Romney Outlines Health Care Plan Using the Consumer Model

[Torie]

Making the medical insurance industry more competitive is the central theme of the Pub vision on medical care (e.g. national markets and so forth). However, I really don't agree with the premise that it isn't competitive. Maybe at the margins it can be made more competitive, but that is not the reason costs are soaring. They are soaring due to medical technology, and mandates, including Obamacare, forcing insurance companies to undercharge olds, offer more coverage, and so forth. Some study just came out that insurance premiums have gone up 4% just due to the Obamacare mandates, much to the shock of the analyst who crunched the numbers for it when it was put together.

There is one constant to medical services and subsidies:  the actual costs over time will be far higher than the government tells you or projects that they will be - way more.

[So rightwing that I broke the Political Compass!]

Making the medical insurance industry more competitive is the central theme of the Pub vision on medical care (e.g. national markets and so forth). However, I really don't agree with the premise that it isn't competitive. Maybe at the margins it can be made more competitive, but that is not the reason costs are soaring. They are soaring due to medical technology, and mandates, including Obamacare, forcing insurance companies to undercharge olds, offer more coverage, and so forth. Some study just came out that insurance premiums have gone up 4% just due to the Obamacare mandates, much to the shock of the analyst who crunched the numbers for it when it was put together.

There is one constant to medical services and subsidies:  the actual costs over time will be far higher than the government tells you or projects that they will be - way more.

Those are all factors, but they hardly explain the vast variation in costs(from 16% of GDP in America, to ~12% in various single payer countries, to 8% in UK, to 4% in Singapore.). Quite frankly the explanation is price controls. See here: http://www.theatlantic.com/business/archive/2012/03/france-and-us-health-care-twins-separated-at-birth/254033/

or here: http://www.washingtonpost.com/business/high-health-care-costs-its-all-in-the-pricing/2012/02/28/gIQAtbhimR_story_2.html

As for Singapore's remarkable 4%... Singapore is distinguished by collective bargaining(on a national level) for all medical imports, hugely underpaid and overworked doctors, and a combination of public and highly regulated private hospitals focused on cutting all fat out of hospital expenditure while giving patients a cost incentive to reduce their consumption of healthcare.

Given Singapore's impressive lifespan it doesn't seem to actually have much adverse consequences on peoples health.

[WhyteRain]

At least he has a plan, and actually a pretty decent plan, at that.  Before he was decrying ObamaCare with no plan on his own to back it up.  The current system is not working, and Romney knows that, so I'm glad he put his plan out there on the table.

And his "plan" is absurd. Inefficient healthcare with an outrageous price tag.

How will the government make healthcare -- or indeed any human endeavor ever before seen in history -- more efficient and less expensive?  Examples please.

[Torie]

Yes, the US system sucks, and it gets rather little bang for the buck relatively speaking, for a host of reasons, including subsidizing medical research, particularly drug research, for the planet. And Medicare is a license to steal, and on and on. Those who say the US has the "best" medical system in the world are either disingenuous, or clueless clowns.

[So rightwing that I broke the Political Compass!]

How will the government make healthcare -- or indeed any human endeavor ever before seen in history -- more efficient and less expensive?  Examples please.

See my post above yours. Of particular note is the Singaporean example. It's certainly quite subjective whether you would consider it more "efficient", but it's a mathematical fact that it's less costly.

[anvi]

Romney is going "make" states responsible for insuring their uninsured populations "in the way they feel best"?  Okay then, I'm convinced. 

[bore]

Romney is going "make" states responsible for insuring their uninsured populations "in the way they feel best"?  Okay then, I'm convinced. 

It's tough times like these where we need the brave leadership Mitt Romney has to offer.

[WhyteRain]

How will the government make healthcare -- or indeed any human endeavor ever before seen in history -- more efficient and less expensive?  Examples please.

See my post above yours. Of particular note is the Singaporean example. It's certainly quite subjective whether you would consider it more "efficient", but it's a mathematical fact that it's less costly.

I think you're confusing "less costly" with "less pricey".  Let's see if I can give an example.

We'll take all of your figures as true:  The U.S. spends 16% of GNP on healthcare while other countries spend 12% or 8% or 4%.  These facts tell us exactly zero about the cost of healthcare in the various countries.  Why?  Because they assume demand is exactly the same in all countries -- which we know it is not.  It is like saying:

Bob's car needs $30 for a gasoline fill-up
Jack's car needs $45 for a gasoline fill-up
Mary's car needs $70 for a gasoline fill-up
Jill's car needs $105 for a gasoline fill-up...

...and then concluding that gasoline is more costly where Jill is.  What if Bob's car is a sub-compact, Jack's is a midsize, Mary's is an SUV, and Jill's is a full-size pick-up truck?  Then not only may the gasoline per unit cost the same but Jill's could actually be cheaper, right?

Demand affects the price of every kind of good and service, not excluding healthcare.  Americans spend more on healthcare because they demand more.

Btw, do you notice that when throwing out numbers like this, people usually don't ask, "Well, if the Singaporeans are spending only 4% on healthcare ... then where's the rest of their money going -- that 12% of GNP that they aren't spending on healthcare and that American are?  Food?  Shelter?  Entertainment?  Energy?"

[So rightwing that I broke the Political Compass!]

How will the government make healthcare -- or indeed any human endeavor ever before seen in history -- more efficient and less expensive?  Examples please.

See my post above yours. Of particular note is the Singaporean example. It's certainly quite subjective whether you would consider it more "efficient", but it's a mathematical fact that it's less costly.

I think you're confusing "less costly" with "less pricey".  Let's see if I can give an example.

We'll take all of your figures as true:  The U.S. spends 16% of GNP on healthcare while other countries spend 12% or 8% or 4%.  These facts tell us exactly zero about the cost of healthcare in the various countries.  Why?  Because they assume demand is exactly the same in all countries -- which we know it is not.  It is like saying:

Bob's car needs $30 for a gasoline fill-up
Jack's car needs $45 for a gasoline fill-up
Mary's car needs $70 for a gasoline fill-up
Jill's car needs $105 for a gasoline fill-up...

...and then concluding that gasoline is more costly where Jill is.  What if Bob's car is a sub-compact, Jack's is a midsize, Mary's is an SUV, and Jill's is a full-size pick-up truck?  Then not only may the gasoline per unit cost the same but Jill's could actually be cheaper, right?

Demand affects the price of every kind of good and service, not excluding healthcare.  Americans spend more on healthcare because they demand more.

All of this is of course entirely true. In fact reducing demand for healthcare has been a cornerstone of Singapore's state policy for reducing health expenditure- they've done that primarily through heavy co-payments for public funded healthcare(with private sector also mandated to make heavy use of them), thus giving consumers a strong incentive to restrain their consumption. Also by making medical treatment a thoroughly unpleasant experience(overworked and underpaid doctors, long waiting times, public hospitals that make hospitals here in Australia look downright pleasant).*

But I don't think you can reasonably say that lower demand explains all of it. Singapore has lower public health expenditures(3.3%) then the most comparable nation, Hong Kong(6%). Hong Kong happens to have a fairly strict cost control regime as well. All other developed countries have higher health expenditures then Hong Kong. So consider that... Singapore has half the expenditures of its closest competitor.

*You might of course say that this is too high a price to pay for reduced healthcare expenditure. I don't necessarily disagree, and I'm not specifically advocating the Singaporean system. Just observing the fact that the government can potentially reduce health expenditure through cost controls and other measures... in fact America is unique in that it doesn't do so.

[WhyteRain]

How will the government make healthcare -- or indeed any human endeavor ever before seen in history -- more efficient and less expensive?  Examples please.

See my post above yours. Of particular note is the Singaporean example. It's certainly quite subjective whether you would consider it more "efficient", but it's a mathematical fact that it's less costly.

I think you're confusing "less costly" with "less pricey".  Let's see if I can give an example.

We'll take all of your figures as true:  The U.S. spends 16% of GNP on healthcare while other countries spend 12% or 8% or 4%.  These facts tell us exactly zero about the cost of healthcare in the various countries.  Why?  Because they assume demand is exactly the same in all countries -- which we know it is not.  It is like saying:

Bob's car needs $30 for a gasoline fill-up
Jack's car needs $45 for a gasoline fill-up
Mary's car needs $70 for a gasoline fill-up
Jill's car needs $105 for a gasoline fill-up...

...and then concluding that gasoline is more costly where Jill is.  What if Bob's car is a sub-compact, Jack's is a midsize, Mary's is an SUV, and Jill's is a full-size pick-up truck?  Then not only may the gasoline per unit cost the same but Jill's could actually be cheaper, right?

Demand affects the price of every kind of good and service, not excluding healthcare.  Americans spend more on healthcare because they demand more.

All of this is of course entirely true. In fact reducing demand for healthcare has been a cornerstone of Singapore's state policy for reducing health expenditure- they've done that primarily through heavy co-payments for public funded healthcare(with private sector also mandated to make heavy use of them), thus giving consumers a strong incentive to restrain their consumption. Also by making medical treatment a thoroughly unpleasant experience(overworked and underpaid doctors, long waiting times, public hospitals that make hospitals here in Australia look downright pleasant).*

But I don't think you can reasonably say that lower demand explains all of it. Singapore has lower public health expenditures(3.3%) then the most comparable nation, Hong Kong(6%). Hong Kong happens to have a fairly strict cost control regime as well. All other developed countries have higher health expenditures then Hong Kong. So consider that... Singapore has half the expenditures of its closest competitor.

*You might of course say that this is too high a price to pay for reduced healthcare expenditure. I don't necessarily disagree, and I'm not specifically advocating the Singaporean system. Just observing the fact that the government can potentially reduce health expenditure through cost controls and other measures... in fact America is unique in that it doesn't do so.

Thanks for your thoughtful response.

Yes, those are ways government can reduce demand for healthcare -- though I think if American culture didn't have this belief that if we only ate and drank just the right things (which makes many of us fanatics for the most stringent environmental laws no matter the "cost-benefit") and if we only exercised just the right way and just the right amount and, and, and ... then maybe we wouldn't really have to die.  Believe it or not, in discussions of healthcare with Americans often the first thing you must overcome is their deep-seated resistance to the idea that no matter what we do, no matter how much we spend, everybody is going to die -- so that we are not talking legislating and spending for "solutions", only "delays".

In the meanwhile, in the U.S. experience, government intervention in the healthcare system -- which has been almost entirely been done by "cost-shifting from patients to taxpayers and insurance rate payers" -- has by concealing the real costs from patients and providers alike served only to increase demand, not decrease it.

[Frozen Sky Ever Why]

I'm uncomfortable with this. Quality will no doubt vary throughout the nation, a national plan is preferable.

[Brittain33]

Also, if you ok interstate sales of insurance, every insurer moves to the one state that makes itself "friendliest" to the industry and offers policies there. The other 49 states' regulation becomes a dead letter because no one's going to need to offer insurance to those standards when they can buy off the insurance commissioner in, say, South Dakota or Delaware and do what they want and sell across state lines.

[WhyteRain]

I'm uncomfortable with this. Quality will no doubt vary throughout the nation, a national plan is preferable.

Then you'll have low quality for all -- but you won't know it because you won't be able to compare state plans with each other.

You're a Democrat, right?

[Torie]

Also, if you ok interstate sales of insurance, every insurer moves to the one state that makes itself "friendliest" to the industry and offers policies there. The other 49 states' regulation becomes a dead letter because no one's going to need to offer insurance to those standards when they can buy off the insurance commissioner in, say, South Dakota or Delaware and do what they want and sell across state lines.

Yes, you made that point before, and I parried with the obvious answer that yes, you need national standards governing a national market. On that one, the states should just butt out. Did I ever tell you that this is one Pub, who has little or no interest in states rights?  I never have from day one, along with the doctrine of "subsidiariness," to wit, that body closest to the people governs best. I "knew" that was BS as a teenager, and have not changed my mind since.

[WhyteRain]

Also, if you ok interstate sales of insurance, every insurer moves to the one state that makes itself "friendliest" to the industry and offers policies there. The other 49 states' regulation becomes a dead letter because no one's going to need to offer insurance to those standards when they can buy off the insurance commissioner in, say, South Dakota or Delaware and do what they want and sell across state lines.

Yes, you made that point before, and I parried with the obvious answer that yes, you need national standards governing a national market. On that one, the states should just butt out. Did I ever tell you that this is one Pub, who has little or no interest in states rights?  I never have from day one, along with the doctrine of "subsidiariness," to wit, that body closest to the people governs best. I "knew" that was BS as a teenager, and have not changed my mind since.

No to national (lowest common denominator) standards!

Of all the "conservative" ideas for reforming health care, the one about "buying insurance across state lines" -- while sounding good -- is the worst precisely because it will make inevitable another centralized bureaucracy and one-size-fits-all "national standards".

[ingemann]

Demand affects the price of every kind of good and service, not excluding healthcare.  Americans spend more on healthcare because they demand more.

Do you have some hard data for this, is it just a feeling you got? Because while this are at least a original talking point, until we get a something more, it's just a talking point.

[Brittain33]

Also, if you ok interstate sales of insurance, every insurer moves to the one state that makes itself "friendliest" to the industry and offers policies there. The other 49 states' regulation becomes a dead letter because no one's going to need to offer insurance to those standards when they can buy off the insurance commissioner in, say, South Dakota or Delaware and do what they want and sell across state lines.

Yes, you made that point before, and I parried with the obvious answer that yes, you need national standards governing a national market. On that one, the states should just butt out. Did I ever tell you that this is one Pub, who has little or no interest in states rights?  I never have from day one, along with the doctrine of "subsidiariness," to wit, that body closest to the people governs best. I "knew" that was BS as a teenager, and have not changed my mind since.

Please don't think of this as a challenge to you--I know we've discussed this already. It was a comment on Romney's plan that I hadn't seen anyone else make on this thread.

[anvi]

WhyteRain,

Demand certainly has an effect on prices.  But in different health care systems, lots of other things do too.  Annual government bargaining with providers and pharma sets caps on the prices of treatments and medicines.  Companies that produce medical equipment use less expensive parts and divisions of those companies that are bigger profit-makers help support the manufacture of that equipment.  Different frameworks of non-profit insurance providers ration out certain procedures from coverage, but the systems still give people the option of purchasing supplemental coverage that will pay for additional care.  Much more stringent tort law in is place that caps lawsuit compensation, and education is heavily subsidized by the state, leading to the results that physicians don't have to spend nearly as much on malpractice insurance and leave medical school with far less debt than physicians do in our system.  In the midst of all these steps, sometimes demand for medical treatments of various kinds is more substantial than it is here, and yet costs are considerably lower than they are in the U.S.  MRIs are in constant demand by Japanese citizens, for instance, but the procedures costs 10% of what they do in the U.S.

Your response to all this will surely be that these measures result in lower quality of care.  In some cases, that's true, but hardly as much as you'd think, or even, I would argue, in the majority of cases in places I've lived.  I've actually been treated in clinics and hospitals in Germany, Japan and Taiwan, and have had American friends who have undergone surgical procedures and emergency treatment in these places too, and they had no complaints about the quality of the care they received (well, one guy hated Japanese hospital food, but I don't hear many people here raving about hospital food either).  The rap on Canada's long wait times and sometimes underperformance in quality is, as far as I've seen from having stayed there over long stretches in the past two and a half years, true enough.  But it would be far less the case if they had a Bismarck system like Germany and Japan do.

Governments, in my experience, can and do take measures to decrease costs and enhance quality for necessary treatments, all the while holding down total national healthcare expenditures below 10% of GDP.  The U.S. will never take such measures, not because its care, and certainly not its insurance coverage, is better than everyone else's, but because we have a badly fragmented system, because a lot of things the government does here with regard to the health care market is quite counterproductive, because there is lots of money in it for vested parties, and because the American people are spoiled rotten, don't take better care of themselves and are often wildly unrealistic about end-of-life issues.  We're eating a very bad bowl of health care soup in the U.S.

So far as I can tell, Romney's "plan" as stated so far won't do anything to effectively expand coverage and won't do anything about health care cost inflation.  The only thing he is promising to do is throw the current legislation in the trash bin.  For a guy who did a good job on his side of the desk in formulating the Massachusetts plan, and for a country where ever-increasing health care costs are the biggest elephant in the room, that's fairly disappointing.     

[Frodo]

For those who are looking for more detail, it is probably a good bet that Romney is taking his cues from the likes of the CATO Institute and the Heritage Foundation, so here is a plan written up in 2010 that might provide some hints as to what Romney's health care reform plan might look like once it is fully fleshed out.  

And if you look at his website, it is a fairly close parallel.