Not April Fool's.
Jim Hamilton has more.
Sunday, April 1, 2012
Yglesias talks some sense about health care costs
It looks like there's a decent chance that the Supreme Court will strike down Obamacare, on the principle that Congressional power must be subject to explicit limits. Matt Yglesias discusses how this might result in a push toward single-payer health insurance. He discusses how the government might then use its monopsony power to drive down the salaries of doctors, which are a major component of health care spending.
This is how it works in Germany. Here, we have a sort of a hybrid between single-payer and an individual mandate with a dollop of competition among doctors. There is a health insurance tax which is progressive until a certain point when it becomes lump-sum. It's explicitly part of the social security system. The money then gets funneled into health insurance pools called "Krankenkassen" (literally "sickness cashiers"). People get to choose their Krankenkasse, and the Krankenkassen compete based on service rather than price. There is a Krankenkasse of last resort for the tougher cases. There is only a quarterly nominal lump sum copay, and doctors are not tied to one Krankenkasse or another. This is the large difference between Germany and truly socialist systems such as the UK's NHS. Better-off people are allowed to opt out of the system and buy private insurance at lower rates, which requires deep pockets and a decent command of German legalese.
The problem with tying health care in with social security, of course, is that Germany is ahead of the United States in terms of demography. This leads to a crushing health insurance payments for the young, which is actually the whole point of the system. For instance, I pay about 677 EUR per month, which is nowhere near actuarially fair for an early 30-something guy. The imbalances in the system lead to cuts in service--no private rooms in hospitals, less investment in equipment, and a tendency for doctors to prescribe placebos to make patients go away. Medical doctors also make about half as much money as they do in the United States. Some doctors have told me that they'd emigrate to the United States if they were younger and not settled down. This sort of outcome is what "Medicare for all" would entail.
At the customer level, restrictions are based on quantity instead of price. One example: I'd like to obtain some good-quality Vitamin D supplements because of the lack of sun, but in order to do it I have to make an appointment with my GP and then get a prescription. Since this is quite a hassle, I haven't done it yet, though I keep planning to get around to it. I've been stuck with the tablets which are far less effective. This is maybe a trivial case, but think of getting two colds per year, not being able to get decongestant, and always ending up with horrible sinus infections which go untreated.
My questions for those who favor this type of system: Is it efficient to restrict customer access to health care to those who have the Sitzfleisch to navigate the system, rather than based on some sort of pricing mechanism for those who can deal with it? Would it pay to be explicit about the goal of health care reform and the individual mandate in particular, which is to transfer money from the young and healthy to the old, poor, and chronically ill? Why should social transfers be bound to insurance at all?
My questions for those who are against this type of system: Sorry for the mixed metaphor, but what is the best way to ensure that the old, poor, and chronically ill do not fall through the cracks without having to jump through an impossible series of bureaucratic hoops? Would it make sense to set up some sort of national insurance market and get employers out of the game entirely? How would you reduce the total amount of public and private bureaucracy that people have to deal with while maintaining incentives against consuming too much health care? What is a reasonable default for people who aren't informed shoppers?
Those are my uninformed thoughts.
Update:
Here is a pair of links on the experiences of an expat in the Krankenkasse system.
This is how it works in Germany. Here, we have a sort of a hybrid between single-payer and an individual mandate with a dollop of competition among doctors. There is a health insurance tax which is progressive until a certain point when it becomes lump-sum. It's explicitly part of the social security system. The money then gets funneled into health insurance pools called "Krankenkassen" (literally "sickness cashiers"). People get to choose their Krankenkasse, and the Krankenkassen compete based on service rather than price. There is a Krankenkasse of last resort for the tougher cases. There is only a quarterly nominal lump sum copay, and doctors are not tied to one Krankenkasse or another. This is the large difference between Germany and truly socialist systems such as the UK's NHS. Better-off people are allowed to opt out of the system and buy private insurance at lower rates, which requires deep pockets and a decent command of German legalese.
The problem with tying health care in with social security, of course, is that Germany is ahead of the United States in terms of demography. This leads to a crushing health insurance payments for the young, which is actually the whole point of the system. For instance, I pay about 677 EUR per month, which is nowhere near actuarially fair for an early 30-something guy. The imbalances in the system lead to cuts in service--no private rooms in hospitals, less investment in equipment, and a tendency for doctors to prescribe placebos to make patients go away. Medical doctors also make about half as much money as they do in the United States. Some doctors have told me that they'd emigrate to the United States if they were younger and not settled down. This sort of outcome is what "Medicare for all" would entail.
At the customer level, restrictions are based on quantity instead of price. One example: I'd like to obtain some good-quality Vitamin D supplements because of the lack of sun, but in order to do it I have to make an appointment with my GP and then get a prescription. Since this is quite a hassle, I haven't done it yet, though I keep planning to get around to it. I've been stuck with the tablets which are far less effective. This is maybe a trivial case, but think of getting two colds per year, not being able to get decongestant, and always ending up with horrible sinus infections which go untreated.
My questions for those who favor this type of system: Is it efficient to restrict customer access to health care to those who have the Sitzfleisch to navigate the system, rather than based on some sort of pricing mechanism for those who can deal with it? Would it pay to be explicit about the goal of health care reform and the individual mandate in particular, which is to transfer money from the young and healthy to the old, poor, and chronically ill? Why should social transfers be bound to insurance at all?
My questions for those who are against this type of system: Sorry for the mixed metaphor, but what is the best way to ensure that the old, poor, and chronically ill do not fall through the cracks without having to jump through an impossible series of bureaucratic hoops? Would it make sense to set up some sort of national insurance market and get employers out of the game entirely? How would you reduce the total amount of public and private bureaucracy that people have to deal with while maintaining incentives against consuming too much health care? What is a reasonable default for people who aren't informed shoppers?
Those are my uninformed thoughts.
Update:
Here is a pair of links on the experiences of an expat in the Krankenkasse system.
Saturday, March 31, 2012
Yes, these are for real.Hello world (yet again)
Hi, I'm Chris, and I'm an economist living in Kiel, Germany.
Check here for irregular doses of economic commentary. You can find my regular research site at http://sites.google.com/site/chrisreicher/ where you'll find my work on macroeconomics. My research at the moment covers wage formation over the cycle, the role of sticky human capital at the macro level, and fiscal policy.
I figured that it was finally time to start this site instead of trolling everyone else's sites. I tried this for a short while in grad school but never really kept it up. Take 2.
Check here for irregular doses of economic commentary. You can find my regular research site at http://sites.google.com/site/chrisreicher/ where you'll find my work on macroeconomics. My research at the moment covers wage formation over the cycle, the role of sticky human capital at the macro level, and fiscal policy.
I figured that it was finally time to start this site instead of trolling everyone else's sites. I tried this for a short while in grad school but never really kept it up. Take 2.
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