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ABC’s This Week Clarifies Supreme Court Issues on Health Care

8:08 am in Uncategorized by Scarecrow

I had high expectations that ABC’s This Week would handle last week’s Supreme Court arguments on the Affordable Care Act under its usual intellectual standards.  After all, with a panel that includes George Will, Matt Bai, Van Jones, ABC’s Terry Moran and the incomparable Ann Coulter, you’re bound to have your mental framework enlightened after they’re done.

Here’s what I learned today:

The free rider problem — people getting health care after refusing to purchase insurance — is wholly a creation of Congress being so foolish as to allow illegal aliens to get free medical care for “the sniffles.” Thank you, Ann Coulter for that insight.

With Ann having reduced the national health care problem to a mere runny nose, it then made perfect sense for George Will to declare that Constitutional founder James Madison would be profoundly offended at the egregious violation of individual rights that would occur if Congress were allowed to impose a mandate for everyone to have to purchase Kleenex and stop borrowing everyone else’s hanky.

Matt Bai said arguing about this would only hurt President Obama, because the ACA hasn’t helped anyone, . . . uh, except the millions it already has helped under provisions that have nothing to do with the mandate, which apparently is the only provision in the ACA.

Bai was sailing on Will’s wind that it was wrong for Obama supporters to challenge the prestige of the Supreme Court, the most venerable institution in America.  When Terry Moran suggested that the Court’s prestige might be harmed by the blatantly partisan divide revealed (again) by the Justice’s questions, Will insisted there is no evidence that the decision in Bush v. Gore did any harm to respect for the Supreme Court. I assume that’s because everyone still loves the winner of that one and they’re thrilled by Citizen’s United.

So, the matter is settled.  The Court can, should and likely will strike down the law because the Constitution is there solely to promote individual liberty over the crazy notion the Congress can promote the general welfare through compassion for the undeserving.  Only the conservatives understand this, and the public will applaud their strictly partisan majority decision, because they’re tired of giving free tissues to those irresponsible brown people.

Coulter finished by assuring us that her candidate, Mitt Romney, “knows how to fix this,” because as we all know, RomneyCare is different.  I believe she means that he will rename every state Massachusetts and let Massachusetts handle it, but perhaps Ms. Coulter was not being serious.

If you are unable to get ABC and wish to have a comparable intellectual discussion, rent a copy of Animal House.

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GOP Debate Candidates Can’t Answer Fla. Woman Who Asks for Health Insurance

8:31 pm in Politics, Republican party by Scarecrow

Don't ask Mitt how to solve Florida's uninsured problems (photo: Gage Skidmore/flickr)

During Thursday night’s GOP debate, a woman from Florida told the candidates she’d lost her job and with it her health insurance.  What would each of the candidates do to get her covered or otherwise provide the health care she needed?

You had to listen carefully, but the effective answer they all gave her was, “this is your problem, not ours.”

Let’s first recall that this woman is not alone.  Millions of Americans have lost employer-provided health insurance.  That was happening before the recession but has become much worse during the recession.  That may be because they lost their jobs and can’t afford COBRA coverage, and the government’s stimulus subsidies for COBRA have expired, or because, even if they still have jobs, their employer stopped providing coverage because of its rising costs.  Or they may have lost effective coverage, because even if they have a job, their employer-provided coverage is so weak or so costly with deductibles, exclusions, and co-pays that they’ve effectively lost affordable, meaningful coverage. In the meantime, those on the individual “markets,” which are dominated by highly concentrated oligopolies, are confronted with insurance premiums they simply cannot afford.

As FDL’s Jon Walker has noted, America now has the highest percentage of uninsured in decades, and that’s not going to change unless/until the Affordable Care Act kicks in by subsidizing private insurance and providing millions with access to expanded Medicaid. So unlike many of the debate topics, this woman’s question was extremely relevant to literally tens of millions of Americans.

The answers she/we heard cannot have been reassuring.  Mitt Romeny said he’d adopt policies that would lead to her getting a new job.  Okay, maybe that happens in a couple years or so, or maybe not.  But even when, pre-recession, we had much lower unemployment, we still had tens of millions of people without insurance, and those who thought they had insurance were often ambushed by insurance company rescissions, exclusions, denials and then refusals to re-insure those with pre-existing conditions.  Millions of people faced these problem before the ACA and before the recession.

Moreover, if these Republicans were successful in repealing the ACA and block-granting Medicaid, as the GOP-Ryan Plan they all eventually suppported provides, then the woman would not be able to get either subsidized private insurance on a health care exchange or government-provided Medicaid.  In Florida in particular, the Governor and state legislature have been particularly vicious in cutting funding for hospitals and providers that treat Medicaid patients, and the GOP-stifled Congress has refused to consider expanded Medicaid beyond the original stimulus, so it would be even less likely this woman could get coverage there.

What’s left?  Read the rest of this entry →

Obama Admin Gives Up Pretense of Competitive Market for ACA Health Insurance Exchanges

7:44 am in Uncategorized by Scarecrow

HHS and Sen. Ron Wyden (D-OR) believe in fairies and insurance markets

The notion that the health insurance exchanges required by the Affordable Care Act would reduce health care costs using “competition” between concentrated health insurers was always one or more unbridgeable chasms away from a plausible theory.

But the myths of competitive markets are so deeply ingrained in our political discourse it was inevitable that a nominal Democratic President not constrained by conceptual coherence and a corrupt Congress would try to sell us the conceit as the only politically feasible model for health care reform.  The economists — not to mention international experience — told us it was gibberish, but nobody cared.

Now, however, the Obama Administration has given up even the pretense of a competitive model for the state-administered private insurance exchanges.  From Saturday’s New York Times (i.e, a Friday night news dump):

In a major surprise on the politically charged new health care law, the Obama administration said Friday that it would not define a single uniform set of “essential health benefits” that must be provided by insurers for tens of millions of Americans. Instead, it will allow each state to specify the benefits within broad categories.

The first thing you note is that this move is one more step towards Mitt Romney, who argues that RomneyCare might be fine for Massachusetts, but each state should be free to decide for itself how best to provide health coverage — or not.  The White House political geniuses who have managed to position their guy as only barely beating or even with the most embarrassing and offensive array of GOP clowns in memory apparently think moving towards Mitt’s incoherent position will leave one less reason to vote against Mr. Obama; others might conclude it’s one less reason to vote for him.

But let’s return to the unproven theory that “competition” between private health insurers will produce better quality and/or lower prices for insurance and hence more affordable quality health care.  Even economists like Paul Krugman who supported the overall ACA package because, among other reasons, it promised through other means to cover tens of millions of the currently uninsured, warned us that private health insurance does not lend itself to the competitive model, but no one — including Democrats — paid attention to that point.

Still the theory of competitive markets depends on some very basic assumptions.  One of the most important is that for an exchange to make sense, the product must be a more or less uniform commodity/service.  Suppliers are then forced to provide that uniform product, buyers can compare on price or perceived fidelity to the uniform standards, and the invisible hand of competition will force markets to clear at the marginal cost.

But all but the most efficient suppliers hate the model and marginal cost pricing, so the first thing they do to undermine the ability of competition to push prices down to marginal cost is to claim their product is different, new, improved, and thus deserves a higher price — or conversely, claim their inferior/dissimilar product is the same as their competitor’s and thus deserves at least the same price.  Consumers have little power to determine whether this is true, and cannot afford to find out when they’re sick; the inherent information disadvantage is then exploited by suppliers.  So much for competition driving down prices, even if insurance markets were not highly concentrated, which they are.

What Mr. Obama’s HHS has done in the hope of beating Mitt Romney is to facilitate the market’s ability to be less competitive and thus to raise prices.

To be sure, each state could define it’s own uniform product, and HHS explains this as a virtue:

Under this approach, each state would designate an existing health insurance plan as a benchmark. The benefits provided by that plan would be deemed essential, and all insurers would have to provide benefits of the same or greater value. Plans could modify coverage within a benefit category so long as they did not reduce the value of coverage.

Whom are they kidding?  If Rick Perry’s Texas can define the state standards anyway they want, and decide whether private insurers who contribute to their campaigns qualify, and there’s only general federal guidance on categories of coverage,  we wind up with inferior or even phony health insurance in Texas compared to Massachusetts — exactly what we have today.  Does anyone believe that humans who happen to live in Texas, because they just moved there from Kentucky and West Virginia, have fundamentally different health needs from Californians or those in Nevada who just moved there from Michigan?  What was the point of a national reform with a national mandate?

And you have to wonder what this does to the fed’s arguments before the Supreme Court about the necessity of a national mandate premised on the commerce clause.  I thought it had something to do with the need for nationally applicable standards to address state and regional differences that adversely affected the national economy.  But perhaps with this Court, theoretical coherence is not important.

I might be more charitable towards giving states more leeway in defining minimum benefits if we didn’t have states like Mississippi and Louisiana, or governors like Scott Walker, Kasich, Rick Scott, et al,  and if the stingiest/most conservative states didn’t have such dismal records on withholding essential health care in the State Children’s Health Insurance Program and Medicaid.  Are we going to leave these decisions to the horror governors of Florida, Wisconsin and Ohio?  A principled, courageous President would be anxious to end the tolerance for such inhumane neglect.

It’s not as though America has no favorable experience in defining nationally uniform standards for medical coverage and then insisting that private insurance alternatives meet or exceed the minimum federal requirements.  It’s called Medicare, which, unlike the pretended “competitive” private insurance market, actually does lower health care costs.   Unfortunately, we keep getting “useful idiots” like Oregon’s Sen. Ron Wyden who can’t remember this.

ObamaCare vs. RyanCare: Scarecrow Gets Confused With “Serious” Strawmen

5:02 pm in Economy by Scarecrow

Ever since Jon Walker and I pointed out the real and superficial similarities between Paul Ryan’s proposed RyanCare for future seniors and the Affordable Care Act (ACA) structure for non-seniors, numerous pundits have been trying to deny either the similarities or the differences.

For example, Ryan’s supporters are in denial that RyanCare requires a mandate, even though he admitted — just as the logic suggested — that he’d require future seniors to purchase a private health insurance plan from a government-overseen exchange. And ObamaCare supporters are in denial that their ACA insurance exchanges rely on pretty much the same faith in the ability of a mostly free private insurance market to sufficiently control health care costs and hence insurance premiums.

We’ve tried to categorize and distinguish Medicare, RomneyCare, ObamaCare and RyanCare — see, e.g., here, here, here, and here — some have tried to grapple with the distinctions, and others have tried to fuzz it all up to serve whatever agenda they had.

The latest effort to make something out of the similarities is from the Washington Post’s Steve Pearlstein, who provokes Paul Krugman into describing Pearlstein as a Very Serious Person, — i.e., someone who gets it wrong.

Krugman and DeLong (responding to Mankiw) address the question, “are non-seniors better off under the ACA/ObamaCare’s subsidized exchanges than they would be without the ACA?” If those are the only choices, their answer is “yes,” though I don’t think they’ve confronted the numerous “affordability” arguments Marcy Wheeler made when ACA was being debated. But let’s assume they’re correct. That still leaves the large question about how well the exchanges can control costs unanswered.

The Administration, Democrats and ACA supporters insisted the exchanges would work to control health care costs because competition within the insurance market would control prices while maintaining quality care and service. But I understand Paul Ryan to be making the same argument for RyanCare: his private insurance market exchanges will make health care affordable, he claims, because future seniors exercising choice when shopping in the insurance exchange markets will benefit from private market competition. Both rely on a mostly free market theory.

Either this claim and its faith in markets are plausible or they’re not. My concern is that when Paul Krugman (or DeLong citing him) talks about the merits of Medicare versus RyanCare, there’s a reminder that ever since Ken Arrow, economists have known the competitive market argument doesn’t work in this industry.

Even ignoring the already huge concentration in the insurance industry, and increasingly so in the hospital and other provider sectors, none of the elements required to make an industry amendable to effective competition and efficient market pricing exist. Therefore, RyanCare can’t achieve the cost savings Ryan claims. But government-sponsored systems like Medicare, because they can reduce administrative costs, and because they can exercise single-buyer market power that individuals in the exchanges will not have, can do better — and have done better, here and in Europe.

If that’s true, then it’s not enough for economists and other ACA supporters to argue the ACA should be better than not having insurance at all; they need to explain why Arrow’s analysis and real-world experience do not apply to the market-based claims for the ACA exchanges, just as they do to RyanCare. And if this is a fatal flaw for RyanCare, isn’t it also a fatal flaw for the exchange structure of ACA?