Can Amazon Fix American Health Care?

Amazon is teaming up with Berkshire Hathaway and JP Morgan Chase to have a go at reforming American healthcare. This is a good idea for two reasons: first, American healthcare definitely needs reforming. Secondly, it needs to be done in a more, not less, free-market direction.

Yes, I know that’s not quite how most of us see it. The usual pearl-clutching view is that the US healthcare system is already far too free-market. But that diagnosis entirely misunderstands the system and what it is that ails it; the system is cartelized and rigged in favor of the producers of healthcare. So much so that the method of paying for it, private-sector insurance, just isn’t the root problem.

Monopolies and Spending Other People's Money

Milton Friedman explained all of this 40 years ago, and matters haven’t improved since then. There is the essential financial problem, which is that people aren’t spending their own money on themselves (the way of spending which produces the optimal outcome). PJ O’Rourke’s version of the four ways to spend money is more amusing than Friedman’s, but we are still stuck on the fourth and least efficient method of doing it — spending other peoples’ money on other people. Not something that’s going to be improved by government taking over the raising and distribution of the cash, obviously.

But beyond that, and far more important as an explanation of the cost of the system, is the manner in which medical care provision isn’t anything close to a free market. Friedman particularly inveighed against the restrictions the American Medical Association places upon the training, number of, mobility, and monopoly of doctors. But there are many other restrictions too. For example, in many states, it is not possible to open a new medical facility — or even expand the equipment installed — without the express agreement of all local competitors that such expansion is needed.

It is this protection of the incumbents which explains why the US pays nearly twice — 18 percent or so of GDP — what other rich nations do for its healthcare. The system is good in at least one sense: treatment, for those who have the insurance, is blindingly fast by the standards of almost everywhere else. The system is also paying for a very large portion of that public good, global drug research, and development. But that’s not enough to explain the cost — it’s the cartelization and monopoly within the system which is responsible.

It would be good to have someone come in and break that economic power. Competition is, after all, the cure for such monopolistic costs. Conceptually, we might imagine government doing this, but since that monopoly power is granted by the political system itself, it’s not where the solution can be sought.

Disruption Is Needed

Warren Buffett is fond of saying that he likes a business with a moat around it. What he means is protection from any competition which might erode profits. He usually means something like branding, a distribution system that would cost too much to replicate, or some similar advantage — although he’s not averse to legally protected profits, such as those to be had in the insurance industry. And there’s a legally constructed moat around US healthcare, which explains the vast incomes of those working in it and, thus, the cost of the system.

Just as with medieval castles, the answer to a moat in military terms is overwhelming offensive power. Or, in economic terms, sufficient market power to be able to battle that defense. Which is where — perhaps — we may be with these three companies taking on the task. They have enough people for whose health care they are already paying to make it interesting for them to try to crack the problem. They’re not short of resources, and they’re most certainly not lacking in entrepreneurial brains. Who knows? They may even be able to make a success of it.

American healthcare definitely needs reform. But to do that we need to identify what ails it and, as Friedman said, the answer is not the insurance model itself, but the privileges accorded to the providers of it. The answer to monopolistic costs imposed upon consumers is competition.

With these three major corporations turning their attentions to providing just that, it may be possible to get genuine reform. We should wish them luck, for they’re going to need it — perhaps we should lay in a stock of popcorn as we watch how it plays out. But since they are identifying the problem correctly, there is at least a reasonable chance that they’ll be able to improve the system substantially.

Reprinted from CapX.

Tim Worstall


Tim is a Fellow at the Adam Smith Institute in London

This article was originally published on FEE.org. Read the original article.

Health Care Is a Mess… But Why?

Health Care Is a Mess... But Why?

You probably know a couple who both work full time to support their children, but even with their dual incomes, they’re finding it more and more difficult to afford health insurance.

Everyday incidents like sports injuries, asthma, and blood pressure, combined with their anxiety over rising premiums, are turning their American dream into sleepless nights.

Why can’t people catch a break? It wasn’t always this way!

According to the Consumer Price Index and Medical-care price index from 1935 to 2009, the health care spending crisis didn’t start until the mid 1960s, around the same time when Medicare and Medicaid were signed into law, and at the same time that we began requiring doctors to go through all sorts of expensive licensing procedures beyond medical school.

Since then, health care spending has doubled, even adjusted for inflation. Why? Well, there are a few reasons.

Everyone wants health care, but there’s only so much to go around. And short supply leads to high prices. Normally what happens in a marketplace is that when prices are high, entrepreneurs try to profit by finding more affordable ways to provide goods and services.

The more people become involved in providing these services, the less scarce they become and the lower the prices drop, so that over time, more and more people can afford them.

This is what happened to televisions, microwaves, computers, cell phones, internet service, delivery services, food, shipping, transportation/air-travel, entertainment, home security, fitness, yoga, massages, and even all the medical technology, like LASIK, that isn't as heavily regulated or controlled by government.

Can't government drive down the price of goods and services like the free market?

Let's look at what happened with Medicare and Medicaid as an example. In 1965, these two single payer health insurance programs were instituted in the US. These programs made the unfortunate less dependant on impartial private charities and more dependant on political institutions and pharmaceutical companies.

On top of that, these programs constantly require tax increases, and because they function more to satisfy the health care industry than the worker, they continually lead to more expensive and wasteful ways of treating patients.

As a result, prices shot up, making it even more difficult for people to afford health insurance. Not only that, but in 1965, government took over the training of new doctors, and in 1997 they limited the number of new doctors they would train at 110,000 per year – and the number hasn’t changed since!

Even worse, our government won’t let migrant doctors from developed western countries practice in the US without undergoing this training. So, not only do experienced doctors from other countries not want to practice medicine here, but the ones who do are taking up 15% of those few 110,000 slots, limiting the supply of doctors even more.

Won't Obamacare solve these problems?

Unfortunately, Obamacare suffers from similar problems. It eliminated the pricing structure by seriously restricting competition because all providers have to offer the same kinds of plans at the same price. And because that price isn’t really determined by the market, providers can charge the taxpayer way more than they could otherwise. It’s basically just a handout to big insurance companies.

But it doesn’t have to be this way! If we get the government out of health care, more people like those you know will be able to get the care they need.

Seamus Coughlin


Seamus Coughlin is a comedy writer and animator with a deep interest in politics and morality. A good deal of his work can be found on the FreedomToons YouTube channel.

This article was originally published on FEE.org. Read the original article.

Why the Swiss Health Care Model Will Never Work in America

Why the Swiss Health Care Model Will Never Work in America

If you’re wondering what in Hell is actually going on with U.S. health-care policy, the short version is this: Policymakers in both parties are trying to replicate Swiss policies in a country that isn’t Swiss.

The Affordable Care Act was, as thinkers as different as Paul Krugman and Avik Roy both observed, an attempt to Swiss up the U.S. health-insurance and health-care markets. (Obligatory reiteration: Those are not the same thing.) The Swiss system, Santésuisse, achieves one big progressive goal — universal health-insurance coverage — while offering much to please conservatives: a private market for health insurance and health care, consumer choice, and relatively low government spending on health care.

Obamacare vs. Santésuisse

Santésuisse is, in its broadest strokes, a lot like the model established by the so-called Affordable Care Act — a model that is kept in large part by the Republicans’ “repeal-and-replace” proposal, which neither repeals nor replaces the Affordable Care Act, though it does make some substantial changes to it.

Like Obamacare, Santésuisse mandates that all citizens purchase insurance from private insurance companies; establishes by law a minimum package of acceptable benefits to satisfy that mandate; subsidizes health-insurance premiums for lower-income people, with a goal of keeping their insurance premiums to less than 10 percent of their incomes; mandates coverage of preexisting conditions and imposes “community rating,” which means that low-risk insurance buyers pay higher premiums to allow for high-risk buyers to pay lower premiums, though the Swiss do make some adjustments for age and sex (!); it imposes controls on procedure costs and reimbursement for providers.

The Swiss model also does a few things that ACA does not: It requires that insurance companies offer their minimal policies on a nonprofit basis; it is structured around relatively high out-of-pocket expenses (high copays and deductibles) in order to encourage consumers to spend soberly; and, perhaps most important, it does this in the context of a health-insurance market that is entirely individual: There are no employer-based health-insurance plans in Switzerland. Everybody buys his own health insurance, the same way people buy everything from tacos to mobile-phone service. Swiss regulations also mandate that prices be made public, which helps consumer markets to function.

The Cost of Health Care

In terms of government spending on health care, Switzerland isn’t terribly different from the United States. Indeed, with the exception of high-spending Norway, per-capita government spending on health care is pretty consistent across a selection of advanced countries with very different health-care systems: Switzerland, the United States, the Netherlands, Sweden, Germany, and Denmark all have similar per-capita outlays. Interestingly, none of those countries has a national single-payer system: Sweden and Denmark have largely public systems, but they are run mostly by local governments rather than by the national government.

Among countries with single-payer systems, there is a fair amount of variability in per-capita spending: Australia, for example, has lower government spending than does the United Kingdom.

In terms of total spending — government and private spending together — countries with quite different systems lead the pack: The United States spends the most, followed by Switzerland, Norway, the Netherlands, Germany, Sweden, Ireland, Austria, Denmark, Belgium, and Canada. (These are OCED statistics from 2014.) The lack of a robust relationship between health-care systems, health-care expenses, and health-care outcomes suggests that the most powerful determinants of these are exogenous to policy, things like national demographic characteristics and economic conditions: Older people with lots of disposable income will tend to spend more on medical services, the Swedes and Okinawans have been healthy and long-lived under a number of different health-care systems, etc.

Which is to say, one of the reasons the Swiss and the Americans spend relatively large sums on health care may be the structure of the insurance markets; it might simply be that they are rich countries in which consumers choose to consume more health care, which would explain why Sweden and Canada are in the club of relatively big spenders. And low medical spending is not necessarily a sign of health: They don’t spend very much on health care in Cameroon.

Cultural Differences Matter

As Avik Roy and others have pointed out, trying to build Swiss health-care architecture on American foundations is a project by no means guaranteed to succeed. Switzerland, for example, has enjoyed very strong compliance with its national health-insurance mandate. Part of that is cultural (the Swiss are rule-following people), and part of it is that Swiss government: If you fail to comply with the mandate, the Swiss government will garnishee your wages and charge you a penalty equivalent to the cost of the premiums plus up to 50 percent, and, if you persist, the government will sign you up for an insurance policy and allow the provider to sue you for back premiums covering the period during which you were uninsured.

The American version is a little less robust, to say the least: The ACA mandate is “enforced” with a very small penalty that in most cases is nowhere near as expensive as signing up for insurance. That is, the Swiss have a system under which compliance makes economic sense, and we have a system under which non-compliance makes economic sense.

The Affordable Care Act was designed in a dishonest way, front-loading the revenue and backing in the expenses in order to get a nice budget score from the Congressional Budget Office. The CBO rolled its institutional eyes at this, and its report suggested very strongly that its analysts did not believe a word of what they were writing, inasmuch as the most popular parts of ACA were likely to be enforced while the unpopular bits — like the “Cadillac tax” — would be put off or softened, resulting in a program that in reality cost much more and produced less revenue than it did in the model version that CBO scored.

Sure enough, Hillary Rodham Clinton and Bernie Sanders both campaigned against the Cadillac tax (it hits their union foot soldiers first and hardest) while the House and Senate Republican plans would keep in, in theory, but put off collecting it until 2025 — at which point the smart money would be on its being put off again.

If you want a Swiss health-care system, then you have to be willing to accept ruthlessly efficient Swiss enforcement and an unsentimental Swiss bottom-line view of the program. Neither party is interested in that: The new Republican health-care plan would formally do away with the individual mandate while keeping a form of the preexisting-coverage rule, which is, the protestations of the bill’s drafters notwithstanding, probably going to be unworkable.

As long as you have a mandate that insurance companies cover preexisting conditions (i.e., that they place bets against events that already have happened) then you really have to have the mandate that people buy insurance, too; otherwise you create incentives to forgo buying insurance until you are actually sick, creating insurance markets composed mostly of sick people, a model that is not economically sustainable. If you want to cover preexisting conditions, then you have to have a mandate and enforce it strongly — Switzerland’s compliance rate is about 99.5 percent.

For comparison, the United States mandates that drivers carry automotive insurance, and about one in five drivers fails to comply with that mandate. And while the enforcement is tougher, the subsidies are less generous. Two-thirds of the Swiss receive no health-insurance subsidies at all, and the subsidies that are received tend to be relatively small except for the very poor.

But what is most critical may be that the Swiss model is free of one big problem that most Americans do not see as a problem at all: employer-based health-insurance programs. The Swiss market is an individual market, but most insured Americans get their insurance from their employers. Doing away with that would provide real benefits, but it would also bring a great deal of stress to risk-averse Americans who are, in large part, satisfied with their employer-based insurance plans. A Swiss system in the United States might — might — be a good idea, or at least better than the status quo ante of 2009.

A Swiss system with no real enforcement, sloppy economic thinking, and no dynamic, consumer-driven insurance market? A Swiss system that replaces Swiss efficiency with American sentimentality? It didn’t work when it was called Obamacare. It won’t work when it’s called Trumpcare or Ryancare or McConnellcare, either.

Reprinted from National Review. 

Kevin D. Williamson


Kevin D. Williamson is roving correspondent for National Review.

 

This article was originally published on FEE.org. Read the original article.

15 Faceless Bureaucrats Will Decide what Health Care You’re Allowed to Have

15 Faceless Bureaucrats Will Decide what Health Care You're Allowed to Have

President Trump and congressional Republicans have a second chance to take a whack at the Obamacare piñata – and the beauty of it is that this time, Democrats may want to take a swing at it, too.

“It” being the Independent Payment Advisory Board (IPAB), a.k.a the death panel that was much in the news during the debate over passage of the Affordable Care Act but which then quietly faded away. For the time being.

And for good reason – especially as far as Democrats are concerned.

The IPAB/death panel is to be composed of 15 bureaucrats appointed to six-year terms by the President. Future tense because the 15 bureaucrats haven’t been appointed yet. Because the IPAB hasn’t been “constituted” yet. Thankfully.

It is, however, slated by statute to come online once Medicare spending reaches a certain threshold relative to the Consumer Price Index. Kind of like an alarm clock you hope never goes off. 

Given the continued rise in health care costs, especially Medicare costs (the “Affordable” Care Act’s easy promises of reduced costs notwithstanding), this could happen as early as next year. As soon as the actuary for Medicare/Medicaid Services issues a report – already overdue for 2017 – that the "targets" have been exceeded, the IPAB automatically rises to life – in order to dispense death.

And that is what has Democrats worried.

Bureaucrats Directing Your Doctor

Nominally, the IPAB was created to control Medicare spending – supposedly by cutting red tape and so on. In practice, and notwithstanding assurance to the contrary, it would inevitably become a de facto price control/care-rationing body, cutting costs by unilaterally reducing "authorized" payments to doctors and other providers and by the simple expedient of declaring various treatments “not cost-effective,” thereby denying treatment outright.

To paraphrase Joe Stalin: No care, no problem.

It is Orwellian that the same Democrats who endlessly accuse Republicans of seeking to "deny care" to people have done exactly that by legislative and bureaucratic fiat.

By statute, the IPAB is required to cut costs in line with arbitrary “targets” – regardless of the effect on care. There is no provision for judicial or administrative review. Even the President is powerless to remove IPAB bureaucrats, once they are appointed. The IPAB is effectively both omnipotent and unaccountable. 

It is, in a very real sense, the not-yet-popped kernel of a UK-style single payer system in which neither you nor your doctor decide what care is needed, nor what care you’ll get. Instead, faceless bureaucrats – people neither you nor your doctor will ever meet or even talk with – would determine the care you’ll be allowed to get.

This, perhaps, is what former Speaker of the House Nancy Pelosi – an ardent backer of the Affordable Care Act – meant when she said, "You have to pass it in order to find out what's in it."

Well, surprise. 

The Chance to End the IPAB Before It Happens

It's no surprise that almost everyone who has found out – or will soon –  what the IPAB actually is either loathes it or is uneasy about defending it. Which presents a fantastic opportunity to do away with it. 

Republicans have of course always objected in principle to the idea of empowering government bureaucrats to interpose themselves between patients and doctors and to the rationing of care – and to government death panels. 

Democrats, on the other hand, are boxed into a corner. The whole point of Obamacare was to increase access to care – or so they claimed. But the ugly fact is that the IPAB will reduce access to care. Will ration care. Will deny people care. In particular, to older people – those dependent on Medicare. 

This time, it won't be hard-hearted insurance companies that pull the proverbial plug on grandma. It will be the much harder-hearted government. One can always change insurance policies. But there is no way to get away from government.

If the IPAB is ever “constituted," it will be compulsory. You will not be allowed to say “no, thanks” to it. You will not even be asked. The 15 unelected bureaucrats will simply decree.

Democrats will have a tough time facing their constituents once they find out what the IPAB is all about.

The good news – the huge news – is that it's politically feasible to prevent the IPAB from ever being “constituted” if action is taken within the next couple of months. A provision was built into the arcana of the Affordable Care Act that makes it possible to hit the ”delete” button on the IPAB without broaching the broader issue of the ACA itself.

In other words, it is not necessary to repeal and replace Obamacare in order to get rid of the IPAB death panel. It's an a la carte opportunity to nix a dangerous provision of Obamacare.

This must, however, be done by August 15, 2017 – just two months from now.

Republicans not only oppose the IPAB as a matter of principle, they very much need a legislative victory, particularly on the health care issue.

Democrats may not be particularly interested in helping them win one, of course. But they aren't in a strong position to prevent one, either.

It will be very politically difficult for them to defend rationing health care – and denial of care outright – to their constituents. They may not smile and shake hands for the cameras over this, but it's not likely they'll mount a vigorous opposition, either. Democratic Sen. Ron Wyden of Oregon has already joined with Republican John Cornyn of Texas on bipartisan legislation to repeal the IPBA – and there is a companion repeal measure in the House that has 124 co-sponsors. 

Republicans could easily jump-start the effort to get repeal and replace Obamacare by getting rid of it one piece at a time.

And with the help of Democrats this time.


Eric Peters


Eric Peters is an automotive journalist. Eric started out writing about cars for mainstream media outlets such as The Washington Times, Detroit News and Free Press, Investors Business Daily, The American Spectator, National Review, the Chicago Tribune and Wall Street Journal.

This article was originally published on FEE.org. Read the original article.

Occupy Wall Street talking gibberish about healthcare

The Act is nothing more than a half trillion dollar theft for the health insurance industry. That it benefits big business does not make it a “free market” solution. It’s just more welfare, of the corporate variety, that libertarians oppose like any other forcible redistribution of wealth.

The gibberish comes in when Occupy argues for its solution. Proposing “Medicare for All,” a single-payer healthcare system 100% operated by the government, Occupy makes this statement.

“We believe that healthcare is a human right, not a commodity or a luxury for those who can afford it.”

Gibberish. Why? Let’s think for a moment about what this statement really means. To do that, we’re going to have to define the words used in the statement. The first one is “healthcare.”

What is healthcare? There is one answer to that question that is impossible to refute.

Healthcare is the labor of other people.

When a patient sees a doctor, they are purchasing a product. The product is the doctor’s labor. It is not only the skills and experience that the doctor brings to the exam room. It’s also his time. It’s a portion of his life that he is giving up to try to solve whatever ails the patient.

To claim a right to healthcare is to claim a right to some part of the healthcare provider’s life.

via megalextoria.com

Something cannot be a 'right' that requires someone else to provide it. - http://f52b0cf2.tinylinks.co

Ron Paul: Government is Already Too Involved in Healthcare

Congress needs to let markets work by aggressively repealing healthcare laws, including: the HMO Act of 1973; the Medicare Part D prescription drug benefit passed in 2003; and the Obamacare bill passed in 2010. Furthermore, we must begin scaling back Medicare coverage altogether for younger generations so they will not rely on a system that cannot remain solvent in future decades. Only by taking these steps now can we begin to undo the harm done by government to the once noble field of medicine.

via megalextoria.com

http://4a1ef97b.tinylinks.co