More on Medicare

I had barely finished my last post when Austin Frakt presented the hard numbers:

All told, the cost to the system of raising the Medicare age to 67 would be $11.4 billion in 2014, which is a high price to pay for $5.7 billion in federal savings. It’s exactly a factor of two too high. That’s a massive cost shift. Let’s put it this way, how much would you want to pay for the federal government to save $5.7 billion? I hope your answer is no greater than $5.7 billion. (If not, I’ve got a business proposition for you.) Paying $11.4 billion is a rip off.

It is actually worse than I thought it would be!!

Is health care choice important?

Aaron Carroll has a nice overview of the situation in Florida where people who campaigned on health care choice seem to be removing for state employees. He quotes this news story:

Florida is changing part of its state-employee health insurance program to offer only one HMO in each county. The state Department of Management Services, which oversees employee insurance, said changes in the program would save an estimated $400 million over two years. The changes also would require thousands of state employees to switch to different HMOs, a process that would begin in late September.

I wonder if these positions are more harmonious than they appear on first glance. If the goal is to make government service less appealing, reducing health care choice (and thus competition) makes these positions less desirable.

Reporting on methods

Austin Frakt has the definitive take on the new McKinsey report:

As someone who does research, this really bothers me. It should bother you too. Look, anybody can say what they like on a topic. They can put out a glossy report. They can claim they did a “survey” to make it sound scientifically rigorous. They can talk to the media all about it. They can stand behind their good name and reputation, if they have one. But when what they’re saying runs counter to previous experience and other credible estimates, they’d better have a good explanation.

But, McKinsey has no explanation. None. They’re stonewalling. You know what would happen to me if I tried that? Suppose I sent my new results to a journal, results that were very different from that of others, and said, “Trust me. They’re good.” Well, my paper would be laughed out of the editorial office.

And that’s as it should be. That would not be research. That would be the opposite of research. That would be indistinguishable from making things up. Well, anybody can make things up. The difference between making things up and actually doing some sound, rigorous work is the difference between fiction and reality.

It is no surprise that I, also, see the methods as being critical. Some extremely misleading associations can occur depending on how the sample was developed and how the survery was conducted. Of special concern:

"Our survey shows significantly more interest in alternatives to ESI [employer sponsored insurance] than other sources do, for several reasons," the report says. "Interest in these alternatives rises with increasing awareness of reform, and our survey educated respondents about its implications for their companies and employers before they were asked about post-2014 strategies. The propensity of employers to make big changes to ESI increases with awareness largely because shifting away will be economically rational not only for many of them but also for their lower-income employees, given the law's incentives.

So the survey educated employers on how it would be economically rational to not give health insurance and then 70% of them still decided to do so!! This is the precise opposite of the headline -- that employers will tr to keep covering employees even if it is not an optimal strategy. Probably because they want to do right by their employees.

Why is this key issue not getting a lot more attention in the interpretation of the report? And why is McKinesy's reputation not being brought into question given that they released such a report?

update: The fallout continues.

Canadian Health Care

Aaron Carroll provides support for the Canadian Health Care system after comments by Paul Krugman. It is a pretty devastating critique (quality seems slightly higher) made even more so when you consider cost and universal access.

The universal access point is important. When people talk about fear and uncertainty (for business) as being a concern, I think it could also be an issue at the individual level. After all, the fear of an unexpected dread disease appears to be a major concern for most people. How much better would it be if we could eliminate these concerns by breaking the link between health coverage and employment while controlling costs in an effective manner?

The most startling thing in Dr. Carroll's graphs was that physicians are beginning to emigrate to Canada (on net). So even the medical care specialists (with requisite wage controls) seems to like the system.

Arguments that generalize poorly

If only Megan McArdle would make the same argument for medical care that she does for congestion pricing:

But that brings us to the heart of the populist argument against congestion pricing, and even express toll lanes, and I think ultimately supports Tim's argument that this is never going to be democratically popular: most people don't pay. And they tend to resent the people who do. It is not an accident that congestion pricing is a system most beloved of people who are a) relatively affluent and/or b) don't drive to work. This tells us empirically why congestion pricing is unlikely to ever get enough political support to be implemented in America. But maybe it also tells us, maybe, why it shouldn't be implemented. Who are we to tell people that they ought to prefer prices to queuing?

The is a reflection of how conservatives often seem to (oddly) switch sides when the question is one of transportation. Clearly, a single payer medical system is the most fair (see Canada). Canada's single payer system has also got issues with efficiency, being one of the few countries to have worse physician wait times than the United States.

But with health care we always see the reverse argument (efficiency > fairness), which strikes me as an odd mixture of priorities. Or am I missing something?