Recent adventures with the medical system — June 29, 2018

Recent adventures with the medical system

I’ve spent a significant fraction of my mental energy in recent weeks dealing with the U.S. medical system, and I’ve taken away from all of it a very solid conclusion: unless you’re

  • reasonably knowledgeable about biology and medicine
  • assertive in a way that many people (and certainly I) are not always prepared to be
  • able to commit lots of time to the task
  • free of significant cognitive impairments
  • surrounded by a solid social network
  • well-fed and so forth—meaning not just able to afford food, but able to prepare it for yourself, etc.
  • reasonably affluent
  • lucky enough to have a doctor in the family
  • able to understand insurance, particularly things like how to choose among Medicare plans, how and whether to buy a Medigap plan, etc.

then I really suspect you’re going to have a hard time navigating the medical system. And to be clear: the logical connective joining all of those bulleted items is AND, not OR. I think you need all of those things.

My mom started losing vision in her left eye late last year. She underwent the usual spate of tests, to no avail. Somewhere in here she was put on prednisone, I believe to fight off an autoimmune disorder that they thought might be causing the vision loss. While scanning her head to look for problems in her optic nerve and such, they found an aneurysm. They decided to repair the aneurysm, and made the first attempt in January, using a pretty remarkable technique whereby they run a coil from her hip all the way up to her brain, stuff the aneurysm with that coil, and thereby prevent it from growing any larger. The first attempt only half-worked, so they stopped midway through and waited a few months to complete the second half. It took her at least eight weeks to feel like herself again, and soon thereafter she underwent round 2; this happened in mid-April.

This one went much worse than the first round. After the first round, she was able to leave the hospital the day after the surgery; after the second she was hospitalized for four or five days. After the second round they found fluid building up in her lungs, and oxygen-saturation levels in her blood that were well below where they should have been. Upon examination, a pretty clear reason for the slow recovery speed came out: they discovered she has emphysema, a result of decades of smoking up to three packs a day. (She quit 30-plus years ago.) Not long after the surgery, she also developed, for the first time in her life, really severe depression. This is apparently not terribly uncommon after surgery: it’s classified in her record as ‘Adjustment disorder with depressed mood’.

Meanwhile the prednisone continued. Eventually one of her doctors pointed out two things: first, that she would never keep a patient on prednisone that long, and second, that a significant fraction of patients on prednisone end up experiencing some form of psychosis. (Google for it; it’s fun.) After something like six months on prednisone, her doctor expected that her adrenal glands would have stopped producing adrenaline altogether. You can imagine the sort of effect this would have on her mood.

Throughout this process, each doctor blindly felt his part of the elephant, but it was exceedingly rare for any one of them to see the whole animal. I thought it was her PCP’s job to coordinate care, and in a certain sense he did: he farmed out tasks to specialists, then washed his hands of it. The surgeon who handled the aneurysm surgery saw that the aneurysm would never again pose a problem, declared his work done (as it probably was, in a sense), and backed away. Her ophthalmologist was the one who originally prescribed prednisone, which sounds like the standard approach to such problems, but I don’t really understand why he kept it going as long as he did; it took a rheumatologist to raise the red flag about health effects of long-term prednisone use.

Nowhere in this process, from what I can tell, did anyone introduce risks to the patient. Are there downsides to performing aneurysm surgery on an elderly patient? Life expectancy for the average 73-year-old non-Hispanic white female is another 14.3 years; is the aneurysm expected to burst in 14.3 years? In 20? As for the prednisone, I don’t think anyone told her about the significant psychosis risk, or the risks of long-term use.

Even if they’d told her the surgical risk, I can imagine how that would have registered. Imagine being told you have a Sword of Damocles hanging over your head, which might not drop during your lifetime. Do you leave the sword alone and hope it never falls? Or do you try to do something to stop it from ever falling, risks be damned? I don’t really know the liability calculus on the doctor’s part, but I imagine it cuts in a similar direction.

Many elderly patients can’t be expected to make complicated risk tradeoffs—especially right when they’re in the middle of a stressful health event. If you’re lucky, you rely for help on the people around you. But many people don’t have a knowledgeable network around them. Many people don’t know doctors. In my mother’s case, her husband suffers from Parkinson’s, and his ability to help is, by everyone’s understanding (including his, and including hers) diminished. So their network is smaller than we’d like. I’m helping where I can, but it’s a struggle.

This latest depressive episode introduces its own complexities. Now my mother is simply unable to make decisions for herself. And it’s not clear, from a distance, that my parents are feeding themselves well, are getting even a minimal amount of exercise, etc. Here’s where we need to bring in community organizations like Meals on Wheels. Those organizations have their own stigmas; but if we can overcome those, there’s at least someone checking in on my parents a couple times a week to make sure that the non-medical portions of their lives are okay. Step out a tiny bit, though: who’s going to request Meals on Wheels? The patient and her husband are not in a place to manage this for themselves. My parents have children who can help them, but not all elderly people do. Even many children who are willing to be involved in their parents’ care may not be able to be involved: work may not allow them the time to handle family care. In my case, I’m lucky to have an employer who will give me the time to place some phone calls on behalf of parents who need help. Not everyone will be so lucky.

I’ve only found one doctor throughout this process who’s seen the big picture, including the weakness of the underlying social supports. This doctor has gone out of her way to send visiting nurses, check in on my mother’s mental health, and even prescribe Ensure to get a few more calories into her diet. Doctors, in my experience, are at worst focused on their specialty to the exclusion of all else; if you’re lucky, they can scale out to all purely medical issues. It’s the rare doctor who can think about nutrition, home care, and even what “informed consent” means for a patient who’s in no position to make decisions for herself.

I’ve started having to fight with insurance in recent days, thereby opening up a new and delightful front in the proceedings. My favorite of my mother’s doctors prescribed Cellcept to combat possible auto-immune attacks on her optic nerve; the drug could literally keep my mom from going completely blind, so it seems rather important to cover it. They’ve been dragging their feet on granting approval. It’s possible the insurer rejects Cellcept for this particular use (namely preventing blindness, I guess), so now we need to file a Letter of Medical Necessity, etc., etc. And on it goes. Imagine trying to navigate this while you’re suffering through post-operative depression, not eating well, deferring to authority figures, in no mood to fight, and with no one around to help or guide you.

My parents are understandably concerned about the medical bills that will result from all of this surgery. So a couple natural consequences of all of this will be some discussions of finances, and some discussions of health-insurance choices. I consider myself a reasonably sophisticated consumer of health information, but even my heuristics here are pretty simple: pick the insurance plan that minimizes the maximum total financial hit I’ll take in a year, when premiums and out-of-pocket max are factored in. For elderly people, this turns into choices among classic Medicare, Medicare Part C, Medigap, and so on. It’s complicated. Many elderly people are vulnerable to scams. Family can help, but eventually the involvement becomes total: is the rest of the family expected to intervene in every financial, technological, and health decision which could lead to the patient’s being scammed? The honest answer may be “yes”, but few people are going to have the time to get that involved in someone else’s life; we have our own financial, technological, and health decisions to worry about.

In the midst of all this, I had my own fun run-in with the health system. Radically abbreviating the whole thing: I picked up a nasty infection six days ago and got a urine culture right away, but it took until last night for the culture to come back. Had it come back sooner, I could have avoided two fruitless courses of antibiotics. I don’t know why it took 5 days to get back cultures which were, as was known at the beginning, urgent. (The pain was unbearable for at least a couple days.) Maybe it just takes that long to culture for the specific types of bacteria at issue?

I consulted a specialist in the middle of the week, who told me that at some point a specialist like him would have to schedule imaging for me. “Aren’t you one of those specialists?” I asked. He said that he wasn’t able to urgently schedule scans for his patients; should the urgency increase, he said I should call the ER, which could take care of the urgency. Consider for a moment how busted the incentives are if specialists are making referrals to the ER.

Sure enough, that night my temperature spiked, and I went to an ER within the same medical group. Our first glimpse at the ER showed that it was overcrowded, serving a largely poor population. Not to be too short about it: it was the kind of hospital that you wouldn’t go to if you had options. Our friends, who are more familiar with D.C. hospitals than we are, all endorsed Sibley, so we called a Lyft and drove the half hour between the two ERs. The contrast could not have been more stark: Sibley was virtually empty and felt boutique. It felt like a hotel, in fact, which made the literal “Marriott Reception Area” all the more…glaring? Hilarious? I don’t know. In any case, I want someone like Sarah Kliff to explain to me why anyone would go to the Washington Hospital Center when Sibley is that close by. Yes, I understand the obvious answers: WHC is the neighborhood hospital in a poorer neighborhood, so it’ll be the hospital for ambulances in the surrounding catchment area, and not everyone can afford a Lyft. Is that most of the story?

This is my second recurrence since 2015 of this sort of infection, and I was told in 2015 that even one was concerning and unexpected. So I’ve been reading up on the chronic appearance of this sort of infection, and when this immediate outbreak is over I’m going to spend a good long while (I already forecast) trying to get doctors to answer my calls and solve a long-term problem even when the short-term crisis has passed. No one cares more about my life than I and my immediate family do, so I need to badger and badger and badger until others grudgingly give me a minute of their time.

Health-insurance deductibles and the average American’s assets — July 20, 2017

Health-insurance deductibles and the average American’s assets

Here‘s a little thing about health-insurance deductibles:

In short, the BCRA makes changes to regulations that will cause annual deductibles for individual market health plans to skyrocket — to $13,000. But other regulations set the legal limit on annual out-of-pocket spending to $10,900. This means the BCRA’s health plans could actually violate the law.

If you want to get a sense of how large a $13,000 deductible is, consider this, from the Federal Reserve:

respondents are asked how they would pay for a hypothetical emergency expense that would cost $400. Just over half (54 percent) report that they could fairly easily handle such an expense, paying for it entirely using cash, money currently in their checking/savings account, or on a credit card that they would pay in full at their next statement (collectively referred to here as “cash or its functional equivalent”). The remaining 46 percent indicate that such an expense would be more challenging to handle and that they either could not pay the expense or would borrow or sell something to do so.
[…]
among respondents who would not pay the expense in-full using cash or its functional equivalent, 38 percent would use a credit card that they pay off over time and 31 percent simply could not cover the expense.

So around 1 in 7 Americans couldn’t pay a $400 expense in any way.

(There’s a BankRate survey that seems to ask a similar question, but I couldn’t identify the exact question. The Fed’s question is precisely laid out. And of course it’s a more trustworthy source.)

When people talk about how insurance ought to be only for catastrophic expenses, I hope they realize what ‘catastrophe’ entails for a lot of Americans.

A couple conservative pieces on health insurance — July 8, 2017

A couple conservative pieces on health insurance

One from Philip Klein. And another from Peter Suderman.

Both pieces openly acknowledge what the liberal side has been saying for a long time — that Obamacare is a three-legged stool, and that you can’t keep the pre-existing-condition regulations (“guaranteed issue”) without keeping the rest. Klein and Suderman then, fascinatingly, land on conclusions exactly opposite to the ones that liberals would land on. Both Klein and Suderman would do away with guaranteed issue, community rating, and all the rest. They would then replace Obamacare with catastrophic insurance, health savings accounts, high-risk pools, and so forth. Fundamentally, they don’t view health care as a human right, and they don’t believe that government has any business getting involved in the insurance market. If you start from those premises, you’ll likely end up where they do.

You get this sort of clarity from op-ed writers, but not from elected officials. I would posit that that’s because the moral basis of Obamacare is in line with most Americans’ values: most Americans would, I think, agree that you shouldn’t be denied care just because you had a pre-existing condition. (A close friend’s son had open-heart surgery very early in life — I want to say before he turned 2 years old. Do we want him to be uninsurable for the rest of his days?) Having granted this premise, elected officials can either give Americans something in line with their moral values — that is, Obamacare or stronger — or can do what writers at Reason would find congenial, tear off the Band-Aid, and give them health care that’s stingy and (by most Americans’ lights) immoral. It’s no wonder that conservative politicians hesitate to take the orthodox-economist position; or, having taken it, refuse to admit that that’s the position they’ve taken. The BCRA can only pass most Americans’ moral muster under cover of darkness.

Parts of the orthodox-economist position are in line with wonky liberalism. Suderman, for instance, writes that the tax deduction for employer-sponsored health insurance “is the original sin of the United States health care system,” and is “[w]orth more than $250 billion annually.” Many liberals would love to get rid of it; I certainly would. There’s a liberal case against it: it’s regressive, and it makes a dollar of health insurance worth more than a dollar of salary, with the predictable effect that employers pay less in salary and more in health insurance. (I’ll look around for research on how much of Americans’ well-documented wage stagnation can be explained by this tax preference.)

The much-maligned “Cadillac tax” in Obamacare sought to do away with this regressive tax expenditure, albeit stealthily. High-value employer-based health-insurance plans would be taxed, and the definition of “high value” would not be adjusted for inflation. So over time, more and more health plans would be subject to the tax. The dream was that high-value health plans would slowly fade away and salaries would rise; we’d take away with one hand (the Cadillac tax) what we gave with another (the tax deduction).

I have no problem granting that this is ugly: to correct one tax sin, we create another. It’s the embodiment of a libertarian parody of how government works. While granting this, I’m sympathetic: politics is the art of the possible. My liberal dream also collides with the art of the possible: I’d prefer something akin to the Canadian system or expanding Medicare to everyone, or expanding the VA hospital system to everyone, but those are also not yet possible. We take what we can get for now.

In any case, it doesn’t matter: the Cadillac tax was unpopular with everyone, including labor unions. Orthodox economics runs up against the art of the possible.

I’m happier with a discussion centered around the Philip Kleins and Peter Sudermans of the world than I am with one centered around Paul Ryan and Mitch McConnell; at least the former are more honest about what they want. Though this, from Suderman, is misleading:

Medicare, meanwhile, offers a huge system of federal benefits to older Americans that typically run far beyond what most have paid in. Its introduction was associated with explosive growth in hospital-costs inflation during the 1970s.

That was absolutely true about Medicare … in the 70s. It’s not true anymore. The keyword you want to Google for here is the “prospective payments system”. See this review from the Centers for Medicare and Medicaid Services, for instance. Suderman has better arguments than this; I wonder why he chose to use a poor argument there.

Obamacare featured lots of experiments to control costs, including the Independent Payment Advisory Board, which Sarah Palin famously derided as “death panels”. It’s somewhat isolated from the political process, presumably because politicians realize that doing what’s right will often be at odds with what voters want.

I don’t believe, though, that any number of experiments in cost control will sway those of a libertarian cast of mind, because I believe we’re fundamentally having a debate over values rather than one over implementation details. I’m happy that those values — the desire for universal coverage against the belief that health care should be treated like any other market good — are out in the open. Let’s argue it on those moral grounds.

Health-care-debate frustration of the day, Philip Klein-of-the-Washington Examiner edition — July 7, 2017

Health-care-debate frustration of the day, Philip Klein-of-the-Washington Examiner edition

And now, this podcast, namely The Gist with Mike Pesca. Three things Klein says frustrate me:

  1. Shelley Moore Capito was pro-Obamacare repeal when Obama was president and her opposition was all talk. Now that she’s got some power over the BCRA, she’s chafing at the reductions in Medicaid. Pesca raises the obvious point that Capito doesn’t want the residents of West Virginia to suffer, which is what you’d expect from their senator. Klein responds that maybe the citizens of West Virginia should pay higher taxes, then.

    I didn’t think this needed to be said, but that’s not how the United States works. Wealthy people subsidize poor people. Wealthy states subsidize poor states. Senators represent individual states, with actions that sometimes affect other states. The way deals work is that my state gets a little something, your state gets a little something, we each pay for the other, and that’s how we govern. Oppose that way of doing things if you like, but we’re a unified nation of 50 states. The Civil War resolved that question. I’m surprised to see Klein reaching for such a juvenile model of how our government works.

    You can also feel free to call her a hypocrite if you like. Me, I’m well and truly exhausted of the hypocrisy label being bandied about. Don’t get me wrong: when Republican politicians thunder on about homosexuality and the decline of the traditional family, then turn out to be philanderers or closeted, I smirk as much as the next smug liberal. But the real problem isn’t hypocrisy. The real problems are that these politicians are wrong in their evaluation of the country’s moral decline (I for one think that starting a war for no good reason in Iraq is a far graver sin than is falling in love with someone of your own gender), and are pushing policies that condemn a subset of their fellow-citizens to second-class status. Let’s stop talking about hypocrisy, and instead talk about whether the politicians are right or wrong.

  2. Klein returns to the old canard about how government involvement in health care leads to rationing. He neglects to mention that it’s already rationed; it’s just rationed by income. “If there’s only a finite amount of care to go around, the wealthy should get it rather than the poor” is a coherent worldview, which I think the bulk of Americans would reject as morally abhorrent (because it is). I would like Klein to come out and say that this is his principle. Everything else that he says hints that he doesn’t believe health care is a human right, and that he does believe it should be rationed by income. I’d like to see him be explicit about this principle.

  3. Klein also mentions that he’d like a world where consumers shop for the best options. Everyone knows why this doesn’t work, so again I didn’t think it was necessary to go over it. First, someone like me — who visits the doctor a few times a year for routine checkups — is not responsible for the bulk of medical expenses. People in the final year of life, people with multiple chronic ailments, people whose illnesses require expensive treatments, etc. are responsible for the bulk of medical expenses. Klein is implicitly asking cancer patients to shop around for the cheapest chemotherapy. Which is absurd for reasons that I really do not intend to go into.

    Second, shouldn’t insurance companies already have an incentive to negotiate for the best prices? Why don’t they? Why would consumers — who certainly have less leverage than insurers — be expected to do a better job at negotiating or shopping around than the insurers do? And here’s a completely non-rhetorical question to which I don’t have an answer: I’ve wondered for a while why insurers don’t already tell their patients, “We’ll pay for your chemotherapy, but it’s half the price if you travel across the state to a cheaper hospital. We’ll even pay to drive you there and back, and for the hotel when you get there. Even after paying for all that travel, it’s still cheaper for us.”

    Third, I return always — practically every day — to Socialism: Converting Hysterical Misery into Ordinary Unhappiness for a Hundred Years. Who actually wants to spend his time on hold with insurance companies, trying to cajole them into paying for a coronary bypass? This is not the world I want to live in, and I doubt it’s the world you want to live in either. I have a hard time imagining that Philip Klein wants to live in that world, but maybe he expects that in Marketopia, concierge services will appear whose job it is to sit between you and the insurance company, negotiating on your behalf? Is adding another layer of rentiers really the dream end-state for conservatives? I honestly wonder what the goal here is.

Ezra Klein’s latest interview with Avik Roy is maddening — July 6, 2017

Ezra Klein’s latest interview with Avik Roy is maddening

The tl;dl to this episode is that Avik Roy believes some future hypothetical Republican health-insurance bill will be a significant improvement over the existing health-insurance market. It happens that the actually existing Better Care Reconciliation Act is not that bill, which Roy seems to have no problem conceding. It’s not clear at all from the interview which problems Roy actually thinks the BCRA solves, yet this is the bill about which Roy tweeted

There’s some hypothetical Republican Congress, says Roy, which will care about providing universal coverage for the poor, but it’s not this Republican Congress; there’s some hypothetical humanitarian Republican health-care bill which could hypothetically arise out of the ashes of the BCRA, but the BCRA is not that bill. Roy says we’re supposed to be happy with the BCRA because it’s the result of a debate between the hardcore “throw the poor out in the street” wing of the Republican Party and the “let’s give the poor some health insurance that they can’t afford” wing of the Republican Party. It’s a compromise, and at least they managed to get legislation out the door. The Democratic Party wants, as a core tenet of its platform, to provide health-insurance coverage to everyone, so the result of a Democratic compromise is something that’s at least ideologically coherent: we knew we couldn’t get single payer, and even the public option was too liberal for the likes of Joe Lieberman. It’s not at all clear what the result of this notional Republican compromise is supposed to accomplish.

I believe Roy is a person of conscience, and I take him at his word that he wants good coverage for everyone. Central to his belief system, though, seems to be a cramped view of government that is likely to make it work more poorly and get less public support. Health insurance, he says, is meant to prevent bankruptcy. If you believe that, you’re going to downplay the humdrum day-to-day use of health insurance — e.g., going in for a checkup, or getting a routine dental cleaning; those aren’t the sort of things that threaten people with medical bankruptcy. You’re also going to land, as Roy does, on a spare view of the government’s role in health insurance. The government, he says, should be subsidizing the poor more and the wealthy less. I agree with this, which is why I think it’d just be simpler to provide a service, pay for it with taxes, and make those taxes steeply progressive. Roy takes it in a different direction: if I understand him, he would have the government provide stingy care for catastrophic illnesses only, and only to the poor.

I have major concerns when we think about government like this. Universal programs get universal buy-in: if your wealthy grandfather gets Medicare, he’s going to fight like hell to keep it — even if, by Roy’s lights, he’s too wealthy to need it. In the world Roy envisions, only the poor, who don’t donate to political campaigns and often can’t afford to take time off from work to vote, have an incentive to fight for (Roy’s version of) Medicaid.

The government Roy envisions provides systematically poor service. It’s not just in health insurance; you see Roy-style government also in, say, mass transit. Hence the excellent Matt Yglesias Twitter thread ending here:

Here in the U.S. our mass transit is dirty, overcrowded, and unreliable, at least in part because of an Avik Roy-style ideology that thinks the government should be providing a “safety net”: if every other means of getting to work fails for you, at least you’ve got this one crappy option; if you’re poor, at least you won’t end up too far in debt trying to pay for your health care. So people come to think of government as the provider of crappy services. So they bail on those services and use the expensive private options. So the services become crappier and the cycle continues.

And in many cases what Roy envisions is just too complicated. Roy and Klein go back and forth about premiums, deductibles, cost-sharing, etc., as though we didn’t already have a government which is extremely good at collecting taxes. The Laniel Plan for government is: provide people an excellent service (subways, health care via the VA, health insurance via Medicare), then tax them for it, and make the tax code steeply progressive. (Roy and I would agree that removing the tax deduction for employer-sponsored health care is vital here. Doing so would be both good for the overall health system and very progressive.) No deductibles. No copays.

Scale out just the tiniest bit. The goal should be that the insurance you get via the government — whether it’s Medicare or Medicaid or the VA or the ACA exchanges — is as good as the best employer-provided health insurance. Why are we always settling for a “safety net”? We’re a wealthy country. We can afford to provide stellar coverage to everyone. Not only can we afford to provide excellent services; our habit of not providing them has led us to the state we’re in, where government services are near-universally perceived as … well, as the government cheese of whatever service they’re supposed to provide. We’re in a self-fulfilling vicious cycle now, where government services are perceived as poor, which makes cutting their funding politically easier, which leads to poor government services. I’d like to see us reverse that into a virtuous cycle.

It seems clear that Roy would disagree with all of this, and that Democrats would agree with most of it. To the extent that our laws look muddled — as, arguably, Obamacare did — it’s because we know that the thing we actually want (single-payer, basically) is not feasible, so we unfortunately compromise into something muddled. Whereas it’s not clear what Roy wants; and to the extent that it is clear what he wants, what he wants is something that would make the government work even less well. What’s truly terrifying is that Roy is the moderate in his party.

How long should parents wait before getting insurance for their newborns? — June 27, 2017

How long should parents wait before getting insurance for their newborns?

The revised BCRA includes this change to Obamacare’s “Special Enrollment Periods” (SEPs):

(4) EXCEPTIONS.—Notwithstanding paragraph (3), a health insurance issuer may not impose a waiting period with respect to the following individuals:

(A) A newborn who is enrolled in such coverage within 30 days of the date of birth. …

(internal quotation mark omitted)

This is a change from the ACA, which gives parents 60 days to enroll their kids in health insurance. I asked on Twitter (see thread ending here) what the justification would be for this change. The answer is basically: to avoid parents’ enrolling their kids in health insurance only when they know that the kids have serious illnesses. In this way, it’s of a piece with other policies that try to get a good mix of healthy and sick people into the risk pool.

How would we determine the correct length of an SEP? Zero days — i.e., you must sign your kid up for insurance on the day he or she is born — is clearly too short; parents have a lot of other stuff on their minds on that first day, and it’s unreasonable to expect them to take care of insuring their kids right away. On the other hand, there’s clearly some period of time — a year? Two years? Infinity years? — that’s too long. If we wait too long, we really will encourage people to only enroll their kids when they know the kids are sick.

So what’s the appropriate waiting period? To be clear, I don’t know if this is an economic question; it may be a moral one. And there may be no better answer than “see what the best private insurers do, and mimic them”; people shouldn’t get stingier/more-Draconian coverage just because they’re using a federal program.

I have similar questions about other aspects of the new Republican health-care bills. I’m not inclined to give them any benefit of the doubt, but how about, specifically, their change to age-ratings bands? This is the wonky way of saying: the ACA allows old people to be charged at most 3 times as much as young people; the AHCA increases that to a 5-to-1 ratio. I’ve heard howls of outrage from the left about the 5-to-1 band, and I certainly have a gut moral objection to it: I’d prefer that everyone just be charged the same amount (aka “community rating”). This comes from a place of preferring simple laws (one flat rate is simpler than a variety of rates), and from a belief that the young and healthy ought to be subsidizing the old and sick. That second reason doesn’t really justify a 3-to-1 age-rating band, though: we’re still subsidizing the old and sick with a 5-to-1 band; we’re just subsidizing them less.

But clearly there comes a point when an age-rating band is tantamount to no subsidy at all. A 100-to-1 ratings band would hardly count as a subsidy, for instance. So somewhere between 1-to-1 (community rating) and 100-to-1 (no subsidy) is the optimal (in an economic, moral, or other sense) band. Is there any objective way to determine the correct band?

Whenever I ask a question like this, I’m reminded of this comment by the much-beloved Cosma Shalizi:

our gracious host would really like to be just a little bit to the left of a technocratic center, and to debate those just a little bit to his right about optimal policies within a shared objective function, and pretending that it is a technical and not a political discussion. But because shit is fucked up and bullshit, and because everyone at all on the right has spent forty years (at least) doing their damndest to make sure shit is is fucked up and bullshit, even the smallest gesture in that direction is not so much reconciliation as collaboration. And so our host has sads. (So, for that matter, did Uncle Paul, before he learned to relish their hatred.) The realization that this applies to economists — that much of the discipline is not a branch of science or even of dialectic, but merely of rhetoric (and not in an inspirational, D. McCloskey way either) — cannot come too soon. Whether someone who still assigns Free to Choose to callow freshmen, in 2012, is really in a position to complain about the absurdities of Casey Mulligan is a nice question; but recognizing that half your erstwhile colleagues were always mere ideologists is a step in the right direction.

Maybe looking for optimal (in whatever sense) age-ratings bands is in the same vein.

Some quick hits on health care —

Some quick hits on health care

I wanted to quickly discuss two recent posts about health care.

First, this tweet is totally correct:

Whenever you see that Obamacare fails to cover a certain number of people, your next question should be: why does it not cover everyone? Obamacare covers people largely in a few ways:

  1. Medicaid expansion.
  2. Requiring those who lack employer-based coverage or Medicare to buy coverage on the individual market.
  3. A system of exchanges to organize the individual market.

These give rise to a few ways in which people could fail to be covered:

  1. Obamacare contained a provision under which states that refused to accept the Medicaid expansion would lose all their Medicaid grants; the Supreme Court ruled that this was unconstitutionally coercive, after which some states (mostly conservative ones, including some large conservative states like Texas and Florida) chose not to extend Medicaid coverage to their residents.
  2. Not everyone who was required to obtain health-insurance coverage did so; some chose to pay the mandate fine instead.
  3. Obamacare does not extend financial support to undocumented immigrants.

There are, then, a few obvious solutions to these problems:

  1. Conservative states could choose to take the Medicaid expansion.
  2. The requirement to obtain health insurance could be made easier through financial assistance (call this the ‘carrot’ approach); alternatively, the fines for not obtaining health insurance could be increased (the ‘stick’ approach).
  3. Essentially another form of the carrot approach from above: create a ‘public option’. That is, the government could set up its own health-insurance plan that would be a decent, cheap option for people who lack such options.
  4. Extend coverage to undocumented immigrants. (Sidebar: I’ve not looked for studies, but it wouldn’t surprise me if extending coverage in this way would be better for the country as a whole. If undocumented immigrants aren’t, say, getting their kids vaccinated, then that harms everyone else. By insuring more people, we may improve public health.)

No Republican plan, and certainly not the recent AHCA or BCRA, do any of these things. (See this Urban Institute report for a breakdown of the uninsured.)

Another thing I wanted to mention was this Vox piece comparing the tax cuts going to the 400 wealthiest Americans to the people who will be thrown off Medicaid. It’s true, and is a little more precise with the numbers than I’ll be. But I like being able to do quick sanity checks using cursory scans of publicly available numbers. So check this:

  1. The IRS has been tracking the tax returns of the 400 highest-income Americans for some time. Here’s the latest table. You’ll see that as of 2014, the total adjusted gross income for the 400 highest-income filers was about $127 billion. Very little of that was earned income; it was mostly dividends, capital gains, and so forth. Let’s say that about $120 billion from those top 400 earners was investment income.
  2. Two of the main ways the Affordable Care Act is funded are through a Medicare surtax of 0.9% for people earning $200,000 or above ($250k for couples), and through a 3.8% tax on investment income. Ignore the nonsense about, say, the tanning tax. That’s not where the real money comes from, and I’m inclined to believe that all the focus on it has been intended to distract from the taxes on wealthy people.
  3. Assuming $120 billion in investment income from the 400 highest-income filers, and about a 4.7% tax on all of that income, that’s $5.64 billion in tax revenue from the 400 highest-income filers.
  4. How many Medicaid recipients can $5.64 billion pay for? If I’m reading this table from the Kaiser Family Foundation correctly, Medicaid beneficiaries cost $5,736 each, on average. They’re cheaper in some states, more expensive in others. $5.64 billion divided by $5,736 per beneficiary is just south of a million beneficiaries — 980,000, to be inappropriately precise from numbers that were thrown together like this.

You could pay for nearly a million Medicaid beneficiaries just by applying this one small tax to four hundred taxpayers.