Friday, June 26, 2009

Health Care Deception

The debate over a public health care option has seen a number of seductive but false claims arising from both sides of the political arena. I thought I’d take a few minutes to address what I think are some of the most wrongheaded and deceptive arguments in the discussion over national health care.

1) A public option is socialized medicine. This is patently false. Ezra Klein has pointed out that socialized medicine is "a system in which the government owns the means of providing medicine." The National Health Service in the United Kingdom an example of socialized medicine; a public option is not socialized medicine. There are no proposals on the table for socialized medicine or even single-payer. Even those who believe that a public option is simply a "backdoor" to single-payer are misusing the term socialized medicine to describe what should more accurately be called a government "monopsony." There are many reasonable criticisms of the public option, but those who cry that a public option constitutes socialized medicine are being wildly unfair and, in my view, deliberately anti-intellectual.

2) Medicare has much lower administrative costs than private insurance companies. A number of liberal economists, most notably Paul Krugman, have argued that because "Medicare has much lower administrative costs than private insurance companies . . . [t]here’s every reason to believe that a public option could achieve similar savings." The comparison is totally unfair. First, the Social Security Administration determines eligibility and collects premium payments for Medicare beneficiaries; CMS does not do this. Second, Medicare outsources much of its administrative management to private insurance companies. My grandmother, for example, used to have her Medicare Advantage benefits administered through a private fee for service plan. Third, as John Calfee stated in his recent WSJ article, "what 'insurance' firms actually sell to large employers – which account for the single largest segment of the entire health-care market – is usually administrative services, not actual insurance. (Large companies are not insured; they pay benefits directly.)" Medicare does not do this. In fact, it generally takes advantage of these private services. Fourth, Medicare is a federally subsidized entitlement program which is available to virtually everyone over the age of 65. Most seniors are automatically enrolled in Medicare. Entitlement programs do not typically compete for market share and, thus, do not have to incur the cost of advertising.

3) Other countries pay less for health care and have better health care outcomes. Greg Mankiw explained in a recent blog post that in order "[t]o make comparisons in health outcomes, you need to control for other variables. Without such controls, the simple correlations have little meaning." When you take cultural factors into account, the comparisons with other countries become much murkier. There are many reasons why Americans have poorer health outcomes, but those reasons have much more to do with cultural habits and lifestyle choices than how we pay for care. International comparisons do not take into account rates of obesity, homicide, vehicle collisions, teenage pregnancies, or any other cultural factors that could skew the data. This makes them deceptive, at best.

The question of whether a public option – or, for that matter, a single-payer system – could dramatically lower per capita health care costs while expanding coverage and keeping America’s health care innovation machine intact is extremely complex. Reasonable people can disagree over the proper structure of our health care system and the best way to achieve cost reduction while simultaneously increasing coverage.

Pundits on the right need to stop attacking every plan that involves government participation as "socialism," while offering limited, impractical, or downright silly alternatives. Those on the left must stop accusing conservatives of callous indifference to the plight of the uninsured, while putting forth deceptive arguments that rely on incomplete or misleading facts and comparisons.

The only way to construct a workable health care plan for all Americans is to have an honest discussion about our cultural priorities that begins with a fair accounting of the costs and benefits as they apply to our health care delivery system.

(Bonus reading: Robert Reich’s endorsement of the public option.)

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