Thursday, June 25, 2009

Government Health Plans Always Ration Care

President Obama objects when people use the word "rationing" in regards to government-run health care. But rationing is inevitable if we simply expand government control without fixing the way health care is reimbursed so that doctors and patients become sensitive to issues of price and quality.

What will be new about government-run health care is the instrument of regulatory control. There will be an omnipotent federal health board. The idea of an omnipotent board that makes unpopular decisions on access and price isn't a new construct. It's a European import. In countries such as France and Germany, layers of bureaucracy like health boards have been specifically engineered to delay the adoption of new medical products and services, thus lowering spending.

In France:

■ Assessment of medical products is done by the Committee for the Evaluation of Medicines.

■ Reimbursement rates are set by the National Union of Sickness Insurance Funds, a group that also negotiates pay to doctors.

In Germany:

■ The Federal Joint Committee regulates reimbursement and restrictions on prescribing, while the Institute for Quality and Efficiency in Healthcare does formal cost-effectiveness analysis.

■ The Social Insurance Organization, technically a part of the Federal Joint Committee, is in charge of setting prices through a defined formula that monitors doctors' prescribing behavior and sets their practice budgets.

■ In the past 12 months, the 15 medical products and services that cleared this process spent an average 35 months under review (the shortest review was 19 months, the longest 51).

In short, other countries where government plays a large role in health care aren't shy about rationing. Even Mr. Obama's budget director has acknowledged that rationing reduces costs.

~Scott Gottlieb, "Government Health Plans Always Ration Care," in today's Wall Street Journal via NCPA

As Steve Chapman wrote, "The administration pretends we can get generous government-sponsored coverage for everyone without higher taxes, higher insurance premiums or rationing of health care."

MP: In reality, with government-sponsered health coverage we will probably face a trifecta: higher taxes, higher premiums AND rationing.

14 Comments:

At 6/25/2009 10:35 AM, Blogger threecollie said...

As much as we may hate this concept and at least some of us do, what can we actually do to stop it? Serious question here...

 
At 6/25/2009 11:01 AM, Blogger MovingEast said...

How does private healthcare not ration care also?

It all comes down to public health outcomes. There are good and bad private systems and good and bad single payer systems across the world.

But what is the cost?
What are the outcomes (not datamined results, but things like average life expectancy in the country)...

 
At 6/25/2009 11:23 AM, Anonymous Anonymous said...

J'accuse!

I also am skeptical of socialized medicine, in the American context.

However, we have been subsidizing rural electricity since 1936, and thus creating a permanent welfare class in our outback. See below, just one sliver our permanent rural subsidy program, since 1936.

"Welcome to USDA Rural Development's Electric Programs

Providing reliable, affordable electricity is essential to the economic well-being and quality of life for all of the nation's rural residents. The Electric Programs provide leadership and capital to upgrade, expand, maintain, and replace America's vast rural electric infrastructure. Under the authority of the Rural Electrification Act of 1936, the Electric Programs make direct loans and loan guarantees to electric utilities to serve customers in rural areas.

The loans and loan guarantees finance the construction of electric distribution, transmission, and generation facilities, including system improvements and replacement required to furnish and improve electric service in rural areas, as well as demand side management, energy conservation programs, and on-grid and off-grid renewable energy systems. Loans are made to corporations, states, territories and subdivisions and agencies such as municipalities, people's utility districts, and cooperative, nonprofit, limited-dividend, or mutual associations that provide retail electric service needs to rural areas or supply the power needs of distribution borrowers in rural areas.

Through the Electric Programs, the Federal government is the majority noteholder for approximately 700 electric systems borrowers in 46 states.

The Electric Programs also provide financial assistance to rural communities with extremely high energy costs to acquire, construct, extend, upgrade, and otherwise improve energy generation, transmission, or distribution facilities."

I think the "right wing" broadly defined, is marginalizing itself by taking loud exception to market distortions and subsides--but only when the urban poor appear to benefit.

Never do I hear the R-Party bash to ongoing subsidization of rural areas, which has helped create and sustain a whole population that can only be sustained by ongoing subsidies for roads, electricity, phones, even rural medical clinics. Check out where a lot of Homeland Security spending went. It become a boondoggle for rural districts.

The Cato Institute has produced some excellent reports wondering about the size of our military when we face almost no substantive military threats.

I won't even mention the home mortgage income tax deduction, which is nanny-state social-engineering at its worst.

I don't know if the right-wing can ever change--and thus it will be rather easily pegged as a front for plutocrats, not a movement genuinely interested in real market reforms, all through the economy, and no cows sacred.

I have to say, on this score, I am disappointed with Carpe Diem, although I admire the energy and openness of Dr. Perry (who I have never met).

But, IMHO, if Perry wants to become a leading light for the right-wing, he should bring to light the full range of federal, or even state subsidies and market distortions, scared cows be damned.

J'accuse! (Did I spell that right?)

 
At 6/25/2009 11:25 AM, Blogger Colin said...

Yes, everyone rations care. But at least in a system not run by the government individuals can decide on those trade-offs instead of bureaucrats.

There will never be a system where everyone gets all the care they want when they want it. The best we can do is aim for a system that is most efficient with lowest cost. Our experiences with government-run care such as Medicare, TennCare and the MA plan implemented by Romney do not suggest that government can achieve such efficiencies.

 
At 6/25/2009 1:18 PM, Anonymous Anonymous said...

Rationing For Thee, But Not For Me

President Obama struggled to explain today whether his health care reform proposals would force normal Americans to make sacrifices that wealthier, more powerful people — like the president himself — wouldn’t face.

The probing questions came from two skeptical neurologists during ABC News’ special on health care reform, “Questions for the President: Prescription for America,” anchored from the White House by Diane Sawyer and Charles Gibson.

Dr. Orrin Devinsky, a neurologist and researcher at the New York University Langone Medical Center, said that elites often propose health care solutions that limit options for the general public, secure in the knowledge that if they or their loves ones get sick, they will be able to afford the best care available, even if it’s not provided by insurance.

Devinsky asked the president pointedly if he would be willing to promise that he wouldn’t seek such extraordinary help for his wife or daughters if they became sick and the public plan he’s proposing limited the tests or treatment they can get.

The president refused to make such a pledge, though he allowed that if “it’s my family member, if it’s my wife, if it’s my children, if it’s my grandmother, I always want them to get the very best care.["]

ABC

 
At 6/25/2009 1:21 PM, Blogger DaveinHackensack said...

Dr. Perry,

"In reality, with government-sponsered health coverage we will probably face a trifecta: higher taxes, higher premiums AND rationing."

This is probably true, but I wonder what solution you would propose to control the increase in health care costs. You have done a good job of showing that there are market solutions to make basic primary care more affordable, but what about solutions to control the costs of intensive medicine?

Anonymous,

"Never do I hear the R-Party bash to ongoing subsidization of rural areas, which has helped create and sustain a whole population that can only be sustained by ongoing subsidies for roads, electricity, phones, even rural medical clinics."

It's worth remembering that the rural electrification project was started under FDR. It's also not necessarily true that the rural population wouldn't have been sustainable without it. More likely, rural communities would have organically evolved their own power infrastructure of windmills, hydroelectric, coal -- whatever suited the local areas.

Colin,

"Our experiences with government-run care such as Medicare, TennCare and the MA plan implemented by Romney do not suggest that government can achieve such efficiencies."

I'm wary of Obama's plan, but if he gets his public insurance option passed, there would be a big difference between his plan and current or previous plans: his plan would give the government enormous leverage to set prices on procedures. Today, if the government is too stingy with Medicare reimbursements, for example, doctors can decide not to take Medicare patients. But if there's a public option that dominates the under-65 insurance market, and the government requires, say, surgeons to treat both groups of patients or neither, that would be an offer most doctors wouldn't be able to refuse.

Sure, at the high end, a few doctors would eschew the government insurance and run concierge practices for ultra-wealthy patients, but since the supply of ultra-wealthy patients is relatively small, this wouldn't be an option for most doctors. At the low end, a few primary care physicians might work on a PATOS model and take no insurance, but it's hard to imagine any surgeons or other specialists doing this, as few patients could afford expensive procedures out of pocket.

 
At 6/25/2009 1:41 PM, Blogger OBloodyHell said...

> MP: In reality, with government-sponsered health coverage we will probably face a trifecta: higher taxes, higher premiums AND rationing.

"Probably"?

What kind of odds can I have on this trifecta? I like betting on a sure thing.

 
At 6/25/2009 1:43 PM, Blogger OBloodyHell said...

> There are good and bad private systems and good and bad single payer systems across the world.

True, but most of the private care systems are good and most of the public care systems are bad.

And the difference is, with private systems, you can go find another provider. Or buy supplemental if you don't think your employer-selected (idiotic in itself) health care plan is sufficient.

Public systems chase out the competition. Always.

 
At 6/25/2009 4:55 PM, Anonymous Anonymous said...

DaveinHackensack:
Maybe, but likely just a much smaller rural population, and wealthier cities. We (the feds) are siphoning out of cities $100 billion every year to sustain rural areas, probably more (no state-by-state tallies).
I expect rural areas would be clustered along the main highways, and railroads tracks. Might even have dirt roads running to railroad tracks.
I understand FDR started the program, and it was a bad idea then and now.
It is a regrettable market distortion, probably much larger than the minimum wage everybody gets so hot and bothered about.
And sheesh, talk about environmental despoilation.

J'accuse!!!!

 
At 6/25/2009 5:32 PM, Anonymous Anonymous said...

The bigger the government program, the larger the pay off to insiders. Enjoy crony capitalism at it's finest - looting the system for our good.

Once again the poor get poorer and the insiders get richer.

Who needs free markets, this is so much easier.

Bring on Cap n Trade.

 
At 6/25/2009 6:04 PM, Blogger rufus said...

The fact is, there are millions of Americans who would Love to have "Rationed" Health Care.

They are sick, and would love to have Any Type of Health Care.

 
At 6/25/2009 7:33 PM, Anonymous Anonymous said...

You can't increase demand for health care while holding the supply of health care providers constant, and expect lower costs.

 
At 6/26/2009 7:01 AM, Blogger 1 said...

"The fact is, there are millions of Americans who would Love to have "Rationed" Health Care.

They are sick, and would love to have Any Type of Health Care
"...

Well rufus there is always Cuban healthcare for them...

Your fellow philosophical traveler
Michael Moore lauds Cuban healthcare...

 
At 6/26/2009 2:11 PM, Blogger marketdoc said...

Translation: More beaurocracy.. .. more time spent waiting to receive treatment. Forget about having that open heart surgery you need, or that total knee replacement you want to improve your quality of life... you will probably die first... especially if you have more than one medical problem. But the proponents for nationalized healthcare aren't telling you that part.

 

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