Posts tagged ‘Great Society’

The Looming Failure of Obamacare, Part 2: Incentives

My new column, second in a series, is up at Forbes.  It is the second of a three-part series, and looks at incentives issues with Obamacare.  A few excerpts:

In the late 1960s, as part of the Great Society program, the US government constructed huge government housing complexes, with the goal of guaranteeing that everyone, no matter how poor, would have access to housing.  By the turn of the century, most of these complexes had succumbed to the wrecking ball  -- the era of large public housing complexes was over.

Why?  Well, there were a lot of reasons the program failed, but a big one was faulty incentives.  By getting free housing, recipients had no "skin in the game," no ownership, no financial participation in their housing.  As a result, many treated their taxpayer-funded abodes with contempt.  Why not?  They weren't paying for it.  And if the property was in good shape at the end of the lease, they didn't get any extra money.

I often compare Obamacare to the great failed public housing projects by warning folks that government health care is going to be much worse.    With the housing projects, we taxpayers paid large sums of money but only a few actually had to live in the horrible government apartments -- at least most of us were able to keep our own homes.  With Obamacare, it is going to cost us even more money, and we are all going to have to move, figuratively, into the projects.

If we are all forced to have the same, low deductible, first-dollar health plans, what incentive is one going to have to stay out of the health care system, even for something minor?

I also talk about the incentive for drug development

Look around the world today -- not one country with a government health care system pays drug reimbursement rates at a level that provides any incentive for new drug development.  In fact, almost all of the world's health care R&D is paid for by Americans.  What happens when politicians, trying to close an exploding health care spending hole in the Federal budget, do exactly what every other country in the world has done and use their power to drive drug prices down to marginal cost?

In fact, to be confident that there will continue to be health care innovation in the future at all, one has to believe that the US Government will act completely differenlty in running its government health care system than does every other government in the world, despite the fact it will have the incentives to behave identically to all of them.  Is this a bet you feel good about?

CMS Report on the Health Care Bill

Megan McArdle has a great post on the CMS post. Bascially, there is no magic bullet to cut medical costs.  Benefits are going to get cut and costs are going to go up.

I really don't need the report to tell me this.   Here is the common sense answer -- before this administration embarked on the health care fiasco, we all pretty mich knew that Medicaire and Medicaid bankrupt and was going to blow a huge hole (McArdle's term) in the budget.  So, since this bill at its heart is really just an expansion of Medicaire/Medicaid to cover more people, how can we expect it to do anything but blow an even bigger hole in the budget.

By the way, years ago I wrote:

...health care is not like failed Great Society housing programs.  In those housing programs, only the poor got crappy government housing "” the rest of us kept what we had.  Universal health care is different, because it will effectively be like forcing everyone to move into the housing projects.

Now that we know what is in the actual bills, I stand by this prediction.  Here is the poll question I would still like to see:

Would you support a system of government-run universal health care that guaranteed health care access for all Americans, but would result in you personally getting inferior care than you get today in terms of longer wait times, more limited doctor choices, and with a higher probabilities of the government denying you certain procedures or medicines you have access to today.

My Health Care Poll Question

I was going back through my archives and I found a health care poll question I suggested about a year ago that I would still love to see asked.  I believe it accurately reflects the reality that most middle class Americans face with various universal health care plans:

Would you support a system of
government-run universal health care that guaranteed health care
access for all Americans, but would result in you personally getting
inferior care than you get today in terms of longer wait times, more
limited doctor choices, and with a higher probabilities of the
government denying you certain procedures or medicines you have
access to today.

I have said a number of times that health care is not like failed Great Society housing programs.  In those housing programs, only the poor got crappy government housing -- the rest of us kept what we had.  Universal health care is different, because it will effectively be like forcing everyone to move into the housing projects.

Anti-Universal Coverage

Michael Canon has proposed for principles of an anti-universal health care coverage club:

  1. Health policy should focus on making health care of ever-increasing quality available to an ever-increasing number of people.
  2. To
    achieve "universal coverage" would require either having the government
    provide health insurance to everyone or forcing everyone to buy it.
      Government provision is undesirable, because government does a poor job of improving quality or efficiency.  Forcing
    people to get insurance would lead to a worse health-care system for
    everyone, because it would necessitate so much more government
    intervention.
  3. In a free country, people should have the right to refuse health insurance.
  4. If governments must subsidize those who cannot afford medical care,
    they should be free to experiment with different types of subsidies
    (cash, vouchers, insurance, public clinics & hospitals,
    uncompensated care payments, etc.) and tax exemptions, rather than be
    forced by a policy of "universal coverage" to subsidize people via
    "insurance."

You know I'm in;  after all, I am the one that has said that "universal coverage is as if, in the Great Society public housing programs, everyone in the country, not just the poor, had been required to tear down their current houses and enter monolithic public housing structures."

However, I would have added a fifth principle:  Health care decision-making and tradeoffs amongst cost, quality, and
content of care should belong to the individual, except when an
individual delegates this decision in some way by his own choice (say
by joining a very structured HMO program).

I wrote about the joys of actually shopping for health care under a high-deductible policy here and here.  Michael Canon also has a new post on shopping and HSA's here.

Anti-Universal Coverage

Michael Canon has proposed for principles of an anti-universal health care coverage club:

  1. Health policy should focus on making health care of ever-increasing quality available to an ever-increasing number of people.
  2. To
    achieve "universal coverage" would require either having the government
    provide health insurance to everyone or forcing everyone to buy it.
      Government provision is undesirable, because government does a poor job of improving quality or efficiency.  Forcing
    people to get insurance would lead to a worse health-care system for
    everyone, because it would necessitate so much more government
    intervention.
  3. In a free country, people should have the right to refuse health insurance.
  4. If governments must subsidize those who cannot afford medical care,
    they should be free to experiment with different types of subsidies
    (cash, vouchers, insurance, public clinics & hospitals,
    uncompensated care payments, etc.) and tax exemptions, rather than be
    forced by a policy of "universal coverage" to subsidize people via
    "insurance."

You know I'm in;  after all, I am the one that has said that "universal coverage is as if, in the Great Society public housing programs, everyone in the country, not just the poor, had been required to tear down their current houses and enter monolithic public housing structures."

However, I would have added a fifth principle:  Health care decision-making and tradeoffs amongst cost, quality, and
content of care should belong to the individual, except when an
individual delegates this decision in some way by his own choice (say
by joining a very structured HMO program).

I wrote about the joys of actually shopping for health care under a high-deductible policy here and here.  Michael Canon also has a new post on shopping and HSA's here.

The "Crisis" Looks a Lot Like State-Run Medicine

The USAToday published a front-page story today arguing that a health care "crisis" looks a lot like Houston, Texas.  I would argue, from their descriptions, that a health care "crisis" looks exactly like state-run medicine.

Ijeoma Onye awoke one day last month short of
breath, her head pounding. Her daughter, Ebere Hawkins, drove her 45
minutes from Katy, Texas, to Ben Taub General Hospital, where people
without health insurance pay little or nothing for treatment.

Onye, 62, waited four hours to be seen. Still,
going to the emergency room was faster than getting an appointment. For
that, "you have to wait months," Hawkins says....

The huge number of uninsured residents here means that health officials
must make tough decisions every day about who gets treated and when.
"Does this mean rationing? You bet it does," says Kenneth Mattox, chief
of staff at Ben Taub, the Houston area's pre-eminent trauma care
facility.

The article goes on and on like this.  The problem is delays and queuing in facilities that provide free care.   And the difference between this and state-run health care is what exactly?  When a product or service is free, people will tend to over-consume the supply, with rationing taking place via queuing rather than price.  This is how every state-run supply system works, from food in the Soviet Union to health care in Canada.  And by the way, exactly how upset should I be about people receiving an extraordinarily valuable and costly service for free but having to wait a while to get it?

This article is actually a great rebuttal of the inherent message in
the health care debate that "uninsured" means "denied health care."  In
fact, it is clear that even in the spot USAToday picked out as the worst in
the country, the uninsured are in fact getting health care.  It is tedious with long waits, but there are no examples in the long article of people going without.  Yes some people consume less than they might if it was free and convenient, but that is just the rationing at work.  Anyone who says that rationing goes away in a state-run system is bald-faced lying to you.

Remember that national health care does not eliminate queuing and waits for the poor -- it just institutionalizes these waits for the rest of us.   Universal Health Care is equivalent to a Great Society housing program where everyone, rich and poor, have to give up their house and move into a crappy public apartment block.

Postscript: By the way, I am sympathetic to certain hospital administrators who have a "crisis" on their hands because the mass of uninsured show up in their emergency rooms.  That, however, is a problem manageable far short of government-run health care.  They want to blame diversions of critical patients away from over-crowded emergency rooms on the "uninsured" but it is really a function of their own faulty triage.

Update: Michael Moore will soon argue that its better in Cuba.  Hah! That is funny.  If people really want to believe this, then it is another reason is is way past time to open up our relations to Cuba, so people can see for themselves what a lying sack of poop this filmmaker is.

What is "Extreme"?

Per the Washington Post:

But Democrats recited a litany of Brown's controversial statements, including
several from a 2000 speech titled "Fifty Ways to Lose Your Freedom." She said
senior citizens "blithely cannibalize their grandchildren because they have a
right to get as much 'free' stuff as the political system will permit them to
extract." Elsewhere, Brown has said: "Where government moves in, community
retreats, civil society disintegrates. . . . When government advances . . .
freedom is imperiled, civilization itself [is] jeopardized."

Sen. Joseph R. Biden Jr. (D-Del.) told reporters that Brown is "one of
the most extreme nominees that has ever come before the United States Senate in
the 32 years I've been a senator."

OK, so I am an extremist.  Take in particular the last quote from Brown - I bet I could find about 20 similar quotes in the Federalist Papers or from other contributors to the US Constitution.  That quote should be over the front door of the ACLU.  This is the second time I have read statements about her that were intended to scare me off but in fact endeared me to her. The first example was here.

Update:  People for the American Way have other JRB comments that are supposed to scare me, but don't.  Here is an example of what scares PFTAW:

In the New Deal/Great Society era, a rule that was the polar opposite of the
classical era of American law reigned...Protection of property was a major
casualty of the Revolution of 1937"¦Rights were reordered and property acquired a
second class status...It thus became government's job not to protect property
but, rather, to regulate and redistribute it. And, the epic proportions of the
disaster which has befallen millions of people during the ensuing decades has
not altered our fervent commitment to statism.

I am starting to wish she was running for office, so I could vote for her.  Reason has similar thoughts here.

Update #2:  Reason has a profile of her here.  Many more great quotes from her, including this gem:

In a dissent in San Remo Hotel v. City and County of San Francisco
(2002), which upheld the city's sweeping property restrictions, Justice Brown
expanded on that theme. "Theft is still theft even when the government approves
of the thievery," she declared. "The right to express one's individuality and
essential human dignity through the free use of property is just as important as
the right to do so through speech, the press, or the free exercise of religion."

Go Janice, go.