Monday, November 29, 2010


5. The differential payment rates across Medicare, Medicaid, and private insurance are becoming unsustainable more quickly than I had anticipated; see for instance the link in #4.  Further reforms will be required more quickly than had been anticipated, but it's not obvious how such reforms should proceed.  It's hard to either upgrade the Medicaid (and Medicare) rates or to downgrade the private insurance rates.  Monitor this one closely, because it is likely to prove the breaking point of our health care status quo, with or without the Obama plan.  (This is our version of the ticking time bomb within the eurozone, namely that natural rates of growth split apart a distortion, increasingly, over time.)

6. I am less worried about mandate enforcement than I used to be; Austin Frakt has had good posts on this at TheIncidentalEconomist, see here.

7. I am more worried about employers shedding employees onto the subsidized exchanges than I used to be; Reihan Salam has had good posts on this topic and how it could prove to be a fiscal breaking point for the new law.  You can argue that this is the actual long-run restructuring plan, but unless we are willing to go the "Medicaid for all reimbursement rates" route, I don't see how we afford it.

That's Tyler Cowen of Marginal Revolution. Be sure to check out the link for all nine of his points which constitute a sober assessment of where things stand with the health reform.

Is #5 an argument for or against the "Medicare for All" strategy? I'd say against, at least if we want to continue to demand the level of medical services we currently do. Say we adjusted all payment rates down to current Medicare rates, what would be the effect on supply? If you believe the AMA, it would be dire.

WRT #7 I was of the opinion that real health insurance reform should have eliminated the current system of employer provided insurance. Obamacare instead made this relationship stronger, at least notionally.

As Cowen mentions, perhaps one of the unintended consequences of the reform will be to weaken the link between employment and insurance. If removing this link really is key to fixing health insurance in this country, then it would appear we are taking a long, slow, painful route to get to that point.

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