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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?

Ezra Klein Says Government Health Programs Work, So Why Not Expand Medicare?

8:17 am in Uncategorized by Scarecrow

I’m a little confused by Erza Klein’s mostly helpful post showing, once again, the US paying much higher public and private costs than OECD countries for health care. Congress and the Administration should be reminded of that every day.

Klein is surely correct in noting that other developed nations rely much more on government-sponsored plans than purely private systems. As a result, they achieve not only lower total health care costs, as a percentage of GDP, but more universal coverage (and equal or better care) than does the US. The lesson to draw is fairly obvious: we need to move towards Medicare for all or some variation of a government-sponsored single-buyer model. But curiously, it’s not clear that’s what Ezra means.

I think Klein inadvertently muddles the point when he compares Paul Ryan’s plan to replace Medicare with its increasingly inadequate voucher system to buy private insurance with the Democrat’s plan — in the Affordable Care Act — to preserve Medicare in its present form but make it more cost effective. The comparison is valid, and I share the condemnation of what Ryan is proposing. But what Klein has done is to switch in mid-post from talking about universal coverage/care systems to talking only about what we do for the elderly.

What I’d like to have seen is Klein dealing with the alternative proposals for how to provide affordable, quality care for everyone else. Because here I think he’s lost his own point.
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How Will Mitt Romney Explain Why Paul Ryan’s “ObamaCare for Seniors” Is Okay?

2:06 pm in Uncategorized by Scarecrow

Now that FDL’s Jon Walker has done the deliciously dirty work of exposing Paul Ryan’s anti-Medicare proposal to force America’s seniors to accept the same flawed mandate and voucher system as ObamaCare, I can’t wait to hear Mitt Romney explain why he thinks this is a terrific idea.

As Jon so subtly hints, a pig is a pig, even if it has Mitt Romney’s lipstick on it. For the affected groups, the basic outline of RomneyCare is the same as the basic outline of ObamaCare is the same as the basic outline of StupidRyanCare. Let’s review the features:

1. Force everyone in the affected group to purchase private health insurance. We’ll call that a “mandate.”

2. Require the private insurers to accept all eligible customers but do little to prevent them from discouraging/screening out sick people via poor service and marketing. Call this “the business plan.”

3. Deprive the customers of any lower-cost public alternatives, like Medicare for all, a public option, etc. Call that “choice” or “keeping the insurers honest.”

4. Allow insurance companies to become so concentrated that in 80-90 percent of the country, only one or two mega insurers control the local market and set prices, while providing minimal oversight to ensure quality of service. Allow the antitrust, anti-price fixing regulators to wither. Call that “free market competition.”

5. Require the affected group to select between this one or two insurers on an “exchange” website that allows them to find the websites for the few eligible private insurance plans. We call this, “using teh Google.”

6. Having stripped consumers of the ability to bargain collectively (via Medicare, a union, an employer) for better, cheaper, more honest private insurance, send individual consumers, including the sick and the elderly, out on their own to “bargain” with the insurance giants. Call this, “leveling the playing field.”

7. Minimize or neglect obvious efforts to rein in the costs of private health care providers, including hospitals, specialist cartels, and big PhRMA, who are allowed to merge and concentrate. Let them be shielded by too-long patents and non-compete agreements and exempt from market or regulatory cost controls or antitrust pressure. Then allow them to fix the prices that private insurers must cover and pass on to their captive customers, plus the insurers’ higher but hard-to-audit administrative costs and profits. Do “homes of the rich and famous” shows on the execs. Call this, “the invisible growing hand in your wallet.”

8. Collect payroll taxes and other revenues via government mandate to help subsidize premiums — we’ll call this “premium assistance” — but provide no mechanism to ensure that the assistance keeps up with rising care costs to make the premiums affordable. If you’re Ryan, make sure it doesn’t keep up (See Dean Baker and CBO on how this screws Seniors). Call that “fixing the budget by shifting the costs to vulnerable people on fixed incomes.”

9. Wait to see how many people die from this stupid system. Call that “fiscal responsibility” or just “evil.” (Note similarity to Wi. Gov. Walker et ilk in shifting budget costs to workers as a means to strip workers’ economic leverage.)
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