Thursday, December 3, 2009

The MIT View on Health Care: East Campus

In the NEJM article by Gruber, from the MIT faculty, not engineering so don't worry folks, he makes the current administration's case for the bills making their way around the District. I thought it worth a few words on the good Professor's thoughts. Thank God I am on the main part of campus because it must be the water over on the east side, never could figure that out. But to the words:

" One common refrain of opponents of reform is that it represents a government takeover of health care. But reformers made the key decision at the start of this process to eschew a government- driven redesign of our health care system in favor of building on the private insurance system that works for most Americans. The primary role of the government in this reform is as a financier of the tax credits that individuals will use to purchase health insurance from private companies through state-organized exchanges."

As we have argued before and as we have seen recently, the camel's nose in the tent, called Government Mandate CCE efforts is the process by which this control will evolve. No mammograms, no treatment for prostate cancer if you are over 70, and the list goes on. I have demonstrated how this works in the Brit's National Health Service. It is the backdoor approach to rationing and Government control. You do not have to own the store if you supply the goods. Gruber just seems not to see this, yet politically one suspects that he would not.

Gruber continues:

" A second criticism is that the bills are budget busters. This is simply incorrect. Both bills are completely paid for — indeed, both would reduce the deficit by more than $100 billion over the coming decade. And the CBO estimates that both would reduce the deficit even more in the long run, particularly the Senate bill with its strong cost-containment measures. Some argue that the bills won’t reduce the deficit because Congress won’t follow through on its cost-reduction plans, as it has failed to do with the sustainable-growth-rate program for Medicare’s physician payments. But this one example has been ridiculously overused, given the sizable Medicare reductions that Congress has made in the past; the proposed reduction in Medicare spending is less than half of the percentage reduction enacted in 1997, for example."

First, there is the reality that Congress always has overspent. It has never demonstrated an ability to control giving itself more goodies. One can use Popperian Falsifiability as a tool to validate this theory, it has never happened. As for Medicare, this is a gimmick, in that one must first remember that almost all Medicare recipients get back less than they pay, Congress has absconded with the money, just look at the non-public portion of the more than $12 trillion debt. Gruber just seems to be oblivious to the facts.

Second, the Medicare reductions were ways to keep the Medicare Fund flowing while those in Congress emptied the till every year. Congress will do whatever it can to keep the till filled to support their pork. And are they spending it now!

Gruber then continues:

"The bills are also said to impose unaffordable mandates on individuals. Without the individual mandate, fundamental insurance market reform is impossible and we cannot cover the majority of the uninsured. But an individual mandate without financial assistance for low-income families is unethical."

Gruber does have a point. It must be like auto insurance. There are, and I hate to use the term, externalities here. If one gets ill with no insurance all pay. There is an equity argument here but there still is a Constitutional issue to be determined.

He then continues:

" Some argue that the bills would harm the privately insured. But although a primary focus of reform has been on helping the uninsured, the bills also deliver enormous benefits to the privately insured. Americans who previously purchased insurance in an overpriced, unpredictable nongroup insurance market will have the ease and certainty of buying through an organized marketplace where insurance loads are lower, prices do not vary according to health status, and preexisting conditions cannot be excluded from coverage."

The problems with the current system are simple:

1. Company plans are not taxed and individual plans are.

2. Insurance companies are not covered by Antitrust laws, like baseball, fishing co-ops and farm co-ops. That should be stopped.

3. Insurance is controlled and regulated at state levels and it should be national, allowing "interstate" competition.

4. Tort reform is essential.

5. The insurance should be with the person and not the job, like all other insurance policies. This is another Democrat artifact of market distortion.

I hate to lecture an economist but it is the absurd market structure not the lack of a Government plan which is the problem.

Finally he states:

"Some critics also argue, however, that the bills don’t do enough to control costs. This argument ignores fundamental reforms in the Senate bill in particular, which includes a four pronged attack on health care costs.

First, it imposes a tax on high-cost insurance plans that will put pressure on insurers and employers to keep the cost of insurance down, while delivering $234 billion in wage income to workers over the next decade.

Second, it includes funds and a structure for comparative-effectiveness research that will provide the information necessary to guide our health care system toward care that works and away from care that doesn’t.

Third, it establishes a Medicare advisory board with the power to set rates (subject to an up-or-down vote by Congress) if costs grow too rapidly. Finally, it sets up an innovation center within the Centers for Medicare and Medicaid Services and launches pilot projects to explore alternative reimbursement and organizational structures that could transform the delivery of care."

First, the tax on the high cost plans will never see the light of day. The Unions will kill this. It is at best specious to think otherwise. Now he uses the CCE and Medicare cuts as the core.

Second, again as an economist of sorts where is his demand reduction argument. We have repeatedly shown as now has Cutler et al in NEJM, that obesity and smoking, the preventable costs, can and should be focused upon. Gruber seem oblivious to that element.

Third, CCE as we have argued above, it is just wrong. No one in their right mind would think that the Government should decide on what procedures a physician should use on a patient. Medicine, like any science, is just that, a testing of methods, rejection and acceptance and change. It is not like the climate academics who seem to be outright liars. Physicians see patients die if they are in error. It happens quickly. Economists suffer no such fate. They just say the stimulus was not big enough! CCE controlled by the Government as in the Bills before us will kill medicine plain and simple. Gruber just is clueless on this fact.

Fourth, cramming down Medicare costs will do to Medicare what it has done to Medicaid. Almost any and all competent physicians will not take Medicaid patients. There is no payment available to accept them. Even if they can charge something reimbursement takes years! One can see this happening now. Fewer physician will or can take a Medicare patient. With the cram down on Medicare, that will place the Medicare recipients, people who have PAID my dear Professor, more than they will ever get back, my dear Professor, and the result will be a drastic diminution of Medicare services. It is economics 101!

Thus Gruber and his polemic fall upon a pile of, in my opinion, falsities, half truths, which if enacted will as I have said before destroy medicine as we know it.