First the New York Times worries that welfare rolls aren’t growing despite the recession. Now the Robert Woods Johnson Foundation releases a new report to help states recruit and retain more people in Medicaid and SCHIP. Family, private charity, they have their place I guess, but the welfare state must grow at all costs.

Most of the debate over the stimulus bill (or the Big Boondoggle as my colleague David Boaz calls it) has been over the cost and wasteful spending. Less mentioned are the bill’s many provisions that would increase government control over the U.S. Health Care system. For example,

• The bill would spend $83 billion to subsidize state Medicaid costs, including paying 100 percent of the cost of Medicaid coverage for unemployed workers and their families. And there would be no income or asset limits whatsoever on eligibility. As a result, still more of the middle-class would be shifted into government health care. Nor is the extension of eligibility limited to just the middle-class. A Republican amendment to bar millionaires from the program was stripped out before final passage in the House.
• For the unemployed who don’t go directly into government-run health care, the stimulus bill would spend $30 billion to extend COBRA coverage, and have taxpayers pick up 65 percent of premium costs. It would also require employers to continue COBRA coverage until a worker becomes eligible for Medicare. (Currently employers are only required to provide COBRA coverage for 18 months). Studies show that this would raise the cost of insurance for employers and workers.
• The bill would spend $1.1 billion to create a Comparative Effectiveness Council, so that the federal government can decide on whether medical treatments are worth the money. Once the federal government decides how medicine should be practiced, according to the summary featured in a discussion draft of the bill, “interventions…that are found to be less effective and in some cases more expensive will no longer be prescribed.”
• And, the stimulus would also spend some $20 billion for the federal government to muscle its way into the growing market for electronic medical records.

Does anyone actually believe that increasing government control over one-seventh of the U.S. economy is going to be stimulative?

Last month, Cato released a paper titled, “Does the Doctor Need a Boss?“ by Arnold Kling and me. Our friend Greg Scandlen called it “one of the most offensive papers I’ve ever read.” Scandlen is one of the leading lights of the consumer-directed health care movement. He is a senior fellow at the Heartland Institute, founder and director of Consumers for Health Care Choices, a former Cato health policy scholar, and has written for health policy journals such as Health Services Research and Health Affairs. I invited Scandlen to exchange thoughts on the issues raised. Click here to read my initial post, and here to read what others said about Scandlen’s comments. Below is Scandlen’s first response.

Hey, Michael, thanks for giving me a chance to respond. You are right that we agree on far more than we disagree. You wrote, “I imagine we agree that fee-for-service, capitation/​prepayment, and everything in between should have to compete without government favoring any one payment system over the others. Likewise, solo practitioners, HMOs, and everything in between should compete on a level playing field. And I suspect Scandlen would agree with our policy recommendations: that we should deregulate the medical profession, and let consumers control their health care dollars and choose their own health plan.”

Absolutely. But let’s try to learn from experience. We’ve already tried what you are suggesting. Indeed, rather than tilting in favor of fee-for-service medicine, the federal HMO Act of 1974 massively subsidized “health systems that use capitation/​prepayment — which encourages coordinated care.” Mr. Nixon’s dream turned into a nightmare for millions of Americans who were denied the care they needed by remote managers who didn’t know them, didn’t know much about medicine, and had incentives to undertreat patients due to the very capitation arrangements you are embracing.

That led in turn to the predominance of Managed Care in the 1990s, which all but eliminated fee-for-service medicine in the private sector. Instead, we had a labyrinth of networks, utilization review, prior approval, rationing, and limits on benefits, all imposed by corporations that were driven by efficiency concerns rather than patient care.

True, this all held down health care costs dramatically. But is that the purpose of a health care system? Holding down costs is easy, as we have seen in Europe – don’t provide any services. Simplest thing on Earth. We could also hold down transportation costs by not providing transportation, housing costs by not providing housing, food costs by not providing food. I suppose in some eyes all of this would be considered a success.

The problem is not, and has never been, that we pay a fee to get a service. That is precisely what we do in every other area of our economic lives. We pay a barber a fee and he cuts our hair. We pay a mechanic a fee and he changes our oil. We pay an accountant a fee and he prepares our taxes. None of it is particularly inflationary and none of it leads to poor quality.

That is because we are controlling our own money and we don’t like to throw it away. The same thing can happen in health care. In fact, the same thing IS happening in health care in “consumer driven” approaches. People are becoming more engaged, choosing more convenient and lower cost treatments, and saving a ton of money.

Now, I have no problem with people taking their money and using it to buy “capitated, coordinated care” if that is what they prefer. But I would urge you and Arnold Kling not to invest too much of your retirement funds in such companies. I expect not many people would choose such a model over having a real doctor.

Thanks, Greg. I’ll be posting a response sometime soon.

Based on some critical comments that Greg Scandlen made in his Consumer Power Report newsletter about “Does the Doctor Need a Boss?” — a Cato briefing paper on improving the coordination of medical care, coauthored by Arnold Kling and me — I invited Scandlen to a “blogoquy” on that paper.

Readers of Scandlen’s newsletter also offered their reactions, which Scandlen printed in a subsequent newsletter. I’ve pasted those reader comments below, with some links added:

From Jane Orient, M.D., of Tucson, Arizona, and head of AAPS:

So just who should be my boss? What credentials? What oversight of the boss? Who gets sued if there’s a problem?

The “project manager” in cases like Mr. Kling’s used to be called “doctor.” Seeing to all those details used to be my job when I was the attending internist rounding on my private patients in the hospital, calling the consultants but doing all the medical work outside of the specialty procedures, always looking for trouble.

I don’t do that any more; very few doctors do. They rely on hospitalists. Reasons: (1) They don’t get paid. (2) They do get hassled constantly by managers with clipboards, not to mention Medicare bureaucrats. They have to cope with increasingly complex although largely pointless, legalistic hospital procedures and impossible Medicare billing requirements (and threats of draconian fines and prison terms for errors). Probably worst is the lack of experienced, well-trained nurses who know their patients and are familiar with the hospital unit because they work there all the time.

A job that interns used to be able to do, with the help of a good nursing staff, is now probably impossible for any human being, thanks to all the bosses, supervisors, overseers, committees, risk management, quality assurers, teams, team leaders, managers, utilization reviewers, etc.

Pretty soon you won’t be talking about bosses for doctors, because there won’t be any doctors. Who needs them anyway? If the project manager is capable of bossing the doctor, and if he’s a hospital employee gets paid even if the doctor doesn’t, why doesn’t he just do the doctor’s job?

From Peter Nelson, with the Center of the American Experiment in Minneapolis:

As someone who works almost entirely on health care issues at a state-based think tank, I find incredible value in your regular emails. However, I must say that I was a bit put off by your recent assessment of the Cato paper by Michael Cannon and Arnold Kling. Writing “YIKES!” and calling it “one of the most offensive papers I’ve ever read” were unwarranted.

As you recommended, I did read the paper and I did draw my own conclusions. Permit me to share.

First off, asserting that the authors arrive at their conclusions primarily from an emotional reaction versus logical contemplation was quite unfair. Almost everyone in health care has an emotional health care story that in some way colors their view. I know I do and I suspect that you do too. Based on personal experiences, I readily admit to a bias against UnitedHealth Group. However, I would be highly offended if someone dismissed my policy work in regard to general insurance regulation because UnitedHealth refused to pay my father’s medical bills in bad faith for a year and a half after his death. The fact is, if anything was tainted by emotion, it was your critique.

Second, the paper presents a vision for how health care could be delivered if people were given more control over health care dollars. Importantly, it doesn’t say this is what needs to happen, it just describes possibilities. While I might disagree with a number of the points made by Cannon and Kling, the paper delivers a more imaginative and thought provoking vision than we’re used to seeing from think tanks.

Finally, the paper attempts to address a mind boggling question: How can we improve the way we pay for health care? Whether you agree with them or not, anyone who enters this thicket deserves significant leeway.

From Kirby Neilsen, a retired insurance agent in Ohio:

Greg, your Consumer Power Report #162 seemed especially well timed and well written this week although I think your writing is good every week.

Over the weekend I had a chance to read “Does the Doctor Need a Boss?” and I am left wondering really why they think Corporate Medicine will solve all the problems we have in health today? In fact in one section they talk about “Corporate Competence,” while I thought the phrase to be an oxymoron. Give me my individual MD’s any day. Not that corporations can’t do things well. Like the authors said, corporations can build houses and cars and space ships, but that model doesn’t easily translate into health care.

Although I am living a chronic and complex disease process and can certainly say more needs to be done at refining interdisciplinary care, I just can’t see any way to do that other than through a consumer centric model of care. Not a corporate model of care.

The authors’ perception of physicians as worker bees in a beehive run by managers and ultimately queen bees leaves one with a perfect reminder of bureaucratic complacency and the manager clocking out at 5:02 pm while the poor patient has to wait until the morning to learn whether or not they are going to get the treatment the MD ordered. Going on, they insist that case management be replaced by something called “senior management” which doesn’t sound like there is room for any consumer input. It sounds like bureaucratic power struggles to me.

The way they denigrated physicians was shameful and unnecessary. I know a lot of doctors both as an agent and as a patient and not one has exhibited the old “I am God” syndrome to which they referred. Plus, who do they think is going to care for all those folks out in rural Minnesota, Montana, and North Dakota?

There are other areas I reacted to, including the National licensing of physicians and other health care providers (talk about your Federal Control of medicine), and the notion that corporate competition using their model will really bring about better health care results. So they said would happen if we only had more big privately owned hospital chains. I recall that specifically from Columbia, the corporation once owned by the Frist family and who ended up with huge Medicare or Medicaid (or both) fraud convictions. They bought up hospitals all over the country and were going to drive down the cost of health care. Right.

I also compliment you on your calling out the use of personal experiences as a basis for a position statement. My reaction was, aren’t families supposed to put a stop to too much chaos in health care for their parents? Don’t blame MD’s for doing their job, convince them that you are not going to allow any more moves and advocate for prioritized care.

Another person who blames MD’s for the death of a parent is the world famous prognosticator and management guru Tom Peters in his blog … If you hunt around some of the archived issues you will find out he believes MD’s in a hospital killed his 97-year old mother while at the same time admitting she had multiple serious health problems. The link above takes you to the current posting on his blog where he wants to seek out all obese Doctors, School Principles, and Teachers and remove them from addressing obesity because they are no long credible in talking about obesity. Mr. Peters is in the same camp as a lot of folks these days and feels that we do need more regulation to protect people from themselves. So get ready docs, you may have to weigh in before you are allowed to counsel patients.

More to come …

That’s the title of my latest oped over at National Review Online. Here’s how it begins and ends:

Pres. Barack Obama proclaimed in his inaugural address, “The question we ask today is not whether our government is too big or too small, but whether it works.” If he was serious, he should veto the $115 billion expansion of the State Children’s Health Insurance Program that is soon to reach his desk—and insist that Congress eliminate the program entirely…

If President Obama wants to cover more uninsured children, he should set ideology aside and repeal SCHIP. After all, you can’t argue with what works.

Might be time to drag out the Church of Universal Coverage’s pro-SCHIP campaign:

There I go, killing kittens again.

I’ll be appearing on the Destination Casa Blanca program to share my thoughts on the State Children’s Health Insurance Program and the question, “Is this legislation the first step to universal health care?” 

I’m told that other guests will include someone from the Republican National Committee and the Obama administration. The host will be Ray Suarez, senior correspondent for The NewsHour on PBS. 

The program will air this Thursday night (2/5) at 9pm EST, with encore presentations on Friday (12am) and Sunday (10:30am and 10pm). Destination Casa Blanca is easiest to find on DirecTV (438) and the Dish Network (843 & 9401). Otherwise, check here.

Click here for other ironies of Tom Daschle’s ill-fated nomination to head the Department of Health & Human Services.