Home > Ezekiel Emanuel, Gary Becker, healthcare > Support with Skepticism

Support with Skepticism

As regular readers of this blog know, I supported Obama’s comprehensive healthcare reform. Yet, it’s important to continue to point out the problems not just the benefits of public policy even when (especially when?) one supports it.


From Ezekiel Emanuel’s Healthcare, Guaranteed: (Chapter: “The Mistake of Mandates”)

More importantly, over time the number of uninsured in mandate plans is more likely to go up than down. These plans would do little or nothing to reduce high healthcare costs or curb cost increases. The current financing system and high administrative costs of employer-based healthcare and Medicaid would remain. And although the Insurance Exchange would reduce administrative costs for some small businesses and the self-insured, this savings would be partially counterbalanced by the cost of income-linked subsides. 

[…]

Although the mandate approach aspires to near-universal coverage, it ignores other critical problems within the healthcare system. As evidenced by SCHIP, it is likely that covering the uninsured would improve primary care, preventive care, and continuity of care in the short run. But even that claim is debatable: Citizens may choose to buy only catastrophic healthcare policies from the Insurance Exchange and may not purchase preventive or other necessary services.

In the end, mandates would do nothing to improve the overall quality of healthcare in the United States. Without incentives for accountable and coordinated care-delivery systems, electronic medical records, best practices, preventive screening tests, and correct treatment of hypertension and high cholesterol, the mandate model would keep health outcomes as they are. In large part, mandated health insurance succeeds in perpetuating a fragmented, fee-for-service dysfunctional mess for a delivery system.

  From Gary Becker

The most important needed reform is an increase the fraction of total medical costs that come from out-of pocket expenses in the form of large deductibles and significant co-payments. Out-of-pocket spending accounts for only about 12% of total American spending on healthcare, whereas the share of out-of –pocket spending is over 30% in Switzerland, a country considered to have one of the better health delivery systems. Partly because of this major difference, health care takes 11% of Swiss GDP compared to the much higher American percentage. As far as I can discover, nothing in the new bill really tries to raise the out-of-pocket share, and some changes would reduce it even further. These include tax credits for individuals and families that earn up to 400% of the federal poverty level (up to about $90,000 for a family of four) that enable them to get coverage through newly created Insurance Exchanges.

Another desirable reform is to reduce the reliance of the American health system on tax-deductible employer-based insurance since tax deductibility has encouraged low deductibles and low co-payments. It has also locked workers with health problems into their current jobs since they may not qualify for insurance at other companies because of these pre-existing health conditions. The bill does propose to phase out tax deductibility for the more expensive plans by 2018, but who knows if that will ever be implemented.

Interestingly both authors view the purchasing of “only catastrophic healthcare policies” oppositely. Emanuel thinks it is better that people have more extensive insurance because that will lead to better health outcomes. Becker writes:

I do support a requirement that everyone has health insurance that covers medical catastrophes. Coverage limited to catastrophes would not be expensive for the uninsured since they are mainly young and are generally in quite good health. They could readily pay the premiums for catastrophic insurance from their incomes. The health care bill does make health insurance compulsory, but it does this in an unsatisfactory way by requiring rather extensive benefits, and by subsidizing coverage for individuals and families with incomes far above the poverty line. (my emphasis) 

Becker views the issue mostly through the prospective of costs (naturally as an economist) whereas Emanuel’s main focus is overall health. Neither is wrong to focus on what they have (they don’t ignore the other) it is just a matter of philosophy and perspective. Also, it is easy to think Emanuel’s approach is more appropriate but don’t discount the value of costs. Societies and individuals ignore cost/benefit analysis at their peril. No matter how much we pretend people’s health is infinitely valuable our resources are finite. Furthermore, when we choose to value health over “costs” we’re not just saying greater health is worth more than “money,” we’re saying it is worth more than what that money can buy: better education, nicer homes, more food, maybe greater happiness. Maybe health is more important than all these other things, but forcing people to decide on potentially greater health shouldn’t be an easy choice.


Despite these criticisms of the reform and with due respect to Becker, this bill improves the status quo. Emanuel’s plan, I’d agree, is better but as he recognizes, it just wasn’t politically possible at this time.  

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