Monday, November 2, 2009

What Does it All Mean?

In Sunday's New York Times, there was an article entitled, "Changing Numbers Make Meaning Even More Elusive".  One key take away message from this article is that when we are trying to understanding the health care reform efforts, simply looking at the numbers that are part of the headlines is probably no better than taking what you see in a television commercial about a product as all the information you need to make a decision about whether the purchase the product.  And, the numbers in the headlines don't seem to last very long.


First, there are many aspects of this discussion that are not part of the main discussion.  The article gives an example of higher Medicaid payments that were part of the stimulus package in the first year of the Obama administration being continued.  These are not part of the health care reform discussion directly but add over $20 billion and may help to ameliorate concerns about other aspects of the bill.

Second, as the proposals become more clear and people have a chance to assess all the incentives we come to a better understanding of what would happen.  The article describes the expected response to incentives.  The public plan that is under the most direct discussion at the moment will not be able to impose Medicare payment levels but will have to negotiate rates with providers.  This will not necessarily save any money and make the premiums lower as private insurers already do this.  And private insurers have an incentive to maximize profits rather than just to break even.  So, private insurers may actually be better at this.

Additionally, the public plan may attract people who have historically had difficulty getting private insurance.  These people tend to be sicker.  Maybe there will be savings in administrative costs.

So, of three possible differences: one may hold down premiums, one is likely to make no difference, and one is likely to increase premiums.  What may be apolitically viable plan that encourages market behavior will not likely help to achieve the goal of more affordable insurance for those who do not have insurance at present.      

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