Tag: Health Care Reform

David Goldhill, Part II

Four years ago, on the eve of Obamacare, David Goldhill wrote one of the best pieces about healthcare reform. If you didn’t read it then, you should read it now because it is still one of the best things written about healthcare.

(Second place would go to Steven Brill’s expose of hospital billing. Brill’s piece, which is now behind a firewall, has some issues (see here and here) but is a must-read if you can. I caught it before it went behind the wall.)

Given that Obamacare is now resulting in millions of cancelled policies and increased premiums, it’s worth asking what Goldhill thinks now. Reason did a half-hour interview with him. Again, it is very worth your time:

Goldhill hits a number of great points, pointing out how preventative care doesn’t really save money, how “first dollar” coverage will drive costs up, how the incentives in healthcare are all aligned toward more spending and less efficiency, how, in the words of P.J. O’Rourke, when buying and selling are controlled by legislation, the first things to be bought and sold are legislators. This is all basic economics. But something surprised me: Goldhill is a Democrat who believes in universal healthcare. He’s just honest enough and smart enough to see that the way we’re going about healthcare reform is about 180 degrees from how we should be. There are points on which I disagree with him (the Medicaid expansion in particular). But what he’s saying is correct: we could have a better healthcare system at a fraction of the cost by understanding how markets work instead of pushing us closer and close to monopsony.

Running from the Cuts

It’s really pathetic that Team Obama is trying so hard to pretend they didn’t sorta maybe cut Medicare spending, unlike the evil evil Paul Ryan who … also … hasn’t … yet. You can read Avik Roy’s response here. The critical point is this:

Of [Obama’s] $716 billion in [Medicare] cuts, $415 billion come in the form of “updates to fee-for-service payment rates,” a euphemism for reducing Medicare’s payments to doctors and hospitals. But what happens when you reduce payments to doctors? Doctors stop being willing to see Medicare patients. And if you can’t actually get a doctor’s appointment, what does it really matter what your insurance plan covers on paper?

We already see this happening in the Medicaid program, where sick and injured children can’t get appointments to deal with urgent medical conditions, because Medicaid so severely underpays doctors relative to private insurers. By the end of this decade, under Obamacare, Medicare reimbursement rates are set to fall below those of Medicaid.

(Aside: The Obama people keep referring to their cuts as “savings”, a euphemism I find hilarious. Ryan also refers to his cuts as “savings” but because he has an R after his name and doesn’t want to socialize the whole smash, these become “savage, brutal, turing-grandma-into-fertilizer cuts”. But they are cuts. Don’t be ashamed of the word.)

Look, the reality is that Medicare is growing out of control and its “trust fund” will be exhausted in just a few years. Medicare spending is going to have be cut. As I said last week, that’s not even up for debate any more. The debate is over how. Ryan, to his credit, is trying to come up with a more sustainable system. Maybe it won’t work; maybe it’s a piece of shit. But it tackles the problem head on and admits to what it is doing.

By contrast, the Obama Administration is engaged in a great deal of deception. They are saying there are “no cuts in benefits” which is true as far as it goes. But the benefits are cut through the back door by cutting reimbursement rates (already near unsustainable levels) and hoping this, somehow, produces more efficiency in the system. IPAB is thrown in for good measure but we’ve already seen that Congress will happily override the IPAB any time a pet issue like breast cancer comes up.

The irony is that these cuts, such as they are, are unlikely to happen anyway. In fact, the AMA’s support for Obamacare was conditional on them not happening. Our politicians know what Roy does: that cuts of this magnitude would cause doctors to leave the system. They are barely able to keep up with the present reimbursement rates.

(In arguing this on another site, one liberal said this would lead to a decrease in “unnecessary procedures” and this was a good thing. Keep in mind: (a) that is rationing, by definition; (b) if providers leave the system, they’ll take a bunch of necessary procedures with them; and (c) every rate cut for the last 30 years has come with Medicare telling doctors to make it up with volume.)

I’m getting a little sick of this bullshit on Medicare. The Obama Administration already got called out by the CBO for claiming the $716 billion in “savings” for both deficit reduction and shoring up of the Medicare trust. Now they’re trying to pretend that this cuts are really going to happen but won’t result in decreased healthcare because … well, just because, that’s why!

I appreciate that the healthcare market is diseased. Over time, most industries see costs fall and quality go up. We have not seen this happen with healthcare (although, to be fair, it’s a lot more complicated than that). But the solution is not to cut prices and hope that some magic happens to improve healthcare quality. If Republicans suggested improving education by slashing teacher salaries in half, they’d be laughed off of the Capitol.

Medicare needs to be cut. Obama has to run away from that because seniors vote like hell. But if he’s going to do the necessary thing, he could do it in a sustainable way. He hasn’t and he won’t. And all the easy-on-the-eyes cliche-spouting senior advisors in the world aren’t going to change that.