Archive

Archive for the ‘Health Care Policy’ Category

The Cost of “Bernie Care”

September 25, 2017 Leave a comment

Senator Bernie Sanders has expressed support for and formally introduced a plan for a health insurance system to be run by the federal government which has been called “Bernie Care” in some media outlets.  A number of other Democratic politicians have also expressed support for this idea. This is quite likely to be the Democratic Party response to the problems with Obamacare. Indeed Barack Obama expressed his own support for this national health insurance program before his first election as President (I saw the videotape of his statements at that time) but he claimed the country was not yet ready for such a health insurance program. What would such a program cost? The Urban Institute has published a study to answer this question. Read more…

Advertisements

Fixing Obamacare

November 15, 2016 Leave a comment

Now that the election is over and President-Elect Trump has begun the transition to his administration, there has been some discussion of reforming the market for health insurance. I have written previously that Obamacare is in the process of collapsing because of its structural defects. For example, the Obamacare feature of guaranteed issue has caused a phenomenon known as adverse selection which is driving insurance companies out of the health insurance exchanges (links to other posts on Obamacare are given below). Here I thought it would be useful to outline some changes that seem to be sensible reforms to the currently-available flawed system.

Read more…

Obamacare Slowly Implodes (Updated)

November 30, 2015 3 comments

Readers of this blog know that I am a critic of the Affordable Care Act.  My view is that it was poorly designed and it has harmed millions of people who have lost access to their doctors and hospitals. (There are links at the end of this article to previous posts on this profoundly misguided law.) There is now accumulating evidence that the insurance exchanges are moving into what has been termed a “death” spiral, a process which can lead to the collapse of the insurance exchanges set up by the law.

This death spiral refers to a situation where insurance companies lose money selling health insurance on the exchanges and thus stop selling insurance to avoid these losses. The exchanges can collapse if all insurers withdraw from the exchanges, leaving millions of Americans without coverage. The design of the Affordable Care Act raises the possibility of this collapse because it limits the ability of insurers to charge higher prices to riskier applicants and because the law requires guaranteed issue, meaning that insurers must sell a policy to anyone who applies. Thus insurers must treat everyone as if they are bad risks and charge correspondingly higher prices for insurance but, if the applicant pool of insurance buyers is dominated by bad risks, insurance companies may lose money on their policies. This latter situation is known as “adverse selection.” There is now accumulating evidence that adverse selection has occurred in these insurance exchanges.

Read more…

Random Thoughts After a Long Hiatus

September 21, 2015 2 comments

It has been quite a while since I last posted on this blog. I finally decided to catch up by posting a series of remarks on a number of issues that are of interest to economists and (hopefully) others.

Disparate Impact Analysis

I teach in a university economics department. If you were to attend one of our faculty meetings, you would observe that nobody in the room is a seven-foot Chinese basketball player. Does that mean the faculty in my department discriminated against the seven-foot Chinese basketball players in the world who wanted to be on our staff and attend this meeting? If you were to use a nonsensical theory known as disparate impact analysis, then if seven-foot Chinese basketball players were a politically-protected group, the answer is yes and my university could be charged with discrimination in federal court.

To say the least, disparate impact analysis ignores the scientific method which most of us learned in primary school. The fact that a person has the disease known as AIDS does not imply how the person got that disease. The reason is that medical science has determined that the disease can be contracted in more than one way. Similarly, if one group of individuals makes less money than another group, there are many reasons why this may be so.  One of those reasons could be discrimination but how do we know this to be true? Put differently, there are causal relationships in an economy and there are many random events that can make a group of individuals have the demographic characteristics that they have. Read more…

Two Lessons from the VA Scandal

The press has been full of reports on the dreadfully low quality health care provided by several VA hospitals and the attempts to cover up this low quality by VA employees. As most all of us would agree, this really is a terrible and tragic situation but, as with almost every tragedy, there are lessons to be drawn from it. Two are worth mentioning here both of which have been stated previously on this blog.

One is that there is simply no good management in government by the Congress because of the sheer size of the organization. The federal government is now a gargantuan bureaucracy with thousands of employees (the Bureau of Labor Statistics provides data on government employment at bls.gov).  One of the best arguments for shrinking the size of the federal government is that it may be possible to do a better job of management if the government is smaller. It is hard to believe that anything like the VA scandal could arise if there was competent management by the Congress.

Second, the VA scandal reveals the reality of what government-run health care would be if we actually had socialized medicine as found in the U.K. and elsewhere. Barack Obama and other Democrats have expressed the opinion that what they would prefer is a single-payer medical insurance system or Medicare for all. On first glance, you might say that this system would not be what is found in other countries but look at the way Medicare currently operates. It sets the prices that it will pay for medical services and it determines the quantities (that is, the medical procedures) that it will cover. This is functionally equivalent to running almost all medical care facilities since, for the vast majority of patients, the Medicare insurance system will dictate how they are treated. People with the resources will go outside the system to get whatever care they deem best for their health. This is precisely how the U.K. system operates. People who stay in the system get lower quality care (for example, they may wait months to see a specialist) whereas those who go outside the system and pay their own way get higher quality care (they get to see the same specialist in a short time). Medicare for all will provide low quality health care for all are confined to it.

If you want to know why the VA scandal is a disaster for Democrats, it is not just because of the scandal itself which is indeed terrible. It is a disaster for what it reveals about the espoused health care policies of the Democratic Party.

Enforcing Obamacare Fines

October 31, 2013 2 comments

Some time ago, I read a claim that it was quite easy to evade the Obamacare fines. I stumbled upon a news article (read it here) that confirms this claim. To avoid the fines, just make sure that you don’t get a refund from the IRS.

It appears that Obamacare instructs the IRS to deduct fines from any refunds owed to taxpayers. If there is no refund, then what? Well it appears that the IRS will just carry over the bill until the next tax return is filed, collecting the fine at that time. But if there is never a refund, the only recourse is for the IRS to ask the Department of Justice to sue taxpayers for the fines. Think about this. How entertaining would it be to see high-priced U.S. attorneys trooping into what amounts to a small claims court trying to get taxpayers to pay a $95 fine? This would be hilarious to see. I think I’d pay money to see this show!

Obviously this enforcement scheme has no teeth. Why would politicians do this? The only answer that I can imagine is that, after deceiving taxpayers by promising  that the IRS would not be involved with Obamacare and because of the lack of public support for this so-called health care reform, Democratic politicians probably tried to avoid making taxpayers any more hostile to the law than they already were. The result may be that the whole Obamacare system collapses when people ignore the fines and only buy insurance when they are sick. Ironically, if this happens, there may be more people without insurance than there were before Obamacare was passed.

Obamacare really is the gift that keeps on giving. If there was ever a program illustrating the profound incompetence of politicians, this is it. I hope that this lesson is not lost on the public and never forgotten.

The Exchange Fiasco Is Only the Beginning

October 31, 2013 1 comment

The Affordable Care Act (AFA) is a stunning example of just how destructive a government can be when it chooses to play central planner of markets. Here is a partial list of the wreckage caused by Obamacare.

1. Layoffs of workers in the medical device industry due to the tax on medical devices in the AFA.

2. Hours reductions have been imposed on part-time workers so that employers can avoid the requirement to provide health insurance.

3. Staggering price increases in the price of health insurance.

4. Millions of individuals losing their health insurance policies cancelled as a result of the AFA.

5. Individuals are often being forced to buy coverage that makes no sense. Do people in their fifty’s really need maternity coverage?

It is hard to think of any other legislation that has wreaked havoc on this scale. Unfortunately, the worst damage is yet to come. Obamacare may destroy the private health insurance market altogether. Read more…

Economics One

A blog by John B. Taylor

The Grumpy Economist

One economist's views on economic policy.

The WordPress.com Blog

The latest news on WordPress.com and the WordPress community.

%d bloggers like this: