Saturday, January 23, 2010

Government vs. Market Reform - Gov-Check.Com

We face a choice here. We can choose to rely entirely on the federal government to allocate resources in the health-care sector, or we can choose to make decisions in a decentralized marketplace with the government providing oversight ant enforcing consumer protections.

James Capretta, “What the Health Care Debate is Really All About, “ RealClearPolitics, January 23, 2010

I have agonized about what to title this blog.

Should I call it “Gut Check?” The Scott Brown election in Massachusetts, it seems to me, may force the nation to choose between government-run health care and market-driven care.

Going forward, as we reassess health reform, will we choose to have government elites allocate health resources? Or will people and institutions on the street determine what we spend on health and how we spend it?

Gut-Check Time

It is gut-check time. Government-driven or market-driven care? The answer has profound implications. Both political parties know it, not just for the economy but for our democracy and our philosophy of government. The stakes are high. There is no backing off. That is why the two parties have been so intransigent and divided in opposition on which way to go. No one dares cross the line.

Not about Reform or Coverage

The debate is not about expanding coverage for the uninsured or cutting costs for everybody. Everybody agrees something has to be done. It is about whether to put government in the cost-control driver’s seat, and suffer consequences – price setting, rationing, and who decides who gets what at what price – or to trust care to the marketplace’s uncertainties.

Gov-Check. Com

Hence, my title – It is about checks and balance, as envisioned by the Founding Fathers., and what role electronic checking of providers will play in overseeing the scheme of things. It is about the current standoff between political parties on how to control costs. Both sides agree the current cost trajectory is unsustainable, both agree we need to cover the uninsured, but neither is willing to give an inch on how to do it.

Medicare and Medicaid Policies as Clubs and Curbs

The present House and Senate Bills would use Medicare and Medicaid payment policies as curbs and clubs to force doctors and hospitals to change how they practice medicine. The bills would penalize hospitals who readmit patients for care, punish doctors who provide too many services, and establish an Independent Medicare Commission with arbitrary powers to cut payments to hospitals and doctors to meet payment targets.

According to the Congressional Business Office and based on demonstration projects so far, these measures would not save much money. But government aficionados still have unbounded confidence the government can centrally plan and control a complex process. Half a century of Medicare and Medicaid experience has shown this confidence is unfounded as these government programs skydive towards bankruptcy.

Giving Market Forces a Real Try

The other side of the equation is to give market forces – competition across state lines, health care tax credits for every citizen, HSA plans with high deductibles and catastrophic lids to prevent bankruptcies, and malpractice reforms offering capped objective payments for medical injuries a genuine try.

These approaches have been suggested but never tried on the broad basis as means of providing universal coverage and reduced costs. Perhaps the time to give market forces works on a real try without putting government dampers on them at every twist and turn. Better than Gut Check strikes me as a better title than gut check. Gut check implies a simple choice between government and the market. Gov check is more complicated. means not only a philosophic al check against government centralized power, but electronic checks by the government on market costs and quality of competing providers. Government oversight will be necessary if we are to opt for a market driven system.

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