Levitt on health care

Freakonomics author Steven Levitt gives his take on Obamacare and health care more generally:

Well, my friends in the Obama Administration aren’t going to be very happy with me, but I really, I don’t think it solved any of the important problems that we’re facing with healthcare. So virtually every economist will tell you that there were two things you needed to do to healthcare reform to materially improve the situation. The first was to break the link between the provision of healthcare and employment. And that is just an archaic element of our healthcare system, which really makes no sense.

And yet because of tax subsidies, it’s the way most people get their healthcare — through their employer. It shouldn’t be. There’s no good economic justification for it. And yet, if anything, I think this healthcare reform bill actually strengthened that link. (emphasis mine)

...An even bigger problem with health care today, which was not addressed at all in the reform bill, is that people aren't paying for the services they get. It's virtually the only part of the economy where I can go out and get any service I want—cancer treatment, open heart surgery, have a wart removed, whatever it is—and I pay $3 for it or $5 for it or nothing, even if it costs $50,000 or $100,000.

I mean, imagine if you had the same situation with automobiles. Where I could show up at the car dealership and I could say, ‘I want the Mercedes for free.’ Well, people say, ‘You can’t have the Mercedes for free. You have to pay $50,000 for it.’ You say, ‘Why not, I have an inalienable right to free healthcare. Right? Why don’t I have an inalienable right to a free Mercedes?’

And to me it just makes no sense. Health care is just like any other good in the economy, and because we aren't charging people for it -- what it costs to produce -- people are inefficiently consuming it. They're making the wrong choices. You can tolerate that if it were a small part of the economy, but health care is 15-20 percent of GDP, and so we have to start treating it as what it is, which is another good.

Now, people hate to talk about this trade-off between health and life and money. But the fact is, if not today sometime in the not too distant future we're going to have to make trade-offs, such as my grandmother is in a vegetative state, being kept alive by machines pumping her heart. Instead of the state paying for that, they're going to say, well look, you've got for pay for some of this. You can either take the $150,000 and we'll keep your grandmother alive, or you can put your kids through college. Your choice.

People are going to have to start making those tough choices, and it won't be pretty and it won't be fun or happy. Economics is the study of scarcity, and in a world where health care becomes more and more costly, the scarcity is going to be more and more binding and we're going to have to make those tough choices that are imbued with this moral element but nonetheless it's an economic choice when you get down to it.

This is exactly right. All of it. I hope to follow up on this with a post about the morality and reality of health care sometime this weekend.

The third party payer problem

Pete DuPont gets to the heart of what is wrong with health care in the US:

Health-care payments in America have changed over time. In the past 40 years people's out-of-pocket spending has fallen from 50% of medical expenditures to 10%, while the portion picked up by private insurance companies has increased from 25% to 40%. The portion paid by Medicare and Medicaid -- that is, by taxpayers -- has increased from 25% to 50%. Medicare expenditures averaged $8,300 per beneficiary in 2006 and increased to $11,743 in 2009.

The chief reason behind surging health care inflation is no mystery: the less skin people have in the game, the less incentive they have to care about costs. This is not the offspring of a free market in health care, but rather government subsidization of employer-provided insurance through the tax code (a nonsensical linkage which reduces labor flexibility) as well as government insurance programs (indeed, the public sector accounts for 45-56.1 percent of total US health care spending).

The first step towards genuine health care reform is reducing the role played by private insurance and Medicare/aid. Secondary reforms should address the role of regulatory barriers that restrict the supply of doctors, procedures other medical professionals are allowed to perform and licensure restrictions (professionals licensed in one state must frequently become relicensed in another state, often no easy task).

Other areas deserving of attention are the lack of a national market in health insurance and the role played by the FDA, whose incentive structure is biased in favor of lengthy, costly reviews.

Unfortunately, ObamaCare only further solidifies the role of insurance while addressing none of the other areas. This will not end well.

Obamacare update

They passed the bill, and now we're finding out what's in it:

Dr. Sandy Chung, a Virginia pediatrician, says she is inundated with requests to prescribe nonprescription drugs because of the new health law.

Patients are demanding doctors' orders for over-the-counter products because of a provision in the health-care overhaul that slipped past nearly everyone's radar. It says people who want a tax break to buy such items with what's known as flexible-spending accounts need to get a prescription first.

The result is that Americans are visiting their doctors before making a trip to the drugstore, hoping their physician will help them out by writing the prescription. The new requirements create not only an added burden for doctors, but also new complications for retailers and pharmacies.

"It drives up the cost of health care as opposed to reducing it," says Dr. Chung, who rejected much of a 10-item request from a mother of four that included pain relievers and children's cold medicine.

Though the new rules on over-the-counter drugs amount to a small part of the massive overhaul of the health-care system, the unintended side effects show how difficult it can be to predict how such game-changing legislation will play out in the real world.

Some doctors, irked by the paperwork and worried about lawsuits, are balking at writing the new prescriptions. Pharmacists and retailers say the changes mean they have to apply a personalized label on some 15,000 different everyday products for customers paying with certain debit cards.

In other words, rather than reduce health care costs the "reform" legislation is actually having the exact opposite effect. Now meet the geniuses that dreamed up this particular section of the legislation:

...Peeling back tax breaks for health plans was on the table in 2009 when lawmakers began drafting the health overhaul. Inside the Senate Finance Committee, aides to three Democratic and three Republican senators hashed out the blueprint for what ultimately became the final bill.

Some big ideas—like limiting the tax break for employer-sponsored health insurance—lacked support, so committee aides lowered their sights. Making people pay the full price for over-the-counter medicines seemed like a way to reduce wasteful spending and generate money for the law's main goal: expanding health insurance to nearly every American.

An objection came from William Pewen, senior health-policy adviser to Maine Republican Sen. Olympia Snowe.

He believed the tax-free treatment could lower health costs and thought everyone should have access to a flexible-spending account. He told the group that he takes over-the-counter Prilosec, a heartburn medication, which meant he didn't need a more expensive prescription drug.

"I didn't want to see us set up perverse incentives for people to use more costly drugs than they needed," Mr. Pewen says.

He proposed a compromise that he concedes "was not the ideal solution." People could spend tax-free dollars on over-the-counter drugs, but only if they got a doctor's prescription. It wasn't exactly a new idea: Medicaid, the federal-state program for the poor, already covers some over-the-counter drugs if they are prescribed.

So essentially a staffer told an anecdote, heads nodded, a compromise was struck and the language made its ways into the bill. This is how the sausage gets made. But it gets worse:

...Congress's number-crunchers estimated the change would generate $5 billion over a decade. Hardly anyone noticed it, even as it stayed in the bill through passage in March 2010.

Only after the president's signature was dry did the American Medical Association realize what had happened and send a letter to the government warning of unintended consequences, including more office visits and extra paperwork.

Sure enough, when the change took effect Jan. 1, patients began bringing lists of over-the-counter drugs to office visits and also requesting over-the-counter prescriptions by phone, doctors says.

It's almost as if no one had the chance to fully read and digest a 2,000 bill before they voted on it! And given that the congressional "number crunchers" -- what I am guessing is a reference to the CBO -- scored the measure as a $5 billion revenue gain while the actual impact is proving to be much more uncertain, one can't help but wonder how many of the legislation's myriad other provisions will also turn out to produce less revenue than anticipated. And remember, a big selling point of Obamacare was that it was fiscally responsible, an argument sure to prove ever more fictitious as time passes.

To summarize, a group of central planners crafted far-reaching legislation based on little more than intuition and anecdote, and are now meeting unintended consequences. Welcome to the knowledge problem.

Related: Similar thoughts from Professor Bainbridge.

Update: Peter Suderman comments.

Recommended reading: Health care edition

• Mark Perry has more from Milton Friedman here and also highlights the coming doctor shortage (make sure to check the comments section).

• Michael Cannon says that claims by the Department of Health and Human Services about coverage denials due to pre-existing conditions are wildly exaggerated. But why let facts get in the way of a good argument?

• Jennifer Rubin has some interesting highlights from a recent hearing on Obamacare.

• Peter Suderman on Obamacare's opaque waiver process.

Obamacare update

Earlier this week there was this:

Harvard Pilgrim Health Care has notified customers that it will drop its Medicare Advantage health insurance program at the end of the year, forcing 22,000 senior citizens in Massachusetts, New Hampshire, and Maine to seek alternative supplemental coverage.

The decision by Wellesley-based Harvard Pilgrim, the state’s second-largest health insurer, was prompted by a freeze in federal reimbursements and a new requirement that insurers offering the kind of product sold by Harvard Pilgrim — a Medicare Advantage private fee for service plan — form a contracted network of doctors who agree to participate for a negotiated amount of money. Under current rules, patients can seek care from any doctor.

Now today's Wall Street Journal reports this:

McDonald's Corp. has warned federal regulators that it could drop its health insurance plan for nearly 30,000 hourly restaurant workers unless regulators waive a new requirement of the U.S. health overhaul.

The move is one of the clearest indications that new rules may disrupt workers' health plans as the law ripples through the real world.

Trade groups representing restaurants and retailers say low-wage employers might halt their coverage if the government doesn't loosen a requirement for "mini-med" plans, which offer limited benefits to some 1.4 million Americans.

Hope and change.

Update: A thought: there are one of two possibilities at work here. Either this is a totally unanticipated consequence of Obamacare, which of course speaks to how ill-conceived this whole thing is, or -- for the more conspiracy-minded -- Obamacare's architects knew exactly what they were doing and it's a deliberate effort to blow up the private health insurance industry, thereby prompting the public to clamor for the statist holy grail of "single-payer" government-run health care.

Update: Thoughts from Peter Suderman.

Update: Now a McDonald's senior VP is denying the report.

Update: Analysis from Michael Cannon and John Stossel.

Update: It's happened again:

The Principal Financial Group announced on Thursday that it planned to stop selling health insurance, another sign of upheaval emerging among insurers as the new federal health law starts to take effect.

The company, based in Iowa, provides coverage to about 840,000 people who receive their insurance through an employer.

Principal’s decision closely tracks moves by other insurers that have indicated in recent weeks that they plan to drop out of certain segments of the market, like the business of selling child-only policies. State regulators say some insurance companies are already threatening to leave particular markets because of the new law.

It's almost like a trend or something.

Chart of the day

Source: The Wall Street Journal

Remember how Obamacare was going to reign in health care spending? Well, not so much. Peter Suderman comments on this latest news here.

Related: Tom Bevan notes an under the radar Obamacare story here.

Update: Is the Obama administration now threatening health insurers?

For the record

Let's try to add up some of the more notable government interventions in US healthcare:

• Medicaid and Medicare account for 35 percent of total US healthcare expenditures.

• More than 20 percent of US hospitals are owned by governments.

• The Tax Policy Center, run by the Brookings Institution and Urban Institute, conclude that "The current tax treatment of health insurance encourages taxpayers to purchase overly generous health insurance and consequently to consume more health care than they would in an unsubsidized market."

• A number of US states have passed measures which heavily distort health care markets, ranging from regulations against discrimination against those with pre-existing conditions (the equivalent of purchasing home insurance while it is on fire) to attempts to create universal coverage. Some of the more notable examples include New York, Massachusetts, Maine, Oregon and Tennessee.

• Many states have licensing regulations that do not recognize licenses from other states. For example, I know for a fact that a physical therapist practicing in Washington DC and licensed in Colorado would have to complete a licensing requirement in California that would take at least six months.

• A private sector organization known as The Joint Commission operates accreditation programs for a fee to subscriber hospitals and other health care organizations. These accreditations are recognized by a majority of state governments a condition of licensure and the receipt of Medicaid reimbursement, thus granting it the power to deny market entry.

• Various other government interventions serve to limit the supply of health care professionals, including physicians.

It takes some real cajones to survey the US health care landscape, pre-Obamacare, and declare that the system represents a failure of the free market. Government has created the problem, and more government is held out as the solution. It's an increasingly familiar pattern.

Update: I should have also mentioned the role of state regulations which mandate medical services that insurance must cover, further driving up costs. New Jersey is particularly bad in this regard.

Peter Schiff on health care

Peter Schiff, who is running for US Senate from Connecticut, has some very good thoughts on health care in this interview:

And you have to understand, why is healthcare so expensive? The reason is government involvement in the process. If we had a free market in healthcare, if we had a free market in insurance, there wouldn't be a problem. It wouldn't be so expensive. Healthcare would be getting cheaper every year. After all, with all the new technology and medicine, it should be cheaper, just like cell phones or plasma TVs. Markets bring prices down. That's what happens as you get economies of scale and you become more efficient. But we're being denied that because of government interference.

There are things that we can do to bring down healthcare costs. And it would fall dramatically if we'd simply repeal those regulations that are responsible for the increase. It wouldn't cost the taxpayers anything. The most important thing we can do remove the subsidies for insurance, because people are over-insured. People treat insurance as pre-paid medical. But insurance doesn't work that way. Insurance is for things that are not supposed to happen, or are very unlikely, or are catastrophic and would be expensive. You don't have insurance for the flu or for a sprained ankle, or for childbirth. These are things we know are going to happen and these are things we should save our money for and pay for out of our pocket. When we do that, there are market forces, and people shop around.

If you look at medical care that is not covered by insurance, like eye Lasik surgery, the price comes down every year. It's cheaper to get the surgery today than it was five years ago. And it's more effective. The same thing with cosmetic surgery. That's getting less expensive. In fact one of the reasons that the best and brightest doctors want to go into cosmetic surgery is because there's no insurance. And so we need to get the government out, and that is a function of the tax return.

The government has to stop subsidizing insurance so that employees can get wages instead of healthcare benefits. And then they can buy the insurance they want, and they'll care about the cost. And if we get the insurance companies out of it, we can get price discovery. We can get people competing on price. Doctor's don't compete on price right now because nobody cares about the price, because somebody else is paying for it.

My father, who was an insurance agent, before Medicare came along his most popular policy was two dollars per month. That's what it cost for health insurance in this country!

TLP: He was selling health insurance?

Schiff: Yeah, he was an insurance agent. You know, back then people didn't get their insurance from their employer. They bought health insurance the same way they bought life insurance, automobile insurance, fire insurance, and we're not having a crisis in those areas. You don't have your car insurance going up ten or fifteen percent a year because we buy it ourselves, unlike health insurance. So we need to get the government out of it. We need to get the government to stop mandating that the insurance companies cover everything so that we can buy policies for things that we want to cover, not the things that other people think they should cover.

It's like, what if you had to buy a car, and every car had to be fully loaded? You had to get the sports wheels, and you had to get a sun roof, you had to get GPS. You couldn't just buy the basic car. Nobody could afford it. Why can't you buy basic catastrophic insurance without covering mental issues, alcohol abuse, all the things that people might not want. We should have interstate competition—we should have international competition! But it's illegal for Swiss insurance companies to offer insurance to Americans. Why? Why can't I buy insurance from a Japanese insurance company? We can buy foreign cars, why can't we buy foreign insurance?

Competition is good. It brings down prices. So get government out and we won't have to worry. You know, so much medicine is defensive, and malpractice insurance is so high. One of the reasons we have a shortage of doctors is because they can't afford the insurance we've made mandatory for being a doctor. So there's so many ways government is screwing up healthcare. And now since they screwed it up so much, now they're proposing this Obamacare. This is the camel's nose under the tent, because this is going to fail.

This is going to be the beginning to single-payer, socialized medicine. That is what's coming. Because the government constantly interferes with markets, they screw it up, and then blame the problems on the free market, even though it's their fault. And then they use that as an excuse to get even more involved. And ultimately they completely screw it up. If you're going to want to get healthcare, you're going to have to go to another country for it.

This is just so dead on. We need to replace the Chuck Schumers of the Senate with Peter Schiffs.

Medical tourism

A colonoscopy costs 4% in Costa Rica of what it costs in the US. Wages alone do not account for this difference. The waste and potential for cost savings in our system through greater competition and the free market are enormous.

HT: Mark Perry

Shopping around, health care edition

Here's a great example of what's wrong with health care in this country:

I wanted to have a small epidermoid cyst removed from my back. The first practice I visited was a dermatologist's office, which deals primarily with insured customers and can afford to charge exorbitant rates. I explained to the assistant on my first consulting visit that I didn't have health insurance — I choose not to — and asked how much the procedure would cost if I paid cash. She quoted me $700 for a riskless procedure that takes about 15 to 20 minutes to perform, and would not in this instance be performed by the dermatologist, but by the assistant herself. As I explained to the students in the public-health-policy class, the fact that there are very basic procedures that cost the equivalent of $2,100 an hour is a glaring sign that the market's normal price mechanism has been broken.

On the recommendation of a friend, I decided to visit another medical practice, Country Doctor, which deals mostly with lower-income patients who do not have health insurance. Because its customers pay out of pocket, Country Doctor has a much stronger incentive to charge prices that its customers are willing to pay up front. When I had the procedure to remove the cyst done at Country Doctor, it was performed by an actual doctor, and it cost less than $50.

It would therefore seem that in order to reduce health care costs a good place to start would be reducing the central role of health insurance. Instead, the Obama administration has done the opposite by ordering every American to purchase it. This will not end well.

By the way, also make sure to read the entire article, which is excellent throughout. It also makes some good points about intellectual property that warrant consideration. My own skepticism about the value of strong intellectual property rights has grown, particularly since reading this book which casts doubt on its usefulness.

ObamaCare cost update

John Hasnas, a super guy I met while in college, wrote the following about being a libertarian:

Being a libertarian means living with an almost unendurable level of frustration. It means being subject to unending scorn and derision despite being inevitably proven correct by events.

I think about that quote a lot lately, especially when I read stuff like this:

President Barack Obama's health care overhaul law will increase the nation's health care tab instead of bringing costs down, government economic forecasters concluded Thursday in a sobering assessment of the sweeping legislation.

A report by economic experts at the Health and Human Services Department said the health care remake will achieve Obama's aim of expanding health insurance — adding 34 million Americans to the coverage rolls.

But the analysis also found that the law falls short of the president's twin goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years. That increase could get bigger, however, since the report also warned that Medicare cuts in the law may be unrealistic and unsustainable, forcing lawmakers to roll them back.

The health care reform bill passed earlier this year was a sham and deception of epic proportions. Any legislator who voted for it out of a deep-held belief it will improve the country's fiscal standing should immediately resign their office, as they are obviously too mentally incapacitated to fulfill their duties.

Health care update

Think Democrats are through with health care for the year? Think again:

Fearing that health insurance premiums may shoot up in the next few years, Senate Democrats laid a foundation on Tuesday for federal regulation of rates, four weeks after President Obama signed a law intended to rein in soaring health costs.

After a hearing on the issue, the chairman of the Senate health committee, Tom Harkin, Democrat of Iowa, said he intended to move this year on legislation that would “provide an important check on unjustified premiums.”

Mr. Harkin praised a bill introduced by Senator Dianne Feinstein, Democrat of California, that would give the secretary of health and human services the power to review premiums and block “any rate increase found to be unreasonable.” Under the bill, the federal government could regulate rates in states where state officials did not have “sufficient authority and capability” to do so.

The White House offered a similar proposal in the weeks leading up to approval of the health care legislation last month. But it was omitted from the final measure, in part for procedural reasons.

Reviving the proposal on Tuesday, Mr. Harkin said: “Rate review authority is needed to protect consumers from insurance companies’ jacking up premiums simply because they can. Protections must be in place to ensure that companies do not take advantage of current market conditions before health reform fundamentally changes the way they do business in 2014.”

Welcome to the United States, where permission must be sought from government bureaucrats and politicians for companies to set their prices. Which side won the Cold War again?

This should come as no surprise as Massachusetts, the model for ObamaCare, also requires insurance premium increases to be granted the government's imprimatur. Speaking of Massachusetts, health care's ghost of Christmas future, check out the latest developments from the Bay State:

Health insurers are starting to sell policies that largely bar consumers from receiving medical care at popular but expensive hospitals such as Massachusetts General and Brigham and Women’s — a once radical idea that is gaining traction as a way to control soaring health care costs.

Governor Deval Patrick and Senate President Therese Murray have included such restricted provider networks in their recent legislative proposals to control rising insurance rates. And the state this month began offering limited-network plans to 300,000 state employees, retirees, and their families, promising 20 percent discounts on premiums if they are willing to give up access to some of the Boston area’s most renowned hospitals.

At least they are starting to figure out that even supposed universal coverage doesn't eliminate the need for trade-offs between cost and quality of care.

The New York health insurance mess

It's interesting to behold all of the things the media is discovering now that health care reform has passed. Today's New York Times examines the impact of New York state law which, similar to ObamaCare, prohibits health insurance discrimination against those with pre-existing conditions. It has -- surprise! -- resulted in incredibly high rates and an insurance "death spiral":

New York’s insurance system has been a working laboratory for the core provision of the new federal health care law — insurance even for those who are already sick and facing huge medical bills — and an expensive lesson in unplanned consequences. Premiums for individual and small group policies have risen so high that state officials and patients’ advocates say that New York’s extensive insurance safety net for people like Ms. Welles is falling apart.

The problem stems in part from the state’s high medical costs and in part from its stringent requirements for insurance companies in the individual and small group market. In 1993, motivated by stories of suffering AIDS patients, the state became one of the first to require insurers to extend individual or small group coverage to anyone with pre-existing illnesses.

New York also became one of the few states that require insurers within each region of the state to charge the same rates for the same benefits, regardless of whether people are old or young, male or female, smokers or nonsmokers, high risk or low risk.

Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where many of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the “adverse selection death spiral.”

“You have a mandate that’s accessible in theory, but not in practice, because it’s too expensive,” said Mark P. Scherzer, a consumer lawyer and counsel to New Yorkers for Accessible Health Coverage, an advocacy group. “What you get left clinging to the life raft is the population that tends to have pretty high health needs.”

Since 2001, the number of people who bought comprehensive individual policies through HMOs in New York has plummeted to about 31,000 from about 128,000, according to the State Insurance Department.

At the same time, New York has the highest average annual premiums for individual policies: $6,630 for single people and $13,296 for families in mid-2009, more than double the nationwide average, according to America’s Health Insurance Plans, an industry group.

It's not difficult to imagine how this played itself out back in the early 1990s when these regulations were passed. Left-wing politicians and other self-appointed leaders of the armies of compassion argued that various people with urgent medical needs, including AIDS sufferers, were unable to purchase health insurance (about as surprising as those with burning houses unable to purchase home insurance).

The insurance companies were castigated as greedy and evil by these politicians and other paragons of virtue, and calls for everyone to be guaranteed access to health insurance soon echoed throughout the halls of power. Those with the temerity to speak up against this move, who suggested that it would perhaps actually make the situation worse off, were branded as uncaring corporate lackeys motivated by a ruthless pursuit of profits, which are bad by definition.

The road was approved, paved over with good intentions, and the march to insurance hell began.

The Times notes, however, that the state government did throw the insurance companies a bone in that they were -- wow, this is really generous of you guys -- allowed to set prices within certain profit margins. However, even that limited concession is now being threatened:

As part of the political bargain to get insurance companies to support insurance for all regardless of risk, called community rating, New York State deregulated the market, allowing insurers to charge as much as they wanted within certain profit margins. The state can require companies to retroactively refund overcharges to consumers, but it seldom does.

Now, Gov. David A. Paterson has proposed to reinstate prior approval by the state of rate increases for the small group and individual plans, as a way to reverse New York’s death spiral of healthy people fleeing the market.

...[Mark L. Wagar, the president of Empire BlueCross BlueShield] also said that New York’s medical costs, universally acknowledged as being among the highest in the country, were a factor in its high premiums. He noted that the state already regulated insurance company profit margins, allowing them to allocate no more than 25 cents of every dollar for profits and administration in small group plans and 20 cents for individual plans. The governor is proposing to lower both margins to 15 percent.

Troy Oechsner, deputy superintendent for health at the State Insurance Department, blamed the insurance companies for raising rates beyond what was necessary — by being off on their projections — thus accelerating the exodus of healthy people.

“What we saw them do is they really jacked up rates because they could,” Mr. Oechsner said.

To a large extent, insurance companies police themselves, according to Mr. Oechsner. From 2000 to 2007, insurance plans reported that they exceeded state profit allowances just 3 percent of the time, resulting in about $48 million in refunds to policyholders, Mr. Oechsner said. Yet subsequent Insurance Department investigations found that insurers should have refunded three times as much.

State profit allowances? A system where businessmen must approach state-appointed commissars for permission to make money? Is this New York or the Soviet Union? Moscow on the Hudson indeed. As Michael Moore might say, dude, where's my country?

In any case, defenders of ObamaCare argue that we shouldn't worry about the New York scenario playing out nationally because, in a blow for freedom and liberty, the federal government will avoid the death spiral by requiring all citizens to purchase health insurance:

The new federal health care law tries to avoid the death spiral by requiring everyone to have insurance and penalizing those who do not, as well as offering subsidies to low-income customers. But analysts say that provision could prove meaningless if the government does not vigorously enforce the penalties, as insurance companies fear, or if too many people decide it is cheaper to pay the penalty and opt out.

Under the federal law, those who refuse coverage will have to pay an annual penalty of $695 per person, up to $2,085 per family, or 2.5 percent of their household income, whichever is greater. The penalty will be phased in from 2014 to 2016.

“In this new marketplace that we envision, this requirement that everybody be covered, that should draw better, healthier people into the insurance pool, which should bring down rates,” said Mark Hall, a professor of law and public health at Wake Forest University. But he added, “You have to sort of take a leap of faith that that’s going to happen.”

Of course, we all know how well this system is playing out in Massachusetts.

It's all so infuriating. Health care "reform" measures based on expanded government intervention have failed everywhere they've been tried. They have failed in New York. Failed in Massachusetts. Failed in Tennessee, Maine and Oregon. Left-wing politicians are batting .000 with their various health care initiatives. And still they demand yet more power, forever promising this time will be different.

Related: Also see this piece from Steven Malanga on the New York health insurance follies.

Reconciliation

The Washington Post takes a look at what's inside the health care reconciliation bill:

Although much smaller than the bill Obama has signed, the measure would make major changes to that legislation to bring the final package in line with a compromise worked out between House and Senate leaders. Federal subsidies would be expanded slightly for people who need help buying insurance, and the coverage gap known as the doughnut hole in the Medicare prescription drug program would be closed by 2020. Seniors who fall into the doughnut hole this year would be eligible for a $250 rebate.

The measure would also change the annual penalty on individuals who do not purchase insurance to at least $695 a year or as much as 2.5 percent of annual income. And it would dramatically increase the penalty facing employers who do not offer affordable coverage, to as much as $2,000 per worker.

The most significant change, however, would be the method of financing the overhaul. A new 40 percent excise tax on high-cost insurance policies would be delayed until 2018 and replaced by a new tax on the nation's highest earners. Families earning more than $250,000 a year would for the first time have to pay a 3.8 percent Medicare payroll tax on capital gains, dividends and other investment income.

In other words we find increased subsidies (which are simply wealth transfers), penalties of at least $695 for failing to purchase a product from health insurance corporations (or 2.5 percent of annual income, which is more than $695 for anyone making at least $27,801), penalties for employers who do not offer insurance (a great disincentive to hiring at a time of recession and further entrenchment of the employer-health insurance relationship, which should be viewed as the opposite of reform), and a further delay for taxes on high-cost insurance (which are hated by Democrat-allied unions and will probably never happen in 2018 or any other time) in exchange for higher taxes on the rich, who have far fewer votes than the rest of the population.

This should work out splendidly.

RomneyCare update

Longtime readers of this blog are already aware that RomneyCare -- a package of health care reform measures enacted in Massachusetts in 2006 to provide universal insurance coverage -- is shaping up as quite the disaster. While failed state-level efforts at improving health care through expanded government intervention are nothing new, RomneyCare is particularly instructive as it is essentially a scaled-down version of the current health care reform legislation in Congress. Just call it the Mini-Me of ObamaCare or ObamaCare Jr.

Now in the midst of our health care debate comes fresh evidence of RomneyCare's vast problems from none other than the Massachusetts state treasurer, who warns that enactment of RomneyCare on a national level would bankrupt the country and ruin the economy:

Treasurer Timothy P. Cahill – a former Democrat running as an independent for governor – said the local plan enacted in 2006 has succeeded only because of huge subsidies and favorable regulatory changes from the federal government.

“Who, exactly, is going to bail out the federal government if this plan goes national?” he asked.

Cahill made his remarks after Gov. Deval L. Patrick, a Democrat, accused him and Republican gubernatorial candidate Charles D. Baker of being silent amid the state and national health care debates.

Cahill cited quotations in which he has called for the state to abandon its plan, and for the federal government not to match it.

He also gave reporters a copy of a recent state ledger sheet, showing the state’s Medicaid program ballooning from $7.5 billion to a projected $9.2 billion since the plan was adopted. Meanwhile, of the 407,000 newly insured, only 32 percent paid for private insurance wholly by themselves.

The remainder have received partial or total taxpayer subsidies to buy the insurance coverage required by the plan.

The Obama administration is asking the House and Senate to approve a national plan that includes a similar “individual mandate,” as well as an entity designed to match buyers with private health insurance plans.

Cahill said the Massachusetts equivalent, the Connector, had assisted only 5 percent of those who bought private insurance without any type of government assistance.

And he said that while the Massachusetts program has increased access to health insurance, it has nothing to rein in underlying cost increases, meaning it is steering more people to a broken system.

“If President (Barack) Obama and the Democrats repeat the mistake of the health insurance reform adopted here in Massachusetts on a national level, they will threaten to wipe out the American economy within four years,” the treasurer said.

Cahill is hardly alone in his indictment of the Massachusetts experiment. Writing in today's Wall Street Journal, Grace-Marie Turner of the Galen Institute says RomneyCare has not achieved many of its stated aims. Among the deleterious effects include a growing strain on the supply of health care professionals:

The Bay State is also suffering from what the Massachusetts Medical Society calls a "critical shortage" of primary-care physicians. As one would expect, expanded insurance has caused an increase in demand for medical services. But there hasn't been a corresponding increase in the number of doctors.

As a result, many patients are insured in name only: They have health coverage but can't find a doctor. Fifty-six percent of Massachusetts internal medicine physicians no longer are accepting new patients, according to a 2009 physician work-force study conducted by the Massachusetts Medical Society. For new patients who do get an appointment with a primary-care doctor, the average waiting time is 44 days, the Medical Society found.As Dr. Sandra Schneider, the vice president of the American College of Emergency Physicians, told the Boston Globe last April, "Just because you have insurance doesn't mean there's a [primary care] physician who can see you."

The difficulties in getting primary care have led to an increasing number of patients who rely on emergency rooms for basic medical services. Emergency room visits jumped 7% between 2005 and 2007. Officials have determined that half of those added ER visits didn't actually require immediate treatment and could have been dealt with at a doctor's office—if patients could have found one.

Mr. Romney insists that in Massachusetts, "We didn't do what President Obama's doing, which is putting controls on our system of premiums for private insurance companies."

But that is what's happening now: Faced with soaring medical expenses, Gov. Deval Patrick, Mr. Romney's successor, wants to cap insurance rate increases at 4.8%, not the 8% to 32% increases the companies have requested for April 1. Three of the four major health insurers in Massachusetts showed operating losses for 2009. If their rates are capped, they say they'll be forced to cut payments to health providers, putting further pressure on doctors and fragile hospitals.

RomneyCare is a gaze over the precipice as Congressional Democrats and the Obama Administration march the country towards the health care cliff.

Health care newspeak

President Obama speaking today in Strongsville, Ohio:

I don't believe we should give the government or the insurance companies more control over health care in America. I believe it's time to give you - the American people - more control over your own health insurance.

Wait, what? Really? The fresh-off-the-presses health care reconciliation bill weighs in at an astonishing 2,309 pages and President Obama has the audacity to claim he doesn't think the government should be given more control over health care in America? What exactly does he think is in it if not reams of new regulations and restrictions on health care?

As for insurance companies, their fingerprints are all over the health care legislation which, after all, forces the American public to buy their product.

If President Obama subscribes to his own rhetoric he will waste no time in vetoing this health care bill should it pass.

Health care and the emergency room

One of the justfications that has been advanced in favor of health care reform is that it will help drive down costs by eliminating the expensive over-use of emergency rooms. The logic is that the expansion of health insurance coverage should reduce the number of people who utilize emergency rooms for non-emergency care (while doctors can refuse to see a patient who lacks health insurance, emergency rooms cannot). In addition, patients will be more likely to visit doctors to address health problems before they become major issues requiring emergency room care.

The problem with this theory is that, even if true, the numbers just don't suggest any major savings:

While the past decade has seen dramatic increases in the use of emergency care and ER crowding, ER care is but a tiny portion of the U.S. health care pie: less than 3 percent. The claim that unnecessary visits are clogging the emergency care system is also untrue: Just 12 percent of ER visits are not urgent. People also tend to think ER visits cost far more than primary care, but even this is disputable. In fact, the marginal cost of treating less acute patients in the ER is lower than paying off-hours primary care doctors, as ERs are already open 24/7 to handle life-threatening emergencies.

In fact, if the Obama Administration were truly serious about getting a handle on surging health care costs, it would seek to reduce, not expand, the role played by health insurance. As George Will argues in today's column:

Employer-paid insurance is central to what David Gratzer of the Manhattan Institute calls "the 12 cent problem." That is how much of every health care dollar is spent by the person receiving the care. Hence Americans' buffet mentality -- we paid at the door to the health care feast, so let's consume all we can.

Expanding a major cost driver -- insurance -- but citing the comparatively minor cost driver of emergency room care is simply non-sensical. Then again, the entire health care debate is best explained as an attempt to expand government power rather than improve the state of health care.

HT: Freakonomics.

The sordid history of Medicare

Yesterday I linked to Don Boudreaux's excellent letter responding to a recent NPR story on Medicare. I fear I may have given the NPR report short shrift, however, as the information contained is really deserving of an entire blog post. A close reading provides an excellent summary of the dangers of good intentions, the virtues of libertarianism and why government should stay as far away as possible from health care.

David Kestenbaum and Chana Joffe-Walt from our Planet Money team report that doctor pay has confounded policy wonks, economists and presidents for decades.

CHANA JOFFE-WALT: In 1965, Joe Califano had to answer a question. He didn't know it was such a big question, or a question that would change the course of health care in American for the next five decades. It just seemed simple: How should the government pay doctors?

DAVID KESTENBAUM: Califano was President Lyndon Johnson's adviser for domestic affairs. And the government was about to get into the health insurance business in a huge way - about to launch the largest health insurance plan we've ever had: Medicare. But the idea made doctors nervous, so LBJ, Califano and lawmakers made what seemed like a small concession. The government told doctors: We will pay you for every procedure you do. How much will we pay you? Whatever you think is right.

I wonder how many people struggle with how to compensate those who render them services. Personally, I have never found it that difficult. If a plumber or auto mechanic consistently finds that the only solution involves a whole slew of expensive parts replacements and labor, there are a number of steps one can take: Go elsewhere for another estimate. Ask friends for names of reputable service providers they use. Scour the internet to see if the information you find dovetails with what the plumber or mechanic are telling you. And if, after paying the person and discovering the problem still persists, it might be worth shunning them entirely and opting for a competitor.

The government and Medicare, however, have little access to that information. How do they know if the doctor was earnestly looking out for the best interests of the patient or just looking to run up the bill by piling on unnecessary procedures? They can't.

This dearth of knowledge results in bad decisions and outcomes, such as simply paying doctors whatever they demanded. Predictably, the move led to abuse and wildly inflated costs.

JOFFE-WALT: Califano shakes his head describing that call now. But he says, look, the government needed doctors to participate. If doctors didn't accept Medicare, wouldn't see patients covered by Medicare, the whole thing would fail.

Mr. JOSEPH CALIFANO (Former Adviser, Domestic Affairs): We were on edge. We were on edge.

KESTENBAUM: About?

Mr. CALIFANO: About whether doctors would agree to take Medicare patients.

KESTENBAUM: Why were you worried they wouldn't participate? You were going to pay them whatever they wanted.

Mr. CALIFANO: They were so opposed to it. I mean, they reluctantly - believe me, within two years, they love it. But they really didn't understand what a bonanza this was going to be for them.

A graduate of Harvard Law School and currently in the employ of Columbia University, it's not at all obvious that Califano lacks for intelligence. Nevertheless, he opted for a system in which the main goal was not the careful stewardship of taxpayer dollars, but the participation of doctors. That was the metric he was being measured by, the result being that doctors received a "bonanza" while taxpayers were left feeling a bit lighter in the wallet. Such are the incentives that bureaucrats operate under.

KESTENBAUM: Turns out, doctors had been giving out a lot of free care to old people and now they were going to get paid for that, and within limits, whatever they asked for.

Dr. Lucian Leape was a practicing surgeon at the time.

Dr. LUCIAN LEAPE (Surgeon): We found out what the general fee for our service was and charged that or maybe added 10 percent, 'cause of course I'm better than average. And so it was an incentive for doctors to charge what they thought was reasonable for them, and then of course to increase it every year by, say, 5 or 10 percent.

This is simply amazing. While left-wingers commonly would have you believe that government is the only barrier which prevents society from degenerating into a vicious miasma of greed and selfishness, where the poor and the elderly suffer untimely deaths marking the ends of a miserable existence, we find out that prior to the establishment of Medicare society was actually quite compassionate. Doctors rendered free services to those who needed it (there was probably some subsidization as doctors likely charged those who could pay more to make up for their lost income) out of their own free will.

In the name of creating a world where old age didn't automatically mean suffering and hardship, however, liberals managed to throw sand in the gears of this system, if not wreck it completely. Charity previously borne of genuine compassion and free will was now forced upon workers through the confiscation of their earnings in the form of payroll taxes. Doctors, meanwhile, were transformed from societal givers into takers as they took advantage of the system to charge higher rates, the bill for which was presented to the rest of the country.

By varying degrees both doctors and patients were turned into wards of the state.

KESTENBAUM: Medicare solution for how to pay doctors put into cement this idea of fee for service, paying doctors per procedure for every test, every scan. That sounds reasonable, but it served as a nudge to err on the safe side - to do more tests, to do that exploratory surgery.

JOFFE-WALT: LBJ and Califano, all their people, all realized they created something of a monster right away. I mean, two years after Medicare passed, LBJ is pleading with Congress to let him change the way Medicare pays physicians. Califano remembers it well.

Mr. CALIFANO: By late '67, the budget data was just stunning. I mean 1968, we knew that system should be changed. We asked Congress for authority to change it.

JOFFE-WALT: But you just created it.

Mr. CALIFANO: I know it. But we saw what was happening with costs so fast. So fast.

KESTENBAUM: But they couldn't change it. Doctors now like the system. They were getting paid for work they'd previously done for free. And that was that. This system, with all its problems, stayed in place for almost 30 years. Meanwhile, medicine got more expensive.

Medicare, in other words, helped to stoke some of the very health care inflation that we are now promised more government intervention will solve. Medicare's establishment, along with other government moves such as the subsidization of health insurance through the tax code, have helped produce this graph:

(click to enlarge)

Moving along:

JOFFE-WALT: Figuring out prices for health services is really hard. We have an idea of what we should pay for toothpaste. Back surgery, no idea.

KESTENBAUM: And yet, in 1986, one man was convinced he could calculate the prices. An economist at Harvard by the name of William Hsiao; an economist with a small voice and a big, kind of weird idea.

Professor WILLIAM HSIAO (Harvard University): So the question is: Can we find a rational method that could be used to set physicians' fees?

JOFFE-WALT: Professor Hsiao decided, okay, the market does not work for health care services. So I will calculate the right prices for each and everything a doctor does.

KESTENBAUM: Hsiao brought in groups of doctors and asked them some pretty crazy sounding, almost philosophical questions like: How much mental work does a regular checkup require? He had them compare everything they did to one reference point. For surgeons, it might be a hernia repair: How technically hard is it, how stressful, how many supplies? Hsiao had doctors do this for thousands of procedures.

JOFFE-WALT: Congress loved this idea: An economist, a rational way of answering this annoying question. And Congress said if you can really do this, we will adopt your method. We will make it law.

KESTENBAUM: Now, if someone was talking about changing how you got paid, you'd pay attention - and doctors did.

JOFFE-WALT: While Hsiao was creating his Relative Value Scale, he'd invite groups of doctors in to advise him. And the doctors would bring their own advisors, consultants - lobbyists, really. Hsiao wouldn't let them in the room, so they'd sit outside. And then those consultants started coming out with their own relative value studies that were more favorable to whatever group of doctors they represented.

Prof. HSIAO: So then they were trying to trump us. And so it took tremendous amount of work, took years out of my life and my hair turned gray.

JOFFE-WALT: During that time?

Prof. HSIAO: Mm-hmm.

JOFFE-WALT: In 1992, Congress adopted Hsiao's Relative Value Scale, that enormous spreadsheet. And it worked for a while until just a few years later, it didn't anymore.

KESTENBAUM: There are different explanations for what happened. Hsiao blames lobbyists. Lobbyists and doctors say, sorry, health care just is expensive, and most of the time, Medicare actually underpays us.

Unbelievable. In the midst of the Cold War the U.S. government found itself taking a page out of the Soviet Union's playbook by trying to rely on experts instead of markets to calculate prices. It was essentially an act of economic sorcery in which a variety of ingredients were thrown into a cauldron, stirred, some incantations about value and costs recited (okay, maybe not), and a model known as the Relative Value Scale conjured forth. No such methodology could provide a workable tool to govern compensation for something as complicated as the entire health sector, and indeed it didn't, with Hsiao's efforts ultimately for naught.

The entire effort was proof once again that the knowledge of one Really Smart Person, even with credentials as impeccable as Harvard, is no match for the collective intelligence of the millions of people operating in the marketplace.

We already know that Medicare is a disaster. It suffers from huge amounts of fraud, efforts to curtail which have met with little success. Doctors hate it and it's a fiscal nightmare with unfunded obligations to the tune of at least $34 trillion over the next 75 years. In addition to all this we know the program has been plagued since its inception, operating under a model with encouraged costs to skyrocket -- attempts which to fix have confounded experts -- and coming at a significant detriment to civil society.

With such a track record, why would any sane person turn over additional responsibility for health care to the federal government? Real health care reform should involve scaling back such intervention, not the granting of vast new powers.

Related: Scott Grannis posts his own thoughts on the NPR piece.

Health care problems and solutions

Michael Tanner gets to the root of the problem with health care:

Essentially, we all want to live forever. This makes health care a very desirable good. At the same time, the normal restraints imposed by price are frequently lacking. Today, of every dollar spent on health care in this country, just 13 cents is paid for by the person actually consuming the goods or services. Roughly half is paid for by government, and the remainder is covered by private insurance. And, as long as someone else is paying, consumers have every reason to consume as much health care as is available.

On the other, when consumers share in the cost of their health care purchasing decisions, they are more likely to make those decisions based on price and value. Take just one example. If everyone were to receive a CT brain scan every year as part of their annual physical, we would undoubtedly discover a small number of brain cancers much earlier than we otherwise would, perhaps early enough to save the patient's life.

But given the cost of such a scan, adding it to everyone's annual physical would quickly bankrupt the nation. But, if they are spending their own money, consumers will make their own rationing decisions based on price and value. That CT scan that looked so desirable when someone else was paying, may not be so desirable if you have to pay for it yourself. The consumer himself becomes the one who says no.

Think of it this way. If every time you went to the grocery store, someone else paid 87 percent of your bill, not only would you eat a lot more steak and a lot less hamburger - but so would your dog. And food costs would go up for everyone.

The RAND Health Insurance Experiment, the largest study ever done of consumer health purchasing behavior, provides ample evidence that consumers can make informed cost-value decisions about their health care. Under the experiment, insurance deductibles were varied from zero to $1,000. Those with no out-of-pocket costs consumed substantially more health care than those who had to share in the cost of care. Yet, with a few exceptions, the effect on outcomes was minimal.

And, in the real world, we have seen far smaller increases in the cost of those services, like Lasik eye surgery or dental care, that are not generally covered by insurance, than for those procedures that are insured.

When someone else is footing the bill, don't be surprised if consumers aren't terribly concerned about costs. As a result health insurance premiums have exploded to cover those costs.

The solution proffered by Democrats in response to this development is to broaden the number of people covered by insurance, which are disproportionately the young and healthy. By forcing them into the health insurance pool, their premiums act a de facto subsidy from the healthy to the unhealthy.

Even Democrats, however, at least tacitly acknowledge that such a move is insufficient to reign in costs, which is why they have resorted to 2,000+ page legislation that amounts to a Rube Goldberg machine for health care, complete with subsidies and byzantine rules and regulations. Fortunately we don't have to engage in mere theoretical debates as to how this would play out in reality, as a sneak peak of ObamaCare is already available in Massachusetts, the "Mini-Me" of the Democrats' proposed health care overhaul. The Wall Street Journal editorial page takes a look at how that's going:

As with all new entitlements, the rolling cost crisis began almost immediately. For fiscal 2010 taxpayer costs are $47 million over budget, in part due to the recession, and while the $913 million [Governor Deval] Patrick requested for 2011 is a 5% increase over 2010, spending has grown on average 6.7% per year.

Meanwhile, average Massachusetts insurance premiums are now the highest in the nation. Since 2006, they've climbed at an annual rate of 30% in the individual market. Small business costs have increased by 5.8%. Per capita health spending in Massachusetts is now 27% higher than the national average, and 15% higher even after adjusting for local wages and academic research grants. The growth rate is faster too.

Those data come from granular studies about the Massachusetts health markets published recently by the state. Not that anyone on Beacon Hill seems to have to read them, judging by their policy proposals. Besides Mr. Patrick's latest inspiration, last year a blue-ribbon commission endorsed a "global budget"—i.e., an arbitrary government limit on medical spending, with politics shaping what gets covered and what doesn't.

As in Washington, the political class and providers blame insurers, but a better culprit is the state's insurance regulation. Incredibly, the average "medical loss ratio" in Massachusetts for individual policies is 112%—that is, insurers pay $1.12 in benefits for every $1 in premiums.

This is the direct result of forcing insurers to charge everyone more or less the same rate regardless of age or health status, which makes it rational for people to wait to enroll until they need expensive coverage. It is also the result of the state's decision to merge the individual and small-group insurance markets, which transfers individual costs onto small businesses. Mr. Patrick actually justified his plan by citing small-business costs.

Another reason costs are so high is that state regulations have mandated that insurance coverage be far richer than the rest of the country. The average insurance deductible is 28% lower than the U.S. average, and the benefits are more generous with less cost-sharing. Patients are thus insensitive to the cost of care.

To anyone with even an elementary understanding of either government or economics none of this should come as a surprise, as the Massachusetts model does little to change the incentives for health care consumers. Rather it is more concerned with extending the current insurance-based model to as many people as possible. Taking a broken system and trying to extend its reach doesn't make much sense in theory, and it isn't working in reality.

Fortunately there is another way, as illustrated by Indiana Gov. Mitch Daniels, who also has a column in today's WSJ (Speculation is growing, by the way, that Daniels is considering a run for the presidency). Rather than promote more of the same, Daniels has attempted to change the health care paradigm by making consumers more cost-conscious through the introduction of health savings accounts for Indiana government employees. For those unfamiliar, HSAs are accounts into which a certain amount of money is deposited each year -- $2,750 in the case of Indiana public employees -- to cover health expenses. Expenses beyond $2,750 are shared with the state and those above $8,000 are covered completely. Unused funds, meanwhile, are the permanent property of the HSA's owner, providing an incentive to manage the money carefully and seek out low prices.

Daniels explains how the system, introduced five years ago, has worked out. It's a startling contrast with the Massachusetts approach:

State employees enrolled in the consumer-driven plan will save more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative. In the second straight year in which we've been forced to skip salary increases, workers switching to the HSA are adding thousands of dollars to their take-home pay. (Even if an employee had health issues and incurred the maximum out-of-pocket expenses, he would still be hundreds of dollars ahead.) HSA customers seem highly satisfied; only 3% have opted to switch back to the PPO.

The state is saving, too. In a time of severe budgetary stress, Indiana will save at least $20 million in 2010 because of our high HSA enrollment. Mercer calculates the state's total costs are being reduced by 11% solely due to the HSA option.

Most important, we are seeing significant changes in behavior, and consequently lower total costs. In 2009, for example, state workers with the HSA visited emergency rooms and physicians 67% less frequently than co-workers with traditional health care. They were much more likely to use generic drugs than those enrolled in the conventional plan, resulting in an average lower cost per prescription of $18. They were admitted to hospitals less than half as frequently as their colleagues. Differences in health status between the groups account for part of this disparity, but consumer decision-making is, we've found, also a major factor.

Overall, participants in our new plan ran up only $65 in cost for every $100 incurred by their associates under the old coverage. Are HSA participants denying themselves needed care in order to save money? The answer, as far as the state of Indiana and Mercer Consulting can find, is no. There is no evidence HSA members are more likely to defer needed care or common-sense preventive measures such as routine physicals or mammograms.

Despite this success HSAs are nowhere to be found among the reams of health care legislation. In fact, some analysts fear that ObamaCare's goal of moving away from high-deductible plans -- recall that President Obama flatly stated they were not "not health insurance" during last week's health care summit -- could eliminate them as an option entirely.

To conclude, Congressional Democrats and the Obama Administration are pushing an approach which is failing in Massachusetts over an approach which seems to be working in Indiana. Not only that, but their proposed "reforms" may actually remove the latter as a viable option. This can only be explained as either gross ignorance or the triumph of ideology above all else. President Obama, however, assures us that he is not an ideologue. It rings hollow.

Pet health care vs. human health care

Amazing what competition and reduced regulation can accomplish.

Update: Related video: