November 30, 2003
Neither a Worthwhile Drug Benefit Nor Worthwhile Medicare Reform

The Economist tells us what it really thinks about George W. Bush's Medicare bill: Economist.com | Medicare reform: ...The White House hopes the Medicare drug benefit will be as defining for Mr Bush's domestic agenda as Bill Clinton's adoption of welfare reform (long a conservative issue) was for his presidency. The political logic in all this is hard to fault. But turkeys, no less than slimmer poultry, eventually come home to roost. The full economic disaster of this one will probably not be apparent until after next year's election, since most of it will not come into effect until 2006. But people may begin to do the numbers before then. Whenever they do, it could be painful. For this hotchpotch of compromises provides neither a sensible drug benefit nor any real reform of the Medicare programme. From the old folks' perspective, the bill does not mean (as many believe) that Uncle Sam will now pick up the tab for all their prescriptions. The $400 billion that the bill promises is only a fraction of the amount that America's old will spend on drugs over the next decade. Besides, not all that money will go towards pill-buying. More than $100 billion...

Posted by DeLong at 05:28 PM

November 26, 2003
Notes: Robert Rubin's View of Health Care Reform

Robert Rubin and Jacob Weisberg's In an Uncertain World on health care: pp. 149-150: ...giving the Health Care Task Force a hundred-day deadline to submit legislation was probably unrealistic. More significantly, health care cuts across much of the domestic side of the government, and significant participants in the administration--including the members of the economic team, even though most agreed with the general approach--didn't think, at least until nearer the end, that this process aired their views in a way that seriously affected decision making. Consequently, people whose internal backing was crucial too often felt somewhat disaffected, and cooperation was less than it could have been. At one point, for instance, Lloyd Bentsen said he couldn't produce cost estimates because he didn't feel adequately informed. Also, important arguments and criticism weren't exposed in the way that would have occurred in an NEC-type decision-making process. And, of course, the health reform process had the additional complication of having the First Lady in charge. I [had] told [Clinton] I liked the idea--she was smart and effective and clearly knew the subject well.... What I didn't understand at that stage was how being the President's wife would complicate her role.... People tend to pull...

Posted by DeLong at 11:29 AM

November 21, 2003
Bad Medicare Bill III

Len Burman and Linda Blumberg--who know more than I do about this, and who have always called it straight--really don't like the Health Savings Account proposal: Tax Policy Center | A Project of the Urban Institute & the Brookings Institution: ...Here's one message from the new "bipartisan" Medicare bill currently being debated in Congress: Low-income elderly people are having a hard time paying for their prescription drugs, so we need... another tax cut for rich people! Give tax slashers credit for staying on message. Another tax cut for rich people was also the solution to war, international terrorism, economic recession, and "double taxation" of company earnings. Next month, President Bush will propose tax cuts as the cure for inadequate personal savings. Today's tax cut for rich people--health savings accounts (HSA)--has been all but lost in the debate about the proposed new Medicare prescription drug benefit, but this wolf in sheep's clothing shouldn't be overlooked. It is bad tax policy and bad health policy. The details of the current incarnation of HSAs are not yet public. The House-passed version would allow people covered by high-deductible health insurance policies to make tax-deductible contributions of up to $2,250 per year in a health...

Posted by DeLong at 03:07 PM

Bad Medicare Bill II

Henry Aaron--who knows infinitely more about this than I do--really doesn't like the Medicare bill: The Brookings Institution: ...Not only is the promised drug coverage badly designed insurance, other provisions in the bill undermine the protections Medicare and Medicaid now provide beneficiaries. And the drug bill's costs it will deepen enormous deficits that threaten not only future progressive legislation, but also Social Security and even Medicare itself. The design of the bill's drug insurance makes little sense. Any plan that covers the three-hundredth dollar a person spends on drugs in a year, but provides no coverage for that person's three thousandth dollar of spending has to be regarded as a bit wacky. Yet that is what this bill would do. It would end federal support for Medicaid drug benefits if patients are also eligible for Medicare, even where the new Medicare coverage would be narrower than existing Medicaid coverage. At the same time, it does nothing to remedy Medicare's other major failings. It does not cap out-of-pocket costs, even though almost all policies covering the nonelderly provide this essential "stop-loss" protection. It provides no additional help to pay crippling nursing home costs, which are poorly covered under the current program....

Posted by DeLong at 03:04 PM

Bad Medicare Bill I

The extremely intelligent Len Burman does not like the fact that the prescription drug benefit under consideration comes without a funding source: Tax Policy Center | A Project of the Urban Institute & the Brookings Institution: ...The proposed prescription drug benefit under Medicare and associated tax subsidies for health savings accounts may not directly dig the Medicare hole deeper, but they represent a major expansion of the Medicare program, which will only partially be financed by premiums. The Congressional Budget Office estimated that the new program will cost $394 billion over the next decade--more than four times the projected Medicare surpluses over the same period ($88 billion). The costs in the first decade, however, understate the long run costs because prescription drug coverage under Medicare does not begin until 2006. Assuming that costs will grow at the rate of overall Medicare outlays, the second ten years would cost nearly $1 trillion. In fact, if recent trends continue, prescription drug costs are likely to grow faster than overall health spending, so this is likely to be an underestimate......

Posted by DeLong at 02:58 PM

October 29, 2003
Medicare Reform?

The Wall Street Journal's David Wessel writes about attempts to use market competition to control long-run Medicare costs: WSJ.com - Capital: ..."Premium support" is a misnomer. It essentially means giving Medicare beneficiaries a coupon and letting them use it to choose among competing health plans -- the traditional government plan as well as private health plans. Pick a generous plan that costs more than the coupon, and you pay more. Pick a bare-bones or particularly efficient plan, and you pay less. The federal government and some private employers do something similar already. The hope is that if the elderly bear some financial consequences of their choices and health plans compete for the business, then costs won't rise as fast and quality will improve. That is a big switch from today's Medicare. The current system charges every participant the same premium, provides a fixed menu of benefits, and generally pays doctors and hospitals on a fee-for-service basis. About the only way the government controls spending is by squeezing those fees. The change would be akin to the continuing move away from defined-benefit pensions (for which employers promise a monthly check) to defined-contribution pensions like 401(k) plans (for which employers put aside...

Posted by DeLong at 08:17 PM

September 16, 2003
Virginia Postrel Is in Favor of Unions!

Virginia Postrel is in favor of unions--doctors' unions, that is: Dynamist Blog: MEDICAL PRICE CONTROLS Reader Skip Oliva, president of Citizens for Voluntary Trade writes: One price control on reimbursement rates that gets no discussion nationally is the FTC and DOJ's use of antitrust law to prevent physicians from organizing to negotiate with managed care plans. For example, if a group of pediatricians in a region get together and jointly negotiate with the dominant HMO to stop reimbursing them below cost for administering child vaccines (I'm taking this from a real case), the FTC would deem that an antitrust violation, since the doctors are not "competing" sufficiently... Of course, I don't believe that she is in favor of any other kind of union. And you have to just love the Orwellian touch by which the FTC's attempt to keep doctors from collectively fixing their prices by forming a conspiracy in restraint of trade is called a "price control."...

Posted by DeLong at 05:33 PM

September 12, 2003
Economic Growth Lunch: September 17

For the September 17 Economic Growth Lunch. 11:45 AM. Meet in the Berkeley Faculty Club main dining room. Hi Brad, Here's some reading for my lunch presentation. Could you pass it along to the group? I will talk about some additional work I am doing on my health & technology project: Interesting motivation (note pdf link at upper right): http://www.cbo.gov/showdoc.cfm?index=3521&sequence=0 Notice the key role played by Medicare and Medicaid... Background reading: "Why Have Health Expenditures as a Share of GDP Risen So Much?" http://elsa.berkeley.edu/~chad/health210.pdf Thanks! Chad [Jones]...

Posted by DeLong at 09:37 AM

June 10, 2003
The Devil Is in the Details

An issue I'm not qualified to have an opinion on--save that the entire history of the Bush Administration and the Bush campaign before it is that none of its cost or revenue or growth estimates are anything more than political hackwork: WSJ.com - White House Supports Medicare-Drug Program: ...the CBO's seemingly rosy cost estimate... stems from its prediction that only 2% of Medicare's 40 million beneficiaries, or 800,000 people, would switch to the private-care option... and rein in future [Medicare] costs. Even when added to the existing Medicare+Choice health-maintenance organization option, that would mean just 12% of beneficiaries would be in private plans of one type or another. But Mr. Thompson said he isn't concerned about the CBO's estimate, because actuaries at the Centers for Medicare and Medicaid Services had projected a "much higher" percentage of participants, ranging from "high 30s, low 40s," he said, enough to make the president's plan viable......

Posted by DeLong at 10:14 AM

May 05, 2003
Is Health Insurance "Just too Boring to Become Informed About"?

James Taranto of the Wall Street Journal believes that health insurance reform is inherently boring and beneath the notice of anyone who matters. Gary Farber begs to disagree... Amygdala: BLIND SPOTS: ARE THEY COVERED BY HEALTH INSURANCE? James Taranto, of the Wall Street Journal's Best of The Web, opines of Gephardt's universal health insurance plan: We have no opinion on the merits of the plan and the criticisms; the whole topic is just too boring to become informed about. I know this may come as a shock to the WSJ (which does much good reporting, to be sure), but: if you're an American without health insurance, the subject is very, very, very, very, very Not Boring. It says here: The Census Bureau estimates that 44.3 million people in the United States, or 16.3% of the population, had no health insurance in 1998 -- an increase of about 1 million people since 1997. I dunno, this is such a boring subject, would James Taranto like to pay my emergency room bill from last week? Don't be informed, James. Just send me a check. It's less boring that way. Certainly the most academically interesting thing about health insurance reform is that it...

Posted by DeLong at 08:53 PM

March 30, 2003
The Death of Dr. Carlo Urbani

I don't know how far this disease will spread, or how good a job we'll do of finding out how to treat it. But our odds are much, much better because of Dr. Carlo Urbani: Bug warrior pays with his life - MARCH 31, 2003: HE ALERTED WORLD TO THE DISEASE, NOW... Bug warrior pays with his life. WHO physician who first raised alarm about Sars dies in Bangkok after being infected while working with patients. DR CARLO Urbani, the scientist who first discovered that a dangerous new microbe was beginning to spread around the globe, succumbed on Saturday, in a Bangkok hospital bed, to the frightening disease he alerted the world to. It was the 46-year-old, an Italian epidemiologist at the World Health Organisation's (WHO) office in Hanoi, Vietnam, who first responded last month when anxious hospital officials phoned to report that a sick American businessman was infecting doctors and nurses with a strange pneumonia. Said WHO Hanoi representative Pascale Brudon: 'Carlo was the one who very quickly saw that this was something very strange. When people became very concerned in the hospital, he was there every day, 'We're all devastated.' Dr Urbani treated the sick Chinese-American businessman, Mr...

Posted by DeLong at 04:25 PM

March 17, 2003
CDC Atypical Pneumonia Briefing

Excerpts from the Center for Disease Control's briefing on "Atypical" pneumonia. CDC Media Relations - Telebriefing Transcript - March 15, 2003: MR. SKINNER: Now I'd like to turn it over to Dr. Julie Gerberding, Director of CDC. DR. GERBERDING: Thank you. I wanted to start by explaining why we are doing this on a Saturday. I'm fully aware this is not the optimal time to do a media briefing, but as the Secretary said, the situation is evolving very quickly, and we really do need to get the information out. And, hopefully, you will appreciate that getting information out any time is better than no information. So we're going to tell you what we know today and recognize that this is ongoing, and we'll be updating you as regularly as we have new information. You will also be able to find information on the WHO website, which is their main mechanism for providing international summaries of these health data. And we will have links and so forth on our website as we go forward. The situation today is that WHO has received reports of more than 150 new or suspected cases of a syndrome called Severe Acute Respiratory Syndrome, which...

Posted by DeLong at 10:23 AM

February 11, 2003
The Increasingly-Strong Case for National Health Insurance

Daniel Davies points out that the rapid approach of genetic screening makes national health insurance inevitable--at least if we don't want to have a *huge* problem as those whose genes are bad for expensive-to-treat diseases find themselves very, very poor indeed. D-squared Digest -- A fat young man without a good word for anyone: ...Solutions? Sorry, don't really have one, unless one seriously thinks that the genie of genetic screening can be pushed back in the bottle. I'd note, however, that the engine of most of these "problems of asymmetric information" (in this case, the adverse selection problem which makes the pooled equilibrium solution with private information untenable) is usually an embedded option. In this case, it's the option of the insured party to choose whether or not to buy insurance. Since you can't force them to buy the product, they will only do so when it's to their advantage, and this turns out to be enough to knock down the existence of the market. I speak as a member of a health insurance scheme (the National Health Service) which doesn't have the property that you can refuse to buy it if you don't want it, and would humbly suggest...

Posted by DeLong at 06:24 PM

August 02, 2002
Jim Cooper Is Good People

The likelihood that Tennessee's Jim Cooper will be returning to the Congress makes me very happy. Back during the 1993-1994 health care debate, he was a very smart and constructive influence--if Bill Clinton had been smart enough to put someone like Cooper in charge of developing the health care reform plan, I would have been willing to bet heavily on success. It's a shame he lost his 1994 Senate race. Tennessean.com - Printer-Friendly Version Former U.S. Rep. Jim Cooper won a resounding victory in the 5th Congressional District Democratic primary last night, garnering almost half of the vote with most precincts reporting.His top two opponents -- John Arriola and Gayle Ray -- had conceded before Cooper's 8:30 p.m. victory speech. Cooper is expected to be the next U.S. representative from the heavily Democratic district that includes most of Davidson County and portions of Cheatham and Wilson counties. He thanked voters in those three counties for support. Cooper, 48, has been the presumed front-runner for much of the race and far outspent his opponents with television ads that started early in the campaign. He spent more than $1 million, with Ray spending about $650,000 and Arriola spending about $400,000. He had...

Posted by DeLong at 08:22 AM