Wednesday, April 30, 2008

Money, Quality, and Healthcare

Money Chart

How do you like this four-by-four decision matrix on money and self-interest?

It's from Maggie's Farm, "
How Enlightened Self-Interest Works," and it reminds me of when I was in grad school studying game-theoretic models of cooperation under anarchy.

More immediately, the matrix - especially the payoff in the upper-left quadrant - reminds me of the healthcare debate we've been having. Talk about universal healthcare's been suppressed a bit with
the Wright controversy throwing the Democratic campaign off the rails a bit, but it's starting to come back.

John McCain's making a big push in his healthcare reform proposals this week, focusing on choice, competition, affordability, and availability.

The Wall Street Journal reflects favorably on McCain's movement toward more rationality in our national healthcare delivery:

Mr. McCain undertook yesterday to recast this looming argument [over healthcare] in a new mold. He contended that the health insurance and delivery system is in fact failing many Americans – but that it was failing because of market distortions mostly created by the government itself. Fixing these irrationalities would both make insurance more affordable and increase overall coverage in the bargain. Nor would it require the vast new entitlement programs Democrats are eyeing.

His major proposal would change the tax treatment of insurance. To review: Today's tax code permits businesses to deduct the cost of providing insurance to their employees, but it doesn't do the same for individuals. This creates third-party payment problems; workers aren't aware of the full, true costs of many treatment decisions, part of the reason the U.S. has double-digit health-care inflation. And it makes insurance less affordable for everyone outside the employer-based system, who must pay with after-tax dollars besides. Mr. McCain would correct this imbalance with a refundable tax credit, restoring the parity of health dollars.

As the Senator argued, coverage shouldn't be "limited by where you work" and said that "Americans need new choices beyond those offered in employment-based coverage." Focusing on equity is a canny political argument. For those who don't get insurance through their employers, the current system is patently unfair. As the private market for health insurance became revitalized, everyone else would be more liberated from their bosses' system. A significant portion of the uninsured population at any given point is people who left or lost employment; but portable individual policies would follow them from job to job.

That's a broader political and economic argument than the exclusive liberal concentration on the uninsured. Mr. McCain is saying that the health-care system isn't working as it should, or delivering the quality it should, for the large majority of Americans. "The real reform," he noted, "is to restore control over our health-care system to the patients themselves," introducing more competition on price into the system.

But remember the matrix above: How can we maintain quality and value? Well, McCain argues that more of the decisions over healthcare should be in the hands of consumers, not employment bureaucracies, which make obtaining insurance more expensive for those who are not insured through a workplace plan.

Here's McCain explaining it himself:

The thing to watch, though, are the attacks on greater rationality in healthcare delivery from far-left universal health advocates.

Ezra Klein's got a new piece up, for example, slamming the Arizona Senator for pushing some seemingly diabolical health plan surrepticiously designed to strip Americans of their coverage:

McCain believes that Americans use too much health care, and he has created a plan that will make care less affordable so millions of Americans will use less. He even has a euphemistic description for this approach: "The key to real reform," he says, "is to restore control over our health-care system to the patients themselves … These accounts put the family in charge of what they pay for."

That's not what McCain believes at all. He's absolutely right that costs are out of control, but he's not throwing those without coverage under the bus. McCain realizes there's a role for government to correct for market failures, as the Journal notes:

It's true that individual subsidies might be required for some people with severe chronic illnesses who might have a harder time finding private insurance in this kind of world. So Mr. McCain sharpened his proposal for high-risk pools to cover "uninsurables," building on current insurance experiments in about two dozen states.

See McCain's health proposal itself for more information, since we certainly won't get a straight analysis from hysterical lefties like Christy Hardin Smith at Firedoglake:

Talk about your Double-Talk Express. As scarecrow said, John McCain unveiled his "health care plan" for the masses. Well...the health care plan for masses o' profits for the insurance industry, anyway.

I was on a conference call yesterday with Roger Hickey, co-director at Campaign for America’s Future; Jacob Hacker, author of "The Great Risk Shift" and professor at Yale University; and Karen Ackerman, political director for AFL-CIO. Roger sums the McCain plan up here:

He wants voters to think he is going after health care cost inflation. In reality, he wants to dismantle the employer-provided system that now covers over 60 percent (or about 158 million) of non-elderly Americans....And he would drive health care costs upward, not downward.

This is truly amazing: McCain and his handlers...turned to their friends (and financial supporters) in the health care industry and the conservative think tanks. And they have adopted the most extreme right-wing ideological approach, premised on the idea that the big problem in health care is that Americans have too much insurance – in their words, we don’t have enough “skin in the game” – and that only when we have to buy health care with money that comes directly out of our own pockets will consumers force doctors, hospitals and insurance companies to become more efficient.

Notice the attacks on "the most extreme right-wing," which is to be expected from the folks at FDL, who are itching to move the country further to the left than we've ever been in history, in health care, as well as on foreign, economic, and social policy.

Hardin Smith links to this broader ad attacking McCain from Progressive Media:

Check out this ad from the Service Employees International, smearing McCain's health proposals:

We're not in a recession, by the way, as the Associated Press reports, "Economy Grows by Only 0.6 Percent in First Quarter."

While this is a skimpy statistic on economic expansion, the economy did grow last quarter, although watch out for the attacks on a "GOP recession" in the weeks and months ahead.

But back to the healthcare issue.

Recall the Maggie's Farm matrix, and especially the payoff for the lower-right corner:

No focus. Quality, results and money do not matter.

Leads to inefficient markets, poor quality and service, & corruption.

So, take a look at that matrix one more time: Your money versus other people's money, right?

McCain wants to shift the healthcare system to greater choice, affordability, and access.

The critics on the left want to move to a single-payer nationalized system of healthcare, like, say, in Britain or Canada, where patients wait months to receive basic health services and treatment, with some even dying in the meanwhile.