Arthur Laffer has an op-ed in the Wall Street Journal discussing health care:
Implementing Mr. Obama’s reforms would literally be worse than doing nothing.
Breathtaking, really.
Laffer has impressive credentials. It’s not for most men to be able to bankrupt two of the world’s seven largest economies, but Arthur pulled it off, writing Proposition 13 for Howard Jarvis and then writing what would become the Reagan tax cuts on a cocktail napkin with Dick Cheney and Don Rumsfeld.
However, given the poor state of Republican intellectual life today – Boehner, McConnell, Jindal, Pawlenty, Palin, McCain, Romney, Huckabee; does anyone know what these people are for, except trying to get power of some sort – Laffer is as close as we get to the GOP in complete sentences. Let’s take a look:
[W]hen the patient doesn’t care about costs, only those who want higher costs—like doctors and drug companies—care.
I suppose the guy paying – the government payer or the insurer – might care, but let’s let this one go…
Rather than expanding the role of government in the health-care market, Congress should implement a patient-centered approach to health-care reform. A patient-centered approach focuses on the patient-doctor relationship and empowers the patient and the doctor to make effective and economical choices.
Wait a minute – didn’t we just talk about how the doctor is pushing higher costs? If the doctor is pushing higher costs, why would you leave the patient alone with him? The patient is (a) sick, which generally reduces cognitive function; (b) not trained to evaluate comparative efficacies of treatments. I know (b) because there’s a word for people who have that sort of training: “doctor”.
Far from being “patient-centered,” this is starting to look rather “doctor-centered.” Let’s continue:
A patient-centered health-care reform begins with individual ownership of insurance policies and leverages Health Savings Accounts, a low-premium, high-deductible alternative to traditional insurance that includes a tax-advantaged savings account.
Does that mean individual insurance policies are mandatory? You know, a mandate? Because I haven’t heard Republicans shouting this one from the rafters. Does that mean that all employer-based health care should end, because that would not be “individual?” Louder, please, and into the microphone. Now, before we go further, please explain to me why it matters who owns the policies? If the individual owns the policy, that has the advantage that it goes with him from job to job. But what if the government owns the policy? Wouldn’t that also be portable, and backed by a much larger pool with monopsony power?
I’m even more confused by the tax-advantaged Health Savings Account. Does the government want me to be free or not? If the government is going to subsidize health care, by kicking in non-optional tax dollars to health savings, they are essentially forcing me to buy not only my care but the care of other people who have HSAs. Why am I buying them crappy catastrophic-only care? If I’m spending for it, I’d just as soon get these people some preventive care so they don’t blow a gasket and tear through their high deductible at 52.
It allows people to purchase insurance policies across state lines and reduces the number of mandated benefits insurers are required to cover.
What precise health care miracles does Arthur Laffer believe stop at state lines? This is of a piece with the advocates (including far too many Democrats) of importing drugs from Canada instead of intervening in drug pricing here, as though a drug invented, tested, and manufactured in New Jersey miraculously becomes cheaper from a fourteen-hour round-trip up the NY Thruway.
The only reason buying insurance across state lines would be interesting would be so that health insurance companies could set up operations in friendly regulatory regimes and use those locations to sell into more restrictive regimes, essentially causing the insurance market to coalesce around the lowest common denominator. I am no fan of state regulations of anything, so instead of giving the insurance companies fifty regulators to arbitrage, how about we meet halfway and eliminate all state insurance regulations and come up with one federal regulator? Oh, idea doesn’t seem so popular anymore…
It reallocates the majority of Medicaid spending into a simple voucher for low-income individuals to purchase their own insurance.
You know, as a thought experiment, just switch the “id” with “re” and imagine that some remotely serious politician would make this suggestion. Just give old people a voucher for their cut of the CMS spend and best wishes finding someone to pick them up. The Journal would be beseiged with protestors in walkers, and no one wants that.
And it reduces the cost of medical procedures by reforming tort liability laws.
I knew it was going to come in here somewhere…like running downstairs on Christmas morning, here we go. I actually agree with Arthur on this one. It would be great to kick the trial lawyers in the teeth and radically reform malpractice laws. You know one thing that would probably help? Some sort of national health insurance so people who were injured would not need a lump sum settlement to know that their injuries would be treated for the rest of their lives. I’d be happy to trade hard malpractice reform for single payer. You in, Republicans?
Fact is, Laffer starts with a bizarre premise:
Consumers are receiving quality medical care at little direct cost to themselves. This creates runaway costs that have to be addressed.
Since the French and Swiss get better care than Americans, can our health costs run away to be as high as theirs? How is it possible that they spend less in the Laffer Universe? Isn’t one of the main reasons we are having this entire discussion that we have the lowest life expectancy in the G-7?
By empowering patients and doctors to manage health-care decisions, a patient-centered health-care reform will control costs, improve health outcomes, and improve the overall efficiency of the health-care system.
In this magic world, who pays less? No one. Laffer won’t reduce the price/service, since that would intrude on the sacred doctor/patient relationship, so that must mean there are fewer services. And how will we decide which services to cut? Well, prices will rise and there will be demand destruction, just as the number of vehicle-miles falls when gas prices rise.
There are but a few problems with this. The quibble is that this is, of course, rationing by a different name; we are rationing by ability to pay. We do the same for TVs and yachts, but let’s be honest with ourselves.
The bigger issue is that these avoided treatments contribute to pain, injury, and death. If someone cannot afford treatment for a mole, and the mole becomes an aggressive skin cancer that kills him, he has died for lack of money. Are we the sort of society that tolerates this? If someone has a heart attack and lies dying on the sidewalk, do we want emergency medical services to check his insurance or net worth before treating him? Because if they do not, and he cannot afford treatment, those unpaid bills will end up somewhere. And rather than having a wounded underclass roaming Bombay-style around the property lines of office buildings, I would like these people – my fellow American people – to be treated to both the courtesy and cost-efficiency of regular medical intervention.
As I mentioned here, the Democrats’ proposals do not contain costs, and I think it would be great to introduce market mechanisms to try to bring them down. The status quo, however, is worse; it’s precisely the current course that brought us to the unfortunate position of paying more and receiving less.
Someday the Republicans will find someone with intellect that they can rally around, and it will be a good day, even for us Democrats; while we may not want the French system of eighteen parties and one policy, we do ourselves no favors when one of our two parties seems to be operating with an extra chromosome. Until that happy time, however, we seem doomed to opponents who should “tax cuts” like a nervous tic and do not seem to have even a basic power of perception of the world.
UPDATE
Rather clumsily, I missed this Krugman blog post with Laffer’s wonderful comment:
If you like the post office and the department of motor vehicles and you think they’re run well, just wait till you see Medicare, Medicaid, and health care done by the government.
To atone for it, I bring you this Laffer gem from 2006:
Great post Taunter. I can only come up with 3 reasons why Laffer would post such dishonest gibberish:
1.) He is intellectually dishonest and not interested in a consistent argument;
2.) He is as sharp as a box of rocks; or
3.) He has been well paid to spout a series of buzzwords and catch phrases in the hopes that he can cloud the debate. In other words, create ‘fear, uncertainty & doubt’.
But since this is what passes for Republic Party analysis these days, I suppose it beats debating someone’s birth certificate.
I vote “all of the above.”
One of the great public relations coups of the past decade was the meme that because Dick Cheney is such an asshole, he must be a genius; after all, wasn’t Henry Kissinger both brilliant and amoral?
Cheney, however, was a happy resident of the incompetent asshole segment; if he had been remotely intelligent, he wouldn’t have screwed up his wars and there would be a statue of him on the Mall.
Laffer and the others who pass for intellectuals in the Reagan-era Republican party are merely guys with PhDs who fell for an Ayn Rand worldview. Since there are far fewer thoughtful people on their side of the aisle to begin with, and folks with independent minds, from David Stockman to Paul O’Neill, are inevitably cast off, the loyalist drift along.
Just because Laffer is intelligent doesn’t mean he isn’t intellectually lazy. But when you surround yourself with only those who think like you, it’s easy to spout absurd pronouncements, because they never undergo serious scrutiny.
By the way, when do you think was the last time Laffer and his family went without insurance? Or even had to worry about it?
Laffer….? Don’t make me Laugh…. That stooge… Isn’t he the one who came up with the trickle down theory….? I tested it in the lab and it worked. When I fed a big bull a ton of hay, it trickled down alright….
We refer to that guy as a comemierda where I come from. Go figure….
By the way, great post, “Unconscionable Math”. What a racket!
Ciao,
Econolicious
First of all the entire argument is irrelevant because the country is broke (really) and cannot afford healthcare for the masses unless it is of the ‘two- sticks- rubbed- together- and- wish’ variety.
What I can fathom of the Obama – Pelosi plan is more corporate welfare. There is no part the system – doctors, hospitals, food, transport/exercises, drugs, prevention, long term and senior care – that isn’t completely broken. The proposal to fix this is to throw more printed money at things piecemeal and hope for the best.
Any business – such as healthcare – whose plan revolves around bankrupting its customers … is doomed.
It’s a given that the money is going to flood out of healthcare the same way it’s flooding out of real estate and consumer spending. Healthcare costs represent another bubble. This is one reason why major participants are extending tentative support for government faux ‘reforms’. What is good for Citigroup and AIG is good for America!
Laffer has always been a stooge, Grover Norquist is another; both only exist in the ambit of privilege, easy wealth and cheap energy. All are disappearing fast. Whatever your great- grandparents had for healthcare … that’s what you and other Americans will get … if we somehow get lucky. A smart government would assume that a ‘worst- case- scenario’ will happen and send a team of experts to Cuba to see what kind of system exists there … and copy it here!
steve
“It would be great to kick the trial lawyers in the teeth and radically reform malpractice laws. You know one thing that would probably help? Some sort of national health insurance so people who were injured would not need a lump sum settlement to know that their injuries would be treated for the rest of their lives.”
You know another thing that would probably help? Some sort of central medical advisory panel developing evidence-based treatment paths. Pretty much what Orszag has called for on many occasions in response to the radical regional disparities in the treatment of the same condition that exist in our current “system.”
Besides addressing costs directly, setting such treatment paths could go a long way toward establishing the appropriate “standard of care” at the heart of tort claims. No need to over-prescribe medical care simply to avoid liability, as Republicans like to allege is common. Doctors, follow panel guidelines and establish prima facie “reasonable care.” Simple.
I wonder why Republicans appear no more enthusiastic about this — death panels anyone? — than your proposal of national health insurance? Running downstairs on Christmas morning pretty much sums it up.
[...] on health care that can most charitably be described as a less intellectually rigorous version of Arthur Laffer. John Mackey also happens to run a pretty good store. Like Howard Schultz, he took luxury [...]