Tornado Alley (PROG)

[conix]

We have "Health Gare", hook.

You need to get out more.

You just do not want to pay for healthcare. I get it.

"Free' is fun. Someone else pays for your "Free".

Until they don't.

If Warren Scraps Private Health Care, Beware the Unintended Consequences


Presidential candidate’s promise that Medicare for All will deliver more care for less money needs a reality check
By Greg Ip
Nov. 6, 2019 9:23 am ET

At the heart of presidential candidate Sen. Elizabeth Warren’s ambitious Medicare for All plan is this tantalizing promise: the U.S. can spend less on health care than it does now yet get a lot more for it: 32 million people currently uninsured will have coverage, while co-pays and deductibles will disappear and everyone will get long-term care.

How does she do it? By saving trillions of dollars spent on things she claims have zero value: administrative overhead, inflated salaries of hospital executives and surgeons, and exorbitant drug-manufacturer profits.

This premise has faced far less scrutiny than her tax and financing plans. After all, no one disputes that a lot of private spending on health care is duplicative or useless. But that doesn’t mean all of it is. By dispensing with many private-market mechanisms, Ms. Warren risks unintended consequences such as overuse of health care, fewer breakthrough drugs and potentially fewer doctors serving American patients.

In an analysis prepared on Ms. Warren’s behalf, Donald Berwick, a former health-care official under President Obama, and Simon Johnson, a former chief economist at the International Monetary Fund, project the federal government will, under her plan, spend just under $52 trillion over the next decade on health care, slightly less than the private and public sectors are now projected to spend, largely by rooting out waste and using the leverage of a single buyer.

For example, they note private insurers spend 12.2% of total premiums on administrative costs. By reducing that to the 2.3% average that Medicare spends, Ms. Warren would save $1.8 trillion over a decade.

Jonathan Gruber, a health economist at the Massachusetts Institute of Technology who helped design Obamacare, agrees big savings in administrative costs are feasible. But “not everything private insurers do is waste,” he says. Private insurers guard against overuse of health care by regulating which care givers members can see, and how often.
American ExceptionalismThe U.S. pays more for health-care providersand drugs than other countries, although allstruggle with health costs.Average health-care salaries in 2011, U.S.dollars
U.S.CanadaSpecialistphysiciansPrimarycare physiciansPharmacistsRegisterednursesEMTs andparamedicsPractical andvocationalnurses$0 thousand$100$200$300
Drug Costs in 2016* Part B only
What Medicare* spentWhat Medicare would have spent atforeign pricesEyleaRituxanNeulastaRemicadeOpdivoAvastinXgeva/ProliaLucentis$0.0 billion$0.5$1.0$1.5$2.0$2.5
Health-Care Spending as Percentage of GDPSources: Jillian Chown, David Dranove, CraigGarthwaite, Jordan Keener, NBER Working Paper#26122 (salaries); U.S. Department of Health andHuman Services (drug prices); OECD (spending)Note: Data break in 2003 for France; 2011 for Japan;2012 for Italy; 2013 for the U.K.
%United StatesGermanyFranceCanadaItalyJapanUnited Kingdom2000’05’10’155.07.510.012.515.017.520.0

In a 2015 study of eight New York counties, Mr. Gruber and two co-authors found that patients forced to switch from Medicare Advantage plans, which are financed by Medicare but administered by private insurers, to regular fee-for-service Medicare increased hospital usage by 60%. Their health didn’t benefit: the hospitals they chose didn’t provide better care, and mortality didn’t go down.

This doesn’t mean Medicare for All’s expenses will rise that much, and Ms. Warren proposes various mechanisms to better tie payments to patient outcomes. It does mean, though, that a lot of what Ms. Warren saves by paying less for each procedure could be offset by patients consuming more of them.

Ms. Warren notes Americans pay far more than foreigners for the same service: nearly five times as much as the Dutch on heart-bypass surgery and nine times as much as Canadians on a CT scan. Her plan would narrow that gap in part by reimbursing physicians at 100% and hospitals at 110% of current Medicare rates—significantly less than private insurers, though more than Medicaid.

A key reason Americans pay more than foreigners is that American providers earn more than their foreigner counterparts. A study by Craig Garthwaite and three co-authors at Northwestern University found American doctors earn 48% more than their Canadian counterparts on average.

Ms. Warren claims most doctors’ incomes will be little changed once savings on billing are counted. But Mr. Garthwaite says invariably some doctors, in particular well-paid specialists, will earn less—and supply less care as a result.

Mr. Garthwaite found that in the 1990s many pediatricians saw reimbursement rates drop when patients switched from private insurance to a new federal-state health-insurance plan for children. As a result, they spent less time with each patient and worked fewer hours.

Mr. Garthwaite predicted that if American doctors’ incomes are capped at Canadian levels, future would-be doctors would instead choose more lucrative professions. Mr. Berwick disputes that but adds that Medicare-for-All’s overseers would watch for such effects and could adjust payments to address shortages, such as of primary-care physicians.

Ms. Warren would slash what the federal government pays for drugs to closer to foreign levels, saving $2.5 trillion over a decade. But numerous studies have found that drug innovation is correlated to expected revenue. For example, in a 2004 study, Amy Finkelstein of MIT found federal initiatives to expand vaccination led to a 2.5-fold increase in vaccine trials. She concluded that each dollar of anticipated revenue translated into six cents of investment in vaccine development. This suggests government caps on drug prices would reduce the number of new drugs—both marginally useful “me-too” drugs and genuine breakthroughs.


Finally, Ms. Warren proposes to save more than $1 trillion over 10 years by slowing the growth of health spending to that of gross domestic product. This would be a formidable undertaking. In most advanced countries, health spending has grown faster than GDP. The reasons are structural: health care is more resistant to cost-saving efficiencies than other sectors, the demand for new procedures is infinite, and the elderly, who use more care, are a growing share of most countries’ populations. The Congressional Budget Office estimates aging alone will boost federal health-care spending by 1.5% of GDP by 2049. Mr. Berwick and Mr. Johnson say that if health-care costs do outstrip GDP growth, Ms. Warren has lots of levers to slow costs, such as automatically reducing provider payment rates.

Good luck with that. In 1997 Congress decreed that Medicare payments to doctors would be automatically cut if costs grew too fast. Then fearing a doctor and patient backlash, it repeatedly suspended the provision before repealing it altogether in 2015.

Lawmakers have often found that getting more health care for less is easier said than done. Ms. Warren is unlikely to be the exception.

https://www.wsj.com/articles/if-warren-scrapsprivate-health-care-beware-the-unintended-consequences-11573050198?mod=hp_lead_pos8