The bonus this Sunday night is a New York Times article posted on Barry Ritholtz's site this morning proposing an entirely new model for health care in the U.S., this time more rationally based on ideas from health economists rather than politicians. It is based on a survey of nearly 200 Ph.D.s and is well worth the read. Besides, it's not too terribly long. Hope everyone enjoyed the sunny and mild weekend. Winter is returning this week.
Succinct Summation of Week’s Events 2.21.20
Succinct Summations for the week ending February 21st, 2020:
Positives:
1. Spread of Coronavirus slows in China; a full blown pandemic seems less likely;
2. Index of leading indicators rose 0.8% w/o/w, above the expected increase of 0.3%
3. PPI-FD rose 0.5% m/o/m, above the expected increase of 0.1%.
4. Housing starts came in at 1.567M for January, above the expected 1.420M.
5. Same store sales rose 5.7% w/o/w, higher than the previous increase of 4.8%.
6. Empire State Mfg Survey came in 12.9 for February, above the expected 4.0.
Negatives:
1. Nevada debate increases odds of November battle between a Socialist Idiot and a Populist Idiot;
2. Home mortgage apps fell 3.0% w/o/w after last week’s 6.0% decrease.
3. Home refinance apps fell 8.0% w/o/w, below the previous increase of 5.0%.
4. Existing home sales came in at 5.46M for January, below the previous 5.53M.
5. E-Commerce retail sales rose 2.6% q/o/q, below the previous increase of 4.6%.
6. Jobless claims rose 4k w/o/w from 206k to 210k
THE NEW HEALTH CARE
The Health System We’d Have if Economists Ran Things
A
survey of nearly 200 Ph.D. health economists finds them taking a few
politically unpopular positions.
By Austin Frakt -- New
York Times
· Feb. 17, 2020
Imagine if American health policy were
established by the consensus of health economists. What would the system look
like? A survey of nearly 200 Ph.D. health economists working in the United
States provides some clues.
The survey, presented at
the American Society of Health Economists conference in Washington last summer,
was conducted by the health economists John Cawley of Cornell University,
Michael Morrisey of Texas A&M and Kosali Simon of Indiana University.
Obamacare
would stay
Whether the Affordable Care Act should
be repealed has been one of the highest-profile health policy issues ever since
its passage in 2010. Health economists are clear on this: They strongly reject
repeal, with 89 percent opposing the idea.
Health
economists also overwhelmingly (81 percent agreement) said the A.C.A.’s
individual mandate — in which people paid a fine if they chose not to be
insured — was essential for
its success. Without it, they said, the people who sign up would
disproportionately be sicker, causing insurance to become ever more expensive.
This phenomenon, also known as adverse selection, could collapse the market.
The need for an individual mandate is
consistent with both economic theory and research and
seemed sensible at the time of the survey in 2018. But its necessity is less
clear today. The tax cuts signed into
law at the end of 2017 reduced the penalty for not having coverage to zero last
year, yet marketplaces have by and large remained stable.
A popular feature of
the A.C.A. is that insurers cannot raise premiums for pre-existing conditions.
Health economists appear to agree with this, with 80 percent saying premiums
should not be higher for those with “genetic defects” (the poll’s wording).
But
nearly 70 percent of health economists are comfortable charging people more if
they engage in unhealthy behaviors that lead to higher health costs. The A.C.A.
allows marketplace plans to do just that based on smoking. The idea that people
should pay for the consequences of their personal choices — sin taxes, basically — has some
intuitive appeal. (Another sin tax would be to increase taxes on soft drinks,
an idea favored by 62 percent of health economists.)
But
disciplines other than economics view health behaviors differently. Addictions,
in particular, are often viewed as diseases, not informed choices. “Adult
addiction to nicotine usually stems from decisions made as a teen, which are
shaped as much or more by circumstances than rational thought,” said Michael
Stein, chair of the Health Law, Policy & Management Department at Boston
University School of Public Health. “Charging a higher premium for a smoker is
punishing someone with a disease, so why this disease?”
Medicare
and Medicaid changes are opposed
Various ideas to cut costs in Medicare
and Medicaid have been proposed in recent years. Health economists generally
oppose those changes.
The poll asked them if they favored
converting Medicare into a program based in part on
income. That would mean that full Medicare coverage would not be available to
everyone upon reaching 65, but only to those whose incomes are below some
cutoff. This idea is opposed by 71 percent of health economists.
A
related idea for Medicare is to convert it to a voucher-based program. This
would establish a set amount the government would pay for your coverage so that
you could shop for a health plan. Most health economists (61 percent) also
oppose this idea. This is in step with the broader public, according to most polls over
the years.
Raising the age of
Medicare eligibility is the least opposed of the polled ideas
for changing the program’s eligibility or benefits; around half reject it. But
only 28 percent favor it, with 22 percent not providing an opinion. The most recent polls of
Americans on this issue indicate that a slim majority reject it as well.
It
may surprise some that economists, who normally prefer market-based approaches
to government programs, are so supportive of Medicare’s current structure.
“Though they recognize the value of free markets, economists also believe that
market failures are harmful,” the poll’s conductors told me. “In some cases,
such as health insurance for the elderly, many economists think that society
does best when government provides services directly.”
Another
way to improve Medicare’s finances would be to raise taxes. A slim majority (52
percent) of health economists favor doing so.
While
Medicare’s coverage policy or financing hasn’t changed recently, Medicaid has
undergone considerable changes. One is work requirements. As of last
summer, 16 states have
proposed or put in work requirements for Medicaid eligibility. The change has
been the subject of lawsuits, and
was dealt a defeat before a
federal appeals court panel on Friday. Seventy-seven percent of health
economists do not believe work requirements should be part of Medicaid.
The Trump administration said recently
that it would permit block grants for
some of the funding the federal government sends to state Medicaid programs.
Medicaid block grants, long proposed by Republicans,
would provide states a fixed amount of money for Medicaid instead of an
open-ended funding program. About 70 percent of health economists oppose the
idea.
The
most unpopular way to reduce spending
Employer-sponsored health insurance is
not subject to taxation. That results in $250 billion in lost tax
revenue per year, and many economists say this leads to excessively generous
health insurance plans, contributing to wasteful health care spending. Health
economists, by and large, dislike this big tax break — only 14 percent of them
favor the current tax treatment of employer-sponsored health insurance. But
they’re just about the only group that feels that way. Reflecting public
sentiment, a provision in the Affordable Care Act that would have partly undone
this tax break — the so-called Cadillac tax — was repealed at the end of
last year.
Many
of today’s conversations about reducing health spending focus on prescription
drugs. A good deal of drug spending ends up as profits for the pharmaceutical
industry — drug company profit margins above 15 percent are not uncommon. One
justification for high profits is that they motivate additional investment,
spurring innovation.
A plurality of health economists seem
to question this argument. Forty-eight percent disagree with the statement that
drug company profits are necessary to incentivize the optimal level of research
and development. Twenty-eight percent agree with that statement, and 24 percent
gave no opinion.
Health economists overwhelmingly (93
percent of them) say that if employers were to spend less on health insurance,
wages and other benefits would increase. In other words, when employers appear
to pay for health benefits, at least some of that comes from workers’ wages.
The evidence is on the economists’ side, but it doesn’t necessarily mean that
wages would go up one dollar for every dollar premiums went down. It might for
some workers, but not for all.
If
health economists were in charge of the health system, not a lot would change,
with some notable exceptions. Medicaid would not have work requirements (which
would be unpopular among conservatives in some states), and taxes would go up
for Medicare and for employer-based health insurance (which would make it
unpopular among just about everybody).
Austin Frakt is director
of the Partnered Evidence-Based Policy Resource Center at the V.A. Boston
Healthcare System; associate professor with Boston University’s School of
Public Health; and a senior research scientist with the Harvard T.H. Chan
School of Public Health. He blogs at The
Incidental Economist, and you can follow him on Twitter
at @afrakt
A
version of this article appears in print on Feb. 19, 2020, Section B,
Page 5 of the New York edition with the headline: A Health
Plan Economists Approve Of. Order Reprints | Today’s Paper | Subscribe
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