Goodman Vs. Emanuel

On the fourth anniversary of the ACA, Saturday's Wall Street Journal had an excellent pair of pro and con OpEds from John Goodman "A costly failed experiment" and Ezekiel Emanuel "Progress, with caveats."


Goodman starts with a zinger. The point was universal coverage. "Four years later, not even the White House pretends that this goal will be realized."

The best parts, to me: After noticing that families near 14% of the poverty level get about $8,000 in medicaid benefits, or about $11,000 worth of subsidies on exchanges,

the employees of a hotel who earn pretty much the same wage ... will be forced to have an expensive family plan... the ObamaCare mandate amounts to about a $10,000 burden on these businesses and by extension their employees.

This leads to a novel (to me) economic effect.

As businesses discover that almost everyone who earns less than the average wage gets a better deal ...in the exchange or from Medicaid, and that most people who earn more than the average wage get a better deal if insurance is provided at work, trends already evident will accelerate. Higher-income workers will tend to congregate in firms that provide insurance. Lower-income workers will tend to work for firms that don't. But efficient production requires that firm size and composition be determined by economic factors, not health-insurance subsidies.

And John is prescient on just why exchange policies seem to be pretty awful:

Under ObamaCare, insurers are required to charge the same premium to everyone, regardless of health status, and they are required to accept anyone who applies. This means... they have strong incentives to attract the healthy (on whom they make a profit) and avoid the sick (on whom they incur losses). 

The result has been a race to the bottom in access and quality of care. To keep premiums as low as possible, the insurers are offering very narrow networks, often leaving out the best doctors and the best hospitals.

He has some nice alternatives, including

giving everyone the same universal tax credit for health insurance would be a good start. More easily accessible health savings accounts for people in high-deductible plans is another good idea. 

Every provision in ObamaCare that encourages employers either not to hire people or to reduce their hours should go. Everything in the law that prevents employers from providing individually owned health insurance that travels from job to job should go. And everything that makes HealthCare.gov more complicated than eHealth  (a 10-year-old private online exchange) should go.

By contrast, I was interested that Emanuel, an architect of the law, was so weak in its defense.

Look at access to care. According to Gallup, the percentage of uninsured Americans declined from 18% in the middle of 2013 to 15.9% in the first quarter of 2014..

Interesting that pro and con opeds start with essentially the same opening sentence! The glass is indeed 85% empty. Ezekiel passes on the canard that health insurance is "access to care."

But most important, recall that the idea was not simply to expand Medicaid and high-subsidy insurance. "Free health care for all" would have produced a lot of people signing up. That's not the measure of success.

A very interesting paragraph:

Look at quality. In 2010, as part of the Affordable Care Act, the federal government launched the Partnership for Patients, a push to reduce infections and other preventable errors and injuries that occur in hospitals through financial incentives. The results have been dramatic. In three years, avoidable central line infections have dropped 41%. Ventilator-induced pneumonias have dropped 55%. Unnecessary, elective C-sections have dropped more than 50%. Hospitals are also getting better at preventing falls, which have declined more than 11%. Overall, the Partnership for Patients has prevented roughly 15,000 deaths, averted hundreds of thousands of injuries, and saved more than $4 billion.

This was news to me. And astonishing. After all these years of complaining that doctors are too careful because of out-of-control liability, it took a Federal program to get doctors to wash their hands and prevent falls?

Even if it did, though, this point has nothing to do with the ACA, exchanges, and the rest! The government could easily have passed this magical program without touching health insurance. This is like saying we should fly to Hong Kong first class because the snacks on the plane are good.

He mentions the recent slowdown in costs. But he concedes there was a recession, and that took place before the ACA set in. No need to restart that fight. We'll see if the ACA really ends up being cheap.

But Emanuel concedes all is not right and needs some pretty radical fixing.

Step one would be to operate the exchanges like a cutting-edge e-commerce website, not a traditional government program. ...The challenge is more than getting the sites to work faster and more reliably. The challenge is to get them to run like Zappos or REI, with a relentless focus on improving the insurance offerings, attracting customers, and facilitating an easy, informative shopping experience.

 I just love this paragraph. It's written in a strange new voice that takes over policy discussions -- the regulatory passive. "to operate..getting the sites to work... to get them to run...." Just who is going to do all this toing? News flash: the ACA is a "government program," and it's run by Health and Human Services? When did government programs ever not operate like, well, government programs? When did any government program  relentlessly "focus on improving the insurance offerings, attracting customers, and facilitating an easy, informative shopping experience." Try the Post Office some day. But no,

..there must be constant improvement. And it can probably occur only with a 21st-century, private-sector management structure—one that empowers a CEO, probably with health-insurance experience, and a team of tech-savvy management specialists, to run the entire operation.

Ah, just bring in a czar to command the operation. 

Step two would be to change the way doctors and hospitals are paid as quickly and efficiently as possible. In order to control costs and improve quality, there needs to be a transformation in the way care is delivered. There needs to be continuous monitoring of patients in order to intervene early to prevent acute exacerbations of chronic illnesses. And when patients do get sick, there needs to be a greater focus on treating them outside of the hospital so the care they receive is safer, more efficient and lower-cost.

That wonderful regulatory passive again. "to change... there needs to be a transformation... there needs to be monitoring...there needs to be a greater focus." Who prey tell is going to do all this stuff? Why are they going to do it? Who is going to pay for it?  

Interestingly, the bottom line ends up not being so different from Goodman.  Government programs act like government programs -- for example following arcane procurement rules -- because, by Federal Law they have to run like government programs. And those laws aren't silly, they were put in place because otherwise people steal. 

There is a place filled with "CEOs with health-insurance experience and teams of tech-savvy specialists." There is a place where "big transformations in the way " services "are delivered" happens. There is a place that "private-sector efficiency "happens. It's called "the private sector." Really, Emanuel has without realizing it written a pretty effective piece for deregulation of the whole mess. 

And, though his closing paragraph praises the law, consider the closing sentence

Now is not the time for autopilot.  Lawmakers need to enhance the exchanges and more rapidly adopt alternatives to the fee-for-service payment system.

This actually calls for legislative and regulatory changes no smaller than what Goodman calls for!