My reactions to the three policy proposals in Adam Garfinkle’s article at The American Interest vary from indignant disagreement to grudging agreement. His first proposal is about health care reform:
To take just one example, healthcare insurance premiums could be made affordable again for the vast majority of Americans if the three categories of the most expensive generic cases were carved away from the main insurance pool: the very ill elderly; trauma cases; and treatment for chronic and progressive diseases like diabetes. These cases could be handled by a secondary insurance market, just as secondary insurance markets operate in many niches of a modern economy. Even if some combination of state and Federal government were to heavily subsidize insurance premiums for these classes of cases, it would still be simpler and cheaper than the Affordable Care Act.
and exhibits a remarkable lack of understanding of insurance, health care, economics, or human nature. The total amount of insurable risk outside of his exclusions is extremely small—perhaps as little as 5% of health care spending. The ACA was a “Hail Mary” designed to preserve insurance companies and discourage the legislation being tarred as “socialized medicine”, a goal at which it did not succeed. I believe the question the Obama Administration was trying to answer was how do you insure more people, get the legislation through the Congress and past the various interest groups, and have the result be something you can reasonably claim is health care reform? The ACA was an answer to that question about as good as could have been expected. I happen to think it was the wrong question but that’s another issue.
Mr. Garfinkle’s proposal amounts to socializing 95% of spending. That would remove it from the hands of the insurance companies. When you add subsidies for the poor to the mix in the amount left there would be no health care insurance industry. How that results in lower prices eludes me. It would unquestionably be resisted to the last breath by the health care insurance industry and what the reaction of physicians would be is not clear.
His second proposal is for Social Security:
Second, let’s take a look at the Social Security trust fund. We’ve known for many years that our demography is leading to an insolvency train wreck—more healthy retirees and fewer workers to support them. Every expert who follows this problem agrees that at current rates of tax inflow and disbursements we have at most seven years before the entire system implodes. It’s hard to think of a clearer example of the irresponsibility of Congress—or perhaps we should be honest about calling it cowardice—that this can has been kicked so far down the road.
Of course something has been done in recent years to slow the train engines, but what has been done has been both band aid-like and prejudicial, again to people who work with their bodies for a living: The retirement age for both men and women has been kicked out several years. This is class prejudicial because the data clearly show that people who do physical labor for a living have shorter lives than those who do not. So extending the retirement age amounts to a reverse Robin Hood: taking from the poor to give to the rich.
None of this is necessary, because if Congress had any courage it would do the simple and honest thing: Simultaneously remove the cap from taxing income and means-test benefits.
My preference would be to abolish the payroll tax and the trust fund and to pay Social Security benefits from general revenues but I’d settle for his plan. Heck, I’d settle for raising FICA max to the lowest wage earned by the top 1% of income earners (presently about $389K), indexed. At that we could probably afford to lower both the employer and employee sides of FICA in a revenue neutral way, a consummation devoutly to be wished.
I think his final proposal, putting the budget on auto-pilot, is insanity:
The Westminster method is a bridge too far for us, but legislating an automatic continuing resolution isn’t. So why doesn’t any Senator or Congressman even suggest it? You tell me.
That illustrates my fundamental disagreement with Mr. Garfinkle. Representative government shouldn’t be easy. It should be hard. I’d like to make it even harder by mandating single-issue requirements for all laws. That would eliminate government shutdowns, too.
His proposal would do the opposite of making government more responsible. It would result in removing all responsibility from the Congress.
You are correct on item one, and this illustrates a recurrent problem with health care policy and economics. Most people dont understand it very well, but that doesn’t stop them as “experts” from making recommendations that make no sense to those of us who have studied and tried to understand the problems. We might not agree on the solutions, but there are a lot of basics, like the demographics, that people should know if they want to make recommendations.
Steve
OT- For those still following the VA and its Choice program, nice piece on why it is so expensive (and still is unable to make appointments for over 5% of vets). The companies running the program are getting paid $300 for each patient just for making a referral to a private doc. In essence, they have an $18/hour employee making an appointment with a private doc somewhere and coordinating that with the patient. For this they get $300.
https://psmag.com/social-justice/privatizing-the-v-a-is-not-cheap
“This is what happens when people try and privatize the VA,” Senator Jon Tester of Montana, the ranking Democrat on the Senate veterans committee, said in a statement responding to these findings.”
No. This is what happens when you let contractors deal with the federal government – other people’s money. That article was pure sophistry.
Steve, that sound about right, though the appointment setter is probably working for $9/hr. In a sorta related note, my wife is on medicare, so once a year Blue Cross sends out a RN NP to check her BP, get a list of her meds (and a discreet pill count), height and weight then bills medicare $300. Of course all of this information could have been obtained over the phone with her LMD for say $50 or for free by a view of her claims.
“there would be no health care insurance industry. How that results in lower prices eludes me.”
Eliminating insurance from health care would lower costs, since a typical 80% loss-ratio of insurance raises the cost of a procedure some 25%, by simple math. All that’s needed to rationalize health care is to require posting of all prices by CPT-code and require that providers offer MFN status to all comers (thus getting rid of “chargemaster” nonsense).
The problems of demographic change need to be addressed on much more than a financial dimension. Putting aside that eight thousand boomers retire every day and most have no retirement savings left, their increasing medical and supervisory needs as they age make it nearly impossible to provide quality services if they’re spread out across an entire continent. We should be giving very serious consideration to a mass public construction program for retiree housing and care, along with the assistance necessary for them to move into it from wherever they are now.
“We should be giving very serious consideration to a mass public construction program for retiree housing and care, along with the assistance necessary for them to move into it from wherever they are now.”
Maybe these institutions could offer re-education classes in addition to Bingo. And I’m sure Democrats would be willing to drive re-educated seniors to the polls.….. Just kidding.
Given the absolutely horrid nature of most elder care facilities, one does wonder if a cookie cutter (that is, with uniform and minimum standards) approach might not have some merits. I’ve been going to memory care and nursing home facilities since I was 17 and they have been horrid forever.
The privatizing in the VA is not so much about contracting for managing referrals but using private providers outside the VA. $300 for a referral may be outrageous, but it’s peanuts compared to what providers are charging for actual services. And the VA must use private docs in many cases because there is no other choice.
Part of the problem is the VA has been unable to expand to meet the increasing demand for veteran services. There are still, last time I checked, there is still a severe crisis in hiring at the VA with critical shortages of providers, especially in mental health. The federal government’s bureaucratic hiring processes combined with a shortage of providers generally exacerbates the problem.
Yes, the VA could conceivably run its own referral program, but again, the big issue is the ability of the VA and many other government agencies to adequately build and staff that function in a timely manner.
Just to share my own experience with federal employment, it was well over a year from the time I first applied for the job until I actually started to work. And after working for the feds, I realized how many people who would otherwise work for the federal government give up because the OPM hiring process is complete shit. Most people cannot afford to hang out for a year while the OPM HR department drags its feet. While I was in the federal civil service I saw this happen many times – a candidate would get selected (a process that, by itself, took two months), only to find out they’d taken a job elsewhere. Several times, we’d go through all the qualified candidates to find out they weren’t actually available anymore which meant we needed to readvertise the position – which was another several-month delay.
In my own recent case with the VA, I need to get a colonoscopy (fun!). The closest VA facility that does that is 1.5 hours drive – a bit risky when you’ve had laxatives pouring through your system for the past 24 hours. So the VA used one of these contract referral services to find me a private practice provider in my local area for the procedure. I have no idea what all that will cost.
Overall I’m really happy with the VA, but I’ve been fortunate to be in areas with good staffing and newer facilities. In a lot of places, the VA is terrible for a variety of reasons. All that could be fixed, but the federal government processes are slow, cumbersome and expensive. Change is difficult and slow. The political pressure on the VA to improve service has driven them to outsource.
Bottom line, if you want better government services and fewer dubious government contracts, then fix the damn bureaucracy.
“We should be giving very serious consideration to a mass public construction program for retiree housing and care, along with the assistance necessary for them to move into it from wherever they are now.”
See my post above. The VA is building a new hospital in Denver. It’s still not finished and is years behind schedule. It was originally slated to cost $325 million but now sits at about $1.8 billion and still needs another 200-300 billion to finish everything. And it’s understaffed.
Unless you fix federal government processes, don’t expect much from a mass public construction project. And buildings are useless without staff to actually provide the needed services.
That should be “needs another 200-300 million” not billion.
“The privatizing in the VA is not so much about contracting for managing referrals but using private providers outside the VA. $300 for a referral may be outrageous, but it’s peanuts compared to what providers are charging for actual services. And the VA must use private docs in many cases because there is no other choice.”
They spent about $8 billion on the Choice program in 2016 (17?) and $2 billion of that went towards just the referrals. Yup, that is a small part of the VA, but they were paying more for those referrals than they were paying many docs for consults. In theory the private sector can do things cheaper and more efficiently. In reality it just doesn’t happen very often.
What I cant tell is how much of the physician shortage is created by our government’s refusal to adequately staff the VA facilities. Refuse to pay to staff them, then claim that you need more private docs, who cost more. There will always be geographical issues requiring private supplementation.
As an aside there was a nice study that just came out comparing VA hospitals to other hospitals in their areas and VA hospitals came out very well in comparisons.
Steve
Bureaucracies come pre-broken, i.e. they are inherently broken, cf. Pournelle’s Iron Law of Bureaucracy.
Bureaucracies by their very nature do not scale linearly. They scale at n log n. That means that the larger they are, the slower and more expensive they are and not by just a little. The population of the U. S. is 330 million. The population of Sweden is 10 million, Norway 5 million, Denmark 6 million and Finland 5.5 million. That means that a bureaucracy in the U. S. won’t just be 30 times bigger than the equivalent function in Sweden it will be 50 or 100 times more expensive with the corresponding inefficiency. That can’t be solved by more centralization.
In theory distributing the functions is more efficient but Illinois’s population is greater than Sweden’s plus all of the other challenges I mentioned in the post—lack of social cohesion, everybody looking out for #1, etc. Cook County’s population is about the same as Norway’s.
I find comparisons with Scandinavia tiresome. We are so unlike. And Sweden is actually moving away from its social model, which is precisely what you’d expect as it become less homogeneous or socially cohesive.
“Bureaucracies come pre-broken, i.e. they are inherently broken, cf. Pournelle’s Iron Law of Bureaucracy.”
I agree with that and your comment but maintain that improvements can be made. Most of our federal government is still mired in industrial-era processes and it is ripe for reform. Unfortunately, it’s not something that is on the agenda for either party or prospective candidate (so far).
“What I cant tell is how much of the physician shortage is created by our government’s refusal to adequately staff the VA facilities.”
This gets back to the issues the hiring process I mentioned before. The current hiring process is sclerotic and that is a huge problem for a large organization that is trying to compete for talent but especially for those areas where there are shortages.
I’ve pointed out that before and posted on it. I think that the federal government is fighting the last war, in particular its last great success—World War II. Too many institutions are behaving as though it were 80 years ago.