JONATHAN COHN JUNE 7, 2011
-
Read Later
READ LATERAvailable only to subscribers. SUBSCRIBE TODAY
-
Listen
ARTICLE AUDIO
- Font Size
Bureaucrats versus consumers. Government versus the market. If you’ve followed the debate over health care, then you’ve probably heard conservatives use these terms to describe how the Republican vision for Medicare compares to the Democrats’.
David Brooks is the latest. In his Tuesday New York Times column, he explains that “Democrats generally seek to concentrate decision-making and cost-control power in the hands of centralized experts” while “Republicans at their best are skeptical about top-down decision-making.” Brooks then goes on to suggest Democrats probably have it wrong and Republicans probably have it right.
As usual, Brooks makes his point with more grace and humility than most conservatives do. But he gets quite a few things wrong. And the most important, I think, is that he grossly mischaracterizes the two policy options actually on the table.
Brooks writes as if the key distinction between Democratic and Republican plans for Medicare is the way they would manage the program, with Democrats entrusting experts to make key decisions about where to spend money and Republicans entrusting consumers. But that’s not the most salient difference between the two approaches. The most salient difference is that Democrats would preserve Medicare's fundamental guarantee of health benefits at affordable prices. Republicans would not.
Remember, Republicans would explicitly break this guarantee, by replacing it with a voucher -- or, if you prefer, the equivalent of a voucher -- that would rise far more slowly than any remotely reasonable projection of future health care expenses. The Congressional Budget Office concluded that, by 2030, the typical senior would be responsible for two-thirds of his or her medical costs. As Princeton economist Uwe Reinhardt wrote in his Times some week ago, the Republican plan would likely "shift an ever-larger share of the total health spending on Medicare beneficiaries from the books of government to the household budgets of these beneficiaries."
Perhaps it goes without saying, but this would almost surely put decent health insurance beyond the reach of many seniors. If you want to game this out, the most likely outcome of the Republican proposal is that private insurers would start offering radically scaled back benefit plans in order to cater to the market of moderately low-income seniors. They'd end up with the equivalent of junk insurance, or something close to it, and facing huge medical bills that forced them either to skip care or undergo severe financial hardship. This is basically the situation that existed in the 1950s and 1960s, before Medicare came along.
Brooks’ characterization (and, again, he’s hardly the only conservative who has invoked it) would be accurate if the Republicans had proposed something different. If Republicans promised that the voucher would continue to put decent health benefits within reach of every senior, then the choice Brooks conjures up would really exist. But, of course, if the Republicans did that they’d have to put a whole lot more money into the program. And its structure would look a lot less like the Ryan plan and a lot more like the Affordable Care Act's coverage expansion for non-elderly Americans -- which, by the way, relies on markets very much in the way Brooks idealizes.
To be clear, the philosophical difference Brooks portrays is both real and important. Democrats trust government more and markets less than Republicans do. I happen to think that, contrary to Brooks’ assertion, evidence from here (the Veterans Administration) and abroad (France, Holland, Taiwan…) backs that up. Ezra Klein has more on that in his column today. But this debate just isn't the biggest story here. The biggest story is that one party, the Democrats, wants to preserve Medicare while the other, the Republicans, wants to end it.
18 comments
"The biggest story is that one party, the Democrats, wants to preserve Medicare while the other, the Republicans, wants to end it." This is so plainly obvious to anyone who looks at Ryan's "bold plan." But conservatives continue to yammer that they're the ones trying to save Medicare, and their supporters in the media play the same tune. But why does the New York Times give any editorial space to this lie? Does anyone know why the Times has this jackass Brooks on its staff?
- DAVIDDREIER@EARTHLINK.NET-old
June 7, 2011 at 9:29am
I think it's because the Times love Brook's brand of pop sociology and veneer of intellectual sophistication. Plus they need a conservative and William Kristol was too much of a lazy hack and Douthat's too green.
- Pnaut
June 7, 2011 at 9:59am
It's a Mars-Venus thing. For Brooks, deferring to insurance companies so they may offer cut-rate insurance for seniors who cannot afford comprehensive coverage is a net plus of the Ryan plan. That some seniors may not be able to afford comprehensive insurance coverage and have to endure old age without adequate health care or in poverty as the result of paying for it with their own funds is, well, tough cookies. I don't fault Brooks for being from Mars; lots of folks are from Mars, including Ryan and the other Randians. But as I've pointed out many times, we've already experienced wide-spread poverty among seniors and decided it wasn't tolerable, adopting both social security and Medicare. It confounds Brooks and those who think like he does, but in turns out most Americans are from Venus. So even if we suppose that those from Mars can convince everybody else that deferring to insurance companies is the "responsible" thing to do (with the deficit and all), what's going to happen when we run into the reality of the consequences of their plan, namely wide-spread poverty among seniors. The majority from Venus would do what they did before and re-enact Medicare. In other words, the Ryan plan is merely a device for tax deferral, so the current generation can enjoy the tax cuts conferred by GWB. It's folly. Thankfully there are many more Americans from Venus than from Mars.
- rayward
June 7, 2011 at 10:14am
Well said, Mr. Cohn. But I think the emphasis on how the voucher's value rises too slowly is misguided. Yes, the voucher rises too slowly, but by saying that, you're implicitly endorsing the voucher mechanism itself--i.e., funneling taxpayer dollars through private corporations (insurance companies) instead of paying health care providers directly. If Ryan alters his plan so that the value of vouchers rises more quickly, then he's got you in a bind. Instead, we should attack this notion that we should be subsidizing insurance company CEOs. On another level, I think you have also implicitly endorsed Brooks' (and conservatives') ideological view. It's not true Democrats truly want centralized decision-making (which is what Brooks says, not what you read as "trust government more"). Democrats want an efficient and effective government that works directly for the taxpayers, not a wasteful, complex system that provides welfare for unelected corporate managers.
- polcereal
June 7, 2011 at 11:06am
Brooks is full of shit. His gift is putting a nicer face on Republican lies. If the Republicans were serious in their belief that the market can provide health insurance services, there is a simple way to make a voucher plan work -- a public option in which the value of the voucher buys public insurance. People would have the right to apply their voucher to the public option or any other plan that meets regulatory minimums (but non-refundable so that they cannot skimp on their health insurance and end up uninsured at the end of the day). Anyone who does not use the voucher for private insurance would be automatically enrolled in the public plan. This can to a large extent be handled through the tax system without need of actual vouchers. People who don't file a tax return could file a special return in order to enroll in a private plan with the government paying the premium directly to the insurance company. If the Republicans are correct about the benefits of markets, then private plans will be able to offer superior benefits to the public plan at the same price. The public option will then cover only the few (ha, ha) who do not find superior coverage in the private market. The government would design treatment protocols that would be the coverage provided by the public plan. All private plans would have to provide at least that coverage, without discrimination to all comers, but would be free to provide superior benefits. This would be an extraordinary first step toward actually solving our health care crisis, with ample opportunity for markets to achieve what Brooks claims the Republicans believe they can achieve. I don't think they believe it for an instant an simply want another opportunity to loot the Treasury, but this would put it to the test. I also do not believe that fixing the insurance side will solve the cost problem. The insurance is what is fueling the cost problem. But if we do this, and discover that public and private insurance is no more effective (and based on the history of medicare less effective) at controlling costs, perhaps we then we will realize we have no choice but to move to some version of single-payer in which both the utilization and the reimbursement rate are determined by the government, regardless of who writes the check. This would provide an effective demand side to the health care market, that which is essential for competition to control price and quality and the absence of which is the reason why we cannot control costs, privately or publicly. For the libertarians who remain convinced that privately financed care is better, they should be free to buy whatever care they want, just not to apply the public payment toward that care. This is exactly like the private school market. People can send their kids to private school and write the check, but they still have to pay school taxes to support the public schools.
- roidubouloi
June 7, 2011 at 1:53pm
Thanks Roi.
- Sophia
June 7, 2011 at 6:21pm
Well said, roi. On a side note, I believe that many rank and file Republicans who instinctively oppose intrusions of government bureaucracy into their lives and revere the private sector have no idea how much, relative to other nations, PRIVATE bureaucracy invades American lives. In 2006 I and my family moved back to the States for a year after five years in Australia. The amount of paperwork, background checks, references, deposits and sundry other annoyances required to do just about anything--medical care very much included--was far and away above anything you'd encounter in Oz. The irony, of course, was that none of this bs emanated from the dreaded guv'mint. A quotation from the novel Mating by Norman Rush: "What is becoming sovereign in the world is not the people but the limited liability corporation, that particular invention: that's what's concentrating sovereign power to rape the world and overenrich the top minions who run these entities. The perfect medium for the corporation is an electoral democracy where nobody--in the mature systems--bothers to vote, parties disaggregate, labor unions decompose, corporations control who gets into parliament, accountability disappears."
- AaronW
June 7, 2011 at 6:22pm
The Dutch have universal private voucher system for all their health care needs. It shows that a regulated market can help bring down costs and improve quality in health care. It shows that you don't need a single payer or a public option.
- npunwani
June 7, 2011 at 7:32pm
Brooks frames the issue as one of government vs private cost-control, as if there are many examples where private cost control works. Does he have even a single country to hold up as an example where there is no government role in setting the level of required insurance coverage, payment amounts, etc.? I've been following Jonathan's blog for years, and don't think there is such an example. And the example of Medicare Part D working well to cut costs cannot translate into an across-the-board method, because prescription drugs are probably the only thing where an educated consumer can actually choose to save money by choosing the generic over the brand. (I've done this many times, being in a plan with high deductibles, so I have the incentive to ask for the generics.) But there is no equivalent in the provision of medical care -- what is the "generic" version of a doctor from Sloan Kettering to treat my cancer? How do I comparison shop between NYU and Bellvue? The example of prescription drugs is sui generis; Brooks is smart enough to understand this, I assume, unless he can suggest a way for me to choose a "generic" doctor who is going to give me medically equivalent treatment -- as assured by the FDA.
- shellski
June 7, 2011 at 8:25pm
npunwani. Are you sure about the Dutch health care system? The Dutch system looks like the ACA only with more regulation of insurance companies (no risk assessments are allowed in the Dutch system as opposed to ACA which only has no denials of coverage) see here: http://en.wikipedia.org/wiki/Healthcare_in_the_Netherlands
- Nusholtz
June 7, 2011 at 10:15pm
npunwani, the Dutch system is simply a variation on what I described above. While it has public and private elements, the benefits package (care covered) by the private insurance is mandated, coverage cannot be denied, and premiums cannot be adjusted for risk. Insurance is also mandatory and the insurers are not-for-profit. Whether the government collects the taxes and provides the insurance or mandates that you pay for the insurance, subsidizes it for those with low income, and then controls the coverage so that all must be served is a difference of form, not substance. The trivial difference is that the premium goes from your pocket to the insurer rather than passing through the hands of the government first. The importance of single-payer is not who writes the check, but who controls the coverage and the levels of premiums and payments. This is what might be called "franchised single payer." The interesting question if you look at the wikipedia article linked by nusholtz is why the Dutch health care costs are so much lower than ours, under 10% of GDP for them and more than 17% of GDP for us. Also note, the Dutch insurance reform dates back to 2006, but their costs were already much lower than ours in 2005 and have barely budged with the insurance reform. This suggests that there are things other than health insurance that are different about the Dutch market. If may be the norms of behavior for medical providers or it may be that medical providers are required to accept the insurance payment so that prices as well as consumption are in fact government controlled. It would be good to know the answer.
- roidubouloi
June 7, 2011 at 10:36pm
Quick search and this link: www.ehma.org/.../WP_6_HealthBASKETSP21_CT_2004_501588_D19_Netherlands.pdf make it clear that a large portion of costs in the Netherlands, particularly including acute care, are in fact tightly controlled based on an extensive standard cost system. It would appear that the Dutch have all of the key elements of a single-payer system even if they incorporate some privately owned elements for delivery of insurance and care. The "market" is not controlling healthcare costs in the Netherlands a la the ignoramus David Brooks. The government is. Do the Republicans want to adopt the Dutch system? Not likely.
- roidubouloi
June 7, 2011 at 10:49pm
I've spent a lot of time in the Netherlands and written about its system pretty extensively. Here's one article from 2009: http://www.tnr.com/article/health-care/going-dutch Bascially, the framework is like the ACA -- competing private insurers, mandate with subsidies, etc. But the Dutch have far more aggressive regulation of prices and resources, in ways that more closely resemble single-payer systems. In effect they've turned insurers into public utilities. Insurers, in turn, use health benefits as a loss-leader to sell other types of coverage. Now, they are making a concerted effort to become more "market oriented," particularly when it comes to the setting of prices and role of consumer in choosing among different health plans. That transformation is underway and, really, it's not yet clear how it will turn out. But even after this transition the system will have stronger regulation than we have here and will still have the ironclad commitment to social insurance principles that characterize European universal health care systems. Of course, some of that reflects cultural attitudes of both the Dutch people and their leaders, in the private sector as well as the government.
- Jonathan Cohn
June 8, 2011 at 8:34am
Thank you again Mr. Cohn for addressing our concerns.
- Nusholtz
June 8, 2011 at 10:51am
Yes, thank you indeed. It is one thing to spend a minute searching the web for an answer to such a question. Quite another to have the benefit of information from who someone who has done the homework and understands the subject.
- roidubouloi
June 8, 2011 at 12:46pm
This is exactly what I've said. The Dutch model is a testament that prudent regulation should supersede the principle of single payer or public option. I feel like progressives spent so much time, energy, and resources on getting a public option (and failing), when it would have been wiser to concentrate on getting the ACA to best approximate the Dutch approach (they already resemble each other fairly well). The Dutch system embodies a lot of the premium support ideas developed by Alain Einthoven. Mr Cohen, can you elaborate how the Dutch gov't regulates and fixes prices in health care. Is it an all-payer system or they simply setting premiums or what?
- npunwani
June 8, 2011 at 5:21pm
@ roidubouloi You're wrong; the Dutch health system allows insurers to make a profit even on basic coverage. They are very strictly regulated however. http://economix.blogs.nytimes.com/2009/04/17/health-reform-without-a-public-plan-the-german-model/
- npunwani
June 8, 2011 at 5:30pm
You're missing the point, npunwani. The importance of single payer is the regulation of price, consumption, and access. Who writes the check, and whether it is literally one payer or a franchise system that allows many payers to adhere to the rules and write the checks, is not that important. Is MacDonald's one company or 100,000 companies? Both. Does it matter in terms of the control of the product? No. The article I linked above from the Netherlands says that most of the insurers are not-for-profit. Even if they are for profit, once they adhere to the rules about premiums and payments, about all they can do to make a profit is be good at administration. That's great, but it has absolutely not the slightest relationship to what people here refer to as a private, market-based solution. The private market has been failing us for decades. Contrary to the right-wing lies, its costs are much more out of control than those of publicly funded health care. If the market could solve this problem, it would have been solved long ago. It can't. That's why we are in a mess. Insisting in the face of decades of evidence to the contrary that the private market can solve the problem is . . . well, what would you call it?
- roidubouloi
June 8, 2011 at 5:53pm