Priceless: Chapters 16-17

Chapters 16 and 17 of John Goodman’s book Priceless are about the Affordable Care Act (ACA). In the first of these chapters, he covers some of the ways the law will benefit some groups and ways it won’t. I’m not sure he got everything right. Let’s go through just some of it.

A minor point: In many places in this chapter and elsewhere, John says that the Cadillac tax on high-premium plans will take effect in 2019. I had thought it was 2018. I’m not the only one.

On evidence:

Peter Orszag, former director of the Office of Management and Budget and Obama administration point man on healthcare while the legislation was being written, says that under the new law, Medicare has broad authority to refuse to pay for treatments that are not evidence-based. Orszag also believes the malpractice laws should be rewritten so that doctors who practice evidence-based medicine are given a safe harbor against lawsuits. Former White House health advisers Nancy-Ann DeParle and Susan Sher have made a similar recommendation.

Insofar as I’m paying for your care, I prefer it follow the evidence. Insofar as you are paying your own way, do as you please. I would accept being held to the same standard.

On ACOs:

If you are getting care from an ACO, therefore, your insurance may not pay for you to see doctors outside the ACO. […]

[N]o one had any previous interest in forming ACOs. […] Why don’t they already exist? […]

ACOs will have capitated payments […]

The ACO will get to keep any money it doesn’t spend.

These are all highly misleading if not outright false. Medicare beneficiaries, even if assigned to an ACO, can obtain care from any provider. Some private sector insurers and providers are interested enough in ACOs to have established them before Medicare. Full capitation is not integral to ACOs, though some types (not all) include partial capitation. Medicare and private sector ACOs are based on a shared savings concept. The ACO does not keep all the money it may save. (For my own convenience, I’ve linked to my gated Health Affairs paper, which has references for these claims. With some Googling you can find ungated documentation.)

On creeping socialism:

For the first time in our history, both the practice of medicine and the way money is spent on medical care will fall under federal control. […]

[W]e will all march toward a truly nationalized healthcare system.

Readers, what do you think?

It’s not John’s fault that he had to deliver the content of the chapter to the publisher before the Supreme Court ruled on the ACA. However, some of his concerns should be mitigated by the decision since states are not required to expand their Medicaid programs. On the other hand, unless they secure waivers to do something more to his liking, I don’t expect him to be satisfied, nor need he be.

John wrote about employers dropping coverage. Here’s a relevant FAQ entry. In particular, see this post on Massachusetts. Did you notice John’s citation of the infamous McKinsey report, the one they admitted was “not intended as a predictive economic analysis of the impact of the Affordable Care Act”? What is a good argument for citing it, especially without any mention of its limitations?

John wrote about potential loss of Medicare drug plans, of which beneficiaries now have a choice of at least 25 in every US state. Aside from Guam, which has only 1, and the US Virgin Islands, which has only 3, this seems like a market for which a bit of loss of choice is unlikely to be problematic.

John wrote about the projections that Medicare will pay providers far less than private plans later in the century. I agree this is problematic. So problematic, in fact, that I’ve argued it’s not going to happen.

John raised the “double counting” charge. This is an area where it is easy to get confused. (No, I am not saying John is confused, but you may be.) I tried to clarify it in a chart. Don’t overlook the footnote in that post.

John and I agree that Medicare Advantage benefits will not hold constant as government payment rates are cut. There is a related and valuable discussion John didn’t invite: What is our obligation to Medicare beneficiaries, and how much should we pay for it? What is the implied Medicare “defined benefit”? Even if Medicare is remade as John would like, we still have to decide how much of taxpayer money to devote to it. We still have to define our obligation. Just because spending less means people get less doesn’t mean spending less is wrong. That’s an argument for always spending more, which we cannot do.

It is easy to critique existing law. To become so, it has had to survive the political gauntlet. As such, it doesn’t even or only reflect the preferences of the originators. Of course we could have better policy. A lot of John’s ideas might be better. But once they’ve gone through the meat grinder, don’t expect them to look as appetizing as John’s sketches make them seem. The same applies to your vision of an ideal health system, or mine.

Chapter 17 is about how to reform the ACA. No question the ACA has problems, though I’m not certain everything John mentioned will actually be a problem. I am confident some will. Likely some won’t. What I am certain of is that Democrats will not open up the law to reform in the current political climate. It’s too risky for them. They will wait until clear evidence of an existing crisis, not act on predictions of one. If the GOP takes over the government in January, however, some or all of the issues John raises become more likely to be addressed in some form of repeal/replace effort.

Chapter 18 is John’s conclusion. I will post mine sometime next week. All posts in this series found at this link.

@afrakt

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