Map of life expectancy at birth from Global Education Project.

Thursday, May 14, 2009

The Camel's Nose

under the tent, that is. Yesterday we saw how the teabagging Sons of Liberty are burning the metaphorical tires in the streets in a heroic stand against the Obamunist plot to use Comparative Effectiveness Research to infringe on your God-given right to be screwed by giant corporations. Today we come to the "public option" in health insurance reform, which is an even more insidious Obamunist plot because it not only infringes on your God-given right to be screwed by giant corporations, it's kind of obvious that it does that, and we wouldn't want people to actually know that their God-given right to be screwed by giant corporations was being infringed upon, because then they might start to clamor for even more such infringements.

The fundamental question is why we need private "health" insurance at all, when, for example, Canada and the UK get along without it and they are healthier than we are and spend much less on health care. Anecdotes about people having to wait six months for a knee replacement or not being given useless treatments that they demand aside, it is obvious that to whatever extent that occurs, it's worth it, because the people overall are healthier than we are, remember? Duhh.

Advocates of private insurance claim that "competition" among plans can save money and deliver more of what people want. Fortunately, we have a natural experiment going on right now, called Medicare Advantage. The aptly named Richard Kronick, in the new NEJM, runs it down for you absolutely free of charge. (NEJM scores a birdie, cancelling last week's bogie.) Medicare runs its own fee for service plan, and it also pays private insurers to cover beneficiaries who elect to join their plans. These so-called Medicare Advantage plans take all sorts of different forms with varying levels of managed care, from HMOs to Preferred Provider Organizations, to straight up private fee for service plans. They compete with each other. And they all cost more than standard Medicare -- actually a lot more, an average of 13% more but even more than that for PPOs and fee for service models, and this is an underestimate distorted by ways in which they game the system. Furthermore, they don't deliver any perceivable additional benefit to their members. We're wasting -- just flat out wasting -- more than $10 billion a year.

As Kronick writes:

There remains substantial debate about why competition among HMOs has not produced the benfits hypothesized by private market advocates . . . . Some analysts assert that private plans inevitably create large increases in administrative costs, siphon off valuable resources for executive salaries and profits, create hassles for patients and physicians, and cannot be held accountable by patients or the public. In this view, there is no constructive role for health plans as intermediaries between the government and health care providers.

Count me in, Prof. Kronick. Private health plans "compete" by trying to exclude people who need more services, and trying to screw the members they do have. If you're looking too costly, and they won't pay for what you need, tough luck. They're more than happy to have you go elsewhere. That way they can squeeze out more money for executive salaries and profits, which are their sole reason for existence.

A well-run public health insurance option, available to employers and individuals in an environment in which medical underwriting is strictly limited, there is an appropriate level of subsidy for low income people, and a universal mandate, will eat private health insurers for lunch. It will offer cheaper and better insurance to everyone. They know that. That is why they do not want it to happen.

BTW, is that socialism? You betcha. Sticks and stones . . .

A passing observation: George Annas, writing in the same issue of NEJM on a truly outrageous subject which you ought to read about (I'll let George's unduly restrained essay speak for itself) offers an interesting aside. I wonder if anybody important will notice?

In the area of human rights, the Second Circuit is best known for its 1980 opinion that a physician from Paraguay could sue the inspector general of police of AsunciĆ³n, Paraguay, in the United States for the murder and torture of his son in Paraguay; the court ruled that he could do so under the Alien Tort Statute because torture is universally condemned as a violation of international human rights law and "the torturer has become — like the pirate and the slave holder before him — hostis humani generis, an enemy of all mankind."



Dr. House said...

Must have good food and good health as this can have a better performance and efficiency, this is good information to websites like where there are different ways to improve your health ...

Anonymous said...

Switz. also used the mantra of competition > lower costs to set up private health insurance. However, as it also proceeded to use common sense (the basic health package is agreed on by insurers, docs, the gvmt, patients, citizens, and is subject to referendum - we have just voted on whether to include some homeopathy etc.) and the cost is calculated according to past costs, the insurance cos. had, and have, almost no wiggle room, and all make offers that are very similar. They are closely controlled and make no money from the basic package (arguably, they waste some) the competition is ersatz and that is now recognized. It has also been shown that ppl do not (or hardly ever) change insurers because of cost differences. They change because they move (insurers are regional), marry (to have the same insurer), or because they quarreled with their insurance co.


Cervantes said...

Well Ana, what you really have is just private contractors doing the administrative work. It's sort of silly, but it does make the political road from here to there a bit easier to travel, I suppose. If I thought that could really happen here I'd say fine, let's go that route, but I am skeptical. As long as they have breath, they'll hold onto their profits and their hundred million dollar a year executive compensation (which you never had in the first place).