More on Prices and Health Care: Partial Snark Edition

In light of Mike’s and Mark’s discussion of prices and costs in health care, two things come to miind:

1) The Dear Leader reportedly will focus on health care in the SOTU speech, with particular reference to the uninsured, a topic about which he couldn’t have cared less during his first six years in office. Apparently, he will propose two central “reforms”: tax deductions for the uninsured to buy coverage, and a cap on the deductibility of employee health care benefits.

Maybe I’m missing something here, but this just seems laughable.

The idea of a deduction for the uninsured is silly: the value of deductions increases with tax rate, and most of the uninsured either don’t pay income taxes or at the lowest bracket. Maybe the reporter got it wrong, and it’s actually a credit. That’s better, but it had better be refundable.

Even so, am I wrong in thinking that this is a giveaway to the insurance industry? In what way do individuals have any bargaining power in the market? It’s easy to get more coverage if you want to pay for it, but presumably part of the idea of health care reform is to pay for it through increasing efficiencies. Unlike the Schwarzenegger plan, there is no community rating provision. Moreover, why do we think that it is the most efficient way to deliver benefits is through a refundable tax credit. This puts all the administrative cost onto the beneficiary. Mark? Mike? Anyone?

The idea of refundable credits for the uninsured is the brainchild of Stuart Butler of the Heritage Foundation, who might the only serious conservative health policy thinker in the country: even those who disagree with him respect his work and think that he is committed to solving the problem of the uninsured. But this doesn’t seem to make any sense.

Instead, Bush plans to pay for it not by efficiencies, but rather by restricting the benefit packages of the already insured, through the deductibility cap. I’m sure that there are some extraordinarily lavish plans out there, but is there any serious policy justification for this way to go? If anything, this seems to be a recipe for business to delete coverage, and throwing more people into the individual market.

2) This segues into Mike’s point that “saying “no” to a really costly treatment that might possibly help the particular, named, individual in room 322 who is the dear grandmother of particular individuals gathered around the bed (and that will get the people who provide it closer to a ski condo or a yacht) is not an easy thing to do.”

At some point or other, we are going to have to have a conversation about which of such individuals we think should be covered, and which should not. It’s a fundamental social choice as long as we rely on private insurance that is funded through tax deductibility. I can’t see how capping that deductibility is the best, or even marginally adequate way to have that conversation. In fact, I can’t even see how to have that conversation.

Instead, we hide it by having regulations about what public health programs will cover and what they won’t. The Straussian in me thinks that that might be a decent although highly imperfect way. Maybe it’s the best we can do. In which case, maybe it’s not so bad to promise that “health care costs” will come down.

Author: Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic - Land Use, the Environment and Local Government. He grew up and still lives in the San Fernando Valley, about which he remains immensely proud (to the mystification of his friends and colleagues). After graduating from Yale Law School, and while clerking for a federal appeals court judge in Boston, he decided to return to Los Angeles shortly after the January 1994 Northridge earthquake, reasoning that he would gladly risk tremors in order to avoid the average New England wind chill temperature of negative 55 degrees. Professor Zasloff has a keen interest in world politics; he holds a PhD in the history of American foreign policy from Harvard and an M.Phil. in International Relations from Cambridge University. Much of his recent work concerns the influence of lawyers and legalism in US external relations, and has published articles on these subjects in the New York University Law Review and the Yale Law Journal. More generally, his recent interests focus on the response of public institutions to social problems, and the role of ideology in framing policy responses. Professor Zasloff has long been active in state and local politics and policy. He recently co-authored an article discussing the relationship of Proposition 13 (California's landmark tax limitation initiative) and school finance reform, and served for several years as a senior policy advisor to the Speaker of California Assembly. His practice background reflects these interests: for two years, he represented welfare recipients attempting to obtain child care benefits and microbusinesses in low income areas. He then practiced for two more years at one of Los Angeles' leading public interest environmental and land use firms, challenging poorly planned development and working to expand the network of the city's urban park system. He currently serves as a member of the boards of the Santa Monica Mountains Conservancy (a state agency charged with purchasing and protecting open space), the Los Angeles Center for Law and Justice (the leading legal service firm for low-income clients in east Los Angeles), and Friends of Israel's Environment. Professor Zasloff's other major activity consists in explaining the Triangle Offense to his very patient wife, Kathy.