Fun with Heritage on Health Affairs blog

Sep 25, 2011• 1

Here’s my comment on a recent Health Affairs blog post from Heritage’s Nina Owcharenko whining about the ACA as a g’vermint takeover.I wrote “I’m really pissing myself about this one. Only in the bizzarro world of American politics can the nutjobs on the right, and not just any nutjobs but on the right but Nina’s actual colleagues at Heritage design the basics of a health care policy and then declare it something that’s antithetical to their very being. Furthermore, it’s only in bizzarro world of American politics that a massive expansion of PRIVATE health insurance legislated in the ACA is called a government takeover, or in Nina’s words puts the “trend toward government-based coverage on the fast track”. If Nina had bothered to check she’d realize that the vast majority of Medicaid enrollees — 66% according to KFF– are in private plans and the rest are being moved there. Yet this is another expansion of government!” Of course if you look at the Health Affairs version where they moderate comments, you’ll note that some of the words I wrote and the words they publish are slightly different

Categories: Matthew Holt

Surely it is not so difficult to understand why PPACA expands the role of government in markets for private health insurance. HHS has been given broad ability to dictate the standards for the structure of private coverage that may be offered by insurers. Detailed mandates on coverage are then coupled it with requirements for even more extensive reporting on the nature of the patient, diagnosis and treatment. This is not to mention an expanded range of “quality” measures that are almost wholly dependent on “process” measures – that in most cases have not been shown to be linked to significant improvements in health across a spectrum of patients. Only in a few instances of chronic conditions do we actually have reliable information on what works. Quality measures are in any case so fragmentary that they effectively act as a smoke screen: pretend we can track the details of medical treatment and maintain quality, so that we can impose incentives to restrict access to care without making anyone worry.

In addition, restrictions on medical loss ratios that effectively eliminate incentives for insurers to innovate in order to improve efficiency in the provision of care. Why bother when their profitability is defined ahead of time! Markets work by allowing producers to be a residual claimant of profits if productivity is improved (see Smith, Adam, “The Wealth of Nations”). Given pre-prescribed profitability, it’s less risky to act as a neutral intermediary and just pass costs directly through to the insured population.

So who then, has the incentive to improve the efficiency of the health system? I know, we’ll build ACOs to do that! Instead of building on the structures developed by existing insurers to manage care, we have to have providers recreate these structures and manage provision of care themselves. Do the providers have the skills to coordinate and manage care? Do they have the time to take on the massive effort involved in coordinating care and withholding “unnecessary” care. Will patients like restrictions on access to specialists any better coming from an ACO than from an HMO? Maybe not, but we don’t trust the current insurers, so lets handicap them into uselessness and build a new system from scratch to do the more or less the same thing.

I also find the your comments to be really unnecessarily obnoxious in tone. There is an enormous amount of uncertainty in determining what works in markets for health care – meaning a lot of room for disagreement in a construction discussion. But this kind of rhetoric only encourages the segmentation of discussion into primarily like-minded groups. If you want to be an open forum for health policy issues, this is the wrong direction to take.

1 reply »

cordelia says:

Oct 18, 2011 at 8:59 am

Surely it is not so difficult to understand why PPACA expands the role of government in markets for private health insurance. HHS has been given broad ability to dictate the standards for the structure of private coverage that may be offered by insurers. Detailed mandates on coverage are then coupled it with requirements for even more extensive reporting on the nature of the patient, diagnosis and treatment. This is not to mention an expanded range of “quality” measures that are almost wholly dependent on “process” measures – that in most cases have not been shown to be linked to significant improvements in health across a spectrum of patients. Only in a few instances of chronic conditions do we actually have reliable information on what works. Quality measures are in any case so fragmentary that they effectively act as a smoke screen: pretend we can track the details of medical treatment and maintain quality, so that we can impose incentives to restrict access to care without making anyone worry.

In addition, restrictions on medical loss ratios that effectively eliminate incentives for insurers to innovate in order to improve efficiency in the provision of care. Why bother when their profitability is defined ahead of time! Markets work by allowing producers to be a residual claimant of profits if productivity is improved (see Smith, Adam, “The Wealth of Nations”). Given pre-prescribed profitability, it’s less risky to act as a neutral intermediary and just pass costs directly through to the insured population.

So who then, has the incentive to improve the efficiency of the health system? I know, we’ll build ACOs to do that! Instead of building on the structures developed by existing insurers to manage care, we have to have providers recreate these structures and manage provision of care themselves. Do the providers have the skills to coordinate and manage care? Do they have the time to take on the massive effort involved in coordinating care and withholding “unnecessary” care. Will patients like restrictions on access to specialists any better coming from an ACO than from an HMO? Maybe not, but we don’t trust the current insurers, so lets handicap them into uselessness and build a new system from scratch to do the more or less the same thing.

I also find the your comments to be really unnecessarily obnoxious in tone. There is an enormous amount of uncertainty in determining what works in markets for health care – meaning a lot of room for disagreement in a construction discussion. But this kind of rhetoric only encourages the segmentation of discussion into primarily like-minded groups. If you want to be an open forum for health policy issues, this is the wrong direction to take.