Monday, October 26, 2009

If We Assume a Slippery Slope....


It's not that Fred Hiatt's editorials are usually good, but he usually hides behind the anonymity of his editorial board when he makes his most inane arguments. So I was a bit surprised when he regurgitated some of his recent anonymous inanity in an editorial to which his name is attached.
From the start, the Obama administration has said that health-care reform has to make health care both more accessible and less costly . If Congress does the first without the second - guarantees a new entitlement without controlling costs - it will bankrupt us, because health-care costs are rising faster than the overall economy is growing.
Hiatt distinguishes the cost of wars from the cost of healthcare, arguing that we can spend ourselves into deficit oblivion over wars "because wars end", but what of the military budget? Even excluding the cost of the wars in Iraq and Afghanistan, Hiatt should be wringing his hands over the inevitability that the military budget will bankrupt us. After all, the same slippery slope argument applies to any category of spending where costs are increasing faster than inflation. I would infer first that Hiatt doesn't recognize that slippery slope reasoning is not logically sound,1 and second that his concern about deficit spending is based primarily (perhaps exclusively) on whether he supports or opposes the government action at issue.

Hiatt suggests that only two things are needed to eliminate healthcare inflation.
  • First, we need to tax the middle class and try to economically pressure employers to diminish the quality of healthcare plans available to their employees. This is the Gingrich model - the idea that if you force employees to pay for their healthcare out of pocket, they will be more selective about what care they obtain and costs will decline. Never mind that there's no evidence that this will work and, with the experience so far with low-coverage, high-deductible plans that costs for healthcare consumers will in fact go up.

  • Second, we need to have Congress "cede its power to regulate the minutiae of Medicare coverage" - because, um, it would be better if that were done by magic or something. (Hiatt doesn't explain.) Seriously, healthcare inflation for Medicare is lower than inflation for all other healthcare, yet Hiatt thinks we can solve the world's problems by making some sort of undefined change to "the minutiae of Medicare coverage". Where's his call for private insurers to "cede [their] power to regulate the minutiae of [health insurance] coverage"?

Hiatt continues his silliness by arguing that a public plan won't actually save money over private plans:
If, as advocates sometimes argue, a public plan operates without favoritism, it will be simply one more entrant in the marketplace. Like other companies, it will have marketing and administrative costs. In some markets served by few private plans, it could offer a useful alternative. But it won't radically reduce costs.
People who are truly sick like their Medicare coverage. I know of few people who don't have gold-plated insurance who, following a serious illness, think highly of their private insurance plans. People see value in both having available, and having as a competitor to private insurance, a plan that won't spend huge amounts of money trying to deny coverage it owes under contract. The extraordinary misconduct and, at times, overt fraud committed by insurance carriers should give anybody pause about whether reform could be achieved without a public alternative. Hiatt may be correct that a public plan that competes with private plans doesn't produce much in the way of cost savings, but it could produce a lot in terms of peace of mind. (And if Hiatt were truly in favor of cost savings, he would be looking at various other nations' successful efforts in that regard, rather than throwing up a smokescreen in the defense of our nation's abject failure to control healthcare spending.)

I doubt that a public plan will face much in the way of marketing costs. Everybody will know what it is, where to find it, and what it offers. Besides, how much marketing does Hiatt believe private insurance companies direct at the uninsured and underinsured markets? At least if we're talking about legitimate companies.
If, as advocates argue at other times, the point is to insure sick people whom private companies, despite all regulatory efforts, find ways to shun, the public plan could offer a valuable safety net. But that wouldn't save money.
I've previously pointed out that it is ill-advised to pursue the approach that to be acceptable, any healthcare reform bill must fix every defect of the current system. Here, Hiatt extends that argument to an absurd level, suggesting that it's not enough that the bill fix all problems in the aggregate, but that each and every element of the bill advance all three goals (universality, cost control, and patient choice). At the same time, he does not propose how things would be better in the absence of a public plan - and proposes nothing to pressure private insurance companies or healthcare providers to reign in costs.2 If Hiatt believes what he's suggesting, he's an idiot. If he doesn't, yet still expects you to buy his argument, he thinks you're an idiot.
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1. It could be that Hiatt knows his logic is childish and flawed, but that he doesn't care. He later presents another slippery slope argument, whereby a public plan gradually bankrupts every private insurance plan and becomes the only option based upon an entirely speculative set of future events and assumptions. Perhaps he imagines himself as a silver-tongued advocate, whose sophistry and illogic will not be detected by his readers....

2. Granted, this could be because he doesn't care about the inflation caused by the private side of the market, and favors a system in which private insurers maximize their profits even at the expense of the three ostensible goals of healthcare reform.

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