I’m inclined to give John Garamendi, California’s insurance
commissioner, a smidgen of credit. His new report, which advocates universal health care,
will likely sew up the left-wing base of the Democratic Party,
ensuring him a victory in his race for Lieutenant Governor. That
the report has holes big enough to fly a C-131 transport through
matters not.
The Garamendi report, titled “Priced Out: Health Care In
California,” amplifies the increasing tendency of proponents of
universal (read “government-run”) care to talk out of both sides of
their mouths. For example, the report complains that “Insurance
coverage is shrinking while premiums are increasing,” but then
advocates measures that would further increase premiums such as
making California’s minimum benefit regulation “plus prescription
drugs as the common benefit floor for all HMOs and health insurance
policies.” It laments that “the number of uninsured in California
continues to rise” but then bashes insurance products like Blue
Cross’s TONIK, which are “exclusively aimed at saving money,”
because they “can lead to risk selection and subsequent
underfunding of higher risks.” That such products might help fund
higher risk by encouraging the uninsured — i.e., people who are
not part of insurance pools — to purchase insurance never seems to
occur to the report’s authors.
Next the report states, “Health indicators are the true measure
of the success of California’s health care system.” Naturally, the
health indicators examined are all getting worse: obesity,
diabetes, asthma and infant mortality. None of these measures tells
us anything about a health care system, though. I’ve explained
previously (go here and
here)
why infant mortality rates are not related to health care; with
only a bit of common sense one might realize that about the other
three as well. Insurance companies, doctors, hospitals, and other
parts of the health care system do not determine the extent to
which illnesses like obesity, diabetes, and asthma plague our
society. Rather, these maladies result from factors that the health
care system has no control over, such as diet, sedentary
lifestyles, and pollution.
Like all advocates of government-run health insurance, Garamendi
promotes distortions about consumer-driven health care such as
Health Savings Accounts (HSAs). Of course, the “tax advantages make
HSAs attractive to high income people.” The report ignores evidence
that they are even more attractive to low income people. A recent
report for eHealthInsurance shows that — in the
first half of 2005 — the proportion of total HSA purchasers making
$15,000 or less increased from 4.4% to 5.8%, while those making
between $15,000 and $35,000 rose from 15.4% to 16.3%.
Garamendi also indulges the usual nonsense that HSAs create
“more uninsured” because “Healthier, younger employees will have
new incentives to opt for less expensive plans, leaving sicker and
older employees in more traditional and more comprehensive plans.”
Sorry, but HSAs decrease the number of uninsured. According to the
eHealthInsurance report, the proportion of HSA purchasers who had
been uninsured for the last six months was about one-third.
The report also claims that the “financial disincentives [of
consumer-directed plans] are likely to cause many to forego
necessary treatment at early stages when early detection and
intervention would allow less expensive and more effective
treatments.” That the report is vague about those “financial
disincentives” is probably due to the fact that there are none. A
recent study of HSAs by McKinsey & Company found
that those consumers with HSAs “were as or more likely to receive
preventive care, including annual check-ups, basic blood work,
mammograms, and prostate exams, than those with traditional
insurance,” and were 20% more likely to participate in a company’s
wellness programs. The reasons they gave for this behavior were “it
is important for my long-term health” and “if I catch an issue
early I will save money in the long run.”
Finally, Garamendi’s report presents bureaucratized solutions to
the so-called health care crisis. One such solution is a proposal
to improve the quality of health care. “The first hurdle to
improving health care quality is achieving a consensus on how to
measure it.” Instead of a “hurdle” one might call it a “fool’s
errand” since quality has a highly subjective component. Because no
two humans are alike, different treatments will work (or not work)
for different patients. Accurately measuring quality would mean
gauging all the different preferences and concerns of hundreds of
millions of individuals.
Nevertheless, the report proclaims, “Government entities,
functioning as payors and regulators, are uniquely positioned to
hasten quality improvements.” Make that a really big
fool’s errand! Gilbert Gaul of the Washington Post
reported two weeks ago that Medicare pays more for poor
quality:
Under Medicare’s rules, each time a patient comes back
for another treatment, a hospital qualifies for an additional
payment… hospitals and doctors who order unnecessary tests,
provide poor care or even injure patients often receive higher
payments than those who provide efficient, high
quality.
Meanwhile, the New York Times has reported on the
massive fraud in New York State’s Medicaid program. The article
notes that despite “the enormous sums at stake, Albany has never
formally studied how much of the huge government investment in
Medicaid is lost to criminal activity and abuse.” Perhaps we should
think twice before giving governments the responsibility of
“hastening quality improvements” in health care.
Fortunately, consumer-directed health care is gathering steam.
Blue Cross recently announced that enrollment in its
consumer-directed plans topped one million. The number of people
enrolled in HSAs will continue to expand as in 2006 many large employers will offer
HSA-plans for the first time. Given the terrible ideas advanced by
the likes of Garamendi, it can’t happen too soon.
