“Go It Alone” Is a Path to “Medicare for All”

I’ll end my comments with two quick thoughts. The first is that as Michael Cannon, I, and some others bickered over health care “transparency” at a conference yesterday and today, somehow (OK, it was my fault) the idea emerged that doing a kitchen renovation is damn complicated and expensive. And even if you think you know what appliances and cabinets you want and know what things (especially labor and appliances) cost, you don’t. And after you’ve managed one renovation (as Michael and I both just have) you’re only an expert on how to do your own again — so it’s a non-transferable skill! So the need for full transparency of cost, quality, etc. in health care is in my view strong, so long as the person who (unlike me doing my kitchen) has that view knows what to do about it. For the expensive part of medical care (i.e., the care of the low number of high-cost people), someone who is not the patient has to take the role of decision-maker, or the provider system will roll all over the purchaser — as they have for 6,000 years and especially the last 60.

It may be that the U.S. government is culturally incapable of performing that role (although some government agencies like the U.S. Marine Corps seem to be pretty effective). It may also be that, for quality reasons, we see a growth of high-end health advocates who perform this role for the well-to-do. (Concierge primary care is heading this way). But we should be able to create a system in which purchasers care about that cost, and the “agents” managing the process signal to the end-consumers by price, quality, and other measures that they are providing a better service. The only rational way for that to happen is, in my view, (as Michael says) to have those agents compete on a level playing field. That’s Enthoven style managed competition, and frankly all proper markets are managed — there’s a reason we have an SEC and a CFTC. You can’t sell the same bushels of corn on the Chicago futures market to different people at different prices, or make your bushel bigger or smaller than the markets’. The rules need to be the same for everyone. If Clark’s view of managed competition comes true, the sick will be paying more for their health care bushels.

And, as I said in somewhat more flippant tones to an emailer from the NCPA complaining about my Spot-on article today, if you don’t manage the insurance market by providing incentives to the insurers, or the intermediaries, to compete on providing the most cost-effective care at a rational and visible level (which in my view is a population-average rate charged per month for all care), then the private insurance market will continue to disintegrate. It’s been held together this long only by the “social insurance” provided by large employers, and that’s going away fast. For sure, that may be the intention of some of the Grover Norquist ilk, but I fear that the end result of all of that will be an increasingly elderly and uninsurable segment of middle class America.

Which is why I still believe the most likely outcome (assuming that we don’t have national Arnie-care any time soon) is a continued decline of private insurance and insulation, increased middle class insecurity, and an eventual populist rallying cry making “Medicare for all” the law of the land. And, frankly, it’s the polices of the right that are encouraging the “go it alone” attitude in an unreformed individual insurance market that make that outcome most likely.

You guys don’t want that to happen. Do you?

Also from this issue

Lead Essay

  • Insulation vs. Insurance by Arnold Kling

    In this month’s lead essay, Cato Institute adjunct scholar Arnold Kling draws from his book, Crisis of Abundance, to argue that the health coverage most Americans enjoy is not insurance at all, but what he calls “insulation.” “The problem with insulation,” Kling argues, “is that it is not a sustainable form of health care finance… Insulation leads people to over-consume health care services. Americans make extravagant use of services that have high costs and low benefits.” Kling explains how real health insurance would work, and how it would help solve the crisis in health care, and explores how we could transistion to a system over time institutionally and culturally in order to resolve the inconsistent demand for insulation and affordable, effective care.

Response Essays

  • Abundance Is Insulated from a Crisis—For Now by Matthew Holt

    According to health care strategist Matthew Holt, Arnold Kling is correct that consumer insulation from the costs of “premium medicine” is partly responsible for the rising cost of health care, but Holt dissents from Kling’s solution. Holt examines what he takes to be the three main strategies for dealing with “the insulation and overuse of medical care in the U.S.”: a nationalized “single payer system; a system of “managed competition”; and “individual consumer control of spending at the point of service.” Holt argues that the latter two options face deep problems, and that a nationalized single-payer system “is the likeliest outcome in perhaps a decade or so,” even it is not politically feasible at present. “Kling has provided a decent analysis,” Holt argues, “but has proposed a solution that both ignores the political and cultural realities of the health care system, and probably wouldn’t even work in theory.”

  • Unhealthy Subsidies by Clark C. Havighurst

    Clark C. Havighurst agrees with Kling’s “diagnosis of what’s wrong with health care” in the U.S. “as far as it goes.” Havighurst goes further and digs into the reasons the U.S. health system “has evolved into an entitlement program under which everyone expects nothing less than the very best that ‘modern medicine’ has to offer.” Havighurst lays the blame at the feet of the government’s choice to subsidize the purchase of health care by “excluding the cost of employer-sponsored coverage from employees’ taxable wages and income” and lucidly details three different mechanisms by which the tax subsidy insulates workers, consumers, and voters from the costs of health care. Havighurst proposes that “something approaching [liberals’] goal of universal health coverage could be achieved by ending the current tax subsidy and offering refundable tax credits of, say, $6000 to families that spend at least that amount in health plan premiums or contributions to a health savings account.”

  • Yes, We Need Real Insurance … Real Social Insurance by Jonathan Cohn

    Jonathan Cohn, a senior editor at the New Republic, agrees with Kling that our current health care system doesn’t function according to the widely understood principles of individual insurance, but he doubts we’d do better at fighting rising costs and maintaining quality if citizens with “real” insurance were free to take price into account in their choice of care. “We have precious little evidence to believe that people can distinguish good care from bad care,” Cohn writes. And the notion that consumer choices will improve over time is, according to Cohn, “a lovely idea, but one that seems highly dubious.” Cohn argues that we need a broader notion of insurance – social insurance – to shield people not only against unexpected illness and harm, but against “genetic and economic bad luck.” Cohn argues that many nations do just fine in managing the cost/quality tradeoffs inherent in a state-controlled system of universal coverage, and that Americans would be happy with such a system “if only they knew how those systems really worked.”

The Conversation