The Games Politicians Play

I don't know if Obama should scold the person who stuck the birth control provision into the stimulus bill, or thank them. The scolding should follow from the fact that this was supposed to be a pork-free, non-political bill that could pass with broad bipartisan approval. The birth control provision gave right-wing Republicans a talking point - they could point to it and say "What does birth control have to do with stimulation."

And that brings us to the possible "Thank you." Other than being fodder for an easy one-liner, Republican opposition has been unprincipled and dishonest. The fact is, the provision is good public policy and is consistent with the Medicare policies of a number of Republican governors. It would have saved those governors a ton of money and unnecessary hassle in obtaining waivers so that they could offer birth control benefits through Medicaid. And when the provision was dropped, the Republican answer was still "no" - giving Obama the opportunity to... do this:

“We’re not going to get 100 percent agreement, and we might not even get 50 percent agreement, but I do think people appreciate me walking them through my thought process,” the president said, as he left a meeting with GOP senators just off the Senate floor.

“I hope I communicated a sincere desire to get good ideas from everybody,” he added. “My attitude is this the first major piece of legislation we’ve worked on, and that, over time, some of these habits of consultation and mutual respect will take over, but old habits die hard.”

The shoe is on the other foot. The Republicans were ignoring public policy in favor of a talking point, leaving Democrats to explain why the birth control provision belongs in a stimulus package and makes good sense. Now the talking point is gone and the Republicans are left to sputter things like "We need more tax cuts" or "It's unfocused... not that we have any better ideas".

Obama was placed in an awkward position by the legislators who stuck the birth control provision into the stimulus bill. That measure was inconsistent with his stated goals for the bill. But to ask for its removal opened him up to attacks from the left, accusations that he's selling out women's health. While it's standard Washington fare to stick appropriations like this into "must pass" legislation, this really wasn't the time. I hope that Democratic party leaders have a bit of a sit-down after this, to discuss how they might avoid shooting the President and themselves in the foot over the next two years. Meanwhile, they should work to get a similar appropriation passed through, perhaps, a bill directing some aid or assistance to the states or updating Medicaid rules.

Simple Ideas Can Return Huge Savings

Savings both in financial and human costs:

A simple operating room checklist, similar to the one pilots use in the cockpit before takeoff, can dramatically reduce major complications in patients and even save lives, according to a just published study.

Performing that brief task in eight hospitals in as many countries caused an overall drop in the death rate by more than 40 per cent and major complications by more than a third, according to the New England Journal of Medicine study released online today and in print later this month.

* * *

Data collected from 3,733 patients before implementation of the checklist and 3,955 after the checklist was implemented, showed an overall drop in major complications from 11 per cent to 7 per cent. Inpatient deaths following major operations dropped from 1.5 per cent to 0.8 per cent.

Potential annual cost savings? Possibly $15 to $25-billion per year.

Choosing the Surgeon General

Quick - name a surgeon general.

Dr. Koop? That was easy. Name another.

Sorry, Elders didn't get the job. Got a second? I'm waiting....

Perhaps I'm being unfair in your case, but we've really only had one celebrity Surgeon General. And since Koop retired, Presidents have seemed happy to keep it that way. So, other than to provide fodder for bad jokes, why is Obama apparently choosing somebody who is already a celebrity for that job?

I suspect that there are several reasons, but that they all tie together.

1. Gupta has incredible media access and connections. When he makes an announcement, he's pretty much guaranteed that it will get ample news coverage.

2. He has a popular persona of being trustworthy and competent. He has already been introduced to the American public, and he has an established, good reputation.

3. When necessary, he has enough personality and public access to bypass the media and take his message directly to the public.

This choice, to me, suggests that Obama truly intends to initiate sweeping healthcare reforms, and Gupta is going to be the public face of reform.

Despite his relatively conventional choices for most positions, I personally expect Obama to follow the model of his campaign, using community organizing techniques and Internet outreach to bypass traditional media and even political channels, in order to get public sentiment behind proposals that face opposition - Republican or Democratic opposition. In that context, with health care reform being an exceptionally thorny and controvercial subject, Obama's choice of Gupta makes perfect sense.

The Cost of the Candidates' Health Care Proposals

The Washington post, demonstrating astonishing credulity, tells us about the McCain and Obama health care proposals:

Overall Price Tag

Obama

Says his plan would cost $50 billion to $65 billion a year when all elements are phased in. Money would come from ending tax cuts for people with incomes exceeding $250,000.

McCain

Says his plan would be budget-neutral over 10 years.

How hard would it be to find somebody else's estimates - devoting about five seconds to searching with Google, I came up with this from the Wall Street Journal:

The Tax Policy Center, which is affiliated with the Brookings Institution and the Urban Institute, projected the Obama plan would cost $1.6 trillion over 10 years, and the McCain plan would cost $1.3 trillion. Lewin Group had different figures putting the cost at $2.1 trillion for McCain’s plan and $1.2 trillion for Obama.

So if you ask anybody outside of Obama's campaign, you're likely to hear that he's probably (at best) halving the likely cost, and if you ask anybody outside of McCain's campaign you're likely to get a "He's claiming what?!"

Not that I'm suggesting that you shouldn't take political candidates at their word, but... No, wait, that's exactly what I'm suggesting.

Health Insurance - The New Republican Entitlement Program

Today, Michael Gerson rallies to McCain's defense on health care, lamenting that Joe Biden mischaracterized the tax effects of McCain's plan. He criticizes Obama for making accurate observations about the plan, such as his noting that the tax credit is payable"directly to your insurance company". He also complains,

"At least 20 million Americans," charges Obama, "will lose the insurance they rely on from their workplace." As Yuval Levin of the Ethics and Public Policy Center points out, this is a distortion. He cites a Tax Policy Center estimate that the McCain plan would result in 21 million people entering the individual insurance market by 2018 - many because individual ownership of insurance will be more attractive

Let's see what Obama actually said:

And here’s something else Senator McCain won’t tell you. When he taxes people’s benefits, many younger, healthier workers will decide that it’s a better deal to opt out of the insurance they get at work – and instead, go out into the individual market, where they can buy a cheaper plan. Many employers will be left with an older, sicker pool of workers who they can’t afford to cover. As a result, many employers will drop their health care plans altogether. And study after study has shown, that under the McCain plan, at least 20 million Americans will lose the insurance they rely on from their workplace.

So Obama accurately states that about 20 million people are projected to lose employer-sponsored health care. He specifically addresses the fact that this will result in part from workers who find private plans more appealing (younger, healthier workers) opting for those plans instead of their employers' group plans. That other people would acquire health insurance during the first ten years of the plan is neither a surprise nor relevant to the issue Obama was addressing. Further, if the number of new enrollees is something that must be mentioned, Gerson is guilty of the same sin by not acknowledging that Obama's plan is projected to insure a significantly greater number of people than McCain's.

Gerson also complains,

Obama terms the McCain plan "radical" - which is its main virtue. It goes to the root of the problem - a system that depends mainly on businesses to provide health coverage.

Er, right... How dare Obama mention the plan's "main virtue".

Over the past few decades, the rising cost of health coverage to employers has eaten up pay increases, acting as a wage cap and leaving many incomes stagnant or falling. Business-based health coverage leaves many workers afraid to change jobs - a handicap in the constant employment churn of the new economy. It discriminates against the self-employed and places unique burdens on small businesses. And it insulates workers from decisions about health-care costs.

So let's see... Under McCain's plan:

• Rising costs of health care will continue to devour wage increases, except workers will have to absorb 100% of the increase. The employer will no longer share in that increased expense.

• It's not clear who the people are who are "afraid to change jobs" under the current system. Even if you don't change jobs, you can't rely upon your employer to maintain the same plans or coverage from year to year under the current system. Changing jobs to an employer with inferior health coverage or no health coverage translates into a pay cut, so we shouldn't expect people to voluntarily do that. The current system can be an impediment to self-employment, but that's something McCain has chosen to ignore.

  The McCain plan does nothing to address the real problem - if you lose your job, you lose your coverage. Whether it's your employer who stops paying for it, or you who can't afford it, if the premiums aren't paid you lose your coverage. Gerson's later argument makes it plain that he understands this, so it seems dishonest of him to not admit it.

• In terms of the current plan discriminating against the self-employed, how does that change? McCain envisions employers giving their employees raises equivalent to the employer's share of their current health plan - in his memos and talking points he likes to talk about a $9,000 raise for a family, 75% of a $12,000 health plan. Who's going to hand a raise like that to a self-employed individual? Or does he think this is a good economy in which the self-employed can raise their prices and fees? (After all, according to his reinvention of his past remarks, the self employed number among the "fundamentals of our economy", and thus they are "strong".)

• Is it a bad thing to insulate an insured person from the costs borne by the insurer? Isn't that the whole point of insurance - to spread the costs, so that individuals aren't disadvantaged when they have unexpected medical emergencies or illnesses? So that they don't have to fret over whether they can take their child to a doctor or afford needed medications? And all assumptions aside, who says that individuals will do a better job of assessing which costs are unnecessary or avoidable? That's a nice gloss, but if Gerson wished to be honest he would acknowledge that the real goal is to shift more cost onto the consumer and, once that shift occurs, sponsors of McCain-style plans don't care if there are cost savings.

Gerson apparently rejects the McCain camp's argument that a government-sponsored insurance plan would be subsidized, instead arguing,

Unlike private companies, government can cut costs by imposing price controls and shifting costs to others (just as Medicare does). Over time, this would give the government an unfair price advantage over private insurance, causing more and more businesses to pay into the public program.

I recognize that Gerson rarely knows what he's talking about, but is he for real? Has he ever seen an "explanation of benefits" form from a private insurer, describing the discount the insurer has negotiated for medical services? An insurance company may pay $560 for a procedure that would be billed to a private consumer at $1,000. There's no "cost shift" there? Also, if an insurer (public or private) doesn't offer enough money to doctors and hospitals, they will opt out of the program. Perhaps it hasn't occurred to Gerson that this one of the reasons why many doctors, hospitals, clinics and pharmacies don't participate in certain insurance plans. He also can't explain why a private insurer couldn't negotiate the exact same rate as the government, or benefit from being able to offer a much larger network of participating doctors, hospitals and pharmacies due to even modestly higher reimbursement rates.

Obama's health plan is really slow-motion Medicare for all. And the problem with Medicare-like price controls is that they reduce the number of people willing to provide medical services, which always means longer lines and rationing.

Ah. That must be why people in nations with national health care plans are so eager to switch to "American-style" plans, and why the elderly of this nation are so unhappy with Medicare. And when did France and Germany get waiting lists? No system is perfect, but it's better to point to actual defects than to instead spout right-wing canards.

Here's where Gerson highlights the deficiency of McCain's plan that he previously glossed over - the fact that if you lose your job, you lose your insurance:

McCain's health plan has a problem of its own. It is not too radical but too timid. A refundable tax credit of $5,000 per family - in addition to increased cash wages from employers no longer burdened with paying for health care - would help middle-class workers get insurance. But for people on the lower end of the scale - who don't qualify for Medicaid - the $5,000 credit alone would not be enough to buy adequate coverage, which can cost more than double that amount.

It's interesting here that Gerson isn't suggesting that we eliminate Medicaid (or Medicare) in favor of this new "tax credit for all" - why not? Isn't that the proper "market" solution? And if we're keeping Medicaid, thereby rejecting the idea of a pure "market" solution, why not expand its reach to pick up people who can't afford private insurance? It's also interesting that Gerson claims that health coverage for a family can cost "almost double" the amount of the $5,000 tax credit. It can cost a lot more than that - and that's before we start talking about copayments and deductibles.

To be a genuine alternative, Republicans should follow their own logic and make the ownership of private health insurance an entitlement.

That should be an easy sell to the population of true "compassionate conservatives" in the Republican Party. But now that Gerson's convinced himself, how's he going to sell that idea to everyone else?

Fund the purchase of a basic health insurance plan completely, through a refundable tax credit, so every low-income American can afford insurance.

Help me out here - what's a "basic plan"? It isn't enough to provide a "basic plan" to somebody you know can't use it because they can't afford deductibles and copays, so would the "basic plan" minimize those amounts? You know, and insulate participants "from decisions about health-care costs"?

They say the devil is in the details. Apparently Gerson's religious beliefs prevent him from directly addressing the devil.

Losing the Gatekeeper

Will the cost and prevalence of arguably unnecessary tests and procedures go up or down if people are driven into "consumer-directed" health plans - plans with minimal coverage for routine care, huge copays, and benefits that really only kick in if you suffer catastrophic illness or injury? Despite the conjecture of health economists that people will make glorious, informed, cost-effective choices if asked to pay for their own care, I suspect they'll go up.

Why? Because right now insurance companies act as a gatekeeper. If their analysis shows that a particular procedure is unnecessary, or that a more cost-effective procedure will suffice, they'll refuse to pay for the more expensive or "unnecessary" test or procedure. Sure, the denials can be frustrating, even maddening, but they do hold down health care costs.

Consumers don't have the information, resources, or sophistication to make a similar evaluation of a doctor's recommendation. They may not even have a chance to reflect on whether they should agree to an expensive procedure at an emergency room, let alone inquire and evaluate alternatives, assuming they're even in a state of mind to do so. But maybe that's "okay" if it's an individual who is stuck with the bill?

McCain's Enormous Health Care Assumptions

While asserting that (but not explaining why) Obama's plan is superior to McCain's, Ruth Marcus provides a rose-colored view of the McCain health care plan that illuminates how McCain expects - or probably more accurately, expect us to believe - that the plan would work.

So what does John McCain's plan do? It has just such a refundable credit: $2,500 for an individual, $5,000 for a family. The Obama campaign tries to scare voters into believing that this is a terrible deal, noting that the average family policy costs about $12,000.

True, but if you get $12,000 in health insurance from your employer and are in the 25 percent tax bracket, you would owe another $3,000 in taxes. The credit would let you take $5,000 off your overall tax bill. You come out ahead -- unless your insurance is hugely generous, in which case it's serving to drive up everyone's health-care costs.

In other words, if you currently have a $12,000 plan for your family and your employer picks up 75% of the cost, the McCain plan envisions your getting a $9,000 raise when your employer stops paying that 75% contribution to the cost of your health insurance. She assumes you would pay 25% in taxes, thus paying $3,000 in federal taxes on the cost of your health plan. She then assures you that the McCain tax credit more than makes up for the difference, as $5,000 is greater than $3,000.

What's wrong with these assumptions?

• People at the lower end of the job market are not getting $9,000 per year subsidies of their insurance. We can argue that they are also covered by cheaper policies - man of them are underinsured - but let's not pretend that the McCain plan will enable them to afford $12,000 per year health insurance.

• Employees won't get raises equivalent to the employer's contribution to their health plan, let alone to a family plan. The assumption that the market will compel employers to give raises equivalent to a family-sized contribution is absurd. If raises are offered they will at most be at the level of the benefit to a single employee, or the average cost to all employees, resulting perhaps in a boon to single employees but a net loss to people on family plans.

  • Employers are not going to increase their payroll by giving oversized raises to employees who don't participate in family health plans - those who are single, or opt out because they have insurance through their spouse or domestic partner.
  • Employers have an incentive to shave their costs by giving raises smaller than their current contributions.
  • Employers may not give raises at all. John McCain may not understand this, having married rich and found himself a sinecure in the Senate, but a lot of employees right now will have a hard time making a lateral move at equivalent pay. For employees who have been on the job for twenty or thirty years, earning significantly higher wages than their peers due to annual raises, the employer may see a golden opportunity to both cut their effective pay and shift their increasing insurance costs off of its books.

• Health insurance costs are increasing much faster than the rate of inflation, and wages are not. Even if we assume a raise that covers this year's cost, with each passing year the employee will bear more and more of the cost. Not just an increased copay on a 25% contribution, but an increase of the full cost. With health care inflation at about 6% per year, if we assume inflation of 3%, that translates into a $360+ pay decrease every year a worker maintains that (presently) $12,000 plan. Marcus indicates that McCain will index the tax credit to inflation, but not to health care inflation.

• If a raise is offered that, in fact, makes it a "better deal" to drop employer-sponsored coverage, at least in terms of take-home pay, younger, healthier employees are likely to go uninsured or to opt for minimal coverage. That will raise the costs of health insurance for older and sicker employees, while increasing the likelihood that the increased population of uninsured and underinsured people will end up passing the costs of catastrophic injury or illness on to the taxpayer or other patients.

• Employers are apt to drop their health plans quickly, not "eventually" as Ruth Marcus suggests. Doing so when the job market is bad makes sense, as employees are less able to seek jobs with more generous health plans. Smaller businesses are likely to quickly drop employee health plans. Once a few major employers successfully make the shift, you'll see a cascade. Let's not forget, that's the design of the plan, and is what Ruth Marcus assures us makes it attractive.

• Oops - no mention of payroll taxes. Employers aren't going to transform their tax-deductible insurance contributions into a raise of equivalent size. They're going to reduce it by their share of payroll taxes. Your $9,000 raise drops to about $8,200. After your own share of payroll taxes and state income taxes, your tax bill is probably $4,000. Under McCain's rosy assumptions you come out slightly ahead this year, but the benefit disappears next year or the year after due to health care inflation - it's just delaying by a year the amount of time it takes for you to go in the hole. But even that one- or two-year benefit is abstract - as we previously discussed, if your job is at all typical, you won't be getting that $9,000 raise McCain and Marcus assume.

• Your "free market" plan, even at the same cost, will be vastly inferior to your employer-sponsored plan. You will be denied coverage over pre-existing conditions, or perhaps simply because of your age. (Marcus concedes that insurers will "cherry-pick the healthiest enrollees" under McCain's plan.)

• Your immediate costs - copays, deductibles, the cost of care excluded from the plan, etc. - will go up the second you sign up for an equivalently priced plan as as individual. A few years ago when I was about to reach the end of COBRA coverage on a really nice employer-sponsored plan, I priced private plans - I found many at comparable cost, but none which offered anything even close to the same level of coverage. Some of the plans were then in the range of $16,000 - $20,000 per year for a family of three, but they didn't offer the same benefits of the $12,000 plan, available to federal employees, that McCain likes to ballyhoo as the type of insurance you are likely to be able to afford under his plan. Not even close. And that's assuming you don't try to "save money" by purchasing a less expensive plan that shifts an even greater portion of the cost of your care and prescriptions onto you.

Marcus asserts that we should assume that McCain's on the right track, because one of Obama's economic advisors endorses the idea of replacing employer-sponsored care with a tax credit. But if Marcus were to read past the McCain memo she seemingly cribbed when writing her column, she should be identifying the elements that the advisor asserts would be part of any effective plan - progressive tax credits, mandatory coverage "or other institutional mechanisms to increase participation", new pooling mechanisms, and reducing adverse selection in existing pooling mechanisms. She should also acknowledge that plan is intended to "eliminate the incentive to go from some insurance to more insurance," while "increasing the incentive to go from no insurance to some insurance" - but without clear concepts of what that means, it's literally an experiment with people's health and lives.

A huge hole in this type of plan is that, even if we assume that everything else goes as promised and disregard the many reasons to believe that won't happen, the distortion of tying insurance to employment isn't eliminated. It's reduced - once you're buying your own plan you can keep it even as you move from job to job - but if you lose your income you can't pay your premiums, and thus lose your coverage. As with employer-sponsored care, that could still result in your loss of coverage if you become disabled from working due to illness or injury - and if you recover, you will almost certainly face increased costs for an equivalent private plan or may even find that you cannot get health insurance, rather that being able to get coverage at a group rate through an employer-sponsored plan that doesn't consider your pre-existing conditions. Obama's plan is better in this regard only because it maintains employer-sponsored plans, such that if you return to work you can again get insurance at a group rate, but neither plan actually addresses the problem of paying for insurance when you're between jobs.

The aforementioned McCain memo accuses Obama and Biden of "lying" about the plan, and purports that their claims have "failed every fact-check". Unfortunately no links to those fact-checks are provided, and that claim itself seems dubious. But let's check out the truthiness of McCain's claims about Obama's plan:

Barack Obama's Plan Continues The Push Toward Government-Run Healthcare: The Obama plan will create a brand new government-run health plan at the cost of $243 billion a year – a financial burden of more than $3,000 a year on American families.

McCain doesn't explain how he came up with that figure. I did find this:

Researchers at the Urban Institute-Brookings Institution Tax Policy Center project McCain's plan would reduce the number of uninsured by 1.3 million in the first year at a cost $185 million. About 20 million people would lose their employer-sponsored coverage under McCain's plan, but 21 million would gain coverage on the individual market.

Obama's plan in its first year would reduce the number of uninsured by 18.4 million at a cost of $86 billion. Over 10 years, McCain's plan would cost $1.3 trillion and Obama's would cost $1.6 trillion, according to the report.

So McCain wants to spin a fiction that his plan is free, whereas in fact its projected cost is only marginally less than that of Obama's plan, and he neglects to mention that in the first year alone Obama's plan is projected to provides coverage to more than 17 million people who McCain would leave out in the cold.

Barack Obama's Plan Will Harm Employer Coverage: The Obama plan includes a $179 billion a year employer mandate. The mandate requires employers to either provide "meaningful" coverage or pay a tax towards the government plan. Faced with tough economic conditions and rising health costs this creates a clear incentive for employers to drop coverage and move families into the new government plan.

So we're supposed to accept that the biggest benefit of McCain's plan is that it will end employer-sponsored health care, but simultaneously pretend that Obama's plan will do more to bring about that end?

Barack Obama's Plan Will Damage Private Coverage: The government-run plan will have a clear advantage over private insurance since it will be subsidized by American taxpayers. A recent analysis of both plans by the nonpartisan CATO Institute concluded that the Obama government-run plan will be able to "keep its premiums artificially low…since it can turn to the U.S. Treasury to cover any shortfalls" resulting in "undercutting the private market."

Obviously, fears of a subsidy can be addressed in the legislation that authorizes any government-run plan, so McCain's claim amounts at best to overblown rhetoric and at worst to fear mongering. McCain aparently regards the words "could" and "will" as interchangable - let's not confuse what could happen with what will happen.

We should also consider what happened, for example, when we allowed private insurers to compete with Medicare through "Medicare Advantage". We ended up subsidizing the private insurers because Medicare was able to offer the same (or better) coverage for less money. The real fear here is probably not that the premiums will be artificially low, but that they will be naturally low, particularly as compared to plans offered to individuals by private insurers.
__________
1. Marcus writes,

No one designing a health-care system from scratch would set things up this way. Tying insurance to employment makes little sense in a world where workers hop from job to job. Excluding the value of insurance from taxable income leads to overconsumption of health care, driving up costs. It favors better-off employees who, because they pay higher marginal rates, derive a greater benefit from not being taxed on their health insurance.

Eliminating this distortion - if done the right way, and that's a big if - could help more Americans obtain insurance, push down costs and reduce the drain of health-care costs on the federal budget.

Even if we assume that there's a free market solution to this issue, Marcus does not explain what it would be and, abetted by columns like this, McCain is simply hoping that nobody is paying attention to the glaring flaws of his own plan. By all appearances, McCain is trying to dress up what amounts to a Gingrich-style plan to kill off affordable health insurance and shift costs onto consumers.

Good Health Insurance? That's for Rich People

John McCain opines,

[McCain a]ppeared to concede that his health care plan would result in higher taxes for some. McCain favors a $5,000 annual tax credit to help individuals and families afford health insurance, but that could leader employers to drop their current plans, including some that could not be replaced for $5,000.

"It depends on, on, on what plan they have," McCain said. "But that's usually the wealthiest people. Ordinary working Americans have the kind of, or an overwhelming majority have the health insurance plans that this tax credit, refundable tax credit, will actually put more money in their pockets for the purchase of health care than what they had before."

So as McCain sees it, most people have crappy insurance and thus would profit from McCain's proposal?

No offense, John, and conceding that you're a rich person who doesn't have to care, but how much would cost you to obtain insurance - even crappy insurance - on the private market? How much would the coverage you receive as a Senator cost if you had to purchase equivalent coverage as an individual? The official McCain campaign position:

While still having the option of employer-based coverage, every family will receive a direct refundable tax credit - effectively cash - of $2,500 for individuals and $5,000 for families to offset the cost of insurance.

A dose of reality:

In 2007, employer health insurance premiums increased by 6.1 percent - two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,100. The annual premium for single coverage averaged over $4,400.

Even if we assume that the cost of insurance won't rise for individuals purchasing coverage as individuals, as opposed to at group rates through an employer-sponsored plan, and even if we assume that the average cost of health care is misleading with a median cost of insurance considerably below the average, this doesn't sound like a good deal for working people or their families. If the goal is to lock working people into policies with minimal coverage, though, it sounds like a heckuva plan.

Changing the Subject on Health Care

Robert Samuelson attacks the candidates for proposing how the uninsured might gain insurance coverage, by changing the subject to health care inflation. There's absolutely nothing wrong with his belief that the country has no moral imperative to ensure that all citizens have access to healthcare. Agree or disagree, it's a legitimate point of view. But that's an entirely different issue than "controlling costs".

Samuelson laments both the inflation in healthcare costs, as well as the provision of unnecessary or ineffective services. He argues that increased costs threaten the government's ability to pay for other programs, depresses wages, and transfers wealth from young, healthy workers "to the old, accomplished through taxes and the cross-subsidies of private insurance, because the old are the biggest users of medical care". Those are legitimate concerns that should be addressed. But what does any of that have to do with insuring the uninsured?

Of the uninsured, Samuelson tells us,

In 2008, their care will cost about $86 billion, estimates a study for the Kaiser Family Foundation. The uninsured pay about $30 billion themselves; the rest is uncompensated. Of course, no sane person wants to be without health insurance, and the uninsured receive less care and, by some studies, suffer abnormally high death rates.

Okay, so that's $56 billion passed on to other patients or to governments each year due to the needs of the uninsured. And the uninsured still "suffer abnormally high death rates". It would seem to benefit the insured to have that $56 billion covered by other health insurance policies, rather than being picked out of their pockets through taxes and the cost of their own medical care. Samuelson also ignores the fact that a big chunk of that money is for emergency room care, the place many uninsured people go for services that should be provided by a primary care physician. If you're concerned about waste, that's a big source of waste that expanded access to insurance could help remedy. So how does Samuelson respond to these facts?

But other studies suggest only minor disadvantages for the uninsured. One study compared the insured and uninsured after the onset of a chronic illness -- say, heart disease or diabetes. Outcomes differed little. After about six months, 20.4 percent of the insured and 20.9 percent of the uninsured judged themselves "better"; 32.2 percent of the insured and 35.2 percent of the uninsured rated themselves "worse." The rest saw no change.

Of course. The "But other studies" retort. Who cares which studies are better or more reliable, right? If two studies contradict each other, all you can do is throw up your hands in despair and walk away from the problem. No, really, if Samuelson feels sufficiently informed to speak on this subject, why isn't he capable of reading the studies and trying to determine which have greater validity?

The study he does reference, a six month follow up for patients diagnosed with lifetime chronic illness, doesn't seem convincing. It appears that both the insured and uninsured patients are getting treatment over that short time, so how much of a difference would you expect? More relevant measures include, were uninsured patients less likely to get a timely diagnosis? Timely initiation of treatment? Over the long-term were they less likely to continue treatment, or to limit their treatment due to their inability to afford medical supplies, equipment, medication, or return doctor visits? Is there a difference in their outcome over a period of years, or the duration of their lives? Were Samuelson to think about the issues he would recognize that nothing in the six month study is inconsistent with the previously cited "abnormally high death rates" study. It's quite possible to have similar outcomes over six months and wildly divergent outcomes over a longer time period.

Now let's look at Samuelson's actual figures. He claims that there were 46 million uninsured people last year. He claims that most of these people are young and healthy. He claims that (in 2003) the richest 1/5 of the population incurs $4,451 per person, per year in health care costs. He claims that the uninsured presently pay $30 billion per year for their own care and pass on to the rest of us some $56 billion in unpaid bills. He then claims that it will cost another $123 billion per year to provide the uninsured with insurance. That's $209 billion, or $4,543 per person, per year. Now I'll grant that his 2003 figure needs to be increased for inflation, but what Samuelson is telling us is that a disproportionately "young and relatively healthy" population that doesn't need insurance will incur medical costs roughly on par with the wealthy, who are far more likely to be older and to thus have the medical problems associated with age. He's cherry picking his figures, without paying any attention to whether they render his argument internally inconsistent.

But beyond the bad numbers and reasoning, the fact is that the problem of the uninsured is a different problem than healthcare inflation. Beyond mouthing that the cost of insurance will be an additional $123 billion, Samuelson provides no evidence or argument that this will result in further inflation of healthcare costs. It doesn't even occur to him that by moving uninsured care out of emergency rooms we might actually reduce unneeded testing and the other high costs of emergency room care.

If we ignore the change of subject, what does Samuelson tell us? The candidates need to focus less on universal coverage and more on "more electronic record-keeping, better case management, fewer dubious tests and procedures, and a fairer sharing of costs between the young and the old". In terms of the first three, what's his excuse for overlooking the fact that Obama explicitly endorses improved technology and electronic record-keeping as part of his healthcare reform proposal? Waste should be addressed, but it's difficult to address medical waste, as the moment you do the political right starts squawking about rationing, or "government bureaucrats telling your doctor what to do." The issue of the division of healthcare costs between the young and old isn't either an issue of cost control or an issue of universal coverage. It's reasonable to assert that wealthy people who can afford to do so should pick up an increased portion of their own medical bills, but it's understandable why that's not being suggested during an election year.

For now, let's try to do the following:

• Stop pretending that universal health insurance coverage is incompatible with taking measures to limit healthcare inflation and waste.

• Take an honest look at these separate issues - universality, waste, inflation and cost-shifting due to Medicare - set some priorities, and figure out which should be addressed first

Samuelson believes waste, inflation and cost-shifting should be our priorities? No problem. But lay out the actual case, rather than clouding the issue with false dichotomies and dubious financial claims.

Medical Equipment Costs

The Washington Post opines,

There is little doubt that Medicare has been paying far too much for equipment — including wheelchairs, hospital beds, oxygen concentrators, diabetic test kits, and walkers — under fee schedules based on historical charges. According to federal officials, Medicare currently pays $1,825 for a hospital bed that can be bought online for $754, and $4,023 for a power wheelchair that can be bought online for $2,174.

There's a big element missing from that price comparison. A local equipment vendor will often deliver equipment to a patient's home, set it up, and train the patient in its use. They often arrange service and repairs, and may offer a loaner unit while repairs are being conducted. A mail order vendor will add a shipping charge to deliver the item to your driveway, and that's about it.

I'm not arguing that there's not a lot of waste, or that some vendors may be charging too much for some of the services they provide, but I think the Post is grossly oversimplifying the issue and missing other potential areas for cost savings. For example, what happens to the hospital bed Medicare purchases after the patient dies or moves into a nursing home? Why aren't the beds, or other pieces of expensive equipment, collected, refurbished, and used for other patients?

Meanwhile, many patient-oriented groups have also called for a delay, apparently fearing that switching suppliers, perhaps from a local company with personalized service to a lower bidder elsewhere, could diminish the quality of service. These fears seem overblown and should be easily addressed in coming months, partly by strengthening oversight by ombudsmen and surveying beneficiaries to detect and remedy any problems.

Appointing an ombudsman does little to help a patient with an urgent health need. Surveys? Really.... The patient fears may be greater than are justified by the program, but if you're going to claim they can be "easily addressed" you should do just that rather than dismissing them.

"Gas Tax Holiday" Pandering Is A "Big Deal"

Paul Krugman is right about this much: As compared to other economic issues, the "gas tax holiday" is small potatoes. But to the extent he is trying to minimize the significance of this particular pander, or to suggest that it's politically worse than Obama's use of certain right-wing talking points in criticizing health insurance mandates, I disagree.

If the test is, "Will a candidate embrace right wing talking points", how would this example give me faith in Hillary Clinton? The entiire idea of a gas tax holiday originated with the McCain campaign. When Obama took the grown-up path, rather than joining the irresponsible pandering of the other presidential candidates, what did Hillary Clinton do? She attacked him, directly and through her campaign, as elitist and out-of-touch with the needs of working people. When confronted with the economic realities of her proposal, what did she do? She made a statement dismissive of economists.

I don't like the Obama team's approach to mandates, both because I think mandates are better policy and because their arguments seem weak. (If arguably better than a blanket statement dismissive of economists, not much better.) There's an equivalence here - in both cases we're dealing with election year politics versus good public policy, with the defenders of the weaker policy engaging in attacks on their opponent that, to me, seem unfair, dishonest and opportunistic.

We could debate whether it says more about a candidate that they engage in this conduct over a major economic issue or a minor economic issue. We could debate what it means that one issue deals with a future, theoretical policy that has not been fully fleshed out, and the other proposes immediate action. I suppose somebody could try to introduce some nuance to suggest that somehow one candidate or the other's proposal is "better founded in economics" than the other. But that's a marginal defense, as what is really important is what these conflicts tell us about a candidate and their approach to responsible public policy. A candidate's dogmatically sticking to a weak or bad economic theory, making little to no effort to explain why theirs is the better theory, then resorting to attack mode and right-wing talking points when confronted on the weaknesses, does not impress me.

McCain on Health Care

John McCain offers some not-so-straight talk on health care. Hillary Clinton gets it right:

In a statement, Clinton said McCain's plan has "fundamental flaws" and charged that it would abandon millions of Americans to expensive, high-risk insurance arrangements. "Older Americans or those with pre-existing conditions would be allowed to get only one type of coverage in a high risk GAP pool," Clinton said. "That kind of arrangement does more to help insurers than individuals."

McCain's "plan" basically involves ending employer-sponsored health insurance (i.e., effectively ending group insurance coverage), then handing you a subsidy ("a $5,000 family tax credit") too small to provide you or your family with good, comprehensive insurance coverage. The type that elites like John McCain and Newt Gingrich apparently believe should be reserved to people like themselves.

If McCain were interested in being honest about this, he would admit that he is catering to two powerful special interest groups: Industry lobbyists who see that, even with tax breaks, health insurance is becoming too costly to offer as an employee benefit. And, of course, health insurance industry lobbyists who don't want a national plan to "compete" with their offerings - because to date, in order to "compete" with programs like Medicare private insurers have required massive subsidies.

McCain's proposal for people like himself, who (if given a choice) insurers wouldn't touch?

McCain sought to answer those charges Tuesday by saying he would create what he called a guaranteed access plan, or GAP, to help provide coverage of last resort for the sick and other "high-risk" people until the marketplace has matured enough to take care of them.

Let's compare that idea to Michigan's reality, where within the existing private market,

The Blues argue that as insurers of last resort they have to cover the sickest patients and take the most risk. Other firms, they argue, can dump their customers by raising their premiums to unaffordable levels and stick the Blues with them.

McCain's proposal for keeping this from happening with his newly created guaranteed health insurance plan for the uninsurable? He doesn't have one. Candidate McCain, how would this program work? How would it be financed?

He gave few details of how such a program would work, who would run it or how it would be financed.

Oh, let me throw out an idea for financing it, consistent with McCain's stated economic policy - we'll have indefinite war in Iraq, slash taxes for corporations and the wealthy, and pay for everything else with the savings that result.

McCain advisers said such a program could cost as much as $7 billion a year. But McCain vowed not to "create another entitlement program that Washington will let get out of control." He added: "Nor will I saddle states with another unfunded mandate."

Sure... because as the private health insurance markets insure, private companies will suddenly become willing to take a massive loss by providing individual health insurance policies to people presently deemed uninsurable. Why, isn't that exactly what is happening in our current "free market" system? I suspect that if the "guaranteed" plans for uninsurable people become a reality, $7 billion will look like a bargain. We switch from the current system, replete with delays and denials of care, and the cancellation of policies for specious reasons, to one where the policy holder deemed "too expensive" is simply handed off to the government plan - or quits the private plan in favor of the government plan to avoid the bureaucracy, delays, and specious denials of care.

But McCain says he won't let the unknown costs of his undefined program "get out of control", so who am I to question his claims?

Krugman on Obama on Health Care

I agree with Krugman's general thesis - McCain's health care plan is a joke, and Clinton's is better than Obama's. I'm not sure, though, about this point:

Worse yet, Mr. Obama attacked his Democratic rivals’ health plans using conservative talking points about choice and the evil of having the government tell you what to do. That’s going to make it hard - if he is the nominee - to refute Mr. McCain when he makes similar arguments on behalf of such things as privatizing veterans’ care.

One criticism of Obama, and a valid one, is that he refuses to support mandates. I haven't yet seen evidence to suggest the innuendo sometimes cast about, that he's adamantly opposed to mandates. If Congress sends him a bill that does everything he has proposed but also includes mandates, I expect that he would sign it.

As for whether Obama would hold hands with McCain in an effort to savage the V.A. hospital system, I very much doubt it. Whatever mileage the Republicans might try to gain from Obama's talk of freedoms, privatizing veterans' care is one of those issues that you should be able to undercut with a standard, Republican-style, "Our troops are getting injured right now, and those hospitals are the best source for the specialized care they need after leaving the military! Why don't you support the troops?"

Talk of "choice", really, is to reassure people that if a national health plan passes the government won't be picking their doctor or defining their medical treatment. (That job will remain with a bureaucrat in their HMO.)