Saturday, March 27, 2010

On health care, again

In a word: ambivalence.

So health care passed and depending on who you talk to its either turned this country into an egalitarian paradise or a fiscal nightmare. Both claims are equally ludicrous.

I'm not happy with the legislation that passed because, as I saw it, there were/are two goals to health care reform. We wanted to stop spiraling costs from destroying both private pocketbooks and public entitlement programs, and we also wanted to finally join the rest of the civilized world by insuring most citizens. Well, we've successfully accomplished the latter goal, but even the most ardent supporters of this reform bill have to admit utter defeat on the first.

My lack of happiness stems from our lack of doing what I saw as the more important goal: changing the incentives in this perverse system in order to cut costs. As I saw it, bringing down health care costs would allow more people to afford it and thus bring more people into the system. Bringing more people, however, into a clearly broken system just puts a heavier strain on policies that have been failing for quite some time and will continue to do so.

My lack of outright unhappiness comes from the fact that I don't see broadening the social safety net as an inherently bad thing. I'm glad more people are insured, and it seems that this bill did it in a relatively responsible way. I still think the fiscal aspect is highly overstated: almost everyone compares this bill to the Massachusetts plan which isn't necessarily failing but has far exceeded even the wildest of initial cost estimates. As such, it has turned to the federal government for help, but the federal government won't have that luxury.

The cost estimates from the CBO rely heavily on the ability of congress to approve taxes and recommendations in the future, such as the 'Cadillac Tax' that is supposed to become effective in 2018. This can, and most certainly will be undone with the stroke of a pen once 2017 rolls around and thus the budget estimate becomes meaningless. Likewise, supposed cost cutting measures come from a panel that will set guidelines regarding the efficacy of certain treatments that are contingent on congress signing into law. We all know how well that will work, it's hardly been 6 months since the recommendations for mammograms caused outright vitriol across the country.

Nevertheless, I'm glad to live in a country where more people will be insured and I don't think the effect on growth will be that horrendous. Make no mistake about it though, these taxes will have a net detrimental effect. Caterpillar predicts 100 million in added costs, AT&T: 1 Billion. Yes we'll insure people with that money, but it will absolutely come at the expense of jobs and productivity. I'm okay with that, but it's essential to keep in mind.

The real issue now is how to get at cost. Unfortunately, and I hope I'm wrong on this, passage of this bill makes further reform even less likely if only for the fact that people are sick of hearing about health care. We do, however, need tort reform. We absolutely do need to take away the tax breaks for employer provided insurance. This ridiculous system serves only to obfuscate health care costs and prevents individuals from being able to accurately weigh the costs and benefits of certain health plans and procedures. We would all be much better off if our paychecks were a bit larger and we could use that money to shop around for our own insurance plans like they do in every other non-single-payer country in the developed world. Increasing transparency and bridging the information gap at this microeconomic level is crucial to fixing our macroeconomic problem.

Politically, I laugh in the face of angry Republicans on this one. They claimed the system was broken and provided abslutely no concrete fixes. How hard would it have been to say at the health care summit, here: this is our plan. But they didn't. Instead they talked about tort reform, and even then it was far to late. They had the chance to get these good ideas into the Senate Finance Comittee's initial bill, but they belly ached and left the processs completely. The sad thing is that tort reform would have been great to add to this bill, as would have been the end of employer tax breaks. I think the bill would have been far better with some of these Republican ideas, none of which were at odds with this existing legislation.

Instead they kept them as mere ideas rather than concrete proposals and stood steadfast in their opposition to the current bill which really isn't all that bad and they know it. Just ask Mitt Romney the conservative poster child who passed an 85% similar bill a few years ago in Massachusetts. Whining about the individual mandate is absolutely shameful; this was THEIR idea in the mid 90's. You absolutely can't stop the exclusion of pre-existing conditions without the individual mandate because everyone would wait until they get sick to go sign up for insurance. Likewise, you can't break this bill into smaller chunks and tackle them one at a time as was preposterously suggested: it's clear that these policies rely on one another to be effective.

That's not to say I'm happy with the Democrats, after all, why on earth isn't tort reform in here? Just because it was a Republican idea? Clearly bowing to the unions are why the employer tax break stays put, and why the Cadillac Tax won't be implemented for 8 years, if ever. My inclination is to take the government intervention out of the system rather than add more regulation, but I know not everyone would agree. This is why I advocate less government intervention in the realm of giving tax breaks to businesses that supply health insurance. I just truthfully can't fathom the argument for this system especially in the face of an individual mandate where everyone would be forced to get health care. It's a 'less-government' idea, and why democrats can't support a single decrease in government size is mind-boggling.

In any event, we're left with a new entitlement that is mostly paid for and will help a lot of people in this country, most of whom are from lower income brackets, get access to health care. It also leaves us with a politically toxic and polarized environment which will make further reform on health and other issues more difficult. It adds more stress to an already broken system of health delivery, and it does little to curb costs and nothing increase tranparency at the microeconomic level so that individuals can make more rational decisions. The tax increases aren't crippling to growth, but considering the other inevitable tax increases that will be required to come close to balancing the bloated federal budget, they might quickly approach crippling.

With that rant, I'll leave you with some of the better articles that I've read on the issue. Most of these are critical or ambivalent, and I'm purposefully doing that because the benefits of having more people insured are clear. Reading some critiques can help us decide whether the costs (which are far less clear) are worth the benefits.

From Cafe Hayek

From The Economist
From the American Enterprise Institute

Another from AEI

And as a special treat, here is a fantastic bonus article on entitlements

No comments:

Post a Comment