Tag Archives: health care

Will Cardiac Rehab Programs Actually Decrease Health Care Expenditures?

Since 1950, the developed world has experienced a continual increase in life expectancy at birth as well as a decline in fertility rates. Together, these trends imply that the population of the developed world is aging. This means that the age demographics of society as a whole are shifting towards a higher and higher share of elderly people. But why has life expectancy been increasing steadily for centuries? A big part of the reason is the gigantic strides that have been made in both medical understanding and medical technology.

In modern times, the leading causes of death include heart disease and lung cancer. And while medical advances continue to be made to help prevent and slow these diseases, it comes with a cost: an increase in health expenditures. Heart failure is a chronic condition in which the heart can’t pump a sufficient supply of blood to deliver oxygen to other organs in the body. Some 6.5 million Americans are living with heart failure and an additional 650,000 new cases are diagnosed each year, according to the American Heart Association, though Medicare data suggest the number is higher. As a result, heart failure is the single most common reason why Medicare beneficiaries end up in the hospital.

To counteract this high rate of hospital admissions due to chronic heart failure along with its hefty contribution towards health care expenditures, cardiac rehabilitation programs are beginning to open up for patients to attend regularly. With chronic heart failure being one of medicine’s most debilitating and costly illnesses, the goal for these programs is to give patients a chance to improve their functional capacity and quality of life and keep them out of the hospital by offering supervised exercising and counseling.

But will this decrease in hospital admissions actually reduce health care expenditures? The problem with assuming that a particular disease will greatly reduce expenditures is that it does not take into consideration competing risks, or the inevitable rise in hospitalization and mortality from other causes. For example, say that these cardiac rehab programs could actually help to completely prevent heart failure in the future. In this case, the rate of mortality and morbidity from all other diseases would just increase. These programs would be keeping the elderly alive long enough just for them to end up in the hospital due to some other degenerative disease. As a result, we would end up with elderly people living longer, thus contributing to our aging population, and eventually they would all end up in the hospital one way or another. Instead, maybe an increase in the age of when a person is eligible for Medicare would be a better solution to try to lower health care expenditures.

The Future of Neuroprosthetics (Revised)

How much money would you pay for an artificial retinal chip that would allow you to see in the dark? Or for a neural implant that could store the entire Library of Congress neatly into your brain where you could access any information you ever wanted by just thinking about it? Brain implants today are where laser-eye surgery was decades ago; they’re full of risk but they are a sign of things to come in the future. Neuroprosthetics are computer devices that are wired directly into the brain that might be able to replace lost functions such as allowing people to be able to see who would otherwise be blind.

Although these devices could be life changing for many, there are many safety risks at play with neuroprosthetics. For now, the only method is to drill a small hole through the skull and insert long, thin electrodes until they reach their destination deep inside the brain. This means that there are high risks involved such as infection, unstable blood pressure, and bleeding inside the brain that could even be fatal.

But what do these devices mean for the economy and the health care sector in particular? As of now, health care expenditures in the U.S. account for approximately 18% of GDP. With new technologies such as these brain implants, this share could rise very sharply. One explanation for this could be the change in demand. With the continual development of new technologies and treatments such as neuroprosthetics, one cause for an increase in health spending is an increase in demand. As new types of health care come into existence, demand rises sharply considering this health care was never available in the past. In addition, as the quality of medical care improves, each dollar spent on health care generates a higher marginal health benefit, further increasing demand.

At the same demand is increasing, prices are also increasing. This could be due to an increase in resource costs, markets becoming less competitive, or once again, expensive new technology. But this doesn’t necessarily mean that health care is becoming “more expensive.” While expenditures have increased, health care 50 years ago is not really the same thing as health care today. For example, as the price for care increases, the price of a cure decreases. Care becomes more expensive as a result of the standard of care improving. The price of a cure, on the other hand, plummets as it comes into existence. The reason for this is because when these cures did not exist, prices were essentially infinite and thus demand was zero. When a cure is made available, however, the price for it now becomes finite and it creates demand in the market. So, while the price for a cure may drop substantially, demand for this cure will cause health expenditures to rise sharply.

As technology becomes more advanced, health care not only becomes more safe and effective, but it also becomes more expensive. But, will these neuroprosthetics be inexpensive enough to be attractive to broad segments of society and not just the rich and famous? In part, it depends on what percentage of the costs health insurance companies are willing to cover. It also depends on how much value a consumer places on the utility gained from these implants and whether or not the potential benefits outweigh the costs and possible risks involved.   

In the near term, first time users will be people who have severe problems and have lost ordinary functions. The military will also invest in neural implants in order to improve soldiers’ memory and fix circuits that may have been destroyed in an attack. Eventually, in the long-term, neural implants will not just be replacements but they will be enhancements for “normal”, healthy people. For example, the ability to do a Google search and have it directly wired into your brain. It could even go as far as providing you with a skill, such as golf, without having to practice for a decade.

As technology allows people to become more intelligent and superhuman, those who are willing to take the risks will outperform others. As a whole, this could affect competition within the job market and challenge society in a whole new way. It’s impossible to predict what the future has to bring and what kind of world we are capable of creating.

The Future of Neuroprosthetics

How much money would you pay for an artificial retinal chip that would allow you to see in the dark? Or for a neural implant that could store the entire Library of Congress neatly into your brain where you could access any information you ever wanted by just thinking about it? Brain implants today are where laser-eye surgery was decades ago; they’re full of risk but they are a sign of things to come in the future. Neuroprosthetics are computer devices that are wired directly into the brain that might be able to replace lost functions such as allowing people to be able to see who would otherwise be blind.

Although these devices could be life changing for many, there are many safety risks at play with neuroprosthetics. For now, the only method is to drill a small hole through the skull and insert long, thin electrodes until they reach their destination deep inside the brain. This means that there are high risks involved such as infection, unstable blood pressure, and bleeding inside the brain that could even be fatal.

But what do these devices mean for the economy and the health care sector in particular? As of now, health care expenditures in the U.S. account for approximately 18% of GDP. With new technologies such as these brain implants however, this share could rise very sharply. Continual medical care innovation causes prices to change from year to year with prices increasing. So will these neuroprosthetics be inexpensive enough to be attractive to broad segments of society and not just the rich and famous? In part, it depends on what percentage of the costs health insurance companies are willing to cover. It also depends on how much value a consumer places on the utility gained from these implants and whether or not the potential benefits outweigh the costs and possible risks involved.

In the near term, first time users will be people who have severe problems and have lost ordinary functions. The military will also invest in neural implants in order to improve soldiers’ memory and fix circuits that may have been destroyed in an attack. Eventually, in the long-term, neural implants will not just be replacements but they will be enhancements for “normal”, healthy people. For example, being able to do a Google search and have it directly wired into your brain. It could even go as far as providing you with a skill, such as golf, without having to practice for a decade.

As technology allows people to become more intelligent and superhuman, those who are willing to take the risks will outperform others. As a whole, this could affect competition within the job market and challenge society in a whole new way. It’s impossible to predict what the future has to bring and what kind of world we are capable of creating.

Confirmation of a Wise Choice for CVS

A few weeks ago I wrote a post about the brave decision for CVS to stop selling tobacco products. It was seen mainly as a decision for moral and company-image reasons, seeing as it is highly hypocritical for a store which promotes health care to sell the source of the top killer in the United States. However, as any reasonable company looking to make profit, a new report in the Wall Street Journal articulates the real benefits from this move. Not only is the company more respected by consumers and health care providers, but this new-found respect gives CVS the opportunity to get more directly involved in the health care industry.

First, let’s evaluate the growth this company has been experiencing over the last year. A New York Times article reports that its fourth quarter earnings increased by more than 12%. The company reports a $1.27 billion earning and $1.05 per share. Compared to $1.13 billion and $0.90 per share at the end of 2012. Revenue increased by 5% to a total of $32.83 billion. And analysts predict earnings of $1.11 per share and about $32.67 billion in revenue. Though less than last quarter, the company is maintaining its growth from over a year ago.

And the future looks bright for CVS with this new no-tobacco decision. Although its decision is expected to reduce 6 or 9 cents from its yearly earnings per share, a prescription deal is expected to out-weigh this. CVS has a good chance at renewing its prescription deal with the Federal Employees Health Benefits Program, which is worth 16 to 21 cents per share. Additionally, the Affordable Care Act is expected to extend health insurance to an estimated 25 million people by 2016, which will be beneficial to drug stores like CVS through increased drug sales. Also, branded drugs are being replaced by generics, which have a gross profit margin over 40%, compared to the single-digit figures in branded drugs. Lastly, CVS’ MinuteClinics in stores are a great advantage over its competitors. They are very convenient ways for patients to be treated for minor wounds and illnesses, get prescriptions, have tests done, and get vaccines. Health plans can potentially steer patients towards MinuteClinics when appropriate – possibly waiving copayments to encourage this low-cost alternative.

As this company looks into the future, forecasts are very favorable. In 2015, earnings are expected to be over $5 per share and $5.65 in 2016. Though the implications of its decision are more long-term, as I pointed out in my other post, CVS certainly made a wise choice. We can also assume that this was part of their plan, to launch the company more deeply into the health care market. And the impacts of its decision earlier this month will prove to be positive by next year, if not sooner.

Who Deserves To Be A ‘Young Invincible’?

The Wall Street Journal frets:

The ObamaCare exchanges are unlikely to survive financially unless enough healthy, low-cost young people buy overpriced policies to subsidize everybody else.

Now there are several problems with the article I’m referring to here, but I find this to be the most severe one. And it’s one that keeps popping up again and again. Some people – mostly conservatives, but not exclusively – seem to think that asking young, healthy people to pay higher premiums than their expected costs of treatment is somehow deeply immoral, and should be stopped immediately. This, it seems to me, must be based on the idea that young, healthy people have somehow earned the right to be young and healthy, and that sick, old, or otherwise more ‘expensive’ members of society somehow deserve to be sick, old, or’expensive’.

Do you deserve to be a ‘young invincible’? Do you deserve to be a healthy individual between 18 and 29 in 2014? I’d say you don’t (and for that matter, I don’t either).

The fact that somebody was conceived between 1985 and 1996 isn’t really a great achievement on their part, is it? You obviously didn’t exists pre-birth, so it’s really none of your business that you happen to be young, and that that lowers your risk of getting sick.

Whether you deserve your good health is more debatable, although a lot of health-related issues are rooted in your genes. That means that not having any genetic disposition towards, say, cancer gives you an advantage over someone who does, in terms of expected quality of life and health care costs. But you din’t do anything to ‘earn’ that advantage – you’re born with it. You have what’s known as a morally arbitrary (economic) advantage. There’s now reason why you shouldn’t get cancer, but the other person should, or vice-versa. You just happen to be the one who doesn’t.

The same goes for being born into a family that can afford to lead a healthy lifestyle, and chooses to do so. Growing up in a healthy environment will make you more aware of the importance of living a healthy life yourself. But it’s not that you were somehow allocated to nice, healthy parents before you were born because you were somehow better than others who got dealt a worse hand (i.e. less healthy childhood). Actually, maybe you believe you were. I don’t.

So if you’re a ‘young invincible’, you are so not because you deserve to be, but because you happen to be. And others, who are just as much of a human being as you are, and have just as much of a right to an enjoyable life, happen to not be a member of that exclusive group.

The same, by the way, goes for old people. Had the ACA been instituted ten years ago, or ten years from now, the group of the ‘young invincibles’ would be a completely different set of individuals! Suddenly, you wouldn’t be among them anymore. Does that mean that suddenly, those other people deserve to be young and healthy? Obviously not.

Healthy young people have a whole life ahead of them. Throughout that life, they’ll be able to make lots of money if they so choose. Sick, young people don’t have that same rosy expectation. I’m not asking any of those lucky, healthy ones to give up their health and share it with the sick. That’s not only impossible, but it would also be insensible. I don’t want to punish anyone for being healthy.

What I ask is that people realize that they’re lucky, and that it’s acceptable that they should share their resources with the less fortunate members of society. That’s not impinging on their personal liberties, it simply ensures that other people, who are less fortunate, can effectively lead a life worthy of a human being. And part of that means being able to pay your health bills and get the treatments you need.

If you think this whole idea through, you’ll notice something else too: the ‘young invincibles’ of today are the middle-aged heart-attack risks of tomorrow. People get older. Over the course of your life, if you start out paying a premium that’s higher than your expected costs, and then move on to a premium close to, and eventually perhaps even lower than, your personal costs, what did you pay in total? Seems like it’s at least close to a fair premium, all things considered.

If you can show me a free market model of health care where the outcome is that nobody is being discriminated against on the basis of the health expectations they get dealt by the great lottery that is birth, I’ll consider that as a viable option. I’ve seen government-run models that do this. I haven’t seen laissez-faire ones.

More Obamacare Means More Unemployment

According to the Congressional Budget Office, the Affordable Care Act (aka Obamacare) will reduce the labor force by 2 million workers by 2017.  And it’s not because employers aren’t hiring.  The CBO explicitly states that the Affordable Care Act will “reduce the total number of hours worked, almost entirely because workers will choose to supply less labor – given the new taxes and other incentives they will face and the financial benefits some will receive.”  Interestingly, the same analysis performed by the CBO in 2011 showed a mere 800,000 person reduction in the labor force by 2017.  Why is this estimate so different now?

The reason is the newly implemented structure of Obamacare.  Under the Affordable Care Act, Americans are provided with a certain amount of free health care given the amount they work.  In the reverse fashion of our progressive tax system, as you work more (generating more income and contributing more hours), the amount of free coverage you receive declines.  According to CBO Director Douglas Elmendor, in this way Obamacare imposes an “implicit tax on additional work.”  In response to this implicit tax, the CBO estimates that significantly more workers will choose to work part time instead of full time, as doing so maximizes their level of free coverage.

Specifically, the law works as follows. First imagine an American supporting a 4 person family.  This American can choose between a part-time job paying $36,000 a year or a full-time job paying $42,000 a year.  If he chooses the part-time job, he will qualify for about $10,000 more of free coverage each year relative to the full-time job.  Assuming consumers treat health care coverage as a type of income/compensation (I feel safe making this assumption because health care coverage is now legally required.  If you’d like to challenge this assumption, please do so), the part-time job is clearly the better choice.

Now consider another American support a family of four.  He is choosing between a job paying $54,000 a year and a job paying $72,000 a year.  Given the reverse-progressive (regressive?) coverage rates of Obamacare, this individual would only lose out on $7,000 of free coverage by choosing the higher paying job.  As such, this American, who is in in a higher income range, will not distort his behavior based on Obamacare’s coverage rules.

What this example shows is that Obamacare does distort employment decisions, and that it does so on the low-end of the income spectrum.  The benefits for low-wage employees are so high, that Obamacare encourages them to remain low-wage employees.  For high-wage employees, while losing out on free coverage is certainly disappointing, the free coverage is not significant enough to alter indivdiual behavior.

At a time when income inequality and a lack of income mobility are such key issues in this country, it seems that Obamacare is fighting against our end goal: making the American Dream easier.  At least for the poorest Americans, Obamacare seems to encourage individuals to give up on the American Dream, because if the government will pay your expenses for you, why go out and get a higher paying job.  Personally, I think that in this way, the Affordable Care Act is hurting America.  And while I think health care is extrememly important, maybe Obamacare should focus more on helping businesses pay their full-time employees healthcare (which would likely encourage employment as it is a requirement for coverage) instead of bypassing businesses and going straight to consumers…

Obama Care Reevaluation

The Affordable Health Care Act better known as Obama-Care has had its estimated effects reanalyzed and published by the Congressional Budget Office (CBO). The budget office’s estimate of loss hours is equivalent to 2.5 million fewer jobs by 2024. The report places the majority of the losses due to employee incentives as opposed to employer costs.

The rational here is that employees will take fewer opportunities for overtime and promotions because of the stipend or benefits the health care act will provide at marginally lower levels of annual income. Those at the threshold will not choose to teeter-totter to the side with higher taxable pay and less government issued health benefits.

While the loss of productivity/work puts a dent in the economy, there is a blessing in disguise that proponents of Obama-Care have highlighted. Workers are no longer tied down to a particular line of work that offers a good health care plan. They are free to pursue their dream careers and/or work reasonable hours each week. In addition, the loss of work can be seen as an opportunity to put more unemployed people to work, but there are many problems with that argument (too many nodes = less productive, unemployed are typically unskilled, etc).

Republicans and opponents of the health care bill cite this as more job killing evidence they’ve been citing all along. In fact, some like Joe Rago go even further, claiming in his WSJ Opinion piece that some other negatively affecting variables were not considered, making this an underestimation (think arrow diagram).

arrowdia

 

 CBO’s job-loss prediction is all the more remarkable because it doesn’t include the impact of ObamaCare’s employer mandate, which requires businesses with 50 or more full-time employees to offer insurance or pay a $2,000 penalty for each worker beyond 30 employees. CBO more or less punts on the issue because the White House delayed the mandate for a year and the changes would be hard to model. But this means CBO is probably still underestimating job losses because common sense says that labor mandates raise hiring costs and induce businesses to hire less, or pay lower wages, or slash hours, or all three.

This will be providing the Republican Party with even more momentum for the 2014 elections. Democrats seeking election have been distancing themselves from this issue and deviating from the President’s agenda, due to controversy over his “broken promise” – saying citizens could keep their old healthcare plan at no additional cost. So as a recap:

 Good news:

  • Incentive work pursue work that person has best fit for rather than one with good health plan
  • Possible unemployment decrease

Bad news:

  • Less labor hours per worker
  • Less hiring incentive by employers

I see both sides have valid concerns and reasoning. The liberal side of me says “individual empowerment to make choices about their own lives and livelihoods” sounds great. If economic mobility means people being worked to death at jobs they chose as opposed to a better fit, then we are not headed in the right direction. On the other hand, an economy where people are not rewarded adequately for more work/accomplish via higher pay sounds very unappealing. I believe that the health care plan should be reevaluated with some income levels redrawn, in order not to burden those on the cusp of making more income as much, and optimized for lowest job losses. I do want a simplified, cheaper access to health care in this country, but I still want people to work and be efficient. I don’t believe policies will address this problem as much as culture, but I do believe that giving people an access to health services and incentives to work in a wide variety of domains will provide some good to society overtime.

Can Health Affect Socioeconomic Status?

There is a broad consensus that variations in socioeconomic statuses lead to large health disparities. For instance, at each age, every decrease in income is associated with having a worse health status. This is because the poorer you are, the less likely you are to have health insurance; meaning you have a higher risk for getting sick and having that illness affect your working productivity. Those who have higher socioeconomic statuses are likely to have better nutrition, better housing, more access to good health care, and lead safer lives; all of which would lead to better health for those with higher incomes.

In my economics of population course I took last semester, we looked at this direct causation. In the video In Sickness and In Wealth, Michael Marmot argued that social and economic disparities cause differences in health status through a stress hormone called cortisol. Levels of cortisol are higher in those who are lower down the socioeconomic status ladder because these people are more likely to live with chronic stress. These high levels of stress hormones are then associated with high blood pressure, heart disease, diabetes, and other diseases; all of which have negative effects on one’s health. The question is: Could the reverse causation from health to socioeconomic status be significant as well? Since those who have better health are able to work better, they will be more productive which will later reward them with higher income. In the case of a major health event, however, people are able to work less, bear out-of-pocket costs for their medical care, and suffer a substantial loss in household income.

In addition, one article looks at several other factors, such as age and sex, which can also have direct effects on health. In particular, once puberty hits, chronic pain has been shown to disproportionately affect women. When researchers looked at prevalence rates, they found that the prevalence of any chronic pain condition was 45% among women versus 31% among men. This disparity between men and women suggests a hormonal influence given that when kids are little, boys and girls have roughly the same amount and degree of pain. But what is more disturbing is the fact that this greater pain in both numbers and intensity in women seems to go under-treated in important respects. For example: women are less likely to be worked up thoroughly when they go into the emergency with chest pain, they are less likely to be put into the ICU to be given interventions that can keep them from dying, and even with less serious conditions such as knee pain, they are much less likely to be referred for knee replacement surgery. Women tend to feel and talk about their pain in relatively more emotional terms than men which can be a turn off for doctors. Doctors tend to react badly when women present their pain in this way as opposed to men who present their pain more factually. This unconscious bias that doctors have towards dismissing women’s pain as emotional is a big issue in the overall effect of women’s health.

In the long run, if chronic pain in women continues to be under-treated, it can create problems for women in the work force. Chronic pain can be triggered by even the slightest move and if women are not given the proper attention, it could inhibit them from being able to work as much. As a result, women’s income would begin to decline and therefore their health would start to take a toll on their socioeconomic status. The federal government spends almost nothing on pain; only about 1% of its massive budget is spent on pain research. Given what a big problem this is, I think that chronic pain in women should be looked at more closely as it can really affect women’s status in the economy.

In the United States, the Farm Bill, which is passed every 5 years, determines this country’s agriculture spending on both food subsidies and food stamps.  The WSJ recently analyzed the state of the most current farm bill, identifying who benefits most from the resulting payments.  Focusing on farm subsidies, which account for approximately 20% of the Farm Bill’s spending, the following chart illustrates the tremendous amount of money spent on farm subsidies:

Farm Subsidies

As this chart makes apparent, the ten states that consume the most farm subsidy dollars consumed $9.445 billion in 2012.  While this expenditure doesn’t compare to military spending in the United States, $9.5 billion is not a trivial value (WSJ: Who Benefits from Farm Subsidies).  After adding in farm subsidies paid throughout the rest of the United States, total annual expenditures is close to $17.5 billion (George Mason University: Ending Farm Subsidies – Unplowed Common Ground)

It’s interesting to examine what crops the government is subsidizing.  If you watch the movie King Corn, or you read the Live Science article “Junk Food Subsidies Threaten American Health,” you’ll learn that the most commonly subsidized crops are commodity crops like corn or soybeans (these are called “commodity” crops because, given the way they are grown, these crops are not edible until processed into secondary products like High Fructose Corn Syrup).  Furthermore, without the existing government subsidies, many farmers would not profit from the production of commodity crops.  The selling price for a bushel of corn, for example, is lower than the cost to produce a bushel; nevertheless, farmers continue to make a profit because of government subsidies (King Corn).  As one learns in any Econ 101 class, these subsidies ultimately distort the commodity crop market, leading to deadweight loss at the expense of American taxpayers (who are footing the subsidy bill).

Many support farm subsidies by stating that these subsidies are necessary for farmers to support themselves and that Mom-&-Pop farmers are the backbone of America.  Regardless of how you feel about Mom-&-Pop farmers, the above statement simply is not true.  Per the US census, farm household income has exceeded the average household income in America for over a decade and a half, and today the average farming household earns 53% more than the average non-farming household.  Additionally, the subsidies given out by the US government do not favor the “everyday” farmer living the American Dream, but rather support enormous commercial farms.  Of the $17.5 billion of farm subsidies paid out by the US government each year, 80% goes to the wealthiest 15% of farmers, whose wealth is usually measured in millions of dollars (George Mason University: Ending Farm Subsidies – Unplowed Common Ground).

Thus it seems obvious that farm subsidies are negatively impacting this country in three ways: (1) they distort the market for commodity crops (2) they place an additional tax burden on Americans who indirectly pay for farm subsidies (3) they contribute to economic inequality by favoring already wealthy, commercial farmers.

That said, there is yet another way that farm subsidies adversely impact the economy: health care bills.  The American Heart Association identifies cardiovascular disease as one the most pressing health problems in the United States, with over 40% of Americans expected to suffer from cardiovascular disease by 2030.  With this increase in prevalence comes an increase in the costs associated with treating cardiovascular disease, which are expected to grow from $273 billion in 2010 to $818 billion in 2030.  So how is this relevant to farm subsidies?  One of the leading causes of cardiovascular disease is obesity, and one of the leading causes of obesity is the exorbitant consumption of high fructose corn syrup.  And why are Americans consuming so much high fructose corn syrup?  Because US farm subsidies favor the production of commodity crops that make high fructose corn syrup so cheap to produce.  (Live Science: Junk Food Subsidies Threaten American Health)

Obviously, I believe that farm subsidies are ridiculous.  They necessarily create deadweight loss and place additional burden on the American taxpayer.  Additionally, by indirectly increasing health care costs, farm subsidies cost this economy exponentially more than the $17.5 billion of subsidy payments given out each year.  As such, I propose a gradual tapering of farm subsidies.  While in the short run, doing so will likely cause marginal increases in food prices, in the long run, I think the reduction in government expenditure and health care costs will certainly justify the additional costs.

Lost in (Health Care) Legislation

I don’t get it. I’m really, truly at a loss. And I’m hoping that someone here will be able to help me make sense of things.

What I’m referring to is the ACA/Obamacare/US Health Care System/pick your favorite acronym, nickname or other designation. And by “I don’t get it”, I mean all of it. Its design, the overly complicated way of implementing it, and the strange enrollment complications going along with it.

Don’t get me wrong here: I’m convinced that a public health care system is the way to go. There are plenty of reasons to have one: mandatory insurance will lead to a lower average premium than private insurers can provide. That means that even if some people have to pay a higher premium under a public system, you could compensate them (say through income tax credits). Another way to go is to simply have the system paid for by taxes (think the NHS in Britain). Sure, those systems are run by governments. And yes, there are plenty of opportunities there for people to do a poor job and be inefficient. But there’s no reason why a good system of checks and balances (something the US prides itself on having) wouldn’t be able to do away with those. And remember, you’re going to be cutting total health care spending by cutting the average premium.

Is there any empirical foundation for these claims, anything beyond economic reasoning that supports a public system? Why yes, for one thing, the US has the third highest health expenditures as a percentage of GDP in the world! Now some have argued that this is in fact all because in the US, medical personnel are paid more than in other places. This attracts the most highly skilled people (provided that they can get into the country and are allowed to work) and thus gives US citizens the best health care that money can buy. In theory, this argument has some merit to it. However, PwC finds that 30% – 50% of the States’ total health care expenditure is, in fact, ‘wasteful’ spending (and this is before the ACA with all its bureaucratic, clumsy government interference – i.e. there were massive inefficiencies in the system as it was before the ACA). I don’t expect a public provider to be able to do much worse, unless they try really, really hard to do an exceptionally bad job (and whatever you think of the competence of state bureaucrats, I don’t think it’s fair to assume that they’re actively working to the people’s detriment).

So the ACA is a public system, right? So things will change for the better; why the rant, you might ask. Well, apparently the ACA has a problem with getting young people to enroll. And with getting the uninsured to enroll (especially the young ones). And that’s what I don’t get. Why does it have to have these troubles? It would have been extremely easy to simply create one single, state-run (so no monopoly issues) provider. Everyone’s enrolled automatically. Payments are deducted together with your income tax. That also makes it easy to give people tax breaks dependent on income (or age, or whatever you deem necessary).

Sure, getting the unemployed to enroll would be a little harder in the US than, say, in most Europeans countries, where you can get indefinite unemployment insurance. But you would’ve saved yourself the trouble with the working population. Perhaps you think that’s all crazy socialist nonsense, and you need private providers. And you can’t force people to enroll in health care either, because that infringes upon their personal liberties. So you make them pay a fine in order to get them to enroll anyways, although in theory they could just cop the fine and never enroll. But why would you make the fine lower than the premiums these people have to pay? Of course that’s an easy way to opt out!

Note here that I’m not saying you need to crank up the fine and force people to enroll. Lowering their premium and letting them enroll would be just as easy. Now if the government provided health insurance, guess what, they could simply lower the amount people pay. But of course under the ACA, that’s out of the question.

And yes, I know that the subsidies are supposed to make health care affordable for everybody. They also provide an easy way for health care providers to charge those with the lowest incomes a lot more than they could without the subsidies, because the government basically provides a baseline reference income for everybody for the purposes of buying health insurance (and then some people don’t get subsidies and still can’t afford the insurance, so there’s that).

So all told, I’m confused here. There was an easy way to do this. Several, in fact. Europe and Japan have public health care. There were plenty of blueprints to choose from. Why all the trailblazing?