Wednesday, February 17, 2016

The subtext of the health care debate is about externalizing costs

There is some interesting discussion and very meaningful debate on the subject of health care costs. Now that we're actually talking about it in the Democratic debates leading up to the primaries, the press and analysts are taking a hard look at the plans being offered by Clinton and Sanders. Where Sanders has a Medicare for All plan, Clinton proposes a more incremental approach.

During the most recent Democratic debates, there was a lot of discussion over details. Clinton made repeated demands for the details, yet a review of her own website reveals a plan scant on details, but clear on the principles she would follow if elected as president. Sanders has introduced legislation that describes what his vision of universal health care would be and that vision has already had much more criticism and vetting than the Clinton plan.

To be fair to both candidates, we're talking about broad proposals that will have details hammered out in committees with everyone jockeying for positions and votes. By most conventional measures, each member of Congress will want to be seen in the best light possible to their constituents and their campaign donors. So at this point, it is hard to say what the details are going to be in the end.

There are more than a few places we can go to look at the costs and how we're going to pay for it. US Uncut has a broad analysis here of Sanders' plan. That analysis is largely based on Politifact's analysis here. Politifact makes an interesting end note to their analysis:
"Keep in mind each dollar saved is a reduction in someone’s income, which is part of why this plan is politically untenable," said Don Taylor, a professor of health policy at Duke University. "But if you could wave your hand and do it, we could spend less."
Where Sanders says that health care should be a right to everyone, Clinton qualifies her statement to say that affordable health care is a basic human right. Clearly, Clinton is portraying herself as pragmatic by making a subtle acknowledgement that someone expects to be paid for their services and that the people who use that service should realize the costs of the care they receive. We get it, Hilary.

Politifact also offers a not so subtle hint as to the political reality of how hard it will be to wring inefficiency out of our healthcare system:
Joseph Antos, a health policy economist with the conservative American Enterprise Institute, said, "The kind of money he’s talking about goes way beyond any plausible guess about how much inefficiency can be ‘wrung out of the system’ — a phrase that makes one think this should be easy when it is very difficult to do."
Notice who is saying that there is only so much we can do to make health care more efficient, a health policy economist at a conservative think thank. Again, we're talking about the prospect of reducing someone else's income.

The problem with the current system is that it allows someone to externalize their costs upon someone else. America has one of the most privatized health care systems in the world and we're paying more for it. Yet, Politifact acknowledges what economists are saying consistently, that single payer systems are more efficient.

Who is most resistant to the changes proposed by Sanders now and Clinton back in 1993 when she proposed her health care for all plan then? Doctors, Big Pharma and device makers. Economist Dean Baker seems to have nailed that down pretty well in this article, and he notices a certain bias in the press in terms of where scrutiny is applied. For some reason, Clinton gets a pass where Sanders has to pony up details.

One of the details missed entirely in the debates is the amount of government protection that the health care industry receives from the government. They get patent protection for their drugs and devices. Then they get protection from international competition by limiting the number of people who can practice medicine. Really, if health care were about supply and demand, that should be part of the debate, but it's not. Probably because there are vested interests who would prefer to leave any discussion of all that protection out of televised debates.

By sticking with a private insurance system and providing generous "tax expenditures" for wealthy doctors, pharmaceuticals and device manufacturers, the health care industry can externalize their costs onto the rest of us. Have lawyers pay less tax, right?

To put it differently, the basis for the argument that people should have co-pays is so that they realize that there is a cost to the services they received so that the service is not over-utilized. That's fine, but not if the people who provide those products and services are setup to be immune from their own abuse of the system.

This is the problem that is addressed in universal health care. Universal health care means that everyone pays, regardless of tax bracket. That means there is no way to shift the costs onto someone else without economic penalty. This is clearly stated in the policies proposed by Sanders so far. The taxes are fairly flat, and there are no deductions for them, no further qualifications. Everyone pays.

Just in case anyone hasn't noticed, the entire inequality debate is about allowing one party to shift costs onto someone else without penalty. Now it is time to bring this simple point to the front of the debates, front and center.
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