Dueling Columnists on Healthcare Reform

This morning Paul Krugman and David Brooks both deal with healthcare reform. Dr. Krugman supports the current bill:

The result would be a huge increase in the availability and affordability of health insurance, with more than 30 million Americans gaining coverage, and premiums for lower-income and lower-middle-income Americans falling dramatically. That’s an immense change from where we were just a few years ago: remember, not long ago the Bush administration and its allies in Congress successfully blocked even a modest expansion of health care for children.

while David Brooks tentatively opposes it:

So what’s my verdict? I have to confess, I flip-flop week to week and day to day. It’s a guess. Does this put us on a path toward the real reform, or does it head us down a valley in which real reform will be less likely?

If I were a senator forced to vote today, I’d vote no. If you pass a health care bill without systemic incentives reform, you set up a political vortex in which the few good parts of the bill will get stripped out and the expensive and wasteful parts will be entrenched.

Yup. As it stands the bill consists of an expansion of healthcare spending paid for with a combination of accounting flummery and wishful thinking.

I strongly recommend the Brooks column which fairly, in my opinion, outlines the case for and against the bill’s passage.

For

  1. It expands the number of American covered by healthcare insurance.
  2. It doesn’t expand the deficit wildly.
  3. It includes a number of trial programs that might bear fruit some day.
  4. We need healthcare reform and legislators will be reluctant to turn their attention to it again any time soon.

Against

  1. It doesn’t reform healthcare fundamentally.
  2. It will cause healthcare spending to increase faster.
  3. It will lay the groundwork for a political environment in which the expansion of coverage is more likely to be reversed than sustained or even further expanded.
  4. Any change this big will have unintended consequences.
  5. It will slow innovation.
  6. Its very passage will have reduced the incentives to address cost control.

The second and sixth are worth expanding on. Brooks writes:

The second reason to oppose this bill is that, according to the chief actuary for Medicare, it will cause national health care spending to increase faster. Health care spending is already zooming past 17 percent of G.D.P. to 22 percent and beyond. If these pressures mount even faster, health care will squeeze out everything else, especially on the state level. We’ll shovel more money into insurance companies and you can kiss goodbye programs like expanded preschool that would have a bigger social impact.

The emphasis is mine and it’s a point I’ve been making for some time. The situation is even worse than Brooks paints it. Without serious cost control immediately not just eventually the expansion of healthcare spending will result in one of three things (or some combination occurring: either we’ll need to cut other programs, we’ll need to raise taxes—continuously, or we’ll need to borrow ever more money. Remember, programs aren’t cut in Washington according to their merits, they’re cut according to their ability to garner support. That means that if healthcare reform passes in the form it has now we will almost certainly be worse off (corporately) than if it failed.

Here’s his sixth point:

Sixth, if this passes, we will never get back to cost control. The basic political deal was, we get to have dessert (expanding coverage) but we have to eat our spinach (cost control), too. If we eat dessert now, we’ll never come back to the spinach.

and, as I pointed out the other day, that’s the single task most in need of doing.

11 comments… add one
  • I don’t know what kind of health care reform will come out of this session, but I strongly suspect it won’t be much. There is, however a silver lining behind this very dark cloud. I am reminded of the Civil Rights Act of 1957. Don’t be embarrassed if you’ve never heard of it, there really isn’t a hell of a lot to remember about it; a mere pittance, really – a scrap of leftovers tossed out to “American Negros” (in the parlance of the age) in order to appease them. But it made the passing of the Civil Rights Act of 1964 – the one we remember – all-the-more easier seven years later.

    We’ll live to fight another day.

    http://www.tomdegan.blogspot.com

    Tom Degan

  • steve Link

    If this does not pass, when will cost control be taken up? By whom? Remember that there is no one on the right, at least that I can think of, who is especially interested in health care unless it is to oppose reform when democrats are pushing the issue. Who is that right wing leader for health care reform?

    I would say that 3 for counters 6 against. You would disagree. I would counter that we do not really know how to cut costs in our health system. Not in a politically acceptable manner. We have ideas that might work, but we do not know for sure. We docs are already plotting how to overcome every proposal, including the high deductible, catastrophic insurance plan favored by many on the right. I would predict that if this plan fails, there will be no follow up attempts on controlling costs. Some more blue states may take a stab at it.

    Slow innovation? The old McArdle argument? This has always seemed like an expansion of the throw lots of money at a system and you will get innovation argument, kind of like government solutions. Throwing lots of money at our pharma and device companies mostly gets me too drugs and devices. That and $100,000 drugs that extend life by one month.

    1 against. Is it possible to fundamentally reform health care in our current political environment? I think we both agree Wyden-Benett would have been a better bill. At one point in the discussion when it got some serious attention, the Republican sponsors bailed. Neither political party will give cover to the other side. Either party can obstruct the other unless they achieve well over 60 in the Senate.

    4 against- The intended consequence of no bill is that some uninsured will die early. I can pass on some recent sad stories if you want.

    Steve

  • PD Shaw Link

    Since the final bill, with all of the amendments lobbyist have gotten out of Reid, is going to be released on Saturday and voted on in the middle of the night Monday, on the premise that if we don’t do it now, we will never do it, I decline on procedural and transparency grounds.

  • Drew Link

    steve –

    “We docs are already plotting how to overcome….., including the high deductible, catastrophic insurance plan…”

    Steve – Could you explain how are you going to do that?

  • Drew Link

    steve –

    “Current incentives reward doing more rather than less. The market is incentivizing me to do lots of expensive procedures.”

    steve, I was reading your comment from a few posts ago and came across that statement. I’m not trying to be inflammatory, but in combination with your comments about gaming the insurance proposals (above) you leave the impression that you are not practicing proper medicine, but doing unwarranted procedures and trying to figure out how to fleece the insureres for your own personal benefit.

    Could you clarify exactly what you mean by such comments?

  • steve Link

    Sure. We are going to try to shift care to the higher priced options. There are a number of ways to do this. I think the favored way, though there is disagreement, is to bundle services, making sure that it goes up into insurance range. It is pretty easy to pre-determine what kind of insurance people have. Prices will be set to the kind of catastrophic insurance they have. For the deductible, we will start to demand cash payments ahead of time, like we do with plastic surgery payments. We will also drastically alter payments required for emergency care. As it currently stands, I make the same amount of money for a C-section on a healthy young woman at 0900 as I do at 0300 on a 400 pound whale. Elective procedures at night will also cost more.

    Insurance companies pay poorly for pain management. We will push that a lot more, especially for kids. Marketing in general will become a bit more aggressive, and more, hmmmm, creative.

    There are more unscrupulous ideas I have heard bantered about also. Will all of these work? I am not sure, but it would be interesting. The large majority of patients I see have zero medical sophistication. Most are short on time and under stress. They seem like potentially easy marks. We may have trouble when dealing with the hyper-informed blog/internet types, but my sense is that is not a big population.

    Unleashing the free market on the consumer side, also frees it up on the provider side.

    Steve

  • steve Link

    Drew-I am speaking in the abstract here. My group, of which I am president, makes very poor business decisions as a rule. We act like doctors. We have never filed a report against anyone’s credit rating. We routinely turn down procedures that would make us more money but seem ethically questionable. (We chose the cheapest pain procedures for example.) We have turned down offers from business advisers on how to make sure we are not “leaving money on the table.” The in phrase. When I say we docs up above, it is a generic we.

    I have worked places where what I describe is common. I do occasionally cover at a place where I think the docs do this kind of stuff. I know physician entrepreneurs who do these things. They are legal. Most of them do not harm the patient. They do make a lot of money. The system already incentivizes this behavior to some extent. The insurers stop the worst of it. Now, suppose we go to the pay out of pocket and catastrophic plan. Who then stops that kind of behavior? (Yes, I am a fan of the behavioral econ guys.)

    Steve

  • If this does not pass, when will cost control be taken up? By whom? Remember that there is no one on the right, at least that I can think of, who is especially interested in health care unless it is to oppose reform when democrats are pushing the issue. Who is that right wing leader for health care reform?

    George W. Bush. He put forward a plan for tax credits, IIRC, for health care that would have leveled the playing field in terms of employer vs. self-insured. Ezra Klein liked it, got beaten up in the comments of the post where he liked it, and did a 180. Jason Furman (a now Obama advisor) liked it. It wasn’t great, but it was a first step. Of course, by the time it was proposed Bush was so wildly unpopular the knee jerk reaction was it was terribad so therefore it can’t be passed.

    Further, your position is most bizzare…the solution is then to pass legislation that will accelerate the rate of increase in health care costs? You are speeding towards a cliffs edge so your solution is to speed up? I would think that at least maintaining the current speed would be preferable, if not outright slowing down or even stopping. Oh wait, you are going to leap the gorge.

    I would say that 3 for counters 6 against.

    “I would hope that 3 for counters 6 against.”

    There fixed it for ya.

    I would say that 3 for counters 6 against. You would disagree. I would counter that we do not really know how to cut costs in our health system.

    Sure we do. End employer provided coverage, or at least tax the benefits like income. That would be one place to start. Insure only insurable events. Eye glasses, pregnancy, cosmetic, etc. procedures shouldn’t count.

    We docs are already plotting how to overcome every proposal, including the high deductible, catastrophic insurance plan favored by many on the right.

    Ahhh the joys of collusion. Which is why we need more competition not less, and clearly we can’t look to the doctors for that. We have proof right here.

  • Drew Link

    steve –

    That was a mixed bag. In the first post I had a WTF response, and in the second, a sigh of relief.

    “We are going to try to shift care to the higher priced options.”

    “Insurance companies pay poorly for pain management. We will push that a lot more, especially for kids.”

    WTF ?? This makes you sound like the slimiest piece of shirt on the planet. You are going to shift medical care decisions based on price? You are going to “push pain management – especially for kids” – based not on medicine, but reimbursement considerations? My father and grandfather are rolling in their graves.

    I’ve read too much of your commentary to believe this. This has to be – as in the old Cool Hand Luke movie – “failure to communicate.” What are you really saying, because I can’t take this at face value?

    Then we had: (making me feel better.)

    “I am speaking in the abstract here……..We routinely turn down procedures that would make us more money but seem ethically questionable.”

    Now that’s more like it.

    Let me cut to the chase. It seems as if you are saying that your practice is ethical, but you are imputing evil motives to other doctors as a way to support your case for the health care bill. (And I’ll presume that Darth Vader-like description of pushing pain medicine for kids was hyperbole.) But in doing so you make your profession out to be largely comprised of scumbags. That certainly is at odds with my experience.

    In my world (private equity) we have a concept of fiduciary duty, which we take very seriously. Here is a very real world and current issue: By contract we could call money from our investors and make overpriced or excessively risky investments in an effort to use up the money in our fund before we no longer have the right to call it. By doing so we could make increased “carried interest” compensation But we wouldn’t dream of it. Its unethical.

    Some in our industry are doing it, as their fund lives are running out and the business has been slow for a year. But very few.

    Unless doctors have become the new “greedy Wall Street bankers,” largely a bunch of money grubbing pigs, I’m having a hard time reconciling your comments.

    As I said, my father and grandfather would be rolling in their graves if your assertions are true.

  • steve Link

    “Ahhh the joys of collusion. Which is why we need more competition not less, and clearly we can’t look to the doctors for that. We have proof right here.”

    Most docs practice and bill ethically, however there are many who are concentrating on making as much money as possible. You concentrate on the consumer side. I am telling you what I think will happen on the provider side with your proposals. It does not have to be collusion, it just has to be taking advantage of what is legal. Big chunks of the medical system are not amenable to competition IMHO.

    Bush? Bush is a long term leader on the right for health care reform? I voted for him twice and I do not remember him making it a major issue. I do not remember him spending major political effort on the issue. Was he calling Lott and Delay up to the office and pushing the issue for months on end? Was it something he championed as governor? (i dont know that so asking.) I also thought the plan was a first step, but I thought it was just political cover for a growing issue, not serious.

    “Further, your position is most bizzare”

    Yeah, it kind of is, but then our situation is bizarre. In the ideal world if this bill (not really sure what will be in it TBH) is defeated, we would see a follow up attempt to seriously control costs. I have laid out my logic as to why I think this will not happen. In the meantime, I also believe that more and more people will lose their insurance. More people will needlessly die. I see no good solution.

    Steve

  • steve Link

    Drew- The MGMA numbers for my practice put us at 70% on productivity and 40% for income. We are not good at working the system. When I finished the military I had several job offers. One of the things that attracted me here was their OB billing. There were essentially two ways to bill for OB back then. One way got you decent money. The other way got you a fortune. The senior guys in this group told me their care was not worth that much money, so they used the lesser charge system. I am repeating here what I have heard elsewhere. Some of this I have heard from the younger members of my group. I suspect that when a few of us leave, they will try some of this. I hope not.

    Most of this is not illegal as I noted. Some of it is just a matter of emphasis. The more expensive, better paying option may be a tad better. However, there are already people who manage based upon reimbursements. How many? Beats me, but I know some and they are the best known, wealthiest docs in my community. Did you read that Gawande piece? Those kind of guys are scattered around. They are often the entrepreneurs who run things as most docs do not want to deal with money issues. My buddy and I who run our group make it a point to find out what is going on elsewhere. We have to. We have to explain to people in our group why me make less than some people do elsewhere. Why we do not want to work with other people.

    I do not think people should choose careers like medicine with making money as their primary objective. Maybe a little idealistic, but that is my belief. People should not feel entitled to make a huge fortune. They should expect to make a good living commensurate with the requirements, work involved and their results. I think that one of the major consequences of the malpractice issue in the US, is that many docs now seek their primary reward from money rather than from their work. My wife, who no longer practices (son has some issues) has long advocated for this as a cause of the commercialization of medicine and has mostly convinced me.

    I do not wish to leave you with the idea that all docs are crooks, but you should be aware that there is much more emphasis on money than in the past.

    Steve

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