18 March 2010

Another irritating meme

"Massive government takeover of one-sixth of the American economy"

What a great talking point.  I'm not being snarky -- it really is well-crafted.  It's succinct, pithy, and memorable.  It clearly encapsulates why conservatives oppose the reform effort.  It's a great tool to get the message out over teevee media outlets.   It's also completely misleading.

Take a moment to review the numbers:

US GDP - $14 Trillion (2008)
Total spending on health care in the US - about $2.25 Trillion, or about 16% of GDP
Total cost of the health care bill annualized over the first decade - $94 Billion

You know, these trillions-billions comparisons of dollars get confusing, so for perspective, I'm going to switch to billions exclusively. And a few other numbers for comparison:

US GDP - $14,000 Billion
Federal Budget - $3,690 Billion
Annual cost of US health care - $2,250 Billion
Annual federal cost of healthcare - $841 Billion
Annual cost of Health Care reform - $94 Billion

Yeah, yeah, I know -- a billion here, a billion there and pretty soon you're talking real money.  The point, however, should be pretty clear: $94 Billion a year is a lot, but it is a drop in the bucket compared to the overall cost of US health care.  It's hardly a "takeover" and laughably not "one-sixth of the economy" that will be affected.

Now some people will immediately object that the cost may be small but the effects will be propagated through the rest of the health-care sector, that the impact of this bill is much father reaching than the simple cost alone.  And you know what? They're right.  That's one of the two key reasons to enact reform: the inflation of health care costs has averaged 8% per year -- far, far above the general inflation rate or the growth of GDP.  It's unsustainable.  So the fact that the HCR bill will impact the rest of the industry is a feature, not a bug.  In fact, most people agree that in this facet, the HCR bill is if anything too small and too limited in its scope.  I think it's a good start -- but just that, a start.  Whether cost-effectiveness research or the Independent Medicare Advisory Commission wind up paying off in cost savings will take quite a while to assess.

And it's not a takeover.  265 million Americans will not see the source of their personal health insurance change.  The vast majority of working Americans will remain in their employer-sponsored plans.  The 83 million Americans on Medicare and other government-funded insurance will retain it.  The only change will be for the 30 million uninsured whom the CBO estimates will find coverage through the insurance exchanges or will be moved into government-sponsored plans.  And of course for those who are currently in the individual market whose premiums will go down.  I'll continue to work in a fee-for-service system with 80% of my revenue coming from private insurers, as will most doctors and hospitals. 

Are there going to be changes?  Yes, there need to be.  Are there going to be challenges and secondary consequences which need to be dealt with?  You bet.  There are not, however, any structural changes that justify the hyperbolic phrase "government takeover."  We are not killing the private delivery system of health care, we are not killing the private funding of most health care.  We are not going to single payer land (Canada) or socialized medicine (England).

Overall, this HCR bill is small and limited in its approach and goals -- a small-c conservative approach to HCR.  And the folks who parrot the "takeover" meme are either being disingenuous or are ill-informed.  I wish they would knock it off.

9 comments:

Thai said...

Ah the illusions of those who continue to pretend this is not a zero-sum issue...

And where will this "trivial" $94 billion come from?

Will it come from people's retirement? Will it come from school budgets? How about public safety? How about vacations? How about building inspection safety?

And when we consume these greater health care resources for less and less benefit so that there is less resources to move to other areas of our economy such that we have less tax revenue to pay for all the other programs we love, how will this play out?

We know this issue is not about health, since if we wanted to improve health or longevity, the very last thing we would do is actually spend more money on health care.

We know it is not about the idea that we can all feel emotionally safer if/when we lose our jobs and government picks up the tab since:

A. One of the reasons we are losing our jobs is because health care is so expensive
B. We provide more care than anywhere else in the world and it is believed this over-utilization is the primary reason health care is so expensive.
C. We currently borrow from abroad to fund a national account deficit of almost 10%, meaning America as both a nation AND a government may potentially be unable to actually meet this promise unless it reduces its consumption patterns.

Or will we simply wait until we move from the current great recession to the even greater Great Depression 2 before we are forced to make the necessary tough choices that actually improve health and longevity?


I am sorry my fellow colleague and ER physician but you and I are not uninterested observers. Indeed, I might say you are a little like the proverbial fox guarding the hen house. ;-)


"It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

-- Upton Sinclair

Be well

shadowfax said...

Thai,

Apparently you did not read the preceding post, in which I point out the new revenue sources and offsets (yes, reductions in spending) which fund the HCR bill. And apparently you did not read the long paragraph in the middle of the post where I talked about cost control.

You and I agree about the need to control costs. This bill provides for a start on that front. It's the most ambitious effort to control cost we have seen in our professional lifetimes, and includes the most effective elements short of single-payer or price-fixing, which I think we agree that we do not want.

America as both a nation AND a government may potentially be unable to actually meet this promise unless it reduces its consumption patterns.

Great. You proposing explicit rationing then? Or do you have some new idea to reduce consumption in a rational way (other than those that are already in the bill - CER, IMAC, etc) that would be politically palatable? Do tell!

Thai said...

We ration already!

If that is the only way to get a degree of honesty into this whole discussion from liberals, then so be it: explicit rationing... But I might add that the explicit rationing of collective resources to individuals should probably also be linked to every other way we individually consume collective funds. After all, isn't it all about equality and fairness?

PS- I am sure I do not need to remind you this is not a new approach in the annals of history. Indeed, wasn't Keynes a eugenicist?

You should be very very careful you absolutely understand the consequences of what you wish for when you push to start things like this rolling.



And you are right, I did not read your earlier post but having just read them, I am even more worried.


So point by point:

Re nonsense like: "Pity the Republicans who passed Medicare Part D in 2003 were not so concerned about the largest deficit in history back then and made no attempts whatsoever to fund the largest expansion of health care in US history -- they just spent the money and tacked on well over a trillion dollars to the deficit without a care. But that's water under the bridge to the GOP now that they are in the minority and it's a Democrat trying to spend some money -- they've rediscovered their aversion to deficits."

A. Go back and recheck the history of how that bill came to pass. The final bill was a lower cost Republican alternative to a more expensive Democratic bill. It was likely either that or the more expensive alternative but not no bill.
B. If you think it was a mistake to pass that bill (and I certainly do), we could always get rid of it now and stop the spending. There is nothing which forces us to continue throwing good money after bad. ;-)


Re nonsense like:"There are new funding sources that bring in more money, and there are offsets that reduce spending in other areas. Specifically, there are new taxes on high-cost insurance plans and on investment income for wealthy taxpayers, among others."

Which was my point: you are confusing zero-sum with Shadowfax job security.

All this bill does is take even more resources away from other areas of the economy (say like your children's local elementary school?) and moves them into health care consumption... And I know NJ is not your state, I am just making a point.

The federal government's finances might look a little better with tax gimmicks, and to the extent you think of the federal deficit as the only deficit, you are correct. But this is most decidedly not the only deficit and the way you present it clouds the fundamental fact that the issue is still zero-sum.

Raising taxes or offsetting other spending means other sectors have less resources. Improved public sector finances come at the cost of deteriorating private sector finances- e.g. zero sum.

Further, this means government spending as % GDP moves from nearly 45% GDP to a much higher number (probably close to 50%).

... In this context, talk of "government take-over" are not so dishonest as they often seem, even if it is technically incorrect.

AND it does nothing to fix our national account deficit which includes BOTH public and private spending.

Sorry Shadowfax but I stick by my original statement: zero-sum.

"It is difficult to get a man to understand something, when his salary depends upon his not understanding it."

Health Care is in a bubble, plane and simple and it always requires a bit of wishful tooth fairy thinking.

Good luck on that one.

Be well

Thai said...

And re: cost controls in the bill

Do I really need to say more? ;-)

shadowfax said...

Thai,

I appreciate that you do engage on the points, which is not always the case in hyper-charged discussions like these. But you're kind of all over the map here.

On rationing: Suffice it to say that it's an ... interesting notion, but it's about as politically viable as Single Payer or Ron Paul for President. Given that it's not actually on the table from either party, I'm gonna ignore it and move on.

On cost controls: Yes, I *do* want you to say more. Because it's something that the critics of HCR like to ignore and just pretend they are not in the bill. It may be that they won't materialize as planned -- that is a distinct possibility. But it is equally possible that some of them will work, and some may overdeliver -- we just don't know and won't know until we try them. But you rail at length about spending too much on health care and leave the cost controls as a smiley and nothing more.

On Medicare Part D: You are wrong when you say it was the GOP bill or a Dem bill but no bill was not an option. Remember, if you will, the way Delay and Frist ran congress when they were in the majority. They simply did not allow democratic bills to come to a vote, they often refused to allow democratic amendments to be considered, and democrats were routinely excluded from conference committees. It was the GOP bill or no bill, but the dem bill never received serious consideration (and it may have been a reckless bill, but it's one of the perks of being in the minority that you can offer your dream legislation without the responsibility that it might actually become law. Same applies to Paul Ryan's GOP budget proposal.)

What I do remember on Medicare D was that a) it was designed to enrich pharmaceutical makers, b) it was rammed through in an unprecedented abuse of the House rules, with the vote held open and the clocks turned off for three hours while Delay hammered reluctant republicans, c) the cost was suppressed, as the medicare actuary scored the bill at $550 B (the bill was supposed to be $400B) and he was told he'd be fired if he told the democrat the real cost, and d) Delay bribed one lawmaker for his vote.

It wasn't exactly the finest hour for the GOP. I don't know enough about the current status of the law to say that it should be repealed, but a better law should definitely have been enacted at the outset. I brought it up, however, not to debate the merits of the law, but to highlight the shameless hypocrisy of the Republicans in Congress with regard to deficits.

On Zero-sum: You keep using that term. I do not thing it means what you think it means. (Think Inigo Montoya) The GDP grows every year (usually). Unfortunately, health care costs are growing as things are now much faster than the GDP grows. The problem isn't that healthcare costs grow, the problem is that they grow faster than the GDP. So IF the HCR bill works as expected, it will bring the two back into line (or at least closer into line). I don't think this will be the final HCR bill. More cost controls are probably needed.

On the Federal Budget: I'm note sure the validity of the quoted source. If GDP is $14T and the Budget is $4T, that's less than a third of all spending being public, not 45% (though there's a fair argument that it is still too much). Either way, I suspect that we agree that there is a massive structural budget crisis looming. If I were feeling particularly snarky I might point out that this is principally due to the Bush years, but, oops, too late, I already did. Either taxes are going to go up - way up - or spending needs to be cut to a huge huge degree that will be more painful than the polity will be able to bear. I don't know which is more probable, but there's a world of fiscal hurt heading toward us. To the degree the HCR bill is related to it, I think it helps more than hurts.

Thai said...

I am not all over any map. Either you simply don't see the whole picture or you are being disingenuous or some combination of both.


Re: "but it's about as politically viable as Single Payer or Ron Paul for President."

I guess you and I will just have to keep on getting paid more until we figure whether they do or they don't. ;-)


Re: %GDP which is government spending

The site's accuracy is not in question. Remember "government" as a word includes state and local government spending.


Re: My intended meaning of zero-sum

To quote Humpty Dumpty from Lewis Carol's Through the Looking Glass:

"When I use a word, it means just what I choose it to mean -- neither more nor less... But when I make a word do a lot of work like that, I always pay it extra."

The health care debate is clearly a zero-sum issue.


Re: Snarky

Sorry, that dog won't hunt either. If fact, it would simply be too easy to cut such nonsense to pieces but I will leave you to read others instead

Or here

Or here

Suffice it to say that in fiscal 2000 before the Bush tax cuts, our government brought in $2.025 trillion in unified revenues while spending $1.789 trillion. Seven years later, before the recession hit, we received $2.568 trillion, a 27 percent increase. BUT, our expenditures rose to $2.729 trillion, a 53 percent rise.
Spending grew at TWICE THE RATE as tax receipts.


Blame Bush if you like but it is a little like saying that on an infinite road of spending, you have decided to make an arbitrary point as the beginning or end of your story. While it may work for you, others may have slight different time horizon that are just as valid.

AND you are still avoiding the public + private TOTAL spending issue which is extremely dishonest. Obfuscating this issue by pretending the sum of the parts is not the whole in order to ignore the increasing % GDP spending by government controls may not bother you, but it does many conservatives.

You cannot deny this simply truth and remain honest in this debate.



Re: Medicare D was a give away to the drug companies.

My point stands. As I said earlier, with a majority of congress and control of the White House, Democrats could always repeal the law now if they don't like it.

Further your response is almost proof of why
people have come to be rather cynical of letting government choosing to watch over their wallet. Fool me once, shame on you. Fool me twice...

And now they/you are them to spend yet $94 billion/year more?

When you and I are the beneficiaries?


Re- health care growing faster than GDP is a problem, even your description is a can of worms and may be in error but I'll let it go out of sheer laziness. Let us just say we can both agree on the following video you once shared. Spending is spending and we can cut anywhere, there will of course always be consequences.


MY point remains, zero-sum

PS- I'll respond on cost controls another time (honest, I am not shirking) but I'm just pooped from all my rantings .

Suffice it to say I have little faith in your response: "We just don't know and will have to wait and see". Especially when you and I are the financial beneficiary of taking this watch and wait approach; we are hardly an "unbiased" source of advice to our patients imo.

Thai said...

Here is my promised comment on cutting health care spending.

I think the report clearly speaks for itself.

Creating the illusion of a guarantee of coverage and then pushing the hard decisions off into the future so the probability of ever meeting that guarantee greatly diminished precisely because of the unsustainable spending trajectories we take is pure fantasy.

You should run for office, your views would fit perfectly in line with those who created the current public pension mess we are in.

And PS- I have voted Democratic every election of my life (including the last one) so you cannot label me blinded by partisanship.


This is really sad Shadowfax. It is clear you are being confused by complexity and confusing your terms.

Remember, the sum of the parts is equal to the whole but the whole cannot be seen as simply an individual part in isolation. Or it can but you might discover that the other parts come back to bite you when you forget about them.

My point remains and indeed from some perspectives, the advice you giving is particularly misleading since you and I are the beneficiaries of pushing hard choices off as long as possible.

1. Total US economy
2. % Economy Government spending
3. % Economy Federal Government spending
4. % Economy spent on health care
5. US economy account deficit
6. US Federal Government deficit
7. US State government deficit
8. US private sector account deficit
9. % health care spending by public sector.
10. % health care spending by private sector.



Focus on the positives of these bills all you want. They do not eliminate the reality of the cost problem they worsen, nor do you place the positives in the context of our larger current account deficit compounding the delayed resolution of total outstanding debt at the expense of worsening government debt.

And to the extent people listen to your version of events without placing them in a broader context of our current national account deficit, you (and I) continue to make even more money until this health care bubble finally pops.

... Fool them with enough complexity so they don't see the bigger picture and all we have to do is 1. prepare for the coming storm and 2. Step aside at the right moment.

Nice racket were in. ;-)

Simply calling a spade a spade.

shadowfax said...

Thai,

First of all, I have to give you credit for an interesting contrarian streak: you're the only physician I have come across who is openly claiming that HCR needs less and not more physician input. Most criticism of HCR from docs have lamented the lack of doctor leadership and direction. As for myself, my personal interests are not driving my policy recommendations, whether it's my calls for covering the uninsured (positive for me) or shifting reimbursement dollars from specialists to PCPs (negative for me).

I'm confused why you linked to the CBO director's blog since it doesn't reference the cost-control elements of the HCR bill at all. Furthermore, the CBO has been reluctant to score the cost control elements due to the uncertainty around their effects -- which is fair, but the consequence is that the cost control elements may well be much more efficacious that the conservative assumptions the CBO makes. Again, you're just blowing off the real elements of HCR that seem to address the biggest concern you have -- overspending.

The Chait-Hennessy smackdown was interesting, but not entirely relevant to my initial point: that the greatest expansion of deficit spending in the post-war period occurred under republican administrations. As Cheney himself said "Reagan proved that deficits don't matter." So they slashed taxes, expanded Medicare, and fought a war without attempting to pay for any of it and took us from a surplus to the largest deficits in history. Yes, the first Bush recession also contributed, and yes, entitlements were going to become an issue either way. But in 2001, Bush was in a position to responsibly deal with the entitlement crisis, to pay down the national debt, and put the government back on sounder fiscal footing. He chose to go for the free money approach. But once in the minority the republicans opportunistically and hypocritically rediscover their inner deficit hawks.

You're right that there is a debt crisis -- private as well as public. No arguments. But the reckless policies of the last administration have made it much much more difficult for Obama and future administrations to come to terms with it.

Thai said...

No, I am calling for less input from (shall we call them) white men bearing gifts who somehow deny the reality of the conservation of energy.


Re: spending cuts

This issue is not rocket science. From my own moral filter, there are really only a few low hanging fruit we can pick to "free up" resources within the health care system before nearly all discussions become truly zero-sum: one person wins at another person's expense.

1. Shifting resources from the massive system of administrative oversight we currently have to actual care-giving. I think it fair to say the current bill does little to address this in a substantive way.
2. Eliminating treatments and screening programs which actually harm more people than they benefit. And I don't ever seeing a central system do this in America very well as politicians do not want to be voted out of a job when some physicians see a cut in their paycheck coming and start stirring up the voters with tales of babies dying in the streets.

But after we cost shift in these two areas, one person will win at another person's expense no matter what we do. Health care is zero-sum on a national level.

We can of course question the value of particular treatments but even this is a zero-sum issue as it will always gets into the issue of whose perspective we are examining the issue from.

Personally I do have much more faith in a system where individuals locally making decision they understand with their own money according to their own value systems vs. a third party insurance system everyone sees as "somebody else's money". But I do not control the world.



Re: Republicans were responsible for the debt.

Fro the way I think you look at it- True. AND I think it also fair to add how social liberals started the war in the first place. For social conservatives have been saying for years that economically expensive behaviors which have control systems dependent on a combination of both personal and group acceptability are getting out of hand. And in particular, the consequences of these behaviors to "other people's money" in areas like health care spending, welfare spending, police and public safety, etc... are becoming disastrous and a point will be reached where others will simply refuse to support other people's behaviors.

If we are going to call a spade a spade, I think it quite fair to also admit that we have been witnessing the consequences of not heeding their advice more seriously for some time now. Indeed, I might add I that I have read several posting on your blog re: the costs of things like drug addiction, etc... Implicit in these posts is a liberal idea that other people just have to keep on paying for this behavior without protest.

So it is not surprising that conservatives have increasingly said "I will not pay for this anymore", and to the extent they continue to be ignored (particularly by the left with its tooth fairy notions that people can behave however they wish and others simply have to pay), it is not surprising conservatives have reacted the way they did.


And again, I might add that large numbers of Americans (correctly in my opinion) now see government funded workers as a special interest group in their own right and it is fair to say that government spending as % GDP has reached non-war time highs, whoever was in power.

So I personally have a hard time assigning blame to Republicans for our debt; I respect your right to disagree of course.