Hsieh LTE in NY Times

The March 30, 2009 New York Times has printed my latest LTE on health care. It's the 6th one down:

Re "A Health Plan for All and the Concerns It Raises":

To the Editor:

It would be just as wrong for the government to compete with private insurers to provide health insurance as it would be for the government to compete with G.M. or Ford to build taxpayer-subsidized "public automobiles."

The unfair competition from a public plan would destroy the private health insurance industry. The inevitable result would be the rationing and other horrors of a Canadian-style single-payer system, which most Americans neither wish nor deserve.

Paul Hsieh
Sedalia, Colo., March 25, 2009

The writer, a medical doctor, is a co-founder of Freedom and Individual Rights in Medicine.

It was written in response to their March 25, 2009 story, "A Health Plan for All and the Concerns It Raises".

WSJ Warning on Massachusetts

The March 27, 2009 Wall Street Journal is warning that politicians plan on imposing a Massachusetts-style plan on the entire US. Here's an excerpt:

National Health Preview: The Massachusetts debacle, coming soon to your neighborhood.

...In Massachusetts's latest crisis, Governor Deval Patrick and his Democratic colleagues are starting to move down the path that government health plans always follow when spending collides with reality -- i.e., price controls. As costs continue to rise, the inevitable results are coverage restrictions and waiting periods. It was only a matter of time.

They're trying to manage the huge costs of the subsidized middle-class insurance program that is gradually swallowing the state budget. The program provides low- or no-cost coverage to about 165,000 residents, or three-fifths of the newly insured, and is budgeted at $880 million for 2010, a 7.3% single-year increase that is likely to be optimistic. The state's overall costs on health programs have increased by 42% (!) since 2006.

...Which brings us to Washington, where Mr. Obama and Congressional Democrats are about to try their own Bay State bait and switch: First create vast new entitlements that can never be repealed, then later take the less popular step of rationing care when it's their last hope to save the federal fisc.

The consequences of that deception will be far worse than those in Massachusetts, however, given that prior to 2006 the state already had a far smaller percentage of its population uninsured than the national average. The real lesson of Massachusetts is that reform proponents won't tell Americans the truth about what "universal" coverage really means: Runaway costs followed by price controls and bureaucratic rationing.

Read the whole thing.

The Massachusetts plan has neither controlled costs nor provided "universal coverage". Adopting such a flawed plan at the national level will merely multiply our problems 50-fold.

Plus it also sets the stage for a complete government takeover of health care. Although the inevitable failures would be caused by massive government interference in the marketplace, pundits will claim that this is somehow failure of the marketplace and that the government needs to "rescue" the people with a "single payer" system.

For more on problems with Massachusetts, see our archive of posts on the subject.

Daily on Insurers

Stella Daily of ReasonPharm points out that the recent news articles on the insurance industry's latest capitulation to government controls should read:

"Insurers offer to start charging healthy people more",

rather than:

"Insurers offer to stop charging sick people more".

As she notes:

...Two insurance giants, America's Health Insurance Plans and the Blue Cross and Blue Shield Association, have written to senators indicating that they are willing to phase out premiums that vary by prior health history if Congress requires all Americans to purchase coverage.

That is bad, bad news for healthy people like me.

It's key that the insurance companies are making this offer in exchange for forcing everyone to be covered -- because that's the only way this scam will work. If insurers don't charge more for higher-risk people, then they simply have to raise costs for everyone. But that would mean health insurance would be an even worse deal for healthy individuals than it already is -- and healthy Americans would flee.

As she pithily concludes:

Let's not shackle the healthy to pay for the sick.

For more on the problems with mandatory insurance, please see my earlier article from the Fall 2008 issue of The Objective Standard:

"Mandatory Health Insurance: Wrong for Massachusetts, Wrong for America"

Insurers Extend Their Faustian Bargain

Health insurance companies have offered to speed up their eventual suicide, agreeing to yet more concessions to the government in exchange for a law requiring all Americans to purchase health insurance.

This is just an extension of the Faustian bargain described in my earlier piece, "Health Insurance Industry Sells Its Soul to the Devil".

Here's the latest development:

Insurers offer to stop charging sick people more

The health insurance industry offered Tuesday for the first time to curb its controversial practice of charging higher premiums to people with a history of medical problems.

The offer from America's Health Insurance Plans and the Blue Cross and Blue Shield Association is a potentially significant shift in the debate over reforming the nation's health care system to rein in costs and cover an estimated 48 million uninsured people. It was contained in a letter to key senators.

In the letter, the two insurance industry groups said their members are willing to "phase out the practice of varying premiums based on health status in the individual market" if all Americans are required to get coverage.

...Insurers are trying to head off the creation of a government insurance plan that would compete with them, something that liberals and many Democrats are pressing for.

Of course, making more concessions to the statists will only embolden -- not discourage -- them. Once insurers concede the premise that the government is right to set the terms for "universal coverage", then a taxpayer-subsidized government plan will be the inevitable next step. After all, if people have a "right" to insurance but the government deems private offerings to be "unaffordable", then the government will have to step in to allegedly rectify the situation with its own plan.

The unfair competition between a private insurance and subsidized government insurance will not be sustainable for long.

This move by private insurers will likely speed up their own demise. One does not fight a killer by offering to slit one's throat first.

And unless Americans speak out against this development, it won't end well.

CNN: 8 in 10 Americans Happy With Their Health Care

Philip Klein discusses a recent CNN poll in which 8 of 10 Americans say that they are satisfied with their health care.

He also notes that the CNN headline accentuates the negative, i.e., concerns over costs.

The media's drumbeat about our health care "crisis" is making most Americans think that everybody else is having a rough time with health care (even if them themselves are doing relatively ok), and hence we need drastic change in the form of government-managed "universal health care".

Hence, it's important for the media to include a fair discussion of the positives about our current system -- just as Dr. Scott Atlas did in his own recent piece.

And in particular, if Americans are satisifed with their health care quality but unhappy with the costs, then there's a perfect solution to lower costs while maintaining customer satisfaction -- free market health care reforms.

Hsieh OpEd at PJM: "Health Insurance Industry Sells Its Soul to the Devil"

The online political commentary/opinion website PajamasMedia.com has published my latest OpEd, entitled "Health Insurance Industry Sells Its Soul to the Devil".

Here's the introduction:

Health Insurance Industry Sells Its Soul to the Devil

Health insurance companies are on the verge of a Faustian bargain that will take the rest of us down with them.

March 22, 2009 - by Paul Hsieh

In German folklore, Johann Faust was a physician who sold his soul to the Devil in exchange for knowledge. Of course, the pact destroyed him. The American health insurance industry is on the verge of striking its own Faustian bargain with the U.S. government. But this bargain won't just destroy the insurance industry; it will also drag 300 million Americans into the pit of government-run "single payer" socialized medicine...

Read the rest here.

Did Natasha Richardson Die from Socialized Medicine?

David Henderson at EconLog asks this pointed question.

He also cites an article which notes:

The province of Quebec lacks a medical helicopter system, common in the United States and other parts of Canada, to airlift stricken patients to major trauma centers. Montreal's top head trauma doctor said Friday that may have played a role in Richardson's death.

"It's impossible for me to comment specifically about her case, but what I could say is ... driving to Mont Tremblant from the city (Montreal) is a 2 1/2-hour trip, and the closest trauma center is in the city. Our system isn't set up for traumas and doesn't match what's available in other Canadian cities, let alone in the States," said Tarek Razek, director of trauma services for the McGill University Health Centre, which represents six of Montreal's hospitals.

(Via Brian Schwartz.)

Goodman: The Rest Of The Story

John Goodman, Linda Gorman, Devon Herrick, Robert Sade ask some important questions in their recent paper, "Health Care Reform: Do Other Countries Have the Answers?":

1. Does the United States spend too much on health care?

2. Are U.S. outcomes no better and in some respects worse than those of other nations?

3. Is the large number of uninsured in the U.S. a crisis?

4. Does lack of health insurance cause premature death?

5. Are medical bills causing bankruptcy?

6. Are administrative costs higher for private insurance than public insurance?

7. Are low-income families more disadvantaged in the U.S. system?

8. Can the free market work in health care?

Their answers may surprise you.

Could it possibly be that the politicians in favor of "universal health care" have misled us about these issues?

(Via Health Affairs blog.)

Pipes on Rationing

Sally Pipes dissects the flaws behind ObamaCare in this OpEd in the March 2, 2009 New York Post. Here's an excerpt:

Bams' Bad Medicine

...Just look at the failure of existing government health programs -- both here and abroad. Many Medicaid patients have a difficult time finding a doctor. According to a 2003 study by the Medicare Payment Advisory Commission, doctors are five times more likely to turn away Medicaid patients than those with private insurance.

The situation is even worse in countries like Canada and Great Britain -- whose government-run systems Obama's health braintrust has cited approvingly.

More than 725,000 Canadians languish on months-long waiting lists for surgery and other necessary treatments. Doctors are in short supply - thanks largely to the government takeover of the health sector. In the early 1970s, when Canada launched its "universal coverage" system, the country ranked second among 28 developed countries in doctors per thousand people. Today, it's 24th.

Further, Canadians often lack access to the advanced medical technology that Americans take for granted. Canada ranks 19th among 26 reporting OECD nations in access to CT scanners and 14th out of 25 reporting OECD countries in access to MRI machines.

In the UK, the government-run health system explicitly rations medical treatments through the publicly chartered National Institute for Health and Clinical Excellence. NICE evaluates data from clinical drug trials to decide if newer medical treatments are more effective than older, cheaper alternatives. It then makes recommendations to Britain's state-run National Health Service about which treatments are worth paying for.

Last summer, British patients with kidney cancer were denied access to four lifesaving drugs. NICE's clinical and public health director said of the drugs at the time, "Although these treatments are clinically effective, regrettably the cost to the NHS is such that they are not a cost-effective use of NHS resources."

In other words, the British government admitted that patients would likely die without these treatments -- but refused to pay for them anyway.

This could happen here. Obama's stimulus package includes $1.1 billion for NICE-style comparative-effectiveness studies.

As the costs for his health reforms mount, Obama will be forced to employ the same strategies that Canada and Britain have to cut spending. That means the rationing of care (and significantly higher taxes).

Read the whole thing.

Rhoads: Less Government, Not More

Jared Rhoads, director of the Lucidicus Project, has written another excellent OpEd on the problems with Massachusetts' health care. Some critics of the Massachusetts system are using that failure to call for yet more government control of health care. Rhoads notes that the exact opposite is true.

Here is his piece in its entirety, reposted with his permission:

Less government, not more
By Jared M. Rhoads

Recently, a national organization of physicians released a report strongly criticizing the health reform effort in Massachusetts that imposes a mandate on residents to purchase health insurance.[1] Citing several studies and data sources, the group showed that the reform has added wasteful new layers of bureaucracy and has failed to control costs. The Massachusetts program, they said, is faltering badly and thus should not be held up as a national model for reform.

Not exactly a ringing endorsement of government intervention in health insurance, right?

Think again. The report was published by Physicians for a National Health Plan (PNHP), a group that exists specifically to advocate for a universal, comprehensive single-payer government system of healthcare in the United States. Since 1987, PNHP has sought a government-financed system that would eliminate private insurers altogether. The group is increasingly visible in the health policy world; with more than 15,000 members nationwide, it has rallied on the steps of the capitol, published papers in journals, and has lobbied Congress.

For PNHP, the reason that the Massachusetts reforms do not work is not because the reforms interfere with the health insurance market, but because they do not interfere enough. The state reform has failed, they argue, because it leaves too much of the private system in tact. Until residents are stripped of the ability to purchase coverage from private insurers, state agencies like Commonwealth Care cannot generate sufficient "administrative savings" -- the magical ingredient in the group's Medicare-for-all vision that will allegedly lower the cost of healthcare and make additional entitlements possible.

In effect, PNHP denounces the Massachusetts reform in order to throw its support behind a much bigger goal: the United States National Health Care Act (H.R. 676). This act, which has already been introduced and referred to committee for review, would provide universal coverage under a single payer (the government) and promise all individuals the "best quality standard of care" for everything ranging from primary care and prevention to prescription drugs, mental health services, dental services, chiropractic services, podiatric care, and more. According to the bill, this would all be made available for "free" -- no co-payments, deductibles, or coinsurance required.[2]

In short, the approach that PNHP, the California Nurses Association, Healthcare for All, the American Medical Students Association, and dozens of other groups employ is: if one big dose of government doesn't work, try a bigger dose.

Combined with the recent statements by President Obama that healthcare reform "cannot wait ... and will not wait another year," it is becoming clear just how dangerous a time it is for those who value individual rights. Government payment for medical services -- regardless of whether state or federal -- is neither a moral nor practical solution to the problems we face in healthcare. But is anyone in the mainstream media arguing that point? Activists have no right to require the young to sacrifice the old, the healthy to sick, or the productive to the poor. But is anyone in Congress about to defend those convictions?

Contrary to what big-government activists maintain, market forces do work in healthcare. Insurance works -- when policies are based on coverage that consumers actually want and when premiums are tied to actual risk profiles. New technologies lead to lower costs -- when reimbursement rates reflect real prices. And uninsured individuals are not a menace to others -- when providers are not forced to provide charity care and when states do not pick up the tab. Real markets feature competitors who are free to compete and consumers who are free to be discriminating in what they buy.[3]

Massachusetts has not had anything resembling a free market in healthcare for decades. But the answer is not to drift even closer to disaster and institute a bigger mess at the federal level. The answer is to unshackle consumers, providers, and insurers and free the markets once and for all.

_____

1 "Massachusetts’ Plan: A Failed Model for Health Care Reform" Physicians for a National Health Plan, February 18 2009

2 The United States National Health Care Act, H.R. 676 [http://www.pnhp.org/docs/nhi_bill_final1.pdf] Accessed February 27 2009

3 This is a careful improvement on a point made in Herzlinger, R. "Creating a Real Healthcare Market", Boston Globe, February 18 2009, a piece that unfortunately cedes ground to the antitrust camp.

Thank you, Jared!

More Problems In Massachusetts

The March 16, 2009 New York Times article "Massachusetts Faces Costs of Big Health Care Plan" discusses the new controls that Massachusetts state government will impose on doctors, hospitals, and insurers in order to salvage their failing "universal health care system".

Costs are continuing to skyrocket out of control despite a round of new taxes. Hence, the article notes:

The very stakeholders who were coaxed into the tent -- doctors, hospitals, insurers and consumer groups -- would probably have been driven into opposition by efforts to reduce their revenues and constrain their medical practices, they said.

"Constraining" how doctors practice basically means the government overriding a doctor's judgment as to how to treat his patients. It interposes the bureaucrat into the doctor-patient relationship in order to save costs.

The end of this road will be government rationing, just as in the UK where the government explicitly says that it won't pay for treatments if it costs too much.

Advocates of universal health care often criticize free market medicine on the grounds that we "can't put a price on human life". But it is the government-controlled medical systems that actually do put a price on life. In such systems, patients can only hope that their government doesn't consider their own lives too expensive to save.

The answer to skyrocketing costs is not a government takeover of health care, but rather the free market. As we've seen with cellphones and computers, the free market drives down costs and improves quality.

Similarly, the sectors of medicine such as LASIK eye surgery which are the most free (i.e., least controlled by the government) show the same pattern of falling costs and rising quality over time. This can and should be the norm in all of medicine.

(For more on the problems with Massachusetts' system of universal health care, see the DC Examiner piece "Universal coverage? First, look at the disaster in Massachusetts" and my Objective Standard piece, "Mandatory Health Insurance: Wrong for Massachusetts, Wrong for America".)

Pisaturo on ObamaCare

In the March 11, 2009 edition of Capitalism Magazine, Ron Pisaturo argues that "Obama's Socialist 'Reforms' for American Healthcare are Impractical and Immoral".

Here's an excerpt:

...But the impracticality of socialized medicine goes far deeper than inefficiency. Socialized medicine -- which already dominates American medicine through Medicare, Medicaid, and persecution of the drug and insurance industries -- is impractical because it rests on the immoral premise that healthcare is a right, that healthcare must be provided equally for all.

Consider the contrasting case of the computer industry, which is much freer than the healthcare industry. When the newest, most souped-up, most software-laden computer with the most comprehensive service contract first comes out, it might cost $20,000 or more. Only wealthy Americans choose to buy, or can afford to buy, such an expensive model. Most Americans settle for a model and service contract that costs maybe $1,000 or less. But a couple of years later, after manufacturers have improved their manufacturing ability and brought their costs down, they can sell the old souped-up model for $1,000; and then the average man can enjoy what only the wealthiest could afford a couple of years earlier. Meanwhile, the wealthy can now buy an even more amazing new computer for $20,000.

This has been the pattern of all technological progress in all industries throughout the Industrial Revolution. A poor immigrant today making less than minimum wage off the books can afford to pay for a life-saving antibiotic that the richest of the rich could not obtain a few generations ago.

But suppose the government declares that owning a computer is a right, and so every American has the right to a quality computer, the best computer available. Then progress becomes an enemy of the state. Every new, $20,000 computer has to be provided to everyone. And so, instead of the average computer cost per person being around $1,000, the average cost is $20,000.

The government's only recourse is to outlaw progress.

Moreover, some people who had no computer before are now entitled to one. And they need more service, because they keep spilling booze on it. And those who had two computers must do with only one, with less service. And soon the computer models become more stripped down, because that's the only way to pay for an equal computer for all.

And so it has been going in America's socialized healthcare industry for the past two generations...

Read the whole thing.

As usual, the combination of moral and economic arguments is more powerful than either alone.

IBD on the Health Care Trojan Horse

The March 10, 2009 Investors' Business Daily warns against the "Trojan Horse" of Obama's health care reform plan. Here's an excerpt:

...Obama's plan is a blueprint for socialization in stages. It starts with a basically good idea -- setting up a truly national market (which we don't have now) for private insurance -- and stacks the odds against the insurers by putting a tax-subsidized plan in the mix.

The private plans would have to be at least as generous as the public plan; this was stated explicitly by the Obama campaign. However, they would be denied its subsidy, so it would be impossible for them to match its benefits and still make money.

It would be like herding sheep into the fold and letting the wolf in. Or you can think of the public plan as a Trojan horse. Once allowed inside the gates of the health insurance market and given an unfair advantage, it will eventually out-compete its private rivals and gain monopoly power.

Plus if history is any guide, the collapse of the private insurers due to unfair competition from the government will be labelled a "failure of capitalism", and used to justify a complete government takeover of health insurance.

We've already seen this specious reasoning applied to the mortgage crisis, as George Mason University professor Peter Boettke noted:

If you bound the arms and legs of gold-medal swimmer Michael Phelps, weighed him down with chains, threw him in a pool and he sank, you wouldn't call it a "failure of swimming". So, when markets have been weighted down by inept and excessive regulation, why call this a "failure of capitalism"?

Fortunately, publications like IBD are calling attention to this problem before it happens. Let's hope enough Americans are listening.

(Update: Fixed bad link to IBD piece.)

Doctors Vs. Begley

The March 9, 2009 Newsweek published an inflammatory piece by Sharon Begley entitled, "Why Doctors Hate Science".

Her basic premise is that doctors refuse to follow science, which is why we need "comparative effectiveness" research to help guide them into appropriate practice patterns.

Others have warned that this is just a smokescreen for government control of medicine (and subsequent rationing). Of course doctors don't hate science -- that's the basis of our profession. But we do hate bureaucrats telling us how to practice. As I wrote in my DC Examiner piece:

The Obama administration would control costs by creating a new Federal Coordinating Council for Comparative Effectiveness Research to determine which treatments are deemed most effective and thus eligible to be paid for by government. These decisions would be based on statistical averages that cannot take into account specific facts of individual patients.

Yet good physicians must consider precisely these specifics when treating their patients. If you are suffering from abdominal pain due to gallstones, who should decide whether medication or surgery would be more effective for you?

The doctor who has felt your abdomen, listened to your heartbeat, and knows your drug allergies? Or the bureaucrat who got his job by telling the right joke to the right person at the right Washington cocktail party?

And now physician-blogger "Orac" has chimed in with his own debunking of Begley's article entitled, "'Why doctors hate science'? More like: Why does Sharon Begley hate doctors?"

I don't necessarily agree with all of Orac's points, but he is correct to note that comparative effectiveness research is going to be used to control costs.

My contention is that it's also going to be used to control physicians. If the government says, "A is cheaper than B, therefore we'll only pay for A", what's going to happen when the doctor believes that B is better for his patient?

Kesler: Top Ten Specious Premises for ObamaCare

Bruce Kesler lists the Top Ten Specious Premises for ObamaCare. Each of these is described in greater detail in the full post:

1. Comparing US Health Care To Other Developed Countries
2. US Health Care Spending Is More Than We Can Afford
3. Reform Overhaul Will Yield Major Savings
4. Increased Evidence-Based Medicine And Health Information Technology Will Significantly Improve Care and Reduce Costs
5. Present Administrative Costs And Insurer Profits Are Too High
6. US Consumer Dissatisfaction Requires Drastic Health Care Changes
7. Health Care Costs Are So High They Are A Major Cause Of Personal Bankruptcy
8. The Number Of Uninsured Is So Large That Drastic Health Care Changes Are Necessary
9. More Preventive Care Will Better Serve Consumers And Save Costs
10. Health Care Consumers Are Being Served By Drastic Health Care Changes

Read the whole thing.

This is another good economic analysis of the issues that will be front-page issues soon.

(Via Debby.)

Schwartz OpEd: "Beware single-payer health care"

The March 8, 2009 Colorado Daily has published Brian Schwartz's latest OpEd, "Beware single-payer health care". Here's the introduction:

Independent Ideas: Beware single-payer health care
Colorado should adopt free-market reform instead

By Brian T. Schwartz, Sunday, March 8, 2009

Politicians cannot guarantee health care, but by trying they can create an unaccountable and toxic insurance monopoly.

Beware of Colorado House Bill 1273, which will be heard by the House Business Affairs and Labor Committee on March 18.

The Rocky Mountain News described the Colorado Guaranteed Health Care Act as a "Canadian-style, single-payer" bill. A recent survey finds that nearly one in four state House members advocate single-payer health care...

Update: It also appeared in the 3/9/2009 Denver Daily News.

Ronald Reagan on Universal Health Care

This classic video has been making the rounds lately:



Via 911Doc.

(Note: Again, FIRM is non-partisan. Plus I don't necessarily endorse Reagan's policies on some important issues, but this video is pretty much on the mark.)

Knope Issues A Call To Arms

Dr. Steve Knope has just issued a call to arms to physicians to stand up against bureaucrats who would control how they practice.

(Note: Knope refers to himself as a "Libertarian". FIRM is non-partisan and does not endorse the Libertarian Party or any other party. Speaking purely for myself, I'm not a Libertarian either, but I am a supporter of individual rights, free markets, and limited government.)

Get Ready For the Unintended Consequences

President Obama plans to pay (in part) for his "universal health care" plan by raising taxes on "the wealthy", defined as those making over $250,000 per year.

However, this will also create massive unintended consequences in the health care sector as well as in the economy at large.

Here's how one physician will respond if Obama's plan becomes law:

My wife and I are both pediatricians. We own our own practice together. We have one PA and 7 other employees. We each gross about $200 K a year. We have 3 young children at home, 2 of whom are not in school. We also employ an in-home nanny. My wife has been torn for years about not being at home for these children, which are our biggest investment in the future. We operate parallel S corporations as PC's, with a 50/50 ownership of the LLC that is our business. We file taxes jointly. After crunching some numbers concerning the President's tax hike proposals, I have come to the following conclusions. If the President's plan is enacted, we will do the following:

1. My wife will become a stay at home mother.

2. At least 3 of my 7 employees will be released.

3. The practice will downsize to a smaller office space, i.e. less rent.

4. The number of patients cared for on a daily basis will drop by 40%.

5. My wife will come out of the forced ER call schedule for good.

6. I will gross $249,999.00 a year, exactly.

7. The net income of our personal home will decrease by less than $10 K a year from where it would have been if we changed nothing.

And another physician points out:

Seeing that almost half of doctors are women, and most are married and many have children, it should be obvious that many will reduce their hours worked. And with all the problems that Obama Care will create, there WILL be a shortage of doctor hours to care for patients. So EVERYONE will EQUALLY WAIT IN LONG LINES FOR CARE.

In Massachusetts' universal system, some patients are waiting up to a year for a routine physical exam.

Is this a taste of the future for the rest of the United States?

(Both quoted segments via Bill Spears.)

Cochrane on Health-Status Insurance

University of Chicago finance professor John H. Cochrane has published a terrific paper on how the free market can handle one of the problems that worries patients most about health insurance -- namely, "What happens if I get sick and become uninsurable?"

His paper, "Health-Status Insurance: How Markets Can Provide Health Security", discusses how this problem can be addressed through the free market, without government regulations. From the executive summary:

Free markets can solve this problem, and provide life-long, portable health security, while enhancing consumer choice and competition. "Heath-status insurance" is the key. If you are diagnosed with a long-term, expensive condition, a health-status insurance policy will give you the resources to pay higher medical insurance premiums. Health-status insurance covers the risk of premium reclassification, just as medical insurance covers the risk of medical expenses.

With health-status insurance, you can always obtain medical insurance, no matter how sick you get, with no change in out-of-pocket costs. With health-status insurance, medical insurers would be allowed to charge sick people more than healthy people, and to compete intensely for all customers. People would have complete freedom to change jobs, move, or change medical insurers. Rigorous competition would allow us to obtain better medical care at lower cost.

Basically, it's insurance on future insurability, similar to this option being offered by United Health Care.

Cochrane's paper also discusses why various proposed government "solutions" (such as laws requiring insurers to accept all applicants and charge them the same price for coverage) merely make things worse.

When there is both a demand for a service (protection against future uninsurability) and someone willing to supply that service, the marketplace will allow both parties to work out a mutually satisfactory arrangement.

(Via PatientPower.)

PJM OpEd: "Ayn Rand and the Tea Party Protests"

The online commentary/opinion website PajamasMedia.com has just published my latest OpEd entitled, "Ayn Rand and the Tea Party Protests".

Although the piece only briefly mentions "universal health care", it discusses basic principles that are definitely applicable to the health care debate:

My overall theme is that the Tea Party protesters must couple their outrage at the government bailouts with a positive vision of a properly limited government based on Ayn Rand's ideas.

Here is an excerpt:

Ayn Rand and the Tea Party Protests
March 2, 2009 - by Paul Hsieh

Over the past week, an extraordinary wave of "Tea Party" protests has erupted across America. Citizens around the country have expressed outrage at the government's mishandling of the financial crisis. And one of the most intriguing developments has been a resurgence in interest in Ayn Rand's classic novel Atlas Shrugged.

Denver's Tea Party protest opened with a reading from Atlas Shrugged. A sign at the New York City protest read, "Ayn Rand Was Right." One banner at the Atlanta Tea Party said, "Read Atlas Shrugged Before It Happens." The Ayn Rand Institute reports that sales of Atlas Shrugged have nearly tripled compared to last year due to Americans' concerns about the economic crisis.

So why has there been such a renewed interest in Ayn Rand?...

Read the rest here.

Basu: "Who Should Pay for Autism Treatment?"

The March 1, 2009 Undercurrent has an excellent discussion of Virginia's proposed autism coverage mandate by Rituparna Basu. Here's an excerpt:

Who Should Pay for Autism Treatment?

Medical treatment for autism is exceedingly expensive. Many parents of autistic children take out a second mortgage on their homes and some even file for bankruptcy because they are unable to pay the costs of autism treatment that insurance does not cover. Many believe that this situation is not fair and that the government should step in to alleviate the hardships these parents endure.

In Virginia, proponents of House Bill 83 are trying to pass a law, similar to one already passed in eight other states, that would require insurance companies to cover the medical costs of treating children with autism.

...Insurance companies' costs will obviously increase if they are forced to pay for the treatment of autistic children. To offset this additional cost, insurance companies will do one of two things: they will either offer fewer medical services to maintain the current premiums or increase the premiums for everyone. In the former case, vital medical services will no longer be covered, and patients who rely on these services will have to pay more for them. In the latter case, all insured individuals will be charged a higher premium, which means that some people who have health insurance will no longer be able to afford it and fewer employers will be able to offer health insurance to their employees.

...People work hard to earn money in order to attain those goods and services that make their lives enjoyable and worth living. Consider what this bill means to those who do not have autistic children: instead of spending their money on that which they value, now they will be forced to spend that money on other people's autistic kids. Many families who already find health insurance difficult to afford will now be forced to decide whether they want to spend more for their health insurance or instead use this money for other important expenses, such as investing it towards a college education for their children or paying their rent or mortgage. If it is unfair for parents of autistic children to have to pay their children's medical bills, how much more unfair is it for other parents to have to pay the same bills? Demanding that people hand over their hard-earned money without regard for the consequences such an action will inflict on their lives is unjust.

Read the whole thing here.

I especially like the fact that Ms. Basu integrates the economic and moral arguments against insurance mandates. IMHO, we badly need more such health policy analysis along these lines.