Grading the Health Care Summit
By Arnold Kling
I sat through the first 2-1/2 hours, and here are my grades.
On costs, everyone came out four-square against waste, fraud, and abuse in Medicare. I don’t give points for that. If they were serious, they could pass a bill that focuses on that issue, and then go back and argue about everything else.
I gave some credit to both parties for mentioning that a good deal of medical care does not improve health. However, they were pretty evasive as to what they would do about it, and it would be easy for a casual viewer to come away confusing that issue with waste, fraud, and abuse. There are in fact many legitimate procedures that nonetheless have only small benefits relative to costs, and that is the big issue as far as cost containment is concerned.
The Democrats get a D+ because they supported a Medicare cost-cutting commission. That might lead to health care rationing, which would reduce costs. Not the way that I would prefer, but it would reduce costs. On the other hand, the Republicans did not make a pitch for having patients pay a higher share of their medical procedures, which is the approach that is consistent with personal responsibility rather than government rationing. [UPDATE: In the afternoon, a couple Republicans gave a spirited defense of catastrophic health insurance. When Obama asked one Republican whether he himself would take catastrophic insurance, he said yes. Obama fell back on demagoguery “yes, but you make a lot more money than the typical person.” So I should move the Republicans up, maybe even to a C-]
On insurance reform, I give the Democrats an F because of their top-down, paternalistic approach. President Obama pretty much flat-out said that catastrophic insurance is bad insurance and needs to be regulated out of existence. In contrast, he called comprehensive insurance “good insurance,” when it is not really insurance at all, but instead is a pre-paid service plan.
The Republicans get a D, because they showed scarcely any more trust in free markets than the Democrats. For example, one way they want to reform insurance is to get rid of lifetime caps. That is, an insurance company will say that no matter what happens to you, they will not pay more than, say, $5 million over the course of your life. This is an absurd, oxymoronic thing for an insurance company to do. You are asking me to insure the insurance company, instead of the other way around. Still, the government does not have to ban the practice. Instead, require prominent disclosure, and let people choose. If I want to insure my insurance company instead of the other way around, I should be free to do so.
Similarly, a lot of other bad things that insurance companies do could be handled with disclosure and competition, if legislators believed in such things. If there were a central database where people could report things like having their coverage rescinded or having legitimate claims denied, then consumers could steer away from companies that are inclined to shaft their customers.
Yes, I know that Democrats complain that insurance companies have monopoly power in some locations. But I think that if you look closely, you will find that government regulation is the cause of the lack of competition, not the solution.
On the long-term outlook, the Republicans get an F, because they are still being demagogic on Medicare cuts. The Democrats get an F-, because they want to use Medicare cuts to create a new entitlement. Also, President Obama repeated the talking point that the whole issue is excess health care cost growth, when in fact the excess cost growth really kicks in big time (under standard assumptions) after 2030, by which point the U.S. government will already be unable to keep its financial promises because of the doubling of the number of people over age 65 and the big debt we already have.
Although President Obama grew impatient and frustrated with the Republicans for the way they took up time and did not follow his agenda, I thought that on average the Republicans actually engaged him more seriously than did the Democrats. In particular, Pelosi and Reid did not seem to have gotten the memo that the tone was supposed to be constructive and businesslike. If Obama had not been there to help the Democratic team, they would have ended up making folks like Ryan and Cantor seem like intellectual giants.