Liberalism Will Never Fix Our Broken Health Care System

Justin Haskins Heartland Institute
Published May 4, 2016

Consumer Power Report #504

In a May 2 op-ed for The New York Times, Richard Scheffler, a professor at the University of California-Berkeley, and Sherry Glied, a professor at New York University, acknowledge the Affordable Care Act’s failure to create a competitive health insurance marketplace.

“The architects of the Affordable Care Act (ACA) counted on competition in the health insurance market to keep costs down and quality high,” wrote Scheffler and Glied. “While the law has accomplished many of its coverage and cost-containment goals, its vision of a more competitive insurance market seems to be fading.”

Scheffler and Glied continue by outlining some of the more troublesome recent developments related to the ACA health insurance exchanges, focusing primarily on the growing list of major health insurance providers who have decided to abandon Obamacare exchanges because of significant revenue losses.

Scheffler and Glied admit Obamacare isn’t working as planned, but rather than suggest a move toward free-market reforms, the authors believe state governments ought to seize even more control over who is allowed to operate in health insurance exchanges.

“The lesson here is that, especially in a health care system that is becoming more concentrated, competition and regulation can work together,” wrote Scheffler and Glied. “A third party – governmental or quasi-governmental – can use its purchasing power to ensure that negotiating better health care prices benefits consumers, not just insurers.”

The authors point to their study of the state exchanges in California and New York to show further market restrictions actually improve market competition. As Scheffler and Glied explain, New York allowed all willing insurance providers to participate in its health insurance exchange, but in California, only 12 of 32 insurers who initially showed an interest were allowed to offer health insurance plans. This, the authors conclude, is one of the primary reasons health insurance premiums are higher in New York markets with fewer insurers available than similar markets in California.

“In California, by contrast, areas with fewer insurers also had lower premiums,” wrote the authors. “Why? With initial premiums set at modest but adequate levels, and a vibrant marketplace, there was no need to further threaten insurers who might consider large premium increases. If an insurer tried to raise its premiums too far, consumers could easily shop among the restricted set of insurers for an identical product and switch to an alternative plan. Even in areas with fewer insurers, competition was sufficient to keep cost growth down.”

Scheffler and Glied also say the lower premiums in California are partly due to greater “standardization” of health insurance plans. They argue that because California forced most insurers to offer plans with very similar terms and benefits, it was easier for consumers to pick health insurance offerings based purely on price, rather than have to wade through all of the various plan types that exist in New York.

We’ve seen this argument before: If only the government were more involved, all of the nation’s health insurance problems would go away. Brilliant bureaucrats with a talent for saving money and being frugal (try to contain your laughter) can negotiate better prices for everyone and cut the unnecessary waste imposed on consumers by greedy businesses, and costs will come tumbling down.

Using that logic, I’m not sure why a market needs to exist at all. If government bureaucrats are so great at negotiating prices and standardizing services with insurers, imagine how outstanding they would be at operating a single-payer, nationalized health insurance system! Even better: Let’s put bureaucrats in charge of everything. If they know better than the health insurance companies and health care providers, why wouldn’t they know better than car insurance companies, banks, fast food restaurants, manufacturers, or any other business for that matter? If improving services and cutting costs is truly as simple as adding centralized planning, why not have the government plan everything?

Just try asking a liberal friend of yours to answer those questions and watch the incredible word-fumbling begin. The truth of the matter is liberalism, when taken to its logical end, always leads a nation to the same place: totalitarianism.

A perfect example of this phenomenon is U.S. health care policy during the reign of President Barack Obama. At the time Obama took office, the health care system had some serious problems: rising prices, out-of-control costs, growing Medicaid rolls, etc. To address these concerns, Democrats gave us the Affordable Care Act. “More centralized planning is what we need,” we were told, and more centralized planning is what we got.

Since the Affordable Care Act passed into law, health insurance premiums have skyrocketed, quality health insurance plans have disappeared from Obamacare health insurance exchanges, insurances companies have, in some cases, lost hundreds of millions of dollars and have abandoned exchanges, access to quality care has been reduced, Medicaid rolls have grown dramatically, and U.S. debt is worse than ever.

How can we resolve these crises? More regulations, we’re told. And when those fail, we’ll be told even more regulations are needed.

When faced with the constant, pounding drumbeat of “more regulation, more regulation,” ask the ultimate impossible-to-answer question for leftists: When in history has this strategy ever taken a nation from poverty to prosperity? Is there even a single example?

The reason free markets work and centralized planning doesn’t is because individuals in pursuit of bettering their own lives will, in the vast majority of situations, make better decisions than lesser-interested parties, such as government bureaucrats. This is precisely why children learn responsibility by having earned possessions of their own to be responsible for.

Why would a government official be more interested than I am in making sure I save money, receive quality health care, or put my children in the best educational environment? A bureaucrat generally isn’t, and anyone who has ever had the pleasure of spending a Saturday afternoon waiting in line at a Chicago post office or DMV office will tell you just how right I am.

What about the arguments made by Scheffler and Glied in regards to New York and California? Didn’t they prove that in at least that instance, more government control improved the situation?

First, comparing California to New York is like comparing a car to a boat. There are so many other factors to consider, such as population size, population density, existing health care problems, weather, eating habits, culture, immigration, etc., that a comparison of health care costs in two completely different states based on a small number of factors is wildly misleading.

Second, premiums are only one piece of the very large and complicated health care puzzle, and other considerations paint a different picture than the one presented by Scheffler and Glied. For instance, average health insurance deductibles in California for Bronze plans rose by $553 in 2016 compared to 2015 and by $297 for Silver plans. That’s significantly higher than the deductible increases that occurred in New York, which experienced a $300 increase in its average Bronze plan deductible and $205 for its Silver plan.

Third, and perhaps most importantly, premiums rose dramatically immediately after Obamacare was implemented, and they have yet to go back to pre-Obamacare levels. In fact, they continue to rise almost everywhere in the country. From 2013 – prior to the opening of the Obamacare exchanges – to 2014, average premiums rose by 44 percent for 23-year-old women, 78 percent for 23-year-old men, 35 percent for 30-year-old women, and 73 percent for 30-year-old men.

All this occurred after the Affordable Care Act greatly increased the role of the federal government in health care. If more central planning is going to solve problems related to rising health care prices, it would be bucking a well-established trend in the opposite direction.

— Justin Haskins


IN THIS ISSUE:


HHS, TEXAS REACH DEAL DELAYING MEDICAID DEBATE

The Obama administration and Texas have reached an agreement to extend a temporary program that helps the state’s poor access healthcare, postponing a contentious debate over ObamaCare’s Medicaid expansion.

The deal between the federal Centers for Medicare and Medicaid Services (CMS) and Texas continues for another 15 months an “uncompensated care” program that gives billions of dollars in federal funding to help hospitals in the state care for the uninsured.

The Obama administration has raised the possibility of reducing this funding so that it does not cover care that would be covered if the state expanded Medicaid. That is, the administration says giving people insurance in the first place through Medicaid is a better system than reimbursing hospitals for caring for uninsured people.

But the Republican-led Texas government opposes expanding Medicaid. If the “uncompensated care” funding had been cut without an expansion of Medicaid, it could have led to harmful cuts in care.

The deal reached Monday postpones the debate over expanding Medicaid by continuing the full uncompensated care funding for another 15 months.

SOURCE: By Peter Sullivan, The Hill


VETERANS MORE LIKELY TO DELAY SEEKING HEALTH CARE

Military veterans are more likely to report delays in seeking necessary healthcare, compared to the US general population, reports a study in the Journal of Public Health Management and Practice. …

Such self-reported care delays may be related to having Veterans Administration (VA) health coverage – and to long waiting times in the VA system, according to the study by Doohee Lee, PhD, of Marshall University, South Charleston, W.V., and Charles Begley, Ph.D., of the University of Texas School of Public Health, Houston. “Access problems within the VA system may be creating disparities in care for this vulnerable and deserving population that need to be mitigated,” the researchers write.

SOURCE: Wolters Kluwer Health


STUDY: MEDICARE PAYS BONUSES TO LOW-QUALITY PROVIDERS FOR HAVING CHEAPER COSTS

The federal government paid bonuses to 231 hospitals with subpar quality because their patients tend to be less expensive for Medicare, new research shows.

The bonuses are small, generally a fraction of a percent of their Medicare payments. Nonetheless, rewarding hospitals of mediocre quality was hardly the stated goal when the Affordable Care Act created financial incentives to encourage better medical care from hospitals, doctors and other health care providers.

A study published Monday in the journal Health Affairs looked at the more than $1 billion in payments made last year in the Hospital Value-Based Purchasing program, which raises or lowers Medicare payments to hospitals based on the government’s assessment of their quality. Medicare primarily uses death and infection rates and patient surveys to judge hospitals, but it also evaluates how much each hospital’s patients cost, both in treatment and recovery.

The 231 hospitals the study identified had below average scores on quality measures but were awarded the bonuses because caring for their patients during their stays and in the 30 days following their discharge cost Medicare less than what it cost at half of hospitals evaluated in the program.

SOURCE: By Jordan Rau, U.S. News & World Report


MORE DEMOCRATS TAKE UNFAVORABLE VIEW OF OBAMACARE

The proportion of Democrats who have an unfavorable opinion of Obamacare is increasing, according to a report from the Kaiser Family Foundation.

Nineteen percent of Democrats viewed the law unfavorably a month ago, a figure that has increased to 25 percent this month, according to the latest poll.

“Of the Democrats who did not express a favorable opinion of the ACA, 40 percent want to expand what the law does, 20 percent do not know what they would like to see Congress do when it comes to the health care or mention of something else, 19 percent want to repeal the entire law, 13 percent want to move forward with implanting [sic] the law as it is, and 9 percent want to scale back what the law does,” the report states.

When asked what Congress should do when it comes to Obamacare, 32 percent said they would like the entire law repealed, 30 percent said they would like to expand what the law does, 11 percent said they want to scale Obamacare back, and 14 percent said they want to move forward implementing it as is.

Overall, 49 percent say they have an unfavorable view of Obamacare, while 38 percent of Americans view Obamacare favorably.

SOURCE: By Ali Meyer, The Washington Free Beacon