Death of the working class... and of Capitalism, as we knew it?

How fighting one pandemic can deepen another Review of “Deaths of Despair and the Future of Capitalism” by Anne Case and Angus Deaton

By Carlos Lozada, Book critic
May 1, 2020 at 5:00 a.m. PDT
DEATHS OF DESPAIR AND THE FUTURE OF CAPITALISM
By Anne Case and Angus Deaton.
Princeton University Press. 312 pp. $27.95

Even before the coronavirus struck, America was suffering an eviscerating epidemic. Its cause was not a virus; its spread could not be blamed on foreign travelers or college kids on spring break. No masks or gloves could slow its contagion, no vaccine could prevent new cases. Its toll is clear in the rising deaths of white Americans in their mid-40s to mid-50s over the past two decades, particularly in states such as Arkansas, Kentucky, Mississippi and West Virginia.

Princeton University economists Anne Case and Angus Deaton call these “deaths of despair” — the deaths from suicide, drug overdoses and alcoholic liver disease ravaging swaths of the country. The victims, overwhelmingly, are less-educated Americans whose loss of life was preceded by a loss of jobs, community and dignity, and whose deaths, the authors argue, are inextricable from the policies and politics transforming the U.S. economy into an engine of inequality and suffering. “The American economy has shifted away from serving ordinary people and toward serving businesses, their managers, and their owners,” Case and Deaton write in their new work, “Deaths of Despair and the Future of Capitalism.”

Although the authors completed this book before the onset of the coronavirus pandemic — it was published four days after President Trump declared a national emergency — their diagnosis is still painfully relevant. Mass unemployment and mass infection, occurring simultaneously in a nation where health insurance often depends on employment, threaten to both prove and aggravate the conditions Case and Deaton describe. The debate over how quickly to ease social distancing restrictions and get the economy moving again forces a reckoning: How do we balance the risk of increased coronavirus infections if we reopen the economy too soon against the risk of more deaths of despair if we do so too late? “Jobs are not just the source of money; they are the basis for the rituals, customs, and routines of working-class life,” Case and Deaton write. “Destroy work and, in the end, working-class life cannot survive.”

Reading this book during a pandemic, I found myself bracing for more death — from the virus or from despair, and, more likely, from both.

Many memoirs, histories and investigations have been written on America’s white working class in recent years, probably too many, but fewer purely economic studies. Case and Deaton are world-renowned practitioners of the dismal science (Case is a top expert on the links between economic and health status, while Deaton snagged a Nobel in 2015 for his work on household poverty and welfare), and their lens on the subject makes for stark reading. They estimate the magnitude of the deaths of despair in the United States by comparing the improving trend lines of recent decades — i.e., if mortality rates had continued falling as before — with what actually came to pass.

“When we add up those numbers from 1999, the critical point where the turnaround began, to 2017,” the authors report, “we get a very large total: 600,000 deaths of midlife Americans who would be alive if progress had gone on as expected.” Case and Deaton liken that number to “what we might see during the ravages of an infectious disease, like the Great Influenza Pandemic of 1918.” They also compare it to the roughly 675,000 deaths of HIV/AIDS in the United States since the early 1980s.

Case and Deaton are largely dismissive of arguments that stress the supposed individual or cultural failings of the white working class, and they focus instead on systemic shortcomings that lead to deaths of despair. Manufacturing towns and cities have seen their factories boarded up, they write, and “in the wreckage, the temptations of alcohol and drugs lured many to their deaths.” Education is another consideration, the authors argue, with “almost all” of the increase in deaths due to suicide, alcoholism and drug overdoses found among people who lack bachelor’s degrees. Deteriorating health matters as well. “Many people are experiencing pain, serious mental distress, and difficulty going about their day-to-day lives,” Case and Deaton write. These conditions make it harder for them to work, which reduces income and undercuts work as a source of “satisfaction and meaning” in their lives.

Who lives, who dies, who decides: How the virus makes us weigh the value of one life

More than 30 million Americans have sought unemployment aid since mid-March, a level of dislocation not seen since the Great Depression. In this context, the impulse to return to work is understandable. Yet the loss of earnings, Case and Deaton contend, is just part of the challenge. “Much more important for despair is the decline of family, community, and religion,” they write, a decline they regard as related to falling wages and disappearing jobs, but distinct from them. Other authors have tackled this problem recently — see, for instance, Timothy P. Carney’s insightful 2019 book, “Alienated America” — and collectively, their conclusion is clear: Long before we began social distancing, Americans had already grown far too distant from one another.

Case and Deaton focus on the white working class because it is undergoing a particularly harrowing shift, not because they believe this demographic matters more than others (they don’t) or because it is worse off in absolute terms than others (it isn’t). Black mortality rates remain persistently higher than white ones, the authors point out, even considering the increased deaths of despair among white Americans. But black mortality rates are falling faster than white rates — and the deaths of despair among white citizens are the difference. “The main reason why death rates of blacks fell more rapidly than death rates of whites at the beginning of the twenty-first century is that blacks were not suffering the epidemic of overdoses, suicide, and alcoholism,” Case and Deaton explain. [...]

It's worth reading the whole thing. While I don't consider myself an anti-capitalist at all, there have been changes in the economy, locally an globally, that have been eliminating working class jobs and incomes. It's a reality.

When Obamacare tried to force small businesses to provide health care for full time employees, the employment industry responded by making all employees part time. I worked as a tax preparer, dealing with all their W-2 forms, and was astounded at how many families were raising children, with two parents working at an assortment of part-time jobs, to pay their bills and keep thier families alive.

This article touches on many causes, and asks many questions we need to face, as it's only going to continue to get worse for the majority of people, if viable solutions are not found.

Many of these people are Trump supporters. And they will vote for Trump, no matter what anyone says, because they feel that the Democrats don't care wether they live or die, so they will vote for anyone who opposes the Democrats. You can argue about wether that perception is right or wrong. But it won't change the fact that they percieve it that way. If the Democrats are serious about winning more votes, they should be addressing this, instead of only attacking Trump non-stop. They have been doing that for the past four years, and it hasn't worked. Isn't it about time they try something that does?

I have Democrat friends who believe that all Trump supporters are racists, bigots and morons. And that if they keep repeating that mantra, it's going to win them the elections. But I think they have forgotten, what every election is about: it's the economy, stupid. Duh. It affects the most people. And the majority will vote for whoever they think, whoever they perceive, will do the better job of that.

     

Pioneers of Hospice: Changing the Face of Dying

I saw this video recently. Here is the first 18 minutes on Youtube:



The full video runs about 50 minutes. It's very informative, well worth watching the whole thing. I've been looking for a copy, but the DVD seems to be out of print, with no indication of when it might become available again. Does anyone know? https://www.academicvideostore.com/video/pioneers-hospice offers it for $249.00, but that's way beyond my budget.

I'm surprised the video has not been re-released and made more readily available. IMO, Hospice is a much misunderstood concept. This video does a lot to clear up those misconceptions. I hope that whoever owns the copyright will release the video for publication again, or else release it into the public domain, where it could do a lot of good.
     

Funding the Affordable Care Act

Or not. With 2.5 million Americans leaving the workforce, that's 2.5 million less paying into it. Even the CBO (Congressional Budget Office) can do math:

White House: It's A Good Thing That Obamacare Will Drive 2.5 Million Americans Out Of The Workforce

[...] By 2024, says the CBO, Obamacare will reduce the size of the U.S. labor force by 2.5 million full-time-equivalent workers. That’s roughly triple what the CBO had estimated three years ago. Such a sizeable decline in the labor force will have substantial detrimental effects on the U.S. economic and fiscal picture.

[...]

In its annual, 182-page Budget and Economic Outlook, the CBO undertook an overhaul of the way it analyzes the effect of Obamacare on the job market. The new, larger estimate of the law’s negative impact on the labor force derives from three factors: (1) Obamacare’s employer mandate, which will discourage hiring and reduce wages offered by employers; (2) Obamacare’s $1 trillion in tax increases, which will discourage work and depress economic growth; and (3) the law’s $2 trillion in subsidies for low-income individuals, which will discourage many from remaining in the labor force.

Let’s focus on that last point, because it’s the one that has been the least-discussed in the media. In the past twelve months, a spate of research from academic economists has concluded that the health law, by offering economic benefits to low-income individuals, will disincentivize some of these individuals from continuing to work. Casey Mulligan of the University of Chicago has been particularly persuasive on this front, publishing two papers with the National Bureau of Economic Research.

Several economists, like Harvard’s Kate Baicker, MIT’s Amy Finkelstein, Texas A&M’s Laura Dague, and Northwestern’s Craig Garthwaite have found that expanding Medicaid is associated with rising unemployment. “Taking that research into account, CBO estimates that expanded Medicaid eligibility under the ACA will, on balance, reduce incentives to work.”

More significantly, as Casey Mulligan has warned, the new subsidized insurance exchanges will allow low-income workers to work less while maintaining the same effective income: what economists call the income effect. In addition, because the subsidies decline on a sliding scale as you make more money, that sliding scale means that as workers work more, they make less per hour worked: what economists call the substitution effect.

When Mitt Romney signed his health-reform legislation in Massachusetts in 2006, economists didn’t discern a substantial impact on the labor market. That led many Obamacare cheerleaders to dismiss concerns that the law would depress the workforce. But Mulligan observes that the Massachusetts law did not have a meaningful impact on income tax rates, unlike Obamacare. The ACA “increases national rates about 12 times as much as the Massachusetts law increased rates,” notes Mulligan; “among other things, [Massachusetts’] employer penalty is an order of magnitude less.”

CBO staff, to its credit, read the sheaf of new research on this topic, and revised its estimates accordingly. Hence all the hubbub about the new report. But wait—there’s more!

Carney: Americans should stop working ‘to pursue their dreams’

After the CBO review came out, White House Press Secretary Jay Carney published a statement in which he declared, remarkably, that it’s a good thing that millions of Americans may drop out of the work force:

Over the longer run, CBO finds that because of this law, individuals will be empowered to make choices about their own lives and livelihoods, like retiring on time rather than working into their elderly years or choosing to spend more time with their families. At the beginning of this year, we noted that as part of this new day in health care, Americans would no longer be trapped in a job just to provide coverage for their families, and would have the opportunity to pursue their dreams.

Bored with your job? No worries—now you can quit, thanks to the generosity of other taxpayers. Want to retire early? No worries—now you can, thanks to the generosity of other taxpayers, and also thanks to the higher premiums that young people will be forced to pay on your behalf. The White House’s apparently sincere belief—echoed by progressive pundits at MSNBC, The New Republic, and the L.A. Times—is that it’s a good thing for fewer Americans to be economically self-sufficient.

If you’re one of the chumps out there who still toils away at a challenging job, and still pays taxes so that others can “pursue their dreams,” you have a right to resent the White House’s argument. And the “dream-pursuers” themselves should become aware of all the research suggesting that earned success, through hard work, is the most reliable path to true happiness.

Participation in the labor force was already declining, thanks to the poor economy and the retirement of the Baby Boomers. Obamacare, it appears, will accelerate that process, forcing fewer and fewer taxpayers to support a greater number of government beneficiaries.

No universal-coverage plan is immune from this problem

I should issue two caveats before I go on: any health-reform plan that seeks to offer coverage to the uninsured will have this type of effect on the labor market. As Josh Barro notes, the new Republican plan to replace Obamacare offered by Senators Tom Coburn (Okla.), Richard Burr (N.C.), and Orrin Hatch (Utah) also has a means-tested subsidy to help the poor buy health insurance.

In addition, it is genuinely a good thing for us to move to a system where people control their own health dollars and their own health coverage, and aren’t stuck at a job because they’re afraid of losing the coverage they have. But giving people the opportunity to switch jobs is quite a different goal from encouraging them to drop out of the work force altogether.

The negative effect of Obamacare on the labor market is far worse than any Republican alternative would be, because the ACA dramatically expands Medicaid, and because the law heavily subsidizes health insurance for those nearing retirement. In addition, Obamacare depresses economic growth through a $1 trillion tax increase, and increases the cost of hiring new workers, because of its employer mandate requiring most businesses to offer health coverage to every worker.

The CBO report harbors more bad news

The new CBO report contained a lot of other interesting information. CBO projects that economic growth will be more sluggish than they had previously projected. From 2018 to 2023, nominal GDP growth will average 4.2 percent, compared to the CBO’s previous estimate of 4.4 percent. Over the same period, unemployment will average 5.6 percent, higher than the previous estimate of 5.4 percent.

Because of this slower economic growth, CBO projects that from 2014 to 2023, the federal government will receive $1.4 trillion less in tax revenue than it had projected last year. As a result, “CBO now estimates that the cumulative deficit for the 2014-2023 period…would be about $1.0 trillion greater than it projected in May [2013].” [...]

The biggest problem with the ACA, the way it is, is funding it. Parts of it were fine, and the Republican plan embraced those parts. But other parts are unsustainable. What is the point of passing legislation that is unsustainable?

Ideally, the president should have worked with Democrats and Republicans in Congress to combine aspects of both their plans, into something that would work. But that didn't happen. We got the Democrats plan shoved down our throats. Now what's going to happen, as this disaster continues to unfold, and it starts to fail?

It looks like we shall see. We will all have front row seats, whether we want them or not.

The full article at Forbes.com has many embedded links, graphs, and videos.

     

The Truth: You can't keep the plan you had

Sticker shock often follows cancellation notice for those with individual health care policies

MIAMI — Dean Griffin liked the health insurance he purchased for himself and his wife three years ago and thought he’d be able to keep the plan even after the federal Affordable Care Act took effect.

But the 64-year-old recently received a letter notifying him the plan was being canceled because it didn’t cover certain benefits required under the law.

The Griffins, who live near Philadelphia on the Delaware border, pay $770 monthly for their soon-to-be-terminated health care plan with a $2,500 deductible. The cheapest plan they found on their state insurance exchange was a so-called bronze plan charging a $1,275 monthly premium with deductibles totaling $12,700. It covers only providers in Pennsylvania, so the couple wouldn’t be able to see the doctors in Delaware whom they’ve used for more than a decade.

“We’re buying insurance that we will never use and can’t possibly ever benefit from. We’re basically passing on a benefit to other people who are not otherwise able to buy basic insurance,” said Griffin, who is retired from running an information technology company.

The Griffins are among millions of people nationwide who buy individual insurance policies and are receiving notices that those policies are being discontinued because they don’t meet the higher benefit requirements of the new law.

They can buy different policies directly from insurers for 2014 or sign up for plans on state insurance exchanges. While lower-income people could see lower costs because of government subsidies, many in the middle class may get rude awakenings when they access the websites and realize they’ll have to pay significantly more.

Those not eligible for subsidies generally receive more comprehensive coverage than they had under their soon-to-be-canceled policies, but they’ll have to pay a lot more.

Because of the higher cost, the Griffins are considering paying the federal penalty — about $100 or 1 percent of income next year — rather than buying health insurance. They say they are healthy and don’t typically run up large health care costs. Dean Griffin said that will be cheaper because it’s unlikely they will get past the nearly $13,000 deductible for the coverage to kick in.

Individual health insurance policies are being canceled because the Affordable Care Act requires plans to cover certain benefits, such as maternity care, hospital visits and mental illness. The law also caps annual out-of-pocket costs consumers will pay each year.

In the past, consumers could get relatively inexpensive, bare-bones coverage, but those plans will no longer be available. Many consumers are frustrated by what they call forced upgrades as they’re pushed into plans with coverage options they don’t necessarily want. [...]

The article goes on to give more examples, from people in lower income brackets than the Griffins, who are also loosing the plans they had, and will now have to pay more.

I've been given a 90 day notice that my insurance plan is being canceled.

Health care reform, done properly, should offer us more choices of things we want and need, not choices made by bureaucrats that are shoved down our throats. I want the health care I had, not somebody elses decisions.

The problem with the ACA right from the beginning was that there was no significant bipartisan input. Reform was needed, but it was too one-sided, and this is the result.

Two interesting comments under the article:

UCanKeepthechange
11/3/2013 10:11 AM PST
The WH is attempting to blame cancelled policies on insurance companies. However, the truth is that it is due to the ACA.

The so called grandfathering in of existing policies was dishonest. If the cost to the consumer of a policy went up a single dollar ($1) since the law passed in 2010, it was DISQUALIFIED from the grandfather clause.

When the law passed in 2010, the administration already knew the following:

80%+ of individual market policies would not conform to ACA and would be eliminated by law
65% of policies for small businesses and their employees would not conform to ACA and would be eliminated by law
45% of policies for large businesses and their employees would not conform to ACA and would be eliminated by law.

So, when you hear the administration's talking heads blaming insurance, understand that it is simply another lie. This one is all on Obamacare.

Salverda
11/2/2013 7:10 PM PDT
Don't be deceived, by the latest straw-man argument, into thinking that insurance companies are some how sabotaging Obamacare. Think for a minute: Who wants the "individual mandate" forcing every American to become a costumer of the insurance industry? And: Why would insurance companies want to infuriate half of their current customers by canceling their existing policies, without having the law on their side? The insurance companies know that they won't loose their clients, they will just be "transferred" or "channeled" into more expensive plans that call for higher premiums and larger deductibles. The complicit insurance companies are in cahoots with Obama on Obamacare; Why aren't they speaking up right now while Obama falsely accuses them of canceling policies, and charges them with selling "inadequate" and "unsatisfactory" "bad-apple insurance" products to their costumers? They keep quiet and just take it, because they are colluding with Obama, open your eyes! Sure there were coverages (no coverage caps, pre-existing conditions, 26 year old "child" dependents) that the insurance industry was reluctant to offer, at first. Their costumers would not have stood for the increased costs of these extravagant, and even unnecessary, services. However, under Obamacare they have found a way to get us to pony up, and now, they view these services in a different light. Their clients will be forced by law, to pay for these things, and they have been "allowed" to charge us for them. To the insurance industry, it is as if all of their costumers have been upgraded into their highest cost Cadillac plans. And they are lapping it up, taking full advantage of the situation.

     

The changing face of healthcare

I recently came across this article, which is aimed at American physicians:

Getting ready for emerging care models

Like it or not change is coming to healthcare. The government, employer groups and other purchasers of healthcare are demanding higher quality and lower costs in the delivery of healthcare. The Affordable Care Act of 2010 started this evolution and whatever you call it -- value-based purchasing, accountable care, patient-centered healthcare, etc. -- it is taking root and starting to grow rapidly.

[...]

To get an idea of what you should be thinking about, let’s look to a healthcare market where these “new” healthcare delivery models are the norm and have been in place for years. One such market is in the Netherlands, where 90 percent of demand for care is generated in the primary care setting and providers (private) are paid a lump sum based on conditions and work in integrated care networks.

In the Netherlands today, 99 percent of physicians use a computer, 97 percent are Internet-enabled, 90 percent store all types of health records electronically, 84 percent receive lab results electronically, and 26 percent exchange data electronically with other providers – all benchmarks that the United States aims to achieve in the next 3-5 years. The international standards used in the Netherlands are consistent with U.S. conventions, as HL7 and ICD-9 are used in healthcare and ICD-10 is being adopted. Also, as in the United States, Holland does not have a dedicated health ID number or “smart card” for patients that some European countries have adopted but which are not relevant in this country. In these respects, the Dutch market is extremely similar to the U.S. market. This market is where our own company history started, and where our care collaboration and disease management solutions have matured.

Here is what you need and why
To participate in a value-based delivery model you must be willing and able to coordinate and collaborate on patient care with other ambulatory providers; the goal is to render the right amount of preventive care, avoiding health complications and resulting in better patient care with lower attendant costs. Once this mind shift has taken root -- a very different and, for some, a difficult way of thinking -- you need the basic tools and capabilities to engage in care coordination. These tools must:

Enable you to store patient information electronically. This does not have to be the typical full-blown EMR that legacy vendors have been marketing. These EMRs were developed in the fee-for-service model to optimize billing and reimbursement and resemble digital renditions of paper records. Not to mention they are expensive to acquire and maintain even when they may be subsidized by the ACO. Instead, you need a platform that is designed for the new delivery model focused on optimizing patient care, with a workflow that fits your practice pattern. For more on this see the 2010 PCAST Report titled "Realizing The Full Potential of Healthcare Information Technology to Improve Healthcare."

Enable patient-centric care, including making sure that patients receive reminders for preventive services through multiple channels based on their personal profile.

Support the care team network, allowing all providers, physicians, facilities, etc., involved in treating particular patients to share relevant information through collaborative and coordinated care.

Manage patients proactively.

Be able to generate electronic referrals.

Be a cloud-based solution. Cloud-based solutions require little or no local IT support and investment. This is really important for the average physician practice. Also the pricing level and payment structure with predictable cash flow more closely matches the size of the practice.

To distill down these capabilities into specific tool sets means you should expect to have the following: an EHR; a care collaboration/coordination solution; and the ability to exchange electronic referrals. The key in selecting the right solutions for your practice is to pick one with the right workflow for your practice. The solution(s) must be cloud-based so you can avoid the costly hassle of purchasing and supporting local software installations, which is expensive and not your core competency. If you do not have these capabilities you either might not be a candidate to participate in an ACO, clinically integrated care delivery network or PCMH, or the ACO will force you to use their solutions.

You should expect the ACO to provide other required solution capabilities such as clinical decision support (CDS), analytics, population health tools, health information exchange platform (HIE); reporting tools, etc. These are expensive solutions tailored for a large organization to manage and support. [...]

It goes on to describe the current inefficient, entrenched ways of doing things, and how they are going to be forced to rapidly change, as has happened in many other industries (It has an embedded link to an article in Forbes).


Also see:

Have Smart Phones to do Medical Work
     

Have Smart Phones to do Medical Work

And save us lots of time and money, too:

Visit NBCNews.com for breaking news, world news, and news about the economy

The doctor being interviewed talks about waste in the medical industry, and suggests that a third of all drugs prescribed are unnecessary or even harmful.

He demonstrates how a Smart Phone can be used to replace many costly and time consuming tests that waste time and money. Yet I wonder how far he will succeed with this medical phone apps technology? It would cut into the profit margins of those who are heavily invested in the old way of doing things.

 http://www.nbcnews.com/id/21134540/vp/50582822#50582822  

Rawanda Healthcare: Lessons for us all?

Rwanda's Historic Health Recovery: What the U.S. Might Learn

[...] Over the last ten years, Rwanda's health system development has led to the most dramatic improvements of health in history. Rwanda is the only country in sub-Saharan Africa on track to meet most of the Millennium Development Goals. Deaths from HIV, TB, and malaria have each dropped by roughly 80 percent over the last decade and the maternal mortality ratio dropped by 60 percent over the same period. Even as the population has increased by 35 percent since 2000, the number of annual child deaths has fallen by 63 percent. In turn, these advances bolstered Rwanda's economic growth: GDP per person tripled to $580, and millions lifted themselves from poverty over the last decade.

The rest of the world, wealthy countries and well as poor, can learn from Rwanda's rapid rise.

[...]

Rwanda achieves exceptional results not from how much money they spend on health, but from how they spend it. A recent article in BMJ, led by Farmer, examined World Health Organization data and sought to identify why Rwanda developed so rapidly, and to clarify the lessons for other countries. Rather than a single cause, the authors identified a series of interconnected factors that contributed to the country's turnaround.

First and foremost, credit belongs to the government of Rwanda's centralized planning. In 2000, the Rwandan government created a plan, called Vision 2020, to develop economically into a middle-income country over the next two decades. Dr. Agnes Binagwaho, Rwanda's Minister of Health, explained that "health is a key pillar of our development" and that without improving health, they will never alleviate the country's poverty.

[...]

While the specific context of Rwanda cannot be replicated, Dr. Farmer contends that Rwanda's focus on evidence-based policy, central planning, health systems, and equitable access to care should be heeded both by countries looking rebuild their health system and those with strong systems already in place. "In our commitment to understanding complexity," said Farmer, "we need to not forget that there are generalizable lessons to delivering care that are not acceptable to ignore."

While the United States still exceeds Rwanda in most traditional health metrics (such as life expectancy), and its hospitals and medical care surpass those in Rwanda, U.S. health outcomes still falter because too many patients fall through the cracks. The U.S. health system relies too heavily on doctors and hospitals to provide care. A growing body of research suggests that more frequent health care use and higher costs may lead to poorer health.

Farmer believes that, if the United States extended health care into the community like Rwanda, care for chronic diseases would markedly improve while costs would over time drop. Indeed, community-based pilots in the United States have proven effective in settings from inner-city Boston to rural Mississippi. [...]

There is much more in the full article. Lots of food for thought.
     

Truely Bipartisan Health Care Reform

Unlike Obamacare, the Wyden-Ryan plan is truely a bipartisan effort, that does not dump any grandma's off a cliff. From Senator Wyden's website:

Bipartisan Health Options

U.S. Senator Ron Wyden (D-OR) and U.S. Representative Paul Ryan (R-WI) introduced a new proposal that represents a major advance in the effort to build a more secure future for the millions of seniors who rely on Medicare.

The new report from Sen. Wyden and Rep. Ryan, titled “Guaranteed Choices to Strengthen Medicare and Health Security for All: Bipartisan Options for the Future,” outlines a detailed proposal to offer expanded health care choices for older Americans while preserving a traditional Medicare plan as an option. The report also proposes to give Americans under 65 more power and freedom to purchase insurance products they can carry with them into retirement.

[...]

Why do you say Wyden-Ryan won’t “end Medicare as we know it?”  Won’t allowing seniors to choose private health plans be a major change?

First of all, the hallmark of Medicare is not its structure but its guarantee that every American will have high quality health benefits as they get older.  And, as has been mentioned before, “Medicare as we know it” will end in 2022 if nothing is done to change its current course.  Wyden-Ryan takes action to ensure the Guarantee is preserved.

Contrary to what many believe, every Medicare beneficiary does not currently get their Medicare from the government-administered Medicare insurance plan.  Many seniors are already getting their Medicare from private health insurance plans.  In Oregon, for example, 56 percent of seniors currently get all or some of their health coverage from a private plan. (15 percent of Oregon seniors purchase private Medigap policies to supplement their traditional Medicare, while 41 percent of Oregon's Medicare beneficiaries are enrolled in private health insurance plans through Medicare Advantage.)Wyden-Ryan would allow seniors to continue to choose between the traditional government-administrated Medicare option and privately administered plans.  But instead of maintaining separate programs, Wyden would make those private plans more robust and accountable by forcing them to – for the first time – compete directly with traditional Medicare.

Every private plan that participates in the program would be required to offer health benefits that are AT LEAST as comprehensive as those offered by traditional Medicare and premium support payments would be pegged to the actual cost of health care in a given area, determined by an annual competitive bidding process.  Therefore, every senior – whether they get their health insurance from a private plan or the government – will be guaranteed to have the high quality health benefits that has long been Medicare’s promise.

How will Wyden-Ryan ensure that private insurance companies don’t take advantage of seniors?

All participating private plans will be required to offer benefits that are at least as comprehensive as traditional Medicare, with such standards enforced by the Centers for Medicare and Medicaid Services.  Any plan that is found taking advantage of seniors or providing inadequate care will be kicked out of the system. Cherry picking healthier seniors will be made unprofitable by robust risk-adjustment, and the Medicare Exchange where plans will seek to offer coverage to seniors, will be policed by the federal government.

It is worth noting that the Medigap law Senator Wyden authored to regulate the private market for Medicare’s supplemental insurance market has been protecting seniors from unscrupulous insurance practices for more than two decades.

How will Wyden-Ryan guarantee that health care will be affordable for all seniors? Isn’t it just a voucher?

A voucher suggests giving seniors a fixed amount of money indexed by a set rate of growth that may/may not have anything to do with the actual growth of health insurance costs.  Vouchers would not guarantee that seniors could afford health coverage.  (This is what the last year’s House Republican Budget did.)

Wyden-Ryan does not give seniors vouchers.  Instead Wyden-Ryan would guarantee that seniors can afford their health insurance premiums by giving seniors premium support payments, the amount of which will be determined by the actual cost of insurance premiums each year.

It would do this through a competitive bidding process in which private insurance plans, wanting to cover Medicare beneficiaries, would submit their benefit packages and the amount they will charge in premiums for the upcoming year.  The amount seniors receive in premium support will be determined by either the cost of traditional Medicare premiums or the second cheapest private plan available on the exchange (whichever is cheaper.)  This process will take place each year, so if health care costs – and therefore insurance premiums -- grow dramatically from one year to the next, so will the premiums support payments that seniors get to pay for them – thus ensuring that every senior can afford their health insurance premiums.

And again, every private plan in the Medicare exchange will be required to offer benefits that are at least as comprehensive as those offered by traditional Medicare. [...]

It's not a "Radical Plan to Kill Medicare". It actually builds on the Medicare options that already exist, in a way that will both control costs and offer more choices. And it's a plan we can actually afford!

It's definitely worth reading the whole thing. It's pretty much the same Medicare plan that Paul Ryan is advocating on his website.

In an interview for Human Events, Ryan explains the history of bipartisan support for the reforms he's advocating.

   

Milton Friedman's Cure for Health Care Costs

How to Cure Health Care

[...] The high cost and inequitable character of our medical care system are the direct result of our steady movement toward reliance on third-party payment. A cure requires reversing course, reprivatizing medical care by eliminating most third-party payment, and restoring the role of insurance to providing protection against major medical catastrophes.

The ideal way to do that would be to reverse past actions: repeal the tax exemption of employer-provided medical care; terminate Medicare and Medicaid; deregulate most insurance; and restrict the role of the government, preferably state and local rather than federal, to financing care for the hard cases. However, the vested interests that have grown up around the existing system, and the tyranny of the status quo, clearly make that solution not feasible politically. Yet it is worth stating the ideal as a guide to judging whether proposed incremental changes are in the right direction.

Most changes made in the final decade of the twentieth century were in the wrong direction. Despite rejection of the sweeping socialization of medicine proposed by Hillary Clinton, subsequent incremental changes have expanded the role of government, increased regulation of medical practice, and further constrained the terms of medical insurance, thereby raising its cost and increasing the fraction of individuals who choose or are forced to go without insurance.

There is one exception, which, though minor in current scope, is pregnant of future possibilities. The Kassebaum-Kennedy Bill, passed in 1996 after lengthy and acrimonious debate, included a narrowly limited four-year pilot program authorizing medical savings accounts. A medical savings account enables individuals to deposit tax-free funds in an account usable only for medical expense, provided they have a high-deductible insurance policy that limits the maximum out-of-pocket expense. As noted earlier, it eliminates third-party payment except for major medical expenses and is thus a movement very much in the right direction. By extending tax exemption to all medical expenses whether paid by the employer or not, it eliminates the present bias in favor of employer-provided medical care. That too is a move in the right direction. However, the extension of tax exemption increases the bias in favor of medical care compared to other household expenditures. This effect would tend to increase the implicit government subsidy for medical care, which would be a step in the wrong direction.

Before this pilot project, a number of large companies (e.g., Quaker Oats, Forbes, Golden Rule Insurance Company) had offered their employees the choice of a medical savings account instead of the usual low-deductible employer-provided insurance policy. In each case, the employer purchased a high-deductible major medical insurance policy for the employee and deposited a stated sum, generally about half of the deductible, in a medical savings account for the employee. That sum could be used by the employee for medical care. Any part not used during the year was the property of the employee and had to be included in taxable income. Despite the loss of the tax exemption, this alternative has generally been very popular with both employers and employees. It has reduced costs for the employer and empowered the employee, eliminating much third-party payment.

Medical savings accounts offer one way to resolve the growing financial and administrative problems of Medicare and Medicaid. It seems clear from private experience that a program along these lines would be less expensive and bureaucratic than the current system and more satisfactory to the participants. In effect, it would be a way to voucherize Medicare and Medicaid. It would enable participants to spend their own money on themselves for routine medical care and medical problems, rather than having to go through HMOs and insurance companies, while at the same time providing protection against medical catastrophes.

A more radical reform would, first, end both Medicare and Medicaid, at least for new entrants, and replace them by providing every family in the United States with catastrophic insurance (i.e., a major medical policy with a high deductible). Second, it would end tax exemption of employer-provided medical care. And, third, it would remove the restrictive regulations that are now imposed on medical insurance—hard to justify with universal catastrophic insurance.

This reform would solve the problem of the currently medically uninsured, eliminate most of the bureaucratic structure, free medical practitioners from an increasingly heavy burden of paperwork and regulation, and lead many employers and employees to convert employer-provided medical care into a higher cash wage. The taxpayer would save money because total government costs would plummet. The family would be relieved of one of its major concerns—the possibility of being impoverished by a major medical catastrophe—and most could readily finance the remaining medical costs. Families would once again have an incentive to monitor the providers of medical care and to establish the kind of personal relations with them that were once customary. The demonstrated efficiency of private enterprise would have a chance to improve the quality and lower the cost of medical care. The first question asked of a patient entering a hospital might once again become "What’s wrong?" not "What’s your insurance?"

I appreciate that he acknowledged that the vested interests of the status quo will make radical reform impossible. So he goes on to describe what can be done "realistically". THAT is worth aiming for.
     

Medicare's future, for those under age 55

People like me:

What no one is telling you about Medicare

[...] Cuts are inevitable. The real battle is over who bears the cost.

This spring the House passed a budget resolution designed by Paul Ryan (R-Wis.) that radically overhauls Medicare. The plan is unlikely to become law in its present form, but the ideas behind it will play a pivotal role in shaping Medicare reform.

Here's how the system would work: If you are younger than 55 today, your Medicare insurance would be replaced with a fixed voucher, or what Ryan calls "premium support," which you'd use to buy a private health insurance plan. In 2022 a typical 65-year-old would get about $8,000. Plans would have to take all comers, regardless of their health, and would charge the same price to people of the same age. Your premium support would go up as you got older or sicker. Low-income seniors would get extra cash.

You get skin in the game...

Premium support attempts to fight what economists call the moral hazard problem. If your insurance picks up a lot of your medical bills, you don't have much incentive to be a picky consumer. Your doctor prescribes, you comply. Even if there might be a cheaper way to get better results.

"Medicare has inherent in it inflationary pressures that push costs up very high, very rapidly," says Jim Capretta, a former George W. Bush administration budget official now at a think tank called the Ethics and Public Policy Center.

Ryan's approach would force you to make choices about what to do with your $8,000. You could pay a lot on top of that to get a generous plan or buy a cheap one that lets you see doctors within an HMO network and leaves you with a high deductible.

How much would that system reduce the cost of care? The answer is hotly contested. Some people would spend less but might also forgo care they really needed, says Juliette Cubanski, a Medicare policy analyst at the Kaiser Family Foundation.

Gail Wilensky, who ran the Medicare system during the George H.W. Bush administration, thinks a market dynamic will help a lot, but cautions that much spending is concentrated on the very sick, whose costs have blown past any reasonable deductible. "The serious spenders are always going to be using someone else's money," she says.

Shifting to private plans also has costs: Insurers have to charge enough to pay for administration and marketing while clearing a profit. The CBO, which concedes a lot of uncertainty about how vouchers would change the market, believes total costs would go up. It estimates that private plans will be so expensive that in 2022 a typical 65-year-old would spend twice as much to get the same benefits Medicare provides. That's an extra $6,240 to you.

...but a shrinking benefit.

The voucher is also a tool to cap government spending on health care. In 2022, once the feds send you $8,000, they're done paying for the year. "What we do in Medicare today is say, 'We're going to set in motion an open-ended entitlement, and the government's going to subsidize whatever it takes to provide that package,'" says Capretta. "The Ryan budget says, 'Why don't we build a budget that sets a level of taxation that we can afford, and here's the level of entitlement spending that will fit within that?'"

The idea of imposing a limit isn't inherently conservative or liberal. Most other rich countries, with their universal insurance, set a health care budget; the reform law signed by President Obama last year tries to cap spending too. But Ryan's cap is remarkably austere.

Social Security checks to rise 3.6%

The value of his voucher would grow at the level of inflation, which is almost always less than the growth of the economy. But no industrial country keeps health spending growth below GDP growth.

"It's implausible to think costs would inflate at that level," says Boston University health economist Austin Frakt. If so, then over time premium support would buy you less and less insurance -- and less and less care.

There are countless ways to moderate the severity of the Ryan plan. Wilensky suggests a cap that grows a little faster than GDP, for instance. What's most important about the proposal, though, is not the specific growth target; it's the philosophical stake in the ground planted about how much of the cost of paying for health care should be shared collectively, through taxes, and how much should be a responsibility for you, the individual, to bear. The Ryan plan says clearly: more on you. [...]

Hmmm. I do believe that costs have gotten so far out of control, because once the "government" is paying, instead of an individual, then nobody cares about the costs or questions what is being charged and why. But if it goes too far the other way, then people under 55 might be getting a lot less, even though they payed into Medicare the same as people over 55.

Is there a happy medium, a balance, somewhere? One will have to be found, because it sure can't continue like it is; unsustainable.

It's quite a long article. From PART 2:

Medicare: How much more will they cut?

For all the chatter about how politicians have to buckle down and get serious about reining in Medicare, you might have missed this development: Last year's health reform bill cut $500 billion out of two big Medicare programs over a decade, while increasing the number of high-income retirees who have to pay larger Part B premiums.

"It's as if that never happened," says Jonathan Oberlander, a professor of health policy at the University of North Carolina.

To be sure, health reform wasn't a let's-shrink-the-government project. The reason Democrats got their hands grimy and made cuts to the program was to help pay for a new health care entitlement, making it easier for Americans under 65 to buy their own insurance. Still, the new law shows that liberal lawmakers will slice into Medicare if needed, and offers a glimpse into how they'll try to do it.

The central idea behind the maze of cost-control provisions health reform establishes: Focus on trimming fat before reducing benefits. One approach is to reduce the power of providers to drive spending. When your doctor says you need this test or that surgery, you tend to take his word for it, even if you have hefty out-of-pocket costs. Hospitals, meanwhile, have consolidated in recent decades, giving them considerable price-setting power.

Results: There's substantial evidence that doctors at times over-treat, and you overpay for just about everything. "For a long hospital stay we pay $18,000, vs. $4,000 or $5,000 in Germany or Japan," says Gerard Anderson, director of the Center.

[...]

In coming months one idea you'll hear debated a lot is imposing a numerical cap on future government spending or revenue -- say, 21% of GDP or even 18%.

No matter what the specific numbers proposed are, growing health care costs are on a path to push the size of government well beyond those limits. If that happens, Medicare would go from long-term challenge to immediate crisis. Big changes would have to happen fast. Budget hawks ought to be specific about what those changes will be.

All you can know for sure now: This country, not just the government, but each of us as individuals -- is facing a monster of a doctor's bill, and there's no easy way to get around paying it.

Yikes.
     

Why Repealing ObamaCare is Unlikely

At least, not directly. So what CAN be done? Take a look:

What Republicans can — and can’t — do about ObamaCare

[...] The new Republican House majority will undoubtedly schedule a quick vote on repealing the health care law, perhaps as early as January. It will pass the House quite easily; not only will every Republican vote for repeal, but there are still a dozen Democrats in the House who voted no last March.

But that is as far as repeal is likely to go. The Democrats remain in control of the Senate, and Harry Reid, returning in triumph, is unlikely to even schedule a vote.

Repealing ObamaCare is just not going to happen while Obama is in office.

Some Republicans may be willing to take their symbolic victory in the House and call it a day. They shouldn’t. There are many things they can do short of repeal that can begin the step-by-step dismantling of ObamaCare.

At the low end of the scale, Republicans should use their new investigatory powers to hold hearings and force officials like HHS Secretary Kathleen Sebelius to testify about the law. For example, since the law passed we have learned that health care spending will go up, not down as promised, and that millions of Americans will not be able to keep the insurance they have today. What does Sebelius think of that? [...]

The second half of the article goes into what could happen, and what is likely to happen, and why.

Thankfully, much of the worst aspects of Obamacare can be dismantled. Other aspects can be modified. The Republicans may now get a chance to give many of the GOP's good ideas a fair hearing.

Eventually, some sort of bipartisan solution will be hammered together. That is what should have happened in the first place. This long slog ahead of us to sort it all out, has been unnecessary and an incredible waste of time and resources. The uncertainty it has created for potential employers has been devastating to job creation and the economy. I think most of the voters resent it. I know I do.