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.