At least 44% of the uninsured are uninsured by choice, and the number could be much higher than that. An Urban Institute study found that:

• One in every four uninsured persons is eligible for Medicaid or SChip, but has not enrolled.
• One in five has a family income in excess of $58,000 and presumably can afford coverage.

This is a minimum estimate. Of those who earn less than $58,000, there are undoubtedly many who can afford coverage because: Continue reading »

Ask silly questions and you get silly answers. This is confirmed by a recent Kaiser poll.

We live at a time when employers are making changes - sometimes radical changes - in their health plans to control health care costs. Many of these changes reduce benefits; but other changes give employees opportunities to manage some of their own health dollars and gain financially from making prudent purchases.

Indiscriminate polling will catch people at different phases of this process. Some people answering the poll will have plans with fewer benefits. Others will be working for employers whose benefit cuts will not come until next year or the year after that. Failure to distinguish among these differences will produce little more than people confirming that more is better than less.

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In "Million Dollar Baby," Hilary Swank's character offers her mother a free house. But the mother angrily rejects the offer, requesting cash under the table instead. The reason: a house would disqualify her for welfare and Medicaid benefits.

Reform of at least one of those problems is well under way, thanks to Pete du Pont and then Bill Clinton and then (mostly Republican) members of Congress - all of whom promised to "end welfare as we know it." What is now needed is to end Medicaid as we know it.

Imagine that tomorrow's newspaper carries the headline: "Supreme Court Declares Medicaid nconstitutional." After much hand wringing, Congress would almost certainly give the Medicaid funds to the states as an unrestricted cash grant and hope for the best. We would then get 50 different experiments - almost all of which would significantly improve the current system.

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I believe the next big issue in health care is going to be portability. My recent article in Health Affairs explains:

• What is meant by portability;
• What the legal obstacles are;
• Whether private insurance survive without it;
• What models can be used to implement it
• What are the expected gains and losses.

Read the full article.

In Australia, 8 of every 10 doctors keep patient records electronically.  In New Zealand and Britain, the figure is 9 in 10.  In the Netherlands, almost every doctor uses electronic medical records (EMRs).  Yet in the US, the figure is less than 1 in 4.  Only Canada scores worse.  So says a recent Commonwealth Foundation report. (Click here to read.)

It gets worse.  In other countries doctors are more likely to be able to order prescriptions electronically, to get computerized alerts about potentially harmful drug interactions, and to get computerized prompts to send patients test results or notices about preventive or follow-up care.

So why are US doctors falling behind?  The short answer is because doctors in other countries get financial rewards for using computers and our doctors don't.  But why are other country's reward systems better?

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"Redefining Health Care" by Michael Porter and Elizabeth Olmsted Teisberg (P&T) is a must read for anyone interested in health policy. Granted, it's a bit daunting at 500 pages, but here's a hint: the first 100 pages or so gives you the best return on your reading time.

Reviewers from left to right (Reinhardt, Enthoven, Wilensky, Robinson, Maynard, etc) have uniformly panned the book at the Health Affairs website.

There are some things not to like. My own complaints include: giving short shrift to HSAs, failing to give Regi Hertzlinger her due, and taking a naïve approach to some public policies.

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Why do doctors so rarely talk to patients by phone or e-mail?  When use of the computer is ubiquitous among other professionals (accountants, lawyers, architects, etc.), why do so few doctors maintain their patient records that way?  Why do so many doctors prescribe medicines without knowing what they cost?  And even when they know about generic substitutes, why don't they know those costs, or where patients might shop for drugs to get the lowest price?

My recent article, published online by Health Affairs, explains all these problems are a direct result of the way doctors are paid. 

Doctors are not paid to talk to you on the phone or by email. Blue Cross doesn't pay for consultations that aren't face-to-face, in the doctor's office. Neither does Medicare, nor do most employers.

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Workers' Compensation is a hugely wasteful system that has received almost no attention from think tanks. All too often, employers believe they have lowered health care costs through one reform or another, only to discover that employees simply shifted their claims from group health to worker's comp. See the summary below of a new study on this topic from the NCPA.

Workers' compensation costs are increasing because state systems provide incentives for employers, employees and others to behave in ways that cause costs to be higher and workplaces to be less safe than they otherwise would be, says N. Michael Helvacian, a Senior Fellow with the National Center for Policy Analysis. Specifically:

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Larry Kotlikoff and his colleagues have completed a ten country study that estimates future health care spending. Among the results: government at all levels in the United States currently spends about 7.2 percent of GDP on health care, mainly on Medicare and Medicaid. Yet, if benefits expand at the rate of the past 30 years and if the population ages the way demographers predict, spending will equal one-third of national income by mid-century, when today's college students reach the retirement age. If that is not immediately alarming, note that one-third of GDP is about equal to all government spending for all purposes today. If private spending on health care keeps up with public spending, the nation will devote about two-thirds of national income to health care by mid-century - an amount roughly equal to the total consumption of all goods and services!

So in the public sphere, health care is on a course to crowd out every other government program - from education and roads and bridges to Social Security and national defense. And for the economy as a whole, health care is on a course to crowd out every other form of consumption, including food, clothing, housing, etc.

View the full study here. 

http://www.ncpa.org/pub/st/st286/

Like many plant species, the uninsured numbers bloom once a year, giving pundits an opportunity to spout another round of nonsense. The numbers do not change very much from year to year. Neither does the nonsense. Here for your reading pleasure are four items: Brief Analyses by Greg Scandlen and Devon Herrick, an editorial by me, and Herrick's calculation of the amount of free care consumed each year by the uninsured. Combined, they make the following points:

1. The official estimate overstates the actual number of uninsured by as much as twofold.
2. Despite claims that the uninsured do not get health care, they get about $1,500 of free care per person per year, on top of the amount they pay for out-of-pocket.
3. From one-fifth to one-third of the uninsured are de facto insured - they can enroll in free government programs at the drop of a hat - often months after care has been delivered!
4. The vast majority of remaining uninsured are also probably de facto insured, considering how easy we have made it to become insured even after people get sick.
5. Another one-third, have above-average incomes and presumably can afford to purchase insurance.
6. Once people see a doctor, they get roughly the same care whether insured or not - so says RAND.
7. Medical debts need not cause bankruptcy in most cases because hospitals rarely ever take people to court to force payment and credit bureaus often do not even list unpaid medical bills.
8. Individual mandates are no solution - auto insurance is mandated almost everywhere and auto uninsurance rates are very similar to health uninsurance rates nationwide.

With the recent Census Bureau report showing a marginal increase in the number of uninsured, now is a good time to take action in expanding health care coverage. Read the news release detailing our free care money solution.

In the decades prior to the establishment of Medicare and Medicaid, health care spending was relatively moderate, and never rose above 6 percent of GDP.  With the expansion of government insurance, however, health care has steadily claimed more and more resources - rising to more than 16 percent of GDP today.

Despite this temporal association, many economic studies suggest that technology is the cause of as much as 65 percent of the growth of medical spending.  Now a new study by Amy Finkelstein of MIT sorts through new evidence and finds that the problem is with demand, not with supply.  Third-party insurance is responsible for more than half of the growth of health care spending.

A clear implication (but not one made by Finkelstein) is that spending can potentially be slowed by shifting from third-party insurance to individual self-insurance through individually owned health accounts.

Read the full article

Read the coverage in Business Week

The idea that more than half of all bankruptcies are caused by medical debt comes from a study by Harvard associate professors David Himmelstein and Steffie Woolhandler, published on the Web in February 2005 by the journal Health Affairs. Both Himmelstein and Woolhandler have long advocated creating a single-payer system of national health insurance in the United States. The purpose of their study was to convince middle-class voters that they need socialized medicine to truly be secure from health-related financial catastrophe.

When the article came out it generated much controversy because the authors used a very broad definition of medical-related bankruptcy. In response, Health Affairs published more than 30 letters to the editor - as well as a follow-up study by researchers critical of the Himmelstein-Woolhandler study's methodology.

Fortunately, a new study by Aparna Mathur surveys the literature and puts matters straight. Dr. Mathur, a research fellow at the American Enterprise Institute, found that only about one-quarter of bankruptcy filers have debts that are primarily medical in nature. Far more common are bankruptcies related to credit card debts.

Read the complete AEI Study.

Read the Harvard/Health Affairs study.

A Commonwealth Fund study in the current issue of Health Affairs finds that high-cost patients with Health Savings Accounts (HSAs) actually spend less out-of-pocket than they would under traditional health plans.  A Bloomberg wire service story treated this as a newsworthy discovery of a “flaw” in design, since if less is spent out-of-pocket, incentives to conserve costs under HSA plans must be weaker. 

The Answer:  There is no news and there is no flaw.

HSA type-plans have been on the market for a decade in the United States and for more than a decade in South Africa.  Everyone familiar with the plans knows that they typically lower out-of-pocket expenses for high-cost patients.  This fact is not only well documented, it has been hashed over in the trade literature, at health care conferences and in numerous think tank pieces, including studies by the RAND Corporation, the Urban Institute, the National Bureau for Economic Research (NBER) and the National Center for Policy Analysis.

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The NCPA's Medicaid Reform Service Center is designed to provide assistance to state think tanks, governors, legislatures, and other groups seriously interested in Medicaid reform. We will provide speakers, briefings, testimony, help with publications, help with the design of reforms and, in some cases, help with federal waivers. We will pay some (but not all) of the costs for these efforts. The degree of help the NCPA offers depends on prospects for reform in the states that request our help. NCPA economists participating in this effort helped design Medicaid reform plans in South Carolina and Florida, and are currently involved in reform efforts in Massachusetts, New York and Kansas. You can read a more detailed description of the program here.

The American Medical Association wants to require everyone who earns more than five times the poverty level to have health insurance.  The thresholds are $49,000+ for individuals and $100,000+ for a family of four. Failure to comply would not earn jail time.  It would result in higher taxes, however.   The AMA's mistake (quite common in health policy circles) is a failure to recognize that the uninsured already pay higher taxes because they are uninsured.  At $49,000 income, an individual who gets a $6,000 health insurance plan from an employer avoids a 25% federal income tax, a 15.3% FICA tax and, say, a 4% state and local income tax.  If he were uninsured, enjoying taxable wages instead of health insurance, the individual would pay $2,640 of extra taxes each year precisely because he is uninsured.   The problem is not the absence of financial penalties; we already have them.  The problem is that the penalties primarily go to Washington, DC; whereas the free care (if needed) is delivered locally.   The solution is to coordinate tax and spending programs (Gov. Romney is trying to do this in Massachusetts).  There is no need for a mandate.

In all my years of interest in health economics, I cannot recall a study quite as stunning as the one that appeared last week in the New England Journal of Medicine.

The conventional wisdom among health experts across the ideological spectrum is that people need health insurance to get good health care.  Indeed, to some politicians the terms "no health care" and "no health insurance" are interchangeable.  Almost as widely accepted is the view that some health plans deliver better health care than others.  But the new study shatters those assumptions.

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How can patients make good choices if they cannot compare prices and quality of service in the marketplace?  This is the problem of transparency.  Yet while pundits talk and politcians threaten to legislate, the private sector already has developed the tools to solve these problems.

• A model developed by HealthMarket allows its insureds to compare the price they will pay for 20,000 procedures performed by virtually every doctor in the country.
• A product developed by Simbro allows patients to compare quality and price data for most hospitals in the country.
• A product developed by eMedicalfiles creates needed transparency for doctors — it allows medical records to travel electronically as patients go from doctor to doctor and hospital to hospital.

The NCPA is holding a briefing on these techonologies on Tuesday.

The latest issue of National Review has my analysis of the President's new health policy proposals. In addition to a stronger-than-ever push for Health Savings Accounts, the President is calling for tax fairness (giving individually purchased insurance the same tax break as insurance obtained at work), portable health insurance, special HSAs for the chronically ill and allowing consumers to shop for insurance in a national marketplace.

An interesting feature of the President’s health plan is that HSA plans would receive preferential treatment over other health plans.  Specifically:

1. Only HSA plans would qualify for the low-income family refundable tax credit. 
2. Only HSA plans purchased by individuals would be tax deductible.
3. Only HSA plans would be personal and portable.

On Tuesday night, President Bush devoted only a few sentences to health policy. At the same time, the administration released a five-page document describing the President's health policy proposals. The reforms described therein are so sweeping and so bold that I would compare them to Hillary Clinton's proposals of a decade ago.

I don't know if the White House will devote the energy and political capital necessary to see this through. But if they do, these reforms will leave a lasting mark on social policy in this country.

Here are the four ideas I find most remarkable.

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The Wall Street Journal this morning published my online "debate" on consumer driven health care with Joe Antos (AEI) and Robert Reischauer (Urban Institute). It also includes many readers' email comments.