALY saved. I agree that more health insurance saves lives, but a) the study should adjust appropriately for the superior demographics of those who hold or buy insurance, and b) the study should adjust for the income that would be lost through mandates and the safety that income would purchase. I worry greatly that we have never, ever seen this number presented and that if we did it would not be pretty. In any case, do the study, scream the number from the rooftops, and reread points 1-11. Enact.
That's my recipe. It's better than what we are doing now. You don't have to adhere to any extreme form of economistic or free market ideology to buy it. It might even be politically easier than the current path, as it "sounds less socialistic."
Posted by Tyler Cowen on November 17, 2009 at 07:19 AM in Medicine | Permalink
What about expanding Medicaid to cover all catastrophic care? What would that do?
Posted by: Neal at Nov 17, 2009 7:31:32 AM
7. You really don't need to hedge. Maybe you've seen things I haven't but HSAs are rarely mentioned at all, usually by me. HSAs are only overrated in that the reformers expect them to perform the same contradictory miracles ("increase demand to reduce price while improving quality!" for example) that their ideas will also fail to deliver.
Posted by: Andrew at Nov 17, 2009 7:31:52 AM
Allow cross state sale and purchase of medical insurance.
Posted by: Paul H. Rubin at Nov 17, 2009 7:51:20 AM
Compared to the alternatives I absolutely love my HSA. How is Obama's plan going to "tank" them? I searched the text of the House bill and can't find any evidence of that.
Posted by: David at Nov 17, 2009 8:04:23 AM
10. One could end fraudulent rescission by requiring a "caveat emptor" approach to preexisting conditions. I do imagine insurers would require more comprehensive tests before granting coverage, though.
Posted by: WPH at Nov 17, 2009 8:08:23 AM
David: My interpretation of how HSAs get tanked - like MassCare, they won't satisfy the minimum requirements for coverage specified in the bill which makes your HSA illegal once any little bit of your plan changes.
Posted by: Jody at Nov 17, 2009 8:17:58 AM
I don't believe any current proposals deal seriously with the cost issue. At best they include demonstrations or pilot projects to experiment with different payment systems. We'll be very lucky if any of those pan out.
I'm not seeing anything in 1-14 above that addresses this either. So my list would include a 15th item: pay providers for cost efficient care. Now, what the heck does that mean?
Posted by: The Incidental Economist at Nov 17, 2009 8:20:06 AM
TIE: 5,6,7,9 address costs.
Posted by: Jody at Nov 17, 2009 8:26:02 AM
Well its now clear that you're a goddamn pinko.
Posted by: yoyo at Nov 17, 2009 8:26:51 AM
The weaken medical licensing part of your plan is dumb since physician salaries have stayed constant for the last decade, it would make no sense to weaken quality control and risk lives in order to deal with something that is not an actual cost driver in the system. In addition, empowering nurses, etc. to do more on the whole will increase costs since with less knowledge/more liability, NPs, etc. typically order even more tests and refer to expensive specialists to greater degrees thus obviating any supposed labor cost savings...
Posted by: v at Nov 17, 2009 8:29:37 AM
On point #3, this is irrelevant if the government decides to work within a "comparative effectiveness" framework or instigate international reference pricing, then further R&D subsidies are meaningless. Pharmaceutical companies are producing high cost/high benefit drugs that don't necessarily fit into the CER mold. Why produce new cancer drugs if the government won't fund them once they're produced?
Posted by: Ryan at Nov 17, 2009 8:32:53 AM
This post should earn a Sir Charles Trevelyan prize (see The Great Hunger, by Cecil Woodham-Smith), awarded annually for the most useless proposal to combat a social ill. The only part of Cowen's plan that would actually increase the number of medically insured people is his proposal to federalize Medicaid. How many Republican votes would this get in the House? My guess is zero, and if it did manage to pass it would be cut every time there's an economic downturn, like most proposals to help low income people. Nice work, Cowen.
Posted by: Stan at Nov 17, 2009 8:35:41 AM
Tyler - On #1, why should we federalize Medicaid? What makes the federal government, which is running its own unsustainable Medicare program, better able to administer the Medicaid program than state governments? You may not be aware of the improved efficiency and improved delivery of health care that has been brought to the Medicaid program by private companies over the past 10 years. Many states have outsourced the administration of Medicaid to the private sector which is better able to manage complex conditions among the low-income senior population AND among pregnant women.
Posted by: MBP at Nov 17, 2009 8:39:11 AM
Where is Rand when we need her?
Posted by: Anne T. Positivist at Nov 17, 2009 8:41:19 AM
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