When our health care costs are completely out of control. Do you realize what health care spending is as a percentage of the GDP in Israel? 8 percent. You spend 8 percent of GDP on health care. And you’re a pretty healthy nation. We spend 18 percent of our GDP on health care. 10 percentage points more. That gap, that 10 percent cost, let me compare that with the size of our military. Our military budget is 4 percent. Our gap with Israel is 10 points of GDP. We have to find ways, not just to provide health care to more people, but to find ways to finally manage our health care costs.So, what sort of health care system does Israel have? The Washington Post reports:
Israel regulates its health care system aggressively, requiring all residents to carry insurance and capping revenue for various parts of the country’s health care system.Israel created a national health care system in 1995, largely funded through payroll and general tax revenue. The government provides all citizens with health insurance: They get to pick from one of four competing, nonprofit plans. Those insurance plans have to accept all customers—including people with pre-existing conditions—and provide residents with a broad set of government-mandated benefits.
In short, if Israel's system were proposed in the U.S., the Republican party would label it socialism and throw a hysterical fit.
Freyguy,
ReplyDeleteMaybe it was just another gaffe.
In any event there’s more at play in healthcare including having a tort system very unlike the one in the US that Democrats would fight to the death to defend. Also ObamaCare cements in place prescription drug costs that effectively have the US subsidizing the rest of the world, guaranteeing that our healthcare costs will remain higher than everyone else's.
As a business owner I think it is ridiculous that I am supposed to provide healthcare to my employees. As an American I am willing to consider any system that actually lowers the cost curve. Unfortunately we have just rewritten the rules for healthcare without doing anything in that regard potentially making it more difficult to address the problem in the future.
But perhaps it’s the thought that counts.
Fred,
ReplyDeleteIt was a gaffe in the sense that he accidentally said something true, but off-message.
The peer-reviewed research cited in the Washington Post concludes that "aggressive government regulation" lowered the cost curve in Israel. So, according to your argument, as an American you ought to be willing to consider such a system. Your man Romney seems to be considering it quite a bit.
And as a non-business owner I think it is even more ridiculous to reject (a) government health insurance for everyone and (b) employer insurance for everyone. You do realize that before the Affordable Care Act, a person with a chronic disease or disorder could be denied coverage on the individual market, don't you? Such a person could not obtain affordable insurance except by banding together with a group of healthy consumers through (a) government or (b) their employer.
That's why the Affordable Care Act is a step in the right direction: it gets us to universal coverage. (That was a GOP goal, too, before the party became more focused on defending a person's right *not* to have coverage.) Providing that coverage primarily through employers was a compromise, remember? The other possibility was to provide a government-run insurance program open to anyone ... as in Israel. But that would be socialism, remember?
Oh, that's right, there's one more possibility. Consumers could band together in interstate markets where even the sick are guaranteed coverage ... as was proposed by the GOP, adopted into the Affordable Care Act, and therefore subsequently opposed by the GOP.
Romney's remarks, and yours, beg the question: what IS the GOP plan for health care, other than irrational opposition to anything associated with Obama?
Freyguy,
ReplyDeleteI assume you are reacting not to my post, but to some evil entity called “The Republican Party” that you seek to engage and slay. You have at times (including this one) accused me of being gratuitously anti-Obama. May I suggest self- reflection?
I simply pointed out (rationally or otherwise) that there are significantly differences baked into Obamacare that will keep costs higher than can be realized under the Israeli system. That seemed fair. I didn’t even think it was debatable, but if you want to challenge that, fine.
In terms of what the Republican plan might be or even if there is one I am not a spokesman, whoops, spokesperson. Frankly none of the big shots talk to me let alone ask my opinion. But if they did ask I would advise them not to say anything until after the election – better not to give Obama something else to talk about to deflect from the economy. On the other hand if you want to know what I would do, I’ll be happy to share it with you, first because I am not running for anything and second because it is a whole lot less than 2,000 pages.
And yes, you have correctly identified the definition of a political gaffe. There goes my trying to be funny.
Fred,
ReplyDeleteYou're right, I am criticizing the Republican Party's stance on health care. That's why I posted Romney's remarks in the first place. I'm glad my purpose has sunk in.
My apologies if I failed to adequately address your specific comments on costs. Let me say it this way: I agree with you that Obamacare is unlikely to realize the cost-effectiveness of the Israeli system. For precisely that resaon, I am personally in favor of a more Israeli-style socialist approach than the more free-market approach of Obamacare. But like you said: "as an American I am willing to consider any system that actually lowers the cost curve". That's exactly the right attitude and I commend you for it.
The crucial point that needs to be added, Fred, to your comments is this: whether or not the Affordable Care Act can ever be as cost-effective as the rest of the world's more socialized medicine, it is more cost-effective than the U.S. system without the ACA. On balance, the best available evidence suggests that in spite of the shortcomings of the ACA, the net result is it gets millions of people health insurance, reduces costs, and makes each dollar spent on health care go further in making us healthier. I understand that to some people (perhaps you included), that sounds too good to be true. What such people fail to realize is that spending to make sure everyone has coverage is a smart investment, which pays substantial dividends. Since everything hinges on this, and since I do not expect you to take my word for it, please see the following links:
The ACA reduces the U.S. federal deficit:
http://www.cbo.gov/publication/43472
The ACA reduces premiums paid by individuals and employers:
http://www.cbo.gov/publication/41792
The ACA saves money on prescription drugs:
http://www.cms.gov/apps/media/press/release.asp?Counter=4388&intNumPerPage=10&checkDate=&checkKey=&srchType=1&numDays=3500&srchOpt=0&srchData=&keywordType=All&chkNewsType=1%2C+2%2C+3%2C+4%2C+5&intPage=&showAll=&pYear=&year=&desc=&cboOrder=date
Some more ways the ACA lowers the cost curve, as explained by a Rice University economist:
http://app1.kuhf.org/articles/1341523211-Bauer-Business-Focus:-Vivian-Ho.html
http://bakerinstitute.org/publications/HPR-Newsletter-Dec2011.pdf
Tangentially, a corrollary of the ACA lowering the cost curve is that the GOP platform to repeal the ACA will raise the cost curve. Therefore, as an American, you should reject the GOP platform. By all means, share your own vision of health care reform as distinct from the ACA, the GOP, and Israel.
And don't fret, Fred -- your comment about this being another Romney gaffe did elicit a chuckle. But actually, I don't think a true-but-off-message statement is the definition of a political gaffe. It's a special sub-category of the generic gaffe. For example, when Herman Cain implied China doesn't have nuclear weapons, or Obama said he had been to 56 (?) states, those were not true statements but they were nevertheless political gaffes. Not that it matters ... I just find the distinction interesting.
Freyguy,
ReplyDeleteYears ago when I was a young financial analyst I would be given various projects by managers trying to direct the company in a particular direction. While I was never shy about voicing my opinion about what I thought made the most sense from a business perspective (something I strongly recommend against for those looking to advance their career) after a while I found it saved a great deal of time and paper (back in the day) if I asked the manager what he or she wanted me to prove ahead of time. It was never a problem to prove it and it helped avoid future awkward conversations.
You can probably see where I am going with this. Should we make decisions in a mathematical vacuum? Of course not. But a conclusion on anything this massive is suspect, particularly when the law is so complex and the study does not account (how could it) for the myriad of unintended consequences that are certain to result. And especially when the law assumes cost containment measures that are based on little more than wishful thinking.
Last month I attended a meeting of high powered Progressive Democrats (someone from my wife’s book club invited us. Since my wife and I both believe in things like evolution and number sets we sometimes slip under the radar). Among the speakers was Democratic Representative John Carney from Ohio. Representative Carney was formerly a healthcare attorney. As the expert on all things healthcare he has been tasked by his party with trying to get Ohio to set up a healthcare insurance exchange.
Not surprisingly Representative Carney is a big supporter of Obamacare. Representative Carney says that much remains to be done because the Affordable Healthcare Act (he doesn’t use the term ‘Obamacare’) doesn’t really bend the cost curve and healthcare costs are unsustainable. Yes, yes, I too was stunned, not at the conclusion, but at who was concluding it. But then again, what does he know?
And by the way Obama said 57 states not 56 (with one left to go). Heck, anyone can confuse the number of states with the varieties on a Heinz label. I'm sure schoolchildren do it all the time. But that’s a mistake, not a gaffe. Explaining why you didn’t mean to suggest that people who work their asses off and challenge the odds to build companies aren’t particularly special, now that’s a gaffe.
Fred,
ReplyDeleteI do see where you are going with this. The question which I respectfully and earnestly submit to you is, do you see where you are going with this? At best, your argument implies that no one can know whether the ACA increases, lowers, or has no effect on costs. It follows that GOP pronouncements that the ACA definitely raises costs (and tangentially, your own opinion that it does nothing to lower the cost curve) are utterly baseless and unsupported by the evidence. At best, then, according to your argument the GOP still lacks a coherent / believable platform on health care -- which is precisely my point.
But what's more problematic about your argument is your premise about the unpredictability of the ACA. Although every act of Congress has unintended consequences, e.g. the authorization of ground wars in Afghanistan and Iraq, to leave it there misses the point.
First, let's not have any suggestion that the CBO is biased (unlike a certain aforementioned young financial analyst). The CBO is non-partisan and its director is appointed by the House Speaker, not the White House. Its current director was most recently appointed by none other than John Boehner, a Republican in violent opposition to the ACA.
Second, for the GOP platform to be plausible (repeal ObamaCare first, worry about millions of uninsured later) the CBO estimates cannot just be off a bit, or somewhat uncertain; rather, the prediction of billions in deficit reduction must somehow turn into billions in deficit increase -- an error not only of magnitude, but of sign. On what basis should we embrace this new figure? To simply claim the ACA will increase the deficit, based on no evidence or analysis whatsoever, is irrational contrarianism. A fairminded person will not assume the opposite of what the CBO says, but will instead acknowledge it as our best estimate, based on the available evidence, analyzed by our top economic minds (Princeton, Harvard, etc.).
Third, the expectation of ACA cost savings is not only based on mathematical theory, but also on factual experience. Prescription drug savings have already been realized -- 5.2 million people saved $3.7 billion. Ask Israel and a dozen other countries if they get more health care bang for their buck in spite of the "myriad of unintended consequences" that you feel, on theoretical grounds, were "certain" to result from their sweeping health care laws. So much for theory, the experiment has been done and the results are in: universal coverage lowers health costs.
Finally, my guess is that Rep. Carney would agree with me that the deficit is likely to be lower and health care dollars are likely to go farther with the ACA than without the ACA. Rep. Carney may nevertheless be correct that the ACA does not lower costs enough to make American health care sustainable. These are two related but separate issues. Hence my agreement with Prof. Vivian Ho that the ACA is not a final solution, but rather "a step in the right direction". And hence the problem with the GOP platform, which is to roll back the ACA and, therefore, place a truly sustainable health care system even further out of reach than it is at present.
Freyguy,
ReplyDeleteI must admit Freyguy, that was an excellent response – not that your others weren’t. So let me explain the viewpoint (prejudice) I have about this as follows:
As I have previously noted in a distant blog post, that the biggest problem I have with Obamacare is that it has hardened positions without accomplishing what should have been a necessary objective: to lower costs in a manner to make healthcare sustainable.
In terms of the CBO, they weren’t too good at estimating the costs of our existing big healthcare entitlement plans, were they? The main huge problem is that they can only score the assumptions. (Actually maybe that’s the same problem they had before.) This is the equivalent of a business deciding to do less advertising and marketing and assuming sales will not suffer. This is similar to how the government scores everything, the static scoring so loved by liberals. So for instance if tax rates are raised from 50% to 100% tax receipts are assumed to double as well. Sure why wouldn’t they?
Do you see where I am going with this? In my days as a (painfully unbiased) financial analyst, I expressed my opinion based on what I perceived to be the best course of action for the company. But as Clinton (the male) was fond of saying, “A man’s got to do what a man’s got to do” and so I did. Still the statistical analyses I performed were mathematically correct and the assumptions were adjusted as needed to make it work. (Okay, I might have also cherry picked which statistical method I used). And isn’t that what Congress did when crafting Obamacare? There are cost-savings built in (paying doctors and hospitals less) that aren’t going to happen and tax increases that are at best tangentially related to healthcare that may or may not happen (Elizabeth Warren is against the tax on medical devices) and are sure to raise less revenue if they do kick in and there’s this thing about half a trillion dollars that may be double counted and….
But why go on. If it’s fully implemented we will, as Nancy Pelosi said, get to see what’s in it. If not we will get to see what those evil Republicans have in mind other than throwing grannie off the cliff to save money that they will give to all those millionaires and billionaires who didn’t build anything and don’t deserve it.