The Biggest Government Health Care Spender Since LBJ Was…Ronald Reagan?

reaganMany readers will recognize Ronald Reagan’s famous maxim that: “Government is not the solution to our problem; government is the problem.”  Some will even recognize his vehement opposition to Lyndon Johnson’s Medicare proposal, before the program was passed into law:

“We are faced with the most evil enemy mankind has known in his long climb from the swamp to the stars.  There can be no security anywhere in the free world if there is no fiscal and economic stability within the United States.”

Reagan even warned at one point:

“If this program passes, behind it will come other federal programs that will invade every area of freedom as we have known it in this country until we wake to find that we have socialism… You and I are going to spend our sunset years telling our children and our children’s children what it was like in America when men were free.”

Pretty overwrought words, and clearly an inaccurate prediction.  But that’s not what I want to write about now.  Instead I want to talk about happened when Ronald Reagan was president, when he passed what David Blumenthal and James Morone describe as “the largest Medicare expansion in decades.”  What was this expansion, and how did Reagan come to embrace it? …(Read more and view comments at Forbes)

Why You Should Know the Cost of Your Medical Treatments

radiotimesCheck out this WHYY Radio Times segment I participated in on health care price transparency:
When it comes to the cost of treating an illness, do you know how much your care costs? Many experts believe if patients would be more value- and cost-conscious when it comes to choosing where they receive care, overall health spending could be significantly reduced. Of course, all this would require providers to make their charges public so that patients could become smarter health-care consumers. Given higher co-pays and deductibles many health plans require, health care price transparency could be an idea whose time has come… (Listen to the RadioTimes segment here

How Parents Get Caught Up in Their Children's Identities

Another great quote from Andrew Solomon’s Far From the Tree:

“My mother didn’t want me to be gay because she thought it wouldn’t be the happiest course for me, but equally, she didn’t like the image of herself as the mother of a gay son. The problem wasn’t that she wanted to control my life—although she did, like most parents, genuinely believe that her way of being happy was the best way of being happy. The problem was that she wanted to control her life, and it was her life as the mother of a homosexual that she wished to alter. Unfortunately, there was no way for her to fix her problem without involving me.”

Now I see why it bothers my parents so much that I’m no longer a Republican.

Good News on Healthcare Inflation

I have been worried about healthcare costs for a long time, so the fact that we’ve had a few years in which healthcare costs have risen more slowly than normal hasn’t got me overly excited. I’ve seen this happen before, and worry that costs will accelerate again soon.
But a recent study suggests that this trend should give me reason for optimism. Healthcare costs actually went down as a proportion of the US GDP:

GDP vs NHE

I am not stupid enough to try to predict the future. But I do promise in the future to keep you informed about what we’ve learned about the recent past. And I hope in the future that our news is as good as what I have communicated to you today.
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The Growing Importance of Behavioral Economics in Retirement Saving Plans

Dick Thaler, an economist who helped create the field of behavioral economics, came up with a wonderful idea a long time ago to promote retirement savings, a plan he calls Save More Tomorrow. Among the many clever aspects of his plan is the idea of automatic escalation of people’s retirement contributions. Think of the idea this way. I might hope to put, say, 5% of my savings aside for retirement each year. But I’m not saving anything right now. So to go from 0 to 5% in one year would be difficult, and I would feel like I lost a lot of my take-home pay. Thaler’s idea is for me to commit to growing my retirement savings rate, by deciding right now to let it increase in the ensuing years, automatically. In other words, if I don’t do anything else again, my retirement savings will go up.
Another part of his idea is to get people automatically enrolled in retirement saving plans, while leaving them the option of opting out. In traditional retirement plans, people have to decide whether to maximize their retirement savings, and if they put off the decision, they end up not contributing anything to retirement. Save More Tomorrow flips this situation. It asks people to decide whether they don’t want to save for retirement, and if they put off the decision, they end up contributing maximally to the retirement plan.
As the graph below shows, which I got from this wonderful website at the University of Stirling, this plan is really catching on:

retirement enrollment

Amazing what a little bit of psychology can do to improve people’s economic behavior.
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Does Health Insurance Improve Health? Evidence from Massachusetts

massachusettsIt is always important to remember that healthcare and health insurance are two very different things, and neither of them is a guarantee of good health. Therefore, when people talk about Obamacare providing people with medical care, we have to remember that it primarily provides people with health care insurance. And as I have written about previously, insurance coverage does not guarantee the receipt of quality healthcare, with many Medicaid recipients having a hard time finding doctors willing to see them.
Now comes a new study from Massachusetts, exploring whether expansion of health insurance within that state through Romneycare has improved the health of that state’s citizens. In the study, the researchers conducted a before/after look at the health of people in Massachusetts. The idea here is that if people’s health improves after they receive insurance coverage, that could result from the receipt of such coverage. Recognizing that other factors could also affect the health of people over time, the researchers also conducted a before/after look at other states in New England. The main idea here is simple: if over the same period of time, people in Massachusetts experience improvements in their health relative to their neighbors, we have evidence suggesting that the expansion of health insurance in Massachusetts benefited its citizens.
The answer? Across a number of measures, the researchers found relative improvements in the health of people in Massachusetts… (Read more and view comments at Forbes)

Baby Thoughts from Andrew Solomon

far from the treeA quote from Far From the Tree I thought I’d share:

“There is no such thing as reproduction. When two people decide to have a baby, they engage in an act of production, and the widespread use of the word reproduction for this activity, with its implication that two people are but braiding themselves together, is at best a euphemism to comfort prospective parents before they get in over their heads”

I guess I should have read this book before my wife and I had our two kids!
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Percent of Americans Without Health Insurance Drops

A recent Gallup poll shows that the percent of Americans without health insurance has dropped significantly in recent months. Here’s a picture of their findings:

uninsured

This drop has occurred largely in response to Obamacare – to the expansion of Medicaid in those states which went along with that provision of the law, and with the introduction of the health insurance exchanges, which subsidizes the cost of insurance for low income people who do not qualify for Medicaid. I expect these numbers to continue moving this direction for a while, as more people find insurance through the exchanges, and as states continue to expand their Medicaid numbers. But I do not expect, anytime soon, for us to have a figures we can brag about to our peers in the developed world. The United States is still likely to lead them all in the percent of its population that has no health insurance.

Is the Profit Motive Ruining American Healthcare?

Greedy-Insurance-GuyWe all know that healthcare costs in the U.S. are too high.  But why is American healthcare so expensive?  Some experts blame the desire for profit.  Russell Andrews, a  neurosurgeon and author of Too Big To Succeed laments “the morphing of American medicine from a function of a humanitarian society into a revenue stream for healthcare profits, drug and medical device companies, hospitals, and insurance companies.  In essence, we have transformed healthcare in the U.S. into an industry whose goal is to profitable.”  Andrews goes on to characterize the profit motive as “a virus” infecting the system.
Sachin Shah, a physician affiliated with Doctors For America, contrasts the struggles patients have paying for their medical bills to the enormous profits of American insurance companies:

“The five largest health insurance companies – WellPoint, United Health, Aetna, Humana, and Cigna – … earned over $3.3 billion in profits [between April and June 2011].”  Shah goes on to contend that “Profit in the health insurance industry is the single greatest barrier to building an efficient, sustainable system of healthcare in this country.”

David Goldhill is not convinced that profits are the problem.  Author of Catastrophic Care: How American Healthcare Killed My Father and How We Can Fix It, Goldhill points out how small those profits are in the face of overall healthcare spending… (Read more and view comments at Forbes)

Why Price AND Utilization Matter

I’m-sure-you-know-this-by-now fact-of-the-day: the US leads the world in healthcare costs. As I’ve written previously, a big reason for this is that prices in the US for healthcare services are higher than elsewhere. This was nicely illustrated in a Health Affairs article from 2012.  The article looked at how many physicians per capita practiced across six countries, and how much money those physicians made. The income figures were dramatic, especially for subspecialists:

physicians and pay
Clearly, it pays to be an orthopedic surgeon in the US. But that does not mean that we can ignore the utilization problem we also have in the US. Far too often, we use far too many medical services. An article in the Annals of Internal Medicine in 2012 illustrated this dual problem, of price and utilization:

utilization

To control costs, we need to reduce the use of unnecessary services, and stop paying unnecessarily high prices for necessary ones.
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PeterUbel