Marginal Revolution: Medicare Loops

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Medicare Loops

"Medicare for Everybody" is becoming a slogan in the left-wing blogosphere. Does it sound so bad? Surely private insurance deserves a whacking for its high overhead costs and its general willingness to not cover people, screw people over, and deny just claims.

But also recall it was only a few years ago that the federal government expanded Medicare coverage to prescription drugs. Private insurance has been covering prescription drugs for -- what -- about twenty-five years?

I do not need to repeat to loyal MR readers that prescription drugs are about the most useful and most life-saving of all forms of treatment. Loyal readers also will know that greater Medicare access, as measured by more doctor visits, doesn't seem to improve health care outcomes. But drugs do.

So when it comes to the one thing that really works, government insurance was twenty or more years behind private insurance.

In case you didn't already know.

Are you familiar with the early musical works of Steve Reich, you know the taped loop recordings, like "It's Gonna Rain"? A phrase is repeated over and over again.

The next time you hear "Medicare for Everybody" I want you to also hear:

"So when it comes to the one thing that really works, government insurance was twenty or more years behind private insurance."

Etc.

I thank a loyal MR reader for making this point to me.

Oh, had I mentioned that the 21st century is supposed to be the century of the biomedical sciences?

Posted by Tyler Cowen on February 19, 2007 at 07:08 AM in Medicine | Permalink

Comments

I really have to laugh when I see/hear the Kos Kidz screaming "Medicare for All". They say a program that is $40 trillion underfunded now will be the salvation of us all. And further, they refuse to acknowledge that any treatment or service would ever be questioned or denied under this new scheme, as questioning/denial is something only the Eeeeeevil insurance companies do.

Posted by: JimMaine at Feb 19, 2007 8:12:30 AM

Tyler says "The century of biomedical science."

Maaaybe... On the other hand, as I wrote: "Medical research funding may have over-expanded and be due for collapse." www.hedweb.com/bgcharlton/funding

Time will tell...

Posted by: Bruce G Charlton at Feb 19, 2007 8:25:22 AM

Your ripostes are becoming more lethal. I love it.

Posted by: Rue Des Quatre Vents at Feb 19, 2007 9:06:36 AM

This explains perfectly why the US has the best healthcare in the world and why medical care in the rest of the industrialized world (every country in which provides universal coverage) is so inferior. Oh, wait…

Posted by: Minipundit at Feb 19, 2007 9:23:43 AM

Why would being 20 years late mean that government could not do as good or better a job than private insurance?

Posted by: richard at Feb 19, 2007 9:25:06 AM

Tyler, your comment is misleading. You imply that Medicare is slow to innovate, but the real point is that Congress and the Executive are slow to innovate. They determine what Medicare can cover, not the staff of Medicare itself. This could still support your point. You could argue that when new innovations arise Congress will be slow to react. It would also be more accurate.
bwi

Posted by: Barry Ickes at Feb 19, 2007 10:04:06 AM

"Loyal readers also will know that greater Medicare access, as measured by more doctor visits, doesn't seem to improve health care outcomes. But drugs do."

Tyler, please explain to me how patients are supposed to access presciption drugs without seeing a doctor. After all, prescription drugs require, at the very least, some medical attention which implies that government insured drugs must be buttressed with some form of government insured medical access to be effective.

Posted by: Econometron at Feb 19, 2007 10:08:24 AM

"Tyler, please explain to me how patients are supposed to access presciption drugs without seeing a doctor. After all, prescription drugs require, at the very least, some medical attention which implies that government insured drugs must be buttressed with some form of government insured medical access to be effective."

He is making a very simple point that more doctor visits ALONE do not improve health care outcomes. Twenty years where multiple visits did not improve health. Brilliant!

Posted by: Scotch at Feb 19, 2007 10:31:32 AM

First, I think that it's a bit of an overstatement to say that drugs are the *one thing* that really works. Second, I think Fogel would disagree with that statement. I believe that he makes a different claim in his latest book. I'll have to double check on that when I get home.

Posted by: eriks at Feb 19, 2007 11:09:23 AM

I'm not a client of the State, so excuse my ignorance, but isn't Medicaid supposed to cover poor people? What exactly is the point of turning Medicare into universal coverage, when Medicaid is designed to cover those who can't afford medical care?

It seems to me the Left's objection is not really lack of medical care, but just the idea that patients have to pay for any portion of their own treatment. That's not a health crisis. That's just more redistribution under another name.

Posted by: Christina at Feb 19, 2007 11:21:53 AM

"The century of biomedical science".

Perhaps, but our lifestyles do seem to keep pace with advances in medicine. Will a huge spike in obesity-related Type2 Diabetes for example, roll back potential gains in life expectancy? Will the northward spread of tropical diseases due to global warminng and antibiotic resistant STD (such as the REALLY nasty strain of Syphillus now spreading in North American urban centers) overtake pharmaceutical advances? And will trends like these overwhelm any reasonable attempts to make health care truly universal?

Posted by: Chris Wren at Feb 19, 2007 11:37:25 AM

Why would being 20 years late mean that government could not do as good or better a job than private insurance?

Mutatis mutandis, this is the main defence of the Libertarians in Space/SpaceShipOne crowd when anyone says that the government was doing it better in 1960.

Posted by: Kieran at Feb 19, 2007 11:40:15 AM

One assured result of "Medicare for All" would be that a lot of hospitals would close. You see, Medicare pays so little (Medicaid is even worse) that hospitals must shift costs to private payers, otherwise, voila, they go broke. Now an argument could be made that there are too many hospitals in this country (due at least in part to government subsidies such as the Hill-Burton Act), but who wants to step up to the plate and volunteer the one in his/her neighborhood to be the first to close? Also, a lot of doctors would quit because they don't want to work for what Medicare pays. So, let's see, fewer hospitals, fewer doctors, but there won't be any adverse consequences on health care. I seem to be missing something here... maybe Hillary can explain it to me.

Posted by: Ned at Feb 19, 2007 1:12:41 PM

The "medicare is for all" slogan points to the same political necessity as is reflected in not means-testing social security. The fear is that the middle and upper-middle classes won't support it if it looks like welfare (for the poor only).

I think we are stuck with that idea, which is why single-payer (government) for health care is the future of medicare.

Posted by: Dennis Tuchler at Feb 19, 2007 2:25:47 PM

"So when it comes to the one thing that really works, government insurance was twenty or more years behind private insurance."

Let's see.... Republican and Libertarian ideologues obstruct the institution and proper operation of any type of beneficial social program and then use the suboptimal performance as an argument against social programs.

Don't be so disingenuous.

Posted by: squik at Feb 19, 2007 2:50:30 PM

"The "medicare is for all" slogan points to the same political necessity as is reflected in not means-testing social security. The fear is that the middle and upper-middle classes won't support it if it looks like welfare (for the poor only)."

Doesn't Medicaid exist now?

Posted by: Sebastian Holsclaw at Feb 19, 2007 2:52:52 PM

Of course, if private insurance insured everyone and did so without terminating coverage due to illness and did so are an affordable price, there would be no discussion. However, as Steve Reich wrote: "come out to show them." When you examine the American health care system, you must factor in the shortcomings of private insurance: almost 50 million not covered, high cost of drugs outside the formulary, and the nasty little habit insurance companies have of weeding out the sick, lame and infirm. That underwriting requirement makes for great profits and a population that is sadly lacking in health treatment.

Posted by: Mike at Feb 19, 2007 2:59:54 PM

Meanwhile, the US pays about twice as much for its health care as developed nations with socialized medicine. It would be acceptable if we were healthier, but we are not. We pay more and get less with the capitalist system. That's the facts.

I'm just thankful the state I live in forces an insurance company to accept my wife. She has diabetes and was turned down by every company we applied to. Finally, we have the privilege of paying $1200 / month for coverage that doesn't include prescriptions. I know that goes against the rant of the blogger, who claims private insurance is so great. But, hey, ideology is blind to reality.

Posted by: squik at Feb 19, 2007 3:20:48 PM

"So when it comes to the one thing that really works, government insurance was twenty or more years behind private insurance."

Were you agitating for a Medicare prescription drug program on the grounds that drugs are very beneficial, or did you oppose such a program?

If you opposed it, how can you possibly criticize the delay?

Posted by: Bernard Yomtov at Feb 19, 2007 3:41:00 PM

So nationalizing health care in this country will produce zero adverse effects? People do not respond to incentives? If we reduce the profit oppurtunities for the creation of new treatments and drugs then we shall have more of these things in the future? The countries with socialized medicine produce most of the world's new pharmaceuticals? Stasis in the health care industry is acceptable so long as we give people more access to doctors? Newer drugs and therapies will not improve health outcomes for the majority of citizens living in this country? Money is not important for research and development of new drugs? Having asked myself all of these questions I think I am going to join the left liberals in arguing for nationalized health care. It is so much easier to debate people when you get to argue for a dream world that does not face the laws of scarcity and will continue to create a ubiquitious supply of new drugs, no matter how unhospitable the climate for innovation is.

Posted by: John Pertz at Feb 19, 2007 6:29:08 PM

Kind of like how Canadians are able to pay less for some name-brand prescription drugs so long as the companies are able to pass along the costs to American consumers.

Posted by: Thorley Winston at Feb 19, 2007 7:32:37 PM

Why would being 20 years late mean that government could not do as good or better a job than private insurance?;

A question that supplies its own answer, how convenient!

Posted by: Thorley Winston at Feb 19, 2007 7:47:16 PM

Medicare for all is a great idea, but just as the coverage of medications is slow so will be this process! Part of me feels that health insurance is a luxery because it does cost so much money, but then again as an American citizen it should be available to you. I do think that the reason for the slowness with medicare is because of the government. They control what is covered and how much of it not the workers of medicare!

Posted by: La'Tasha at Feb 19, 2007 10:01:21 PM

"the nasty little habit insurance companies have of weeding out the sick, lame and infirm"

Well, no, not really. But they do have to pay a higher premium. If they didn't, the insurance system wouldn't work. It always baffles me that seemingly intelligent people have no idea how an insurance system works.

Posted by: Erik at Feb 20, 2007 12:20:17 AM

I think the drug hangups come because the fortunate (and skilled) company that discovers the drug treatment gets monopoly profits for a good long time. While the monopoly price is well below the prior human intensive treatment, it is also well above the competitive result, too (and the fact that "evil stockholders" benefit from the transaction is just too much for many to justify.

Posted by: nelsonal at Feb 20, 2007 1:00:58 AM

Changes to the US healthcare system will necessitate less revenues (and likely profits) to the hospitals and other in care settings (where a HUGE portion of the overall spend is) - and Ned, most public hospital chains are moking a good amount of profits, still - as well as (probably much) lower incomes for most doctors, which is one of the largest determinants of overall healthcare spend. From my experience in Europe, medical doctors are well-off, but not wealthy or rich.

Alot of people seem to target drug manufacturers, and sure they make alot of money (alot of which is plowed back in to R&D, by the way), but drug spend is only something like 10% of overall HC expenditures in the US - almost chump change.

Squik - are you certain that actual medical outcomes are worse in the US than in the socialized countries? Being healthy is one thing, and a separate issues. But we should be thinking of medical outcomes. Again from living in Europe for the past 8
years or so, I would MUCH rather be sick in the US than in Europe (providing I have health insurance in the US), and I think the stadard of care is significantly better in the US for the vast majority of health issues. And the infrastructure is just crumbling. Trust me - when the state is responsible for upkeep and maintenabce of hospitals, they tend to fall into disrepair, and when the state is responsible for investing in the newest equipment, it generally waits.

The real issue (and the personal experience that you, Squik, highlighted) is that access to health care - even rudimentary heathcare - is unequal. Medicare for everyone, is facile and simplistic, and sadly, over the long term, would mean worse healthcare on average for society.

Posted by: glenn at Feb 20, 2007 5:45:37 AM

Or you could pay attention to other countries ... in the UK we had free prescription drugs since the 1950s. Flat rate charges were recently imposed (about $10 per prescription filled), but people on other welfare programs can claim an exemption.

Posted by: Peter Clay at Feb 21, 2007 6:14:10 AM

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