Wednesday, October 28, 2009

Health Reform: Academic Health Economists Versus Republicans

I find it fascinating to read the different health reform views of economists in academia and mainstream Republicans. When I think of the academics, professors Uwe Reinhart and Paul Krugman of Princeton and Alain Enthoven and Victor Fuchs of Stanford, spring to mind. Various vocal Republicans Senators and Congressmen, come to the surface. Their names are too numerous to mention because they stand united against current reform plans.

According to David Horowitz in the The Professors: the 101 Most Dangerous Academics in America in one way or another, most university professors are Democrats and are overwhelmingly “leftists” (The Professors, Regnery Publishing, 2006). Horowitz focuses on radicals, which I'm sure is not universally the case. But certainly most academics who write on health reform favor more government control and more “top-down” management while the Republican party leans towards market reforms.

Victor Fuchs, PhD, professor emeritus of health economics at Stanford, now 85, has been writing on health economics for 40 years.His classic Who Shall Live? Health Economics and Social Choice (Basic Books) appeared in 1974. In the October 29 NEJM, he offers four choices he favors for health reform.

1) creation of insurance exchanges, similar to the Federal Employees Health Benefit Program (FEHBP), and the California Public Employees Retirement System (CalPERS).

2) elimination or limitation of the tax exception of employer-based health insurance with the ultimate goal of doing away with this type of insurance altogether.

3) appointment of an expert commission to devise changes to the way Medicare pays providers.

4) federal funding for a quasi-independent institute for technologic assessment.

And as a fifth choice, almost as an afterthought, he advocates universal coverage financed by a value-added tax dedicated to providing basic coverage for all.

These choices would require more government, phasing out of an employer-based system, and less independence of physicians, which are not Republican positions.

In spite of frequent accusations of being the "No" party on reform Republicans have introduced 6 plans this year. These 6 plans contain these basic elements.

1. Permit insurers to sell policies across state lines.

2. Give people who buy insurance in the private market the same tax breaks as those who get it through employers. People who want to buy insurance in the individual market should get the same tax breaks as employers. That would help millions of people acquire coverage.

3. Expand the ability of small businesses, trade associations and other groups to set up insurance pools to offer coverage at more attractive rates.

4. Enact tort reform and control health costs in part by reining in the medical malpractice system that raises insurance premiums and forces doctors to order tests to protect themselves from lawsuits.

There are a few, but only a few, commonalities between the academics and the Republicans - reforming the employer based system and setting up insurance exchanges or insurance pools to create competition and lower rates.

Republican plans would cost taxpayers much less, perhaps half of what the academics propose, but would expand coverage indirectly rather than directly, through tax write-offs for all health care benefits, whether one is employed or not, and would not guarantee coverage for all. And, of course, the academics rarely mention tort reform.

Perhaps the biggest differences is that the academics would have a government-based “expert” commission to reform doctor pay , a “quasi-commission” to evaluate new technologies, employer and individual mandates, and even a Value-Added Tax (VAT) to guarantee universal coverage. A VAT is anathema to Republicans, an example of government run amuck. The differences hinge on a “top-down” versus a “bottom-up” approach. It’s the fundamental problem of the “center-left” dictating to the “center-right.”

From present reform difficulties, Professor Fuchs concludes,

"Prospects for th enactment of some reform look good, but comprehensive sustainable reform of the health care system must wait for another day. Republican support for President Obama's ambitious agenda is fading fast. As imaginative truly bipartisan approach has failed to gain any traction. Within the Democratic majority, sharp disagreements in each house, and between the House and the Senate, do not augur well for coherent legislation."

As for me as I write, I am reading Dumas Malone's 1962 book Jefferson and the Ordeal of Liberty. Thomas Jefferson was the original Republican and consistently argued for more individual liberties and less government.

From this book and from what I observe on the current scene, I conclude,

When and where the good of society, individual liberties, and good intentions intersect, conflict is inevitable and necessary to reach common ground. In my view, it is possible to disagree agreeably, to listen respectfully to each other's point of view without rancor, racism, and radicalism, and for both to be right, each in their own way, each from their own vantage point, each for the right reasons. That's what makes for good suasage - intellectually seasoned, but edible for most of the people most of the time, with room for individual liberties.


Michael Kirsch, M.D. said...

The academics are parroting the Obama health care doctrine. More government control. More access. More medical mediocrity. Remind me, how do they control the costs that are suffocating us? At least the GOP recognizes that the government shouldn't be the nation's doctor. Are the public options Medicare and Medicaid doing so well that we should extend the model across the country? See

Richard L. Reece, MD said...

Michael, you are right. The answer is you can't superimpose a government entitlement system on the present system without causing costs to explode, which is why Medicare and Medicaid are financial train wrecks. Like you, I do not see how we can extend these programs to cover all the population. Also if we add 30 million more to the insured rolls, given the current doctor shortage, we will have a health care crisis that dwarfs the current "crisis." Universal coverage without universal access is meaningless. Let's go for practical affordable incremental reforms, not impratical impossible to enforce or execute big government reforms.