Questions for Krauthammer

Hello All,

Two quick sets of observations here: 

(1)  The first is offered by way of thanks to Robbie George for the thoughtful posts occasioned by his friend Charles Krauthammer's Op Ed on health care reform legislation, recently published in the Washington Post.  In this connection, ... 

(a)  I'd like to add my voice to Robbie's where our "responsibility to consider the arguments for competing alternatives and [to] support the alternative [we] believe best serves the common good, all things considered," is concerned. 

(b)  I'd also like to second his observation that "there are indeed many considerations to be taken into account, including costs, efficiencies, impact on overall quality of care, concern about the scope, size, and intrusiveness of government, the impact of competing alternatives on the autonomy and authority of families and other institutions of civil society, and the priority that must be given to the interests of the poorest and most vulnerable members of the community." 

(c)  And finally, I find myself nodding vigorously in assent to Robbie's observation that "[w]e should not expect Catholics and other men and women of goodwill to arrive at a common view; but this is certainly an issue on which people should make sure their opinions, whatever they turn out to be, are informed opinions, and not merely partisan ones."

(2)  The second set of observations, however, takes the form of concerns that I harbor about Krauthammer's OpEd itself, with which I cannot in good conscience agree unless and until certain vitiating deficiencies in the argument, doubtless attributable to the limitations of the OpEd genre itself, are addressed. 

(a)  Dr. K first objects to the size, sprawl, and patchwork-style inelegance of the House and Senate Bills under debate, expressing a preference for something a bit more like what I would call a "Euclidian" piece of legislation.  (I'm thinking of E's Elements.)  I'd like that too, and am sure most everyone would, all else equal.  But when have we ever seen comprehensive legislation with that degree of organic unity and elegance?  Never.  Legislation in a sprawling democracy has always been, well, sprawling.  It's been likened to sausage-making for over a century, and to damn particular bills on this ground, it seems to me, is always either idle or meant to damn legislating on the subject at issue altogether. 

I would accordingly first ask Dr. K to name some modern pieces of legislation, aimed at subjects of complexity similar to that which afflicts health care finance, that he would view as exemplary by his own criteria.  Then we could perhaps urge Congress to attempt to repeat that (so far as I'm aware, never accomplished) feat. 

I would, second, ask Dr. K why he does not favor, say, simply going the Canadian, British, or even French route, which routes all are comparatively simple, streamlined, inexpensive compared to the American "system," and productive of much better health outcomes overall.  In other words, why not treat health insurance as social insurance on a par with unemployment and elders' income insurance as all other nations with developed economies do?  There is a reason, of course, that we don't, and that very reason is the reason that simple and elegant health care finance legislation of the familiar well regulated "single payer" or "single provider" varieties has not even come before Congress: viz., objections from private parties who benefit at all of our expense from the way things are. 

(b)  Dr. K next accuses Congress three times, in rapid succession, of simply "picking numbers out of a hat" in arriving at assessible penalties, risk-weight assignments, and subsidy amounts.  I would like to know on what basis he makes these damning accusations.  If it is that they are compromises arrived at after reasoned argument, backed up by evidence, offered by disagreeing parties, then I refer him back to point (a) above, for what he is objecting to in that case is that the amounts are arrived at through legislation.  If instead it is that there was really just a hat here, well, please prove it and I'll join in the condemnation. 

(c)  Dr. K then concludes, on the basis of (a) and (b), that "[t]he bill is irredeemable. It should not only be defeated. It should be immolated, its ashes scattered over the Senate swimming pool."  Apart from the carcinogenic effects apt to be wrought by immolation, which would add to our health care cost burdens as well as to the earth's oversupply of carbon emissions, I must object to the suggestion that (a) and (b), even if my reservations just stated are adequately addressed, would suffice to warrant this conclusion -- at least pending a convincingly better and workable alternative's being offered.  And Dr. K thus far offers none.  For ...

(d)  Dr. K next proffers a three-part solution of his own, which so far as I can tell is no solution at all. 

(i)  First Dr. K urges tort reform, because, he alleges, our current system of malpractice litigation is wasteful in two ways -- first, by "simply hemorrhag[ing money] into the legal system to benefit a few jackpot lawsuit winners and an army of extravagantly rich malpractice lawyers such as John Edwards," and second by prompting "millions of unnecessary tests, procedures and referrals undertaken solely to fend off lawsuits."  These are very familiar, and according to the best evidence, simply false, claims.  Ted Eisenberg, a colleague to Steve, Greg, Eduardo and myself, has done countless statistically sophisticated empirical studies of the so-called "malpractice crisis," all of which show the claim -- long a favorite of lawyer-demonizing political opportunists -- to be a canard.  I commend the publications listing on Ted's CV to interested readers.  A nice summary of this long-running debate can also be found here -- http://www.citizen.org/documents/Bush_Disinformation_Campaign.pdf -- though of course some here will think Public Citizen to be sufficiently partisan as to warrant a salt grain's being taken along with the document.  Let me also note that the most widely accepted explanation for excessive testing is not medical malpractice suits, but the "fee for service" incentive structure pursuant to which our medical system currently operates, combined with the fact that when it's you who are the patient, you're a lot less likely to forgo tests for their alleged "cost-ineffectivness" than you are to judge them so when not a patient.  In other words, there are very obvious micro-economic explanations for widespread overtesting, while there is no good empirical evidence to the effect that a "malpractice litigation crisis" has ever caused it.  (Note also that charges of "rationing!" from the right greet every suggestion ever made to cut back on testing.) 

(ii)  Dr. K next proposes "abolish[ing] the prohibition against buying health insurance across state lines," because "[s]ome states have very few health insurers," with the consequence that "[r]ates are high." This is all very well -- indeed, Dr. K could make his own case much more strongly and do so plausibly.  For it is not simply "some" states that have "very few" health insurers.  Rather, by far *most* states have at most *two* dominant insurers, and a nontrivial number of states have only *one.* Partly for this very reason, the Congress is acting to repeal the McCarran Ferguson Act, which is the source of the prohibition to which Dr. K refers.  It would be nice, then, were Dr. K to credit the Congress with having seen this problem and begun acting upon it well before his suggestion to this effect.  One must also add, however, that there are more reasons than McCarran Ferguson behind the immense degree of market concentration we find in health insurance markets, chief among them the scale economies that attend health insurance.  Health insurance, in other words, is afflicted with what economists call "natural monopoly" attributes, rendering it a prime candidate for treatment as a public utility or regulated monopoly.  That's no doubt one of the reasons why health insurance is treated as a form of social insurance in all other advanced economies.  It's also why it is simply false -- false -- for Dr. K to assert that repealing McCarran Ferguson (which private health insurers of course oppose doing) "would obviate the need -- the excuse -- for the public option."  For fuller elaboration of these points, as well as discussion of all current proposals in light of the economic structure of health insurance, please see this piece -- http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1484768 -- that I have coming out in the next issue of the peer-reviewed economic journal Challenge. 

(iii)  Finally, Dr. K suggests that we "tax employer-provided health insurance," which is "an accrued inefficiency of 65 years, an accident of World War II wage controls."  This would of course be a very good idea, both for the reasons Dr. K adduces and for other reasons as well, including the fact that the current system favors large employers over small ones, which operates as a drag on factor mobility and disadvantages the most dynamic sector of the economy -- small business.  (See my article linked to above for more on this too.)  There are two little wrinkles to note here, however:  The first is that, were this do-able, it could simply be added to the present bills under debate, and would accordingly render them all the more readily financed.  There is absolutely nothing about the current legislation that would prevent this proposed legislation.  So Dr. K's proposal here can be viewed as a friendly amendment rather than an "instead of."  The second wrinkle is more problematic.  As Dr. K himself notes, this reform would be the most difficult to enact.  Entrenched interests -- and far from only the unions or the president, as Dr. K puzzlingly limits himself to mentioning (consider all the managment and directors of the large firms, for goodness sake) -- prefer to leave in place the present system under which large firms offer insurance benefits untaxed.  But that is simply another instance of the more general observation I made at the outset:  All "do-able" health care finance reform will be messy, for the simple and familiar reason that there are multiple parties with conflicting interests, upon whom Congress members are dependent for financing the campaigns by which they gain office, whose interests will be implicated by what ever we do.  So I repeat that to call for "burning" legislation that looks like sausage is to call for not legislating at all -- at least until such time as we eliminate the decisive role private financing plays in election campaigns.  What say you all, including Dr. K, to that?

Thanks for listening,

Bob