Friday, September 14, 2012

Howard Dean on Health Care Reform 3

I have three items for my write-up today on Howard Dean's Prescription for Real Healthcare Reform.

1.  On page 81, Howard Dean takes on the argument that the public plan would reimburse health care providers at a low rate, and thus the providers would shift the cost difference onto Americans who have private insurance.  This is actually a concern that has been raised about Medicare and Medicaid: that they do not reimburse doctors adequately, and so doctors have to make up the cost difference by passing the cost on to consumers, resulting in higher health care prices.  Or the fear has been raised that doctors may not be able to make up the cost difference and thus will quit.  Moreover, there are doctors who currently do not accept Medicare and Medicaid patients.  Dean, however, refers to a study by the Medicare Payment Advisory Commission that says that financially pressured hospitals that operate efficiently are actually able to make money off of Medicare patients.  His point may be that the problem is not Medicare but rather the inefficiency of health care providers.

2.  On page 82, Dean refers to the fear among pharmaceutical companies that the government will use its "huge purchasing power" to bring down the prices of pharmaceuticals.  This may explain to me the whole concept of Medicare negotiating for lower drug prices.  The idea may be that, because Medicare is such a huge customer, it is able to bargain with pharmaceuticals about what the prices should be.  A fear among some conservatives, however, is that this will reduce the amount of money that pharmaceutical companies make, and thus cut research and development and hinder innovation, since people may not innovate new drugs once they realize that they won't make a lot of money (see here).  How, then, can we solve the problem of rising drug prices?

3.  On pages 90-91, Dean disputes the conservative argument that tort reform will significantly bring down the cost of health care.  Dean says that malpractice "constitutes just 0.46 percent of total healthcare expenditures" and that only a small number of people are suing their doctors.  Dean acknowledges, however, that "the increasing costs of malpractice insurance premiums are hurting doctors", but he does not believe that is a significant cause of rising health care costs.  I wouldn't take tort reform (of some kind) out of the equation when it comes to health care reform, for malpractice insurance premiums probably are a burden on doctors, and I can envision doctors doing defensive medicine out of fear of making a mistake and being sued.  At the same time, I do not think that tort reform is the end-all-be-all.  Texas has it, and the cost of health care continues to rise (see here).

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