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  1. Sam
    Sam July 30, 2008 at 2:25 pm |

    This is spot on. Though to give the original original poster a fraction of the benefit of the doubt, the exposition of the proposal does start with the admission that it is “politically unfeasible”. It’s still gross and ugly and exploitative, but at least everybody seems to understand that it’ll never fly in the real world.

  2. scamps
    scamps July 30, 2008 at 2:45 pm |

    I’m currently experiencing the hoops that HMOs make you jump through in order to continue important treatments. I just got married last Friday, and now I’m on my husband’s insurance. I have Asperger’s Syndrome, Bipolar Disorder and agoraphobia, resulting in bi-weekly therapy appointments and the use of three medications that are vital to my being able to function remotely well. Having spent most of my life on PPOs and state-paid MassHealth and Commonwealth Care (I’m in Massachusetts), I have had easy access to everything that I need. Now, with the HMO, they’re making me get all new referrals, need to know if the reasons for my treatments are biological vs. non-biological (what kind of bullshit is that?), and are charging me $30 for therapy, when I don’t even have a job. I’m not even reflected in their system yet, so I had to cancel my appts, and right when I’m running out of medicine (which is going to cost an arm and a leg now) and not knowing when I can get another appointment.

    All of this made me turn to my Republican husband and ask, “And HOW is this better than socialized health care?”

  3. Nobody
    Nobody July 30, 2008 at 2:52 pm |

    Am I the only one that sees potentially ugly outcomes of leaving HMOs free to decide how to “incentivise” health? Obviously lifestyle choices can effect health, and in an ideal world we would all make optimally healthy choices all the time. But do we really want corporations intruding even further into our lives?

    “Hmm…Mr. Smith, according to the records that your credit card company happily shared with us, I see that you ordered double chocolate cake for desert last Saturday AND had two glasses of wine on Friday. I’m afraid we’ll have to reduce your coverage and up your premium.”

    I suppose I’m just paranoid, but it sounds like an Orwellian nightmare in the making.

  4. GreedyAlgorithm
    GreedyAlgorithm July 30, 2008 at 3:25 pm |

    I’m not sure I understand. How will having a chronic disability limit your access to health care? I thought part of the stipulation was that people were randomly assigned to HMOs, and then HMOs were paid based on the level of their patients’ health. The idea is to make HMOs happy to see someone they can make healthier and sad to see someone they can’t make healthier, which is exactly what I want in a health care system. If they can’t fix the disability then they don’t. If it would get worse without treatment, then they’ll lose money, so they treat it. Seems good. I’m assuming there’s an unintended consequence I’m just missing…

  5. Kitty
    Kitty July 30, 2008 at 3:36 pm |

    Why did you marry a republican?

  6. William
    William July 30, 2008 at 3:39 pm |

    I wouldn’t be so quick to say that something like this wouldn’t fly in the real world. While the actual construction proposed (random assignment, payment based on health, etc) is unlikely, I think that pretty much any system we construct is going to end up punishing people who get sick. The problem, at the end of the day, is all about incentives.

    Health care is a finite resource. Medicines need to be made, shipped, and researched, doctors and nurses need to be paid, equipment needs to be built, lab techs need to be paid, the list goes on and on. Beyond that, the apparatus required to pay for all of these goods and services needs to be supported. All the little bureaucrats, bean counters, customer service reps, IT people, and administrators need to be paid for. The more sick people you have the more goods and services need to be rendered and he more functionaries need to push resources around. Its inevitable that someone is going to decide they’re paying too much, not being paid enough, or that the money is going to run out. Thats when sick people start to get punished for being sick.

  7. Corey
    Corey July 30, 2008 at 5:21 pm |

    Amanda,

    I’m not sure what sort of system you’re advocating. I get the concern for a system that would make one standard of health normative, but Waldmann’s hypothetical system is an attempt to change incentives (pay HMOs based on the health of the patient rather than HMOs making money off of how little they spend on their clients, and thus trying to avoid clients with chronic illnesses or refusing to pay for necessary treatments). He isn’t advocating having “that broken system held up and praised and officially instituted”–he wants a new system which he describes as “the Edwards plan plus insurance companies pay for care of former clients based on alpha(cost of the treatment)*(years with that company)/(age at time of care) where alpha is well below one and for the care of current clients minus the part paid by former insurers. They get paid a constant which depends only on the region where they are located times the same alpha factors.”

    And under Waldmann’s hypothetical system, non-compliant patients (those that refuse treatment) wouldn’t bear the costs–insurance companies and/or doctors would. So even if the bad normative definition came to pass, you giving your doc (or HMO) the finger wouldn’t cost you anything.

    I understand what you’re saying about a loss of control about health decisions, but what do you see as the solution (or a better system)?

  8. FashionablyEvil
    FashionablyEvil July 30, 2008 at 5:52 pm |

    well, I have X, Y and Z conditions, but they’re managed well and I’m living a pretty good life with them — so where do I fall?

    This is usually the problem with evaluating quality of life or health–people with disabilities are more likely to say they have a high quality of life, while people imagining what it would be like to have the disability think it would be awful. So if you have conditions and they’re managed well, saying things are good would be an expected response.

  9. annaham
    annaham July 30, 2008 at 8:45 pm |

    Thanks for posting about this, seriously. It might not fly in the real world, but it is still pretty scary that something like this is even being considered.

  10. Robert Waldmann
    Robert Waldmann July 30, 2008 at 9:37 pm |

    Thanks for the link.

    I would like to stress that even in the postage stamp size version of my proposal (as written by me not excerpted by anyone else) I insisted that people get health care even if no HMO wants them. The assignment of client/patients to HMOs is so different from the current situation in the USA, that it is not easy to guess what would happen in the impossible case that my plan were implemented. In any case, people would have a legal right to care no matter what (including if they refused to participate in HMO sponsored wellness efforts).

    Also, one of the aspects which guarantees that the proposal will not be implemented is that people can’t choose their HMO. That means that HMOs can’t drive costly patients away (of course they will make getting actual care a hassle — that’s what they do).

    Now I will try to guess what a profit maximizing HMO would do. I don’t think tormenting unhealthy people is a good strategy. They won’t get their care anywhere else (maybe I should say we as I am chronically depressed and have amazingly high blood triglycerides). If they avoid harassing preventive care setting, the HMO will get the real big bill when they end up in a hospital.

    My guess is that the profit maximizing strategy is based on the idea that you catch more flies with honey than with vinegar. That wellness efforts based on being pleasant and giving prizes and such will work. The aim certainly is to make sure that the HMO has no sticks and that people who don’t want the carrots can ignore the carrots and get health care anyway.

    The brief proposal was an semi joking introduction to a longer proposal which recommended paying health insurers partly based on the change in patients blood pressure, LDL cholesterol and the magnitude of the difference between their blood glucose and normal blood glucose. That way really healthy people would be profit opportunities and it would be possible to make insurance companies beg them to sign up.

    Oh one of the more interesting comments on my thoughts was a reference to a plan to have clients of insurance companies compete in decathalons and charge the insurance companies a constant minus their average score. That is rather more extreme than anything I suggested. You will be pleased to learn that the semi joking proposal was made by David Culter, Barack Obama’s chief adviser on health policy.

    see Brad Delong preserve anonymity.

    http://delong.typepad.com/sdj/2008/07/robert-waldmann.html

    “One prominent health care economist once said that the right way for an employer or a government to compensate health insurance companies is to require that everybody they cover compete in a mandatory decathlon …”

    See Brad DeLong let the mask slip in comments at Matt Yglesias’s blog
    http://tinyurl.com/5dadrm

    “I still favor David Cutler’s plan to make everybody compete in a decathlon every open enrollment period and pay their past year’s health plan by their change in performance…”

    Posted by Brad DeLong | July 27, 2008 7:59 PM

  11. Robert Waldmann
    Robert Waldmann July 30, 2008 at 9:37 pm |

    Oops Cutler said change in score. This is very very important.

  12. SophiaPriskilla
    SophiaPriskilla July 30, 2008 at 9:59 pm |

    I read the article, and it seemed to me that the portion quoted was a case of “Well, hypothetically we could do this about the health care problem, and theoretically it would work, but obviously it’s unacceptable, so instead we should…” I didn’t get the impression that anyone was thinking about it seriously – rather, that he was entertaining every possibility, and pointing out that many effective ones wouldn’t be acceptable. The author follows a brief discussion of this example with “Obviously this would never work.” He’s not advocating an “Orwellian nightmare” – he’s pointing out why the scenario shouldn’t be acceptable.

  13. Dan in Denver
    Dan in Denver July 30, 2008 at 10:43 pm |

    Hrrm. Well, the thing is, that health care is going to be rationed somehow, somewhere, by somebody. Right now we kind of ration it on the basis of wealth, smarts and persistence; you can use any combination of those to get care. (Rich people write a check, smart people game the system, persistent people beat the public health system into giving them what they’re entitled to.) That system kind of ends up sucking, especially for people who are sick and whose wealth, smarts and persistence has been sucked down the hole of chronic conditions.

    The thing is, the other rationing mechanisms that have been proposed also suck, just in different ways. If we had a system like they had in Canada, then lotsof people here who have chronic conditions would be way better off. But the problem is that there are other people who are getting good care here now, who would end up being worse off. The Canadians basically use patience as the rationing mechanism, which works great for the chronic conditions because they aren’t going anywhere, not so great for the guy who needs an MRI today to stop the cancer from spreading.

    I wish there was an easy answer here. Any answer that’s workable is going to involve some kind of incentive system, but I sure hope that whatever solution we come up with gets rid of the massive insurance and legal bureaucracy that’s sprung up in the US. We spend like thirty cents of every health care dollar on things that have no connection to health.

  14. Farhat
    Farhat July 31, 2008 at 12:29 am |

    I would actually prefer a more Mexico like system where we do not have to get to an expensive doctor for minor conditions and more importantly most medicines can be obtained without a prescription OTC. Most of the times I’ve needed a doc, her main utility is in writing a script which I already know the medicine and dosage for.

  15. denelian
    denelian July 31, 2008 at 1:05 am |

    i will never understand people who try to insist healthcare is a MARKET.

    it really must be a leftover from medical history – when doctors where generally the highest (and often the ONLY really) educated people around.

    but FUCK THAT. when i was a kid, there were years where medical bills – after insurance – were over $20,000. not for tests. for BASIC CARE. because i have a weird genetic disease and a chronic condition, where other kids had $90 basic visits, *I* had $500 visits – with the EXACT SAME CARE (as proven by a lawyer. but, sadly, no money back. sigh)

    i have been “sick” all my life; this doesn’t mean i don’t fulfull a role in society – i have worked since my 16th birthday, except for this past year, and that only because of all the surgeries i have had on my leg this year. i work. i go to school. i pay taxes. but – and this is huge here, so hang on – because of my medical conditions, i don’t just have trouble getting insurance because of “pre-exsting conditions” – i have trouble getting JOBS. because i “might not be able” to whatever, and they can’t afford someone who costs more for the same work, etc. i got fired from a new job once because it required insurance but the insurance company wouldn’t cover me because of my disability.

    should i just go find a quiet corner in which to die?

  16. Corey
    Corey July 31, 2008 at 2:58 am |

    This is where my concern comes from. History does not indicate that insurance companies operate in this manner, not at all. Indeed, society in general does not. You can’t say: Aim for a goal of the best health possible, and have existing institutions actually devise effective means to reach that goal.

    Well, yes, which is why the hypothetical changes the incentive structure by forcing (through power of law, part of which makes it politically infeasible) HMOs to take randomly assigned clients. And existing institutions wouldn’t be devising the means to reach it–legislation would. And as Waldmann said, “The aim certainly is to make sure that the HMO has no sticks and that people who don’t want the carrots can ignore the carrots and get health care anyway.” If you are taking the sticks away from the HMO and providing care even if people don’t like the carrots then you are not allowing HMOs to do the same thing only with slight modification–you are fundamentally changing the way HMOs would do business.

    Waldmann isn’t (hypothetically) advocating what you think he’s advocating.

  17. scamps
    scamps July 31, 2008 at 3:12 pm |

    “Why did you marry a republican?”

    Um, maybe because we love each other?

    And maybe because we listen to each other and try not to make sweeping generalizations about each other’s beliefs, not to mention that there’s way more to our relationship than our political affiliations?

    Also, did I say “conservative”? Did I say that I was a Democrat? Yet another reason why I’m unaffiliated and do not believe in the political party system.

  18. William
    William July 31, 2008 at 3:29 pm |

    i will never understand people who try to insist healthcare is a MARKET.

    Healthcare is a market. Maybe it shouldn’t be, but the reality is that health care is a finite resource. There are only so many doctors and nurses to provide labor hours, only so much supply of a given drug, only so much equipment and qualified techs to work it. All of these things cost time, money, and man hours which must come from somewhere.

    Now, obviously, the system we have is imperfect and needs to be improved. But absent some incredible technological advancement, nothing is going to do away with the scarcity that exists within the system today. At some point someone is going to need to decide how finite resources are going to be distributed and who is going to pay for them. Even under a completely socialized system, there will still be limited resources which don’t always meet demand.

  19. William
    William July 31, 2008 at 4:14 pm |

    If people don’t understand what a market is, economically, that really doesn’t change the reality of a market. All it means in that most people don’t have the data to understand the consequences of their actions.

    Who said markets were about fun? Markets are about the balance of supply and demand. Its unavoidable that at some point along the line scarce resources are going to have to be distributed and someone will have to figure out how. The system we have for figuring out who gets what sucks, I’m certainly not denying that. All I’m saying is that if we imagine we’re not dealing with a market, sick people will continue to be treated badly for being sick. The problem will only get worse once some asshole politician looking to make a name for himself starts scapegoating them.

    Take a look at welfare in the US. The US government is a market. X amount of dollars come in and get spent on different things. Government officials get elected primarily to figure out what money goes to whom and who pays what under what circumstances. Once upon a time FDR had a good idea: in this country people ought not to starve, so some of the money that comes in should be spent to help the poor. It was a good idea, but by the 1980s and 90s the market was starting to rear it’s ugly head. You had the contract with America and people who believed that too much money was going to the poor. Scarce resources were moved around, Clinton and Gingrich patted each other on the backs for passing “wellfare reform” and the poor got the shaft. People don’t pay taxes, spend money on national defense, or need food stamps for fun either, but the money that flows to and from those sources flows through a market.

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