Tag Archives: health insurance

Commentary on SCOTUS

I’ve mostly ignored the commentary on the Supreme Court’s blockbuster cases the past couple of days (most of it is not interesting, legally speaking) but I suppose I should offer my thoughts, having followed the court more intensely than ever before this term. (I’m serious. My pump-up mix contains the Scalia dissent from Maryland v. King.) I’ll comment in general, though you’ll see a theme.

King v. Burwell (The Obamacare subsidies case)

The outcome was predictable, of course, and I can’t get too worked up about the result. A few million people get subsidies, which is a rounding error for the bloated federal budget, so whatever; it’s not like forcing the Democrats back to the legislative table would have taken us very far. (Yay politics.)

The real disaster, and there’s really no other way to phrase this, is the precedent this sets for the future. It encourages sloppy legislation at the very least, with the understanding that courts will give you a break if you get it wrong. It will probably encourage intentionally vague drafting with the hope that a court will give you more than you could have gotten in the political process. (Lawyers will sometimes leave a contractual provision vague for the same reason. …I hear.) This has been a trend in legislative interpretation for decades, with doctrines of “saving constructions” and “constitutional avoidance” going out of their way to invalidate or otherwise restrict bad laws. (Bond v. US and Canning v. NLRB are recent examples of this.)

Also, on a personal note, I hate the idea that “established by the State” can also refer to things “not established by the State.” Words have meanings. Please stick with them.

Obergefell v. Hodges (The Same Sex Marriage case)

This wasn’t exactly a stunner, since Kennedy has been telegraphing his desire to be the one to address this issue, but I admit I was surprised by the reasoning of his majority opinion. It’s perhaps the least useful opinion written in the last few years, worse than this year’s Elonis v. US (which passed up an easy chance to pick a mental state requirement rather than saying “the lowest one isn’t it.”). While he can count on being quoted at weddings for the next few decades, the opinion offers very little in terms of legal reasoning that can be translated to any other context. Equivocating between Substantive Due Process and the Equal Protection Clause, Kennedy ultimately concludes that the constitution requires all states and territories to recognize same sex marriages mostly because it would be a good thing to do.

In many ways, Obergefell could be similar to Brown v. Board of Education, another important opinion that suffers from the same legal infirmities but has obviously had a tremendous legal impact. (I would argue, however, that all the hard work for Brown had been done by Justice Harlan’s famous dissent in Plessy v. Ferguson, as tremendous a piece of legal writing as you’ll ever see.)

The four dissents don’t offer much in terms of rebuttal, although I imagine they didn’t really bother to. Thomas and Alito do provide a decent constitutional analysis that makes me think this should have gone the other way, but this was not anyone’s finest writing hour.

I should say, I’m very happy about the outcome, and I definitely think it’s the correct social policy. I’ve voted in favor of SSM in all elections I’ve participated in, and I would have liked to see it go national this way, rather than through a very dodgy legal ruling that could undermine the rule of law and trust in the court as an institution. That said, if I were denied a right, I know I couldn’t care less about those other things if the court ruled my way. So this decision is a good thing.

That said, be worried. Burwell and Obergefell have made the Supreme Court more important than ever. Control of the court will become essential, and it’ll make presidential and senate politics even worse than it is now. (Yes, it’s possible.) It opens the doors to constitutional rulings on religious freedom or gun laws, for example, that should have been left to the states and people. In fact, some early analyses wonder if the court’s reasoning in Obergefell translates to the rights under the Second Amendment. Watch for that fight in the near future.

I’ll skip the other decisions of this term, although there have been some interesting ones, but I will note that the court has not impressed with clarity this year. I’d imagine the early October cases next year being tamer than usual to offset the acrimony of the last few weeks.

Why Surgery Doesn’t Cost A Billion Dollars

Yesterday, I asked why lifesaving surgery doesn’t cost a billion dollars (discounted down to whatever an individual can pay), in light of the argument advanced by Jon Stewart and many others that market mechanisms aren’t appropriate for health care because consumers can’t make informed choices. If you have no choice and would pay anything to save your own life, prices should be much higher than they actually are. I’d pay more than $100,000 for lifesaving surgery, and yet most lifesaving procedures cost less than that.

The answer is one of the most interesting insights I’ve read in recent years. Here’s where it comes from:

Megan: But this is precisely the argument that health care wonks make: when I need a lung transplant, I don’t have the time, or the emotional ability, to comparison shop. So there’s no price discovery mechanism.

Wilson: Does the government know or have the ability to comparison shop for me? Do they know my circumstances?

Also, for some healthcare services, you do have the ability to comparison shop. Those services will then discipline the healthcare market in general.

I want try the example of electric power and then see how it is much different than healthcare. When Intel is making computer chips, they need a secure line of power. At any moment, they don’t have luxury to comparison shop. They need the power now.

I, on the other hand, have a choice to turn my clothes dryer on at noon on the hottest day of the year, or wait until 10pm.

When people like me see the price spike, we will cut off our demand thereby lowering the price that Intel will have to pay. So the example of the lung transplant sounds like to me the position of Intel. At some point in healthcare there must be a margin, like me and my clothes dryer. The problem is how to find it.

When I do not have the incentive to look for alternatives for electric power, I and everyone like me will demand power and drive the price up for Intel.

Is the argument that there is no margin to be discovered in healthcare?

There is a lot packed into this exchange, and it’s at the heart of why people attacking the application of market principles to health care are missing the point. There is a point at which consumers do have a choice: if you have a runny nose, a rash, a headache, you can choose where you go (if anywhere). This brings prices of those medical procedures down as suppliers compete for customers.

The same isn’t true of emergency procedures: you don’t get to exercise choice as a price control mechanism. However! There is another force at play here: because non-emergency procedures are not very profitable (due to competition) and emergency procedures are profitable (because there is no competition), more providers will get into providing emergency services. In a market environment, this means that the price of emergency services would come down.

The problem in the American system is that there is no way that the extra supply translates into competition. Fixing that would bring down health care costs, but it doesn’t seem to be on anyone’s agenda. Shame.

A Question For Jon Stewart

“When you get sick, you don’t ask the ambulance where it’s taking you.”

Jon Stewart utters this line to his guest Steven Brill, and it’s just the latest in a long line of such statements Stewart has made. (For example, in his previous interview with Brill.) The objection, presumably, is that the market doesn’t work in health care because the consumer can’t make informed decisions about supplier, mostly because the consumer is having a heart attack or whatever.

Let’s assume, arguendo, that Stewart is right: health care consumers, most of the time, aren’t able to decide and have to take whatever’s given. This gives the suppliers (doctors, hospitals) tremendous bargaining power so they can charge whatever they want. Let’s imagine that exact scenario: someone has a heart attack, is picked up by an ambulance, and taken to a hospital for emergency surgery. Here’s my question:

Why don’t the doctors charge a billion* dollars for the surgery?

*”Most people won’t have a billion dollars!” you say. Fine, set the price at a billion and give discounts to the maximum anyone can pay. Set the price to 50% of the patient’s income for the rest of his life. Set it to their firstborn. The exact number isn’t the point.

Answer tomorrow.

Childbirth, Health Care, Men, And Women

I’ve addressed a couple issue regarding men and women the last couple of days, and a related issue appeared on my Twitter feed today. I had alluded to the issue of women and medical care, and several people posted about a feature of Obamacare that’s been getting some play: the fact that men will have to pay for insurance coverage of maternity. This mixes with the topics I’ve addressed in this space, particularly the physical differences between men and women that are bound to play out in the real world. Obviously everyone involved addressed the issue with an open mind and the subtlety that such a topic requires.

Just kidding. Mostly, people hated on Republicans for pointing out that this is stupid. Two articles in particular made the rounds. First, Lucia Graves (a woman!) of the National Journal:

[Obamacare] doesn’t allow for health plans to carve out certain things that might have allowed a health plan to price a product lower in the past—like allowing men to not pay for maternity care. That’s a policy known as gender rating. … Gender rating is prohibited under the Affordable Care Act.

…The argument for gender rating, in the days before the Affordable Care Act, had always been that women cost more to insure.

“When you get older, men cost more to insure than women.” .. Later in life, men are more likely to have a variety of conditions including heart attacks, lung cancer, and liver cancer. They’re also more likely to smoke, drink, and get in accidents, according to experts.

You’d expect insurers to charge men more as they got older, if they were in fact charging premiums based on actual usage. Graves gives us that answer, too:

insurers have historically charged younger women more than men in the individual market, even though those plans rarely covered maternity services. “That tends to reverse at older ages, when men have generally been charged more than women,” he said. “It’s reasonable to assume that insurers set those premiums based on the patterns of health care use that they saw.”

So, when allowed by law to do so, insurers charge each gender based on the expected health care usage. Seems fair.

In 2008 the average expenditure per person with an expense, including expenses covered by insurance and those paid out-of-pocket, was slightly higher for women ($5,635) than for men ($4,952), according to data from the Agency for Healthcare Research and Quality. But the difference in expenditures is largely attributable to childbirth.

Alright then, let’s address childbirth and the associated costs. Graves links to and endorses an error-riddled article by Jonathan Cohn at The New Republic. He makes four arguments to claim that men should be charged for maternity care under their insurance policies.

1. Healthy mothers and babies are good for you. Society has a legitimate, and very clear, financial stake in the health of pregnant women and young children. As Eduardo Porter noted recently in the New York Times, the U.S. has fallen behind peer countries when it comes to prenatal health. That has long-term consequences for prosperity and inequality, primarily because of the long-lasting effects it has on children as they develop. Obamacare’s requirement of maternity benefits won’t fix that problem, Porter notes, but it offers a chance to make the problem less severe. You can think of it as a public investment, just like roads, schools, and power lines—goods for which we all help pay, regardless of actual use.

I’m happy to concede that good pre-natal and neo-natal care has potential long-term benefits for the affected children – the literature on that is persuasive but not conclusive. I’m also generally willing to concede that certain public investments deserve government funding, though I draw these lines narrower than the mainstream. Charging insured men for maternity coverage, however, is a terrible way to fund such an investment. First, it’s regressive – all men are charged similar amounts, while investments funded from general taxes are funded more by the rich, who are taxed more heavily. Second, it hides the costs and the responsibilities of the program. Voters and taxpayers have no idea how much of any given premium goes to maternity, and can’t hold anyone accountable if they are dissatisfied with any of this program’s features. If the political goal is to publicly subsidize childbirth costs as a public investment, such costs should come out of general taxes, be a line item on the budget, and subject to voter scrutiny. As it is, they’re hidden away as premiums from private companies. This is a bad thing.

2. You may never bear children. But your mother did. …In this case, men who help pay for pre-natal and maternity costs are helping to shoulder the burden for costs that their parents bore, many years before.

This is pretty stupid. By paying for a stranger’s pregnancy I’m somehow repaying my mother? No. I buy my mother nice things to repay her for everything she’s done.

3. She supplies the womb, but you supply the sperm.

Yup. You should definitely contribute to the well-being of a woman with whom you intend to have a child. Anything else makes you an asshole. Don’t be an asshole. I’m not entirely sure why you bear responsibility for every other pregnant woman, too, though. What have you been up to, exactly?

Anyway, as I’ve said, if we are trying to subsidize a particular activity, we should do so explicitly through the budget.

4. So you ended up XY instead of XX. Get over yourself. Even conservatives generally stipulate that insurance should protect people from the financial consequences of random events. But they seem not to recognize that being born a woman is a random event. Sorry, dudes, you had no control over that. Allowing insurers to discriminate based on gender means penalizing half the population, just because those folks ended up with one type of chromosome instead of another.

Yeah, this is just very, very wrong. Yes, being born a woman is a random event. The proper role for insurance in that case is to insure BEFORE the event. Basically, if being a woman is costly (as it is claimed to be), you should insure against being a woman before you’re born. This is obviously impossible (though I bet there could be an insurance market for parents in this case), but it’s not something that can be addressed by insurance AFTER the random event. If certain houses in a neighborhood randomly burned down, insurance shouldn’t come in after the fact and equally spread costs over those who lost houses and those who didn’t. In any case, I’ve already made my point above how we should deal with the fact that one gender has potential costs associated with it that the other does not.

Of course, if you acknowledge point number 4, it has some implications for the rest of the health care debate. If we’re not going to make people pay higher premiums because of genes that determined their gender, then what about people born with genetic abnormalities? Or predisposition to diabetes, heart attack, or cancer? Pretty soon you end up arguing that it’s wrong to charge higher premiums to people who, through no fault of their own, happen to need more medical care—thereby conceding one of Obamacare’s core principles.

I concede nothing – nothing! While I’m generally sympathetic to those who suffer through no fault of their own – I’ve been lucky in that regard – any help we offer the unlucky should be explicit in the budget as I mentioned above, so that it can be properly evaluated to determine whether it fulfills its function in a cost-effective way. Second, most health conditions can be traced to genetics, even lifestyle ones – how do we know whether someone’s laziness and poor diet is a true choice and not influenced by genes that coded for poor willpower and a sweet tooth? Genes and nurture, neither of which you can choose, determine much of your adult health. Thus, to protect everyone from all random events, you must equalize all healthcare, and, as I’ve noted before, all wealth, and this must be repeated constantly. Now we’re back at communism, and I win.

It’s true that women beat most of the financial costs of pregnancy and childbirth. If we want to help them out, we should give them money when they’re pregnant.* We should not secretly charge insured men for something they won’t use.

*Assuming this is a behavior you want to subsidize. Many do not and think women who want to have children should first be able to afford them, with partner or not. It’s not the crazy wingnut position the two journals above would have you believe.

Matt Yglesias Compares Obamacare To Katrina; Stupidity Ensues

Matt Yglesias, frequent blog antagonist, writes an entirely worthless piece about how Obama’s mishandling of the Obamacare implementation is less harmful that Bush’s bungling of the Katrina response in 2005. While I enjoy the admission that Obamacare is akin to a natural disaster, the comparison is, of course, utterly pointless. The more interesting part of the post is the one that is completely wrong in many ways. Specifically, at least two.

The administration and the Democratic Party writ large had very high aspirations for the Affordable Care Act, viewing it as a legacy-defining major pillar of the American welfare state that would massively improve the lives of millions of people. If they can’t make the basic infrastructure work, none of that will happen and it’ll be a huge failing. But even in the worst case, they’re not going to get anyone killed. That’s a big difference.

First, when Obamacare was being sold to the public, many people claimed that lack of insurance makes death more likely (because the uninsured received bad health care). One such person was Matt Yglesias: “Lack of insurance is associated with low-quality health care which is associated with enhanced risk of death.” Considering that the failure of the exchanges combined with Obamacare “minimum standards” is causing millions to lose insurance without being able to get new insurance, by MY’s own factual assumptions, the Obama administration will get someone killed.*

*Someone who matters, like American voters. Obama is having plenty of innocent people killed in other countries.

Second, MY seems completely unaware of the concept of opportunity cost. Billions of dollars have been spent on Obamacare, in direct costs, in time spent complying with it, in stress and uncertainty. This is true for the government and many private enterprises and citizens that have had to adjust to expansive new regulation. Don’t forget the energy and money spent fighting it and lobbying for it on all sides. These billions of dollars and these years of effort and energy could have been spent on many better things. Money could have helped the poor or unlucky, and people could have spent time on much more fun things than learning new regulations, building a failed website architecture, or navigating that failed website. These are real costs, and that means that by definition, lives were lost. Statistical lives that we find difficult to care about, but lives nonetheless.

Yglesias may wish that his preferred party’s policy become a rousing success, and it’s telling that he feels the need to defend it from comparison with a deadly natural disaster. It’s also telling that he feels the need to hide this policy’s real costs. (Either that, or Matt Yglesias doesn’t know anything. which is also possible.)

Bad Arguments: Guns And Health Care

The government shutdown over health care continues, and I continue not to care about the politics of it. However, one fun part of politics for a cynic like myself are the stupid things people say in a political “crisis.” Twitter is full of people contrasting the Republicans’ apparent views on guns and health insurance/care. Here’s a sampling:

Gun TweetsOf course, these people are all wrong.

Under current law, guns are treated roughly the same as health insurance or health care. Namely, they’re heavily regulated, but you’re permitted to have both. You can’t have all kinds (true of both) and some people can’t afford them (also true of both). But in no case is the “right to own a gun” translated into a “right to have someone else pay to buy you a gun,” which is where the analogy by the blissfully ignorant tweeters above breaks down. You can’t blast someone who says “people should be allowed to own guns, and we’re against major subsidies of health care” by implying that they’re saying “we want the government to buy people guns but not health care.”

Imagine a constitutional amendment that reads:

A well regulated Medical industry, being necessary to the health of a free State, the right of the people to purchase health care or health insurance, shall not be infringed.

Ignoring the comma-happiness, this would not change much about how health care/insurance are treated in the US. The “right” under the second amendment isn’t one that entitles you to anything; it’s merely one that permits a particular type of property. Since contracts and commerce are protected under the law, so is health care and health insurance. There is no great contrast, no matter how smug it makes you feel when you point it out.

I’m in a hurry, so I won’t bother explaining why “free healthcare” is a nonsensical term. But it’s a nonsensical term.

Mandatory Obamacare Post

The Patient Protection and Affordable Care Act, henceforth Obamacare (because it’s shorter and because everyone says Bush tax cuts), opens its insurance exchange website today. I haven’t gotten as worked up about it as many have, but I think that’s partly because so many people are actively opposing it. I prefer to put my energy toward neglected causes like bad phrasing, spelling, or the penny. Nevertheless, some thoughts on Obamacare:

1. The government’s website is misnamed TWICE. “HealthCare.gov” is simply incorrect – the site is about purchasing insurance, not actual care. Except that site isn’t actually about purchasing insurance – the sort of coverage mandated by the law is more akin to a pre-paid service plan than actual insurance. Sadly, the law basically prohibits actual insurance, usually referred to as “catastrophic” plans. The administration really doesn’t seem to understand what insurance is.

2, I opposed Obamacare on the law: I still think the tax aspect of the Supreme Court decision was incorrect, and I think the decision leaves a cloud over the more important constitutional question regarding federal regulation of inactivity.

3. I also opposed the law on economic grounds. It’s a giveaway to a lot of undeserving people: the American Medical Association backed it for a reason, and its members are already well compensated. It also benefits the richer old people at the expense of the generally poorer young. This is a bad thing, and it’s both a cause and a symptom of my well-documented hatred for the elderly.

4. My recent rant against complexity at the end of this post will be tested by the new law. The law will be easier to deal with for smart people and those who can afford advice; it will be a big time and energy suck for the poor.

5. Finally, I opposed the law on moral grounds: by requiring community rating and coverage of pre-existing conditions, the law makes insurance cheaper for people regardless of their effort to stay healthy. I think this is a highly underdiscussed issue. Opponents of the law tend to focus on the cost or the intrusive nature of the mandate. Proponents of the law tend to talk about sick people who die because they can’t afford health care. Moral hazard, however, weighs heavily on me. I’ll use a personal anecdote: a relative of mine suffered a mild heart attack, after which he, a lifelong meat eater, became a vegetarian and started exercising. It’s troubling to me that such a person would be taxed to pay for treatment for someone who drinks, smokes, and lives off junk food. In conversations, it’s become clear to me that the law’s proponents deny that such people exist – I literally had a person tell me “I just don’t think that people would do that.” People do that NOW. They won’t do it less when health care and medication are even cheaper to them. If we’re trying to protect people from arbitrary risk – bad genes – there are much better ways to do it (money) than a massive federal bureaucracy. In order to help people who would naturally have higher health care costs (because of genes), the law encourages bad behavior by those who could avoid it, and it asks the prudent to pay for it. These are all bad things.

6. My least favorite part of Obamacare is the 85% Medical Loss Ratio, which deserves a discussion of its own in an upcoming post.

Breaking Bad Healthcare Post

With the end of Breaking Bad, there have been several versions of different health-care-related memes floating around the internet. There’s Breaking Bad: Canada, and the ungenerous Breaking Bad, Anywhere But America:

buzzfeed1sdfsdfsdf finalbreak2sdfsdfsdfI’ve mostly ignored these posts, because many able people (here & here, among many) have discussed the economics and politics of it (good luck starting treatment on anything in a week in Canada…), but the cartoon above annoys me. It’s fine to lobby for a different health care system, as much as I oppose it because it kills innovation and thus eventually people (best explanation here), but Christopher Keelty couldn’t help himself taking a swipe at people who disagree with him. He asks, “What kind of barbaric society would allow medical care to hinge on a person’s wealth?” Implicitly, then, people like my are barbaric. Keelty is hardly the only or the first person to express such feelings (hi, Facebook feed three years ago), but he has a meme so I am responding now.

First, let’s extend the question beyond medical care:

  • What kind of barbaric society would allow car safety to hinge on a person’s wealth?
  • What kind of barbaric society would allow nutrition to hinge on a person’s wealth?
  • What kind of barbaric society would allow neighborhood safety to hinge on a person’s wealth?
  • What kind of barbaric society would allow access to internet to hinge on a person’s wealth?

If you think these are different from medical care, think about this: a Volvo or SUV is far safer than a Kia compact, so richer people have safer cars and thus live longer by surviving more accidents. Nutrition’s connection to health is obvious. Safer neighborhoods are more costly, so rich people suffer from less crime than poor people. Internet access provides information, including information on medical care, car safety, neighborhood crime, and proper nutrition – people with access to the internet know more and thus live better, healthier lives. In each instance, money plays the major role in the quality you get, and that quality determines how long and healthy your life is. To break it down further, wealth basically equals health. (Of course it’s not a perfect correlation, but ceteris paribus…). There is no real reason to differentiate medical care from a safer car or better food. Each one influences how healthy and long-lived you are, although we tend to think of medical care as more directly related to health (a recent and overblown phenomenon, actually, but never mind that now).

So, unless Keelty and the many folks who agreed with him are in favor of complete and constant equalization of wealth, they’re basically okay with poor people living shorter and sicker lives than rich people. I’ve made the anti-redistribution argument before, as have others in better and a shorter ways, but if you’re hesitant to accept it, remember the last time you had a group project at school for which everyone in a group got the same grade. I bet most of you thought some people didn’t deserve to get the grade they got because they didn’t work as hard as you did. I also bet a few of you think everyone got what they deserved, and I am pretty sure the latter group overlaps strongly with “some people” from the first sentence.

Basically, it makes no sense to single out medical care as something that only a barbaric society would leave to the free market, in which willingness to pay (and thus wealth) decide what you get. Unless people who think the cartoon above is accurate are willing to go as far as complete equalization of wealth – frequently, not just once – they really have no grounds to call out a society that has a larger free market component in medical care. (I won’t even dispute the point that this is the case in the US, though compared to places like Singapore, the US is basically socialist.)

Most importantly, Keelty and his ilk have zero grounds to feel morally superior to those of us who believe the free market should play a much larger role in medical care than it does in the US today. This is especially true if you care about any person who, as of today, is a child, infant, or unborn.