Smart Bombs: Misdiagnosing the illness

When last we met, I wrote about the “public option,” wherein government would offer health insurance (as it does with Medicare) as an alternative to all of the private plans that are available. The idea is to help force prices down. This prompted classy correspondence from literally tens of readers. Let’s examine the chief complaints.

Are you sick? When has government ever reduced the price of anything?

This comes up a lot. The government-bashing, that is. Let’s look at the government-run Department of Veterans Affairs. The Congressional Budget Office found that the VA pays 42 percent below the average wholesale price for prescription drugs. The Federal Supply Schedule, which includes the Department of Defense and the Bureau of Prisons, pays 53 percent of the average wholesale price. Both use their substantial purchasing power to land big markdowns.

Medicare Part D could do the same, but Congress wouldn’t allow the agency to bargain on behalf of enrollees. Instead, the government subsidizes health insurers in the name of privatization, which means each plan negotiates with drug suppliers. Goodbye, clout. Families USA found that the VA whips Part D on the price of every one of the top 20 drugs used by the elderly. Economist Dean Baker estimates that if Part D were allowed to bargain, the government could’ve saved $600 billion between 2006 and 2013. It’s not too late.

You’re advocating socialism!

The status quo is socialism. There’s Medicare, Medicaid, veterans care and the large plans that cover government workers. Then there’s the purportedly private care, which only works because the government subsidizes employers to provide coverage. Washington Post writer Ezra Klein notes a 2007 Joint Committee on Taxation report estimating that “ending all employer-related tax breaks for health care would raise $1.23 trillion between 2009 and 2012.”

Why do we route care in such an incoherent way? To maintain the illusion that we’ve fended off socialism. As a result, our hybrid system spends 17 percent of the GDP on health care, which is easily tops in the world, while leaving so many people uncovered. This will continue until we admit the system is sick.

Bet you’ve never run a business.

Got me there. The Commonwealth Fund studies health systems worldwide for value per dollar. As already noted, we’re the biggest spenders, but we don’t necessarily have the best outcomes to show for it. On 16 measures of quality in 2005, “the U.S. was as likely to be in the top half as in the bottom half of (developed) nations, indicating it is not receiving good value for money spent.”

Isn’t bang for the buck a business principle?

The U.S. has the best health care in the world!

Are you sick?