Sunday, January 19, 2014

The Bad Gets Worse

...for U.S. health care spending.

The graph below illustrates how the pernicious triad of government meddling in the health care system - Medicare, Medicaid, and (worst of all) the tax exemption for employer provided health insurance - has pushed the cost of U.S. health care to unaffordable levels.
And this data is for 2010, before Obamacare kicks in and worsens the picture. As Avik Roy points out, "the experts working for Medicare’s actuary have reported that in its first 10 years, Obamacare will boost health spending by 'roughly 621 billion' above the amounts Americans would have spent without this misguided law."

A few months ago in a National Review article, Kevin Williamson explained how two models of health care delivery, those of Singapore and Switzerland, with two of the lowest per capita levels of government health care spending (see above), offer its citizens universal coverage at a small fraction of what the U.S. spends, while providing better health care.

Both Singapore and Switzerland have systems in which overall health-care spending is lower than it is in the United States but out-of-pocket health-care spending is higher. The shocking thing is this: So does practically every other country. A recent World Bank study finds that in the United States, only 20 percent of health-care spending comes in the form of out-of-pocket expenses paid by consumers. In Singapore, it is 88 percent and in Switzerland 72 percent. But even the single-payer systems of Canada and the United Kingdom feature more out-of-pocket spending by consumers, 49 percent and 53 percent respectively. How is it that in countries with “free” universal health care consumers pay more out of pocket than they do in the United States? The short answer is that treatment in single-payer systems tends to be kind of terrible, which is why a tenth of British subjects use private plans rather than the NHS. And a significant share of Britons who use the NHS must be turning to private care fairly often, since it is estimated that the typical medical specialist in the U.K. supplements his income by 50 percent moonlighting in private practice. In Canada, about 75 percent of people carry supplementary private insurance, and about 28 percent of all health-care expenditures happen in the private sector.
What that means is that health care in Singapore and Switzerland is less expensive because it is more expensive. And both countries enjoy superb quality of care. is worth remembering that under Obamacare there will still be millions of Americans with no health-insurance coverage, while many (and possibly most) of those added to the coverage rolls will simply be given Medicaid cards, which practically come with their own spinal infections*. All together, that means that we have managed to combine the worst elements of the state-run systems with the worst elements of the private systems. We have designed a structurally defective system and entrusted its execution to a gang of politically connected incompetents with less technological sophistication than your AOL-using grandmother.

*Williamson is referring to a study that found that following spinal surgery, Medicaid patients had a 68 percent higher rate of complications than patients with private insurance.

Also - To be filed in the "Didn't I Say That?" category. Apparently I inspired Peggy Noonan's latest weekend column (WSJ, 1/17) in which she decries the selfishness of our public "servants". She enlists two examples - Chris Christie and (of course) Barack Obama. For Christie, she points out how his speech at the 2012 Republican National Convention was more about him than the Republican presidential candidate, Mitt Romney. Then she goes on to cite Christie's exploitation of the Hurricane Sandy disaster.

...(the speech) fit in with his effusive embrace of Mr. Obama in the days before the 2012 election. Any governor would show strategic warmth for a president in charge of ladling out federal money after disaster. But Jersey was about to re-elect president Obama by nearly 18 points, and Mr. Christie wanted to win over Democrats when he ran the next year.
He was already going to win big. But he had to win bigger, had to have more.

On January 11, I wrote -

...(Christie's) love fest with Obama during the big Hurricane Sandy photo-op was a ploy to make him look like a moderate centrist to the blue state New Jersey electorate. He was telling the truth when he said that he didn't "give a damn about the election", meaning the 2012 election. What he was doing was giving a big damn about the 2013 (NJ) and 2016 elections. Meanwhile, the Romney campaign was badly hurt by Christie's self-serving behavior.

Coincidence? I think not.

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