A Curmudgeonly Comment About Healthcare Reform (Updated)

At this point there are bills working their way through Congress that are being sold as healthcare reform bills although I think they’re actually nothing of the sort. Many of the advocates for healthcare reform seem to be hoping that everything that’s taken out of the bills to get them enacted into law will be put back into them later under the nonsensical belief, confusing causes with effects, that since we’re the only major industrialized country without universal coverage and we also have the highest per capita healthcare costs in the world that we have the highest costs because we’re the only major industrialized country without universal coverage. I heard the economist Paul Krugman say something along these lines this very morning on ABC’s This Week program. I gather that he subscribes to the “well they just have to” school of political philosophy, i.e. once we’ve done something fiscally insane we’ll take the steps necessary to make things right again because we just have to.

It’s hard for me to find the heart to post about healthcare reform as these ghastly bills make their way through the Congress and I’m feeling in a particularly grouchy mood. Is it my imagination or do a large proportion of the blogospheric advocates for universal coverage want somebody else to pay for their healthcare? It reminds me of Elbert Hubbard’s response to the charge that he was a socialist: “When 51% of the people want to give rather than get, I’ll be a socialist.”

One of the problems with our healthcare system is that too many people have their healthcare paid for by somebody else already. See also this earlier post. Is there any way that seventy or eighty percent of the people can have their healthcare paid for by the other twenty or thirty percent, costs can keep rising at the rate they’ve been rising for the last couple of decades, and everybody can get all the healthcare they want? I don’t see it.

Update

I see that Megan McArdle is on a similar page to mine about the “we just have to” argument:

This is a terrible, horrible, no good, very bad argument in favor of more healthcare spending. It is true that as the immortal Herb Stein once said, “If something can’t go on forever, it will stop.” But, to belabor the obvious, there is more than one way to stop. This is sort of like saying, “I know I’m going eighty-five now, but it’s perfectly okay for me to press the accelerator here down to the floor, because after all, my current speed is already unsustainable.” One wants to know that one can stop with the brakes, rather than the trees decorating the sharp turn seven miles down the road.

People who aren’t worried about setting up a big new entitlement, because after all, we’re going to have to fix it eventually, are encouraged to read Paul Blustein’s excellent book on the Argentinian crisis, And the Money Kept Rolling In (And Out). Unsustainable fiscal policies can end when the government tightens its belt and raises taxes and cuts spending–or it can end when the whole thing melts down spectacularly.

As I see it the politics of this moves us towards meltdown rather than fiscal prudence.

30 comments… add one
  • Jimbino Link

    I left for overseas on account of Amerika’s Vietnam War and now I feed at the Medicare Healthcare trough. But if I were a young man in my twenties now, I’d leave again to take a contract job overseas that offered cash instead of health benefits.

    The savings amount to over ten thousand dollars per year that would otherwise go to subsidizing the old, the infirm and the youthful breeders. The expatriate Amerikan who gets sick can always come back and feed at the Obamacare trough.

  • Brett Link

    I heard the economic Paul Krugman say something along these lines this very morning on ABC’s This Week program. I gather that he subscribes to the “well they just have to” school of political philosophy, i.e. once we’ve done something fiscally insane we’ll take the steps necessary to make things right again because we just have to.

    It’s more that Paul Krugman is

    A) a Single-Payer advocate who sees the bill as a pathway to it. Presumably whatever form the current bill is in is only a temporary state, and we can then move towards what he really wants after the foot is in the door.

    B) someone who believes that once we get something like single-payer, we can then do cost control by putting pressure on doctor compensation and the like due to market power (aka fiat).

    C) someone who doesn’t mind going back to a higher, more progressive tax system. Read his book, Conscience of a Liberal – while he thinks the rates in the Eisenhower Period (where you had a 91% top bracket rate on people earning the equivalent of about $5 million or more) were too high, he thinks they should realistically be higher than they are now, to pay for a more extensive welfare state.

  • Brett, my point is that since he believes those things in the face of manifest evidence that the political realities are quite different he believes that the politics will change when they’re forced to. “We just have to”. I think he’s wrong.

  • Andy Link

    Dave,

    You could do a post on credit and the big banks. I received notice from Citibank today, where I’ve had a credit card for 17 years. I’ve been an excellent customer over the years and currently have a $50k limit on this card. The notice stated they are raising the interest rate to 30% (prime+26.75%). I have great credit and no history of late payments, etc. When I called to ask WTF, the customer service person told me that it wasn’t because of anything I had done and that the company did it because of the financial mess they’re in and the new policy would affect most accounts. Does Citibank think I’m stupid? I’ll keep the card to protect my credit rating, but they won’t get a penny of interest from me. If they are desperate enough to screw their best customers, then maybe they shouldn’t be in business. Too bad they are “too big to fail.”

  • Andy Link

    BTW, I agree with your post and I’m feeling defeated about the entire health-care fiasco. The political parties and their supporters are so ideologically wedded to certain solutions and to protecting vested interests that I’m skeptical there will be any real reform until we stand on the precipice.

  • I’d suggest writing to your state representative. Here’s a list of usury laws by state. Illinois is one of the more restrictive. Bottom line: Citibank couldn’t charge that rate of interest here. I wouldn’t be surprised if they started cancelling cards here.

    BTW, the credit card biz is a bit of a perverse one. The banks’ best customers aren’t the ones who pay on time—they’re the ones who don’t.

  • Andy Link

    Dave,

    Yes, I am planning on writing my representatives and I will also urge them to prevent any more federal money from going to Citibank.

    Unfortunately, usury laws do not apply because Citibank is based in South Dakota (which has no limit) and since Citi is a “national bank,” my local state law (Ohio in my case) does not apply.

    You’re right about perversity, but it’s not like I’ve consistently paid the balance every month. I just recently eliminated the balance after almost two years of carrying one, but maybe that’s the reason they raised the rate.

  • PD Shaw Link

    Andy, my discover card just amended (increased) its terms and conditions. Each change is preceded by the statement that the following change is necessitated by the impact of new federal laws and regulations and specifically not based upon creditor-specific information. My understanding is that the credit card companies have been limited in their ability to increase interest rates in response to increased risk of non-payment, so this is the response.

    Since I haven’t received similar changes for my USAA card, I assume that not all credit card companies operate under the same business model.

  • Is it my imagination or do a large proportion of the blogospheric advocates for universal coverage want somebody else to pay for their healthcare?

    Not sure about the blosphere, but that sentiment is a winner with a good majority of 18-25 year olds I work with everyday. The thing is, very little of that sentiment is generated by ideology. A lot of them simply believe they should be taken care of.

    It’s hard to relate sometimes.

  • When I was in college and graduate school what healthcare the student infirmary could provide was included as a benefit of paying tuition. As a fulltime student I was also covered under my mom’s healthcare.

    But after finishing school I bought my own healthcare insurance and I’ve either had my own or been covered by employers ever since. That’s nearly 40 years.

  • PD Shaw Link

    I suppose people hear what they want to hear about healthcare and the politicians aid them in this belief. Rev. Sensing recently posted a speech given by Robert Reich about what a politician would say if he didn’t want to get elected:

    * Treating more sick people, will cost young people more.
    * Treating the elderly towards the end of their life isn’t efficient.
    * Using government power to reduce health care costs will reduce innovation.
    * Medicare will bankrupt the nation unless something is done and will impoverish the youth.

    http://senseofevents.blogspot.com/2009/10/entitlement-mentality-knows-no.html#links

  • Andy Link

    I lot of liberals I know seem to think that universal coverage can be paid for through by taxing the “rich” and by eliminating the profits of the evil insurance industry. Many of them don’t understand that a majority of “private” insurance is employers paying for coverage and not insurance companies.

    PD Shaw,

    I do most of my banking with USAA and have heard nothing from them either. I doubt I will though – they avoided the problems Citi and the other big players fell into and are one of the more conservative institutions.

  • I am willing to pay more so that poor and working class people can afford health insurance. I accept that it is my responsibility.

    I think actually that quite a few of us do. I don’t need or want anyone else to pay my way. I am ready, willing, and able to pay my own way — a desire currently being obstructed by the health insurance industry.

    No doubt there are people who want a free lunch. Not all of us.

  • Andy Link

    Michael,

    Do you really want to pay your way when your health care costs (either from goverment, private insurance, or your employer) are rising at 2-3 times your income? That’s the unsustainability we’re talking about. Yes, you may be willing to pay the price today, but what about a decade from now when health care costs have doubled? This trend has little to do with the insurance industry since the problem is systemic. Adding more benefits to the broken system is only going to make the system more unsustainable and move the day of reckoning closer.

  • Michael, I agree with you that I’m willing to pay taxes for the healthcare of people who are seriously in want. I already do. I’m skeptical that 2/3’s of the American people are in want, which is the way that at least some of the bills making their way through Congress would see it.

    I guess I just read the wrong blogs. For every post or comment along the lines of yours I guess I see thirty from people who are looking for a hand-out. If that’s at all typical, I see no way such a system could work.

  • Andy:

    Sustainability is a different matter. I was referring solely to the question of whether we all had our hands out looking for a freebie.

    Obviously I don’t want to keep paying endlessly rising costs. Just as obviously I won’t have my fellow Americans going without medical care. If my only choice is between paying more or seeing Americans suffer for lack of care, I’ll pay more.

    As of now that seems to be the choice. I agree with Dave that we need profound, systemic changes in the way we deliver health care, not just changes in who is eligible for insurance and who pays.

    I want to establish health care as a human right in the US much as it is in the rest of the developed world. It would be swell to have broad reform at the same time but that’s clearly beyond our political capacity at this point. So, I’ll take the establishment of the right for now, and hope that we will then reform the system to provide that entitlement.

    Is this a stupid way to go forward? Of course it is. That’s how we do things in this country: stupidly. We have a population that has been taught to 1) demand services and 2) refuse to pay for them. And a political class paralyzed by those conflicting demands.

  • A “right” that depends to expropriating the labor and property of others is not a “right” at all, human or otherwise. It’s an entitlement, a redistributionist tax levied by force at the point of the governmental gun. Just to be clear.

    The idea that the only way we can fix the system is by actively making it worse is inherently flawed. When you find yourself in a hole, throwing more shovels at the problem is generally not the smartest thing to do.

  • Brett,

    If you think a single payer system will solve the problems, please explain the issue Britain is having.

    Thanks.

  • Obviously I don’t want to keep paying endlessly rising costs. Just as obviously I won’t have my fellow Americans going without medical care. If my only choice is between paying more or seeing Americans suffer for lack of care, I’ll pay more.

    No, you wont. Re-read what Andy has written. If you income is rising at say, 3% on average and health care at 6%, there will come a day when you cannot pay more. I don’t care what you want, the fact is that when the health care for others consumes 100% of your income, you are tapped out, done, finished, game over. In fact, you’ll likely be finished well before you get to that point.

    I want to establish health care as a human right in the US much as it is in the rest of the developed world.

    Can you explian how you will allocate resources on this? We have PD Shaw pointing out that treating the elderly in their last couple of years so that they can live a few extra months is not efficient. We can spend $500,000 to allow an 88 year old to live 4 more months. How exactly, if health care is a human right, would you address this problem. Keep in mind that a few weeks ago Dave posted a chart that showed that if we got rid of the health care costs for those 65 and older there would be no health care crisis.

    You keep saying you want to do this, but you have yet to provide even a rudimentary explanation of how we’d go about doing it.

    Is this a stupid way to go forward? Of course it is. That’s how we do things in this country: stupidly. We have a population that has been taught to 1) demand services and 2) refuse to pay for them. And a political class paralyzed by those conflicting demands.

    We have a country where the political class has repeatedly said over and over that we can indeed have free lunches, and dinnners, and a midnight snack too. We rely on a system that is inherently collectivist and conservative (note the small ‘c’)*. This kind of a system for allocating resources, when applied to a large enough population becomes problematic. You want to treat health care as a common good irrespective of the many observations that common goods are often over-used and ruined or destroyed.

    *Democracy is conservative because many times the results depends on the “median voter” who by definition is not someone on the fringe, generally speaking.

  • Steve:

    No, you wont. Re-read what Andy has written. If you income is rising at say, 3% on average and health care at 6%, there will come a day when you cannot pay more.

    There will come a point when I’m dead and won’t pay anything at all. Almost any trend carried sufficiently far forward reaches a point of absurdity. We were once threatened with being buried in the manure of the growing population of horses.

    So when I say “I’ll pay more” I mean that in the short term I’ll pay more. And I’m willing to do that.

    No one in this country ever solves problems in advance of a crisis, they wait until the fecal matter is fully enmeshed in the fan blades. When things get bad enough we’ll jack up taxes, cut benefits, raise eligibility ages, maybe even restructure the health care biz in some useful way.

    The one outcome I can guarantee won’t happen: your libertarian utopia. Because it’s not the 19th century, it’s the 21st, and so we will continue providing health care to people who can’t afford it.

  • So when I say “I’ll pay more” I mean that in the short term I’ll pay more. And I’m willing to do that.

    Ahhh…soooo we’ll do with the old people what we did with horses. How old are you again Michael, and don’t you have a pre-existing condition?

    All kidding aside, you appear to be banking on a technological miracle.

    No one in this country ever solves problems in advance of a crisis, they wait until the fecal matter is fully enmeshed in the fan blades. When things get bad enough we’ll jack up taxes, cut benefits, raise eligibility ages, maybe even restructure the health care biz in some useful way.

    No doubt, but here’s the problem…we’ve never looked at something of this magnitude before, in either nominal or real terms. The level you’d need to raise taxes and cutting benefits kind of makes this whole concept of reform a pathetic joke. Oh, an upping eligibility ages wont do squat since people aren’t going to get sick if they aren’t on Medicare. What you are really saying is, “Lets boot people off of Medicare pre-emptively.” Instead of dealing with the issue of sky rocketing entitlements you’ll have the savings of the elderly wiped out by illness. And yet I’m the cold-hearted bastard who doesn’t care about people. Congrats Micheal you just made me look like a saint.

    The one outcome I can guarantee won’t happen: your libertarian utopia. </blockquote.

    First, I've never claimed it would be a utopia. Second, you seem to keep disregarding what I've written in the past. Why? Is it that you are just fundamentally dishonest or forgetful?

    See, I realize that a purely market driven approach isn't going to work. People in this country like being provided for, told what to do…treated like pets really. Still reform is desperately needed. Problem is any actual reform will gore to many oxen, and it just isn't in the cards. Insurance companies, doctors, other people in the medical field, drug manufacturers,…basically everyone in the multi-trillion dollar industry right now could end up on the losing end of the stick.

    I agree with Dave, the current bills will further entrench our existing system making it even harder to reform in the future. The only hope is that our current system will get so utterly horrifingly bad that the only option is to have massive reform. But that strikes me as coming almost to killing the patient while trying to cure him.

    Because it’s not the 19th century, it’s the 21st, and so we will continue providing health care to people who can’t afford it.

    By upping the eligibility age? By cutting benefits? You can’t even get your own narrative straight. “We’ll take care of you, but…well not really. You see we are going to cut your benefits, make you use your own savings (well after the point were its too late for you to save anymore) and so forth…oh and hurry up and die already.” That micheal reynolds…what a guy, but hey in the short term, he’d pay more for other people’s health care.

  • Michael,

    Regarding my libertarian “utopia”, please post a citation of where I’ve argued in favor of said “utopia”. Then post the section where I argue it will really be a “utopia”. I’m betting you can’t and that you are bascially lying.

    And I think you need to work on your narrative if you want to paint yourself as such a stand up guy. Namely,

    When things get bad enough we’ll jack up taxes, cut benefits, raise eligibility ages, maybe even restructure the health care biz in some useful way.

    […]

    Because it’s not the 19th century, it’s the 21st, and so we will continue providing health care to people who can’t afford it.

    Or shorter michael for the TL;DR crowd, “I’ll pay for your health care, but then I’ll cut your benefits, raise eligibility requirements, and jack up your taxes.” With a friend like that….

  • AMac Link

    Like Michael, I’m willing to pay taxes and give charitably to support health care for others. I already do both, and I’m willing to do more.

    But not as part of the Reform package that is likely to be passed this year. That’s because Michael and I part company on the wisdom of creating a right of health care. If I have such a right, someone else has a corresponding obligation. Who? My doctor? Nurses? Medical device makers? Taxpayers? Unless they all agree–comments already prove that “they” don’t–this right is bestowed thanks to the coercive power of the State. Where do these Rights and Obligations end, if they ever do? Who gets to decide, and by what mechanism?

    Most readers will recognize that the history of State creation and enforcement of positive rights is not a happy one.

    The savings and cost calculations for the Reform bills are shams. The SFC-passed bill costing less than $900 billion? That’s a bad joke, based on the premises that most people won’t look at the math, and that the faithful are ready to accept any story that gets us closer to the promised land. The land of universal coverage and the single-payer system, where financial problems dissolve into the wisps of last night’s bad dream.

    Cadillac plan tax absurdity discussed by Robert Laszeweski here, scroll to other posts for other dissections.

    Under SFC, HELP, or HR3200, costs will explode. None of these plans have meaningful, workable cost-control mechanisms. None of them address the basic problem of the disconnect between the person who gets the service, and the person who pays for the service.

    The approach of solving social problems by ignoring both economics and human nature has a lousy track record. Why will Health Care Reform be any different?

  • I think that the analogy between the United States and the other developed nations is weak for any number of reasons. The most important one in my view is that we attach different legal weight to a right than most other developed nations do.

    Here you can sue the government for abridging your right of free speech. Do the proponents of healthcare as a right propose that people be able to sue the government if they don’t get the healthcare they want want they want it? I don’t believe so.

    If healthcare becomes a right in that sense, it will be ruinous, pure and simple.

  • You’re right–the majority of the public think, when they hear the “phrase health care reform,” that it means “free health care.”

    Let’s see, “free health care” in France requires a 20-percent tax on each person’s income. Some kind of free, eh?

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