Posts tagged Health care
This week, the Susan G. Komen Foundation, one of the best-funded, most visible, and most powerful organizations gathering money for breast cancer treatment, research and screening, stepped in a big pile o’ poo when they changed their grant application rules in such a way to rather pointedly exclude Planned Parenthood.
Planned Parenthood is not the Komen Foundation’s biggest problem, though. As you’ll see shortly, they spend their money on feel-good projects, rather than using evidence-based medicine to determine who will be funded. In fact, there are several instances where Komen partnerships have been detrimental to women’s breast health. They have always made their decisions based on politics and appearances, not what’s best for women.
The move to bar Planned Parenthood was in response to anti-abortion groups, who objected to Planned Parenthood’s funding of abortions. The media frenzy exposed something that many in the medical and research community have known for some time: health care is political, and the Susan B. Komen Foundation is heavily staffed with people who identify with conservative politics. Most attributed the current crisis to the hiring of Senior Vice President for Public Policy Karen Handel nine months ago.
Ms. Handel describes herself in her Twitter profile as a “Lifelong Conservative Republican” and former Georgia Secretary of State. She would seem to be well-suited to a role involving crisis management for a large, high-profile national organization. (more…)
Here we are, two business days away from the hard ceiling on the debt limit, after blowing through the acoustic tiles a couple of months ago. And yet, there’s no passed increase in the debt ceiling.
The House is supposed to be voting on their bill as we post this. It’s not clear that the House alone can pass a bill on the debt, let alone the House, Senate, and President together.
It’s fine to make a statement via one’s votes, or to grandstand in a debate. That’s the political side of government, and it’s a necessary part of getting people involved in the discussion. But, at the end of the day, government’s first job is to run the country. The debate comes second.
Drawing on my House reference above, it’s fine to remind an obese person who’s having a heart attack that they really need to diet. But perhaps the cardiopulmonary resuscitation is a little bit more important right now.
This week’s science news is a relatively old story with a new twist: in the journal Blood, scientists in Germany report a possible “cure” for infection with the human immunodeficiency virus (HIV), the virus which causes the disease acquired immunodeficiency syndrome (AIDS).
An American living in Germany became ill with the rare and unfortunate combination of AIDS and leukemia. Doctors carried out a standard, but radical and dangerous, therapy to treat the leukemia: they destroyed his native immune system and replaced it with a new one transplanted from another patient’s stem cells. As a result, it seems as though the HIV infection has been completely eliminated from the patient’s body.
Voters aren’t stupid. The world is just complex. Our society has gone far away from the days when we were expected to collect our own food from a foodshed that was walkable in under an hour. We are a society of specialists, but being a specialist doesn’t make one stupid. Rather, being specialists makes us better at the things we do than we are at the things we don’t do.
So we substitute trust relationships for wide but shallow expertise. If I’m sick, I see a doctor. These days, that’s often a specialist, an even more specialized job than merely being a doctor. We converse, and I ask questions. I will make the final call on the treatment plan, but I don’t have the expertise to know if it’s the right plan. I didn’t go to medical school, but presumably my doctor did. I have to trust that the information I get from my doctor is accurate. If my doctor has a hidden agenda, I can easily be talked into treatment plans that would benefit my doctor at my expense. I also must work to keep an open mind in that conversation, because whatever biases I bring into the conversation will impact my decision, possibly to my detriment.
Our representatives in government are necessarily political specialists. Many of them are also specialists in other fields. For instance, I know of a nearby school board president who is also a highly specialized structural engineer. If you need to know anything having to do with his particular engineering specialization, this is the man to see. So we have a government made up of political specialists, mixed with a somewhat random smattering of other specializations.
But we ask these representatives to vote on issues in areas in which they are not specialists. They have a few choices to make at that point. They can vote however the party leadership tells them to vote (thus getting advice solely from political specialists). They can vote however polls from their constituents dictate, or based on communications from their constituents (thus getting advice from the “hive,” or the most motivated members of the “hive”). Or they can seek out advice from specialists in the fields impacted by the legislation and vote based on the advice they get from those specialists.
Specialists are necessary for an ever-increasing percentage of voting issues, for precisely the same reason that specialists have become necessary in an ever increasing percentage of our daily life decisions. For this reason, we should be encouraging our representatives to seek out advice from specialists in ever more areas. We, as voters, should be doing the same.
But an odd thing has been happening with increasing frequency and intensity over the past decade. There is a growing backlash from the right against specialists. Why is this?
I suggest it’s because many people feel that both specialists and liberals are calling voters stupid. Sometimes it’s overt. The upshot is that the message of “it’s a really complicated issue” has become synonymous in many voters’ minds with “you’re too stupid to understand.” This fosters resentment of the specialists.
Let’s face it, if you went to a doctor and he told you “you’re too stupid to understand the treatment I’m prescribing; just do it,” you’d probably start looking for another doctor. If you went to a lawyer, and he told you “you’re too stupid to understand the law, so just accept this plea bargain,” you’d want a different lawyer. So it should come as no surprise that the same thing is happening in politics.
Global warming is complicated. Most of us are insufficiently educated to understand the entire mechanism. This doesn’t mean we’re stupid, but it does mean we are forced to trust specialists.
Keynesian economic policy is complicated. Most of us are insufficiently educated to understand the entire mechanism. This doesn’t mean we’re stupid, but it does mean we are forced to trust specialists.
Health care today is complicated. Most of us are insufficiently educated to understand the entire mechanism. This doesn’t mean we’re stupid, but it does mean we are forced to trust specialists.
See a pattern?
So what happens when you start attacking the very notion of field specialists? You’re forced to devolve. If you conclude that you cannot trust doctors, then you self-treat, and you’re devolving to health care of a couple centuries ago. If you conclude that you cannot trust economists, then you make poor economic decisions, and you’re devolving to an economy of a couple centuries ago. If you conclude that you cannot trust scientists, then you make poor science decisions, and you’re devolving to technology of a couple centuries ago.
Voters on the right are particularly well primed to accept the attacks on the notion of field specialists. With every passing year, more and more are hearing the message that the left thinks they’re too stupid. Why on earth would you vote for or with people who think you’re too stupid to make decisions? So when the Republican party started focusing on that message, beginning with Sarah Palin’s aw-shucks I’m-just-a-regular-guy persona attacking the “élites” (i.e., specialists who make you feel dumb), there was an audience ready to respond.
It’s a very shrewd strategy to win votes. But it’s horribly destructive to a trust relationship that builds up over the course of a century. It takes less time and energy to destroy a trust relationship than to build one, which makes this strategy doubly destructive.
When you undermine trust in field specialists, you necessarily destroy the foundation of our modern economy. It is exactly the strategy that the Taliban used, albeit with different justification. But Afghanistan is a 19th century economy, so it didn’t really cause devolution there. Afghanistan has little to offer the rest of the world besides minerals and agricultural products (opiates being the most profitable of them).
This isn’t all Palin’s fault. She was the spark, but many liberals lay the kindling over a long time. How often have we heard liberals calling conservatives, rural people, and voters in general stupid? I’ve seen it on this very site. It’s condescending, and it should come as no surprise that it’s a major turnoff to the recipients of the condescension.
I don’t have a good solution for this. But the path we’re on scares the hell out of me. I don’t want to live in a place where specialists are distrusted simply for being specialists.
What do you think?
Last time I described how health care has a mix of components, some perfectly suited to insurance, some perfectly suited to universal coverage, some perfectly suited to fee-for-service, and some that doesn’t fit well in any of those. So it would stand to reason that we could break the methods of paying for health care into separate categories, and apply the best payment model to each. That is, for catastrophic external and internal events, we would expect people to buy traditional insurance. For chronic conditions and elective services, we would expect people to pay for everything on a fee-for-service model. For communicable diseases, we would have government-funded universal coverage. We’d still have to figure something out for general maintenance, but it’s not unreasonable to have that be part of the catastrophic internal events coverage, since it should be expected to offset the costs of catastrophic internal events.
But let’s explore this further. The case isn’t as clear as it might seem from last week’s discussion.
Chronic conditions come in two types, congenital and acquired. Acquired chronic conditions do, in fact, have a corresponding form of insurance out there, albeit one few people intentionally carry. Disability insurance is an often overlooked part of Social Security, but some people carry supplementary disability insurance as well. For people of working age, odds are substantially greater of injury causing inability to work than of death. Yet far more people of working age buy life insurance than buy disability insurance.
In any case, we had some spirited discussion about what tradeoffs we’re willing to make in order to produce an ideal system. Not a single person suggested that we should give up universal coverage of communicable diseases, or emergency care access to all, regardless of ability to pay. This could be an artifact of the more liberal lean of the site, but we do have conservatives who participate as well. For the purposes of today’s article, though, I’ll assume that we are in universal agreement of the need for both universal coverage of communicable diseases, and universal emergency care, regardless of finances.
Emergency care access to all is in conflict with the notion of voluntary catastrophic health insurance. That is, the notion of emergency care access to all is more in line with universal coverage, like fire protection services, while catastrophic health coverage aligns with traditional insurance. Just as mixing fire protection coverage with universal firefighting services causes overcoverage, so, too, does mixing emergency care access to all with catastrophic health insurance. Those of us who have health insurance are covered not only via the insurance policy, but also via our taxes; we’re overinsured.
In addition, since emergency treatment is often avoidable through lower-cost general maintenance, it is in the best financial interest of those who cover emergency treatment to also cover general maintenance. So we’re not only overinsured, but we’re overpaying in taxes for the otherwise uninsured.
What about chronic conditions? At the very least, we should have health insurance policies available to us that are similar to disability insurance, in that they cover onset of chronic conditions. I’ve looked for such medical insurance, but it doesn’t exist. In fact, health insurance providers instead drop individual coverage for the very people who develop these chronic conditions. Worse yet, once these people are dropped, they can never be covered for it in the future. So what we have today is similar to the case where an insurer collects premiums on disability insurance, but refuses to make the monthly payments when the insured became disabled. Yet, interestingly enough, the bulk of medical costs come from chronic conditions, which is perhaps why the leading cause of bankruptcy in the United States is medical costs.
Furthermore, untreated chronic conditions (e.g., diabetes or asthma) result in substantial, frequent internal catastrophic medical care. So it is financially in the best interest of insurers of internal catastrophic medical care to also cover chronic conditions. Yet again, those of us with health insurance are overinsured, and overpaying in taxes for the otherwise uninsured.
In other words, if we assume that we want emergency care access to all, it is economically the most sensible to have universal coverage for internal and external catastrophic care, communicable disease coverage, general maintenance, and chronic conditions. To do otherwise is to cost us all more; universal coverage of catastrophic medical care leads to a choice between universal coverage of all non-elective services or paying more money to not cover the other categories of medical care.
We’re left with a decision not of what to cover, but rather how to cover it. Competition among insurers can be beneficial as a means of increasing efficiency, provided a minimum bar of coverage is established to ensure that the financial burden doesn’t fall on taxpayers to handle emergency care access to all. In short, as long as we have taxpayers footing the bill for universal emergency care, taxpayers have a vested interest in either fully funding all non-elective medical services (eliminating health insurance altogether) or mandating a minimum level of private insurance coverage. The simplest approach would be to provide a choice between buying coverage that meets or exceeds the minimum bar, or paying the government an amount of money commensurate with the gap in coverage that would otherwise be paid by other taxpayers.
Such a minimum bar would need to have coverage for pre-existing conditions, and prohibitions against the insurer dropping coverage, which otherwise would result in health care costs falling on taxpayers.
The above mandates present a significant fiscal danger to lower-income families. Health insurance is expensive if we are to maintain the life-at-all-costs level of service to which we have grown accustomed. To handle it in the same way we handle traditional forms of insurance, we need to charge everyone premiums that are irrespective of income. For lower-income families, this would likely result in over half of all income being used for health coverage. While this prevents the uncertainty of bankruptcy resulting from unforeseen circumstances, it rather causes certain bankruptcy from health, housing, and food costs permanently exceeding income. A subsidy for low-income families can overcome this, but at that point we’re playing a lot of financial sleight of hand to disguise the shift to a progressive-tax model, where people pay based on income.
It should be clear by now that I’m describing something very close to the high-level design of the Patient Protection and Affordable Care Act (PPACA). I have described, in broad brush strokes, how we ended up with this model in the legislation.
There is no economic reason for us to maintain the employer-supplied medical insurance. So why aren’t we getting rid of it? Because, when surveyed, most people with employer-supplied medical insurance say that they want to keep it. There are several reasons for this, which I won’t go into here; the point is that it would have been politically unpopular to force people to give up their employer-supplied medical insurance. This was the intent of the “if you like your insurance, you can keep it” message. But as much as it starts to sound nanny-state-like, I still want to get rid of employer-supplied medical insurance. The economist in me recognizes that this is a significant source of inefficiencies in our medical system, due to all of the disconnects among the payers, suppliers, and consumers.
So this is not the most efficient model, but it does amount to a compromise that is on one hand designed to limit the load on taxpayers (at the point of care), while increasing the load on taxpayers (at the point of insurance), and maintaining the strangely popular employer-supplied insurance.
What would I like to see? True open-market insurance, where employers take the existing insurance money and turn it into larger paychecks, would be one reasonable option. I don’t like increasing complexity in the income tax code, but I can see how many would want this to come with a corresponding tax deduction for medical payments. I’ll save my income tax notions for another article. But open-market insurance would need to maintain minimum standards designed to minimize the taxpayer burden that comes along with universal coverage.
I am a fan of a public insurance option, provided there is no thumb on the scale in terms of government subsidy. That is, any public insurance would have to be fiscally self-sufficient. I recognize that there are startup costs, and so there would need to be an initial investment, but the key word is investment. Lend the money to the program, at market interest rates, with an ordinary market payoff schedule, to be paid for by what amounts to an increase in premiums. Beyond that, the public insurance service would have free reign to offer whatever services it wishes, provided all policies meet or exceed the minimum bar, and would be forbidden from receiving supplemental government funding.
Other than elimination of employer-funded insurance, and the public option, PPACA covers pretty much everything I would ask for. The features most often decried by the right are, ironically, the features designed to protect taxpayers. The only way to get rid of those features and simultaneously protect taxpayers is to eliminate universal emergency service.
So I leave you with a few questions, as usual.
If you oppose the PPACA insurance mandate, does this mean that you also oppose protecting taxpayers, or do you oppose universal emergency service?
If you don’t want health insurance to be held to a minimum bar, does this mean that you also oppose protecting taxpayers, or do you oppose universal emergency service?
If you agree with me that employer-supplied insurance is economically inefficient, how do we get to a country that no longer has employer-supplied insurance, given its general popularity?
If you are one of the people who loves employer-supplied insurance, please explain why the system is worth the inefficiencies that arise from it.
Finally, if you believe I’m setting up false choices, explain how they are false choices and what the real options are.
The health insurance system in the United States is broken. But you already know that. What you may not realize is why it is not only broken, but in many ways is not fixable. At least not without changing some of our fundamental beliefs about how health insurance and our health care system should work.
To fully grasp this, let’s start by looking at insurance itself. Insurance exists because there are rare but ruinously expensive events that happen to people at unpredictable times. The purpose of insurance is to spread the risk of those rare but ruinously expensive events across a large enough group of people and a long enough time that the cost per person per unit of time becomes bearable. For most of the insured, this is a losing proposition. That is, even excluding administrative and profit costs, you are likely to spend more on insurance than you will receive in claims. The more catastrophic and rarer the insured event, the more likely this is true.
And yet we buy insurance anyway, mostly because the cost to us of the rare event is so great that we are unwilling to accept the consequences. This is completely rational and expected behavior. There’s an entire article that can be devoted to a discussion of how insurance relates to the spectrum of people from risk-averse to risk-seeking, but that’s far more involved than necessary for this article. The Wikipedia article on risk aversion is quite good, though.
Now let’s look at health care. We treat it as if it were this monolithic beast, when in fact it consists of several loosely related separate parts. I’ll describe them here, and you’ll see what I mean.
- Catastrophic external events: These are things like car crashes or earthquakes causing bookcases to fall on you. They’re essentially unpredictable, and the cases that matter most require expensive medical attention.
- Catastrophic internal events: These are things like aggressive cancer or degenerative diseases. These are, to varying degrees, more predictable than the catastrophic external events, and many of these benefit from early diagnosis and treatment.
- Chronic conditions: Asthma and some types of diabetes go here. Treatment of these is focused on the symptoms, as the underlying disease is not curable.
- Communicable disease: I’m not counting things like the common cold. This is more about diseases for which treatment addresses the underlying disease and/or prevention of acquiring the disease in the first place.
- General maintenance: This includes both asymptomatic and symptomatic checkups, where there is not a clear indication of a particular disease. Non-communicable infections and minor communicable diseases like the common cold also apply here. Basically, this is the stuff for which you go to a General Practitioner.
- Elective services: Most cosmetic surgery falls under this category, but so do a few other things. There’s room for differences of opinion on many of these, such as gastric bypass.
One problem with insuring healthcare is the notion of a total loss. In traditional insurance, there is a known maximum value for an event. In the case of automobile insurance, there is a maximum liability in the policy, and collision will cover a maximum of the current value of the vehicle, at which point it is considered a “total loss.” Health insurance has attempted to accomplish a similar result with lifetime caps (which are no longer legal). But people are understandably squeamish about assigning a dollar value to their lives. Nobody wants to be told that they or their loved ones are going to die due to a lack of money. This immediately changes the insurance equation, because premiums need to be significantly higher if the policies have no caps on claims.
Another problem with insuring health care is most of the above categories don’t all fit well with the traditional notions of insurance. Catastrophic external events are the only sort of situations for which classic insurance is a perfect match. General maintenance would be silly to cover in the case of automobile insurance (imagine insurance covering oil changes), but for catastrophic internal events, the cost to the insurer is often significantly lower if discovered early, which means that it’s less expensive to cover general maintenance if it results in early discovery of catastrophic internal events. But general maintenance will rarely uncover these catastrophic internal events, so most of the money spent on general maintenance goes to areas not typically associated with insurance.
Of course, full coverage of general maintenance without co-pays tends to lead to the insured overusing medical services. If it’s free, there’s little incentive to err on the side of frugality. On the other hand, having co-pays tends to lead to the insured underusing medical services. Since many diseases are much less expensive to treat when they’re either asymptomatic or mildly symptomatic, people with co-pays are more likely to remain undiagnosed until the disease has progressed beyond the cheap-and-easy-to-treat stage. Since most Americans aren’t doctors, and since medicine is so complex today, few of us are able to adequately determine the ideal time to see doctors for diagnosis and treatment. Basically, general maintenance is simultaneously well-suited and poorly-suited to insurance.
Chronic conditions and elective services are badly matched to insurance. Chronic conditions tend to have relatively predictable costs, which are fairly constant over time (think asthma inhalers or birth control pills). Elective services are, by their very nature, entirely predictable, since they are entirely controlled by the person receiving the services. The necessary overhead of insurance makes coverage of chronic conditions and elective services more expensive than simply paying out of pocket. But many types of elective services are hard to distinguish from necessary treatments. At what point does reconstructive surgery become elective, for example?
Communicable diseases are worthwhile to insure against, but work best when everyone is covered. This is the same sort of situation as we have with fire protection (not fire insurance). Just as it is less expensive to put everyone’s fires out as quickly as possible than to have patchwork coverage, where some people are covered and others not, it is less expensive (and causes fewer deaths) to control communicable diseases as quickly as possible than to treat some people and leave others untreated. For communicable diseases, then, the best model is not insurance in the traditional sense, but rather universal coverage. Often these diseases are diagnosed at general maintenance appointments, further clouding the appropriateness of general maintenance coverage.
So, some healthcare is well suited to individual policies, some to universal coverage, and some to no coverage at all. And not all situations fall neatly into a single category, as evidenced by the bleedover between catastrophic internal and maintenance. Already it’s a mess. But it gets worse.
By far, the majority of Americans get their health insurance from their employers. This means that they have little or no choice about the coverage they receive, and from whom. Few of us have the luxury to choose our employer based on the specifics of the health insurance provided, and even if we did we probably would consider other factors to be more important anyway. It’s silly to be in that position in the first place. Imagine if the food we were allowed to eat was determined by the make of car we drive. Health coverage and employment are an equally absurd match, from a purely objective perspective. I am aware of the history behind it, but that hardly makes this model worthy of perpetuation.
Now, since most Americans don’t get to choose their health insurance providers, this means the providers have little incentive to please the consumers of their products. Instead, they need to please their consumers’ employers, and these employers’ needs may well be at odds with those of the insured. For example, an employer will typically want employees to be healthy, because healthy employees are more productive than unhealthy ones. However, once an employee has been diagnosed with a terminal degenerative disease, it is now in the best interest of the employer for the employee to not have the coverage at all, and furthermore to no longer be employed, because the employee has become a pure liability. Even an employee with, say, a child with muscular dystrophy would likely be a net liability to the employer.
In other words, we’re getting insurance for many things that aren’t well-suited to be insured, from companies that don’t need to satisfy us, paid for by people whose interests match ours, when they do, only by coincidence. Given that, it’s remarkable that our system works as well as it does!
And then we have some scenarios for which the current system is completely useless. For example, it has often been suggested from the right that young people (say, in their 20s) don’t need to be insured at all, or need only catastrophic coverage coupled with a Medical Savings Account (MSA). This presumes they will not be subject to catastrophic internal events. Granted, the likelihood of a catastrophic internal event is relatively low, but what is our plan for those cases where they occur? As I noted above, someone with catastrophic-only coverage + MSA is unlikely to go for maintenance, which makes the prognosis much worse and the cost much higher upon diagnosis of a catastrophic illness. Is a 22 year old going to be sufficiently well informed to decide the appropriate level of insurance? I’m not convinced anyone is, since humans are notoriously bad at gauging risk. But those in their 20s are particularly unlikely to have the financial wherewithal to survive even one such instance, fiscally speaking.
So what do we need to do in order to fix this? Anyone who says they know the answer is either misinformed or lying to you. There is no perfect solution, because medicine today is more complex and expensive than ever before, and we must make some hard choices. No matter what, we have to give up at least one of the following:
- Emergency care for all, regardless of ability to pay
- Maximizing the financial efficiency of medical care (i.e., most bang for the buck)
- Universal coverage against communicable diseases
- Affordable coverage
- Coverage of all treatments, regardless of cost
What we’re left with is a choice of which of those bullets are most important. This is where the discussions should start, because which features you choose will quickly lead to the optimal solution for that set of features.
One issue we have as a nation is an inability to have honest tradeoff discussions. Often, the conversations devolve based on an assumption that there is an easy way out, that there is so much money being wasted that we can get everything we want if we just focused on improved efficiency. From personal experience, I have never seen someone present that argument without being intellectually lazy about it. That is, when pressed to explain precisely where the inefficiency resides, the amount of waste described is always orders of magnitude smaller than the amount needed in order to close the fiscal gap between where we are and where they want us to be.
For example, tort reform> is often, especially from the right, described as a way of eliminating much waste from health care. But malpractice insurance costs have not risen over the past couple of decades, and elimination of all malpractice judgments (which I can’t imagine anyone endorsing) would reduce our medical expenses by only 2%. Similar issues arise when the left points the finger at insurance company profits. I’m not arguing that these aren’t worth looking at, but they are very, very small compared to the rise in health care costs over the past decade.
Similarly, what is commonly referred to as “defensive medicine” is far less tied to malpractice costs than it is to the “Coverage of all treatments, regardless of cost” bullet point. We want to make sure nothing is missed, and our doctors know this. Defensive medicine is the natural result when the direct cost to us, the consumers of medical services, is low relative to the actual cost of the testing (because insurance picks up most or all of the tab), and doctors want to keep us happy as patients, and doctors don’t lose any money if patients have more tests. The “system” (usually our employers, ultimately) bears the bulk of the costs, and we as patients get all of the benefits. Is this something we want to change? I know a couple of people who, due to defensive medicine, were diagnosed with cancer. Neither would have been correctly diagnosed without the defensive testing. Both of them would have died if they weren’t diagnosed until they were sufficiently symptomatic. While I recognize that this is anecdotal, I can’t help but wonder if any of us are so firm in our beliefs about cost reduction in healthcare that we are willing to die for those beliefs.
I’ll discuss possible solutions, and the Patient Protection and Affordable Care Act (commonly referred to as the “Health Care Reform Bill” or pejoratively as “ObamaCare”) in particular, in a future article. In the meantime, I’ll leave you with a few questions:
- Which of the five bullet points are you willing to do without, and why?
- Are you willing to accept fewer tests in exchange for lower insurance premiums, but at a cost of higher risk of death?
- If you see inefficiencies in the system today, which ones are big enough to make a serious dent in the cost of medical care in the US if we addressed them?
- Which of the categories of medical care should be provided by health insurance, and why?
- Do you think health insurance should be provided by employers at all? Why or why not?