…at MSSP Nexus Blog. And a note to all you health wonks: if, for some strange reason, you only want to be notified of health-related posts to Cato@Liberty, you can now do so by customizing your Cato@Liberty RSS feed.

Last Friday, at the invitation of the Rio Grande Foundation, I spoke to state legislators in New Mexico about Gov. Richardson’s proposal to expand Medicaid. In brief, I argued that Richardson’s proposal would trap more New Mexicans in low-wage jobs, make private-sector health care more expensive, and purchase little health for the money spent.

The Rio Grande Foundation just posted my powerpoint presentation on their website. (Let me know if it loses something without narration.)

SANTA FE – I’ve received a few reports now that the bill Congress passed in the wee hours of this morning would increase the amount that most people can contribute to a health savings account (HSA). 

Most reports claim that the bill would let all those who qualify for an HSA (i.e., those with a high-deductible health insurance policy) contribute the maximum amount to their HSA ($2,850 for individuals and $5,650 for families; figures are for 2007), rather than set a lower contribution limit for those who have insurance deductibles lower than those maximum contribution limits. That’s probably a good idea, and moves HSAs in the direction we should be taking them.

However, the Washington Post reports this morning something different, and alarming. Lori Montgomery writes:

The package also would repeal a $5,450 limit on contributions to health savings accounts, allowing taxpayers to shelter an unlimited amount of money as long as they choose certain insurance plans with high deductibles.

I doubt that description is accurate. But Thomas and the Government Printing Office don’t have copies of the full bill online yet, so you and I can’t check it out. 

If it is accurate, that means taxpayers would be able to put all their income into an HSA and only pay taxes on it when they withdraw funds for non-medical purposes. They would pay income taxes and a 10 percent tax on non-medical withdrawals. (That 10 percent tax would disappear after the account holder turns 65.) In many cases, they would pay no payroll taxes on those funds. Less money would flow into Social Security and Medicare, and many workers would accumulate fewer benefits under those programs.

All that sounds like good news to a libertarian. But it would be a messy change that would further complicate the tax code. And it would have been enacted with no public debate, which would make HSAs a prime target for the incoming Congress when Democrats might have otherwise ignored them.

But maybe what the Washington Post reported was inaccurate. I don’t know. And right now, I can’t find out. A populace that’s kept in the dark is just one of the perils of late-night legislating.

(In other health care news, that same bill would cancel a scheduled pay cut for doctors under Medicare, a prospect over which I’ve been unable to muster anything but, “So what?”)

Greetings, risk-seekers. We’ve got a smorgasbord of entries for the 14th occasional Cavalcade of Risk blog carnival. I received 24 entries, many of them actually related to the topic of risk.

Lacking Confidence in Confidentiality

Leon Gettler at Sox First reports on a study concerning the risk that companies will compromise confidential data about their customers. That study found that “one-third of senior executives don’t trust their own companies to handle this kind of information.” Tune in to see which industries are trusted least.

In a later post, Gettler looks at the “private equity frenzy,” whose risks he likens to that of the dot-com bubble.

Sympathy for the Investor

Long or Short Capital blogger Mr. Juggles — fresh from a signing ceremony with the Prince of Darkness — explains the profitability of the infotainment industry in four easy-to-understand squares.

Born to Insure

In an interview at RDoctor Medical Portal, Dr. Aleksandr Kavokin gets InsureBlog host Hank Stern to bare his soul (sort of) about “testing positive for insurance sales,” employer-sponsored health benefits, and government regulation of insurance premiums, among other things. Watch Stern give a shout-out to his “brilliant, trophy wife and equally brilliant and lovely chillun.”

Then watch the warm fuzzies continue as Stern, this time from his home base of InsureBlog, shrugs at technology that would allow him to monitor the driving habits of his two trustworthy teenage daughters. Insurers apparently haven’t started offering discounts to families that use these chips — but my guess is that as the market evolves, the discount will be greater for families with teenage sons.

Who’s Your Agent?

Jay of Colorado Health Insurance Insider fame picks up on two themes raised by Stern: that health insurance is about managing risk, not prepayment of care, and that employer-sponsored coverage is nutty. He argues that health savings accounts (HSAs) can help end the madness. I mostly agree. But if Jay can find a health insurance policy that “cost[s] the employer more than 2x what a similar individual/​family health insurance plan will cost,” he either must be suuuuper healthy or have really sick co-workers.

Thanks, Pal

As a guy who’s about to undergo surgery (albeit minor), I just don’t need reminding about the rates of medical error in the United States. Nevertheless, Healthcare Economist Jason Shafrin is all too happy to remind me anyway, noting that medical errors kill an estimated 50,000 to 100,000 patients per year. He discusses one organization’s efforts to promote medical practices that will reduce some of the most common forms of medical error.

I’ll See Your HSA Deductible, and Raise You …

My Cato Institute colleague Arnold Kling takes on fellow blogger Ezra Klein’s argument that HSAs won’t do much to reduce health care spending. Arnold draws from his book Crisis of Abundance, where he argues for some real catastrophic coverage.

Insurance Is Dead. Long Live Insurance.

In what I found the most intriguing submission to this Cavalcade, Jon Coppelman of Workers’ Comp Insider writes that we may be seeing a fundamental change in the nature of insurance since insurers now have the data mining tools to limit their risks dramatically. He foresees that as the concept of pooling evaporates, the number of losers is likely to exceed the winners.

This echoes a phenomenon I see frequently in the area of health insurance. (You might want to read Coppelman’s post before continuing here.) Insurance is a tool for dealing with uncertainty (i.e., by subsidizing uncertain losses). How do we know that? Because people generally don’t buy actuarially fair insurance to pay for certainties. When additional information moves a potential loss from the “uncertainty” to the “certainty” end of the spectrum, people understandably decry the loss of that subsidy. But I find it bewildering when some call that “the end of insurance” or a market failure. First, unless we’re close to eliminating uncertainty, we will always have insurance. Second, in cases where uncertainty is reduced, insurance markets are doing exactly what they should: replacing the subsidy with some very valuable information. Finally, just because the insurance subsidy is gone, that does not prevent society from subsidizing those losses in other ways. I’d be interested to hear from Coppelman and others on this.

Okay, off my soapbox.

Hard to Joke about This One

Meanwhile, Joe Paduda of Managed Care Matters provides evidence that the insurance industry is not heartless.

GRxvy Train

In (at?) the wake of torcetrapib, Wenchypoo prescribes a serious dose of cynicism for those seeking to understand clinical trials for pharmaceuticals. Wenchypoo provides my favorite quote from this week’s submissions: “I suppose when you’re dying, the last thing you worry about is who’s profiting from keeping you alive a few more weeks.”

Libertarian Roundup

And finally, here at my home of Cato@Liberty, you may peruse my colleague Sigrid Fry-Revere’s libertarian perspective on genetic engineering, as well as Arnold Kling on why libertarians have a lot of work to do on health policy.

It took a little more than a fortnight for someone to appropriate the legacy of Milton Friedman in support of something that the Nobel Laureate probably would have opposed. 

In an article for National Review Online, former Speaker Newt Gingrich and his associate David Merritt call on the nation to “Renew Milton Friedman’s Conservatism.” Whether chosen by the authors or the editors, that title betrays that someone missed Friedman’s point entirely. In 1975, an interviewer asked Friedman whether it was fair to describe him as a “conservative economist.” Here was Friedman’s response:

I never characterize myself as a conservative economist. As I understand the English language, conservative means conserving, keeping things as they are. I don’t want to keep things as they are. The true conservatives today are the people who are in favor of ever bigger government. The people who call themselves liberals today — the New Dealers — they are the true conservatives, because they want to keep going on the same path we’re going on. I would like to dismantle that. I call myself a liberal in the true sense of liberal, in the sense in which it means (inaudible) and pertaining to freedom.

Even more jarring is a policy proposal that the authors seem to associate with Friedman. Gingrich and Merritt write:

We can transform health and health care to deliver more choices of greater quality at lower costs to every American. And government has a role to play. It can and should build an electronic infrastructure, much like government builds public school buildings.

I see two problems here. First, Friedman often argued that it would be far preferable were government to stop providing education and instead just finance it. That suggests he saw no need for government to build the schools. Second, if Friedman ever took a stand on government provision of health information technologies such as electronic medical records, the lack of which is often regarded as a market failure, I’m not aware of it. However, I have to suspect that left-leaning economist Brad DeLong more closely captured Friedman’s views on the subject when he wrote:

[Friedman] believed…that where markets failed there were almost always enormous profit opportunities from entrepreneurial redesign of institutions; and that the market system would create new opportunities for trade that would route around market failures.

That view is hardly supportive of having the feds provide health information technologies.

Gingrich and Merritt do not completely misappropriate Friedman’s legacy. They do argue for a few free-market health care and education proposals. 

At EconLog, I point to a survey of economists by Robert Whaples. It seems as though there is a professional consensus on the libertarian side of the issues of free trade, school vouchers, and marijuana legalization. They also support raising the retirement age for Social Security, which is my favorite libertarian approach on that issue.

However, on health care, Whaples reports that a plurality–almost 50 percent–support universal health insurance.

This got me thinking about what the consensus belief among economists ought to be about health care. I think it ought to be that government should stop leading people to think that prepaid health plans are health insurance.

In any case, I think more members of the American Economic Association need to read Crisis of Abundance.

Is there a happier day of the bi-week than HWR Day? Not for us health wonks. Here is this round of health policy blogging, complete with first-time hosting jitters.

R‑E-S-P-E-C‑T

Over at RDoc​tor​.com, Aleksandr Kavokin interviews Kim McAllister, an ER/​critical care nurse and host of Emergiblog, about the nursing profession and operating a web site devoted to that profession.

What Price, Scooters?

Bob Vineyard of InsureBlog wrestles with the inanities of administered pricing in Medicare. The most recent round of silliness? How much Medicare should pay for power wheelchairs and scooters. Seems that Medicare outlays for those geezer-pleasers jumped 28-fold in eight years. Medicare’s bureaucracy just reduced the amount it pays for the things, having gotten the impression that maybe they were paying too much. Gosh, do you think?

What Price, Biologics?

Sure, we want inexpensive biotech drugs. But some (read: biotech innovators) claim that biogenerics are impossible. David Williams of Health Business Blog has “a better idea than biogenerics.” Rather than allow biogenerics, Williams suggests slapping price controls on biotech drugs after an initial period of market exclusivity.

What Price, Medicare Private Plans?

In related news, the Century Foundation’s Leif Wellington Haase discusses the consequences of having Medicare pay private health plans based on the average senior’s expenses when plans have the ability to disproportionately enroll seniors with below-average expenses. It doesn’t take a genius to figure out that taxpayers end up paying more.

Haase concludes that Medicare should just give seniors the cash and let markets sort it out. No wait — that’s my conclusion.

Haase concludes that overpayments to Part D and Medicare Advantage plans should temper the enthusiasm of those who think that markets forces are doing wonders for Medicare. (Hey, that’s my conclusion too.) Haase also suggests that those overpayments “ought to be used for more benefits or for deficit reduction, not for drug company and insurer profits.”

Sine Qua Non of Controlling Health Spending

Speaking of things skewed, Ezra Klein rightly reminds us that we ain’t gonna make much of a dent in health expenditures until we restrain consumption among the 5 percent of patients who account for half of the spending. Klein deserves two cheers (hip! hip!) for noting that the rules surrounding health savings accounts (HSAs) are too restrictive to bring cost-consciousness to all such expenditures.

The host dangles that third cheer in front of Klein to see if he can be cajoled into acknowledging that, if widely adopted, HSAs could bring price sensitivity to more than 60 percent of medical expenditures by the non-elderly. Over at EconLog, Bryan Caplan offers another reason why Klein may be too pessimistic about the ability of HSAs to reduce above-the-deductible spending.

Save a Life, Buy an Organ

Every year, over 6,000 Americans die while waiting for an organ transplant because Congress prohibits payments to organ providers, thereby creating an artificial shortage. (Who says we don’t ration health care?) The always educational Healthcare Economist notes that support for payments to organ providers is bubbling up in some interesting places. You’ll never guess which country eliminated their waiting lists with a considerably more liberal organ procurement system than ours.

Is Health a Human Right?

The American Public Health Association made human rights the theme of its convention this year, and the Health Affairs blog is all over it. Parmeeth Atwal provides the background and interviews American Public Health Association president Georges Benjamin. Commenters include George Annas, Larry Gostin, and Sophie Gruskin.

Build Your Human Capital

Rita Schwab offers the following advice to those looking to excel in health care: attend some of the gazillion conferences put on by the industry every year. How to choose among them? Schwab has some ideas.

Cut to Cure? Or Ride It out?

Over at Workers’ Comp Insider, Jon Coppelman blogs a new study showing that patients who do not undergo surgery for a herniated disc eventually do just as well as those who do undergo surgery. The tradeoff is that they have to live with the pain a while longer.

But if the injury occurred on the job, workers’ comp provides an interesting twist: because comp pays as long as the injured worker is unable to work, that creates an incentive to forgo surgery and collect 2/3 of one’s salary while not working. Coppelman thinks insurers and employers would do well to steer clear of those costs — i.e., don’t start discouraging surgery.

How to Stand up to Your Rheumatologist

Add India’s to the list of health care sectors that aren’t following best-practice guidelines. Or so says Dr. Qaedjohar Dhariwal, an orthopedist writing at orthINDIA. Dr. Qaed lists “ten things any decent rheumatologist should be implementing in his practice” and advises that if your doc doesn’t make it past Thing Number One, “ditch him.”

The Hardest-Working Man in Health-Care-Blog Business

Matthew Holt, writing at Spot-on, thinks about what the Democrats might do if they had a Republican-like desire to reward their base, and how they’d need to create the political coalition to force through universal health care. Holt writes that a politically viable plan would have to (1) cover all the uninsured, (2) maintain the incomes and autonomy of doctors and hospitals, and somehow at the same time (3) convince employers and taxpayers that they won’t end up paying more. (Quoth Ned Flanders…)

As if that weren’t heavy lifting enough, over at The Health Care Blog Holt interviews Lonny Reisman, CEO of Active Health Management, a company that manages care using claims and lab data from insurers.

I’m not Going to Pay a Lot for This Procedure

Shahid Shah (a.k.a. The Healthcare IT Guy) gives a forum to Chini Krishnan, founder and CEO of Vimo​.com, which hopes “to be the Lending Tree of healthcare and offer comparison shopping for surgical procedures, insurance, doctors, health savings accounts, and hospitals.” Krishnan expects that HSAs and other forms of consumer-directed health plans (CDHPs) will encourage the development of tools that help consumers make smarter decisions — and argues that CDHPs would have failed pre-Al Gore (read: before we had the internet).

One Spoonful at a Time

The title of this brief blurb comes from a New York Times Magazine article praised by Jon Schnaars at the Anxiety, Addiction and Depression Treatments blog. Schnaars provides links to that article and others on the struggle faced by families who are fighting anorexia.

Choose Your Enemies Wisely

Fard Johnmar, of Envisioning 2.0, takes a look at the recent flap between the American Heart Association and Pfizer over the release of data relating to Pfizer’s “good cholesterol” medication torcetrapib. Johnmar shows how this incident highlights the tension between numerous competing interests: medical societies vs. drug makers, medical societies vs. “outside” investors, medical societies vs. the SEC, small vs. large drug makers…

Duking It out in Denver

Speaking of industry bigwigs not getting along, Louise of the Colorado Health Insurance Insider laments the way that patients are getting jerked around in the spat between HCA and United HealthCare in Denver. Louise rightly questions whether those CEOs are really earning their seven- and eight-figure salaries — but did she call the U.S. health care sector a free market?

Shameless Self-Promotion

Finally, your humble host would be remiss were he not to plug the Cato Institute’s recent offerings on Indiana Gov. Mitch Daniels’ new health plan, a Health Affairs review of the Cato book Healthy Competition, and the ethics of the Born-Alive Infant Protection Act.

Next!

Health Wonk Review #22 is scheduled for December 14 and is to be hosted by Rita Schwab of MSSPNexus Blog. Get your entries in by Wednesday, December 13, at 9am EST.