Hill's economic forum (part 2): health care

The second session was better by a notch or two. An overview: First, as is common, the panelists failed to enunciate why health insurance is not "true" insurance-- an absolutely key point of discussion. Second, there was a strong emphasis on personal responsibility-- and the contributions of tobacco, alcohol, and obesity to health care costs. And third, there was a very interesting discussion of Hill's vote against S-CHIP.

Health insurance is not "true" insurance: Insurance is a service that consumers purchase to protect themselves from rare, catastrophic events (e.g., car accidents, house fires). Health insurance covers everything from cancer to allergy shots. Imagine what would happen to the cost of car insurance if it covered oil changes, door dings, and detailing. Imagine what would happen to the cost of an oil change if 80-90% of its costs was covered by insurance. How much paperwork would this insurance generate? How much would people pay attention to cost? And so on...Oddly, most of us have "too much" insurance-- since it is subsidized by the government (as a non-taxed fringe benefit). The result, co-pays and deductibles are too low for coverage is far too comprehensive. True health insurance would cost a fraction of what we have today.

Tobacco, alcohol, and obesity: The panelists addressed this quite a bit, although sometimes in a confusing manner. They want to incentivize people, but they don't want to discriminate against them (for example, by charging them higher insurance premia). Good luck with that! But everyone agreed that we should broaden the discussion from tobacco to the big three. At one point, there was praise for IUS becoming a "tobacco-free" campus on August 1; if the campus deals with obesity next, maybe we'll go "tubby-free" next year.

Hill's vote against S-CHIP: This was the most interesting exchange of the morning. Hill started by defending his vote against S-CHIP because it funded the program on the backs of tobacco farmers (vs. spreading out the cost to liquor/beer and obesity). He said that it really bothered him when people said he was in the pockets of the tobacco companies. (Apparently, being in the pockets of tobacco farmers is ok.) And interestingly, he said that he was doing so because he had to support his constituents. (If this was my position, I'd say it was "the right thing to do".) But this got him in some trouble when a lady followed up with a few questions about a much larger group of"constituents"-- "the children". Hill did a decent job in fending that off, but it was hilarious to see a Democrat get attacked with a "it's for the children" argument. (Hill also made a very interesting point about tobacco farming as "a way of life". It's not just an occupation, but a vital part of the culture in areas where that crop dominates-- so that it's not as simple as getting people to move to other crops.)

What was unsaid: Again, there was no discussion about the local/state vs. Fed role of government in this arena. Interestingly, one of the panelists, Dr. Rob Stone of Hoosiers for a Commonsense Health Plan advocates a state-based plan with universal coverage. Baron and the U.S. Congress are moving toward a national plan for children. But why should this be a role for federal government? If the states want to do it, good luck with that, but the efficiency and equity arguments both work against a federal "solution".

As a postscript, the funniest/saddest part of the HCHP literature was the claim that "economic impact studies have repeatedly found that single-payer systems offer the most viable financial solution to the health care crisis"-- followed by a reference to the financial merits of Medicare! Stone seemed to argue that Medicare's problems were a function of Bush's new Medicare Advantage program. Although the extension of Medicare benefits has exacerbated the cost problem modestly, it also relaxed the choice constraints that must follow such a plan when trying to contain costs. And HCHP wants to finance the new program with a "progressive income tax" and a payroll tax (that tax would be regressive or flat, but they didn't want to mention that!).