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CONSUMER CHOICE MATTERS #20
DATE: June 17, 2003
TO: Consumer Choice Matters Readers
FROM: Greg Scandlen
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IN THIS ISSUE:
· Your Big Chance to Become an Old FOGI
· Swimming in a Sea of Economists
· More Hobnobbing with Economists
· John Hood - GOP Needs to Focus on Health
· Ronald Bailey - Brave Policy Makers Needed
· RAND Corporation - State Reforms of Little Consequence
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Swimming in a Sea of Economists
I'm writing this from San Francisco where I'm swimming in a sea of health economists. I was on a panel at the "Fourth World Congress of the International Health Economics Association." This is an incredible event. There are nearly 1,000 people listed as "presenters" and another 1,000 or so attendees. The "program at a glance" brochure is 70 pages long.
I am here at the invitation of Bob Woodward of the University of New Hampshire who presented a paper arguing that the focus on outcomes and "medical necessity" misses the true utility of much of health care, which involves "consumer amenities" along with "investments" in improving health. Amitabh Chandra of Dartmouth presented new research showing the timing of child birth is often one such amenity, and people increasingly use C-Sections and induced labor to have babies during weekdays, thus avoiding holidays and weekends. I said health care costs have been in a state of crisis since 1970, and we will never know whether our spending on health is rational until we reduce third-party payment and enable people to make their own spending decisions in competition with everything else they might spend their money on. Uwe Reinhardt of Princeton said we need to decide how much of health care should be "socialized" and made available to everybody. Once that has happened, people should be free to spend additional money on amenities if they want to.
In a discussion that was too short, we approached something of an agreement. That is, the United States already has an implicit floor of guaranteed assistance to all Americans of approximately $1,000 per person. $1,000 is roughly the per person value of the exclusion from taxes of employer-sponsored coverage, and it is also roughly the amount of money we spend on taking care of the uninsured. Interestingly, it is also roughly what President Bush has suggested as a tax credit for people who do not get employer coverage. I would prefer to have this subsidy made explicit and available to everybody through a tax credit for all to replace the exclusion as well as Medicaid. People could then buy their own preferred coverage. Uwe would probably prefer it to be provided directly either through a government insurance system or direct provision of services. But we both agreed that beyond that baseline coverage, people should be free to spend their own money the way they want to. Not bad for a day's work.
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More Hobnobbing with Economists
Last Friday was also a day for hobnobbing with economists. The Heritage Foundation asked me to be on a panel reacting to Alain Enthoven's latest "Health Affairs" paper, in which he tries to resurrect strict managed care through managed competition. I said I didn't agree with his affection for managed care, but I thought he broke important new ground by calling for risk-based rating along with fixed contributions from employers. I'm perfectly willing to put all the coverage models to the test in the market under those circumstances, especially if they move us toward individual ownership, portability, and long term contracts. Again, there was an important point of agreement, this time around the idea of risk-based rating. The other panelists were Helen Darling, president of the Washington Business Group on Health, and Lynn Etheredge, of George Washington University. Stuart Butler moderated.
SOURCE: http://www.healthaffairs.org/WebExclusives/Enthoven_Web_Excl_052803.htm
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John Hood - GOP Needs to Focus on Health
Hanging around with all these economists has me in a mood for Deep Thoughts. And there have been a number of thoughtful essays on health reform published lately. One such is by John Hood, president of the John Locke Foundation, in the June 30 issue of "National Review." Mr. Hood warns Republicans that they continue to ignore health care at their peril. He says it is no accident that the Democratic presidential candidates have all announced health proposals. Real Americans in real towns are alarmed about health care trends. He calls on Republicans to go on the offensive by, first, dropping their "me-tooism" in which they support bad ideas like SCHIP and HIPAA (and now, perhaps, adding Rx coverage to an unreformed Medicare program). Next, he says, they should "expand personal choice and control," by allowing FSA roll-overs and more employee control over HRA funds. He says, "Republicans should think wisely about tax policy," and treat personal health spending as a form of human capital investment. Finally, he says, "State governments - whether run by Republicans or Democrats - have done little to advance free-market health care reform." They need to get busy rolling back onerous regulations and taxes and reforming Medicaid and SCHIP.
SOURCE: This article was published as part of NR's Health Care Symposium, which also includes articles by Grace-Marie Turner, Bob Goldberg and others. Go to:
http://ads.nationalreview.com/pfizer_1.asp
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Ronald Bailey - Brave Policy Makers Needed
"Reason Magazine's" science correspondent, Ronald Bailey, applies a unique analysis to the "crisis" of the uninsured. He notes that even the long-term uninsured are young (80% under age 45) and healthy (86% say they are in good or excellent health) and people under age 35 have only a one in 1,200 chance of dying from all causes (even these deaths are not the ones likely to be helped by insurance, btw - usually accidents, homicides, and suicides). "To the extent a crisis exists," he writes, "It's because nobody in the health care 'system,' least of all patients, feel they are in control of their health care arrangements." He hopes the time has come "when some brave policy makers can step forward and advocate true free market health care," and says developments like
Simple Care and "boutique medicine" are showing the way.
SOURCE: http://www.reason.com/rb/rb052803.shtml
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RAND Corporation - State Reforms of Little Consequence
The RAND Corporation has published a paper summarizing many of the studies coauthored by Susan Marquis and Stephen Long on state efforts to reduce the numbers of uninsured. The studies examine state small group insurance regulations, state purchasing alliances, providing subsidies for coverage, expanding public programs, and improving the "safety net" of direct service delivery. Very briefly, most of these efforts have been dismal failures. Small group regulations have not consistently lowered the numbers of uninsured or the cost of premiums. Alliances have done no better. Subsidizing premiums has worked - slightly - but at a very high cost. Expanding public programs does indeed "crowd out" private coverage. Improving safety net services seems to work better, at least for maternal health care outcomes, than providing public insurance coverage. But the paper says, "unfortunately, the states with the greatest need to extend coverage have the least capacity to do so." The paper concludes, "In a system in which purchasing health insurance is voluntary, we cannot expect to eliminate the uninsured. Maintaining a strong safety net will be necessary to ensure that those who remain uninsured will have access to health care."
SOURCE: http://www.rand.org/publications/RB/RB4558.1/index.html
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