• Tag Archives Obamacare

  • Obamacare’s “People Will Die” Canard

    Posted on by Azrael 1 Comment

    Obamacare’s “People Will Die” Canard

    Passions are high in the national health care debate. Some supporters of the Affordable Care Act (ACA) have taken to asserting that hundreds of thousands of “people will die” if it is repealed or significantly altered. These claims do not withstand scrutiny, and those who wish their policy arguments to be taken seriously would be well advised to avoid them.

    These sensational claims rest on fallacious reasoning, which I’ll describe later in this piece. But first let’s acknowledge that neither I, you, nor anyone else has any idea how many Americans will live or die under alternative federal health care policies. It’s an inherently fruitless exercise to attempt to quantify these effects. However, if one seriously wished to attempt it, one would not do so via the methods now being employed to promulgate the “people will die” claim.

    Effects of the ACA

    The claims are based on extolling a single effect of the ACA: increasing health insurance coverage, which is said to reduce mortality. Of course, the ACA didn’t magically produce its coverage increase out of thin air. To finance it, the law included several features that likely have countervailing effects on mortality.

    Below is a partial list of such effects, provided with the caveat that it would be just as silly to charge the ACA with killing people as it is to attribute deaths to its possible repeal:

    • CBO also found the ACA to reduce workforce participation. Although there is a fierce national debate over the effects and causes of unemployment, there is broad understanding that unemployment correlates with worsened health.
    • The ACA imposed substantial taxes on medical devices and drugs, inhibiting their development and use. We do not know how many lives these products would otherwise have saved.
    • Most of the ACA’s coverage expansion occurred through Medicaid, which has a limited supply of providers and services. Those who gained Medicaid coverage via the ACA gained access to subsidized health services. But unless the number of providers, facilities and services accessible through Medicaid grew at least as fast as enrollment did, there has been a corresponding reduction in health service availability to people previously on Medicaid.

    What Studies Show

    But even a balanced attempt to weigh the ACA’s net effects on longevity would be inherently problematic under the methods currently being employed to estimate them.

    The widely-circulated figures for deaths supposedly caused by replacing the ACA are extrapolated from a study of the Massachusetts health reform experience. That study found that post-reform (2007-10) mortality rates in Massachusetts improved relative to pre-reform (2001-05) mortality rates more than was the case in other US counties after controlling for demographic and economic conditions.

    The study is credible, interesting, and suggestive, but does not offer any generalizable proofs of the effects of national health policy on longevity. To the contrary, the authors state that “Massachusetts results may not generalize to other states.”

    The study merely shows that longevity improved within Massachusetts after health legislation, more than can be accounted for by economic and demographic trends. This indeed might plausibly have happened because of Massachusetts’s particular health reforms but as the authors acknowledge, it could also have arisen from any of countless factors specific to Massachusetts.

    Indeed, a similar study of Oregon’s experience with Medicaid expansion “did not detect clinical improvements other than depression reduction.” In any case, the Massachusetts study only tells us what didn’t cause its longevity improvement; it cannot definitively explain what did.

    Killing Your Credibility

    But the biggest problem with the “people will die” claim is that it rests on a fundamental logical fallacy. It is related to the familiar “Fallacy of Composition,” which any discerning interlocutor will call you on if you commit it. An oft-cited example of the fallacy is that just because a standing spectator can see a baseball game better than the patrons seated near him, this doesn’t imply that everyone will see better if they all stand up.

    The application of the fallacy to health insurance is straightforward. One cannot leap solely from the observation that “having health insurance. . . results in better health” to the conclusion that “the more we expand health insurance, the healthier we all will be.”

    Health insurance reduces the out-of-pocket costs individuals face when they buy health services. Expanded insurance coverage increases health service consumption which, considered by itself, should improve health. But it also increases cost growth, an effect widely recognized in health expenditure forecasting. People with insurance feel this cost growth through rising premiums, but the cost inflation is felt especially keenly by the uninsured, who must pay more whenever they buy health services (or receive less care for what they pay). The observation that the insured are relatively healthier doesn’t by itself imply that expanding coverage will save lives.

    Thus, even if health insurance did absolutely nothing to improve national health outcomes, we’d still expect the insured to be healthier than the uninsured. Thus, the observation that the insured are relatively healthier doesn’t by itself imply that expanding coverage will save lives.

    There are countless potential examples of the fallacy in operation. For example, consider the current tax preference for employer-sponsored insurance (ESI). Those who receive health insurance through their employer enjoy an advantage in these benefits’ exemption from taxation. This tax preference steers additional health benefits to these individuals. However, this does not mean improved health for the nation as a whole. To the contrary, the ESI tax preference is widely recognized as a driver of health market inefficiency, reducing the value of health services relative to dollars spent.

    An even simpler example: the government could easily add to the wealth of ten individuals by sending them each a million-dollar check. It is a non-sequitur to infer from this that the national wealth would be increased by the government’s sending a million-dollar check to every American.

    In short, the “people will die” argument is premised on an easily-recognized logical fallacy. Don’t use it if you want to convince others to adopt your health care policy views. If you do, the only thing certain to die will be your credibility.

    Reprinted from Economics 21.

    Editor’s Note:
    Check out this hilarious video, parodying the “people will die” argument.


    Charles Blahous

    Charles Blahous is a senior research fellow for the Mercatus Center, a research fellow for the Hoover Institution, a public trustee for Social Security and Medicare, and a contributor to e21.

    This article was originally published on FEE.org. Read the original article.


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  • Why the Swiss Health Care Model Will Never Work in America

    Posted on by Azrael Comment

    Why the Swiss Health Care Model Will Never Work in America

    If you’re wondering what in Hell is actually going on with U.S. health-care policy, the short version is this: Policymakers in both parties are trying to replicate Swiss policies in a country that isn’t Swiss.

    The Affordable Care Act was, as thinkers as different as Paul Krugman and Avik Roy both observed, an attempt to Swiss up the U.S. health-insurance and health-care markets. (Obligatory reiteration: Those are not the same thing.) The Swiss system, Santésuisse, achieves one big progressive goal — universal health-insurance coverage — while offering much to please conservatives: a private market for health insurance and health care, consumer choice, and relatively low government spending on health care.

    Obamacare vs. Santésuisse

    Santésuisse is, in its broadest strokes, a lot like the model established by the so-called Affordable Care Act — a model that is kept in large part by the Republicans’ “repeal-and-replace” proposal, which neither repeals nor replaces the Affordable Care Act, though it does make some substantial changes to it.

    Like Obamacare, Santésuisse mandates that all citizens purchase insurance from private insurance companies; establishes by law a minimum package of acceptable benefits to satisfy that mandate; subsidizes health-insurance premiums for lower-income people, with a goal of keeping their insurance premiums to less than 10 percent of their incomes; mandates coverage of preexisting conditions and imposes “community rating,” which means that low-risk insurance buyers pay higher premiums to allow for high-risk buyers to pay lower premiums, though the Swiss do make some adjustments for age and sex (!); it imposes controls on procedure costs and reimbursement for providers.

    The Swiss model also does a few things that ACA does not: It requires that insurance companies offer their minimal policies on a nonprofit basis; it is structured around relatively high out-of-pocket expenses (high copays and deductibles) in order to encourage consumers to spend soberly; and, perhaps most important, it does this in the context of a health-insurance market that is entirely individual: There are no employer-based health-insurance plans in Switzerland. Everybody buys his own health insurance, the same way people buy everything from tacos to mobile-phone service. Swiss regulations also mandate that prices be made public, which helps consumer markets to function.

    The Cost of Health Care

    In terms of government spending on health care, Switzerland isn’t terribly different from the United States. Indeed, with the exception of high-spending Norway, per-capita government spending on health care is pretty consistent across a selection of advanced countries with very different health-care systems: Switzerland, the United States, the Netherlands, Sweden, Germany, and Denmark all have similar per-capita outlays. Interestingly, none of those countries has a national single-payer system: Sweden and Denmark have largely public systems, but they are run mostly by local governments rather than by the national government.

    Among countries with single-payer systems, there is a fair amount of variability in per-capita spending: Australia, for example, has lower government spending than does the United Kingdom.

    In terms of total spending — government and private spending together — countries with quite different systems lead the pack: The United States spends the most, followed by Switzerland, Norway, the Netherlands, Germany, Sweden, Ireland, Austria, Denmark, Belgium, and Canada. (These are OCED statistics from 2014.) The lack of a robust relationship between health-care systems, health-care expenses, and health-care outcomes suggests that the most powerful determinants of these are exogenous to policy, things like national demographic characteristics and economic conditions: Older people with lots of disposable income will tend to spend more on medical services, the Swedes and Okinawans have been healthy and long-lived under a number of different health-care systems, etc.

    Which is to say, one of the reasons the Swiss and the Americans spend relatively large sums on health care may be the structure of the insurance markets; it might simply be that they are rich countries in which consumers choose to consume more health care, which would explain why Sweden and Canada are in the club of relatively big spenders. And low medical spending is not necessarily a sign of health: They don’t spend very much on health care in Cameroon.

    Cultural Differences Matter

    As Avik Roy and others have pointed out, trying to build Swiss health-care architecture on American foundations is a project by no means guaranteed to succeed. Switzerland, for example, has enjoyed very strong compliance with its national health-insurance mandate. Part of that is cultural (the Swiss are rule-following people), and part of it is that Swiss government: If you fail to comply with the mandate, the Swiss government will garnishee your wages and charge you a penalty equivalent to the cost of the premiums plus up to 50 percent, and, if you persist, the government will sign you up for an insurance policy and allow the provider to sue you for back premiums covering the period during which you were uninsured.

    The American version is a little less robust, to say the least: The ACA mandate is “enforced” with a very small penalty that in most cases is nowhere near as expensive as signing up for insurance. That is, the Swiss have a system under which compliance makes economic sense, and we have a system under which non-compliance makes economic sense.

    The Affordable Care Act was designed in a dishonest way, front-loading the revenue and backing in the expenses in order to get a nice budget score from the Congressional Budget Office. The CBO rolled its institutional eyes at this, and its report suggested very strongly that its analysts did not believe a word of what they were writing, inasmuch as the most popular parts of ACA were likely to be enforced while the unpopular bits — like the “Cadillac tax” — would be put off or softened, resulting in a program that in reality cost much more and produced less revenue than it did in the model version that CBO scored.

    Sure enough, Hillary Rodham Clinton and Bernie Sanders both campaigned against the Cadillac tax (it hits their union foot soldiers first and hardest) while the House and Senate Republican plans would keep in, in theory, but put off collecting it until 2025 — at which point the smart money would be on its being put off again.

    If you want a Swiss health-care system, then you have to be willing to accept ruthlessly efficient Swiss enforcement and an unsentimental Swiss bottom-line view of the program. Neither party is interested in that: The new Republican health-care plan would formally do away with the individual mandate while keeping a form of the preexisting-coverage rule, which is, the protestations of the bill’s drafters notwithstanding, probably going to be unworkable.

    As long as you have a mandate that insurance companies cover preexisting conditions (i.e., that they place bets against events that already have happened) then you really have to have the mandate that people buy insurance, too; otherwise you create incentives to forgo buying insurance until you are actually sick, creating insurance markets composed mostly of sick people, a model that is not economically sustainable. If you want to cover preexisting conditions, then you have to have a mandate and enforce it strongly — Switzerland’s compliance rate is about 99.5 percent.

    For comparison, the United States mandates that drivers carry automotive insurance, and about one in five drivers fails to comply with that mandate. And while the enforcement is tougher, the subsidies are less generous. Two-thirds of the Swiss receive no health-insurance subsidies at all, and the subsidies that are received tend to be relatively small except for the very poor.

    But what is most critical may be that the Swiss model is free of one big problem that most Americans do not see as a problem at all: employer-based health-insurance programs. The Swiss market is an individual market, but most insured Americans get their insurance from their employers. Doing away with that would provide real benefits, but it would also bring a great deal of stress to risk-averse Americans who are, in large part, satisfied with their employer-based insurance plans. A Swiss system in the United States might — might — be a good idea, or at least better than the status quo ante of 2009.

    A Swiss system with no real enforcement, sloppy economic thinking, and no dynamic, consumer-driven insurance market? A Swiss system that replaces Swiss efficiency with American sentimentality? It didn’t work when it was called Obamacare. It won’t work when it’s called Trumpcare or Ryancare or McConnellcare, either.

    Reprinted from National Review. 


    Kevin D. Williamson

    Kevin D. Williamson is roving correspondent for National Review.

     

    This article was originally published on FEE.org. Read the original article.


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  • 15 Faceless Bureaucrats Will Decide what Health Care You’re Allowed to Have

    Posted on by Azrael 1 Comment

    15 Faceless Bureaucrats Will Decide what Health Care You’re Allowed to Have

    President Trump and congressional Republicans have a second chance to take a whack at the Obamacare piñata – and the beauty of it is that this time, Democrats may want to take a swing at it, too.

    “It” being the Independent Payment Advisory Board (IPAB), a.k.a the death panel that was much in the news during the debate over passage of the Affordable Care Act but which then quietly faded away. For the time being.

    And for good reason – especially as far as Democrats are concerned.

    The IPAB/death panel is to be composed of 15 bureaucrats appointed to six-year terms by the President. Future tense because the 15 bureaucrats haven’t been appointed yet. Because the IPAB hasn’t been “constituted” yet. Thankfully.

    It is, however, slated by statute to come online once Medicare spending reaches a certain threshold relative to the Consumer Price Index. Kind of like an alarm clock you hope never goes off. 

    Given the continued rise in health care costs, especially Medicare costs (the “Affordable” Care Act’s easy promises of reduced costs notwithstanding), this could happen as early as next year. As soon as the actuary for Medicare/Medicaid Services issues a report – already overdue for 2017 – that the “targets” have been exceeded, the IPAB automatically rises to life – in order to dispense death.

    And that is what has Democrats worried.

    Bureaucrats Directing Your Doctor

    Nominally, the IPAB was created to control Medicare spending – supposedly by cutting red tape and so on. In practice, and notwithstanding assurance to the contrary, it would inevitably become a de facto price control/care-rationing body, cutting costs by unilaterally reducing “authorized” payments to doctors and other providers and by the simple expedient of declaring various treatments “not cost-effective,” thereby denying treatment outright.

    To paraphrase Joe Stalin: No care, no problem.

    It is Orwellian that the same Democrats who endlessly accuse Republicans of seeking to “deny care” to people have done exactly that by legislative and bureaucratic fiat.

    By statute, the IPAB is required to cut costs in line with arbitrary “targets” – regardless of the effect on care. There is no provision for judicial or administrative review. Even the President is powerless to remove IPAB bureaucrats, once they are appointed. The IPAB is effectively both omnipotent and unaccountable. 

    It is, in a very real sense, the not-yet-popped kernel of a UK-style single payer system in which neither you nor your doctor decide what care is needed, nor what care you’ll get. Instead, faceless bureaucrats – people neither you nor your doctor will ever meet or even talk with – would determine the care you’ll be allowed to get.

    This, perhaps, is what former Speaker of the House Nancy Pelosi – an ardent backer of the Affordable Care Act – meant when she said, “You have to pass it in order to find out what’s in it.”

    Well, surprise. 

    The Chance to End the IPAB Before It Happens

    It’s no surprise that almost everyone who has found out – or will soon –  what the IPAB actually is either loathes it or is uneasy about defending it. Which presents a fantastic opportunity to do away with it. 

    Republicans have of course always objected in principle to the idea of empowering government bureaucrats to interpose themselves between patients and doctors and to the rationing of care – and to government death panels. 

    Democrats, on the other hand, are boxed into a corner. The whole point of Obamacare was to increase access to care – or so they claimed. But the ugly fact is that the IPAB will reduce access to care. Will ration care. Will deny people care. In particular, to older people – those dependent on Medicare. 

    This time, it won’t be hard-hearted insurance companies that pull the proverbial plug on grandma. It will be the much harder-hearted government. One can always change insurance policies. But there is no way to get away from government.

    If the IPAB is ever “constituted,” it will be compulsory. You will not be allowed to say “no, thanks” to it. You will not even be asked. The 15 unelected bureaucrats will simply decree.

    Democrats will have a tough time facing their constituents once they find out what the IPAB is all about.

    The good news – the huge news – is that it’s politically feasible to prevent the IPAB from ever being “constituted” if action is taken within the next couple of months. A provision was built into the arcana of the Affordable Care Act that makes it possible to hit the ”delete” button on the IPAB without broaching the broader issue of the ACA itself.

    In other words, it is not necessary to repeal and replace Obamacare in order to get rid of the IPAB death panel. It’s an a la carte opportunity to nix a dangerous provision of Obamacare.

    This must, however, be done by August 15, 2017 – just two months from now.

    Republicans not only oppose the IPAB as a matter of principle, they very much need a legislative victory, particularly on the health care issue.

    Democrats may not be particularly interested in helping them win one, of course. But they aren’t in a strong position to prevent one, either.

    It will be very politically difficult for them to defend rationing health care – and denial of care outright – to their constituents. They may not smile and shake hands for the cameras over this, but it’s not likely they’ll mount a vigorous opposition, either. Democratic Sen. Ron Wyden of Oregon has already joined with Republican John Cornyn of Texas on bipartisan legislation to repeal the IPBA – and there is a companion repeal measure in the House that has 124 co-sponsors. 

    Republicans could easily jump-start the effort to get repeal and replace Obamacare by getting rid of it one piece at a time.

    And with the help of Democrats this time.


    Eric Peters

    Eric Peters is an automotive journalist. Eric started out writing about cars for mainstream media outlets such as The Washington Times, Detroit News and Free Press, Investors Business Daily, The American Spectator, National Review, the Chicago Tribune and Wall Street Journal.

    This article was originally published on FEE.org. Read the original article.


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