More Pushback from VT Providers

We've seen the "good cop" side of Vermont care providers' response to Single Payer, here comes the "bad cop."  The good doctor gives a litany of ways providers will react to the cost control regime, none of them good.  This kind of reaction is predictable and inevitable, it is why single payer advocates who focus solely on the evils of private insurance are not setting themselves up for success.  But two points are worth bearing in mind:

• The fact that doctors practicing under the current system are unwilling to practice under a system affordable to the public doesn't mean that reform is unworkable.  It just means that different doctors will be needed.  Med Schools starting at the application stage need to reconsider what it means for someone to be a good candidate to become a doctor.  Why does someone want to practice medicine?  Is it to help people, or to get automatic entry into the top 0.1% of the economy?  Such questions need to be given priority, especially when you consider how trivial admissions processes are (is it relevant in any meaningful sense whether someone got an "A" or a "B" in a weed-out OChem class?)
• Despite all the threats and complaints, the reality is that doctors in countries with single payer plans tend to be happier with their work then doctors now in the U.S. Again, see the point that maybe we need different people with different priorities and motivations practicing medicine.

Why the "industry" means more then insurers

When Oregon considered creating its Health Insurance Exchange, there were two key issues of dispute.

• Would the exchange be an "active purchaser", with the ability to exclude carriers even though they met federal qualifications?
• How many board members could be from the "health care industry," where that was broadly construed to mean insurers and providers.

 In discussions of the latter issue, it was routine to see questions about why doctors should be excluded or to simply construe "industry" as meaning insurers.  Implied was that providers were disinterested parties not at all concerned about money.  Here is a headline that puts such thinking in its place:

AMA opposes ‘active purchaser’ model for exchanges

H/T Incidental Economist

Irreconcilable Differences on the Right

From Kaiser, on why South Carolina isn’t trying to build an exchange:

[South Carolina’s Director of Health and Human Services] argues that the main function of the exchanges is to deliver the federal subsidies. That, according to Keck and other members of the subcommittee he chairs, "is solely a federal concern in which the state has no compelling interest."

From WSJ, claiming federal exchanges can’t offer subsidies:

ObamaCare authorizes premium assistance in state-run exchanges (Section 1311) but not federal ones (Section 1321). In other words, states that refuse to create an exchange can block much of ObamaCare's spending and practically force Congress to reopen the law for revisions.

Who’s lying?  Also notice the extortion angle in the WSJ piece- rewrite the health care law or Tea Party states will go to court to deny themselves exchange subsidies.  Wow, that will keep people up at night.

Ratemaking vs. Negotiating in Vermont

Doctors in Vermont have apparently picked up on the concept that they will be providing most of the savings under Single Payer.  Unsurprisingly, they're forming bargaining units to "inform the process."

Here is a philosophical question:  Does it make sense to pay doctor groups differentially based on how effectively they negotiate?  Should the Vermont Medical Society get paid more then HealthFirst because of the skill of their lobbyist?

That question points out a politically incorrect truth.  The process of establishing provider payments isn't really a negotiation at all, it is an exercise in rate setting by the state.  That rates will likely be influenced by "negotiators" does not contravene this, it will just indicate a clumsy and poorly thought out ratemaking process.

POW: Alex Steffen

LSE hosted Alex Steffen for a discussion of where the world in general and cities in particular are going.  I thought the most interesting take was the concept that what will save us is better data.  He talks about how everything from how we drive (mileage meters) to how we use power or water will eventually automatically record data and then give us information- how do we do compared to average?  How are we doing compared to yesterday or the year before?  To me it is a profound example of tech making what was once arbitrary and irrelevant into something specific and purposeful- changing how we use the gas and break pedal to be more efficient, connecting actions with consequences.

There is a downside though, in that the process of converting data into knowledge is not value free.  Someone has to determine what the average is and how it should be calculated, someone determines the scales on which we judge ourselves.  For example with utilities is the relevant average per household or per person?  For vehicles should they be judged by class (hatchbacks separate from SUV’s) or all together?  Those questions establish norms for society, but because of their “back room” nature it is unlikely people will be aware of them or the values embodied in their selection.  It’s analogous to what insurers do in developing classification plans, except that if people don’t like the way an insurer classifies them it’s easy enough to find a different insurer.  Not so with society…

Notes from Vermont

The Vermont Legislative Joint Fiscal Office released a report estimating the savings made possible by Single Payer. They estimate it will save between 0.8 and 3.5 billion between 2014 and 2019. To put those numbers in perspective, at the high end it would save more in six years on a per person basis then the much ballyhooed “super committee” is trying to cut in ten.

There’s also plenty of grist to back up my suspicions that people who advocate for Single Payer don’t really know what they’re talking about. The most common narrative advocating Single Payer runs along the line of “If we just get rid of the insurers, there will be tons of money and everyone will be happy.” Helpfully, Vermont breaks out their savings into some detail:

The low estimate shows about a third of savings coming from admin including both the payer (insurance) and provider (doctor) sides. More then half the savings come from clinical reform, which addresses how much doctors get paid, in what manner (capitation vs. fee for service), and improvements to public health and reduced utilization. The location of the "fat" is even more apparent in the high estimate:

So if Single Payer works the way people want it to, more then 75% of savings come from medical reform, not admin. And unsurprisingly, this is really hard. The paper discusses some of the issues confronted just to construct credible estimates. For example,

Each of these [payment reforms] has its own set of difficulties. For example, what is the right price to pay for a medical service? Is it the amount it costs to produce? Is it the amount at which an adequate provider supply is available? Is it the amount someone without insurance would be willing to pay for it (and who – Bill Gates or someone working at a minimum wage job)? Finally, is it the amount we as a society can afford to pay?

Implementing Single Payer involves all kinds of questions about what care should be delivered and what should be paid for it. In my view to answer those questions is to sell the program. How likely are people to buy into single payer if they don't know what they are getting? Instead advocates rely on a false narrative that reinforces a mythical conception of cost-free healthcare, one that ensures that even if the public does buy into single payer they will be unwilling to accept the compromises necessary for it to actually work.

Remedy and Reaction

I finished reading Paul Starr’s Remedy and Reaction.  This is an extraordinarily readable discussion of health insurance.  The book is worth getting for the first chapter alone, which summarizes reform efforts from the progressive era through Carter with enough detail to articulate why programs like Medicare succeeded versus the many others that failed. 

Starr then devotes chapter length treatments to the Clinton and Obama plans, describing why the Clinton plan ran off the rails and how Obama was determined to avoid the same fate.  I couldn’t help but walk away with much more respect for both men for their efforts.

Highly Recommended!