Is Tort Reform Really the Answer to Rising Health Costs?
Tort Reform is one of the cornerstones of every Republican health care proposal. Normally the tort reform package proposal takes the form of some sort of cap on recoveries. Tort reform is not simply a cost savings device. There are considerations other than cost that weigh heavily in the tort reform debate. My limited concern at this point is whether tort reform can induce meaningful cost savings.
The proponents frequently make the argument that there are too many frivolous malpractice claims. It is true that there are many frivolous claims because, at least in Alabama, the defendant prevails in a very high percentage of the claims filed. Nevertheless, I submit that it is not the frivolous claims that raise the costs most significantly. It is the meritorious claims that cost the big bucks.
Costs of tort reform can be easily identified because virtually every practitioner carries insurance and the premiums define the dominant cost. The complexity comes from the fact that the premiums vary widely based on the specialty. The highest premiums are paid be obstetricians which have been reported to be in the range of $150,000. The reason for this are because babies suffer the most serious damage and have the longest life expectancy extending the time that they may suffer the consequences of an adverse event. Both factors run up the cost of claims dramatically. These premiums are not typical. I suspect that the premiums for pathologists would be toward the bottom of the scale and would be negligible, but other specialties are spread all over the landscape. The point is that there is more need for reform for some aspects of the practice than others.
I cannot figure out whether tort reform would have any effect on the cost of medical services. As I have discussed in another posting, the doctors enjoy monopoly power which means that they can raise their prices above the competitive level. Insurance would be classified as a fixed cost. As I recall from distant studies of price theory the true monopolist will raise prices until the price matches the marginal cost. Marginal cost represent the additional costs for serving one more patient. The cost of insurance does not materially increase when a patient is added.
Put another way. Competitive prices have a close relationship to costs. In a competitive environment additional costs translate into higher prices. On the other hand the monopolist charges what the traffic will bear regardless of total costs. Therefore, it would seem to me that the cost of insurance does not govern the prices set by the medical profession for their services.
I suspect you can detect, that I really do not fully know what the economic impact of tort reform on the cost of health care would be. I would like to find studies done by respectable academicians (who are not employed to find a predetermined answer). Under any circumstances I do not believe that tort reform is likely to produce substantial cost savings..
This is the last posting for the week. I will publish the next one on Tuesday, March 16, 2010 . At that time I will discuss my ideas as to the most effective means of containing health costs.
Showing posts with label Republicans. Show all posts
Showing posts with label Republicans. Show all posts
Tuesday, March 9, 2010
Thursday, February 4, 2010
The Failing Health Care Reform Bill IV - The Belligerent Left
The far left seemed to insist on strict conformity with their own agenda and regularly threatened to bolt if anything less was adopted. They ignored the fundamental fact that they can only pass what the sixtieth senator will support.
For instance Senator Baucus warned them early in the fall that the public option was dead. Yet the far left threatened to revolt, if it did not stay in. Keeping that issue alive prevented the Senate leadership from reaching the magic number of 60 before the Massachusetts election..
Obama also reneged on his promise that he would seek a bipartisan solution largely because the far left forced him into a more strident posture.. Both sides accuse the other of abandoning bipartisanship. I come down squarely on the side of the Republicans on this issue. Not because they were enthusiastic participants in a bipartisan strategy, but because the Democrats gave them no other viable alternative.
The Democrats have been in charge and must take the initiative. It appears to me that the Democratic idea of bipartisanship is to adopt their own plan and ask the Republican to rubber stamp it..
I do not believe that the Democrats ever really wanted to reach an accommodation with the Republican leadership. Instead they were simply trying to pick off a handful of backbenchers so that they would have a comfortable margin to pass the Democratic plan. That is not a bipartisan strategy in my book. Those tactics made the job of the Minority Whip to keep the Republicans in line very easy.
If the bill does not pass it will be the left who killed it.
For instance Senator Baucus warned them early in the fall that the public option was dead. Yet the far left threatened to revolt, if it did not stay in. Keeping that issue alive prevented the Senate leadership from reaching the magic number of 60 before the Massachusetts election..
Obama also reneged on his promise that he would seek a bipartisan solution largely because the far left forced him into a more strident posture.. Both sides accuse the other of abandoning bipartisanship. I come down squarely on the side of the Republicans on this issue. Not because they were enthusiastic participants in a bipartisan strategy, but because the Democrats gave them no other viable alternative.
The Democrats have been in charge and must take the initiative. It appears to me that the Democratic idea of bipartisanship is to adopt their own plan and ask the Republican to rubber stamp it..
I do not believe that the Democrats ever really wanted to reach an accommodation with the Republican leadership. Instead they were simply trying to pick off a handful of backbenchers so that they would have a comfortable margin to pass the Democratic plan. That is not a bipartisan strategy in my book. Those tactics made the job of the Minority Whip to keep the Republicans in line very easy.
If the bill does not pass it will be the left who killed it.
Wednesday, February 3, 2010
The Failing Health Care Reform Bill III - Transparency
Obama vowed to bring transparency to government. Ironically, he is now identified with a massive, secretive and sometimes confusing campaign to pass health care reform.
We hear about backroom deals with blue dog senators that do not pass the smell test. In most instances the bill was drafted behind closed doors without significant dialogue in public hearings explaining how it works. It was initially presented to Congress and the Senate without any explanation as to how the costs would be covered. The public was simply supposed to trust them.
When details on financing came out, the vast bulk of the costs were to be underwritten by savings which the plan was supposed to generate. The proponents skipped over the details about how these costs would be wrenched out of the system. Obviously they were placing a lot of the burden on new regulations that they were also proposing.
I for one am cynical about cost reduction. History has proved that regulations coming out of the New Deal era were totally ineffective in reducing costs in the long run. Moreover, our government has proved that it has a rapacious appetite for spending saved moneys rather than paying off debt. I have watched the Department of Defense save costs decade after decade, but somehow the actual totals go up. We have already seen the Obama Administration’s propensity to spend. Last year the administration was downplaying the long term cost of TARP loans, because the banks would pay it back. Now that some of the banks are repaying the loans, Obama seems to be looking for ways to put the money into other give away programs.
Moreover, there are a myriad of taxes, including medicare premium increases, being proposed. Virtually every one of these taxes have been met by a maelstrom of criticism.
The sheer size of the bill also prevented thoughtful and thorough discussion of the ramifications of the plan. Most of the public, including me, does not understand all that the it entails.
Democrats charge the tea party types with distortion when they claim that the Federal government is planning to kill grandmother in order to save costs. The claim is easy to make, however, when no one can give an adequate explanation as to why that will not be the case. The cost savings are largely dependent on removing “unnecessary” expenses incurred in the final months of life. Admittedly a large portion of the costs are related to the final illness. Moreover, the present tends to enable incurring excessive expense for heroic but futile efforts to extend life. Who is going to make the decision as to which costs are unnecessary? Some bureaucrat?
The sprouting Tea Party movement has probably benefitted most from the non-transparency. They smell a conspiracy and have found that many others do, too. It is only human nature to believe that anyone who is hiding something does not want us to know the truth. I do not believe that the Democrats ever took them seriously enough until after they showed their muscle in Massachusetts. And then it was too late.
We hear about backroom deals with blue dog senators that do not pass the smell test. In most instances the bill was drafted behind closed doors without significant dialogue in public hearings explaining how it works. It was initially presented to Congress and the Senate without any explanation as to how the costs would be covered. The public was simply supposed to trust them.
When details on financing came out, the vast bulk of the costs were to be underwritten by savings which the plan was supposed to generate. The proponents skipped over the details about how these costs would be wrenched out of the system. Obviously they were placing a lot of the burden on new regulations that they were also proposing.
I for one am cynical about cost reduction. History has proved that regulations coming out of the New Deal era were totally ineffective in reducing costs in the long run. Moreover, our government has proved that it has a rapacious appetite for spending saved moneys rather than paying off debt. I have watched the Department of Defense save costs decade after decade, but somehow the actual totals go up. We have already seen the Obama Administration’s propensity to spend. Last year the administration was downplaying the long term cost of TARP loans, because the banks would pay it back. Now that some of the banks are repaying the loans, Obama seems to be looking for ways to put the money into other give away programs.
Moreover, there are a myriad of taxes, including medicare premium increases, being proposed. Virtually every one of these taxes have been met by a maelstrom of criticism.
The sheer size of the bill also prevented thoughtful and thorough discussion of the ramifications of the plan. Most of the public, including me, does not understand all that the it entails.
Democrats charge the tea party types with distortion when they claim that the Federal government is planning to kill grandmother in order to save costs. The claim is easy to make, however, when no one can give an adequate explanation as to why that will not be the case. The cost savings are largely dependent on removing “unnecessary” expenses incurred in the final months of life. Admittedly a large portion of the costs are related to the final illness. Moreover, the present tends to enable incurring excessive expense for heroic but futile efforts to extend life. Who is going to make the decision as to which costs are unnecessary? Some bureaucrat?
The sprouting Tea Party movement has probably benefitted most from the non-transparency. They smell a conspiracy and have found that many others do, too. It is only human nature to believe that anyone who is hiding something does not want us to know the truth. I do not believe that the Democrats ever took them seriously enough until after they showed their muscle in Massachusetts. And then it was too late.
Tuesday, February 2, 2010
The Failing Health Care Reform Bill II- Overreaching Legislation.
The Democrats should have learned from Clinton’s experience that it is extremely difficult to adopt an comprehensive plan covering various subjects, all at the same time. One constituency may be concerned about by an isolated portion of the plan, but their best strategy is to oppose the entire package. Another segment may have entirely different concerns but they join in opposition in order to prevent their own interests from being adversely affected. Thus two groups with different interests combine to constitute a more formidable opposition.
That phenomenon is apparent in the case of health reform. Obama expressed shock that the insurance companies invested so much in their lobbying activities. Why not? Proposals such as the public option and single payer government insurance threatened their existence. I already mentioned the unions who suddenly became disaffected with the new taxes being assessed on the health plans they have proudly negotiated over the years.. The Medicare generation, which was betrayed by the NAARP, does not believe that their benefits will be secure. Even those who are approaching 65 have been hearing that they will not receive all the benefits now included in Medicare. Even the issue of the deficits is tied to self interest. Three quarters of the population are happy with the insurance they now have. Most likely they see the plan as a trillion dollar boondoggle for the benefit of some one other than themselves.
Clinton made the same mistake as Obama in attempting to take too big a bite at the apple, but he quickly retreated. If the Clintons had successfully sponsored a less ambitious plan, Obama could have built on what had been done and the Democrats might have had a significant trophy in their cabinet.
Sometimes overlooked is the fact that the most significant health care reform actually enacted was proposed by George W. Bush, who procured prescription drug benefits for the elderly. It certainly was not comprehensive, but it survived the scrutiny of a contentious congress.
Instead all the Democrats have done is generate a lot of hot air and, so far, have nothing to show for their work.
That phenomenon is apparent in the case of health reform. Obama expressed shock that the insurance companies invested so much in their lobbying activities. Why not? Proposals such as the public option and single payer government insurance threatened their existence. I already mentioned the unions who suddenly became disaffected with the new taxes being assessed on the health plans they have proudly negotiated over the years.. The Medicare generation, which was betrayed by the NAARP, does not believe that their benefits will be secure. Even those who are approaching 65 have been hearing that they will not receive all the benefits now included in Medicare. Even the issue of the deficits is tied to self interest. Three quarters of the population are happy with the insurance they now have. Most likely they see the plan as a trillion dollar boondoggle for the benefit of some one other than themselves.
Clinton made the same mistake as Obama in attempting to take too big a bite at the apple, but he quickly retreated. If the Clintons had successfully sponsored a less ambitious plan, Obama could have built on what had been done and the Democrats might have had a significant trophy in their cabinet.
Sometimes overlooked is the fact that the most significant health care reform actually enacted was proposed by George W. Bush, who procured prescription drug benefits for the elderly. It certainly was not comprehensive, but it survived the scrutiny of a contentious congress.
Instead all the Democrats have done is generate a lot of hot air and, so far, have nothing to show for their work.
Monday, February 1, 2010
The Failing Health Care Reform Bill I - Who is to blame?
Obama and his party have a debacle on their hands.. They have fiddled with health care reform for an entire year, while more important issues remained unresolved. The Democrats have managed their razor thin majority in the Senate with the sophistication and finesse of a mafia hit man. Now that they have been caught making all the wrong choices, it is time to look for scapegoats.
The media has tended to look for parallels with the first years of the Reagan and Clinton. Both presidents escaped largely unharmed from their early failures. I believe that the Jimmy Carter years may be more apt. Carter had a strong mandate with a convincing victory over Gerald Ford and control of both houses. It appeared that the way was clear for the Democratic juggernaut to restore the New Deal. In fact they squabbled so much that very little was accomplished. The economy went south, and Carter ended up with a one term presidency.
The stunning defeat in Massachusetts now leaves the Democrats in limbo with a few choices that are all distasteful to them.
Abandoning the health care effort will make them look like the gang that cannot shoot straight.
Starting over again, as the Republicans smugly suggest, would take at least another six months. Neither the Congress, which is facing an uncomfortable election, nor the country will tolerate more of the endless bickering and stalemate.
The only viable choice would be for the House of Representative to adopt what the Senate already passed without changes. In that case, they would avoid the necessity of coming back to the Senate where the Republicans are armed with their forty first vote. The problem is that the Senate bill includes terms that the left wing Democrats deem to be abominable, such as restrictions on funding abortions and taxing the so-called Cadillac plans which are largely established through union collective bargaining agreements.
How did they get into the mess? I have three major suggestions, which will be discussed separately over the next three days. I hope you will join me.
The media has tended to look for parallels with the first years of the Reagan and Clinton. Both presidents escaped largely unharmed from their early failures. I believe that the Jimmy Carter years may be more apt. Carter had a strong mandate with a convincing victory over Gerald Ford and control of both houses. It appeared that the way was clear for the Democratic juggernaut to restore the New Deal. In fact they squabbled so much that very little was accomplished. The economy went south, and Carter ended up with a one term presidency.
The stunning defeat in Massachusetts now leaves the Democrats in limbo with a few choices that are all distasteful to them.
Abandoning the health care effort will make them look like the gang that cannot shoot straight.
Starting over again, as the Republicans smugly suggest, would take at least another six months. Neither the Congress, which is facing an uncomfortable election, nor the country will tolerate more of the endless bickering and stalemate.
The only viable choice would be for the House of Representative to adopt what the Senate already passed without changes. In that case, they would avoid the necessity of coming back to the Senate where the Republicans are armed with their forty first vote. The problem is that the Senate bill includes terms that the left wing Democrats deem to be abominable, such as restrictions on funding abortions and taxing the so-called Cadillac plans which are largely established through union collective bargaining agreements.
How did they get into the mess? I have three major suggestions, which will be discussed separately over the next three days. I hope you will join me.
Wednesday, January 20, 2010
My Take on the Tuesday Elections
Democrats and some of their friends in the media tried to spin the Scott Brown victory over Martha Coakley as a local race with minimal effect on the November elections. That tactic may have been persuasive in Virginia and even sounded reasonable when consistently Democratic New Jersey elected a Republican governor. In Massachusetts, however, Brown campaigned on platform dominated by national issues boasting that he would be the forty first senator who could derail the Obama juggernaut. Now that the Democrats have shown that they cannot hold power in the East, what is going to happen when seats are contested in the Midwest, South and beyond? It may not be pretty.
The fact is that the Democrats now have no safe seats in the November elections. Their efforts to raise money will be impaired, and they will have many more places to spend it. The health care bill has become an albatross and will only pass by use of brute force and awkwardness.
The White House is bound to be in disarray too. Obama chose to invest virtually all of his political capital on a health care plan which now enjoys support of less than a majority of Americans who view the economy as their number one priority. Health care is Nero’s fiddle while the economy is the fire burning in Rome. Moreover, Obama has not seemed to be any more effective in dealing with the mess in the Middle East than Bush.
There was another election. William Bell has finally become Birmingham’s mayor, a position that he thought would come to him many years ago. There are many needs for the city of Birmingham. At the top of my list would be the curbing of wholesale corruption, bringing sanity and some measure of competence to the education system, and attracting new businesses. Is Bell the man for the job? The answer is patently obvious.
Bell’s victory is no surprise. The election result last night was politics as usual in Birmingham. The most stunning event in my mind was a political ad Bell ran close to election day. Many years ago Art Hanes Sr., a hard nosed segregationist, was running for president of the old City Commission against Tom King, Sr., who was more moderate. (Both men had sons who ended up as distinguished judges in the Jefferson County Circuit Court. I always wondered what they discussed during coffee breaks.) The Hanes campaign hired a black man to approach King and shake his hand and a photographer to snap King’s picture. The picture was reproduced in Hanes ads to show that King was an “integrationist.” The ploy worked and Hanes was elected. That tactic has been widely regarded as one of the low points in the politics of the segregation era.
Now after many decades, the same tactic was used again in reverse. Bell ran an ad showing him and his wife accompanied by pictures of Patrick Cooper and Julia Boaz Cooper, Patrick’s ex-wife. Nothing was said in the ad, but the message was clear, Julia is white and Patrick is black. Bell was conveying the message that Patrick Cooper was not black enough to be mayor. Who said that racism is dead?
Oh well, Birmingham once called itself the “Pittsburgh of the South.” Today it would be more appropriate to be described as the “Newark of the South.”
The fact is that the Democrats now have no safe seats in the November elections. Their efforts to raise money will be impaired, and they will have many more places to spend it. The health care bill has become an albatross and will only pass by use of brute force and awkwardness.
The White House is bound to be in disarray too. Obama chose to invest virtually all of his political capital on a health care plan which now enjoys support of less than a majority of Americans who view the economy as their number one priority. Health care is Nero’s fiddle while the economy is the fire burning in Rome. Moreover, Obama has not seemed to be any more effective in dealing with the mess in the Middle East than Bush.
There was another election. William Bell has finally become Birmingham’s mayor, a position that he thought would come to him many years ago. There are many needs for the city of Birmingham. At the top of my list would be the curbing of wholesale corruption, bringing sanity and some measure of competence to the education system, and attracting new businesses. Is Bell the man for the job? The answer is patently obvious.
Bell’s victory is no surprise. The election result last night was politics as usual in Birmingham. The most stunning event in my mind was a political ad Bell ran close to election day. Many years ago Art Hanes Sr., a hard nosed segregationist, was running for president of the old City Commission against Tom King, Sr., who was more moderate. (Both men had sons who ended up as distinguished judges in the Jefferson County Circuit Court. I always wondered what they discussed during coffee breaks.) The Hanes campaign hired a black man to approach King and shake his hand and a photographer to snap King’s picture. The picture was reproduced in Hanes ads to show that King was an “integrationist.” The ploy worked and Hanes was elected. That tactic has been widely regarded as one of the low points in the politics of the segregation era.
Now after many decades, the same tactic was used again in reverse. Bell ran an ad showing him and his wife accompanied by pictures of Patrick Cooper and Julia Boaz Cooper, Patrick’s ex-wife. Nothing was said in the ad, but the message was clear, Julia is white and Patrick is black. Bell was conveying the message that Patrick Cooper was not black enough to be mayor. Who said that racism is dead?
Oh well, Birmingham once called itself the “Pittsburgh of the South.” Today it would be more appropriate to be described as the “Newark of the South.”
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