Don't Skip to the End....

The Wall Street Journal offers up an editorial on healthcare that's surprisingly wonkish. Although it is selective in its sources in order bette support its thesis, authors Jason Fodeman and Robert Book do a decent job of laying out some of the problems that contribute to healthcare inflation and why they're difficult to address. Waste, unfortunately gets a passing mention. To their credit the authors don't try to overhype medical malpractice costs and give only passing mention to "defensive medicine". They also offer an interesting analysis on why technological advancement doesn't reduce healthcare costs in the manner that it has reduced costs in pretty much every other industry.

Unfortunately, having laid a decent foundation, the quality of their analysis deteriorates markedly when they start addressing the Democratic reform bills, and disappears when they start proposing "solutions" of their own. For example, they object to "limits on out-of-pocket spending" in the proposed bills as "strengthen[ing] the incentives for most patients to engage in excessive spending". You know, as opposed to being told, "Sorry, your insurance doesn't cover this much chemotherapy in a year, and you're broke." No doubt, some patients will receive more medical care once annual or lifetime caps are removed, but let's not gloss over how much of that care is needed.

They also complain that the "tax on health insurance", presumably the Senate Bill's excise tax on "Cadillac policies", will not inspire insurance companies to fashion cheaper policies, and that the cap won't keep up with inflation such that more plans become taxed with each passing year. I am skeptical of their first point. The excise tax appears designed to bring about the second outcome. The goal is to make people opt for less comprehensive plans, consistent with various Republican reform proposals, and it's designed to reach more and more people each year. If the authors are correct on the first point the entire construct is misguided. But this is essentially a concession to the political right - I don't see the authors expressing support, in the alternative, for the House Bill's surtax on the nation's highest wage earners. That's not even mentioned. The House's hobbled "public option" won't be a money-saver? Again, that's by design. But what does it matter, given that almost nobody believes it will be part of the final bill.

The authors present a peculiar argument on "comparative effectiveness research", complaining that it somehow creates a "one-size-fits-all approach to health care" and that even if an equal or superior, much cheaper non-invasive treatment is identified, "some patients prefer the most invasive and intensive procedures available despite the risk of significant side effects". But they're deliberately missing the point. First, there's no reason to believe that the goal of effectiveness research is to impose, or even propose, "one size fits all" solutions. Doctors and patients will benefit from the information when making choices about how to proceed. Second, if data analysis indicates that a particular treatment is enormously cheaper than its alternative, with equal or superior outcomes, insurance companies should be able to say, "The treatment we cover costs $1,000 per year. You're free to get that $100,000 risky surgery you want instead, but we'll only cover the first $1,000." Funny how quickly the authors forgot their own argument about personal responsibility for medical costs. The idea that this research might lead to somebody being told that their only approved treatment is a pill that "might [trigger] a potentially fatal adverse drug reaction" is just plain silly.

The authors go from there to the slippery slope, arguing that "regulators" could impose so many coverage requirements and guidelines on private insurance companies that they "effectively deny[] care to patients except under specified conditions", and ban providers from accepting any payment outside of the insurance reimbursement. Never mind that nobody has proposed such a plan, and that it would be political suicide for a party to try to implement such a plan. They also propose that the government could force insurance companies to offer an enormous set of services while simultaneously capping insurance rates at a level that makes it impossible for insurers to turn a profit, leaving the non-existent "public option" as the only available insurance option. Where's my tinfoil hat?

The authors fall flat on their face when they introduce their "real reforms that could control costs and improve care". Or, to be more fair, they drop any remaining pretense that they're building a case based upon data and switch into an ideological mode. What a surprise - reform number one is to abolish Medicare and Medicaid in favor of private insurance plans, "allowing [enrollees] use their benefits to enroll in the health plans that deliver the best value according to their own preferences and values." Never mind that Medicare has pioneered many cost-saving approaches to health insurance that have been emulated by private insurers, or that "Medicare Advantage" insurers required a subsidy in order to compete with Medicare's basic package of services.

And seriously, let's say that a Medicare enrollee chooses coverage that's inadequate to cover a catastrophic medical condition or end-of-life care. They transition more quickly to the combination of Medicare and Medicaid, because they have less insurance to cover their needs. Then what? If they lack sufficient coverage to pay for their care, and the HSA they set up based upon "their own preferences and values" is long-exhausted, they get dumped on the street? Because in the alternative the cost is still borne by the taxpayer, or is passed along to other healthcare consumers who pay for their care. As for Medicaid, which the authors argue is woefully insufficient in its reimbursement rates, suddenly recipients are going to get better services and care because a private insurance company is in the mix, taking out a profit before reimbursing their care providers? Or, as seems to be the case, is the type of "empowerment" the authors describe about sharply reducing the set of services available to Medicaid recipients.

The authors continue by making plain that yes, they in fact would prefer all Americans to enjoy minimal health insurance coverage coupled with HSA's. They describe a 2005 study that found that "patients in consumer-driven health plans were twice as likely to inquire about cost and three times more likely to select a cheaper treatment plan compared to patients in traditional plans" - well, given that some of them probably didn't have the funds to pay for the more expensive treatment, that's hardly a surprise. On the whole, these plans reduce costs for employers, increase profits for insurance companies, and significantly increase costs to consumers. Why? Because you no longer have an insurance adjuster demanding documentation that a less expensive treatment has been tried and failed, or arguing that a less expensive diagnostic study is likely to be sufficient to diagnose a patient's condition. Patients lack the time and information necessary to make the type of informed decision at issue, even if they're comfortable second-guessing their doctor. Frankly, even if we assume that they have the necessary information and the luxury of time, many patients lack the skills necessary to evaluate the information. Perhaps, if the authors take the time to think about it, they'll realize that to be a big part of the reason people go to doctors in the first place, rather than

The authors also whip out the notion of "a real national market for health insurance". No, that doesn't mean introducing new insurance companies into your state. It means allowing insurance companies to administer the plans they already offer, but while enjoying the regulatory framework of a different state. The authors want to allow insurers to reduce the scope of covered services offered in your state to those required (or should I say "not required) by the state with the fewest requirements, the fewest insurance regulations, and the fewest consumer protections in the nation. Federalism? That's a different type of "conservatism" - the author's branch involves an expansive use of the Interstate Commerce Clause in the manner of the New Deal Supreme Court decisions that, well, conservatives used to deride. The idea that you should be able to keep the insurance you have? Fuggedaboutit.

You want to kick over the apple cart, start from scratch, and impose a nationwide social experiment in consumer driven health care? Then why not show some backbone and make that the debate.