The Economist Comes Out For Universal "Basic" Health Care For All Humanity

I'm old enough to remember when The Economist was a source of good economic sense on most issues of public policy.  By that I really mean only that they generally recognized that resources were not infinite, that choices needed to be made, and that all human problems could not be immediately solved by just spending enough money from the infinite piles of government loot.  But over the last decade or so they have gradually lost track of these principles.

The levels to which they have sunk are well-illustrated by the lead article in the current (April 28 - May 4) issue, headline  "Universal healthcare, worldwide, is within reach."   You read that right.  This is not an argument, à la Bernie Sanders, that wealthy countries like the United States now have sufficient wealth that they should use some (much) of it to provide universal health care to their citizens.  Rather, this argument is that universal "basic" health care should be adopted everywhere:  

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Progressive Fantasy Of The Day: Healthcare As A "Human Right"

I live in New York, and as a result I get to have friends and acquaintances tell me, more or less on a daily basis, that they firmly believe that "healthcare" is a "human right."  Or, make that a "basic human right."  Mind you, these are very nice and sincere people, and generally quite intelligent as well.  They care, deeply -- or at least, they believe that they care deeply -- about the plight of the poor generally, and in particular about the plight of those with health issues who have inadequate "healthcare."  (Note that the word "healthcare" for these purposes has very little or nothing to do with whether the subjects in question receive care for their afflictions, and almost entirely relates only to the question of whether the subjects have the unrestricted ability to call upon third parties to pay for that care.)  My New York friends find it difficult to comprehend how any person with a minimum level of morality could disagree on this subject.  When they learn that the winner of the Ms. USA pageant -- a black woman, no less! -- expressed the opinion that healthcare was a "privilege" rather than a "right," they are horrified, if not outraged.  

And God forbid that I should try to engage one of these people by presenting arguments for a different point of view.  As you might have gathered from reading this site, I'm not one to acquiesce or remain silent in the face of poorly-reasoned groupthink.  Plenty of people have raised their voice at me, or just walked away in a huff.  Another friend lost!

But in my case it has never gotten to the level that it reached over the weekend at the convention of the California Democratic Party.  That's where, as I reported just yesterday, the crowd raised its middle fingers for a chant of "F**k Donald Trump!", and then proceeded to shout down the likes of U.S. House Minority Leader Nancy Pelosi and California State Assembly Speaker Anthony Rendon for daring to suggest that the state might want to consider a "public option" healthcare law before going all the way to the holy grail of fully-socialized medicine, known as "single payer."  Simultaneously, a bill (known as Senate Bill 562) to impose the "single payer" system has been advancing in the California legislature, and declared socialist Bernie Sanders has been criss-crossing California whipping up his fans to support the proposed "single payer" system.    

Then, even as I was writing yesterday's post, the Appropriations Committee of the California State Senate went and released a financial analysis of SB 562.  The Sacramento Bee has the story here:

The price tag is in: It would cost $400 billion to remake California’s health insurance marketplace and create a publicly funded universal heath care system, according to a state financial analysis released Monday.  California would have to find an additional $200 billion per year, including in new tax revenues, to create a so-called “single-payer” system, the analysis by the Senate Appropriations Committee found. The estimate assumes the state would retain the existing $200 billion in local, state and federal funding it currently receives to offset the total $400 billion price tag.

How does this level of cost compare to the entire existing annual budget of the State of California?  The answer is, it is well more.  The entire current annual budget is about $180 billion.  Thus, implementing the "single payer" system of SB 562 would require more than doubling of all state taxes in California, which, as I am sure you already know, are already among the very highest in the country.  Don't worry, there's a proposal to raise the money:  impose a 15% payroll tax on everybody in the state. (As I understand it, a "payroll tax" is like an income tax, except without the features that low income people are exempted and high income people pay a higher progressive rate.)  For comparison, the current top California income tax rate is only about 13%, and only applies to incomes well above $1 million per year.

Are you surprised that just this one new program could possibly cost so much?  Then you haven't been following the issue.  For example, as I reported as recently as Saturday, New York also has a "single payer" bill working its way through the state legislature, and the incremental cost of that bill has also been estimated as well more than the entire amount raised by all state taxes currently in existence.  (In the case of New York, the estimated incremental cost of the "single payer" bill is $91 billion per year starting in 2019, while the entire take from all existing state taxes as of 2019 is estimated as $82 billion.)

Can anybody do this more cheaply?  Well, we can look to see if any other states have had a single-payer healthcare system that got far enough in the legislative process to get costed out.  And there are two more such states.  Vermont, under Democratic Governor Pete Shumlin, made a run at enacting a single-payer system in 2014 -- indeed, bringing "single-payer" to Vermont was Shumlin's signature issue.  As reported by Avik Roy in Forbes here, in late 2014 two consultancies  put cost figures on the Vermont proposal, known as Green Mountain Care:

The Shumlin administration, in its white-flag briefing last week, dropped a bombshell. In 2017, under pre-existing law, the state of Vermont expects to collect $1.7 billion in tax revenue. Green Mountain Care would have required an additional $2.6 billion in tax revenue: a 151 percent increase in state taxes. Fiscally, that’s a train wreck. Even a skeptical report from Avalere health had previously assumed that the plan would “only” cost $1.9 to $2.2 billion extra in 2017.  In 2019, Costa estimated that Green Mountain Care would have required $2.9 billion in tax revenue vs. $1.8 billion under pre-existing law: a 160 percent increase in revenue.

So Green Mountain Care also was estimated to cost well more than the entire existing take of all state taxes -- about 120% according to one estimate, and about 160% according to the other.  Once these numbers came out, Shumlin raised the "white flag" (as Roy puts it) and the proposal went away.  

On the cost end, are you starting to notice a pattern here?  The cost of these single-payer healthcare proposals seems always to turn out to be something well in excess of the entire existing state tax revenue.

Colorado was no different.  Colorado's single-payer plan was called Amendment 69, and it was put to the voters in a referendum that was on the ballot at the same time as the 2016 presidential election.  From Megan McArdle at Bloomberg last August:

Building this new entitlement would cost more than 140 percent of the total current state budget. Since there are no plans that I’m aware of for the Colorado state government to stop doing all its other functions, that means that everyone in Colorado would have to take whatever check they are currently sending to their state government, tear it up, multiply the total by 2.4, and write a new check.

In other words, pretty much the exact same story.  Meanwhile, while the proposal seemed to be leading in early polls, once the costs were known, it sank rapidly.  It ended up losing in a huge landslide, about 80-20.  Meanwhile, Hillary Clinton carried the state by about 5 points.  

My expectation is that even California is going to come to its senses on this one, angry activist demonstrators or no.  But the progressive fantasy will never go away, with the federal government as the ultimate target.  After all, the federal government is not subject to normal budget constraints, and has an infinite pile of free money to be used to create perfect justice and fairness in the world.  Right?  Of course, there are lots of other causes lined up for the infinite money -- curing poverty, ending income inequality, "climate justice" payments, reparations for slavery, etc., etc.    

The Regular Fake News And The Really Evil Fake News

The subject of "fake news" seems to have faded from the headlines somewhat now that Hillary's defeat is receding in the rear view mirror.  But before the topic disappears completely, I'd just like to pause for a moment to make a distinction between two different kinds of fake news, which for these purposes I'll call the "regular" fake news and the "really evil" fake news.

The kinds of things that Hillary was complaining about I would put firmly in the category of "regular" fake news.  Things like "Pope Francis endorses Donald Trump," or "The Clintons are running a child sex ring out of a pizza parlor in Washington, D.C."  Did anybody actually believe those things, let alone then change their vote as a result?  It's not impossible, but I find it hard to believe that any material number of people could be that naive.  Moreover, it's not like there weren't plenty of comparable fake stories relating to Trump.  Do you remember "RuPaul claims Trump touched him inappropriately in the 90s"?  Just part of the normal political rough-and-tumble.

But here's something I consider to be in a wholly different category:  falsely accusing your political opponents of mass killings of tens or hundreds of thousands of people on no basis whatsoever.  Here I am talking about what seems to be the norm of acceptable advocacy by progressives as they try to preserve disastrous government programs designed and run by themselves.  The prime example of the moment is Obamacare.

The new Congress (with its vow to repeal Obamacare) has only been in session for less than a week, and already it has started.  For example, here we have Nicholas Kristof in yesterday's New York Times, under a headline "The G.O.P. Health Hoax":

The paradox of Obamacare is that it is both unpopular and saves lives. Preliminary research suggests that it has already begun saving lives, but it’s too early to have robust data on the improvements to life expectancy among the additional 20 million people who have gained insurance. It is notable that an Urban Institute study found that on the eve of Obamacare’s start, lack of health insurance was killing one American every 24 minutes. . . .  The American College of Physicians warned this week that the G.O.P. course could result in seven million Americans losing their health insurance this year alone, by causing parts of the insurance market to implode. Back-of-envelope calculations suggest that the upshot would be an additional 8,400 Americans dying annually.

They're going to kill tens of thousands of people!!!!!  But is there any real evidence that lack of health insurance actually leads to materially increased mortality?  Of course, the real evidence is firmly against that, and of course Kristof doesn't mention it.  In a post back in April, I reported on the results of the big three studies that have attempted to measure in a serious way whether there is any mortality benefit to having health insurance.  From that post (with internal quotes from this 2013 article by Megan McArdle summarizing the research):

  • There was the big Oregon randomized study that ran for two years from 2008-10.  Oregon got some money to expand Medicaid, but only for about half the number of people they wanted; so they held a lottery to determine who got in.  And then they ran a randomized study on 6400 people who got in and 5800 who did not.  Results:  Not only was there no detectable difference in mortality, but "the study failed to find statistically significant improvement on the three targets associated with the most common chronic diseases.  This, mind you, is the stuff that we're very good at treating, and which we're pretty sure has a direct and beneficial effect on health."  
  • Then there was the big observational study, conducted by Richard Kronick of UC San Diego, based on data from 672,000 insured and uninsured people as reported on the National Health Interview Survey from 1986 to 2000.  Results: "no mortality benefit from insurance."   
  • Or, going back a ways, there was the big Rand randomized study of close to 8000 people, divided into five groups ranging from very to much less comprehensive health insurance, that ran from 1971 to 1982.  Results:  "[T]hey looked to see what differences emerged in health outcomes.  Shocker: none did."

So OK, Kristof just fails to mention that the big, real, serious studies completely contradict his contention.  We know that that is how they do business at Pravda.  But what is the supposed evidence that he relies on instead?  For example, what is that Urban Institute "study" that he links to?  Go to his link, and you find that this "study" is just an update of a much-criticized Institute of Medicine report from 2002.  Here is a 2009 comment on the IOM report (and related advocacy "studies" including the Urban Institute update) from John Goodman of Health Affairs:

Last year [2008], a report by Families USA made the astounding claim that 6 people die every day in Florida because they are uninsured. Seven die every day in Texas, 8 in California, and 25 in New York.  How was Families USA able to tally up all that carnage with such pinpoint precision? As Linda Gorman explains, these claims are based on a 15-year cascade of studies — each repeating the errors and misinterpreting or mischaracterizing the findings of the previous one and ultimately relying on data that is 37 years old.  It begins with a paper by Peter Franks et al. published in the Journal of the American Medical Association in 1993, estimating that being uninsured increased the probability of death by 25%. Although the subjects were interviewed only once, for the study’s inference to be meaningful, one is forced to make the unverified assumption that the uninsured stayed uninsured for a full 19 years!  Continuing the saga, the Institute of Medicine (IOM) uncritically used the Franks result to claim that 18,000 deaths a year in the U.S. are attributable to a lack of health insurance. The Urban Institute updated the IOM report, and Families USA updated the Urban Institute report.

That's how you do it:  Instead of studying two populations over a period of years, you just interview some people once.  From that you make up a preposterous "estimate" that being uninsured increases mortality by an astounding 25%.  Project that "excess mortality" out over the whole population, and voila! you claim "18,000 excess deaths per year" (IOM), or "22,000 excess deaths per year" (Urban Institute).  And then you sit back and watch as Pravda uncritically parrots these ridiculous numbers endlessly without ever describing how they were invented or mentioning that the real and serious studies show exactly the opposite.  By the way, there's an even more preposterous 2009 advocacy "study" from Harvard University and Physicians for a National Health Program that claimed that the annual number of "excess deaths" for the uninsured was 45,000.  The methodology is basically similar -- this time they just assumed 40% excess mortality for the uninsured.  This one and the Urban Institute "study" were part of the coordinated 2009 advocacy program for Obamacare, which was enacted shortly afterward in early 2010.  Suppose you want to claim 100,000 excess deaths per year?  Easy!  Just assume 100% excess mortality!

I actually believe that the people who produce these fake "studies," as well as the New York Times, Nicholas Kristof, et al., think that they are on the moral high ground when they do this.  Their thinking goes something like this:  We're just doing what we need to do, and saying what we need to say, to achieve the moral imperative of bringing the holy grail of universal health insurance to the poor and the vulnerable.  Sure it has been difficult to establish empirically that lack of health insurance causes excess mortality.  But it's just obvious that that has to be true!  So we are completely justified in fudging things and making up tales of thousands of deaths to scare people and thus get to the morally right end point.

The problem is that something like Obamacare is not free.  Far from it.  It comes with hundreds of billions of dollars of extra government spending to fund Medicaid expansion and private insurance subsidies -- all of which is taken away from things the people would rather do with the money if they were free to spend it themselves.  It also comes with forcing millions of the relatively young and healthy to wildly overpay for health insurance that is uneconomic for them and that they would not buy unless forced to do so by government coercion.  Loss of freedom and loss of wealth (much of that for relatively low income people) count for nothing in the progressive/New York Times world view.

But, making up tall tales about tens and hundreds of thousands of deaths to scare people into accepting loss of freedom and loss of wealth and increasing government control over their lives?  Is that really OK?  I'd call it really evil fake news. 

Young Healthy People Should Not Have Health Insurance

A few days ago, in a post entitled "Medical Insurance Is About Asset Protection, Not Health," I Iinked to the report of results from the recent randomized Oregon study of increased Medicaid enrollment -- results showing that providing medical insurance to people leads to greatly increased expenditures on medical care without any demonstrable or measurable improvements in health.  But I did not fully draw out the implications of those results.

If medical insurance does not improve health results, then its purpose is asset protection.  That's a perfectly good purpose -- if you have assets to protect.  But what is the consequence for a young, healthy person with no substantial assets?  Very simple:  you are a fool if you buy health insurance.  If you have some routine medical expenses, pay for them out of pocket, and skip the huge contribution to the old and the sick that you would have to make by buying insurance, let alone the insurance company's overhead and profit.  If you get really sick, show up at a doctor or hospital and demand care.  It will be provided.  They will send you a bill.  You can't pay it.  Offer them what small amount you can pay.  If they don't take it, declare bankruptcy.  In bankruptcy, you will have to give up whatever substantial assets you have (by definition, not much) and then you will get a discharge.  Whether you ended up getting sick or not, you will have saved many years of real money going down the rat hole of health insurance.  A few years, or maybe ten, from now, when you have a spouse and a kid and you're buying a house, it's time to think about medical insurance.

In fact, many young Americans are fully smart enough to make this calculation, which is precisely why we have had the non-problem of 40+ million "uninsured" for many years.   Now enter Obamacare.  Starting January 1, 2014 a minimum level of health insurance is "mandated."  What now?

In case you haven't figured it out, at its heart Obamacare is a scam to force the young and healthy to subsidize the healthcare of the older and less healthy.  If you are young and healthy and think about it for a few minutes, you will realize that you want no part of this.  How to escape?

The good news (as noted here by Richard Epstein) is that it appears that the tax penalties for not having health insurance will be far less than the cost of the health insurance.  The decision is then obvious.   Pay the penalty.

Advocates for Obamacare are starting to figure this out.  Thus, on the same day as my previous post on this subject (May 6) we have one Ezekiel Emanuel writing an extremely bizarre op-ed in the Wall Street Journal entitled "Health-Care Exchanges Will Need the Young Invincibles." If you don't recognize the name, Ezekiel Emanuel is a "medical ethicist," brother of Rahm, and thought to be a major designer of Obamacare.   Emanuel identifies what he sees as the problem:

Here is the specific problem: Insurance companies worry that young people, especially young men, already think they are invincible, and they are bewildered about the health-care reform in general and exchanges in particular. They may tune out, forego purchasing health insurance and opt to pay a penalty instead when their taxes come due.

Actually they're not "bewildered" at all, but rather completely rational and making the obvious and sensible decision.  But Emanuel has what he thinks is the solution:  an appeal to civic duty! 

[W]e need to make clear as a society that buying insurance is part of individual responsibility. If you don't have insurance and you need to go to the emergency room or unexpectedly get diagnosed with cancer, you are free- riding on others. Insured Americans will have to pay more to hospitals and doctors to make up for your nonpayment. The social norm of individual responsibility must be equated with purchasing health insurance.

Well, good luck with that.  Here's a little news for Mr. Emanuel:  The principle of "from each according to his abilities, to each according to his needs" does not work as a method of organizing affairs in human societies.  Also, that principle is the opposite of the principle of "individual responsibility."  So the idea of "equating" a massive wealth transfer from one group to another with "the principle of individual responsibility" is a ridiculous example of doublespeak.  Also, get over that "free riding" nonsense.  If Obamacare (and before it all kinds of other regulations and stupid tax treatment) did not make health insurance ludicrously overpriced for young people, they could and would buy it.  You're trying to scam them, and they are too smart to get taken in. 

Now why (as Mr. Emanuel points out) Obama won the 18-29 age cohort by a 23% margin, I cannot explain.  But I can predict with a great deal of confidence that when called upon to waste several thousand dollars a year each, year after year, in a supposed act of civic responsibility that is really a scam, they are just not that stupid.

 

 

  

Medical Insurance Is About Asset Protection, Not Health

Before I had this blog I used to talk (my wife would say "pontificate") about my theories to anyone who would listen.  In the health insurance debate leading up to Obamacare a few years ago, one of the points I would make endlessly was that "medical insurance is about asset protection, not health."  Of course, like my famous prediction in the 80s that Communism would shortly collapse, there is no written record of my saying this.  But I do have many witnesses.

Anyway, additional results from a major randomized study out of Oregon are just in, and to summarize the results in one short phrase:  medical insurance is about asset protection, not health.

Whether medical insurance is about asset protection versus health is a big deal.  The argument justifying massive government intervention in health insurance is almost entirely about alleged improvement in health outcomes, as in "By refusing to allow government to provide health insurance for all, you are causing people to die!!!!!!!"  That argument goes away if the health outcomes for the insured and uninsured are basically the same.  A few people (most notably the execrable now Senator from Massachusetts Elizabeth Warren) have made the different argument that government has an interest in providing health insurance even if it is not about health, because lack of health insurance was causing millions of "medical bankruptcies."  But I never understood why that was a good argument for universal medical insurance -- if a person has substantial assets, such as large equity in a house, and chooses not to buy medical insurance, why exactly shouldn't he have to contribute that value to his own medical care before the taxpayers step in?  If you have substantial assets, by definition you can afford insurance to protect the assets.  If you are uninsurable, use your brain and don't keep major assets in your own name.

When I made my point about health insurance a few years ago, the main evidence cited against me was a large study from the Institute of Medicine in 2002 called "Care Without Coverage."   That study purported to show that lack of health insurance led to 18,000 additional deaths per year among the uninsured population.  When I got the Institute of Medicine study, it looked like so much hocus pocus.  There was no randomized trial, but rather a meta-analysis of some hundred or more studies in the medical literature.  There is extensive recognition in the report of numerous confounding factors that I would say make it impossible to come up with any number like the supposed 18,000 additional deaths from any study of this sort.  For example, the insured tend to be wealthier and more educated than the uninsured, and to smoke less.  How to weigh such factors in a study of this type is not a matter of statistics, but rather entirely a judgment call, here made by people who were clear advocates of universal health insurance.  But none of that slowed the authors down from making their highly politicized conclusion, and claiming the imprimatur of the IOM brand for their conclusions.  The report was not funded by the government, but rather by the Robert Wood Johnson Foundation.  That's the Johnsons of Johnson & Johnson -- do you think they might have any interest in increasing government spending on health care?

The run-up to Obamacare in 2009 then led to a frenzy of advocates putting out increasingly imaginary numbers as to the "additional deaths" among the uninsured.  A report from the Urban Institute in 2008 upped the IOM's number to 22,000 additional deaths per year.  If you look at their abstract, the result comes entirely from an assumption that the uninsured have a mortality rate 25% higher than the insured.  The basis for that?  They claim to rely on the IOM's previous hocus pocus.   In September 2009, as the Obamacare bill approached its end game in Congress, Harvard released a study purporting to estimate the additional annual deaths at 44,789.  Again, no randomized study.  This time it is based on an assumption of 40% increased risk of death among the uninsured.  Perhaps we should note that two of the three authors were co-founders of something called Physicians for a National Health Program.

Meanwhile, a guy named Richard Kronick, who had been a senior health policy advisor in the Clinton administration, and became chief of the division of Health Care Services at the Department of Family and Preventative Medicine at the University of California at San Diego, did his own careful review of the IOM's findings and published a paper in 2009.  His conclusion:  after adjusting for demographic and health factors (such as smoking), the uninsured were at no greater risk of dying earlier than people who had employer-sponsored group insurance.  I don't even remember coming across Kronick's study at the time.  As a former Clintonista, he clearly would not have minded coming to the opposite conclusion, and he should be congratulated for his honesty.  But he was drowned out by advocates making up their own numbers.

Anyway, the world has been waiting for the results of an actual randomized controlled experiment.  (Actually, there was one previous randomized study, done by the Rand Corporation in the 70s.  It found no mortality benefit from health insurance according to Megan McArdle here.)  Recently Oregon has handed the world an opportunity for randomized study, in the form of a 2008 Medicaid expansion that was underfunded, so they allowed people into it by lottery.  Two years of data are now in, and the results of analysis of that data were published in the New England Journal of Medicine last week.  Conclusions:

This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.

Hmmm.  "No significant improvements in measured physical health outcomes."  And as to that business of "reduced financial strain" -- do we get to count financial strain on the government here?  How many trillions are we spending on Obamacare again?

As I said, medical insurance is about asset protection, not health.