Monday, October 05, 2009

Incoherent Health Care Debate

Paul Krugman writes in an NY Times op-ed today that Republicans campaign using adolescent spite, while Democrats are paragons of thoughtful and logical argument. While that may be a bit hyperbolic in describing his column, Krugman has become such an inveterate cheerleader for the Obama Administration that it’s hard to take him seriously any more.

If the “health care reform” debate is an example of Democrats being thoughtful and rational, then we need new definitions of those two words. They can’t even decide what to call the debate, because sometimes it is “health care reform” and other times it is “health insurance reform.” They cannot decide on the goal, which is sometimes universal insurance coverage and other sometimes cost reduction. The one goal that seems never to be sought is universal provision of health care.

Even if the cost reduction, which gets most of the discussion, is the goal, they go about that in a truly bizarre manner. Our health care delivery system is a complex and massive profit machine, and Democrats are focused on one small aspect of it; the red arrow in the diagram below. All of the blue arrows represent cash flow that is being omitted from the discussion completely.
health care chart
Sort of like having a car that is failing; motor running badly, leaking oil, transmission blowing smoke, body rusting out and u-joints clanking. Democrats are going to “fix that car” by putting new tires on it and hoping that the rest of the problems will magically repair themselves.

Notice, too, the cash flow at that red arrow. Democrats are going to pass measures that will require insurance companies to pay out huge amounts of additional payments for care, but insist that premiums collected to make those payments will decrease.

Insurers will be required to insure people with preexisting conditions. Excellent; a moral thing to do, but how much will that require in additional payments by insurance companies to medical providers? No one knows, and no estimate has even been made.

Insurance will not be allowed to cap benefits or drop insurance, and must lower copays and deductibles. Also excellent and moral things to do, but how much will they require in additional payments by insurance companies to medical providers? No one knows, and no estimate has even been made.

These additional costs will be offset, Democrats say, by the new insured who do not have insurance but are healthy and so will not result in payments by insurance companies. That is somewhat belied by the Democratic arguments of the numbers of people who are dying because they don’t have insurance; how healthy are they if they are dying? It’s also belied by the claims of hospital costs being high due to treating uninsured patients; that does not make the uninsured sound particularly healthy.

Add to those the decision that younger people will pay one-fifth the amount that older people do for premiums, due to their lower expectations of using the insurance, and that supposed offset of higher payouts against new insureds becomes even more suspect.

Democrats point out that insurance premiums have increased by x% in past years. The amount varies, but is always horrendous. Do they ever state the increase in the amounts that have been paid out by insurance companies; the amounts charged by hospitals, doctors and pharmacutical companies? True health care costs are not insurance premiums, they are the charges made by medical providers, and those are not being discussed at all.

The basic Democratic argument is that compelling higher payouts by insurance companies in unknown amounts will be offset by mandating an uncertain number of new insured people who will pay mostly lower premiums and will result in unknown amounts of mandated additional payouts by insurance companies, but it will all work out for lower costs because of a “public option” that will “keep insurance companies honest.” Meanwhile we will “suggest” that everybody else in the health care system do a better job of not being greedy.

That does not sound like a thoughtful and logical argument to me.

1 comment:

bruce said...

Gee, a lot of unknowns and no estimates and so on... In a way I hope this fails and then perhaps aof more thoughtful and better planned one can be crafted

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