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Medicare: Government Does It Right

I recently had occasion to go through two years of my 84-year-old mom's medical and insurance statements, to be sure that everything was kosher and that insurers were, in fact, paying all the bills they were supposed to be paying.

You've undoubtedly attempted similar, so you can imagine that it was a daunting task--trying to cross-reference all the providers' bills against the insurance statements.

All I can say is, thank god for Medicare.

The bills and statements from private providers and private insurers were nightmarish--mostly just dollar amounts (often lacking dates of service) attached to cryptic codes--often providers' internal codes unrelated to standard practice codes. If I'd been relying on these private statements alone, it would have taken me at least week to sort through all the statements--searching the web to track down those codes, and spending hours on hold with all the providers and insurers.

Happily, the Medicare statements made it easy. They are clear, well-laid out, and fully informative (in plain English)--exactly the kind of statements I insisted on when I was running a company. I was able to cross-check all the private statements against the Medicare statements to figure out what those private statements were actually referring to, then determine if private insurers had covered their share.

Thanks to the Medicare statements, I got the job done in a few hours.

Then, this fall it was time to choose a Medicare drug plan for my mom. Guess what? Medicare has the best insurance comparison engine, hands-down, anywhere on the web. You enter the prescriptions you currently take or expect to take, and it throws up an easily apprehensible list of insurers, sorted by your total costs per year and including quality ratings for the insurers. You click deeper for details on each, compare them, or jump to their sites for more info.

No private entity is offering anything even approaching this site. Market incentives?

So when somebody tells you that you can't trust governent to do anything right...well, you won't convince them because it's a faith-based belief...but you can take comfort in knowing that they're just plain wrong.

Do Voters Prefer Death or Taxes?

Today's NYT/CBS poll gives the answer: Taxes.

67% of voters think it's "more important to provide health care coverage for all Americans" than to "hold down taxes."

Wacky Objections to an Obama Senate Bill

Greg Mankiw links, apparently approvingly, to a VoxEU post by Willem Buiter and Anne Sibert savaging an Obama-sponsored bill in the Senate. (Cloyingly titled the Patriot Employer Act.)

Felix Salmon has replied quite effectively, pointing out that the bill would not have the kind of disastrous effects the authors suggest, and that their objections are flawed, overblown, and largely trivial.

Mankiw pulls the money quote for his post title: the authors describe the bill as "reactionary, populist, xenophobic and just plain silly." They forgot "distortionary," which is their post's main basis for fear-mongering.

I just want to point out a couple of blatantly disingenuous parts of Buiter and Sibert's argument, which to me exemplify how frantic and reactionary the whole post is.

The bill provides a one-percent-of-revenues kickback to employers who fulfill a list requirements. One of those requirements (in Buiter and Sibert's words, my emphasis) is that:

"[employers] must provide a defined benefit retirement plan or a defined contribution retirement plan that fully matches at least five percent of each worker’s contribution."

Putting aside the question about "fully" matching five percent, or the incredibly low bar that five percent represents: The authors attack this by attacking defined benefit retirement plans (a.k.a. company pension plans)—with some good basis for their objections. But they conspicuously ignore the "or"—the option for defined contribution plans. Presumably they can't muster any objection to those.

Next, to receive the kickback under the bill, employers must:

pay at least sixty percent of each worker’s health care premiums

The authors' objection:

tax incentives...that link health insurance with being employed rather than with being alive, are distortionary and unfair.

So...because the bill does not promote universal, single-payer health care, it's a bad bill.

Is Mankiw really endorsing this argument?

The main point, though, is that employers aren't required to opt in to this program. If they think they can fulfill its requirements for less than 1% of revenues, they can do so—with the manifest benefits (primarily to Americans) that would result for individuals, the companies, the government, and the general public.

Isn't this exactly the kind of win/win incentive that government at its best (and only government) can provide?

“Usual and Customary”: Macro Effects?

The NY State attorney general is investigating (NYT) health insurers for gaming the system on “usual and customary” charges. Turns out the database used to determine the charges is managed by Ingenix, which in turn is owned by UnitedHealth Group—one of the country's biggest health insurers. The database is licensed to other insurers as well.

I can't determine from press reports who crunches the database to determine the charges—Ingenix or the insurer. But in any case it's to their advantage to set those charges lower rather than higher, so they pay less.

Wouldn't this serve to ratchet down health care costs? Free market at its best? (Especially considering the impediments to individuals exerting any downward pressure on those costs.)

Well yes, except for all those "out of network" payments. The uninsured pay full ticket, and the insured going outside the insurer's preferred provider network have to  pay (all or some percentage of ) full ticket minus the (gamed down) U&C amount.

Just theorizing here absent any empirics (you judge if it makes sense): If medical providers are getting less than they should from insurers, the natural incentive is to raise prices for everyone (else). This would also feed back into the (rather elastic) insurance loop, exerting upward pressure on the U&C payments.

Short story, the well-insured and the insurers do better, everyone else does worse. What‘s the net macro effect? I haven’t found any research to answer that, and I'm at a loss to answer it myself.