Tag Archive for: Healthcare

The Chart that Could Undo the Healthcare System: Skyrocketing costs are being driven by bureaucracy

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For a larger view click on the image.

This chart looks remarkably similar to a chart that tracks the growth of the administrative class in higher education. And that’s no accident. As the physician who shared the chart writes:

[The chart] outlines the growth of administrators in healthcare compared to physicians over the last forty years. And, it includes an overlay of America’s healthcare spending over that same time. Take a look at the yellow color. A picture is worth a thousand words, isn’t it?

You see, when you have that much administration, what you really have is a bunch of meetings. Lots of folks carrying their coffee from place to place. They are meeting about more policies, more protocols to satisfy government-created nonsense. But, this type of thing in healthcare isn’t fixing things. It’s not moving the needle.

What moves things is innovation.

Innovation, indeed. But it’s not easy to innovate in stagnant, hyper-regulated, captured sectors.

In Tyler Cowen’s 2011 book the Great Stagnation, he argued that the areas that were stagnating the most are education, healthcare, and government. Writing about Cowen’s book in his Wall Street Journal blog, Kelly Evans says:

A particular challenge we confront is that our progress as a society — chiefly, in extending and improving lives — is now at a point in which it appears to be undercutting our potential for further advancement. Part of this, Mr. Cowen observes, stems from well-meaning efforts to do more with education, government, and health care that instead seem to have backfired and left us with noncompetitive institutions closer to failing us than to serving us well.

With respect to healthcare, this chart gives us an indication of why these efforts are backfiring: The more an industry becomes like a regulated utility, the more administrators are required to enforce the regulations and administer the programs. And they, as well as the programs they administer, are expensive. All manner of distortions follow, and the costs of healthcare go up proportionally.

There also seems to be perverse incentives associated with subsidy: The more resources you dump in, the more expensive that industry becomes. You might shift the costs around on unsuspecting groups (like taxpayers), but in almost every case we see premium hikes and tuition increases in both of these industries, despite (or rather because of) the truckloads of federal largesse.

But they will have to stop at some point — one way or the other.

The US healthcare system has become something of a Frankenstein monster, with pieces stitched together ad hoc by regulators and special interests. The ACA seems to have ignored most of what really needed fixing and doubled down on the worst aspects of our system. Price transparency, affordability, innovation and competitive entrepreneurship have all gotten worse, not better. And the beast has grown to take over more than 17 percent of GDP.

(And if you think 17 percent is about right, consider that in Singapore healthcare takes up less than 3 percent of GDP.)

The trouble with any further healthcare reform is that a massive coalition of special interests in multiple sectors has formed as a husk around the entire industry — a care-tel, if you will — and they will be very difficult to dislodge.

Max Borders

Max Borders is the editor of the Freeman and director of content for FEE. He is also co-founder of the event experience Voice & Exit and author of Superwealth: Why we should stop worrying about the gap between rich and poor.

The White House is Lying About Climate Change and Health

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Let us begin with the understanding that there is no connection between the climate and health. The climate is something measured in decades and centuries, so what happened in the last century has nothing to do with whether you are sneezing today.

The weather surely can help generate health problems. For example in the northeastern states, the Lyme disease season is beginning. Between 1992 and 2010 reported cases of Lyme disease doubled to nearly 23,000 according to the Centers for Disease Control and Prevention, but CDC officials believe the actual number of those infected may have been three times that number.

Lyme disease is transmitted by deer ticks and since these tiny insects will hitch a ride on birds, squirrels, mice and small animals as well, even if you live in an area without deer, the possibility of being bitten by a deer tick is just as likely. This increases for people who love gardening or outdoor recreational activities such as hiking and camping. Children, too, are particularly susceptible.

The fact that Lyme disease shows up in the Spring simply tells you that the warm weather facilitates the tick population. The weather has always been tied the mating habits and activities of various species, but that does not mean that is constitutes a massive threat to everyone’s health.

That’s not the way the White House sees it. On April 7 the administration made it official. It announced that it is “committed to combating the health impacts of climate change and protecting the health of future generations.”

Since the climate changes over extended periods of time, not just month to month, one has to wonder what “health impacts” the White House has in mind. The last Little Ice Age lasted from around 1300 to 1850. It was cold all over Europe and North America. Does the White House propose that it can “protect” us from a new one? If so, that’s absurd.

Let us understand, too, that there has always been what the White House announcement calls “extreme weather events.” Notice the change from “climate” to “weather”? Among the events identified are “severe droughts and wildfires to more powerful hurricanes and record heat waves…” Has there been a time when such weather-related events have not occurred? In fact, there are times when they don’t. For example, there hasn’t been a single Category 3-5 hurricane hit the U.S. mainland since 2005!

The White House has launched a massive brainwashing effort using many elements of the federal government to frighten Americans using the “climate” and the “weather.” How deceptive is it?

One example is sufficient. The President has claimed that climate change was the cause of one of his daughter’s asthma. In its announcement, it claimed that “In the past three decades, the percentage of Americans with asthma has more than doubled and climate change is putting these individuals and many other vulnerable populations at greater risk of landing in the hospital.”

Here’s what the Asthma and Allergy Foundation of America has to say about the various causes of asthma:

“Since asthma has a genetic origin and is a disease you are born with, passed down from generation to generation, the question isn’t really ‘what causes asthma’, but rather ‘what causes asthma symptoms to appear?’ People with asthma have inflamed airways which are super-sensitive to thinks which do not bother other people.”

What the Asthma and Allergy Foundation of America is telling us is that there is no direct connection between either the climate or the weather and the illness called asthma.

Those who suffer this disease however can be affected by a range of triggers such as irritants in the air, pollens, molds, and even cockroach droppings. Infections such as colds, flu, and sore throats are among the leading triggers for asthma attacks in children.

The facts, the truth, were no deterrent to the April 7th White House twelve-page announcement of all the things it intends to do to brainwash Americans into believing that there is a connection between the “climate” and health.

Here’s just a few of the dozens of events and programs it will initiate so that the media will report on them and thus convey the message that climate change is the greatest threat to Americans today:

“The Administration is expanding its Climate Data Initiative to include more than 150 health-relevant datasets…this is intended to help communities and businesses reduce the health impacts of climate change.” Only there are no such impacts.

The Administration is announcing a coalition of Deans from 30 medical, public health, and nursing schools around the country, who are committing to ensure that the next generation of health professionals is trained to address the health impacts of climate change.” Only there are no such impacts.

“Announcing the White House Climate Change and Health Summit.” It will feature the Surgeon General who will lead discussions to “the public health impacts of climate change and identify opportunities to minimize these impacts.” Only there are no impacts and nothing that could be done if there were.

From the Department of Homeland Security to the Department of the Interior and the Environmental Protection Agency, many elements of the federal government will be integrated into this massive brainwashing effort.

What can be done to ignore a government determined to lie to everyone about a “threat” that does not exist? Not much.

© Alan Caruba, 2015

RELATED ARTICLE: Earth Day: 22 Ways to Think about the Climate-Change Debate

Not Just the VA: Another example of government failure in healthcare by Terree P. Summer

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Jay Littlewolf, a 54-year-old man, said inadequate healthcare at the government clinic compounded his problems with a diabetic ulcer on his right foot. He said that at one point he was told the remedy was to cut off his toes. Instead, he sought private medical treatment in Billings, Montana. “I don’t like those comments when the podiatrist says he just wants to cut your toes off,” Littlewolf said. “I know there are alternatives. Common sense says that.” To date, Jay has spent $3,000 out of pocket and expects his total bill to exceed $20,000. He wants to be reimbursed—and pay the balance of the bill—but the government agency has refused.

“We are trained and born not to challenge the system,” he said. “I’m not trying to challenge the system. I just want my bills paid. I wanted to save my toes, my foot, my leg, my life. All I want to do is mow my darn lawn.”

Littlewolf’s story is reminiscent of the stories of neglect and incompetency at the U.S. Department of Veterans Affairs (VA), the agency charged with caring for American veterans. Last April, news broke that the VA had serious problems. They came to light in its Phoenix  facility, where more than 40 veterans died while waiting for care. An internal audit released June 9, 2014, revealed that more than 120,000 veterans nationwide were left waiting or never got care and that pressures were placed on schedulers to use unofficial lists or engage in inappropriate practices to make waiting times appear more favorable. On June 11, 2014, the Federal Bureau of Investigation opened a criminal investigation of the VA.

Littlewolf, however, isn’t a veteran, and he was not dealing with the VA. Jay is a Native American and a member of the Northern Cheyenne reservation in Montana. He’s talking about the Indian Health Service (IHS), another federal government-operated healthcare system. When the scandal broke about the VA, the media, pundits, and politicians quickly concluded that the remedy for the VA’s ills was reform: more funding, regulation, and accountability. But the occurrence of the same problems at the IHS suggests that these sorts of problems may be endemic to government-run systems. Unfortunately, few are stepping up to recommend a more permanent fix than to enact reforms to the existing systems. What is needed is the privatization of healthcare services for those who suffer under government-controlled programs.

The IHS is familiar to me, as my grandfather was an IHS physician in Arizona. There are 22 tribes in my home state, and growing up there, I saw the issues facing Native Americans up close. The IHS has problems with long waits, inferior care, rationing, and lack of access—just as with the VA and with nationalized healthcare systems abroad. And, like the VA, when healthcare is under government control, it becomes inefficient and ineffective. Just ask Littlewolf.

In 2004, a report of the U.S. Commission on Civil Rights unsurprisingly blamed the substandard care in the IHS on the usual culprits: lack of funding, hiring the wrong people, retention and recruiting of qualified healthcare providers, and maintenance of aging facilities. As usual, the report didn’t point to the real problem: the program itself.

As with all government programs, inevitably most of the funding goes to pay bureaucrats and administrators, leaving little money for medical staff salaries and treatment. Low salaries contribute to unfilled vacancies, poor retention, and low morale among staff, causing waiting lists and inferior treatment for patients. The IHS has job vacancy rates for healthcare professionals ranging from 12 percent to 32 percent.

Bureaucrats cover up their mistakes with phony documents, like those found in the VA scandal, showing that patients are being promptly treated. Ultimately, supporters of government control lament that if only the right people could be found to run the program, everything would be fine.

In order to justify their salaries, government administrators promulgate endless regulations, bogging down the treatment process with red tape. Additionally, the IHS has a bloated bureaucracy, with over 14,000 employees, including eight assistant surgeon generals, 439 “Director Grade” bureaucrats, and 601 “Senior Grade” bureaucrats. Yet, in 2005, per capita federal spending on patients by the IHS was only $2,130—half the amount spent on federal prisoners’ care.

In a move in the right direction, in 2008, U.S. Senator Tom Coburn (R-OK), introduced an amendment to the Indian Health Care Improvement Act that would allow tribal members to choose from various healthcare coverage options, including the ability to purchase private health insurance. According to Senator Coburn, the IHS currently rations services on the basis of whether a particular service will save a “life or limb.” Unfortunately, but not surprisingly, Coburn’s amendment was voted down, 28 to 67.

While Coburn’s attempt at reform was laudable—and would have, at a minimum, provided an option for Native Americans seeking better health care—it didn’t really address the root of the problem. The only lasting solution that would ensure improvements in care and health outcomes would be the privatization of services to Native American tribes. I’m not confident that such a change is likely in the near future—for the IHS or for the VA. And, unfortunately, the problems that have plagued the VA and the IHS are harbingers of a future under our increasingly socialized healthcare system.

ABOUT TERREE P. SUMMER

Terree P. Summer is an economist and author specializing in healthcare and the federal budget. She is the author of What Has Government Done to Our Health Care? published by the Cato Institute (1992).

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.

New York Federal Reserve: Higher Health Costs, More Part-Time Workers from Obamacare

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Obamacare puts employers in a bind, two New York Federal Reserve surveys show. Employers’ health care costs continue to rise, and the health care law is driving them to hire more part-time labor, CNBC reports:

The median respondent to the N.Y. Fed surveys expects health coverage costs to jump by 10 percent next year, after seeing a similar percentage increase last year.

Not all firms surveyed said the Affordable Care Act (ACA) is to blame for those cost increases to date. But a majority did, and the percentage of businesses that predicted the ACA will hike such costs next year is even higher than those that said it did this year.

Obamacare’s higher costs will cascade down to consumers. The surveys found that “36 percent of manufacturers and 25 percent of service firms said they were hiking prices in response” to Obamacare’s effects.

The Empire State Manufacturing Survey polls New York State manufacturers, and the Business Leaders Survey polls service firms in the New York Federal Reserve District.

A June Gallup poll found that four in ten Americans are spending more on health care in 2014 than in 2013.

Let’s dig into the numbers.

When asked, “How would you say the ACA has affected the amount your firm is paying in health benefit costs per worker this year?” More than 73% of manufacturers and 58% of service firms said the health care law has increased costs this year.

Companies are also more pessimistic about Obamacare next year. Over 80% of manufacturers and 74% of service firms expect health plan costs to increase in 2015.

New York Federal Reserve Empire State Manufacturing and Business Leaders Surveys

Source: New York Federal Reserve. For a larger view click on the image.

Employers were also asked what effects Obamacare is having on their labor forces. Over 21% of manufacturers and nearly 17% of service firms say they reduced the number of employees because of the law, while only about 2% of each have hired more workers. What’s more, nearly 20% of both manufacturers and service firms say that Obamacare has pushed them to increase their proportion of part-time workers, but just under 5% of each type of firm said they have lowered them. Presumably this is due to the perverse incentives from Obamacare’s employer mandate.

This data fits with research from the Atlanta Federal Reserve that found that since the recession, 25% of firms have a greater share of part-time workers, while only 8% have a lower share. This data also fits with anecdotes from around the country of employers saying that they’re hiring more part-time workers because of Obamacare.

New York Federal Reserve Empire State Manufacturing and Business Leaders Surveys

Source: New York Federal Reserve. For a larger view click on the image.

The sad truth is the health care law is pushing higher health costs onto employers and incentivizing them to hire more part-time workers. Despite passing a law in 2010 loaded with rules, regulations, mandates, and taxes, health care reform is needed more than ever. For solutions that that will control health care costs, improve quality, and expand access, check out the U.S. Chamber’s Health Care Solutions Council report.

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

Tragedy of the Healthcare Commons: The Affordable Care Act contributes to an already unsustainable situation by D.W. MacKenzie

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Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the healthcare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor-supply issues. Give the mounting difficulties with and growing concerns about the ACA, it is worthwhile to reconsider the main issues regarding this program.

The Congressional Budget Office (CBO) recently published a report examining some of these problems. It contains nothing new. Many commentators have discussed the projection of lower labor-force participation. Obamacare subsidies will allow lower-income Americans to work less. People do in fact work less if their costs are shared. The tendency of people to withhold work from collective undertakings is known among economists as a tragedy of the commons.

Reduced labor-force participation means both lower total tax revenue and higher spending on government benefits. The CBO’s long-term forecasts report serious imbalances between tax revenues and federal spending. Federal deficits are projected to remain high, but “manageable,” for about a decade.

The costs of entitlements, along with regular budget items (defense and non-defense), are relevant to any discussion of the ACA’s affordability. The retirement of the baby boomers, though, will result in steadily rising costs for older entitlement programs. Taxpayers are already legally responsible for a national debt of $17 trillion (which  will hit $20 trillion by the time Obama leaves office). Interest payments on the national debt are low for the time being, but they won’t stay that way forever. The Medicare trustees have admitted to a long-term deficit of $34 trillion, but independent estimates run much higher. Social Security has an unfunded liability of more than $12 trillion. These costs pile on top of the current regular budget of $3.5 trillion, not to mention projected growth in this budget. Taxpayers are also responsible for the ACA’s cost overruns. Section 1342 of the ACA makes taxpayers responsible for bailing out insurance companies if the need arises.

Taxpayers are legally obligated to finance all of the above-mentioned expenditures, debts, and unfunded liabilities. People who believe in individual liberty reject the idea that people are morally obliged to fund ever-rising Federal expenditures. But the dispute over whether American taxpayers should fund projected federal spending is rendered academic by the fact that younger Americans will not be able to afford to pay for all of it. The commons created out of the New Deal and the Great Society is collapsing.

Economist Larry Kotlikoff estimates that average rates of taxation would have to rise 56 percent to cover projected increases in federal expenditures. Kotlikoff’s estimate may be high, but even a lower figure would leave Americans in dire financial straits. Taxpayers simply will not be able to fund all projected increases in all current federal programs. Bond investors will not finance our rising national debt in unlimited amounts. The ACA’s increased spending and lower labor-force participation, on top of these increases, makes national bankruptcy that much more likely.

National bankruptcy is not inevitable. The U.S. government is heading toward bankruptcy superficially because politicians have failed to set rational budget priorities, and fundamentally because citizens expect far too much of the public sector. The ACA was created out of concern that financial considerations bar access to healthcare to many people. And Americans do spend a large percentage of national income on healthcare.

The good news is that “we” have a substantial amount of leeway to save money on healthcare. Data on the overall effectiveness of public healthcare spending is clear, but not nearly as well known among voters. For example, The RAND Corporation conducted a health insurance experiment from 1974 to 1982, which showed that making healthcare “free,” or available at no personal marginal cost, does lead people to buy more. Much of this extra healthcare is inappropriate or largely unneeded, however. When people pay for more of their healthcare out of pocket, they tend to waste less money. The RAND study concluded, “In general, the reduction in services induced by cost sharing had no adverse effect on participants’ health.” Many other studies cast doubt on the effectiveness of providing healthcare at no private cost. According to another study, “Medicare enrollees in higher-spending regions receive more care than those in lower-spending regions but do not have better health outcomes or satisfaction with care.” Studies of people with health savings accounts (HSAs), as compared with people with plans like PPOs, show HSA holders control premium inflation better than their PPO counterparts.

Having people pay deductibles or bear other out-of-pocket costs causes us to economize on healthcare. Health insurance pools risks and creates a type of commons, whether done privately or publicly. The private commons of insurance companies does, however, have limits. Private insurance companies deny some types of coverage, depending on how much insurance people contract for in the first place. In other words, private insurance is not an open commons—it specifies the extent to which each policy holder can draw out of the insurance pool.

Public insurance programs lure people in by promising more benefits than private insurance plans offer. Yet public programs ultimately run into the basic problem of scarcity. The ACA pushes people out of very basic insurance plans into plans with higher levels of coverage, but excessive coverage is a major source of high healthcare costs. Americans spend a sizable portion of GDP on health expenses (17.9 percent in 2011). The overconsumption of healthcare by overinsured Americans is both a major source of excessive costs and a cost that can be cut with little adverse effect.

The tendency of people to waste money in open-access healthcare financing is simply going to produce another tragedy of the commons. Too few young people have been signing up at Healthcare.gov because younger Americans are mostly smart enough to avoid paying into a commons. Americans are signing up mainly because they expect to draw subsidies out of this commons.

Problems with managing a commons in healthcare financing are serious. Once someone enters into a life-threatening medical condition, they and their family will want every possible available step taken to save this person—provided that “someone else” pays. Passing costs onto someone else is, aside from being morally dubious, unworkable in the aggregate because we are each “someone else” to everyone else.

There are many costs associated with government intervention into the healthcare industry: administrative and regulatory compliance costs, elevated costs of litigation and court rulings, lobbying costs, costs of perverse incentives. The perversities associated with treating health as an open-access and politicized commons have, along with other, government spending programs, created an unsustainable fiscal situation. The unaffordability of the Affordable Care Act leaves us with two main options: Congress can repeal the ACA immediately through the legislative process, or we can all wait for the repeal process of national bankruptcy.

ABOUT D.W. MACKENZIE

D. W. MacKenzie is an assistant professor of economics at Carroll College in Helena, Montana.

Ten Bills, Ten Solutions to save America

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Russ Vought, Political Director for Heritage Action for America, notes, “During the State of the Union address, President Obama called for 2014 to be a year of action. We agree, but Americans deserve action that will take the nation in the right direction. That’s why, with no clear goals or mandate from the Washington Establishment, we hosted the first Conservative Policy Summit.

On February 10th, Heritage Action brought together leaders to highlight conservative bills that would improve the lives of hardworking Americans. 10 speakers. 10 solutions.

[youtube]http://youtu.be/26d0H5Wl43M[/youtube]

Conservatives must lead through action. And we are. Heritage Action brought these leaders together on February 10th. The Conservative Policy Summit highlights the bills they have introduced, showing Americans a winning conservative reform agenda. Watch important discussion about our nation’s most pressing issues and learn about the conservative answers.

 

Privacy – Rep. Matt Salmon (R-AZ)
Social Welfare – Rep. Jim Jordan (R-OH) 
Health Care – Rep. Tom Price (R-GA) 
Health Care – Rep. Phil Roe (R-TN) 
Energy – Sen. Ted Cruz (R-TX)

Housing – Rep. Jeb Hensarling (R-TX)
Transportation – Rep. Tom Graves (R-GA)
School Choice – Sen. Tim Scott (R-SC)
Higher Education – Sen. Mike Lee (R-UT)
Religious Freedom – Rep. Raul Labrador (R-ID)

EDITORS NOTE: The featured image is courtesy of Claude Covo-Farchi. The use of this image does not in any way that suggests that Covo-Farchi endorses Heritage Action or the use of the work in this column. This file is licensed under the Creative Commons Attribution-Share Alike 2.0 Generic.