Consumer Power Report #218

There’s a must-read essay by Avik Roy in the journal National Affairs this month, with some real insight into the lack of a transparent national health care marketplace, including a solid explanation of why consumers are voting with their feet on health care:

“It is true that consumer-driven plans can lead to less consumption than fourth-party insurance does. That is, after all, one of their salient qualities — they encourage more intelligent (and so more selective) consumer behavior. But the significantly lower premiums associated with consumer-driven plans make health care more affordable for individuals with lower incomes, and so allow them more, not less, access to the care they and their doctors decide they need. The lower premiums have the added benefit of attracting younger and healthier individuals into the risk pool, mitigating the problem of adverse selection, and thereby reducing the cost of coverage for everyone else. And while it is true that health-care choices can be complex, 21st-century consumers are accustomed to making complex decisions. If they can choose between hundreds of models of computers and automobiles, each with its own extensive set of bells and whistles, they are certainly capable of making choices about health plans and treatments that will affect their lives far more significantly.”

The Hill is one of many outlets reporting today about the latest report from Rick Foster, chief CMS actuary. Foster finds the new health care reform law will add coverage for roughly 34 million – exceeding some estimates – but also finds the new plan will do very little to cut back on spending projections or controlling costs. And without holding Congress to its word on Medicare cuts and other unlikely circumstances, those costs will rise by more than 1 percent over the next decade.

Of the four million people the Congressional Budget Office expects to pay the IRS-levied fine rather than purchase health insurance, the vast majority of penalties are expected to be paid from households with incomes more than 400 percent above the federal poverty level. The penalties at that point should average around $1,000 a year – well below the expected cost of coverage. I continue to believe that, given the simple math involved, these estimates are far lower than the actual number of people who will pay the fine and skip the coverage until they need it. As much as 15 percent of American drivers lack auto insurance, and I expect nearly that percentage to avoid purchasing health insurance.

Touching on the doctor shortage question, commentator James Warren writes at BusinessWeek that general practitioners deserve to be paid better than they are: “Other factors affect the general practitioner shortage, from a med school culture that considers it more glamorous to be an orthopedic surgeon or anesthesiologist – not to mention more advantageous to pay back student loans – to the media’s fascination with obscure diseases. (Goodbye Marcus Welby, M.D., hello House.) The result is a system ill suited to our needs. The panel is calling for a 40% hike in the number of primary-care doctors – and a 40% income increase for those entering the field. That should get general practitioners to within 70% of the median income of specialty physicians.”

At MedPage Today, a friendly reminder on the limits of those popular omega-3 fish oil supplements: “In a randomized, placebo-controlled trial of nearly 900 septuagenarians, the omega-3 fatty acid supplements had no effect on cognition, according to Alan Dangour, PhD, of the London School of Hygiene and Tropical Medicine, and colleagues. Over a two-year period, there was no difference in cognitive decline in either the fish oil or placebo arm of the study, the longest yet conducted, Dangour and colleagues said online in the American Journal of Clinical Nutrition.”

Omega-3s are still good for you, but “good for you” seems to transform into “wonder drug” far too fast in today’s supplement marketplace.

Wall Street insider Francis Cianfrocca writes on the “health care bubble” as an economic issue, and raises an interesting point: “We know that the government created one of the essential causes of the financial collapse, by steadily increasing mandatory lending to ‘underserved’ (primarily minority) communities. … But do you notice the similarity with healthcare? Just as government then (and now) forces banks to lend money to people who can’t afford to borrow it (leading the banks to relax underwriting standards so they meet their mandates), government is now forcing insurance companies to cover people that wouldn’t ordinarily buy insurance for economic reasons.” The result, in conditions like this, is a skewing of resources and a growing bubble.