Tuesday, April 19, 2011

Return of the death panel

13 comments:

Patrick_L said...

and our current system, the one Paul Ryan hopes to expand upon, rations care by income and health status.

Every approach will have rationing- you just have to pick your preference:

Republican rationing- income (Ryan repeals the expansion of health insurance under PPACA, significantly reduces funding for Medicaid, creates a Medicare voucher support system that will quickly lose value and lead to the average senior paying twice as much for their health care)and health status (no ban on preexisting conditions, exposing the very sick Medicare population to the adverse selection problems of a private health insurance market)

Obama rationing: technocratic cost-effectiveness

TJE said...

Markets are imperfect, especially in health care. But so is central planning/bureaucracy.

Patrick_L said...

Yes. Did I say otherwise?

Conservatives just need to stop throwing around the word "rationing," when they are clearly fine with "rationing" by income and health status.

TJE said...

No, but you sometimes appear to have great faith in technocrats.

PBM said...

You appear to have great faith in the insurance industry, TJE, which has a pretty bad track record up to this point.

PBM said...

Also, I would maybe have some respect for this author if he didn't constantly refer to Obama as a socialist. That's an absolute joke.

TJE said...

Good to see PBM back in the game.

TJE said...

PSPBM: In 2009 86% of respondents said they liked their health care plan.
http://www.realclearpolitics.com/articles/2009/08/13/the_health_care_reform_paradox__97866.html

PBM said...

That's unrelated and doesn't make Obama a socialist.

TJE said...

http://www.californiahealthline.org/road-to-reform/2011/paul-ryans-radical-plan-to-reform-medicare-not-so-radical.aspx

PBM said...

Where do you find this stuff? Also, for someone who believes in universal coverage, Ryan's plan is not in any way a legitimate alternative to Obama's health care plan.

TJE said...

Mr. L is right that private insurance for senior health care has problems. But I don't think we should rule out completely using some market mechanisms.

If I had to choose between government rationing and higher cost/higher deductibles, I think I'd choose the latter. Ryan plan might be tweaked to deal with income issue.

http://finance.fortune.cnn.com/2011/04/07/in-defense-of-paul-ryans-medicare-plan/

Patrick_L said...

I think you and I are pretty close on this subject, though maybe we differ significantly in acceptable levels of cost-sharing.

Market mechanisms are absolutely essential to health care reform, and PPACA actually relies on a number (though it also does rely on government-directed approaches as well. I completely agree that many people have valid reasons for being opposed). I also agree- private health insurance for the elderly has a unique set of problems that would be very difficult to overcome. I don't think it couldn't be accomplished successfully, but Ryan's approach as is doesn't even come close to what would be necessary. For instance, many successful countries do have private health insurance for the elderly and get equivalent outcomes and lower costs. It can be done- but these countries do it through highly regulated private markets. And I'm not talking about obnoxious "regulations"- off the top of my head I'm thinking in particular about individual mandates or mechanisms to get the same result, guaranteed issue (aka no preexisting condition restrictions), and limits on age rating. Many of these conditions are not acceptable to conservatives at the moment (though just five years ago many did support these aspects), and without those safeguards a shift to private health insurance for the elderly is a very bad idea.

However, increased cost-sharing in moderation applied to specific population pools is a good idea. I'm concerned about the empirical results from the Rand Health Insurance experiment and elsewhere about negative consequences for certain demographic pools. Basically, Medicaid's cost go largely to care for the disabled, very sick elderly (nursing home care), and those under 133% of the FPL. Cost-sharing is a bad idea for this group- they would be extremely sensitive and make bad long-term medical decisions, or these are people with little or no control over their medical decisions or pretty much anything.

On the other hand, some increased cost-sharing for Medicare beneficiaries is a good idea. Quick caveat: some care would need to be taken to eliminate cost-sharing for evidence-selected most important preventative medicine and screenings. But I think increased cost sharing could be applied to a lot more of specialty care medicine (the U.S. is severely oversupplied in this area). Some consideration of income would be important for determining cost-sharing, since many elderly essentially rely on Social Security and Medicare for everything- they don’t really have much income to be cost-sensitive about. But moderate-income and up beneficiaries could bear some increases in cost-sharing (though we also have to think about the changes we are hopefully making simultaneously in Social Security). However, there’s a limit on how much cost savings or behavioral response we could get from this because of reasons I’ve already cited on this blog (ex: incredibly concentrated health care costs, already comparatively high levels of cost-sharing). This means that increased cost-sharing won’t come close to addressing the problems in Medicare or bending the cost curve for rising costs in the private sector. Ryan’s proposal does dramatically increase cost-sharing, but it does at the same time it increases program costs by bringing in private insurers (and all the risks and costs of that). Much of the savings from increase cost-sharing would be swallowed up by the added costs of private insurance for the elderly. It would be better to work in increased cost sharing into the traditional Medicare framework, while still allowing Medicare to use its market leverage to create cost savings systemwide (like conservative economists such as Tyler Cowen have argued). You can’t start with Ryan’s approach as your baseline and hope to modify it and get a successful approach, but you can take certain elements from it. Namely, the principle of increased cost sharing from those able to afford it for the positive behavioral and budgetary effects.