I doubt that it surprises anyone that Senator Max Baucus did not read the ObamaCare bill that he navigated through the Senate, but we should all be surprised that he has no shame in admitting it in a town hall meeting that he hosted last week with the U.S. Secretary of Health and Human Services (HHS), Kathleen Sebelius. Indeed, he appears proud of the fact that he did not “waste” time reading the bill, but delegated it to “experts.”

Many of the bill’s supporters have been walking away from it recently. An August 19 report on “A Communications Perspective” for ObamaCare, prepared for the pro-ObamaCare lobbying group Families USA (and leaked to Politico.com), significantly reframes the mission of ObamaCare’s supporters:

• Instead of selling reform, the new goal is to build “resistance to repeal”;
• The public is “disappointed, anxious, and depressed,” making the environment for ObamaCare “challenging”;
• Claims have to be “small” to be “credible”;
• Convince citizens that only “the rich” will pay for ObamaCare;
• Finally, do not claim that ObamaCare will ‘reduce costs and deficit.”

This is all understandable — but does it explain why Sen. Baucus and Sec. Sebelius are preparing to throw their own “expert” staff under the bus?

Continue reading »

Disastrous economic policy is almost certainly the reason. And number one on my list of disasters is the new health reform law.

Did you know that the Patient Protection and Affordable Care Act (PPACA) uses the term “the Secretary shall” 1,075 times? That means enormous discretionary power to make decisions about the fate of a sector that is more than one-sixth the size of the entire economy has been vested with one government department. And after Kathleen Sebelius makes all of those decisions, the election in 2012 could easily produce a different Secretary from a different political party which could have 1,075 opinions very different from those of Secretary Sebelius.

You’ve got to pick a pocket or two 

Continue reading »

There are two fundamentally different ways of thinking about complex social systems: the economic approach and the engineering approach.

The social engineer sees society as disorganized, unplanned and inefficient. Wherever he looks, he sees underperforming people in flawed organizations producing imperfect goods and services. The solution? Let experts study the problem, discover what should be produced and how to produce it, and then follow their advice.

Social engineers invariably believe that a plan devised by people at the top can work, even though everyone at the bottom has a self interest in defeating it. Implicitly, they assume that incentives don’t matter. Or, if they do matter, they don’t matter very much.

To the economist, by contrast, incentives are everything. Complex social systems display unpredictable spontaneous order, with all kinds of unintended consequences of purposeful action. To have the best chance of good social outcomes, people at the bottom must find that when they pursue their own interests they are meeting the needs of others. Perverse incentives almost always lead to perverse outcomes.

In the 20th century, country after country and regime after regime tried to impose an engineering model on society as a whole. Most of those experiments have thankfully come to a close.  By the century’s end, the vast majority of the world understood that the economic model, not the engineering model, is where our hopes should lie. Yet there are two fields that are still completely dominated by people who steadfastly resist the economic way of thinking. They are health care and education.

Continue reading »

In most families moms are the caregivers. They know the right cough medicine, the right dosage, the difference between aspirin and Tylenol, and what to do for their child’s allergies. Most moms have a box or tray with all kinds of cures for their children. Mom’s “medicine box” is there to fix the middle-of-the-night pains and fevers. God bless moms.

Relief may range from chicken noodle soup to special itch-soothing creams. Moms handle most issues with love and the right choice of home remedies and over-the-counter medications. If it’s not in “the box” a quick trip a local 24-hour pharmacy will secure the needed treatment. If mom’s care and time don’t make the hurt go away, a doctor’s visit may be in order. But, for most situations a caring mom, Mother Nature and over-the-counter medications get the kids well, and avoid unnecessary visits and expenses to the see a physician. 

Continue reading »

Many of the problems in U.S. health care are the direct result of the way Medicare pays for things. The payment system adopted by the Medicare End Stage Renal Disease program at its creation in 1973, for example, was likely responsible for radical changes in the way dialysis was performed. It fueled the expansion of stand-alone centers, an option that had been tried and found both more costly and less convenient. Had Medicare subsidized patients directly using a Cash & Counseling arrangement, it is likely that today’s kidney dialysis would cost less and be more convenient.

Continue reading »

Fair. Unbiased. Evenhanded. We have produced something that is genuinely unique. It’s a consumer’s guide to how the new health care overhaul works, in a question-and-answer format. You can also get a pamphlet version — ideal for doctors’ offices, clinics, work places and everywhere else that people meet and socialize.

When you read the consumer’s guide, I think you’ll agree with me that it’s the first effort anyone has made to even try to be objective, and that in itself is rather amazing. See if you agree. Give us your comments below the fold.

Continue reading »

John Graham makes an excellent point about the lack of correlation between recessions and Medicaid spending. Medicaid eligibility has been relentlessly expanded over the last two decades. Caseloads drive expenditure.

And there is no reason to think that unemployment creates an automatic urge to sign up for Medicaid. Unemployment does not create an automatic need for health care. Furthermore, work done by the Census Bureau shows that a great many people who are eligible for Medicaid do not bother to sign up until they actually need health care.

Continue reading »

Almost everyone says that it is. Conservatives. Liberals. Republicans. Democrats. A vast swath of the health policy community. With near unanimous agreement among everybody who knows anything about health economics, how could we even ask the question?

Trouble is, all these people are wrong.

We pay for most things fee-for-service. Or, more precisely, the payment mechanisms that are predominant in health care are widespread in almost every other market.

Continue reading »

Accountable care organizations (ACOs) are the latest fad.  They were even included in the newly passed health reform bill, whose backers expect ACOs to raise the quality and lower the cost of patient care at the same time. Detractors, on the other hand, describe them as “HMOs on steroids.” A point-counter-point on the topic is at the Health Affairs Blog.

As is so often true in health policy, the clearest way to think about this topic is to imagine applying the concept to some other good or service. Say automobiles. What would it be like to buy an automobile from an accountable CAR organization?
                                                                                                                                                                                       
                                                                                                                                                                                                                                                                                                                                                   

Continue reading »

Although the White House’s marketing focused on keeping teachers employed, last Monday’s bailout of public employee unions included a huge chunk of change for Medicaid, the joint federal-state program for low-income Americans. This follows the so-called “stimulus” bill, signed in February 2009, which increased federal funding to each state’s Medicaid program by 5.5 to 11.5 percent until the end of this year. Because Medicaid is a welfare program, some economists might not think this spending is wrong: In recession, welfare programs increase spending, and they cut back when prosperity returns. At university, they told me that such programs are “automatic stabilizers.”

But Medicaid is not an “automatic stabilizer.” In fact, it’s been growing through thick and thin, in good times and bad, at a faster rate than Medicare, the program for the elderly that started the same year.

Continue reading »