Tied to the mast
…but orange now and black

Cogent and persuasive conservative healthcare ideas…

…relatively (to the screamers) speaking. Who knew?

David Frum makes his case on Bill Moyers’ Journal:

BILL MOYERS: So what’s the plan you would like to see the Republicans put on the table?

DAVID FRUM: Well, let’s start by focusing on what do you think is the problem? You can’t solve a problem unless you agree on what you’re trying to achieve. The Republicans are not the party of equality. They’re the party of liberty and they’re the party of efficiency.

BILL MOYERS: And liberty leads to inequality.

DAVID FRUM: Liberty leads to inequality just as attempts to reduce equality lead to adoption of liberty. And it is that tradeoff that is why you have two parties so that the country can come to its balance. Especially in this health care debate, we are talking a lot about efficiencies.

Why is the American health system so crazy? Why do Americans spend so much more than anybody else for outcomes that aren’t a lot better? Well, we talk about the health market. We don’t have a health market. We have 50 state markets.

And although there are many, many insurers, in many states there are only one or two who are active. So what we need to do, first of all, is create a national market. I would like to see the responsibility for regulating health care removed from the states entirely and put in the hands of the federal government.

We don’t regulate banking at state level anymore because it doesn’t make sense. That should be true with insurance as well. The federal government should set rules. Here are the requirements for what a health plan should look like.

BILL MOYERS: Now you’ve just lost some of your conservative allies–

DAVID FRUM: But the state–

BILL MOYERS: –because you’re calling for more regulation.

DAVID FRUM: No. Different locus. The states regulate it right now. And they regulate it in incredibly detailed ways. They say in some states that infertility must be covered if anything is and other states not. In some cases, if a woman has a mastectomy, the plan must cover reconstructive surgery. In other states, not.

In some cases, there’s community rating. Everybody must be charged the same price. In other states, there are different systems. So from an insurer’s point of view, they have to write a completely different set of offerings for Maryland from Oregon, from New York, from New Mexico. And the result is that you have these segmented little markets. It’s a case for free trade to say let’s begin by opening up a national market.

BILL MOYERS: If you eliminate regulation at the level of 50 states, aren’t you giving the insurance industry more clout at the national level?

DAVID FRUM: It’s a downside risk that you would have much more regulation at the national level. But just think about it. If we had 50 different mileage standards in this country, if we had 50 different sets of rules to describe what could and couldn’t go into toothpaste, we would just collapse the national market. The reason almost every product is cheaper and better and more convenient in the United States than it is in other places is because of the size of the national market. No surprise that when the national market is cut up for one product, that is the product that is the most troublesome.

A second immediate thing, if you’re self-employed, the way more and more people are– and you want to go buy a plan, you’ll have to play with after-tax dollars. Employers buy with before-tax dollars. If you’re a small business, you get a much worse deal than big businesses. We need to regulate, level this field. One of the ideas that originates with the Heritage Foundation that was adopted by Republican Governor Mitt Romney are these health insurance exchanges that allow individuals and small business to buy on more equal terms. Again, that can be nationalized and made– that’s, by the way, in the Obama plan.

BILL MOYERS: Right. Health exchange.

DAVID FRUM: Health exchange. We need to begin to sever the link between employment and insurance. It is just– it’s a holdover irrationality that you get your insurance through the place where you work, that discourages people from leaving. People who get ill, when they’re at a job are then indentured because they can’t– so long as they can work at the old company, they are covered under the old plan. If they move, they can’t get a new one. And there– and that is an artifact of the tax code. And we need to correct the elements for the tax code that do that.

Breaking the link between employment and coverage. We have a terrible problem right now with the cost of Medicaid are divided between the federal government and the states. This is a formula, always, for irresponsibility because the people who are not only– are states spending 50 cent dollars or in some cases less, but worse, when it comes time to cut budgets, a state, especially a state that gets a lot of money from the federal government, says, “If we take dollar out of Medicaid, we buy a dollar’s worth of political pain. And yet we only get 40 cents of budgetary benefits.” So that makes no sense. And so Medicaid ratchets endlessly upwards with no one really in control of it. We need, I think, to have to locate Medicaid either with the states or with the federal government, not continue to divide them.

BILL MOYERS: What about a public option that would provide a government competition to the health insurers? It would not end private insurance, but it would provide competition, which, of course, conservatives believe in because they believe competition reduces prices.

DAVID FRUM: This is going to be a line in the sand and one of those–

BILL MOYERS: Deal breaker?

DAVID FRUM: No, on which — a lot of politics is about political muscle. What do you bring to the party? Party A has this view. Party B has that view. And they put their shoulders against each other in rugby style, see who can push the other over the line. For Republicans, it’s absolutely unacceptable. For a lot of Democrats, it’s secretly unacceptable.

BILL MOYERS: What do you mean?

DAVID FRUM: Well, I think there are a lot of things that Democrats from conservative states pretend to be in favor of to keep in good order with the national party while counting on the Republicans to make it impossible to happen. When they have Democratic majorities, they then quietly defect because they don’t believe in it either.

BILL MOYERS: So you’re saying a public option is not politically feasible?

DAVID FRUM: No, I’m saying it’s not acceptable to conservatives.

BILL MOYERS: What about you?

BILL MOYERS: You’ve broken with conservatism in this respect.

DAVID FRUM: I am not an unorthodox conservative. I think I’m a calm conservative. Right now I think a lot of — their blood is up. They want to win this fight.

BILL MOYERS: Is that why we’re seeing these protests, these loud, raucous protests?

DAVID FRUM: Well, let’s distinguish between the people who are in those halls, who I think are many– who, as I say, are people who have a good government plan in Medicare and are anxious because they know that President Obama wants to take a lot of money out of Medicare. That’s how he’s going to finance his plan.

BILL MOYERS: He says not.

DAVID FRUM: No, he acknowledges he’s going to take money out. He just says it’s going to make no difference. Because they’re going to find so many efficiencies. So there are people who are a little skeptical about it. And they’re kind of worried. Those are the voices. Now, that’s different from what you’re hearing on the radio. That’s different from what you’re going to be seeing in television advertising. Those people have more ideological motives. But what I am concerned about is in the desire to defeat President Obama, the Republicans are going to fossilize a status quo that is more unacceptable to them.

BILL MOYERS: You mean an unworkable health care system.

DAVID FRUM: Right. Because from the point– Think about this, if you’re a Democrat and you’re confronted with ever-escalating health care costs and especially ever-escalating health care costs in the public sector, oh, well. You raise taxes to pay for it. It’s not the worst thing in the world.

And if health care grows and if government grows with it, you know, you’re not as upset by government as Republicans are. If you want to hold the line on the growth of government over the next two decades, this system has to be reformed.

BILL MOYERS: That’s what Kathleen Hall Jamieson says. She said that in order to fix the long-term deficits, which are a concern to conservatives, we need to fix health care. Is that what you’re saying?

DAVID FRUM: Yeah, if you see President Obama saying, “I volunteer to go into the beehive and put my hand inside the beehive and fix it,” good luck, buddy. Better you than us. Like, why aren’t Republicans saying, here’s some things you can do that we’ll like. Here are our red lines. If you do the public option, no. Surtaxes, no. Higher taxes on capital gains, no.

But if you have an idea as to how to slow the growth in Medicare, if you want to do things like this health exchanges, making it easier to afford to make it easier to buy across state lines, well, good luck to you. That sounds pretty good. And if you’re prepared to take the political heat, again– you know, good luck to you.
BILL MOYERS: Couldn’t the conservative, a calm conservative make a case for that kind of national insurance plan in this country?

DAVID FRUM: Look, where those plans have grown up, as in Britain, for example, you’ve seen conservatives make their peace with them, as the British conservatives have done. And once something is integrated into the status quo of your country, it gets conservative. There are I think a lot of reasons not to regard it as a preferable system.

It stifles the possibility of innovation and diversity. It means that ideas that get into the minds of people in Washington are very difficult to get out. And it creates a — it also creates this tremendous problem where every malfunction in the system becomes the fault of the politicians.

Food for thought. Thoughts?

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3 Responses to “Cogent and persuasive conservative healthcare ideas…”

  1. A couple of thoughts.

    1) The health care industry has total control over what regulations are passed at the federal level, centralizing all regulation at that level would give them a choke hold over any reform. For an example of how destructive this would be, look at how medicare is forbidden from using its size to negotiate lower prices for pharmaceuticals, as any HMO or large pharmacy does. States are now forbidden from doing this for their medicaid payments thanks to language in the federal medicaid prescription drug plan.

    2) These arguments are nonsense on their face. Many of the examples he gives work directly against his main point. We do have different mileage standards across the country, or rather, we all have CA’s mileage standard because it is a large market and has the most stringent standards. While the auto industry was able to successfully bottle up federal regulation requiring higher fuel efficiency, to disastrous results, but they were not able to work their anti-democratic magic on all of the states.

    The only reason he can hold up the success of health exchanges is because individual states have been able to experiment with different systems. It is incoherent to argue in the same post that: a) medicare, the federal program, needs to be reined in, b) by taking successful state programs like health exchanges, c) and making it illegal for there to ever be more state programs like them.

    3) If you take the power to regulate health insurers out of the states’ hands, you immediately immortalize the culture war over abortion, stem cells, etc, that has polarized our national parties for the last 40 years.

    4) Health insurance is not expensive because of the complexity involved with offering different plans in 50 states, the insurance industry offers a plethora of plans in every state and tweaks the rates and premiums for each policy to extract the maximum from everyone. Health insurance is expensive because it is an oligopoly run industry offering life saving goods to a captive audience.

    • Re: (1) I agree that corporate interests are very powerful at the federal level, but let’s not delude ourselves into thinking they have any less of a chokehold at the state level. In fact, that healthcare is administered below the federal level creates all kinds of opportunities for effective monopoly and collusion and simultanneously reduces peoples’ freedom of movement. Further, at the federal level, while the money is bigger, since we would only be dealing with one as opposed to 50 different systems, the regulatory landscape will be drastically simple and easier to oversee. With this in mind, the state vs. federal administration question needs to be taken seriously.

      (2) State experimentation is an advantage, but if anything, experimentation is more greatly incentivized in a larger and more competitive marketplace. He’s arguing that medicare needs to be reined in on the grounds that it’s growing to the point where it will be impossible to finance. This reason, for him, overwhelms the advantage of it operating federally. That’s not incoherent. And re: (c) making state programs “illegal” is a stacked and misleading way of describing what Frum is proposing. What he’s saying is that state markets should be opened up to interstate competition. If anything then, states with the best and most efficient programs will export them, while those with inefficient programs will wither. Health exchanges are efficient… they’ll follow the former route. Again, don’t really see your issue?

      (3) This point seems silly to me. What grounds do we have for thinking that leaving healthcare in state hands will not perpetuate the culture war in an era of globalized communication, cross state and national border dependency, and increased human migration?

      (4) The captive audience comes partially from the information disadvantage that an incredibly complicated and variegated system puts consumers into. The other problem, that Frum wouldn’t agree with but which I wholeheartedly believe, is that consumers are at a disadvangage fundamentally because health care is not something that can be very effectively commodified. It’s too immediate, particular, and personal for people to weigh their purchases of it with economistic disinterest.

      Thanks for you comment.

      • re 1) Unfortunately we have plenty of evidence that the insurers and pharma have less influence on the States than on the Federal Govt. Marcia Angell, the former editor of the JAMA, gives one compelling example in her book _The Truth About the Drug Companies. States have been trying for years to cut the costs of the health care they provide either to their employees directly or through their portion of medicaid payments. Maine passed a law allowing the state to bargain directly with the drug companies as a large purchaser for lower prices. Pharma challenged them in court all the way up but in 2003 the supreme court upheld Maine’s right to bargain (p.15). In contrast, the Federally negotiated medicare prescription drug plan specifically prohibits Medicare from using its purchasing power to negotiate lower prices.

        re 2) What I meant by incoherent was offering up Health exchanges, a state program, as a supporting example of his general proposition from first quote ” would like to see the responsibility for regulating health care removed from the states entirely and put in the hands of the federal government.” Offering a /good/ state regulation in support of removing the ability of states to regulate the area is an incoherent argument. Further, the particular program he offers (health exchanges) is a state end-run around the federal (IRS) regulations governing the tax exempt-ness of money spent on health care. As a proposition, it is all over the place.

        All of which is still overlooking that we do have a national mileage minimum on our cars as a result of CA’s actions. Because it is expensive to manufacture and market different cars for different states, the auto makers simply use the highest standard.

        Insurance policies are much cheaper to manufacture and so the insurance industry creates ones to provide only the mandated minimum amount of coverage for each state. Why not follow the auto industry and take the highest minimum as your baseline if a national market is such an efficiency gain? There may be incompatible state regulations, but none of the examples he gives, covering re-constructive surgery, fertility treatments, or using community rating/pricing, are incompatible with the idea.

        re 3) Consensus is always more reachable the smaller the group. It is when the disagreements go national that they become intractable arguments. See for instance the Terri Schaivo case or the Partial Birth Abortion ban.

        In a non-health care context, the various state laws about gay marriage offer a good example of how culture war issues are more decidable on state rather than national scales. The many ways these laws have come into existence, via the legislature, the courts, and direct referendum, also show how much more difficult it is to control the state governments than the national one.


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