Tag Archives: health care

About That Partisan Divide

Over at Talking Points Memo, Josh Marshall makes a point I have often made: partisanship today is different than it used to be, not just in intensity, but in kind.

Marshall’s essay was focused on what he sees as inadequacies in media coverage of the GOP’s “health care” bill, but in the course of that discussion, he made the following observation.

.. coverage of national health care policy is fundamentally distorted by the imperatives of false balance or forced balance coverage. The idea here is that the two parties are so set in their ideological corners that they can’t constructively come together and find points of compromise to address issues of great public concern. But this sentiment only makes sense if you think both parties are trying to accomplish something approaching the same thing, albeit perhaps with very different strategies. That is simply not true….

We talk a lot about how Republicans real focus is getting the ACA money for a big tax cut, which is unquestionably true. You can only get the tax cut if you get back the money that went toward getting people covered. But at a deeper level this is a philosophical dispute, a basic difference in goals. It’s a difference in desired outcomes, not an ideological dispute over the best way to achieve them. (Emphasis mine.)

Perhaps my memory is faulty, but back when I was a Republican, fiscal conservatism meant crafting more cost-effective policies to achieve goals we held in common with Democrats–policies that would help poor people, for example. We favored programs that would help those who needed that help without inadvertently distorting markets in ways that deepened the original problem.

An example would be rent control. The shared goal was affordable housing for low-income renters; opposition to rent control as a means of accomplishing that was based upon the belief that rent control would deter investment in additional, desperately needed units. You could agree or disagree with that analysis (I agreed), but the opposition wasn’t based on a belief that government shouldn’t help low-income people find decent housing.

We were arguing means, not ends.

Today’s Republicans and Democrats do not share a belief in the nature of the common good. Democrats believe that government has a responsibility to ensure access to healthcare. Republicans don’t. As Marshall says,

When you try three times to ‘repeal and replace’ and each time you come up with something that takes away coverage from almost everyone who got it under Obamacare, that’s not an accident or a goof. That is what you’re trying to do. ‘Repeal and replace’ was a slogan that made up for simple ‘repeal’ not being acceptable to a lot of people. But in reality, it’s still repeal. Claw back the taxes, claw back the coverage.

Pretending that both parties just have very different approaches to solving a commonly agreed upon problem is really just a lie. It’s not true. One side is looking for ways to increase the number of people who have real health insurance and thus reasonable access to health care and the other is trying to get the government out of the health care provision business with the inevitable result that the opposite will be the case.

That difference cannot be bridged with pious calls for “bipartisanship.”

We Aren’t Number One…Not Even Close

Donald Trump is accelerating America’s retreat from the world stage, illuminating our national flaws and demonstrating the contradictions between our aspirations and our performance.

Let’s be honest: a nation that could elect this ignorant, unstable man is a nation seriously in decline. If we are really prepared to be honest, we will also concede that America’s social and racial divisions, extremes of inequality and lack of anything approaching an adequate social safety-net aren’t exactly attributes that confer bragging rights, either.

A prime example is our overpriced and underperforming health care system, which our Congressional overlords are eager to make even worse. How long can intellectually dishonest pundits and politicians keep a straight face while peddling the myth that American medical care is “the best in the world”–that “we’re number one”?

The truth is that, if you are very wealthy or have exceptionally good insurance, you can get extremely good care for serious illnesses in the United States. If you don’t fall into one of those categories, not so much. And if you are an average American with a treatable ailment–or an ailment that should be treatable– your prospects are even worse.

Over at Dispatches from the Culture Wars, Ed Brayton reports on yet another in a long line of studies ranking national healthcare systems.

A new study that looks at the effects of highly treatable diseases, ones for which greater access to continual medical care can mean the difference between life and death, finds that the American health care system lags behind much of the developed world.

There are a number of ways to evaluate healthcare systems, but if you are measuring outcomes over a country’s population, rather than touting cutting-edge therapies available only to the privileged few, the U.S. has long lagged other industrialized countries.

Christopher Murray, a researcher at the University of Washington, and his collaborators looked at 32 causes of death in 195 countries from 1990 to 2015 to create a health-care quality index they used for rankings. Murray described the findings as “disturbing.”

“Having a strong economy does not guarantee good health care,” he said. “Having great medical technology doesn’t, either. We know this because people are not getting the care that should be expected for diseases with established treatments.”…

As might be expected, many highly developed nations, such as Norway, Australia and Canada, scored well. Those in more-remote areas in sub-Saharan Africa, South Asia, Latin America and the Caribbean scored poorly…

The United States measures well for diseases preventable by vaccines, such as diphtheria and measles, but it gets almost failing grades for nine other conditions that can lead to death. These are lower respiratory infections, neonatal disorders, non-melanoma skin cancer, Hodgkin’s lymphoma, ischemic heart disease, hypertensive heart disease, diabetes, chronic kidney disease and the adverse effects of medical treatment itself.

The United States spends enormously more for medical care than any other country–twice as much per capita has the next most expensive system. We just spend our dollars in the least efficient ways possible: multiple non-standard insurance forms, laws that prohibit government agencies from negotiating drug prices, and private insurers whose high overhead costs include everything from marketing to sky-high management salaries and corporate jets. (Medicare’s overhead runs about 3% in contrast to 24-26% for private insurance companies.)

Obamacare is far from perfect (what we really need is “Medicare for All”), but its passage did represent a move in the right direction–and an acknowledgement that access to healthcare is a human right, not a consumer good to be made available only to those with sufficient disposable income. But rather than working to improve it with “fixes” that are fairly simple and obvious, the White House and  the Congressional GOP consistently sabotage it, most recently by threatening to end crucial Affordable Care Act payments to insurers. Politico has reported on the move, and the fact that it would guarantee huge premium increases, the withdrawal of insurers from the O-Care markets, and generally cause chaos across the individual health insurance marketplace.

It’s enough to make you think American policymakers put a higher priority on the bottom lines of Big Pharma and Big Insurance than they do on the health of average citizens.

But then, what do we expect when we elect people so corrupt and self-serving they don’t even care about the health of the planet their children and grandchildren will inherit?

Taxes and the Common Good

I know “real Amuricans” sneer at the notion that we might learn from the experiences of other countries. Universal healthcare? A commie plot! Decent mass transit? People who can’t afford–or don’t want– cars shouldn’t be coddled! A comprehensive social safety net? You are a commie!

Every so often, however, a “real American” finds living in a country that actually offers these and other subversive services is pretty attractive. Vox recently published an essay by one such person, whose job and that of his wife requires that they split their time between Wisconsin and “high tax” Sweden.

My wife and I have been dividing our time between jobs in Sweden and Wisconsin for the past dozen years, and I’m here to tell you that taxes in Sweden are not that high. To my surprise, I found that there are lots of things to love about the Swedish tax system. Swedish taxes are easy to pay, rational, and efficient. Best of all, rather than take away opportunities, Swedish taxes expand them.

The writer goes on to list things he loves about Swedish taxes. No kidding.

It turns out the average Swede pays less than 27 percent of his or her income in direct taxes. As I’ve written elsewhere, my wife and I pay about 22 percent of our US income in taxes. Our Swedish income tax was 31 percent. So, yes, our income taxes in Sweden were higher than in the US, but we still paid less than one-third in tax.

And you get far more for your taxes than you do in the US. In Sweden, college is free and students get a housing stipend. A colleague’s daughter, Kerstin, just completed a five-year dental program. Her family paid nothing for her education.

In Sweden, tax forms are simple, and they come already filled out. The author points out that tax-preparation services cost American taxpayers more than $32 billion per year–not to mention hours of citizens’ time and effort.

And in Sweden, there are no property taxes.

When the conservative government, favoring lower taxes, came to power in Sweden in 2006 one of its first steps was abolish the property tax and replace it with a fixed fee. The real estate fee for services is 7,112 SEK per house ($825 at current exchange rates).

This is the same for everyone no matter what the assessed value of the dwelling. The fee is $12 a month for our co-op apartment in Stockholm. If we owned the same property in Madison, our taxes would be $18,000 a year.

There are sales taxes in Sweden, and they’re high, but even then the author finds mitigating factors:

Sales taxes are high in Sweden, but you don’t see them, and that makes them easier to pay. If something costs 100 kronor, you pay the 100 kronor! Only when you look at the receipt do you see that it costs 80 kronor and 20 kronor for VAT (value-added tax). Many things are taxed at lower rates — 12 percent to have dinner out or buy groceries, 6 percent (only half a percent higher than our sales tax in Madison) for books and tickets to cultural events and in-country travel. Health related items: zero percent.

It is true that sales taxes are regressive; poor people pay a higher proportion of their income in this tax. In the US, a 25 percent sales tax would have to be offset with some kind of subsidies for our many poor. But because Sweden has a narrower income distribution, its sales tax is less regressive than in the US.

A fascinating difference between the U.S. and Sweden is that, in Sweden, if the government wants to encourage an activity, they don’t do it through the tax code.

One of the reasons US income tax preparation is so awful is that we try to reward certain activities by providing a tax deduction. If you do some good deed (like putting in a solar panel) and if you can find the receipt and documentation…, then you can list a number on Form H, line 36, that will lower your taxes.

Does this feel good? Do you feel rewarded for your solar panel?  Or is it just another damn number on a tax form?

If the Swedish government wants you to do something, they give you the money. For example: Having children is good for the society and costs parents money. In the US, you get a deduction on your income tax for dependents. In Sweden, you get a check every month and you can use it to buy shoes. For one child you get $120 a month and up to $620 for four children. Every parent gets a check.

The most persuasive argument for Sweden’s approach (at least, from my perspective) is that the taxes generate income used to provide collective goods that make life better and less costly for citizens.

Not having to pay for college gives the best and the brightest the opportunity to attend any school they choose — equalizing opportunity on merit, not parents’ wealth.

It’s not just college. Public amenities like parks and hiking trails, excellent and frequent public transportation, and–oh yes– universal health care.

Paradoxically it turns out the bloated, heavily lobbied, privatized US system spends more tax money ($4,437) per person than Sweden’s socialized health care ($3,184).

This is due to Swedish efficiency rather than poor service. I do get to choose my doctor, have high-quality care a short walk from my home, same-day appointments and short waits when I walk in unannounced.

Keep chanting “We’re number one! We’re number one.” Maybe we’ll convince someone besides ourselves..

The Tragedy—and Promise—of the Commons

The “tragedy of the commons” is a term often used by economists and ecologists;  it’s shorthand for situations where individuals who are acting independently and rationally in their own self-interest undermine the common good.

Indiana Law professor and activist Fran Quigley thinks the tragedy of the commons explains a lot about the state of American health care. As he explains in an intriguing new article he shared with me (not in print yet, so no link available)

Between the 15th to 19th centuries, the rich and the powerful fenced off commonly-held land and transformed it into private property. Land switched from a source of subsistence to a source of profit, and small farmers were relegated to wage laborers….

 More recently, a similar enclosure movement has taken place. This time, the fenced-off commodity is life-saving medicines. Playing the role of modern-day lords of the manor are pharmaceutical corporations, which have taken a good that was once considered off-limits for private profiteering and turned it into an expensive commodity. Instead of displacing small landholders, this enclosure movement causes suffering and death: billions of people across the globe go without essential medicines and 10 million die each year as a result.

Quigley points out that producing medicine for profit is a relatively modern phenomenon–and says it is time to reclaim this commons, and he spends several pages showing how medicines fit the definition of a public good.

The public health implications of access to medicines generate another core quality of public goods: positive externalities. One person’s consumption of an essential medicine provides clear benefits beyond the direct consumer. Vaccines, for example, prevent both the recipient from getting ill and also from spreading the disease to others. If a society vaccinates widely enough, the chain of disease transmission is broken, leading to the quintessential public good of herd immunity. Global distribution of the smallpox vaccine has led to the eradication of a disease that once infected 50 million people a year.

I hadn’t known that “Until well past the middle of the 20th century, few countries allowed individuals or companies to hold exclusive rights to produce medicines.” ( I was aware that pharmaceuticals are and always have been, as Quigley points out “the very opposite of a laissez faire market.”)  And I did know that the U.S. government is a major funder of medicine research.

Quigley is particularly critical of the notion that drugs can be patented, and points out that many countries limit the duration or scope of such patents:

Among governments and the public alike, medicines continue to be treated as a good quite distinct from consumer items like cell phones or flat-screen TV’s….Jonas Salk declined to pursue a patent for the polio vaccine, saying the patent belonged to the people. The creator of the first synthetic malaria vaccine donated the patent to the World Health Organization. As Salk said in 1952, “Would you patent the sun?”

Today, of course, major drug companies depend upon those patents for their profitability.

Economists call this process the transformation of a public good into a “club good,” like taking a public park and turning it into a gated dues-required golf course.

Quigley’s article is a fascinating history of how intellectual property protection overcame the previous widespread belief that medicines should be considered public goods, not consumer products. And he argues that

The history of pharmaceutical innovations, especially vaccine developments and life-saving treatments for infectious and chronic diseases, shows that the critical research behind these developments was created outside the patent system…The U.S. National Institutes of Health alone provides $30 billion annually for medical research, governments provide tax credits to support corporate research, and government health programs are bulk purchasers of patented medicines priced far above the costs of production. When it comes to medicines,  taxpayers of the U.S. and other research-supporting countries are the very opposite of free-riders: they pay to build the bus, fill it with fuel, and hire the driver, but still are asked to pay a prohibitive fare if they wish to take a seat.

In fact, a decade ago, U.S. economist Dean Baker crunched the numbers and estimated the savings to the U.S. government if its health systems could provide medicines without the artificial mark-up imposed by monopoly patents. The resulting savings could fund the replacement of all private industry research and development several times over, while still leaving billions of dollars in remaining public benefit. A significant source of those savings derives from eliminating the for-profit pharmaceutical companies’ expenses on marketing, a cost that exceeds their investment in research and development. As it happens, there are more efficient use of resources than funding television ads for erectile dysfunction drugs.

When the article is in print, I will share a link, because this abbreviated review doesn’t do it justice. But the question is, given the extent to which current practices are embedded in our economic system, can it be changed? Quigley admits the magnitude of the barriers, but he provides a surprisingly long list of reform efforts currently underway.

What struck me most while reading the article was how easy it is to assume that “the way things are” is the way they’ve always been, and the only way they can be—and how difficult it is to identify and protect a steadily shrinking commons in an America that has lost sight of citizens’ essential interdependence.

 

 

 

The Problem Isn’t Capitalism

‘Tis the season to bemoan crass capitalism. But we should think before joining that chorus.

Markets are wonderful things; as Adam Smith explained many years ago, the “invisible hand” channels self-interest toward socially desirable ends. Market competition has given us better goods at lower prices, and has demonstrably been a “rising tide” lifting many boats.

Why, then, is America’s capitalist economy generating so much criticism? What is the cause of the country’s growing and very worrisome inequality?

Two reasons are pretty apparent.

First, the system we currently have in the U.S. is not market capitalism. It is corporatism. Corporatism has been defined as the organization of society by major interest groups, specifically corporations. It isn’t exactly a secret that the last thing many of our captains of industry want is genuine competition. The legions of lobbyists sent to Washington and state capitals are not arguing for open markets; they are vying for competitive advantages and taxpayer subsidies.

The second reason is less obvious, but no less consequential. Markets don’t work for everything.

In the areas of the economy where market competition is appropriate—in the production of consumer goods and services, most obviously—markets operate as Smith’s theory suggests. But as every student of economics learns, there are areas where competition is unworkable.

Historically, for example, America has regulated utilities, and (at least since Teddy Roosevelt) tried to prevent domination of a market through monopolistic practices. (As technologies and markets change over time, these categories may shift, and it isn’t always clear that our governing institutions keep pace, but that is a subject for another day.)

What doesn’t change, however, is a foundational premise: In order for a market to function, there must be a willing buyer and a willing seller, both of whom are in possession of the necessary relevant information. When there is a significant and unavoidable asymmetry of knowledge or information, a true market cannot exist.

Health care is the poster child for that asymmetry. Not only does the consumer lack the information and expertise necessary to “shop” for a seller/provider, the realities of illness make it likely that she will lack the time needed to evaluate her options. Add to that the way in which the health insurance industry has developed, with “in network” and “out of network” providers, and you don’t have to be an economist to recognize that market principles are simply inapplicable.

Most Western nations came to that conclusion many years ago, and most have national health care systems. Here in the U.S., even the modest movement toward government-insured access to health insurance has met with hysterical resistance—and lots of rhetoric about creeping socialism and the superiority of markets.

The immorality of this refusal to make important distinctions was most recently highlighted by the actions of one Martin Shkreli, who bought the rights to a drug and raised its price 5500%. As several commentators noted, America is the only developed nation that lets drug-makers set their own prices — maximizing profits the same way that sellers of chairs, mugs, shoes, or any other seller of manufactured goods would.

Shkreli’s behavior underscores the irrationality—and yes, the immorality—of America’s healthcare system, where corporations set our public policies and insist upon market principles in an area where, by definition, genuine markets cannot function.

The moral of this story: don’t blame capitalism. This isn’t it.