Tuesday, September 8, 2009

A: "It's Complicated"

Q: "How would Facebook describe the relationship between health care and government?"

So... why is HR 3200, "America's Affordable Health Choices Act," 1017 pages long?

Stakeholders. The "HR" means that the bill has to answer to a majority of the house. The Senate will eventually have to reconcile, and the President will eventually have to sign, so it's going to have to answer to them too.

Congresspeople, Senators and Presidents have campaign promises to keep. The Legislators have lobbyists to answer to.

Finally, there are already scads of laws on the books that address the health care system. It's not like the government is out of health care presently. We've got Medicare and Medicaid already, and tax breaks for businesses who provide health care to employees, and probably a few dozen initiatives in that you and I have never heard of.

In the face of this kind of complexity, folks need to fall back upon simpler heuristics in order to make sense of what's going on.

At a basic level, you'll see those who simply believe, a priori, that government intervention is either good or bad. They don't need to know anything more to make up their minds.

At a secondary level, there are those who might note that other nations have attempted similar plans in the past. These folks would want to compare major parts of our bill with systems in Canada or Britain or elsewhere abroad.

Spend enough time studying comparative politics though, and you'll run into a chaos theory mindset. It's very difficult to measure the interactions between institutions, laws, culture, and economy. You just don't know.

One thing that I do know is that 1) laws usually have unintentional consequences, and 2) it's far easier to pass a law than it it is to change one or repeal one.

Of course, NOT doing anything ALSO has unintended consequences.

Anyone who believes that they really know, to a certainty, what will happen when 1017 pages of legal code are or are not released upon a country of 300 million citizens and hundreds of billions of dollars of health care spending is not to be trusted.

So, I guess we'll just have to see what happens.


sbeath said...

I had a completely different understanding of the length of the bill: we think that the current market-based healthcare insurance situation is simple, but it's not. Some of that is due to previous laws (ERISA, etc), but some of it is because insurance companies create a complicated mess of uninsurable people through a combination of recision and deliberate exclusionary tactics that are difficult to stop.

The exemplar tactic used by my professor last semester was that in some places, individuals seeking health insurance had to apply in person at the company and the insurance companies put those application offices in places only accessible up one or more flights of stairs, effectively barring less desirable people (not just extremely out-of-shape people, but people with conditions like congestive heart failure, multiple sclerosis, etc) from even applying for insurance. How do you fix that kind of complicated social-manipulation tactic? I'd assume the answer could be dozens, if not hundreds, of pages of the bill.

Me said...

I would never accuse the present healthcare situation of being simple or market-based.

As for your final question, are you asking how one might do a better job of coercing private insurers into offering insurance for unprofitable customers? That does sound difficult, since only the companies clever enough to circumvent the regulation could remain in business, right?

sbeath said...

Hmm... I'd thought that a fee-for-service structure where many of the actors are protected from effective regulation through ERISA would be considered market-based, just not a market that anybody likes. That's covered to some extent in the readings I sent you from my class about Health Insurance Policy--did you get a chance to look them over? They make most cases far better than I can.

That does sound difficult, since only the companies clever enough to circumvent the regulation could remain in business, right?

Why do you assume that avoiding regulation is the only way to stay profitable? You can reap a profit business when you charge undesirables much higher rates (but perhaps slightly lower than your competitors), negotiate with drug companies and hospitals to get lower rates, reduce administrative costs through switching to electronic records (IIRC, admin costs are about 30% of health premiums), and/or convince doctors or similar plans to accept capitation rates instead of fee-for-service system that drives up health costs and healthcare-induced mortality.

Me said...

ERISA *is* regulation (and so is HIPAA), but it's not exactly regulation that I'm talking about when I say that healthcare isn't market-based. I'd have to look it up, but government spending accounts for about half of all healthcare spending, right?

Of the spending that comes from the private sector, most is expenditures by plans chosen by the companies for which individuals work, not plans chosen by individuals themselves or services purchased directly from individuals.

A "market" where so many decisions are made by so few actors (US govt, half a dozen major insurers) isn't going to perform as well as a market that's more closely tied to the folks actually consuming a product.

As for your second question... if insurance companies could profitably cover those with pre-existing conditions such as MS or heart disease... then why aren't they?

sbeath said...

I take it you didn't read the review articles / chapters that I sent you on the subject then.

Me said...

I did read through the forwarded articles, but there was a lot of content and I surely might have missed something, or perhaps I'm not understanding you.

Everything I've read suggests that adverse selection isn't an issue for insurance companies... since they're actually pretty good at identifying risky patients.

You seemed to be suggesting that health care reform faces additional complexity because insurance companies are engaging in trickery in order to avoid covering risky patients.

I think it's a valid question: if these patients could be profitably covered, why waste time and effort on trickery?

Also, while some of the uninsured are those with pre-existing conditions, aren't most of them actually healthy folks who are just caught in the gap between being poor enough for medicaid and rich enough for private (employer-provided) care?

Basically, if you're saying that the government is wasting tons of time, effort, and legislative ink playing a complex game of cat-and-mouse with the insurers, what are the motivations of the cat and the mouse here?

I'm not sure where things like capitation enter into this. Under a capitation model, isn't adverse selection *more* of a problem, rather than *less*?

Devin said...

Stupid question: What's the difference between passing a law and changing/repealing a law?

Me said...

Procedurally, not much. Practically, somewhat more than that. Over time, new government initiatives will develop constituencies that defend them. That's why we can't remove farm subsidies. Heck, that kind of inertia is why we can't legalize marijuana...