The health care plan is about rationing – these are the utilization reviews that are critical to bringing down costs, if that is the objective. And the “crisis” is the lack of care for the uninsured, for which an entitlement of one sort or another is being proposed. The reform bill is an attempt to capture savings from utilization reviews (”rationing”) and use it to pay for the care of the uninsured in either private or public insurance pools.
Feldstein and other economists are right when they say increasing health care expenditures are not by definition a sign of a crisis. The country is buying a good that it wishes to buy – like housing, cars and other goods – in increasing proportions. But if rising costs are not a problem, as TP advises, then why does he propose alternatives reforms to control costs? There are problems with some of these alternate reforms:
1. Interstate competition – Health insurers are regulated by the states, not the Federal government; they have resisted Federal regulation for many, many decades because state regulation is weaker. If some states are not allowing some providers to sell in their states, there is a reason for it based on past misconduct. This “solution” is exaggerated as there are many competitors in all states. The problem with rising costs is not lack of competition, so increasing competition is not the solution. And of rising costs are not a problem at all, then it doesn’t matter.
2. Tort Reform – Someone who is wronged has a right to sue for damages; there are serious constitutional issues here that cannot be waived off by a blogger; such reforms will face serious legal challenges. Moreover, studies (Harvard Medical School) show only 1 in 8 malpractice claims are pursued and that plaintiff awards have remained stable at 1/2%; 1% (Public Citizen) or 2% (CBO) of total healthcare costs. As for cost of malpractice insurance, I would say the insurers are no better at estimating malpractice claims than they are at practicing medicine. So malpractice claims are not the cause of rising costs, and so cannot be the solution. And if rising costs are not the problem, then it doesn’t matter. Read the rest of this entry »