As of January of this year, U.S. employers can automatically enroll their employees in 401(k) plans with diversified portfolios – without fear of lawsuits and without certain regulatory burdens.  Automatic enrollment should increase participation by about one-third, and diversification should produce larger and safer returns, although employees are able to opt out of both decisions.  In the future, roughly one of every two 401(k) enrollees is likely to be so enrolled.

This opportunity was created courtesy of the Pension Protection Act of 2006, which reflected the joint efforts of the National Center for Policy Analysis (NCPA) and the Brookings Institution, including Capitol Hill briefings, publications, speeches, editorials, etc.  Yet the real intellectual groundwork came from University of Chicago professors Richard Thaler and Cass Sunstein.  They call the theory behind this effort "libertarian paternalism," and they have written a book about it called Nudge

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Actually, it's a Goodman/Musgrave idea that first appeared in Patient Power (1992) and later in "Applying the ‘Do Not Harm' Principle to Health Policy" (2007). To my knowledge, no politician, no other think tank, no other health policy wonk has yet endorsed it – but, hey, this is a sleepy field.

First things first. There are five mega-changes that motivate the solution. The first two you already are familiar with. The next three you may not have thought about. Continue reading »

Everyone agrees. Republicans and Democrats.  Conservative and liberals. Newt and Hillary.  Government should force doctors and hospitals to clean up their act by: adopting electronic medical records, practicing evidence-based medicine, coordinating care, integrating care, and doing numerous other things that all right-thinking health policy analysts have determined they should do.  Trouble is, what everybody knows turns out not to be true. 

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Who should pay for my health insurance?

I'm not raising this as a legal or contractual issue.  This is an "ought" question.

As a moral and ethical issue, who should pay for my health insurance?

If you spend all your time around health policy wonks, I'm probably the only person you know who even thinks this is an interesting question.  I've never heard it raised at any health conference.  But then most of the ones I attend are in Washington, D.C. – where no one ever talks about the ethics of anything unless he is skewering an opponent.

Anyway, let's start with Warren  Buffett.  He can certainly afford it.  But why Buffett?  Why not John Templeton down in the Bahamas?  Or the Queen of England?  Or anyone else on Forbes' list of international billionaires? Continue reading »

Real health reform does not cost money. It saves money. Conservatively, I would guess we could reduce health spending by one-third and raise quality and increase access to care at the same time. That's $7,000 for every U.S. household. Since government spends almost half the money, we could all get an annual economic stimulus check for $3,000 – leaving $50 billion behind for government to mop up any remaining problems.

Alas, hardly anyone is in favor of real reform. For a lot of people, reform doesn't even count as reform without sacrifice and atonement. Think of California liberals and global warming. Nothing they do will have any perceptible impact on the climate. But they don't feel good about themselves unless they are enduring pain and discomfort.

Anyway, suppose we did need more money to add to our annual $2.1 trillion health care spending spree. Where could it come from? Continue reading »

Do you think it's possible to demonstrate with a single graph the fallacy behind every wrong-headed solution to the problem of rising health care costs? Here it is:

I call this graphic the "Health Fork," because it reminds me of a tuning fork and it has the power to fine tune potentially sloppy thinking. Once the diagram becomes widely known, it can serve several useful purposes:

• A postcard version could be used by journal editors to signify rejection of poorly conceived manuscripts, thereby saving the time and money costs of peer review.
• A placard version could be used to visually reject ill-advised health policy speeches instead of hissing and booing.
• A gold-plated version could be worn as a lapel pin by clear thinkers so the two of you will know who you are at the next event sponsored by the Center for Health Systems Change.

[Note: additional uses for the Health Fork- including the most creative and most amusing uses - have been deleted by the internal NCPA editorial censor]

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I am establishing the Mondrian Award for Ineffectiveness in Health Policy. The award will go to the program, agency or proposal that promises the least health outcome for the most dollars spent.

Once this idea catches on, I think it could take on a life of its own. The GAO, for example, could award an annual Mondrian to some deserving federal agency. The CMS could give a Hospital of the Year Mondrian. Each hospital, in turn, could give an annual award to a deserving department or staff doctor. Continue reading »

Close your eyes and try to think of every health reform plan you've ever heard of – beginning with Hillary Clinton's plan about 15 years ago right up through Arnold Schwarzenegger's plan today.  Think left and right.  Think big and small.  Don't overlook the self-serving plans devised by hospital, insurance and drug company trade groups. And don't overlook Len Nichol's plan, which is supposed to be rooted in the Old and New Testaments and the Koran.

Yes, I know.  No one should have to do this on a full stomach.  So you may want to put this exercise aside for a few hours and then come back to it.  But if you really concentrate, at least three or four dozen plans should easily spring to mind. Continue reading »

The American health care system has three fundamental problems: cost, quality and access.

Problem of Cost: Health care spending per capita is growing at twice the rate of growth of national income.  If that trend continues, health care will crowd out every other form of consumption by the time today's college students retire.

Problem of Quality: RAND researchers find that patients get recommended care only about half the time; and the type of insurance, or whether you even have insurance, doesn't seem to matter.  An Institute of Medicine study found that as many as 98,000 people die every year because of medical errors.  Other studies have shown that an appallingly low percentage of doctors and hospitals have patient records in electronic form, thereby missing opportunities to use error-reducing software. Continue reading »

It is the season for health insurance reform, and that's dangerous.  The odds of doing something bad are much higher than the odds of doing something good. 

At the NCPA, we are producing a handbook on state health reform.  The final document will soon be ready.  However, we don't want to be like the FDA and deny people life-saving remedies.  So here is the URL for the latest draft:

http://www.ncpa.org/email/State_HC_Reform_6-8-07.pdf

In the meantime, here are four things to avoid. Continue reading »