MAKING HEALTH CARE MARKETS WORK:COMPETITION POLICY FOR HEALTH CARE. I predict there will not be significant improvements during the next two years.]
[4/6/19 - addendum added below re "markets and competition in healthcare"]
I am not aware of any reply from the Alabama legislative delegation to my solicitation of their views related to the American Health Care Act, particularly concerning coverage and affordability (and other matters I inquired about in Health care and Letter to Rep. Sewell).
In the clash of advocacy in Washington DC, the sides mainly argue in favor of what they want, and they prevaricate and avoid that which does not support what they want. This methodology is not optimal for helping voters get an accurate picture of what the American Health Care Act will or will not achieve.
The Alabama legislative delegation, to the extent they say anything, are likely to echo what their side says in Washington DC. That, as stated, is not optimally helpful to voters.
Maybe, in the face of what the politicians serve up to the voters, it is a pointless exercise for Alabamians to strive to get an accurate picture related to the American Health Care Act.
Be that as it may, there is expertise and knowledge in Alabama which could helpful in a voter quest to get a more accurate picture than they can get from the politicians.
I will try to solicit views and information from these resources in Alabama.
One good resource are academics. For example, UAB has a Department of Health Care Organization and Policy, which has more than 20 professors. Professors in that department, as well as other professors and departments have relevant expertise which may be drawn upon..
Health insurance companies, hospitals and doctors should be well informed about how Obamacare is working and its attendant problems, and how it can be expected that the American Health Care Act would perform.
Personnel who work in the Alabama Medicaid program should be able to shed useful light on how it can be expected that the American Health Care Act will affect Medicaid in Alabama.
Alabama newspapers, TV stations, and radio programs should have an interest in obtaining and purveying relevant information, and they may be of help for voters to get an accurate picture related to the American Health Care Act
Business chambers of commerce have an interest in the health care bill from the perspective of business.
I will endeavor to solicit views from the above parties.
There is likely going to be a variety of opinions that may be proffered, and there also may be significant bias in the views expressed.
There is likely going to be a variety of opinions that may be proffered, and there also may be significant bias in the views expressed.
Short statements from responders that would lend themselves to comparison would seem best for the purpose of trying to get an accurate picture of what the American Health Care Act will do. If responders provide statements, the responders should try to set aside their own biases and agenda and think only from the perspective of Alabamians generally.
I will endeavor to post responses I receive.
For what it is worth I set forth below my own layman's statement about the American Health Care Act.
[Edit: After My statement below, I will append the contacts I am making to solicit statements. I am posting statements I receive and relevant information at Statements re health care.]
My statement
The provision of health care in the United States is a monstrously difficult problem.
The existing system is badly fragmented, and that contributes greatly to difficulty in solving the country's health care problem. Obamacare has done little for lessening the fragmentation. The American Health Care Act is not going to do much either.
The United States system is hugely expensive compared to what other countries pay for their health care. In the United States, health care is in the range of 20% of the total economy, whereas other countries do with much less, in the range of 9% to 14%. This disparity in national health care costs is in dire need of attention and is a large component of the difficult problem the United States faces regarding its health care.
Cost is not the sole consideration, but getting health care for less cost should be in the fore of what Congress is doing. In reducing cost, attention should still be paid to what is needed to provide adequate health care. With that in mind, consider the following:
A. Things that can reduce cost
1. If medical malpractice is reformed, and defensive medicine is reduced, that will help reduce the country's health care costs. An estimate of the amount of reduction is something that responders can usefully inform Alabama voters about.
2. The government can play a role in reducing health care costs by exerting control over prices. The biggest impact could be regarding drug prices, which might start with Medicare negotiating drug prices with the pharmaceutical companies. This is a controversial step, which may be part of steps 2 or 3 of the Republican plan. Any such control will have ramifications, including reducing availability of some drugs and lessening the development of new drugs.
3. If there is a reduction in total demand for health care, prices will fall and premiums and deductibles should fall. The American Health Care Act will reduce government funds for health care by means Medicaid cutbacks and replacing higher subsidies with lower tax credits, and this will translate to a reduction of demand. Under principles of supply and demand, the reduced demand should result a reduction of prices but the amount of such reduction is very problematic and may be negligible. It is probably the wildest of imagining by the Trump team that this reduction in demand by cutting back Medicaid and people dropping coverage will result in more than a small fraction of what is in their minds for reduced premiums and deductibles. Further the reduction in prices, premiums and deductible is not due to increased plan choice, but due reduced spending and reduced health services, drugs and medical equipment being obtained.
I will endeavor to post responses I receive.
For what it is worth I set forth below my own layman's statement about the American Health Care Act.
[Edit: After My statement below, I will append the contacts I am making to solicit statements. I am posting statements I receive and relevant information at Statements re health care.]
My statement
The provision of health care in the United States is a monstrously difficult problem.
The existing system is badly fragmented, and that contributes greatly to difficulty in solving the country's health care problem. Obamacare has done little for lessening the fragmentation. The American Health Care Act is not going to do much either.
The United States system is hugely expensive compared to what other countries pay for their health care. In the United States, health care is in the range of 20% of the total economy, whereas other countries do with much less, in the range of 9% to 14%. This disparity in national health care costs is in dire need of attention and is a large component of the difficult problem the United States faces regarding its health care.
Cost is not the sole consideration, but getting health care for less cost should be in the fore of what Congress is doing. In reducing cost, attention should still be paid to what is needed to provide adequate health care. With that in mind, consider the following:
A. Things that can reduce cost
1. If medical malpractice is reformed, and defensive medicine is reduced, that will help reduce the country's health care costs. An estimate of the amount of reduction is something that responders can usefully inform Alabama voters about.
2. The government can play a role in reducing health care costs by exerting control over prices. The biggest impact could be regarding drug prices, which might start with Medicare negotiating drug prices with the pharmaceutical companies. This is a controversial step, which may be part of steps 2 or 3 of the Republican plan. Any such control will have ramifications, including reducing availability of some drugs and lessening the development of new drugs.
3. If there is a reduction in total demand for health care, prices will fall and premiums and deductibles should fall. The American Health Care Act will reduce government funds for health care by means Medicaid cutbacks and replacing higher subsidies with lower tax credits, and this will translate to a reduction of demand. Under principles of supply and demand, the reduced demand should result a reduction of prices but the amount of such reduction is very problematic and may be negligible. It is probably the wildest of imagining by the Trump team that this reduction in demand by cutting back Medicaid and people dropping coverage will result in more than a small fraction of what is in their minds for reduced premiums and deductibles. Further the reduction in prices, premiums and deductible is not due to increased plan choice, but due reduced spending and reduced health services, drugs and medical equipment being obtained.
If there is more choice in insurance plans, people may plan they don't want certain services, drugs and equipment to be covered under their plan. and that can allow the insurance company to charge them less in premiums and deductibles.
That creates a problem, however, that, if those people are allowed to do that, the people who need the services, drugs and equipment that the first set of people forego will have to pay higher premiums and deductibles to have the services, drugs and equipment covered by their plan. In other words, plan choice can reduce premiums and deductibles for some people but increase them for other people.
The same applies as regards the Obamacare mandate and what happens if it is eliminated.The elimination of the mandate will reduce premiums for those who choose not to have insurance coverage. As is well known, under Obamacare, the mandate results in healthier people having to buy insurance and pay premiums. If healthier people do not buy insurance, that will result in higher premiums and deductibles for the unhealthier people who buy insurance.
It should also be pointed out that consumers are unaware of the substance of their plan choice and and ostensible competition in premiums and deductibles. Under Obamacare, where there are standard benefits, insurance companies have competed on premiums and deductibles by reducing their "networks." Consumers cannot make a meaningful comparison of slightly higher or lower premiums compared to the "value" of a larger or smaller network. If there is more plan choice, comparison of premiums and deductibles will prevent genuine competition from happening.
There is an argument to be put forth that Rep. Palmer's proposal will result in increased plan choice and increased competition among plans, and that such increased competition will get translated into reduced provider charges.
It is submitted that this is a chimera, and the insurance companies best understand why it is a chimera. The insurance companies are most informed about provider charges, and the contracts they negotiate with providers about charges, and consumers are without information or ability to make meaningful marketplace choices about insurance plans that will filter through to impacting provider charges. Further, insurance companies are practiced in navigating the provider marketplace, out of sight of consumers, with a view to higher insurer profitability, and with little concern about consumer plan choice translating into reduced charges.]
C. My picture for Alabama voters to think about
The picture I would offer to Alabamians is that the country has spent six wrenching and expensive years endeavoring to implement Obamacare, and the result has been very inadequate in addressing the country's immense difficulties in providing health care.
The American Health Care Act is going to wrench the country for more years to come. It is not going to do much to solve the long term problem of providing health care in the United States. The country is going to be beset by great problems for many years to come.
The American Health Care Act will achieve a reduction of health care spending and a reduction of health care received by millions of Americans, but that is not a viable long term solution to the problem.
The American Health Care Act will achieve a reduction of health care spending and a reduction of health care received by millions of Americans, but that is not a viable long term solution to the problem.
Medical malpractice reform and government control of health care prices offer meaningful ways to reduce health care costs and need to be pursued. The are steps in the right direction, but more is needed to tackle total health care costs in the United States (to bring them in line with what other countries are able to do). This includes reforming the countries fragmented health care system, which should help significantly in reducing cost.
Edit 3/23
Press releases and other statement of Alabama's seven members of Congress are posted at Statements re health care. Those are not helpful for Alabamians to understand what they should want to understand. Here are some things Alabamians should understand:
The country's health care costs (i.e., total spending on health care) are subject to being reduced if less health care is consumed (which can translate into reduced premiums and deductibles). As an example, if maternity care, mental health services and substance abuse treatment are eliminated as essential health care benefits in health insurance, insurance premiums and deductibles can get reduced, and either there will be less of those services consumed (which will reduce total health care spending), or, to the extent people obtain those services outside their insurance, there will not be reduced health care cost.
The matter of increased plan choice is unclear for now as to how it will fit with required essential health benefits, and that may not get pinned down for some time. To the extent increased plan choice allows people to decide they want less covered by their insurance, or not to have insurance at all, those persons may slide back towards the pre-Obamacare situation of cut rate "skinny" insurance or no insurance sending them to emergency rooms, and further premiums and deductibles for other people who need and choose fuller coverage will rise.
Amounts of subsidies (or tax credits in lieu of subsidies) are subject to alterations, with corresponding impact on health care that will be received. As an example, it is being put out that Medicaid may be replaced by a refundable tax credit to be used to buy insurance in lieu of Medicaid. These are largely fungible dollars ultimately being spent on health care. If the aggregate of these refundable tax credits are less than the aggregate amount of the Medicaid dollars they are replacing, there will be less health care that will be provided to to those persons.
It is being suggested that people in the 50 to 65 age group will be given bigger tax credits than originally provided because those persons will have larger premiums and deductibles if younger, healthier people forego insurance.
The crux of the debate and negotiating that is going on is essentially how far health care is to be pushed back to pre-Obamacare days versus the extent to which is essentially another form of Obamacare.
Further see Does politics make us idiots?.
Edit 3/23
Press releases and other statement of Alabama's seven members of Congress are posted at Statements re health care. Those are not helpful for Alabamians to understand what they should want to understand. Here are some things Alabamians should understand:
The country's health care costs (i.e., total spending on health care) are subject to being reduced if less health care is consumed (which can translate into reduced premiums and deductibles). As an example, if maternity care, mental health services and substance abuse treatment are eliminated as essential health care benefits in health insurance, insurance premiums and deductibles can get reduced, and either there will be less of those services consumed (which will reduce total health care spending), or, to the extent people obtain those services outside their insurance, there will not be reduced health care cost.
The matter of increased plan choice is unclear for now as to how it will fit with required essential health benefits, and that may not get pinned down for some time. To the extent increased plan choice allows people to decide they want less covered by their insurance, or not to have insurance at all, those persons may slide back towards the pre-Obamacare situation of cut rate "skinny" insurance or no insurance sending them to emergency rooms, and further premiums and deductibles for other people who need and choose fuller coverage will rise.
Amounts of subsidies (or tax credits in lieu of subsidies) are subject to alterations, with corresponding impact on health care that will be received. As an example, it is being put out that Medicaid may be replaced by a refundable tax credit to be used to buy insurance in lieu of Medicaid. These are largely fungible dollars ultimately being spent on health care. If the aggregate of these refundable tax credits are less than the aggregate amount of the Medicaid dollars they are replacing, there will be less health care that will be provided to to those persons.
It is being suggested that people in the 50 to 65 age group will be given bigger tax credits than originally provided because those persons will have larger premiums and deductibles if younger, healthier people forego insurance.
The crux of the debate and negotiating that is going on is essentially how far health care is to be pushed back to pre-Obamacare days versus the extent to which is essentially another form of Obamacare.
Further see Does politics make us idiots?.
Can @ALhospitals provide a statement re American Health Care Act? https://t.co/cOC3i9nznS #alpolitics— Rob Shattuck (@RobShattuckAL06) March 17, 2017
Can @BCBSofAlabama provide a statement re American Health Care Act? https://t.co/cOC3i9nznS #alpolitics @cjloft— Rob Shattuck (@RobShattuckAL06) March 17, 2017
Can @BCAToday provide a statement re American Health Care Act? https://t.co/cOC3i9nznS #alpolitics @LeahCGarner— Rob Shattuck (@RobShattuckAL06) March 17, 2017
Can @ALPublicHealth provide a statement re American Health Care Act? https://t.co/cOC3i9nznS #alpolitics— Rob Shattuck (@RobShattuckAL06) March 17, 2017
— Rob Shattuck (@RobShattuckAL06) March 17, 2017
Addendum 4/6/19 - markets and competition in healthcare
Healthcare costs nearly twice as much in the United States as in other countries. Congress needs to analyze why this is, and what can be done to lessen the cost of health care in the United States.
One possible factor causing health care to cost so much more in the United States is that the United States has a less healthy population than other countries, and thus more has to be spent on healthcare.
Another possible factor causing healthcare to cost more in the United States is that more and better health care is provided in the United States.
A third possible factor is that there is a lot of waste and misallocation of economic resources that are expended on healthcare, and that such waste and misallocation must be reduced.
This discussion will address waste and misallocation.
"Waste and misallocation" of economic resources needs a standard for gauging what is "waste and misallocation."
Markets and competition are supposed to be a mechanism for gauging and limiting "waste and misallocation." This is by means of consumers making informed decisions about products and services offered to them, which decisions take into account the prices for the products and services of the providers, comparing prices, and assessing the value of the product or service to the consumer as determined by the consumer. In this model, there is not waste and misallocation of resources because consumers get what they want for the price they decide to pay. If a provider is inefficient and wastes money in manufacturing or providing products and services, and charges higher prices as a result, the consumer will choose not to pay the higher price.
The foregoing concerning markets and competition has significant failure in how it works in healthcare where the health care is obtained pursuant to insurance. The consumer, in choosing a health insurance policy, knows little or nothing about the contracts that the insurer has with providers and how much is payable to a provider for a product or service the insured consumer obtains or will obtain. The insured consumer, at the time of getting the policy, does not even know exactly what products and services the consumer will need under the policy, let alone what the prices are that the insurer will pay.
After the insured consumer obtains the insurance policy, and when a product or service is needed or desired, the additional cost the consumer is required to pay may be nothing or a small fraction of the total cost payable for the cost or service, and frequently the product or service is obtained by the consumer without knowing what the full price is.
Further, products and services related life or death, and fixing health problems, are frequently of incalculable worth to the consumer, and no price is too high, which is different compared to other products and services a consumer purchases.
From the consumer's perspective, "markets and competition" basically operate only through comparing amounts of premiums, deductibles, co-pays, covered services and the network. The question then becomes how consumer decisions about which insurance policy to obtain affects prices that are charged by providers, and paid by the insurers, under insurance contracts.
The insurers are in the best position to know about providers, their products and services, the prices they seek to obtain for their products and services, and what prices the insurer is able to get in the contracts with the providers.
From the insurer's perspective, an overriding consideration is profitability for shareholders and paying salaries of executives. An insurer has a number of ways to achieve a profitability target, including negotiating for lesser provider prices, limiting the available "network" under the insurance policy, and limiting covered services,
Insurers are constrained by the consumer impetus that "no price is too high" and that no product or service shall not be covered if it will help, or may, help the insured with the insured's medical condition. All insurers are subject to that consumer impetus, and an evaluation could be made that they all accommodate that impetus.
It is submitted that the combination of the foregoing factors yields a situation in healthcare markets and competition exert insufficient downward pressure on prices and much pushes or pulls the prices up.
The insurers probably have the best sense of the foregoing. Given their economic interest in maintaining the status quo, it is uncertain how forthcoming the insurers will be explaining how well or how poorly markets and competition work in healthcare.
It is further submitted that a main explanation of why healthcare costs are so much lower in other countries is that, directly or indirectly, there is much greater governmental control over prices for healthcare services and products, and there is effectively a national budgeting process for healthcare.
If you do an internet search of "how well do markets and competition work in healthcare," you will find numerous articles. If you find an article that you consider especially informative and persuasive about the question, please tweet me a link. Thanks.
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