Posts tagged with: Healthcare reform in the United States

pills and billsWhile Michelle Obama grows vegetables in the White House garden, her husband’s administration grows every government program it can. At The Federalist, Sean Davis gives 12 reasons why Medicaid should not be expanded.

Since Medicaid is a health care program, we should see some improvements in American’s health, right? Not so, and this is Davis’ first reason why we should not consider expanding this program.

According to an extensive, randomized study of people who enrolled in Oregon’s 2008 Medicaid lottery, Medicaid doesn’t improve the health outcomes of its patients, even after controlling for major health predictors like income and pre-existing health status. The researchers tracked the health progress of people who were admitted into the program and who people who applied but did not get selected by the lottery. According to the researchers, one of whom helped craft Obamacare, while the program led to people using more health services, those services didn’t actually make them physically healthier…

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burden-bearingOver the past year, public discussion about the Affordable Care Act has led many Christians to question the proper roles of government and business in providing healthcare. Too often, though, the question left unexamined is what role the church should have in responding to the medical needs of the community.

Throughout the history of the church, Christians have been actively involved in the provision and funding of health and medical resources. But for the past 50 years, these functions have been treated as political problems reserved for the state rather than matters to be addressed by the church.

Some Christians though, are beginning to reassert this biblically mandated role by participating in health care sharing ministries (HCSM). HCSMs are not insurance companies, but nonprofit religious organizations that help members pay for medical treatments.

As the Alliance of Health Care Sharing Ministries explains, “A health care sharing ministry (HCSM) provides a health care cost sharing arrangement among persons of similar and sincerely held beliefs. HCSMs are not-for-profit religious organizations acting as a clearinghouse for those who have medical expenses and those who desire to share the burden of those medical expenses.”
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Rate-map-3-27-40-67Forbes has just released its 49-state analysis of Obamacare and the cost of insurance premiums. The findings?

In the average state, Obamacare will increase underlying premiums by 41 percent. As we have long expected, the steepest hikes will be imposed on the healthy, the young, and the male. And Obamacare’s taxpayer-funded subsidies will primarily benefit those nearing retirement—people who, unlike the young, have had their whole lives to save for their health-care needs.

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Want to help the poor? Promote a free market in health care. That’s the argument made by John C. Goodman, author of the new book Priceless: Curing the Healthcare Crisis.

Timothy Dalrymple recently talked with Goodman about the best approach for restoring free-market pricing mechanisms into the market for medical care and health insurance:
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In addition to internal logical inconsistencies which raise serious concerns of long term economic sustainability regarding the Affordable Care Act (ACA), recently analyzed by John MacDhubhain, Robert Pear reports in the New York Times over the weekend how confusion over certain ambiguities in the law (ironically over the meaning of the word “affordable”) would end up hurting some of the people it is precisely designed to help: working class families.

Pear writes,

The new health care law is known as the Affordable Care Act. But Democrats in Congress and advocates for low-income people say coverage may be unaffordable for millions of Americans because of a cramped reading of the law by the administration and by the Internal Revenue Service in particular.

Under rules proposed by the service, some working-class families would be unable to afford family coverage offered by their employers, and yet they would not qualify for subsidies provided by the law.

Read more . . .

Blog author: jmeszaros
posted by on Wednesday, July 20, 2011

John Boehner recently stated, in the debt-ceiling talks, that “We’re going to continue and renew our efforts for a smaller, less costly and more accountable government,” which most Americans agree with in principle.  However, citizens say that keeping benefits the same for the three big programs, Social Security, Medicare, and Medicaid, is more important than taking steps to reduce the budget deficit by a margin of 60 percent compared to 32 percent for Social Security, 61 compared to 31 percent for Medicare, and 58 compared to 37 percent for Medicaid.

So Americans purportedly want thriftier government, but still want benefits? What gives?  Part of the problem, according to James Kwak, is “the idea that there is one thing called ‘government’–and that you can measure it by looking at total spending–makes no sense.”

What Kwak means is that total expenditure is a misleading measure of the “size” of government. He presents this example:

The number of dollars collected and spent by the government doesn’t tell you how big the government is in any meaningful sense. Most government policies can be accomplished at least three different ways: spending, tax credits, and regulation. For example, let’s say we want to help low-income people afford rental housing. We can pay for housing vouchers; we can provide tax credits to developers to build affordable housing; or we can have a regulation saying that some percentage of new units must be affordably priced. The first increases the amount of cash flowing in and out of the government; the second decreases it; and the third leaves it the same. Yet all increase government’s impact on society.”

So increased spending (or decreasing it) does not necessarily mean the “size” of government has grown (or shrunk). Think how regulation is synonymous with big government, but it does not involve a tax or direct spending of any kind.

In fact, “big” government is often viewed through the lens of regulation, rather than cost. For instance, Kwak explains:

When people say government is too big, they often have in mind something like the Consumer Financial Protection Bureau–a regulatory agency that tells businesses what they can and can’t do…the CFPA’s budget is about $300 million, or less than one-hundredth of one percent of federal government spending.”

Again the divergence between cost and “bigness” is seen.  The CFPA may be viewed as “big,” intrusive, and unnecessary but it is not large in terms of cost like Social Security and Defense spending.

Kwak states, “popular antipathy toward the regulatory state has been translated into an attack on popular entitlement programs.”  Many people dislike certain government regulations and, due to the budget debate, dislike of regulation, the amount of government spending, and specific government programs may have become accidentally intertwined.

As mentioned before, Americans view Social Security, Medicare, and Medicaid as important and worth preserving.  Kwak elaborates: “Rationally speaking, your opinion about Social Security or about Medicare should be based on how much you put in and how much you get out–not on the gross size of the program, and not on how big the rest of the federal budget is. Yet instead the total size of the budget has become the driving force behind potential structural changes in Social Security and Medicare.”

Kwak suggests that “we should make decisions on a program-by-program basis, just like a business is supposed to do.”  His advice is: “If there’s a program that the American people, through our democratic system, agree will provide benefits greater than its costs, we should do it, independently of the existing spending level. And if there’s a program that isn’t covering its costs, we should kill it.”

Instead of focusing on a generality, “government size”, our elected officials should evaluate programs on a cost-benefit level.  Then government agencies that are viewed as too costly or intrusive (the CFPA) could be eliminated and government programs that are viewed as beneficial (SS, Medicare), but need reform, can be focused on in an unbiased way and not be harmed by the “too big” generality.

Jordan Ballor, in a blog post for Acton, wrote: “All government spending, including entitlements, defense, and other programs, must be subjected to rigorous and principled analysis.”  Indeed, although the American people think Social Security, Medicare, and Medicaid are beneficial, 52 percent think Social Security needs significant reform, 54 percent think Medicare needs reform, and 54 percent, likewise, for Medicaid.  However, without having a clear definition of what “too big” means, successful retooling will be difficult to achieve.

Ballor added: “This means that the fundamental role of government in the provision of various services must likewise be explored. This requires a return to basics, the first principles of good governance, that does justice to the varieties of governmental entities (local, regional, state, federal) and institutions of civil society (including families, churches, charities, and businesses).”  True reform requires not simply legal and budgetary change, but a reevaluation of what entities perform certain services, as Ballor suggested.

The Acton Institute is committed to real budget reform, and, to make sure that programs, like Social Security, are evaluated fairly and reformed properly, the United States should make sure it clearly defines the costs and benefits of individual programs before taking drastic action.

Blog author: jmeszaros
posted by on Wednesday, July 6, 2011

Many politicians have talked of repealing the Patient Protection and Affordable Care Act (“Obamacare”).  Mitt Romney has said nullifying the healthcare law would be one of his first actions if he was elected president.  However, rather than just repealing the law and going back to the status-quo, with minor changes, the American people should demand true reform.

In 2001, Milton Friedman, the famed, Nobel-prize winning economist, published an article titled “How to Cure Health Care.” (Although worthy of serious consideration, Friedman’s analysis does not contain any explicit moral message, and is simply a policy analysis on healthcare.  For a more in-depth look at the moral dimension of healthcare reform, visit Acton’s special section on healthcare)

In his essay, Friedman stated that, “The United States spends a mind-boggling percentage of its GDP on a health care system that virtually everyone agrees is a disaster,” and that was in 2001.  Spending has only increased over the past decade.  In fact, according to the Department of Health and Human Services Center for Medicare and Medicaid Services, the United States spent 17.6 percent of its GDP on healthcare in 2009, and this figure is expected to grow over time.

In addition to out of control spending, studies in the United States and Europe at the time were showing “…public dissatisfaction with the increasingly impersonal character of medical care.”  Recently, a 2010 Gallup poll showed a majority of Americans are satisfied with the quality of healthcare they receive (62 percent rated quality as excellent or good), but only 39 percent rated the availability of coverage as excellent or good.

How did this happen? How has massively increased spending led to unsatisfactory coverage?

In four words: the government got over-involved.

Friedman explained, “In other technological revolutions, the initiative, financing, production, and distribution were primarily private, though government sometimes played a supporting or regulatory role.”  However, in healthcare, the government decided to intervene and regulate extensively.

It all started at the onset of World War II when, due to wage and price controls enacted during the war, “firms competing to acquire labor at government-controlled wages started to offer medical care as a fringe benefit,” which was not recorded as part of their salary due to the wage-controls.  As a result, employees came to expect healthcare from employers as part of their compensation.

The IRS eventually wised up to this and, wanting more revenue, started to tax the contribution.  Workers raised an uproar so Congress passed a law, The Revenue Act of 1942 (Section 127 specifically), allowing, in Friedman’s words, “… medical care expenditures to be exempt from the income tax, if, and only if, medical care is provided by the employer.”  This system, according to Dr. Donald P. Condit in his Acton Institute commentary “Should Business Be Responsible for Employee Health Care?”, “effectively punishes taxpaying citizens who are paying for health care benefits with after-tax dollars.”

Thus, if an employee paid directly for healthcare, this was added to their taxable income, but, if they went through their employer, it was not, setting up a large incentive to get insurance coverage from one’s employer.  Condit states “medical spending has increased with this ‘tragedy of the commons’ scenario, wherein resources [health care dollars] are overconsumed with the perception that someone else [the company, the government] is paying.”

Friedman similarly demonstrated the result of this and other policies dealing with healthcare with a simple example: “In 1946, seven times as much was spent on food, beverages, and tobacco as on medical care; in 1996, more was spent on medical care than on food, beverages, and tobacco.”  In 50 years, healthcare went from a minor expenditure to the major expenditure of most people, and, during this period, spending by individuals and government on healthcare approximately quadrupled.

Friedman explained, “On the evidence to date, it is hard to see that we have gotten much for quadrupling the share of the nation’s income spent on medical care other than bureaucratization and widespread dissatisfaction with the economic organization of medical care.”

What can be done?

For starters, Friedman said: “If the tax exemption were removed, employees could bargain with their employers for higher take-home pay in lieu of medical care and provide for their own medical care either by dealing directly with medical care providers or by purchasing medical insurance.”  This would make families more responsible for their own healthcare and they could adjust accordingly, either spending less/more on healthcare or taking more/less in wages.  (It seems that most would probably spend less on healthcare and take more income in light of this National Journal article).

This kind of reform would help by “reprivatizing medical care by eliminating most third-party payment, and restoring the role of insurance to providing protection against major medical catastrophes,” rather than using insurance to pay “for regular medical examinations and prescriptions.”

This sounds great, in theory, but how would such a drastic change actually be accomplished?

Friedman advocated for medical savings accounts. He stated: “A medical savings account enables individuals to deposit tax-free funds in an account usable only for medical expense, provided they have a high-deductible insurance policy that limits the maximum out-of-pocket expense.”  This way, employees, not employers, would be responsible for their own healthcare spending, hopefully eliminating the third-party problem, while allowing the wages contributed to still be tax free.

Several companies, including Forbes, Quaker Oats, and the Golden Rule Insurance Company, tried out medical savings accounts instead of employer provided insurance and found that healthcare costs were lower and both management and employees were more satisfied than under the old employer provided system.

Friedman stated, “Families would once again have an incentive to monitor the providers of medical care and to establish the kind of personal relations with them that were once customary.”

This puts responsibility back on the individual to care for his or her family and brings to mind the words of 2 Thessalonians 3:10: “If a man will not work, he shall not eat.”  Modern healthcare is obviously not comparable to biblical food, but the concept of individual responsibility has largely been lost with employer provided healthcare. This reminds all that a family is better served caring for itself rather than relying on someone else to make choices, including healthcare, for them.  Condit, in his essay, says as much: “Employer, or any third party, involvement in providing health care can interfere with an employee’s ability to make his or her own decisions and distort individual responsibility.”

Also, allowing families to manage their own healthcare costs would allow for greater efficiency by means of more efficient spending.  For instance, instead of using insurance to pay for a doctor visit due to a cold or a small prescription, one could pay out of pocket.  If most people paid out-of-pocket, the cost would likely go down because what individual would pay $80 (like my insurance company does) for a 20 minute doctor visit?  By putting people in control and not insurance or government bureaucracies, one could expect people to “shop around” for quality doctors.  Then, doctors’ offices would likely offer better care to compete for patients, instead of expecting an $80 to $100 payout from the insurance company or the government.

In addition, Friedman advocated for the abolishment of Medicare and Medicaid, which sounds rather radical.  However, he said the government should “…replace them by providing every family in the United States with catastrophic insurance (i.e. a major medical policy with a high deductible).”

That way “the family would be relieved of one of its major concerns – the possibility of being impoverished by a major medical catastrophe – and most could readily finance the remaining medical costs.”

This should satisfy the concern that impoverished citizens would not get adequate coverage.  Even if a small portion of the population is chronically ill or unable to pay their medical bills, these people would be covered by a government catastrophic care policy.

It is a citizen’s duty to care for those individuals in their communities who simply cannot help themselves.  Condit states, “Christians, and others, are expected to fulfill a service obligation, with a preferential consideration for the poor and underserved.”  This corresponds to the principles of subsidiarity and sacrifice seen throughout Catholic and Christian teaching.

In Luke 3:11, John the Baptist states: “The man with two tunics should share with him who has none, and the one who has food should do the same.”  Jesus himself said, in Luke 14:13, “when you give a banquet, invite the poor, the crippled, the lame, and the blind.”  Again, in Jesus’ and John’s teaching, the focus is on “you”, the individual, caring for ones neighbor, rather than an entity such as the government (or a corporation).  The government, naturally being more impersonal and disconnected, could provide support in the severest cases, when communities and individuals could not support their own.

Rather than harming the less-fortunate and marginalized, this kind of health reform could free up time and hospital beds (many families would spend much less time and money on care) to help those chronically ill individuals who truly need the best care and doctors available. Friedman’s approach does not solve all the problems of healthcare (how do I know this doctor/hospital is reputable or provides good care since there is no rating service, what about those that refuse to or cannot pay out of pocket, etc.) and this is only a basic analysis, but it does offer a seldom discussed approach to improve care, allow for greater individual independence, and decrease costs.

 

The Detroit News published Dr. Don Condit’s Acton commentary on Accountable Care Organizations (ACOs) in today’s paper. The ACOs are designed to manage costs under the Patient Protection and Affordable Care Act, better known as Obamacare.

Medicare beneficiaries will be “assigned” to 5,000 patient-minimum organizations to coordinate their care. While HHS Secretary Kathleen Sebelius talks about improvement in care, the politically poisonous truth is that Medicare is going broke and ACOs are designed to save money.

The words “rationing” or “treatment denial” or “withholding care” are not part of her press release, but reading the regulations reveals intentions to “share savings” with those who fulfill, or “penalize” others who fall short of, the administration’s objectives. The administration’s talking points include politically palatable words that emphasize quality improvement and care enhancement when the real objective is cost control by a utilitarian calculus.

Physicians and other health care providers will find themselves in conflict with the traditional ethos of duty to patient within ACOs. Doctors will face agency conflicts between the time honored primary duty to patient. Medical care providers will receive incentives for controlling spending, and penalties if they do not. “No one can serve two masters” (Matthew 6:24); not even physicians.

Read “Obamacare rules belie compassion, care” on the Detroit News website.

Another election has come and gone, and once again the balance of power has significantly shifted in Washington, D.C. and statehouses across America.  Tuesday’s results are, I suppose, a win for fans of limited government, in that a Republican House of Representatives will make it more difficult for President Obama and his Democrat colleagues in the Congress to enact more of what has been a very statist agenda.  But even with the prospect of divided government on the horizon, we who believe in individual liberty and the principles of classical liberalism still have much to be concerned with.  Perhaps the primary concern is whether or not those Republicans who were swept into office—not due to any real love of the electorate for the Republican Party, but rather due to anxiety over the direction the Democrats have taken the country—will be able to hold to the principles of limited government and individual liberty that so many of them claimed to espouse during the campaign, or whether those principles will be abandoned in a mad pursuit of power.  Forefront in the mind of every lover of liberty should be Lord Acton’s famous maxim: “Power tends to corrupt, and absolute power corrupts absolutely.”

My sincere hope is that with Americans deeply dissatisfied with both major political parties and finding that the government is either unable or unwilling to solve the major fiscal and social problems that we face, people will begin to re-think their basic assumptions about the role of government in American life.  For decades, the default assumption has been that the government is a force for good and can be a driver of positive social change.   Witness Social Security, Medicare, the Great Society, the War on Poverty, etc.  All of these programs were designed by experts to alleviate some pressing social need, and were assumed to be the right thing to do.  After all, who wouldn’t want to help the poor and elderly to live a fuller, better life?  And yet, as the years went by, all of these programs—though well-intentioned by their creators—have failed to achieve their lofty goals.  The Social Security “trust fund” is devoid of funds and packed with IOUs left by politicians who, over the years, have spent the money promised to seniors on other programs.  Medicare, Medicaid, and other government health care programs have warped the economics of health care, paying doctors less and less and therefore driving up the cost of private insurance in order to make up the difference.  Obamacare is little more than an attempt by the government to solve a cost crisis—created in large part by government intervention—with even more extensive government intervention into the market.  We already know how that story ends.  And as for the Great Society and the War on Poverty, trillions of dollars over the years simply failed to alleviate poverty in America, and in many cases only created deeper, more entrenched social problems.

It is clear by now to anyone who cares to look that massive government intervention into society tends to do more harm than good, no matter how well intentioned the interventionists are.  Government has its place—no arguments for anarchy are to be found here—but the government must be limited to its proper place.  The genius of the American founding came in the limitation of the national government to certain enumerated functions, leaving the people at liberty to take care of the rest of life as they saw fit.  The respect for individual liberty and the acknowledgement that the rights of citizens were not granted by the state but were granted to individuals by God himself provided a firm foundation for the vibrant growth and strength of the United States in the coming centuries.  As a people, we need to realize that the further we move away from those founding principles and the more we cede our liberty to governmental agents in return for a promise of security, the less likely it is that we will remain strong, vibrant, and free.

At the Acton Institute 20th Anniversary Celebration, Acton President Rev. Robert A. Sirico reminded us of the roots of human dignity and the importance of individual liberty during his keynote address: