Category Archive for: Health Care [Return to Main]

Monday, March 27, 2017

Paul Krugman: How to Build on Obamacare

"If Mr. Trump really wanted to honor his campaign promises about improving health coverage..., there’s a lot he could do":

How to Build on Obamacare, by Paul Krugman, NY Times: “Nobody knew that health care could be so complicated.” So declared Donald Trump three weeks before wimping out on his promise to repeal Obamacare. ...
Actually, though, health care isn’t all that complicated. Basically, you need to induce people who don’t currently need medical treatment to pay the bills for those who do, with the promise that the favor will be returned if necessary.
Unfortunately, Republicans have spent eight years angrily denying that simple proposition. ... But put politics aside..., what could be done to make health care work better...?
The Affordable Care Act deals with the fundamental issue of health care provision in two ways. More than half of the gains in coverage have come from expanding Medicaid... And that part of the program is working fine, except in Republican-controlled states that won’t let the federal government aid their residents.
But Medicaid only covers the lowest-income families. Above that level, the A.C.A. relies on private insurance companies, using a combination of regulations and subsidies to keep policies affordable. This has worked well in some places. ...
Overall, however, too few healthy people have purchased insurance, despite the penalty for failing to sign up... As a result, some companies have pulled out of the market. And this has left some areas, especially rural counties in small states, with few or no insurers.
No, it’s not a “death spiral”... But the system could and should be improved. ...
What about the problem of inadequate insurance industry competition? ... At the very least, there ought to be public plans available in areas no private insurer wants to serve. There are other more technical things we should do too...
So if Mr. Trump really wanted to honor his campaign promises about improving health coverage..., there’s a lot he could do... And he would get plenty of cooperation from Democrats along the way.
Needless to say, I don’t expect to see that happen. ...
And the tweeter-in-chief’s initial reaction to health care humiliation was, predictably, vindictive. He blamed Democrats, whom he never consulted, for Trumpcare’s political failure, predicted that “ObamaCare will explode,” and that when it does Democrats will “own it.” Since his own administration is responsible for administering the law, that sounds a lot like a promise to sabotage Americans’ health care and blame other people for the disaster.
The point, however, is that building on Obamacare wouldn’t be hard, and wouldn’t even be all that complicated.

Friday, March 24, 2017

Paul Krugman: The Scammers, the Scammed and America’s Fate

"The destructive effects of false symmetry in reporting":

The Scammers, the Scammed and America’s Fate, by Paul Krugman, NY Times: ...Mr. Ryan’s proposed Obamacare replacement ... is one of the worst bills ever presented to Congress.
It would deprive tens of millions of health insurance — the decline in the number of insured Americans would be larger than ... simple repeal of Obamacare! — while sharply raising expenses for many of those who remain. It would be especially punitive for lower-income, older, rural voters.
In return, we would get a small reduction in the budget deficit. Oh, and a tax cut, perhaps as much as $1 trillion, for the wealthy.
This is terrible stuff. It’s made worse by the lies Mr. Ryan has been telling about his plan. ...
Some people seem startled both by the awfulness of Mr. Ryan’s plan and by the raw dishonesty of his sales pitch. But why..., he’s still the same guy I wrote about back in 2010, in a column titled “The Flimflam Man.”
I wrote that column in response to what turned out to be the first of a series of high-profile Ryan budget proposals. ... It was a con job all the way.
So how did Mr. Ryan reach a position where his actions may reshape the lives of so many ... for the worse? The answer lies in the ... news media, who made him what he is.
You see, until very recently both news coverage and political punditry were dominated by the convention of “balance.” ... And this ... meant that it was necessary to point to serious, honest, knowledgeable proponents of conservative positions.
Enter Mr. Ryan, who isn’t actually a serious, honest policy expert, but plays one on TV. He rolls up his sleeves! He uses PowerPoint! He must be the real deal! So that became the media’s narrative. And media adulation, more than anything else, propelled him to his current position.
Now, however, the flimflam has hit a wall. ... The C.B.O. told the devastating truth about his plan, and his evasions and lies were too obvious to ignore.
There’s an important lesson here, and it’s not just about health care or Mr. Ryan; it’s about the destructive effects of false symmetry in reporting at a time of vast asymmetry in reality.
This false symmetry — downplaying the awfulness of some candidates, vastly exaggerating the flaws of their opponents — isn’t the only reason America is in the mess it’s in. But it’s an important part of the story. And now we’re all about to pay the price.

Tuesday, March 21, 2017

The World's Easiest Chart to Make

In case you were wondering (any your probably weren't), from Kevin Drum:

Well, This Was the World's Easiest Chart to Make: CBPP has calculated how much tax money you'll save if Obamacare is repealed. Behold:

Blog_cbpp_tax_savings_obamacare_repeal

You know what really gets me? Even among the millionaires, repeal will only net them about $50,000. That's like finding spare change in the sofa cushions for this crowd. Is clawing back a few nickels and dimes really worth immiserating 20 million people?

Tuesday, March 14, 2017

Populism and the Politics of Health

Paul Krugman:

Populism and the Politics of Health: What’s next on health care? Truly, I have no idea. The AHCA is a real stinker... But ... starting off the Trump legislative era with the crashing and burning of Obamacare repeal would deeply damage Trump... So they will pull out all the stops.
But why are Republicans having so much trouble? Health reform is hard... But there’s a more fundamental issue: who is being served?
Obamacare helped a large number of people at the expense of a small, affluent minority: basically, taxes on 2% of the population to cover a lot of people and assure coverage to many more. Trumpcare would reverse that, hurting a lot of people (many of whom voted Trump) so as to cut taxes for a handful of wealthy people. That’s a difference that goes beyond political strategy. ...
And yet, and yet: Trump did in fact win over white working-class voters, who thought they were voting for a populist...
This ties in with an important recent piece by Zack Beauchamp on the striking degree to which left-wing economics fails, in practice, to counter right-wing populism... Why?
The answer, presumably, is that what we call populism is really in large degree white identity politics, which can’t be addressed by promising universal benefits. Among other things, these “populist” voters now live in a media bubble, getting their news from sources that play to their identity-politics desires, which means that even if you offer them a better deal, they won’t hear about it or believe it if told. For sure many if not most of those who gained health coverage thanks to Obamacare have no idea that’s what happened.
That said, taking the benefits away would probably get their attention, and maybe even open their eyes to the extent to which they are suffering to provide tax cuts to the rich. ...
... Trumpism is faux populism that appeals to white identity but actually serves plutocrats. That fundamental contradiction is now out in the open.

Monday, March 13, 2017

Life Expectancy and Health Expenditure

Life Expectancy and Health Expenditure per capita, 1970-2014
Static1.squarespace.com
Source: Esteban Ortiz-Ospina and Max Roser, Financing Healthcare, 2017. Published online at OurWorldInData.org.

 

Life Expectancy and Health Expenditure per capita (2011 international dollars, PPP-adjusted), 2014
Static2.squarespace.com
Sources: World Bank and authors' calculations.

More here: Improving U.S. Healthcare and Coverage - Cecchetti & Schoenholtz

Why the Republican Health Care Plan Is Destined to Fail

I have a new column:

Why the Republican Health Care Plan Is Destined to Fail:
It is the general social consensus, clearly, that the laissez-faire solution for medicine is intolerable.” – Kenneth Arrow, 1963.
As Republicans struggle to find an acceptable replacement for Obamacare, a task that does not yet appear to be complete given the growing opposition to their recent proposal, they would do well to remember the words of the person who invented healthcare economics, Kenneth Arrow.
Professor Arrow, a Nobel Prize-winning economist who recently passed away at the age of 95, argued that the market for healthcare is not like other markets for several reasons. ...

Friday, March 10, 2017

The AHCA’s Mandate Replacement Doesn’t Make Sense

Aaron Carroll:

The AHCA’s mandate replacement doesn’t make sense to me: ...The Republicans hate the individual mandate. I get that. I don’t necessarily understand their rationale, but I accept it. They also, however, understand the need for some sort of carrot/stick to get healthy people to buy insurance so that we don’t get adverse selection and see the private insurance market enter a death spiral. So they need to replace it.
We have discussed this before. There are many ways to solve this adverse selection problem without a mandate. ...
Moreover, the incentive is totally in the wrong direction. The individual mandate punishes those who don’t buy insurance – every year. As long as I remain uninsured, I will be penalized. I will be hit again and again, until I buy insurance. That’s a stick.
The new AHCA penalty works in the opposite direction. Once I’m out of the market, I’m left alone. It’s not until I re-enter that I’m hit with the penalty. The longer I stay out, the longer I avoid the pain. It’s an inducement to remain uninsured.
We know what needs to happen to reduce adverse selection. We need to make the carrots and/or sticks stronger. This seems to do the opposite. I don’t get it.

Tuesday, March 07, 2017

A Plan Set Up To Fail

Paul Krugman:

A Plan Set Up To Fail: So now we know what Republicans have to offer as an Obamacare replacement. Let me try to avoid value judgments for a few minutes, and describe what seems to have happened here.
The structure of the Affordable Care Act comes out of a straightforward analysis of the logic of coverage. ...
And the result has been a sharp decline in the number of uninsured, with costs coming in well below expectations. Roughly speaking, 20 million Americans gained coverage at a cost of around 0.6 percent of GDP.
Republicans have nonetheless denounced the law as a monstrosity, and promised to replace it with something totally different and far better. Which makes what they’ve actually come up … interesting.
For the GOP proposal basically accepts the logic of Obamacare. ... Conservatives calling the plan Obamacare 2.0 definitely have a point.
But a better designation would be Obamacare 0.5, because it’s really about replacing relatively solid pillars with half-measures, severely and probably fatally weakening the whole structure.
First, the individual mandate – already too weak, so that too many healthy people opt out – is replaced by a penalty imposed if and only if the uninsured decide to enter the market later. This wouldn’t do much.
Second, the ACA subsidies, which are linked both to income and to the cost of insurance, are replaced by flat tax credits which would be worth much less to lower-income Americans, the very people most likely to need help buying insurance.
Taken together, these moves would almost surely lead to a death spiral. Healthy individuals, especially low-income households no longer receiving adequate aid, would opt out, worsening the risk pool. Premiums would soar – without the cushion created by the current, price-linked subsidy formula — leading more healthy people to exit. In much of the country, the individual markets would probably collapse.
The House leadership seems to realize all of this; that’s why it reportedly plans to rush the bill through committee before CBO even gets a chance to score it.
It’s an amazing spectacle. Obviously, Republicans backed themselves into a corner: after all those years denouncing Obamacare, they felt they had to do something, but in fact had no good ideas about what to offer as a replacement. So they went with really bad ideas instead.

 Kevin Drum notes one reason why the bill is structured as it is:

The GOP Health Care Law Is Missing a Surprising Number of Tea Party Hobbyhorses: I was reading through the Republican health care bill last night, and it struck me that a lot of Republican hobbyhorses are missing. ...
I'm pretty sure the bill doesn't include any of the following:
-No tort reform. ...
-No insurance sales across state lines. ...
-No change to the essential benefits required of all health care plans. ...
-Obamacare is chockablock with regulations of all kinds, including incentives to reduce costs and rules about how doctors are paid. These appear to be intact under the Republican bill.
Why is this? If you look carefully, you'll see what these things all have in common: they don't directly affect the federal budget, which means they can't be passed via reconciliation. They have to be passed in a separate bill under regular order, which means Democrats can filibuster them. Republicans don't have 60 votes in the Senate to overcome a filibuster, so they can't do any of this stuff.
Republicans can starve the subsidies to make Obamacare virtually useless for the poor, but they can't repeal the entire law. The result of such a partial repeal is likely to be such obvious chaos that they'll be lucky to get their bill passed in the House, let alone the Senate. There are bound to be at least three senators who just aren't willing to clap loudly and pretend that everything is OK. It's very hard to see a path to passage for this bill.

Monday, March 06, 2017

Trumpdoesn'tcare

The "Trumpdoesn'tcare" health care proposal has been released (calling it "Trumpcare" implies he, and the GOP, do care -- they don't). Here's Krugman's quick take on Twitter:

Paul Krugman: Can't do full analysis until tomorrow. But GOP now basically accepts logic of ACA - just determined to offer an inferior version

Paul Krugman: Philosophical case for free markets has been abandoned (because it's so obviously wrong here) Mean spiritedness is all that's left.

Paul Krugman: It's not Obamacare 2.0. It's Obamacare 0.5 - a half-assed attempt to preserve ACA successes without spending nearly enough money

Guess who does well, and who is hurt? More details here and here.

Paul Krugman: A Party Not Ready to Govern

"They have no idea how to turn their slogans into actual legislation

A Party Not Ready to Govern, by Paul Krugman, NY Times: According to Politico, a Trump confidante says that the man in the Oval Office — or more often at Mar-a-Lago — is “tired of everyone thinking his presidency is screwed up.” Pro tip: The best way to combat perceptions that you’re screwing up is, you know, to stop screwing up.
But he can’t, of course. And it’s not just a personal problem.
It goes without saying that Donald Trump is the least qualified individual, temperamentally or intellectually, ever installed in the White House. ... Thanks, Comey.
But the broader Republican quagmire — the party’s failure so far to make significant progress toward any of its policy promises — isn’t just about Mr. Trump’s inadequacies. The whole party, it turns out, has been faking it for years. Its leaders’ rhetoric was empty; they have no idea how to turn their slogans into actual legislation, because they’ve never bothered to understand how anything important works.
Take the two lead items in the congressional G.O.P.’s agenda: undoing the Affordable Care Act and reforming corporate taxes. In each case Republicans seem utterly shocked to find themselves facing reality.
The story of Obamacare repeal would be funny if the health care — and, in many cases, the lives — of millions of Americans weren’t at stake. ...
Then there’s corporate tax reform — an issue where the plan being advanced by Paul Ryan ... is actually not too bad, at least in principle. ...
But Mr. Ryan has failed spectacularly to make his case either to colleagues or to powerful interest groups. Why? As best I can tell, it’s because he himself doesn’t understand the point of the reform. ...
At this point, then, major Republican initiatives are bogged down for reasons that have nothing to do with the personality flaws of the tweeter in chief, and everything to do with the broader, more fundamental fecklessness of his party.
Does this mean that nothing substantive will happen on the policy front? Not necessarily. Republicans may decide to ram through a health plan that causes mass suffering, and hope to blame it on Mr. Obama. They may give up on anything resembling a principled tax reform, and just throw a few trillion dollars at rich people instead.
But whatever the eventual outcome, what we’re witnessing is what happens when a party that gave up hard thinking in favor of empty sloganeering ends up in charge of actual policy. And it’s not a pretty sight.

Monday, February 27, 2017

The Real Test for the Republican Health Care Plan

I have a new column:

The Real Test for the Republican Health Care Plan: The Republicans’ rallying cry on health care reform is that the marketplace – relying on the forces of supply and demand – is the best way to run our healthcare system. Government involvement in health care interferes with the magic of markets and makes us all worse off.
The problem with this argument is that markets for health insurance are subject to significant market failures. Without regulatory intervention to fix these problems the market system will not provide what the market systems promises, widely available health care at the lowest possible price. ...

Interestingly, despite their public rhetoric Republicans seem to recognize that these features will be needed in whatever health care reform package they put forward, assuming they can eventually agree on a plan. ... So far, however, although there has been evolution, the proposal is still bad news for those with low incomes and – surprise! – it is very beneficial to those with considerable means. ...

Friday, February 24, 2017

Paul Krugman: Death and Tax Cuts

"So why do Republicans hate Obamacare so much?":

Death and Tax Cuts, by Paul Krugman, NY Times: Across the country, Republicans have been facing crowds demanding to know how they will protect the 20 million Americans who gained health insurance thanks to the Affordable Care Act... And after all that inveighing against the evils of Obamacare, it turns out that they’ve got nothing. ...
After years to prepare, Mr. Ryan finally unveiled what was supposedly the outline of a health care plan. It was basically a sick joke: flat tax credits, unrelated to income, that could be applied to the purchase of insurance.
These credits would be obviously inadequate for the lower- and even middle-income families..., so it would cause a huge surge in the number of uninsured. Meanwhile, the affluent would receive a nice windfall. Funny how that seems to happen in every plan Mr. Ryan proposes.
That was last week. This week, perhaps realizing how flat his effort fell, he began tweeting about freedom, which he defined as “the ability to buy what you want to fit what you need.” Give me consumer sovereignty or give me death! And Obamacare, he declared, is bad because it deprives Americans of that freedom by doing things like establishing minimum standards for insurance policies.
I very much doubt that this is going to fly, now that ordinary Americans are starting to realize just how devastating loss of coverage would be. But for the record, let me remind everyone what we’ve been saying for years: Any plan that makes essential care available to everyone has to involve some restriction of choice. ...
So yes, Obamacare somewhat restricts choice — not because meddling bureaucrats want to run your life, but because some restrictions are necessary as part of a package that in many ways sets Americans free.
For health reform has been a hugely liberating experience for millions. ...
So why do Republicans hate Obamacare so much? It’s not because they have better ideas; as we’ve seen..., they’re coming up empty-handed on the “replace” part of “repeal and replace.” It’s not, I’m sorry to say, because they are deeply committed to Americans’ right to buy the insurance policy of their choice.
No, mainly they hate Obamacare for two reasons: It demonstrates that the government can make people’s lives better, and it’s paid for in large part with taxes on the wealthy. Their overriding goal is to make those taxes go away. And if getting those taxes cut means that quite a few people end up dying, remember: freedom!

Thursday, February 23, 2017

Justifying Health Insurance

Jonathan Baron at RegBlog:

Justifying Health Insurance: Recent discussions about revising or replacing the Affordable Care Act (ACA) raise philosophical questions about the rationale for having a health insurance system. Among these philosophical questions are the extent to which such insurance should be compulsory, and, relatedly, the extent to which the cost of compulsory insurance should depend on risk and ability to pay. As lawmakers continue to debate the path forward for health policy, it is helpful to review the economic and moral justifications for health insurance.
From a utilitarian, or “welfare economics,” perspective, the main purpose of insurance is redistribution. Insurance redistributes money collected from a broad group to those who suffer some misfortune that can be mitigated with money, such as a treatable illness. Those who suffer such misfortunes find greater utility from the money than those who pay premiums but have no misfortune, so this redistribution increases total utility.
An increase in total utility also justifies other forms of redistribution. ...

Tuesday, January 17, 2017

The Economics of the Affordable Care Act

Dean Baker at INET:

The Economics of the Affordable Care Act: The Affordable Care Act (ACA), which President-elect Donald Trump and the Republican-controlled Congress have vowed to repeal, was crafted to overcome two basic problems in the provision of health care... First, the costs are incredibly skewed, with just 10 percent of patients accounting for almost two thirds of the nation’s healthcare spending. The other problem is asymmetric information: Patients have far more knowledge about the state of their own health than insurers do. This means that the people with the largest costs are the ones most likely to sign up for insurance. These two problems make it impossible to get to universal coverage under a purely market-based system. ...
Covering the least costly 90 percent of patients is manageable, but the cost of covering the least healthy 10 percent is exorbitant. ...
The ACA gets around this problem by requiring that everyone buy insurance — a mandate that allows people with serious health problems to get insurance at a reasonably affordable price. Since many people cannot afford an insurance policy even if it’s based on average costs, the ACA also provided subsidies to low and moderate income people. It pays for the subsidies primarily through a tax on the wealthiest households, those with incomes over $200,000.
Thus far, the ACA has actually worked better than expected in most respects. ...
Insofar as the ACA has run into problems, those have been attributable to too few healthy people in the health care exchanges, and too little competition among insurers. Many commentators have wrongly blamed the problem in the exchanges on a failure of young healthy people to sign up for insurance. This is not the cause of the problem, since more people are getting insured than had been projected. The reason fewer healthy people are showing up on the exchanges is that fewer employers dropped insurance than had been projected. ... By continuing to provide insurance for their workers despite the ACA, employers are effectively keeping healthy people out of the exchanges.
The other problem with the exchanges has been limited competition, as many insurers have dropped out after the first few years. The loss of competition has meant higher prices. ...
One way to make insurance more affordable would be to reduce the costs of the health care system as a whole. Americans pay twice as much per person as people in other wealthy countries, with few obvious benefits in terms of outcomes. But such cost cutting would mean reducing the incomes of drug companies, doctors, and insurance companies — the big winners under the current system. It seems unlikely the Republicans will go this route. They are more likely to restore a version of the pre-ACA situation, in which many more people are uninsured and most workers know that their insurance is only as secure as their job.

Friday, January 13, 2017

Paul Krugman: Donald Trump’s Medical Delusions

Repeal and hope to blame the Democrats:

Donald Trump’s Medical Delusions, by Paul Krugman, NY Times: ...Some Republicans appear to be realizing that their long con on Obamacare has reached its limit. Chanting “repeal and replace” may have worked as a political strategy, but coming up with a conservative replacement for the Affordable Care Act — one that doesn’t take away coverage from tens of millions of Americans — isn’t easy. In fact, it’s impossible.
But it seems that nobody told Mr. Trump. In Wednesday’s news conference, he asserted that he would submit a replacement plan, “probably the same day” as Obamacare’s repeal — “could be the same hour” — that will be “far less expensive and far better”; also, with much lower deductibles.
This is crazy, on multiple levels.
The truth is that even if Republicans were settled on the broad outlines of a health care plan — the way Democrats were when President Obama took office — turning such an outline into real legislation is a time-consuming process.
In any case, however, the G.O.P. has spent seven years denouncing the Affordable Care Act without ever producing even the ghost of an alternative. That’s not going to change in the next few weeks, or ever. For the anti-Obamacare campaign has always been based on lies that can’t survive actual repeal. ...
Republicans don’t have a health care plan, but they do have a philosophy — and it’s all about less. Less regulation, so that insurers can turn you down if you have a pre-existing condition. Less government support, so if you can’t afford coverage, too bad. And less coverage in general: Republican ideas about cost control are all about “skin in the game,” requiring people to pay more out of pocket (which somehow doesn’t stop them from complaining about high deductibles).
Implementing this philosophy would deliver a big windfall to the wealthy, who would get a huge tax cut from Obamacare repeal...
But the idea that it would lead to big cost savings over all is pure fantasy, and it would have a devastating effect on the millions who have gained coverage during the Obama years.
As I said, it looks as if some Republicans realize this. They may go ahead with repeal-but-don’t-replace anyway, but they’ll probably do it because they believe they can find some way to blame Democrats for the ensuing disaster.
Mr. Trump, on the other hand, gives every impression of having no idea whatsoever what the issues are. But then, is there any area of policy where he does?

Tuesday, January 10, 2017

There Will Be No Obamacare Replacement

Paul Krugman:

There Will Be No Obamacare Replacement: You may be surprised at the evident panic now seizing Republicans, who finally — thanks to James Comey and Vladimir Putin — are in a position to do what they always wanted, and kill Obamacare. How can it be that they’re not ready with a replacement plan?
That is, you may be surprised if you spent the entire Obama era paying no attention to the substantive policy issues — which is a pretty good description of the Republicans, now that you think about it.
From the beginning, those of us who did think it through realized that anything like universal coverage could only be achieved in one of two ways: single payer, which was not going to be politically possible, or a three-legged stool of regulation, mandates, and subsidies. Here’s how I put it exactly 7 years ago...
It’s actually amazing how thoroughly the right turned a blind eye to this logic, and some — maybe even a majority — are still in denial. But this is as ironclad a policy argument as I’ve ever seen; and it means that you can’t tamper with the basic structure without throwing tens of millions of people out of coverage. You can’t even scale back the spending very much — Obamacare is somewhat underfunded as is.
Will they decide to go ahead anyway, and risk opening the eyes of working-class voters to the way they’ve been scammed? I have no idea. But if Republicans do end up paying a big political price for their willful policy ignorance, it couldn’t happen to more deserving people.

Monday, December 05, 2016

Paul Krugman: The Art of the Scam

Republicans have promised to repeal Obamacare, but they haven't told us what their replacement would look like. Why not?:

The Art of the Scam, by Paul Krugman, NY Times: ...While many Americans say they disapprove of Obamacare, large majorities approve of the things the Affordable Care Act does, notably ensuring that people with pre-existing medical conditions can still buy insurance. And there’s no way to achieve these things without either a major expansion of government health programs — hardly a Republican priority — or something very much like the law Democrats passed.
Worse yet, from the Republican point of view, Obamacare has worked. .. And Americans newly insured thanks to Obamacare are highly satisfied with their coverage.
So what can the G.O.P. offer as an alternative? We know what Republicans want: a free-for-all in which insurance companies can discriminate as they like, with minimal regulation and drastic cuts in government aid. Going there would, however, cause millions of Americans — many of them people who voted for Trump, believing that their recent gains were safe — to lose coverage. The political blowback would be terrible.
Yet failing to repeal Obamacare would also bring heavy political costs. So the emerging Republican health care strategy, according to news reports, is “repeal and delay” — vote to kill Obamacare, but with the effective date pushed back until after the 2018 midterm elections. By then, G.O.P. leaders promise, they’ll have come up with the replacement they haven’t been able to devise over the past seven years.
There will, of course, be no replacement. And there’s likely to be chaos in health care markets well before Obamacare’s official expiration date, as insurance companies exit markets they know will soon collapse. But the political thinking seems to be that they can find a way to blame Democrats for the debacle.
It’s all very Trumpian, if you think about it. An honest memoir of the president-elect’s business career would be titled “The art of the scam.” After all, his hallmark has been turning a profit on failed business projects, because he finds a way to leave other people holding the bag.
In this case, the effort to replace Obamacare will clearly fail miserably in terms of serving the American people... But it could nonetheless be a political success if the public can be convinced to blame the wrong people.
You might think that this would be impossible, given the obviousness of the ploy. But given what we’ve seen so far, you have to take seriously the possibility that they’ll get away with it.

Thursday, December 01, 2016

The Future of Aid for Health

Larry Summers:

The Future of Aid for Health: Yesterday, I gave a keynote speech at the World Innovation Summit for Health on “The Future of Aid for Health”. When I agreed to give the speech, which built on the work of a Commission I chaired several years ago on Global Health 2035, I did not imagine the degree of uncertainty that the US election would bring to the global health area and indeed to the global community.
We are in uncharted territory. No one can know what the attitude of the new US administration will be to funding foreign assistance of any kind or to global cooperation in the health area.  Certainly an “America first” strategy is not highly propitious. Global health has been an area of bipartisan cooperation with major initiatives launched during  both Democratic and Republican administrations and has some Congressional champions in both parties so perhaps things will work out.
Rather than dwelling on political uncertainties I could not dispel, I chose to concentrate on something that should be a priority for those concerned with reducing premature death around the world, for those looking to foreign assistance as forward defense of US interests, and to those primarily interested in reducing budgets—assuring the optimal allocation of aid resources.
My argument was simple. The world needs to move decisively away from the current regime where 80 percent of health assistance is devoted to supporting national health care delivery and only 20 percent is devoted to global service delivery towards a model where half of assistance is devoted to global goods. ...
While I have often disagreed with particular judgments or been distressed that political considerations sometime carried the day my experience in policymaking in the United States and at the international level is that reason has always had its day in court and usually carried the day.
I desperately hope this tradition continues. But when the President of the United States is someone who believes that vaccines cause autism, that Barack Obama was born in Kenya, and that global climate change is a hoax, I am far from certain how decisions will be made going forward.

Friday, November 18, 2016

Paul Krugman: The Medicare Killers

Why do Republicans want to dismantle Medicare?:

The Medicare Killers, by Paul Krugman, NY Times: During the campaign, Donald Trump often promised to ... represent the interests of working-class voters who depend on major government programs. “I’m not going to cut Social Security like every other Republican and I’m not going to cut Medicare or Medicaid,” he declared, under the headline “Why Donald Trump Won’t Touch Your Entitlements.”
It was, of course, a lie. The transition team’s point man on Social Security is a longtime advocate of privatization, and all indications are that the incoming administration is getting ready to kill Medicare, replacing it with vouchers that can be applied to the purchase of private insurance. Oh, and it’s also likely to raise the age of Medicare eligibility. ...
While Medicare is an essential program for a great majority of Americans, it’s especially important for the white working-class voters who supported Mr. Trump most strongly. ... People like Paul Ryan ... have often managed to bamboozle the media into believing that their efforts to dismantle Medicare and other programs are driven by valid economic concerns. They aren’t.
It has been obvious for a long time that Medicare is actually more efficient than private insurance, mainly because it doesn’t spend large sums on overhead and marketing, and, of course, it needn’t make room for profits.
What’s not widely known is that the cost-saving measures included in ... Obamacare, have been remarkably successful in their efforts to ... rein in the long-term rise in Medicare expenses. ... This success is one main reason long-term budget projections have dramatically improved.
So why try to destroy this successful program...? ... It would be very helpful for opponents of government to do away with a program that clearly demonstrates the power of government to improve people’s lives.
And there’s an additional benefit to the right from Medicare privatization: It would create a lot of opportunities for private profits, earned by diverting dollars that could have been used to provide health care. ...
You might think this would make the whole idea a non-starter. And this push will, in fact, fail — just like Social Security privatization in 2005 — if voters realize what’s happening.
What’s crucial now is to make sure that voters do, in fact, realize what’s going on. And this isn’t just a job for politicians. It’s also a chance for the news media, which failed so badly during the campaign, to start doing its job.

Tuesday, November 01, 2016

Is the Obamacare Problem a Public or a Private Problem?

Jared Bernstein:

Is the Obamacare problem a public or a private problem?: My WSJ greets me on the front stoop this AM with the banner headline on the “Depth of Health Law Woes,” based on the rise of “thin” markets with too few private insurers to generate cost-saving competition. ...
First, while the Journal article is surely informative, it violates my rule #1 in this space: when writing about private exchanges, declare up front that we’re talking about 7 percent of the population. That’s the share that get coverage through the ... the exchanges. ...
Those shares don’t negate the thin market problem at all, but they do give it essential context. Most people still get their coverage through their employer (about 50 percent) and Medicare or Medicaid (34 percent).
But my question today is whether this spate of articles is accurately framing this problem. That is, diminished competition among insurers in various markets is invariably framed as an architectural flaw in Obamacare, and thus, a government failure. But it could just as easily be seen as market failure, or more specifically, a pricing-calibration problem. If so, the problem isn’t too much government intervention; it’s too little.
The theory of the case when the law was being crafted was, for both policy and political reasons—the latter being buy-in from private insurers, whose powerful lobby couldn’t be ignored—that the exchanges would be populated by private insurers competing for customers in the (relatively small!) non-group market.
The insurers would get a bunch more customers, most of whom would come to the table with a tax credit to help pay the cost of their subsidy, a non-trivial deal sweetener for the private insurers (not to mention the mandate, further nudging customers into the exchanges). In return, they’d have to accept a set of rules designed to promote adequate coverage, like accepting applicants with pre-existing conditions and “community rating:” no price discrimination based on health status.
At the time, there was a robust argument about the wisdom of this path. While it was the least disruptive to a major industry, the long history of the uneasy relationship between health care and markets, along with the experience of other advanced economies, led many to worry that private insurers could not be depended on to meet the demands of a newly regulated individual market. They had an incentive, for example, to set their initial prices too low to get customers, which would mean actuarial losses and a big jump in premiums (one solution was to add a program to limit losses to such insurers: the so-called “risk corridors”).
This was partially the motivation for adding a public option, but the politics blocked that option (some will argue that the administration, of which I was then a member, didn’t push hard enough; I’d argue the votes just weren’t there). The private folks didn’t want to compete with anything like Medicare, which consistently posts lower price growth than the privates—it is non-profit, after all—and their message was thus, “we got this.”
Well, it turns out they don’t got this, though again, this is less a failure in the structure of the program than growing pains as insurers learn to price their products based on the health of those coming into the exchanges. If there’s a structural flaw in Obamacare, it’s that it doesn’t include the public option. Those of us who pulled for it had it right in that we saw the need for just such a backstop.
To be fair, a public option is itself a tricky bit of work, and it’s too easy to make it sound like a hand-wave, miracle solution (see Jacob Hacker’s excellent discussion of these issues here). But you know what else is a big, old hand wave?: the miracle of competition, allegedly solving everything that ails the health care market.
Obamacare is a public/private hybrid, and this recent episode with the 2017 premiums should teach us that dialing back the public side is not the way forward. To the contrary, the private sector never has and never will provide the health care Americans want and need on its own.

Friday, October 28, 2016

Paul Krugman: Obamacare Hits a Pothole

"If health costs are looking good, what’s with the spike in premiums?":

Obamacare Hits a Pothole, by Paul Krugman, NY Times: ...Obamacare ... has hit a pothole: After several years of coming in far below predictions, premiums on covered plans have shot up by more than 20 percent.
So how bad is the picture? ... Health reform had two big goals: to cover the uninsured and to rein in the overall growth of health care costs... Sure enough, the fraction of Americans without health insurance has declined to its lowest level in history, while health cost growth has plunged...
But if health costs are looking good, what’s with the spike in premiums? It only applies to one piece of the health care system — the “exchanges”... established for people who aren’t covered either by their employers or by government programs, mainly Medicare and Medicaid.
The way the exchanges were supposed to work was that both healthy and less-healthy people would sign up, providing insurers with a good mix of risks that let them offer reasonably priced policies. ...
In many states, however, not enough healthy people signed up — and now insurers are either pulling out or hiking their premiums to reflect the not-so-good risk pool. Since premiums have until now been well below projections, this only brings them back up to expected levels. But it’s clearly not good news.
How many people are hurt by these premium hikes? Not as many as you may think..., a fraction of a fraction of the population (which admittedly may still be several million people). Oh, and bear in mind that many of those affected ... have pre-existing conditions, which means that without Obamacare they wouldn’t be insured at all. ...
Can the current problems be fixed? As a technical matter, the answer is clearly yes. Strengthen the mandate; expand the subsidies; close the loopholes that have allowed some insurers to bypass the exchanges; take a more active role in setting standards and reaching out to families to make them aware of their options. Some states are doing much better than others, and it wouldn’t take a lot of money to expand best practices to the nation as a whole.
The trouble is that Congress would have to vote to spend that money. So unless Democrats manage to take the House (unlikely) or Republicans are willing to cooperate in the public interest (even more unlikely), the easy fix ... will have to wait for a while.
So, is the latest health care news disappointing? Yes. Is it catastrophic? Not at all.

Monday, August 29, 2016

Paul Krugman: States of Cruelty

Why are some states unwilling to help the poor?:

States of Cruelty, by Paul Krugman, NY Times: ...While many people are focused on national politics, with reason — one sociopath in the White House can ruin your whole day — many crucial decisions are taken at the state and local levels. If the people we elect to these offices are irresponsible, cruel, or both, they can do a lot of damage.
This is especially true when it comes to health care. Even before the Affordable Care Act went into effect, there was wide variation in state policies, especially toward the poor and near-poor. Medicaid has always been a joint federal-state program... States with consistently conservative governments generally offered benefits to as few people as the law allowed, sometimes only to adults with children in truly dire poverty. States with more liberal governments extended benefits much more widely. These policy differences were one main reason for a huge divergence in the percentage of the population without insurance, with Texas consistently coming in first in that dismal ranking.
And the gaps have only grown wider since Obamacare went into effect... This should be a no-brainer: If Washington is willing to provide health insurance to many of your state’s residents — and in so doing pump dollars into your state’s economy — why wouldn’t you say yes? But 19 states, Texas among them, are still refusing free money, denying health care to millions. ...
But why are states like Texas so dead-set against helping the unfortunate, even if the feds are willing to pick up the tab? ...
A large part of the answer, surely, is the usual one: It’s about race. Medicaid expansion disproportionately benefits nonwhite Americans; so does spending on public health more generally. And opposition to these programs is concentrated in states where voters in local elections don’t like the idea of helping neighbors who don’t look like them.
In the specific case of Planned Parenthood, this usual answer is overlaid with other, equally nasty issues, including — or so I’d say — a substantial infusion of misogyny.
But it doesn’t have to be this way. Most Americans are, I believe, far more generous than the politicians leading many of our states. The problem is that too many of us don’t vote in state and local elections, or realize how much cruelty is being carried out in our name. The point is that America would become a better place if more of us started paying attention to politics beyond the presidential race.

Friday, August 19, 2016

Paul Krugman: Obamacare Hits a Bump

The problems with Obamacare would be easy to fix, the real problem is Congress:

Obamacare Hits a Bump, by Paul Krugman, NY Times: More than two and half years have gone by since the Affordable Care Act, a.k.a. Obamacare, went fully into effect. Most of the news about health reform since then has been good, defying the dire predictions of right-wing doomsayers. But this week has brought some genuine bad news: The giant insurer Aetna announced that it would be pulling out of many of the “exchanges,” the special insurance markets the law established. ...
So what’s the problem?
Well, Obamacare is a system that relies on private insurance companies to provide much of its expanded coverage... And many of these private insurers are now finding themselves losing money, because previously uninsured Americans ... turn out to have been sicker and more in need of costly care than we realized. ...

The bad news mainly hits states that have small populations and/or have governments hostile to reform, where the exit of insurers may leave markets without adequate competition. That’s not the whole country, but it would be a significant setback.
But it would be quite easy to fix the system. It seems clear that subsidies for purchasing insurance, and in some cases for insurers themselves, should be somewhat bigger — an affordable proposition given that the program so far has come in under budget... There should also be a reinforced effort to ensure that healthy Americans buy insurance, as the law requires, rather than them waiting until they get sick. Such measures would go a long way toward getting things back on track.
Beyond all that, what about the public option?
The idea of allowing the government to offer a health plan directly to families was blocked in 2010 because private insurers didn’t want to face the competition. But if those insurers aren’t actually interested in providing insurance, why not let the government step in (as Hillary Clinton is in fact proposing)?
The trouble, of course, is Congress...
That said, there may still be room for action at the executive level. And I’m hearing suggestions that states may be able to offer their own public options; if these proved successful, they might gradually become the norm.
However this plays out, it’s important to realize that as far as anyone can tell, there’s nothing wrong with Obamacare that couldn’t be fairly easily fixed with a bit of bipartisan cooperation. The only thing that makes this hard is the blocking power of politicians who want reform to fail.

Thursday, June 23, 2016

A Shameless Deception in Paul Ryan’s Obamacare Replacement Plan

Republicans sabotage government programs, then complain they don't work:

A shameless deception in Paul Ryan’s Obamacare replacement plan, by By Stephen Stromberg: ... Paul Ryan (R-Wis.) released an Obamacare replacement plan on Wednesday that, among other things, complains that the ACA leaves people out. ... Then it blames the gap on “Obamacare’s poor design and incentives.”
This is an outrageous distortion. The coverage gap ... is the direct result of anti-Obamacare hysteria in Ryan’s party.
After the ACA passed, the Supreme Court ruled that the Medicaid expansion must be optional for states. The terms were so good for state leaders — the federal government promised to pay nearly the whole cost to cover lots of vulnerable people — it seemed inconceivable that any of them would refuse to expand Medicaid... But this thinking did not account for the anti-Obamacare tantrum... Nineteen states have refused to expand Medicaid in rote Republican opposition to the ACA. ...

Republicans ... could have simply expanded Medicaid in their states... Or Republicans in Congress could have agreed to extend eligibility for marketplace subsidies downward, solving this gross and unnecessary inequity without requiring the states to do a thing. ...

Republicans chose not only to create the gap, but also to keep it in place. Their continued inaction hurts low-income people in those 19 states. And Ryan has the nerve to complain about it — even to use it as evidence that the ACA is fatally flawed. ...

Monday, June 06, 2016

Is Health Insurance Good for Your Financial Health?

Nicole Dussault, Maxim Pinkovskiy, and Basit Zafar at the NY Fed's Liberty Street Economics blog:

Is Health Insurance Good for Your Financial Health?: What is the purpose of health care? What is the purpose of health insurance? When people fall ill, they seek health care in order to get better. But insurance has a slightly different function: Its main role is not to protect our health per se, but to protect our finances. For most people, lifetime health expenditures are quite low. However, some people have enormous health costs owing to major illnesses or health conditions. And this is where health insurance comes in—its goal (like that of any other form of insurance) is to protect these individuals against large, and sometimes ruinous, health expenditures. Has the recent health reform served this purpose?

Protection against financial hardship was one of the drivers behind passage of the 2010 Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act (ACA). ...

In this blog post, we discuss the results of a research project that examines the effect of the Affordable Care Act’s Medicaid expansion on personal financial indicators. We find suggestive evidence that after the implementation of the ACA in the first quarter of 2014, counties with a high uninsurance burden pre-reform in states that subsequently expanded Medicaid had a decrease in average debt sent to collections agencies compared with such counties in states that did not expand Medicaid.

Our findings are consistent with prior research that has provided evidence that health insurance is good for individual finances...

Conclusion
While the full effects of the Affordable Care Act on financial health are yet to be seen, and while the effects of the ACA—positive or negative—are not restricted to financial health, we offer suggestive early evidence that the Medicaid expansion is fulfilling the goal of health insurance: providing “peace of mind” by protecting against financial hardship. ...

Monday, May 23, 2016

Why Obamacare's "Cadillac Tax" is so Contentious

I have a new article at CBS MoneyWatch:

Why Obamacare's "Cadillac tax" is so contentious: President Obama's signature health care law is called the Affordable Care Act... One of its provisions that aimed at chipping away health care's high costs is a tax that attempts to remove a hidden subsidy for the most expensive employer-paid health insurance plans.
The highly controversial 40 percent surcharge on these plans quickly became known as the "Cadillac tax," but its implementation has been anything but quick: Congress has delayed its effective date from 2018 to 2020, given the misgivings many lawmakers have about its wisdom -- and possible effects. Indeed, it's not at all clear that the provision will ever become effective.
The Republican opposition is based upon the party's overwhelming aversion to everything about Obamacare, and the Democrats' resistance arises from concerns over how the tax will affect employee benefits. Unions are also concerned that health insurance benefit increases they've bargained for in lieu of wage increases will be lost.
Of course, economists have opinions on this topic as well, with a recent poll of economists finding strong support for the Cadillac tax on high-price employer-provided health plans.
The tax was intended to raise revenues to help fund Obamacare and, because it provides an incentive for employers to reduce their spending on health care, function as a cost-control measure. ...

Thursday, April 28, 2016

High-Risk Pools Don't Work, Have Never Worked, and Won't Work in the Future

 Kevin Drum:

High-Risk Pools Don't Work, Have Never Worked, and Won't Work in the Future: Even among conservative voters, Obamacare's protection of people with pre-existing conditions has always been popular. ... But popular or not, Paul Ryan wants nothing to do with it:

..."Less than 10 percent of people under 65 are what we call people with pre-existing conditions, who are really kind of uninsurable," Ryan, a Wisconsin Republican, told a student audience at Georgetown University. "Let's fund risk pools at the state level to subsidize their coverage, so that they can get affordable coverage," he said. "You dramatically lower the price for everybody else. You make health insurance so much more affordable, so much more competitive and open up competition."

It's true that the cost of covering sick people raises the price of insurance for healthy people. That's how insurance works. But there's no magic here. It costs the same to treat sick people whether you do it through Obamacare or through a high-risk pool—and it doesn't matter whether you fund it via taxes for Obamacare or taxes for something else. However, there are some differences:

  • Handling everyone through a single system is more efficient and more convenient.
  • High-risk pools have a lousy history. They just don't work.
  • Implementing them at the state level guarantees a race to the bottom, since no state wants to attract lots of sick people into its program.
  • Ryan's promise to fund high-risk pools is empty. He will never support the taxes it would take to do it properly, and he knows it.

This is just more hand waving. Everyone with even a passing knowledge of the health care business knows that high-risk pools are a disaster, but Republicans like Ryan keep pitching them anyway as some kind of bold, new, free-market alternative to Obamacare. They aren't. They've been around forever and everyone knows they don't work.

See also Shorter Paul Ryan to Cancer Patients: Die Quickly from Charles Gaba.

Sorry, that's really the only headline which came to mind when I read this story...

The magic solution to the problem, according to Ryan and the GOP, is "high risk pools", which simply means separating out the sickest, most expensive people in the country and dumping them into a separate program.

With the "bad apples" (ie, human beings with terrible medical problems) safely tucked out of the way, the average cost of treating everyone else supposedly suddenly becomes less pricey.

This is the exact opposite of the entire point of health insurance in the first place...spreading the risk. In addition, as Jean P. Hall notes in this Commonwealth Fund analysis, it doesn't actually save anyone a dime...

Harold Pollack put it far more succinctly for the Twitter age:

@charlesornstein @LenMNichols @Reuters_Health high risk pools are among the very worst ideas in health policy.

— Harold Pollack (@haroldpollack) April 28, 2016

Tuesday, April 19, 2016

Debunking Republican Health Care Myths

From the NY Times editorial board:

Debunking Republican Health Care Myths: “Disaster.” “Incredible economic burden.” “The biggest job-killer in this country.”
Central to the presidential campaigns of Donald Trump and Ted Cruz has been the claim that the Affordable Care Act has been a complete failure, and that the only way to save the country from this scourge is to replace it with something they design.
It’s worth examining the big myths they are peddling about the Affordable Care Act and also their ill-conceived plans of what might replace it. ...
In inventing problems that don’t exist and proposing solutions that won’t help, Donald Trump and Ted Cruz show that they don’t care about helping Americans get health care, which has never been their interest. They want to trash the Affordable Care Act, and they’re willing to mislead the public any way they can.

Thursday, March 24, 2016

Why Is the CBO Concocting a Phony Debt Crisis?

Lifted from Brad DeLong at Equitablog:

Why Is the CBO Concocting a Phony Debt Crisis?: Must-Read: Ari Rabin-Havt: Why Is the CBO Concocting a Phony Debt Crisis?: “The CBO assumes that Social Security and Medicare Part A will draw on the general fund of the US Treasury…
…to cover benefit shortfalls following the depletion of their trust funds, which at the current rate will occur in 2034. That would obviously lead to an exploding debt, but it’s a scenario prohibited by law. In the case of both programs, benefits must be paid either from revenue collected via payroll taxes or from accumulated savings in the programs’ trust funds. When those funds run out, full benefits will simply not be paid. ‘Because there is no borrowing authority, there is really a hard stop,’ said Goss.
Congress could pass a law saying that Social Security and Medicare Part A would begin drawing on the US Treasury general fund after 2034. Or, Congress could preemptively pass laws to avert the situation before the deadline; it could take the approach favored by progressives and increase revenue to the programs by lifting the payroll tax cap, or alternatively raise the retirement age and lower benefits. But the bottom line is the CBO projections disregard the actual law and assume a worst-case legislative scenario—and one that is politically unlikely, to boot…

Friday, February 05, 2016

Paul Krugman: Who Hates Obamacare?

The left's attack on Obamacare could be harmful:

Who Hates Obamacare?, by Paul Krugman, Commentary, NY Times: ...the Affordable Care Act is already doing enormous good. ... Why, then, do we hear not just conservatives but also many progressives trashing President Obama’s biggest policy achievement?
Part of the answer is that Bernie Sanders has chosen to make re-litigating reform, and trying for single-payer, a centerpiece of his presidential campaign. So some Sanders supporters have taken to attacking Obamacare as a failed system. ... And some of these critiques have merit. Others don’t.
Let’s start with the good critiques...
The number of uninsured Americans has dropped sharply... But millions are still uncovered, and in some cases high deductibles make coverage less useful than it should be.
This isn’t inherent in a non-single-payer system: Other countries with Obamacare-type systems, like the Netherlands and Switzerland, do have near-universal coverage even though they rely on private insurers. But Obamacare as currently constituted doesn’t seem likely to get there, perhaps because it’s somewhat underfunded.
Meanwhile, although cost control is looking better than even reform advocates expected, America’s health care remains much more expensive than anyone else’s.
So yes, there are real issues with Obamacare. The question is how to address those issues in a politically feasible way.
But a lot of what I hear from the left is not so much a complaint about how the reform falls short as outrage that private insurers get to play any role. The idea seems to be that any role for the profit motive taints the whole effort.
That is, however, a really bad critique..., the fact that some insurers are making money from reform (and their profits are not ... all that large) isn’t a reason to oppose that reform. The point is to help the uninsured, not to punish or demonize insurance companies.
And speaking of demonization: One unpleasant, ugly side of this debate has been the tendency of some Sanders supporters, and sometimes the campaign itself, to suggest that anyone raising questions about the senator’s proposals must be a corrupt tool of vested interests. ...
And let’s be clear: This kind of thing can do real harm. The truth is that whomever the Democrats nominate, the general election is mainly going to be a referendum on whether we preserve the real if incomplete progress we’ve made on health, financial reform and the environment. The last thing progressives should be doing is trash-talking that progress and impugning the motives of people who are fundamentally on their side.

Monday, January 18, 2016

'Paul Krugman, Bernie Sanders, and Medicare for All'

Dean Baker (this was posted at Econospeak instead of CEPR due to website troubles -- assuming CPER's Creative Commons license still applies):

Paul Krugman, Bernie Sanders, and Medicare for All: Paul Krugman weighs in this morning on the debate between Bernie Sanders and Hillary Clinton as to whether we should be trying to get universal Medicare or whether the best route forward is to try to extend and improve the Affordable Care Act. Krugman comes down clearly on the side of Hillary Clinton, arguing that it is implausible that we could get the sort of political force necessary to implement a universal Medicare system.
Getting universal Medicare would require overcoming opposition not only from insurers and drug companies, but doctors and hospital administrators, both of whom are paid at levels two to three times higher than their counterparts in other wealthy countries. There would also be opposition from a massive web of health-related industries, including everything from manufacturers of medical equipment and diagnostic tools to pharmacy benefit managers who survive by intermediating between insurers and drug companies.  
Krugman is largely right, but I would make two major qualifications to his argument. The first is that it is necessary to keep reminding the public that we are getting ripped off by the health care industry in order to make any progress at all. The lobbyists for the industry are always there. Money is at stake if they can get higher prices for their drugs, larger compensation packages for doctors or hospitals, or weaker regulation on insurers.
The public doesn’t have lobbyists to work the other side. The best we can hope is that groups that have a general interest in lower health care costs, like AARP, labor unions, and various consumer groups can put some pressure on politicians to counter the industry groups. In this context, Bernie Sanders’ push for universal Medicare can play an important role in energizing the public and keeping the pressure on.
Those who think this sounds like stardust and fairy tales should read the column by Krugman’s fellow NYT columnist, health economist Austin Frakt. Frakt reports on a new study that finds evidence that public debate on drug prices and measures to constrain the industry had the effect of slowing the growth of drug prices. In short getting out the pitchforks has a real impact on the industry’s behavior.
The implication is that we need people like Senator Sanders to constantly push the envelope. Even if this may not get us to universal Medicare in one big leap, it will create a political environment in which we can move forward rather than backward.
The other point has to do with an issue that Krugman raises in his blogpost on the topic. He argues that part of the story of lower health care costs in Canada and other countries involves saying “no,” by which he means refusing to pay for various drugs and treatments that are considered too expensive for the benefit they provide.
While there is some truth to this story, it is important to step back for a moment. In the vast majority of cases, the drugs in question are not actually expensive to manufacture. The way the drug industry justifies high prices is that they must recover their research costs. While the industry does in fact spend a considerable amount of money on research (although they likely exaggerate this figure), at the point the drug is being administered this is a sunk cost. In other words, the resources devoted to this research have already been used; the economy doesn’t somehow get back the researchers’ time and the capital expended if fewer people take a drug that is developed from their work.
Ordinarily economists treat it as an absolute article of faith that we want all goods and services to sell at their marginal cost without interference from the government, like a trade tariff or quota. However in the case of prescription drugs, economists seem content to ignore the patent monopolies granted to the industry, which allow it to charge prices that are often ten or even a hundred times the free market price. (The hepatitis C drug Sovaldi has a list price in the United States of $84,000. High quality generic versions are available in India for a few hundred dollars per treatment.) In this case, we are effectively looking at a tariff that is not the 10-20 percent that we might see in trade policy, but rather 1,000 percent or even 10,000 percent.
This sort of gap between price and marginal cost leads to exactly the sort of distortions that economists predict when the government intervenes in a market with trade tariffs, except the distortions are hugely larger with drugs. Companies have incentive to engage in massive marketing efforts, they push their drugs for conditions for which they may not be appropriate, and they conceal evidence suggesting their drugs may be less effective than advertised, or possibly even harmful. They also lobby politicians for ever longer and stronger patent protection, and they use the legal system to harass potential competitors, both generic and brand. Even research is distorted by this incentive structure, with large portions of the industry’s budget being devoted to developing copycat drugs to gain a share of a competitor’s patent rents.
Perhaps the worst part of this story is that the patent monopolies put us in a situation where we might have to say no. The industry’s monopoly allows it to say that it will not turn over a life-saving drug for less than $100,000, $200,000, or whatever price tag it chooses. However, if there was no patent monopoly, we would be looking at buying this drug at its cost of production. That will rarely be more than $1,000 and generally much less. At those prices, it will rarely make sense to say no. (The same issue arises with most medical equipment – once we have the technology, producing an MRI is relatively cheap, as would be the cost of an individual screening.)
We do have to pay for the research, but the way we are now doing it is incredibly backward. It is like paying the firefighters when they show up at the burning house with our family inside. Of course we would pay them millions to save our family (if we had the money), but it is nutty to design a system that puts us in this situation.
We should be looking for a system that pays for the research upfront. There are various mechanisms to accomplish this goal. (Here’s my plan for a system of publicly funded clinical trials.) Obviously overhauling our system for financing drug research is not something that is done overnight, but it is an issue that needs attention. The current system is incredibly wasteful and it needlessly puts in a situation where we have to say no in contexts where the costs to society of administering treatment are actually very low.
This doesn’t mean that we would pay for everything for everybody. There are some procedures that actually are very expensive, for example surgeries requiring many hours of the time of highly skilled surgeons. But we should be trying to design a system that minimizes these sorts of situations, rather than making them an everyday occurrence.

Paul Krugman: Health Reform Realities

Would it be worth it to try to enact single-payer health care system?:

Health Reform Realities, by Paul Krugman, Commentary, NY Times: ... Obamacare is ... a somewhat awkward, clumsy device with lots of moving parts. This makes it more expensive than it should be, and will probably always cause a significant number of people to fall through the cracks.
The question for progressives — a question that is now central to the Democratic primary — is whether these failings mean that they should re-litigate their own biggest political success in almost half a century, and try for something better.
My answer ... is that they shouldn’t, that they should seek incremental change on health care (Bring back the public option!) and focus their main efforts on other issues...
If we could start from scratch, many, perhaps most, health economists would recommend single-payer, a Medicare-type program covering everyone. But single-payer wasn’t a politically feasible goal in America, for three big reasons...
First, like it or not, incumbent players have a lot of power. ...
Second, single-payer would require a lot of additional tax revenue — and we would be talking about taxes on the middle class...
Finally, and I suspect most important, switching to single-payer would impose a lot of disruption on tens of millions of families who currently have good coverage through their employers. ...
What this means, as the health policy expert Harold Pollack points out, is that a simple, straightforward single-payer system just isn’t going to happen. ...
Which brings me to the Affordable Care Act, which was designed to bypass these obstacles. ... Even so, achieving this reform was a close-run thing: Democrats barely got it through during the brief period when they controlled Congress. Is there any realistic prospect that a drastic overhaul could be enacted any time soon — say, in the next eight years? No.
You might say that it’s still worth trying. But politics, like life, involves trade-offs.
There are many items on the progressive agenda, ranging from an effective climate change policy, to making college affordable for all, to restoring some of the lost bargaining power of workers. Making progress on any of these items is going to be a hard slog, even if Democrats hold the White House and, less likely, retake the Senate. ...
So progressives must set some priorities. And it’s really hard to see, given this picture, why it makes any sense to spend political capital on a quixotic attempt at a do-over, not of a political failure, but of health reform — their biggest victory in many years.

Tuesday, December 29, 2015

'Mandate Memories'

Paul Krugman:

Mandate Memories: Sarah Kliff notes that the individual mandate in Obamacare is turning out to be essential — and it’s working, with the risk pool improving as the penalties kick in. What I wrote back in 2007, when Obama was campaigning against the mandate.
Fortunately, once in office he was a stronger advocate for health reform than I feared — including for necessary pieces he opposed in the primary; what we actually ended up with was, strictly speaking, Hillarycare.

Kevin Drum:

Chart of the Day: The Uninsured Rate in America Just Keeps Dropping:

I forgot to blog about this when the numbers came out, but the CDC has now updated their survey of the uninsured through the second quarter of 2015. ...
The number of uninsured adults under 65 continues to decline...

Tuesday, November 24, 2015

'Is the ACA in Trouble?'

Henry Aaron at Brookings:

Is the ACA in trouble?: United Health Care’s surprise announcement that it is considering whether to stop selling health insurance through the Affordable Care Act’s health exchanges in 2017 and is also pulling marketing and broker commissions in 2016 has health policy analysts scratching their heads. ...
Is United’s announcement seriously bad news for Obamacare, as many commentators have asserted? Is United seeking concessions in another area and using this announcement as a bargaining chip? Or, is something else going on? The answer, I believe, is that the announcement, while a bit of all of these things, is less significant than many suppose. ...
What seems to have happened—one can’t be sure...—is that the company, which mostly delayed its participation in the individual exchanges until 2015, incurred substantial start-up costs, enrolled few customers who turned out to be sicker than anticipated, and experienced more-than-anticipated attrition. Other insurers, including Blue-Cross/Blue-Shield plans nation-wide which hold a dominant position in individual markets in many states, did well... But minor players in the individual market, such as United, may have concluded that the costs of developing that market are too high for the expected pay-off. ...
What this means is that United’s announcement is regrettable news for those states from which they may decide to withdraw, as its departure would reduce competition. United might also use the threat of departure to negotiate favorable terms with states and the Administration. ... But it would be a mistake to treat United’s announcement, presumably made for good and sufficient business reasons, as a portentous omen of an ACA crisis.

Monday, November 23, 2015

Paul Krugman: Health Reform Lives!

The recent "bad, or at least not-great news about health reform" is won't derail Obamacare:

Health Reform Lives!, by Paul Krugman, Commentary, NY Times: To the right’s dismay, scare tactics — remember death panels? — and spurious legal challenges failed to protect the nation from the scourge of guaranteed health coverage. Still, Obamacare’s opponents insisted that it would implode in a “death spiral” of low enrollment and rising costs.
But the law’s first two years ... went remarkably well. The number of uninsured Americans dropped sharply,... while costs came in well below expectations. ...
I mention all of this to give you some perspective on recent developments that mark a break in the string of positive surprises. Yes, Obamacare has hit a few rough patches lately. But they’re much less significant than a lot of the reporting, let alone the right-wing reaction, would have you believe. Health reform is still a huge success story. ...
First, premiums are going up for next year, because insurers are finding that their risk pool is somewhat sicker and hence more expensive than they expected. There’s a lot of variation across states, but the average increase will be around 11 percent. That’s a slight disappointment, but it’s not shocking, given both the good news of the previous two years and the long-term tendency of insurance premiums to rise 5-10 percent a year.
Second, some Americans who bought low-cost insurance plans have been unpleasantly surprised by high deductibles. This is a real issue, but it shouldn’t be exaggerated. All allowed plans cover preventive services without a deductible, and many plans cover other health services as well. Furthermore, additional financial aid is available to lower-income families... Some people may not know about these mitigating factors ... but awareness should improve over time. ...
Oh, and official projections now say that fewer people will enroll in those exchanges than previously predicted. But the main reason is that surprisingly few employers are dropping coverage; overall projections for the number of uninsured Americans still look pretty good.
So where does that leave us? Without question, the run of unexpectedly good news for Obamacare has come to an end, as all such runs must. ... There were bound to be some bobbles along the way.
But are we looking at the beginnings of a death spiral? Some people are indeed saying that, but as far as I can tell, they’re all people who have been predicting disaster every step of the way...
The reality is that Obamacare is an imperfect system, but it’s workable — and it’s working.

Tuesday, November 10, 2015

'To Understand Climbing Death Rates Among Whites, Look To Women Of Childbearing Age'

From an email suggestion:

To Understand Climbing Death Rates Among Whites, Look To Women Of Childbearing Age, by Laudan Aron, Lisa Dubay, Elaine Waxman, and Steven Martin, Health Affairs: The news that mortality is increasing among middle-aged white Americans spread like wildfire last week ... thanks to a study by Anne Case and Angus Deaton... Unfortunately, there are a couple of pieces of the puzzle ... the ... study missed.
By not looking at men and women separately, Case and Deaton failed to see that rising mortality is especially pronounced among women...., in the decade between 1992-96 and 2002-06, female mortality rates increased in 42.8 percent of US counties. Only 3.4 percent of counties, by comparison, saw an increase in male mortality rates. ...

Urban-womens-survival-age-50

Furthermore, our own analysis of the same data used by Case and Deaton shows that ... between 1999 and 2013, age-specific mortality rates for US white women age 45-54 increased by 26.8 deaths per 100,000 population, while the corresponding increase for men was 7.7 deaths.

By lumping women and men together, the study also missed the important point that the increases in mortality are affecting women of reproductive and childrearing ages...

Accidental poisonings ... explain only half of the total increase in deaths among white women... In addition to suicide, obesity- and smoking-related diseases are driving these mortality increases. Our findings clearly point to the need for a stronger public health focus on the misuse of prescription opioid drugs, as well as more prevention and treatment of tobacco, alcohol, and other drug use; mental illness; and obesity-related illnesses. ...

Friday, November 06, 2015

'Health Inequality'

Health inequality is large and consequential:

Health Inequality, by Giacomo De Giorgi and Maxim Pinkovskiy, Libery Street Economics: However important income inequality is, it is only a partial representation of the inequality in well-being among individuals, households, counties, and other communities. At a minimum, we need to consider other crucial measures such as consumption, leisure, and health. ...

It seems rather obvious that health is a fundamental component of welfare, yet more work needs to be done on analyzing the evolution of health inequality and its relationship with income inequality in a consistent framework that would allow us to draw welfare conclusions, as we do later in this blog.

First, we document, and map below, a large dispersion in life expectancy across counties.

Average Life Expectancy by County in 2007

...From the map’s legend, we can immediately notice a very large dispersion: the top 20 percent of life expectancy is about a decade longer than the bottom 20 percent. Looking at the map also immediately tells us that the Southeast has a substantially lower life expectancy. We note that this is partly owing to differences in demography and income across counties. ...
Welfare Analysis How important are these large health inequalities for welfare? ...

We ... conclude that raising life expectancy out of the lower tail would be a much more welfare-improving intervention than fully equalizing consumption. (We get analogous results if we ask by how much the decision maker would need to have all consumption levels raised in order to be indifferent between the current consumption and life expectancy distribution and the proposed intervention).


Health is a Key Component of Inequality
In terms of welfare (under standard assumptions on the welfare function), the elimination of the left tail of mortality would have a beneficial impact that is about 60 percent larger than full consumption equalization.

What are the policies that might eliminate the lower tail of the life-expectancy distribution? This remains a topic for further discussion. However, we observe that the increase in life expectancy that we need to achieve the elimination of the lower tail is not unprecedented. Over a span of twenty years, life expectancy increased on average by three years across U.S. counties, which would be sufficient to raise the lower tail substantially.

Monday, October 26, 2015

Paul Krugman: Free Mitt Romney!

Mitt can't win:

Free Mitt Romney!, by Paul Krugman, Commentary, NY Times: Sometimes I find myself feeling sorry for Mitt Romney. No, seriously. In another time and place, he might have been respected as an effective technocrat ... for his ability to get things done. In fact, that’s kind of how it worked when he was governor of Massachusetts...
But now it’s 2015 in America, and Mr. Romney’s party doesn’t want people who get things done. On the contrary, it actively hates government programs that improve American lives, especially if they help Those People. And this means that Mr. Romney can’t celebrate his signature achievement in public life, the Massachusetts health reform that served as a template for Obamacare.
This has to hurt. Indeed, a few days ago Mr. Romney couldn’t help himself: he boasted to the Boston Globe that “Without Romneycare, we wouldn’t have had Obamacare” and that as a result “a lot of people wouldn’t have health insurance.” And it’s true!
But such truths aren’t welcome in the G.O.P. ... Not surprisingly, then, Mr. Romney quickly tried to walk his comments back, claiming that Obamacare is very different from Romneycare, which it isn’t, and that it has failed.
But you know, it hasn’t. On the contrary, the Affordable Care Act has been a remarkable success, especially considering the scorched-earth opposition it has faced. ...
In short, President Obama, Nancy Pelosi and Harry Reid, who pushed the Affordable Care Act through despite total opposition from the G.O.P., have a lot to be proud of. And so does Mr. Romney, who helped lay the foundation. Instead, however, he’s trashing the best thing he’s ever done.
You have to wonder: Does Mr. Romney really think that his party would look more favorably on Obamacare if it worked even better than it has, if it cost no money at all? If so, he’s delusional. After all, the great majority of Republican-controlled states have turned down free money, refusing to let the federal government expand Medicaid...
The point is that from the point of view of the Republican base, covering the uninsured, or helping the unlucky in general, isn’t a feature, it’s a bug...: the base is actually willing to lose money in order to perpetuate suffering. ...
Maybe Mr. Romney ... just can’t bring himself to admit that he picked the wrong group of people to hang out with. Either way, one hopes for his sake that he eventually gives up his illusions. Trust me, Mitt: it will be a liberating experience.

Saturday, October 24, 2015

'Uniting Behind the Divisive ‘Cadillac’ Tax on Health Plans'

Summers and Mankiw:

Uniting Behind the Divisive ‘Cadillac’ Tax on Health Plans: One of us, a former member of the Obama administration, remains a fan of the president. The other, not so much. But we agree on one thing: The excise tax on high-cost health care plans, the so-called Cadillac tax, is good policy. Congress should side with President Obama and resist calls to scrap it. ...

To some, the Cadillac tax is unpopular because unions oppose it, having negotiated especially generous health plans. But legislators should not let special interests stand in the way of a more rational health care system for all Americans.

To some, the Cadillac tax is unpopular because it was passed as part of the Affordable Care Act, a.k.a. Obamacare. But the Cadillac tax can be evaluated as a stand-alone measure. Both fans and critics of Obamacare should see the merits in a more level playing field between alternative forms of compensation.

One of us worked for President Obama when the Affordable Care Act was passed. One of us worked for President George W. Bush and supported John McCain and Mitt Romney in their attempts to defeat Mr. Obama. We disagree on many things, but we agree that health policy is too important to treat as if it were nothing more than another political battlefield.

Some policies deserve bipartisan support. The Cadillac tax is one of them.

Thursday, September 24, 2015

'Rational Drug Pricing'

Should we rationally expect rational drug pricing?:

Rational Drug Pricing, by Jeff Sachs: Drug pricing has taken center stage in U.S. politics, and it's high time that it should. ...
Drug pricing is not like the pricing of apples and oranges, clothing, or furniture that well and good should be left to the marketplace. There are two major reasons. First, the main cost of drug production is not the cost of manufacturing the tablet but the cost of producing the knowledge embedded in the tablet. Second, there is often a life-and-death stake in access to the drug, so society should take steps to ensure that the drug is affordable and accessible.
To ensure that financial resources flow to scientists to produce the knowledge embedded in the tablet, the government does two things. First, the government pays directly for a substantial part of the research and development (R&D). ... Second, the government grants patent rights for drug discovery. ...
It's a basic insight of economics that patent rights are a "second-best" solution to drug pricing, not an optimal solution. A patent creates an artificial monopoly to incentivize R&D. Yet it also reduces access to the product, perhaps with unacceptable and immoral life-and-death consequences. Rational drug pricing would get the best of the patent system but ensure that it is compatible with access to the life-saving drugs.
Unfortunately, the current rules of the game in the U.S. pharmaceutical sector do not compensate for the weaknesses of patents. They amplify them. ... What should be done? Here are three key principles.
First, private R&D should certainly be protected by patents but only enough to elicit the needed R&D, not to produce outlandish profits. ...
Second, when the U.S. government pays for much of the R&D, it should share in the property rights. This should be a no-brainer, but in fact the NIH simply gives away most or all the intellectual property that it has financed, so the taxpayer pays part of the R&D bills but the returns are fully captured by private companies.
Third, when companies ... make profits from their U.S.-based research and U.S.-based production and sales, they should certainly pay U.S. taxes on their profits. The fact that the IRS lets them hide their profits in overseas tax havens is scandalous and without any logical justification whatsoever.

Wednesday, September 16, 2015

'Bernie Sanders Wants to Spend $18 Trillion: So What?'

James Kwak (Dean Baker makes the same point):

Bernie Sanders Wants to Spend $18 Trillion: So What?: The front page of yesterday’s Wall Street Journal featured an article claiming that Bernie Sanders wants to increase federal government spending by $18 trillion over the next ten years—an increase of about one-third over that time period. This was apparently supposed to raise some kind of alarm—what kind of maniac is this?—and I’m sure both Republicans and Hillary Clinton are happy the Journal is doing their work for them.
The problem is that a spending figure, even one as big as $18 trillion, is meaningless on its own.
Most of that money—$15 trillion—is the expansion of Medicare to cover all Americans. Yes, that’s a lot of money. But we are already spending a ton of money on  health care—with embarrassingly poor results. In 2013,... Americans ... paid ... $1.4 trillion... Project that out for ten years, add health care inflation, and you’re talking about a lot more than $15 trillion.
At the end of the day, what matters isn’t the amount of money that the federal government spends for health care. What matters is the amount of money that the American people spend for health care. The government is just a device that we use to provide certain services that are better handled collectively than individually. If the government can provide equivalent service at lower prices, then the gross dollar amount involved doesn’t matter. ...
Now the big issue, I admit, is whether the government can provide equivalent service at lower prices. For the vast majority of consumer goods and services, it can’t. ... But real economists have known for more than half a century that health care doesn’t behave like ordinary consumer goods. ...
If you don’t want to read economics papers, the best evidence that health care is different comes from comparing the United States to other rich countries, which all have something closer to a single payer model for health insurance. As is well known, we spend a lot more money and have comparable or worse aggregate health outcomes. There is a huge ongoing adebate about why this is, which I’m not going to try to settle here.
The main point, however, is that if you want to argue against the Bernie Sanders health care plan, you have to make the case that Medicare for all will actually produce worse outcomes or higher costs than our current system. The fact that it costs a lot of money is beside the point.

Tuesday, September 15, 2015

'Market Power in Healthcare'

Via Austin Frakt at The Incidental Economist (I shortened the summaries):

Market Power: Recent NBER publications by Laurence Baker, M. Kate Bundorf, and Daniel Kessler:

1) “The Effect of Hospital/Physician Integration on Hospital Choice“:

We find that a hospital’s ownership of an admitting physician dramatically increases the probability that the physician’s patients will choose the owning hospital. We also find that ownership of an admitting physician has large effects on how the hospital’s cost and quality affect patients’ hospital choice. Patients whose admitting physician is not owned by a hospital are more likely to choose facilities that are low cost and high quality. ... We conclude that hospital/physician integration affects patients’ hospital choices in a way that is inconsistent with their best interests.

2) “Does Health Plan Generosity Enhance Hospital Market Power?” :

To what extent does the generosity of health insurance coverage facilitate the exercise of market power by producers of health services?  […]

We find a statistically significant and economically important effect of plan generosity on hospital prices in uncompetitive markets. ...

Thursday, July 30, 2015

'Dentists and Skin in the Game'

Paul Krugman:

Dentists and Skin in the Game: Wonkblog has a post inspired by the dentist who paid a lot of money to shoot Cecil the lion, asking why he — and dentists in general — make so much money. Interesting stuff; I’ve never really thought about the economics of dental care.

But once you do focus on that issue, it turns out to have an important implication — namely, that the ruling theory behind conservative notions of health reform is completely wrong.

For many years conservatives have insisted that the problem with health costs is that we don’t treat health care like an ordinary consumer good; people have insurance, which means that they don’t have “skin in the game” that gives them an incentive to watch costs. So what we need is “consumer-driven” health care, in which insurers no longer pay for routine expenses like visits to the doctor’s office, and in which everyone shops around for the best deals. ...

As it turns out, many fewer people have dental insurance than have general medical insurance; even where there is insurance, it typically leaves a lot of skin in the game. But dental costs have risen just as fast as overall health spending...

Monday, July 27, 2015

Paul Krugman: Zombies Against Medicare

Despite what you might hear from conservatives, Medicare is "eminently sustainable":

Zombies Against Medicare, by Paul Krugman, Commentary, NY Times: Medicare turns 50 this week, and it has been a very good half-century. Before the program went into effect, Ronald Reagan warned that it would destroy American freedom; it didn’t, as far as anyone can tell. What it did do was provide a huge improvement in financial security for seniors and their families, and in many cases it has literally been a lifesaver as well.
But the right has never abandoned its dream of killing the program. So it’s really no surprise that Jeb Bush recently declared that while he wants to let those already on Medicare keep their benefits, “We need to figure out a way to phase out this program for others.” ...
The ... reason conservatives want to do away with Medicare has always been political: It’s the very idea of the government providing a universal safety net that they hate, and they hate it even more when such programs are successful. But ... they usually shy away from making their real case...
What Medicare’s would-be killers usually argue, instead, is that the program as we know it is unaffordable — that we must destroy the system in order to save it... And the new system they usually advocate is ... vouchers that can be applied to the purchase of private insurance.
The underlying premise here is that Medicare as we know it is incapable of controlling costs, that only the only way to keep health care affordable going forward is to rely on the magic of privatization.
Now, this was always a dubious claim. .... In fact, Medicare costs per beneficiary have consistently grown more slowly than private insurance premiums... Indeed, Medicare spending keeps coming in ever further below expectations...
Right now is, in other words, a very odd time to be going on about the impossibility of preserving Medicare, a program whose finances will be strained by an aging population but no longer look disastrous. One can only guess that Mr. Bush is unaware of all this, that he’s living inside the conservative information bubble, whose impervious shield blocks all positive news about health reform.
Meanwhile, what the rest of us need to know is that Medicare at 50 still looks very good. It needs to keep working on costs, it will need some additional resources, but it looks eminently sustainable. The only real threat it faces is that of attack by right-wing zombies.

Friday, May 08, 2015

'Childhood Medicaid Coverage Improves Adult Earning and Health'

I highlighted the second article below, and many others reaching similar conclusions, in my last column:

Childhood Medicaid Coverage Improves Adult Earning and Health, NBER Digest: Medicaid today covers more Americans than any other public health insurance program. Introduced in 1965, its coverage was expanded substantially, particularly to low-income children, during the 1980s and the early 1990s.
Throughout Medicaid's history, there has been debate over whether the program improves health outcomes. Two new NBER studies exploit variation in children's eligibility for Medicaid, across birth cohorts and across states with different Medicaid programs, along with rich longitudinal data on health care utilization and earnings, to estimate the long-run effects of Medicaid eligibility on health, earnings, and transfer program participation.
In Childhood Medicaid Coverage and Later Life Health Care Utilization (NBER Working Paper No. 20929), Laura R. Wherry, Sarah Miller, Robert Kaestner, and Bruce D. Meyer find that among individuals who grew up in low-income families, rates of hospitalizations and emergency department visits in adulthood are negatively related to the number of years of Medicaid eligibility in childhood. The authors exploit the fact that one of the substantial expansions of Medicaid eligibility applied only to children who were born after September 30, 1983. This resulted in a large discontinuity in the lifetime years of Medicaid eligibility for children born before and after this birthdate cutoff. Children in families with incomes between 75 and 100 percent of the poverty line experienced about 4.5 more years of Medicaid eligibility if they were born just after the September 1983 cutoff than if they were born just before, with the gain occurring between the ages of 8 and 14. The authors compare children who they estimate were in low-income families, and otherwise similar circumstances, who were born just before or just after this date, to determine how the number of years of childhood Medicaid eligibility is related to health in early adulthood. Their finding of reduced health care utilization among adults who had more years of childhood Medicaid eligibility is concentrated among African Americans, those with chronic illness conditions, and those living in low-income zip codes. The authors calculate that reduced health care utilization during one year in adulthood offsets between 3 and 5 percent of the costs of extending Medicaid coverage to a child.
In Medicaid as an Investment in Children: What is the Long-Term Impact on Tax Receipts? (NBER Working Paper No. 20835), David W. Brown, Amanda E. Kowalski, and Ithai Z. Lurie conclude that each additional year of childhood Medicaid eligibility increases cumulative federal tax payments by age 28 by $247 for women, and $127 for men. Their empirical strategy for evaluating the impact of Medicaid relies on variation in program eligibility during childhood that is associated with both birth cohort and state of residence. The authors study longitudinal data on actual tax payments until individuals are in their late 20s, and they extrapolate this information to make projections for these individuals at older ages. When they compare the incremental discounted value of lifetime tax payments with the cost of additional Medicaid coverage, they conclude that "the government will recoup 56 cents of each dollar spent on childhood Medicaid by the time these children reach age 60." This calculation is based on federal tax receipts alone, and does not consider state tax receipts or potential reductions in the use of transfer payments in adulthood.
Both studies use large databases of administrative records to analyze the long-term effects of Medicaid. The first study measures health utilization using the Healthcare Cost and Utilization Project (HCUP) State Inpatient Databases for Arizona, Iowa, New York, Oregon, and Wisconsin in 1999, and those states plus Maryland and New Jersey in 2009. State hospital discharge data were also available from Texas and California. Data on all outpatient emergency department visits were available for six states in 2009. The second study examines data on federal tax payments and constructs longitudinal earnings histories for individuals who were born between 1981 and 1984. It also analyzes administrative records on Medicaid eligibility of children in this cohort.

Friday, April 24, 2015

Paul Krugman: Zombies of 2016

Some bad ideas just won't die:

Zombies of 2016, by Paul Krugman, Commentary, NY Times: Last week,...Chris Christie ... gave a speech in which he tried to position himself as a tough-minded fiscal realist. In fact, however, his supposedly tough-minded policy idea was a classic zombie — an idea that should have died long ago in the face of evidence that undermines its basic premise, but somehow just keeps shambling along.
...Mr. Christie ... thought he was being smart and brave by proposing that we raise the age of eligibility for both Social Security and Medicare to 69. Doesn’t this make sense now that Americans are living longer?
No, it doesn’t..., almost all the rise in life expectancy has taken place among the affluent. The bottom half of workers,... who rely on Social Security most, have seen their life expectancy at age 65 rise only a bit more than a year since the 1970s. Furthermore,... many ... still have to perform manual labor.
And while raising the retirement age would impose a great deal of hardship, it would save remarkably little money. ...
And there are plenty of other zombies out there. Consider, for example, the zombification of the debate over health reform. ...
Finally, one of the interesting political developments ... has been the triumphant return of voodoo economics, the “supply-side” claim that tax cuts for the rich stimulate the economy so much that they pay for themselves.
In the real world, this doctrine has an unblemished record of failure..
In the world of Republican politics, however, voodoo’s grip has never been stronger. Would-be presidential candidates must audition in front of prominent supply-siders to prove their fealty to failed doctrine. ... Supply-side economics, it’s now clear, is the ultimate zombie: no amount of evidence or logic can kill it.
So why has the Republican Party experienced a zombie apocalypse? One reason, surely, is the fact that most Republican politicians represent states or districts that will never, ever vote for a Democrat, so the only thing they fear is a challenge from the far right. Another is the need to tell Big Money what it wants to hear: a candidate saying anything realistic about Obamacare or tax cuts won’t survive the Sheldon Adelson/Koch brothers primary.
Whatever the reasons, the result is clear. Pundits will try to pretend that we’re having a serious policy debate, but, as far as issues go, 2016 is already set up to be the election of the living dead.

Monday, March 30, 2015

Paul Krugman: Imaginary Health Care Horrors

Why doesn't the public know how successful Obamacare has been?:

Imaginary Health Care Horrors, by Paul Krugman, Commentary, NY Times: ...Representative Pete Sessions of Texas, the chairman of the House Rules Committee, recently ... declared the cost of Obamacare “unconscionable.” If you do “simple multiplication,” he insisted, you find that the coverage expansion is costing $5 million per recipient. But ... the actual cost per newly insured American is about $4,000.
Now, everyone makes mistakes. But this wasn’t a forgivable error..., one indisputable fact is that it’s costing taxpayers much less than expected — about 20 percent less...
But that is, of course, how it’s been all along with Obamacare. Before the law went into effect, opponents predicted disaster on all levels. What has happened instead is that the law is working pretty well. So how have the prophets of disaster responded? By pretending that the bad things they said would happen have, in fact, happened. ...
Remember, Obamacare was also supposed to be a huge job-killer. ... Well, Obamacare went into effect fully at the beginning of 2014 — and private-sector job growth actually accelerated, to a pace we haven’t seen since the Clinton years. ...
Finally, there’s the never-ending hunt for ... for ordinary, hard-working Americans who have suffered hardship thanks to health reform. ... Remarkably, however, they haven’t been able to find those stories. ...
In reality, the only people hurt by health reform are Americans with very high incomes, who have seen their taxes go up, and a relatively small number of people who have seen their premiums rise because they’re young and healthy...
In short, when it comes to the facts, the attack ... has come up empty-handed. But the public doesn’t know that. ...
And the favorable experiences of the roughly 16 million Americans who have gained insurance ... have had little effect on public perceptions. Partly that’s because the Affordable Care Act, by design, has had almost no effect on those who already had good health insurance..., they have seen no change in their status.
At a deeper level, however, what we’re looking at here is the impact of post-truth politics. We live in an era in which politicians and the supposed experts who serve them never feel obliged to acknowledge uncomfortable facts, in which no argument is ever dropped, no matter how overwhelming the evidence that it’s wrong.
And the result is that imaginary disasters can overshadow real successes. Obamacare isn’t perfect, but it has dramatically improved the lives of millions. Someone should tell the voters.

Monday, February 16, 2015

Drug Prices are Bankrupting America

Jeff Sachs:

The Drug that is Bankrupting America: America is the land of breakthrough science ... in the case of the new hepatitis C virus (HCV) cure named sofosbuvir, sold under the brand name Solvadi by the drug company Gilead Sciences. There is no question that Solvadi is a godsend - a lifesaver for millions ... around the world ... Yet Solvadi is also the poster child of a US healthcare system that is being bankrupted by greed, lobbying and indefensible policies on drug pricing.
The basic facts are these. ... Gilead set the price for a twelve-week treatment course of Solvadi at $84,000... According to researchers at Liverpool University, the actual production costs of Solvadi for the twelve-week course is in the range $68-$136. ...
The standard defense by the drug companies ... is that drug discovery is costly and their high profits reimburse the R&D costs. Here is where the story of Solvadi gets even more interesting. The total private-sector outlays on R&D were ... almost surely under $500 million, meaning that the decade-long R&D outlays were likely recouped in a few weeks of drug sales.
Here is the background. Sofosbuvir was developed under the leadership of Prof. Raymond Schinazi, a brilliant professor of biochemistry at Emory University. The US Government heavily funded Prof. Schinazi's research...
Solvadi ... shows how publicly financed science easily turns into arbitrarily large private profits paid for by taxpayers. The challenge facing the US is to adopt a rational drug pricing system that continues to spur excellent scientific breakthroughs while keeping greed in check. Big Pharma and the US public are on a collision course when they should be partners for the advancement of health.

Friday, January 30, 2015

'Don't Trade Away Our Health'

Joe Stiglitz:

Don't Trade Away Our Health: A secretive group met behind closed doors in New York this week. What they decided may lead to higher drug prices for you and hundreds of millions around the world.
Representatives from the United States and 11 other Pacific Rim countries convened to decide the future of their trade relations in the so-called Trans-Pacific Partnership (T.P.P.). Powerful companies appear to have been given influence over the proceedings, even as full access is withheld from many government officials from the partnership countries.
Among the topics negotiators have considered are some of the most contentious T.P.P. provisions — those relating to intellectual property rights. And we’re not talking just about music downloads and pirated DVDs. These rules could help big pharmaceutical companies maintain or increase their monopoly profits on brand-name drugs. ...

Friday, December 05, 2014

Paul Krugman: Democrats Against Reform

Despite the political difficulties it has caused, Obamacare was not a mistake:

Democrats Against Reform, by Paul Krugman, Commentary, NY Times: It’s easy to understand why Republicans wish health reform had never happened.... But it’s more puzzling — and disturbing — when Democrats like Charles Schumer, senator from New York, declare that the Obama administration’s signature achievement was a mistake.
In a minute I’ll take on Mr. Schumer’s recent remarks. But first, an update on Obamacare..., which continues to rack up remarkable (and largely unreported) successes ... with more than 10 million people gaining coverage since last year. ... And ... a huge majority of the newly insured are pleased with their coverage...
What about costs? There were many predictions of soaring premiums. But... Premiums for 2014 came in well below expectations...
In short,... as a policy intended to improve American lives, it’s going really well. Yet it has not ... been a political winner for Democrats. Which brings us to Mr. Schumer.
The Schumer critique — he certainly isn’t the first to say these things... — calls health reform a mistake because it only benefits a minority of Americans, and that’s not enough to win elections. What President Obama should have done ... was focus on improving the economy as a whole.
This is deeply wrongheaded in at least three ways.
First, while it’s true that most Americans have insurance through Medicare, Medicaid, and employment-based coverage..., but what happens if you’re fired, or your employer goes bust, or it cancels its insurance program? What if you want to change jobs for whatever reason, but can’t find a new job that comes with insurance? ...
Second, whenever someone says that Mr. Obama should have focused on the economy, my question is, what do you mean by that? Should he have tried for a bigger stimulus? I’d say yes, but ... especially after 2010 scorched-earth Republican opposition killed just about every economic policy he proposed. Do you think this would have been different without health reform? Seriously? ...
Finally, we need to ask, what is the purpose of winning elections? The answer, I hope, is to do good — not simply to set yourself up to win the next election. ....
And one related observation: If more Democrats had been willing to defend the best thing they’ve done in decades, rather than run away from their own achievement and implicitly concede that the smears against health reform were right, the politics of the issue might look very different today.