Yesterday my lunch companion announced his new weight loss strategy—he’s eating more cake. He’s got it figured that if he eats enough cake now, it will motivate him to take up running someday (even though he’s never run before). So he ordered a slice of chocolate cake and announced that he’d just lost two pounds.
Of course, my friend wasn’t entirely serious; he was just gearing up for a possible future at the Congressional Budget Office, which says we can reduce government spending by enacting the president’s health reform proposal. They’ve got it figured that if we pass this proposal now, it will motivate future cuts in Medicare (even though nobody’s ever had the stomach for those cuts before). If I understand the numbers right, they’re counting that as a “saving” of several hundred billion dollars. Well, pass me that cake.
Isn’t this just a little bit different, because (a) eating cake motivates you to start jogging, but (b) increasing health care services not only motivates you to cut Medicare (to free up money) but also makes it *possible* to cut Medicare (while keeping people’s health outcomes constant), because you’re now providing free health services to people who couldn’t afford it before.
I don’t know too much about the health reforms, so forgive me if I get something wrong here.
Weight loss: problem = overweight. Solution = jogging. The cake motivates by making the existing problem worse, so a solution becomes more urgent.
Health care: problem = people not covered. Solution = cover those people at public expense. Side effect – some people will be covered twice, so you don’t need to pay them twice.
To make the healthcare problem analagous to the overweight problem, you would have to be proposing making the initial problem worse to stimulate a solution. This could be by re-stating the initial problem as – Health care: we spend too much money. Solution: spend more money. This would of course be stupid. So the analogy only works if the purpose of the health care reforms is to save money.
I am assuming that the “savings” from Medicare are only partial off-sets of the costs of the reforms
In fairness, this doesn’t seem to be quite the CBO’s fault. After all, they’re told to “score” what’s in the bill, including the parts that say “oh, and we’re definitely going to cut spending in the future, even though this bill actually further entrenches political support for constantly expanding government healthcare spending.” They don’t have the authority to say that the spending cuts aren’t going to happen, though the staff has been signalling as well as they can that that’s what they think. The real problem here is that Congress has figured out how to game the system.
Uncompensated health care costs run around $40 billion + each year. These hidden costs get shifted to government almost surely. Making these costs visible does not increase the total, so it is legitimate to count these as “health care cost savings”.
Steve:
I know you hate the idea of health care reform. I basically understand your arguments. They make a lot of sense.
My question is: Aren’t the same exact arguments an even better reason to get rid of Medicare?
So, you don’t want to make the problem worse by adding more insanity onto our terrible Medicare system.
But can you name a single politician, with the exception of Paul Ryan, who wants to eliminate Medicare?
I think, to be consistent, the reasons to be in favor of health care for a 60 year old should be similar to a 70 year old. However, the Republicans are saying that we shouldn’t cut Medicare. That is INSANE.
I think you guys are missing the point by disagreeing with the analogy. Let’s take the study of economics to one of its cores: “incentives matter.”
Eating a piece of cake when you’re already overweight does not create an incentive to exercise, especially when you currently never exercise. The logic in that is backward. Now apply that to health care reform; spending more money on health care from your left pocket doesn’t create an incentive to reduce spending from your right pocket, especially when you’ve never showed a willingess or ability to reduce that spending previously. In this context, the analogy makes perfect sense.
Now I understand why I am gaining weight: as I get older, I can’t stand eating cake or any sweet stuff anymore, except at breakfast, and then in moderation.
There is too much fertile ground here to respond to so many interesting posts. Here are a few:
Harold-
“Weight loss: problem = overweight. Solution = jogging. The cake motivates by making the existing problem worse, so a solution becomes more urgent.”
This is actually the approach of many, especially ideologically-motivated, opponents of hc reform.
Problem = “socialized medicine” (i.e., Medicare). Solution = Oppose changes that address Medicare deficits. The deficits worsen = Medicare collapses.
This is precisely the “starve the beast” strategy employed during Reagan and Bush II through their huge increases in deficit spending. Cut taxes + boost military spending = no money for new domestic initiatives (like hc reform) + eventually all the programs the Right has hated over the last 75 years will have to be gutted or “privatized”.
“I am assuming that the “savings” from Medicare are only partial off-sets of the costs of the reforms.”
I’m not sure what you mean by this, but CBO says Obama’s reform package is entirely paid for.
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ryan-
“they’re [CBO] told to “score” what’s in the bill, including the parts that say “oh, and we’re definitely going to cut spending in the future…”
Actually, this is inaccurate. CBO does not score unspecified, open-ended promises of this sort.
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Neil-
“Uncompensated health care costs run around $40 billion + each year. These hidden costs get shifted to government almost surely. Making these costs visible does not increase the total, so it is legitimate to count these as “health care cost savings”.”
Exactly right, though private providers bear some part of the burden of uncompensated costs.
But these externalized uncompensated costs are a small fraction of all externalized costs under our current system. The much larger costs are attributable to the worsened health of the 30-40 million Americans who can’t afford adequate access to hc because they lack insurance. The bill for these costs will come due when the productive life of these people is shortened and their elevated, long term hc costs come due after they enter Medicare.
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neil wilson-
“I think, to be consistent, the reasons to be in favor of health care for a 60 year old should be similar to a 70 year old. However, the Republicans are saying that we shouldn’t cut Medicare.”
They’re opposing cuts, not because they support Medicare, but for tactical reasons. It’s a twofer:
(1) if hc reform passes, come November, they’ll make the Dems pay a political price for cutting Medicare to pay for hc reform
(2) they scare seniors (as they did with death panels) into opposing hc reform making it more difficult for the Dems to pass it.
“can you name a single politician, with the exception of Paul Ryan, who wants to eliminate Medicare?”
Yes, there are quite a few, but they keep a lower profile than Ryan. I could do some Google searches and find them but, if I can avoid it, I’d prefer not to spend the time.
“CBO does not score unspecified, open-ended promises of this sort.”
The bills now in Congress don’t contain “open-ended promises of this sort,” they actually require reducing Medicare expenses. Nobody, including the people at the CBO, believes that these reductions will go into effect, because it is all but certain that Congress will pass new laws to prevent this, even if the health care bill passes. Congress has done this be3fore; the new laws restoring earlier Medicare “cuts” are called the “doctor fix.” But the CBO cannot ignore the budgetary effect of a provision in the bill it is scoring on the ground that Congress will later undo what it proposes to enact. So Ryan Yin is right: the blame here attaches not to the CBO, which has no choice, but to those pushing the health-care bill, who have included in that bill a cost-reduction provision that they know will later be repealed. This enables our President to claim that the bill won’t increase the deficit. He’s lying.
I haven’t read the CBO report, but I’m inclined to be a little skeptical of Professor Landsburg’s take on it. The post didn’t link to the report, which makes me suspicious since the CBO puts most of their reports online. Looking for the report I’ve only found a CBO post saying the president’s bill isn’t specific enough to do a cost analysis on, so I guess I just don’t know what Professor Landsburg is looking at. http://cboblog.cbo.gov/?p=473
This is a good analogy for the “starve the beast” GOP ideology – offered as a weak defense for not living up to conservative spending promises. It is also a good analogy for the many fold “spend to save” arguments from the democrats – especially on health care. And it may be a good analogy for the CBO’s take on Obama’s proposal, but there is no way I can tell that from this article.
The lynch-pin of your argument is that investing in expanded Healthcare coverage will not motivate cuts in Medicare. By comparing it to cake and jogging you distract from the logic of it.
Developing a Universal Healthcare system will necessarily involve creating institutional systems that overlap with those used by Medicare.
For instance medical billing and collections, hospital privileges administration, accounts payable, payroll are all things needed by the new system that will be put to use serving medicare as well.
Why is it hard to believe that creating a second healthcare system will allow for cuts in services to one of them in areas of overlap?
@Benkyou Burito
Your logic hinges on this second healthcare system being a “public option.” Thankfully that idea has been scrapped and instead they’re pushing for the healthcare exchanges. They’re not necessarily better, but it’s not a true public option.
So, since the healthcare exchanges are going to involve government subsidized plans being offered by traditional insurance companies, this overlap you claim cannot materialize. In fact, just the opposite would be true. New accounts payable, payroll, etc. would need to be established to process the subsidies from the government to the insurance companies. This is an additional cost, not an overlapping one.
Cheers!
Alan-
I believe your description applies to the 8 years of the Bush admin. when the GOP let Gramm-Rudman expire and took the lid off all budgetary contraints. Of course, during this period budget deficits skyrocketed.
During the Clinton years the Dem Congress accepted the budget constraints of Gramm-Rudman which is part of the reason we went from big deficits to surpluses in those years. (Of course, strong economic growth helped.)
Congress has now reinstituted those restraints which, in most but not all cases, require Congress to offset spending increases and tax cuts with matching spending cuts or tax increases. As a result, the game-playing you decry will be tougher than it was during the Bush admin and more like it was during the Clinton years.
Furthermore, it’s not enough to criticize the Obama plan in a vacumn. We need to take a look at how the Obama reforms would affect deficits compared to current law and the GOP plan.
While Steve did not provide a link to the CBO report he characterizes (and like jambarama, I can’t find it, and I’m pretty good at digging CBO reports up), I will:
http://cbo.gov/ftpdocs/107xx/doc10705/hr3962amendmentBoehner.pdf
This report provides the comparisons we need. Here’s a brief summary:
* Today, 17% of legal, non-elderly residents don’t have health care insurance.
* Under the GOP plan, in 2019, 17% of legal, non-elderly residents won’t have health care insurance. So, no change.
* Under the Obama plan, in 2019, 4% of legal, non-elderly residents won’t have health care insurance. This means an additional 36 million people will be covered.
But surely the GOP plan does a better job of reducing the deficit. Not so.
* CBO says the GOP plan will cut $68 billion off the deficit over the next 10 years.
* CBO says the Obama plan will cut $104 billion off the deficit between now and 2019.
The Obama plan, in other words, covers 12 times as many people and saves $36 billion more than the Republican plan.
In all these costings, is the reduced productivity of sick or dead potential workers with no health cover included?
@Philip:
“The Obama plan, in other words, covers 12 times as many people and saves $36 billion more than the Republican plan.”
I don’t know what “Republican plan” you are talking about; neither the original post nor any of the comments has anything to do with some “Republican plan.” In any event, your comment says nothing about whether the health-reform plans now before Congress will reduce or increase deficits. The issues are whether the CBO scoring, which says these plans will reduce the deficit, is accurate (it’s not) and, if it’s not, whether this is the CBO’s fault or Congress’s (Congress’s). It is true that this game of “let’s write a bill that the CBO will score as deficit-reducing and later take away the cost-cutting part” is regularly played by both parties. That doesn’t make it any less dishonest; it just means both parties lie to us on a regular basis. “I am shocked, shocked ….”
I don’t know what “Republican plan” you are talking about;”
If you click on the link you’ll see what plan the CBO has analyzed.
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“neither the original post nor any of the comments has anything to do with some “Republican plan.”
My point is that among the three options in the real world (current law, the GOP plan and the Obama plan), the Obama plan is the best in terms of cutting the deficit, not to mention in expanding access to hc insurance. I apologize if pointing this out has caused you distress.
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“In any event, your comment says nothing about whether the health-reform plans now before Congress will reduce or increase deficits.”
You must have missed this in my post:
“* CBO says the GOP plan will cut $68 billion off the deficit over the next 10 years.
“* CBO says the Obama plan will cut $104 billion off the deficit between now and 2019.”
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“The issues are whether the CBO scoring, which says these plans will reduce the deficit, is accurate (it’s not) and, if it’s not, whether this is the CBO’s fault or Congress’s (Congress’s).”
Do you have a better, non-partisan source for scoring legislation?Maybe you haven’t examined one of these scores, but it’s not as easy as you seem to think. CBO has a good reputation on both sides of the aisle and off Capital Hill.
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“it just means both parties lie to us on a regular basis.”
Welcome to politics, corporate accounting, credit ratings and statistics.
D-Smith:
The same logic works your way as well. If you expand private sector coverage then you are still going to create infrastructure used by those in the medicare system. Because nearly all of the actual care is provided by private industry.
A clinic that could never justify an MRI machine, can now hire several more doctors and buy the needed equipment to meet the demand of the many newly insured. Having that MRI in house cuts a lot of waste compared to scheduling and billing a 3rd provider.
In Japan, where the gov. sets price ceilings on every medical treatment, the top price a clinic can charge for a night in the hospital is about $75 and the top price for an MRI is about $260. The actual price you will pay for each is about $25 and about $160 respectively.
@Benkyou
Thank you very much. I never realized that an arbitrarily imposed government price ceiling could solve the problem of an “overpriced” commodity. You’re quite insightful. Perhaps the government should set an arbitrary price ceiling on everything that populist rage insists is too expensive.
All snark aside, I hope you get my point. And, as an individual who (unfortunately) worked in a claims processing environment for two years, even the government imposed fee schedules in the US for an MRI pay far more than $260 for an MRI. The price goes even higher for an open MRI. Is it too logical to assume that government imposed price controls, a la Japan, may have led to the MRI machine never having been invented in the first place?