Meanwhile, at True/Slant…

Art Deco says:

Your esteem for Dr. Cowan’s ideas is puzzling.

1. Construct a path for federalizing Medicaid and put it on a sounder financial footing; call that the “second stimulus” while you’re at it. It’s better and more incentive-compatible than bailing out state governments directly and the program never should have been done at the state level in the first place.

You offer as well that having state governments as insurers is ‘silly’. Why is this? Collectively, the state governments collect taxes and disburse benefits to the same body of people that the federal government does. A national program would have a larger actuarial pool, but even the least populous states have north of 175,000 households. That’ll do. The utility of state programs is that the scope of services covered, the assessments on the public, and the deductibles can be set in accordance with the particular preference of each. Please note, occupational licensing and tort law are generally the artifacts of state legislatures and state courts. If you are concerned about the effect of geographic variation in per capita income on a state’s ability to provide services, a straightforward no-strings-attached subsidy to state, county, and municipal government can be enacted, with a distributional formula which takes into account population and per capita income; Mississippi can then keep pace with Connecticut, more or less. If you are concerned about the effect of people migrating, keep in mind that only about 7% of the population change their state of residence in a given year; one might set up a parallel federal program to cover itinerant populations (e.g. military families) and ‘binder’s coverage’ for people who have moved in the last 18 months or are out of area when they are injured.

2. Take some of the money spent on subsidizing the mandate and put it in Medicaid, to produce a greater net increase in Medicaid than the current bill will do, while still saving money on net. Do you people like the idea of a public plan? We already have one!

He takes the rococo schemes of the administration and Congress as a point of departure. Must we enter that labyrinth?

2b. Make any “Medicare to Medicaid” $$ trade-offs you can, while recognizing this may end up being zero for political reasons.</i.

3. Boost subsidies to medical R&D by more than the Obama plan will do. Establish lucrative prizes for major breakthroughs and if need be consider patent auctions to liberate beneficial ideas from P > MC.

Am I surprise that a professor is arguing for more academic pork barrel?

4. Make an all-out attempt to limit deaths by hospital infection and the simple failure of doctors to wash their hands and perform other medically obvious procedures.

Can’t we leave that to hospital administrators advised by their in house counsel? Neither Dr. Cowan or the President are likely to speak with much force on this issue.

5. Make an all-out attempt, working with state and local governments (recall, since the Feds are picking up the Medicaid tab they have temporary leverage here), to ease the spread of low-cost, walk-in health care clinics, run on a WalMart sort of basis. Stepping into the realm of the less feasible, weaken medical licensing and greatly expand the roles of nurses, paramedics, and pharmacists.

To the extent that this could be done, it would be through modification of esoteric state regulations. He is proposing to have federal authorities squeeze the nuts of state officials to make it happen. That in turn means adding conditions to funding, distorting local preferences, and more barnacles on the ship.

6. Make an all-out attempt, comparable to the moon landing effort if need be, to introduce price transparency for medical services. This can be done.

His analogy is strange. The absence of transparency has nothing to do with deficits of capital or technology.

8. Invest more in pandemic preparation. By now it should be obvious how critical this is. It’s fine to say “Obama is already working on this issue” but the fiscal constraint apparently binds and at the margin this should get more attention than jerry rigging all the subsidies and mandates and the like.

Does Dr. Cowan have a ready conception of how much you should devote to preparing for black swan events like the 1918 influenza epidemics?

9. Establish the principle that future extensions of coverage, as done through government, will be for catastrophic care only.

Why not limit all public provision to that in excess of a high deductible? Some hypotheses: 11.) there is a cultural expectation that you receive medical care at the price of a nominal co-pay, and politicians pander to that; 2.) politicians within the Democratic Party are governed by a potted conception of what is ‘fair’, which is to say that no benefit conferred by politicians within the Democratic Party on their favored clientele may ever be rescinded. The Democratic Party will have to be ignored if any work is to be done.

11. Realize that you cannot tack “universal coverage” (which by the way it isn’t) onto the current sprawling mess of a system, so look for all other means of saving lives in other, more cost-effective ways. If you wish, as a kind of default position, opt for universal coverage if the elderly agree to give up Medicare, moving us to a version of the Swiss system and a truly unified method of coverage. But don’t bet on that ever happening.

There is a certain amount of discussion in elementary microeconomics about compensating populations injured by trade liberalization. Why not make use of the funds expended on Medicaid for a program of comprehensive coverage of the whole population (over a high deductible) and then use the funds now allocated to Medicare for an addendum to Social Security: erect a medical savings account for each beneficiary and dump about $10,000 in it each year. The use of the account would be restricted to paying service providers and providers (under penalty of law) could accept drafts only for the provision of services specified in a state manual. If the funds in the account exceeded a certain standard balance (say, $25,000), the excess could by the beneficiary be transferred to another account to be used at his discretion.

12. If you can tax health insurance benefits and cut a Pareto-improving deal overall, fine, but I am considering this to be too politically utopian and it’s not clear what the rest of that deal looks like. The original tax break makes no economic sense but you don’t want to end up with a big tax increase and a lot more people on the public books with little in return.

Dr. Cowan is an economist, not a politician. Working out the ‘politics’ is not his job. All we have is the hope that some day good ideas can trump vested interests and stupidity.

14. Commission a study of how much the Obama plan is spending per QALY saved. I agree that more health insurance saves lives, but a) the study should adjust appropriately for the superior demographics of those who hold or buy insurance, and b) the study should adjust for the income that would be lost through mandates and the safety that income would purchase. I worry greatly that we have never, ever seen this number presented and that if we did it would not be pretty. In any case, do the study, scream the number from the rooftops, and reread points 1-11. Enact.

You are thinking that a Congress in the hands of the likes of Barney Frank and Henry Waxman would react to the data by crafting responsible public policy?Report