The New England Journal of Medicine appears to have plunged deep into the debate on health insurance reform since Trump was elected, and in its 9th March issue has a series of articles and opinion pieces on Obamacare’s effects. This includes a piece pointing out that Obamacare expanded access to treatment for substance addiction, including opioid addiction (a big and growing problem in the US at the moment) and also a research article examining the impact of the medicaid expansion on specific health and health financing outcomes (the findings: it was broadly very positive). It also has a short research article examining the claim that the individual insurance markets have been thrown into a death spiral by the poor design of the law.

This claim has been going around for about a year now, and is generally based around the fact that some insurers have left some markets, and in some cases blamed Obamacare for their decision. For example, Zero Hedge made this claim in 2015, and the National Review took it up in July 2016. Articles discussing the alleged failings of the exchanges typically point to the withdrawal of big companies such as Aetna from some exchanges, suggesting that these companies are withdrawing because the fundamental dynamic of the exchanges prevents them from making a profit. This is important in the US context because for people earning above 138% of the federal poverty line who do not have employer-based insurance, the best and most efficient way for them to get insurance coverage is through a marketplace called an exchange, which is a special clearinghouse for selecting Obamacare-compliant insurance plans that is set up either by your state or by the federal government if your state refused to cooperate with the law. (An example of a generally well-liked exchange in a Republican-run state is Kentucky’s Kynect exchange). Obamacare’s defenders have pointed out that some consolidation is natural in markets when they change, and that new entrants or changing business practices will naturally force some businesses to fail or leave – that’s capitalism! Under this defense, the exchanges are working as intended and there’s nothing to worry about, except that in some smaller states this process may lead to a collapse of competition as only one or two insurers remain – a problem Clinton intended to fix by introducing a public provider in all markets if she won the presidential election.

The new article in the NEJM explores this issue in detail, by collecting data on all the plans that operated in exchanges from 2016 – 2017 and comparing those that left with those that remained. The authors make the particular point that once the exchanges opened the marketplace itself changed, and this had implications for insurers. They say:

In particular, the ACA’s insurance-market reforms required firms to develop and market new products that were attractive to low-income Americans who faced few access and pricing restrictions based on their underlying health status.

This means that organizations that are unfamiliar with these market conditions might struggle. They explain this as follows:

Anecdotal evidence supports the argument that the skills of particular insurers may not have been well suited to these marketplaces. Many of the exiting firms, such as UnitedHealth, have primarily covered enrollees in the self-insured–employer market, in which insurers provide administrative services and are not primarily responsible for bearing actuarial risk or for developing products targeting low-income consumers. In addition, many of the assets that have proven quite valuable in the self-insured market — such as a large national footprint that is attractive to multistate employers — may not be particularly useful in state-based individual insurance marketplaces.

They then present the results of their detailed assessment of the properties of those businesses that entered or left the market place, which they summarize in a table, reproduced as Table 1 below.

Table 1: The characteristics of leavers

This table makes clear that the insurers who left the marketplace in 2016 were offering more expensive plans with narrower networks and lower levels of behavioral health coverage; they were also much more likely to be bigger actors in the market for fully-insured people and much less likely to have experience in Medicaid markets. Overall this suggests that these companies left the exchanges not because the exchanges were flawed, but because these companies were not experienced in targeting low-income Americans who make up a large share of the individual insurance market, and having made a play at the individual market decided to get out when they were out-competed by organizations with more experience in the marketplace. The authors further note that actually a lot of the insurers active in the exchange markets are making a profit and are aggressively targeting new marketplaces – but these insurers tend to be smaller organizations with experience in Medicaid services, and don’t attract the same attention as the big employer-market insurers who failed.

This study isn’t definitive and has some limitations – for example it did not compare leavers in 2016 with historical leavers before Obamacare was implemented, and it only compared silver plans (which are the most popular but not necessarily the most profitable, I guess). Nonetheless, it gives the lie to the claim that Obamacare’s exchanges are not working, or at least suggests that they are working well enough to warrant tweaks and improvements rather than complete abolition. Once again the NEJM has shown that Obamacare’s opponents are long on rhetoric and short on facts, and that although this health care law is not perfect, it is doing okay and is certainly a significant improvement on the status quo. Let’s hope that whatever reforms proceed over the next two years will lead to improvements in the areas that are not working, and not wholesale destruction of America’s best chance at universal health coverage in half a century.

What the American people have to look forward to

What the American people have to look forward to

We’re a week away from the inauguration of the 45th President, but the Senate and House seats have changed so that the Republicans now control both houses of Congress, and one of their first actions has been to begin repealing Obamacare. They’ve been salivating over this prospect for six years and making a big fuss about it, as have all their adjutants in think tanks and conservative media, so you would think they would be ready to roll with a coherent plan. Unfortunately it appears that they don’t, and the first week of their attempts to begin the process have been rather shambolic. Since they don’t control 60 Senate votes they are trying to enact the repeal through some arcane process called reconciliation, but that is just the start of the rolling drama that is coming; Vox has an explainer about the whole process, and is running a fairly good series of articles watching as the Republicans attempt to wreck Obama’s signature achievement.

The Republicans’ first plan seemed to be “repeal and replace”, in which they would unravel all the key parts of Obamacare now but put some kind of deadline on when they would take effect, then begin working on a replacement plan in the meantime. Unfortunately this was patent madness, that they were warned about for months, which would tip many insurance markets into a death spiral and create chaos for both insurance companies and millions of insurance holders. Trump stepped on this with the announcement that repeal and replacement would happen simultaneously and soon, which is something of a problem for the Republicans since they don’t have a plan and working one up in a couple of weeks is going to be kind of challenging (Obamacare took about 15 months to happen, I think). Even more challenging for the Republicans is their lack of a filibuster-proof majority in the Senate – they can repeal the law’s components with 51 votes, but they can only put in place a replacement with 60 votes. If the Democrats decide to act in exactly the same way that the Republicans have for the past 6 years, they will prevent any replacement plan for the next two years, and unless the Republicans can hold them responsible in the mid-terms, potentially kill any future replacement. This would be a disaster for the Republicans, since they would create an insurance death-spiral with no ability to legislate a repair, and go to the mid-terms with several million people suddenly losing their insurance. Given this their choices all seem very unpleasant.

This is incredibly irresponsible politics. Health care reform has been a Democratic party priority – and part of national debate – since the 1990s, and Obamacare was passed in 2010. The Republicans have had 25 years to think about this stuff, and have tried more than 50 times to repeal Obamacare while they were in opposition, yet over that whole time they haven’t come up with a single plan that will do anything to improve health insurance coverage. One Republican even admitted that the plans they have tried to pass during Obama’s administration were only pushed because they knew they wouldn’t get passed – they aren’t serious plans. Paul Ryan has been saying the Republicans will release a plan “soon” for years, and although there are a couple of different ideas floating around out there none of them is near the level of a properly designed plan – and none were pushed during the election. The Heritage Foundation was able to scour the whole country looking for complainants in a Supreme Court case – and fight that case – to gut one part of Obamacare, but didn’t appear to have time to come up with an alternative plan that was worth putting to Congress. The Republicans have known this day is coming for at least six years and they have nothing coherent to offer the American people. We all know the reason for this, of course – Republican political ideology simply cannot produce a reform of the American healthcare system that will give more people affordable coverage, because the Republicans’ fundamental position is that government should not be interfering in healthcare markets, and it is impossible to make healthcare affordable and accessible without extensive government interference in markets.

As if that were not bad enough, their president-elect campaigned on a promise not to cut medicare or medicaid, and recently his spokesperson said that no one would lose their existing plan (a promise that has been held against Obama by Republicans for six years!) Trump has also said he likes Obamacare’s provisions on pre-existing conditions. So now the Republicans have to come up with a free market plan that somehow keeps Medicaid in place, doesn’t take away anyone’s insurance, and forces insurance companies to cover pre-existing conditions, while bringing prices down and giving individuals greater choice (the latter two points being raised by Paul Ryan recently as part of what he described as a “rescue mission” to make health care more affordable than it is under Obamacare). And if they follow Trump’s timeline they have to do it in a few weeks or months.

It’s not clear what colour everyone’s unicorn will be, but we know it will be a free market unicorn.

So what can we expect this plan to contain? It’s not clear, because there have been multiple Republican “plans” or “policies” in the past couple of years, but based on the major ones that have floated around and some of the major policy discussions we have seen, the plan will likely include some or all of the following.

  • Abolishing the mandate: The mandate is the Obamcare rule that hits people with a tax penalty if they do not take out health insurance, in an attempt to force young and healthy people to take up insurance. This mandate is key to Obamacare, since forcing young and healthy people to take up insurance will ensure that the insurance risk pools are large enough to keep costs down and keep insurance companies viable. The mandate hasn’t been as successful as its planners envisaged, probably because the plans young people are likely to choose to take up are “Bronze” plans with very poor benefits, and many young people probably don’t think they’re worth the effort of filling in forms, given the size of the tax penalty. Republicans hate the mandate and want to get rid of it but of course don’t have an alternative method for forcing people to take up health care. If you abolish the mandate but force insurance companies to cover people with pre-existing conditions then they have to raise prices for everyone else – which means the care won’t be affordable, a key goal of Ryan’s “rescue mission.”
  • Deregulating insurance markets: Trump was big on allowing insurers to operate across state lines, and most Republican plans want to see some kind of reduction of conditions on insurers. In the repeal of Obamacare this will likely involve removing the restrictions placed on plans that can be marketed on exchanges – when Obamacare was introduced, a set of minimum standards was established for insurance plans which guaranteed people buying them would get a certain minimum level of benefits, and enabled people to choose between plans that were rated as either Bronze, Silver, Gold or Platinum. By deregulating markets and the rules on how insurers market their plans, the insurance companies will be able to return to the pre-Obamacare era of selling absolutely shonky packages at a low price – which, if they’re required to offer coverage to people with pre-existing plans, is the only way they’ll cover their costs. Many Republicans also think insurance companies should be able to compete across state lines, ostensibly because this will increase competition in smaller states and rural areas where currently only one insurer operates, and also to allow more mergers. This is unlikely to encourage competition in the long-term, but will lead to large insurers merging and creating multi-state monopolies – monopoly pricing being another way to cover costs. There is no universal health coverage system in the world which operates successfully with a deregulated private market, and it’s not going to magically happen in the USA.
  • Reforming subsidies: Another aspect of some Republican plans has been to change subsidies so that they are not income-based. Currently under Obamacare anyone with income below a certain level receives a subsidy towards the cost of their health insurance, with the subsidy growing as income decreases, to ensure the plan remains affordable. This is the natural compensation for the mandate, and is one of the pillars of Obamacare. Republicans like Tom Price have proposed replacing these income-based subsidies with age-based subsidies, which means Bill Gates gets the same subsidy as a minimum-wage 61 year old labourer in Louisiana. This policy is part of a new rhetoric the Republicans are developing based on “equality of access” rather than equality of coverage. The natural consequence of this will be that poor people will decline to take up insurance, since the subsidy won’t be enough for them – especially in a deregulated market with no mandates.
  • Block-granting medicaid: As part of Obamacare the Medicaid program was expanded, with states being offered financial support to extend Medicaid to a larger pool of people (Medicaid is the USA’s free health coverage for very poor people). Republicans hate this because it’s straight-up welfarism, and the Heritage Foundation ran a successful challenge in the Supreme Court that enabled states to refuse the expansion. Unfortunately for the Republicans a lot of states – including some Republican-ruled swing states – took the expansion, and about 5-12 million people gained health coverage through it (estimates vary). If the Republicans take away this expansion they will piss off a lot of people, including people in Republican swing states that could damage them in future elections, so they need to find a way to take away the Medicaid expansion from safe Democrat and safe Republican states, and enable swing Republican states to keep it. Their answer is block-grants, in which the money for Medicaid is granted to the states but not earmarked for Medicaid only. Since some deep Republican states like Kansas and Louisiana are in big financial trouble, they can then use the Medicaid money to bail out their failing state finances, and pare back Medicaid in their states; while swing states can keep using the money for Medicaid and avoid creating a large pool of angry voters. Even then it is likely that the block grants will be smaller than the funds currently available so all states will have to cut Medicaid coverage or reduce the quality of care offered – but the Republicans don’t care because Medicaid is for poor people, so just need to make sure they don’t cut it away from so many people that it swings an election.

Any single one of these reforms in isolation would probably be enough to radically roll back recent gains in insurance coverage in the USA, but it’s likely that whatever misbegotten, evil plan the Republicans come up will have all of these reforms to some extent. This is why Republicans have started talking about equality of access rather than coverage, because if everyone theoretically has a subsidy and the right to purchase healthcare, then you can blame them if they decide they can’t afford it. In this rhetorical model they will force insurers to cover people with pre-existing conditions, abolish the mandate, deregulate the market in such a way that insurance companies can offer absolutely shonky products at inflated prices, cut subsidies so that no one takes them, and then blame poor people for “choosing” not to take up the healthcare they had “equal access” to.

It remains to be seen whether the Republicans will be able to get away with this – either because Trump takes a personal interest in a reform that actually works, and vetoes anything they offer, or because the Democrats drag out the replacement strategy until they can again win control of Congress. In any case it’s going to be fascinating to watch the Republicans try to behave like responsible adults now that they have the levers of power, even though for the past six years they have shown themselves pathologically incapable of dealing with the contradictions and challenges their ideology has thrown up.

Of course, what’s “fascinating” to those of us who live in countries with sane governments and universal health coverage, is going to be very terrifying to a very large number of poor and chronically ill people in America. Good luck to all of you!

This week’s Journal of the American Medical Association features an excellent article by Barack Obama, reviewing the implementation and outcomes of the Patient Protection and Affordable Care Act (“Obamacare”). Obviously large parts of this article were likely written by someone else, since Obama is too busy with his secret Muslim conspiracies to write a full paper, but some parts – particularly the part on why and how he implemented it – do seem to be written in Obama’s voice, which is nice to see. Vox has a brief report of the article, indicating that it is the result of a six-month Whitehouse review of the legislation and focusing on the implications of one of Obama’s recommendations (for a public option). Like most non-Americans I don’t find the recommendation of a public option to be particularly controversial or striking, so I’m not interested in revisiting it here. Rather, I’d like to briefly discuss the article’s findings on Obamacare’s achievements, take a moment to rant about what a terrible statistician Obama is, and look at some of the other conclusions he draws from his success. I will quote some parts of the article and put up one figure, but I won’t go quote too much or put up too many figures because JAMA probably wouldn’t like that. I would like to say that this is a very easy-to-read article and the choice of figures and data presentation is largely very strong – Obama certainly knows how to make a case. Also note the author affiliation: “President of the United States, Washington, DC”. Classic.

Reduction in the uninsured

In Figure 1 of the paper Obama presents the long-term trend in the proportion of Americans not covered by health insurance, and shows a huge drop after the implementation of Obamacare, from 15% to below 10% of the population. That is a huge achievement, which he states corresponds with roughly 20 million Americans receiving health insurance who would not have received it if Obamacare had not been passed. This still leaves about 30 million people without health insurance in 2015, a pretty shocking number for a developed country (in contrast, Japan has about 98% coverage and the UK about 100%). In Figure 2 Obama shows that the Medicaid expansion was responsible for a major reduction in the uninsured, by comparing the percentage drop in the uninsured in states that accepted the Medicaid expansion and those that didn’t. This drop in the uninsured increases with the proportion of people who had no insurance before the implementation of Obamacare: in a state that had 20% of its population uninsured in 2013, we see a 10% drop in the uninsured rate if the state accepted Medicaid, compared to 5% if it didn’t (these are percentage point drops, too, meaning that the proportion uninsured halved in the Medicaid state!) Obama doesn’t attempt to estimate the total number of people missing out on insurance due to the recalcitrance of the 21 states that refused to accept the Medicaid expansion, but I think the implication is obvious.

Obama’s sad statistics

Figure 2 annoys me because the straight lines shown in the plot are from an ordinary least squares regression of percentage point drop in uninsured against pre-intervention proportion of the uninsured. The straight line fit for non-Medicaid states is quite poor, because of course the relationship between percentage point drops and their starting point is non-linear. Obama would have been better served to take the logit transformation of the proportional drop, fitted a straight line model to that, and then back-transformed the resulting prediction to get two pretty s-shaped curves in his figure. I guess his article wasn’t subjected to JAMA’s usual rigorous peer review standards …

(In truth this isn’t a big deal in this case because the relationship in the data is so obvious that it doesn’t really matter how you handle it. My guess is that this figure was prepared by one of the people doing the review of Obamacare, and I would like to think that the people doing that review can do higher quality work than this!)

The three dimensions of coverage

The three dimensions of coverage

Mixed results on financial protection

Insurance is only good if it covers the services you need and offers financial protection. In health financing we talk about depth, height and breadth of coverage, which are depicted graphically in the figure above that I cribbed from an LSHTM course on financing health. Reducing the number of uninsured increases the breadth of coverage (the proportion of the population covered) but if this comes at the expense of the depth of coverage (which services are covered) or the height of coverage (the proportion of financial protection people receive) the overall benefits of the plan may be limited. Obama tackles these three dimensions in his paper, though he doesn’t use the WHO framework described in the figure above. Regarding depth, he states

Coverage offered on the individual market or to small businesses must now include a core set of health care services, including maternity care and treatment for mental health and substance use disorders, services that were sometimes not covered at all previously

Which indicates that Obamacare has forced minimum standards of coverage onto organizations that offer health insurance. This is something that people living in countries with robust universal health coverage (UHC) systems take for granted, and it’s really hard to imagine having to navigate a health insurance market where this isn’t the case – at the very least setting up a core set of covered health services reduces the risk of mistakenly choosing a health insurance package that doesn’t help you with the things you’re most likely to need it for. Obama’s language here implicitly suggests that the core package of services covered under Obamacare is an expansion of those in the previous system, but he doesn’t present any evidence that this is the case for all plans, or even in general – it could be that in adhering to these core requirements insurers have dumped some other coverage from their plans. I haven’t ever seen any research on how to assess the best services to include in a plan, or how to compare two plans that have quite different and non-overlapping benefits, so I don’t know how to assess this aspect of Obamacare (or if it can be assessed), but from the point of view of consumer protection having a guaranteed core of services seems like a good idea.

Obama's Figure 3

Obama’s Figure 3

On financial protection – the height of services – Obama makes a strong case that his legislation has been very protective. Figure 3 in the article, shown above, shows the trend in the proportion of workers enrolled in an insurance scheme that has no annual upper limit on the amount of out-of-pocket payments they must make. Out of pocket payments for health care are the main source of financial risk for individuals, and typically arise when someone has no health insurance (so must pay everything from their own money) or has health insurance with very high co-payments and deductibles, a common problem in the USA before Obamacare. Obamacare required insurers to put a cap on these out of pocket payments, and the effect on the proportion of workers exposed to unlimited financial risk is obvious in this chart. Unfortunately in a later figure we see that average out of pocket expenses haven’t changed much over time, suggesting that the annual limits that insurers placed on out of pocket payments were set high enough as to not effect the majority of such payments. To properly explore this issue we need to see data on health-related financial catastrophe, distress financing, and impoverishment due to health expenses, which to the best of my knowledge have never been adequately reported for the USA. We see some hints of this in other parts of the report, where Obama notes that the proportion of people not seeking care because they can’t afford it is down, and the average size of Medicaid debts is also down, but the picture here is incomplete. My suspicion is that a lot of healthy people have picked up bronze plans that offer them financial protection in only the most extreme cases, leaving them wearing significant costs for routine care. This isn’t in itself necessarily a problem, but to properly understand the financial protection and equity effects of the law we really need to see measures of who gets screwed by very high costs and how, rather than seeing trends in average costs.

Lessons from this policy battle

Obama concludes, unsurprisingly, that his policy has been highly effective, and I agree with this conclusion. It’s definitely not the best UHC plan out there, and even before it was rewritten by the Supreme Court and repeatedly undermined by Republicans it wasn’t a great plan, but it has achieved a lot and a lot of Americans are much better off for it. He states in the conclusion that he now wants people to accept it as the law of the land and move on to ways of improving it, but first he makes this comment about the challenges of working in American politics which gives some idea of how much of an achievement even this compromised package is:

The first lesson is that any change is difficult, but it is especially difficult in the face of hyperpartisanship. Republicans reversed course and rejected their own ideas once they appeared in the text of a bill that I supported. For example, they supported a fully funded risk-corridor program and a public plan fallback in the Medicare drug benefit in 2003 but opposed them in the ACA. They supported the individual mandate in Massachusetts in 2006 but opposed it in the ACA. They supported the employer mandate in California in 2007 but opposed it in the ACA—and then opposed the administration’s decision to delay it. Moreover, through inadequate funding, opposition to routine technical corrections, excessive oversight, and relentless litigation, Republicans undermined ACA implementation efforts. We could have covered more ground more quickly with cooperation rather than obstruction. It is not obvious that this strategy has paid political dividends for Republicans, but it has clearly come at a cost for the country, most notably for the estimated 4 million Americans left uninsured because they live in GOP-led states that have yet to expand Medicaid

Here he hasn’t gone into great detail about how the Supreme Court rewrote the Medicaid expansion part of his bill, and he has notably understated the effect of obstructionism on the Republicans, but his central point is clear: this legislation could have been better if Republicans would just have supported it, or contributed in any way at all to a constructive debate on health care. Five years have passed since the bill was first introduced to Congress, and Obama has had enough time to review its effects and write a JAMA article on it, and in all that time the Republicans have tried repeatedly to repeal it yet are still to come up with an alternative health care plan. Today they released their convention platform, and as reported by Vox it doesn’t include an alternative health care plan – in an election year. This is beyond juvenile politics, and in any other democratic polity a party that cannot come up with a coherent health policy would be treated as a joke. This is the background of Obama’s legislative efforts.

Finally, Obama makes the point that people working in health financing understand well: that UHC is about a pragmatic pathway to financial protection for everyone, not about an ideological commitment to a specific means of getting there. He says:

The third lesson is the importance of pragmatism in both legislation and implementation. Simpler approaches to addressing our health care problems exist at both ends of the political spectrum: the single-payer model vs government vouchers for all. Yet the nation typically reaches its greatest heights when we find common ground between the public and private good and adjust along the way. That was my approach with the ACA. We engaged with Congress to identify the combination of proven health reform ideas that could pass and have continued to adapt them since. This includes abandoning parts that do not work, like the voluntary long-term care program included in the law

and in this respect I also agree with him. I suspect that if the Republican party were a real political party and not a clown car, they would have recognized the importance of reform and accepted Obamacare as a practical model that protects the free market nature of the existing health system. For those Bernie dead-enders who refuse to accept compromise, nothing except a full single-payer public plan will do, and while this worked completely fine in Australia, Canada and the UK it just won’t make it in the USA, which is probably why those Berniebros find themselves in their current cul-de-sac. Obamacare is an artful example of the importance of compromise in making good health policy, and the value of practical planning over ideology. Shamefully for the Republicans and unfortunately for the country, it hasn’t been able (yet) to achieve its full promise. Obama made a few suggestions for how it can, but ultimately his particular recommendations are less important than the simple need for a return to rational policy-making by the Republicans. Whoever the next president is, she is going to want to begin tinkering with Obamacare to make it better, and hopefully the Republicans will by then have recognized that it is their responsibility to contribute positively to that process, for the good of all Americans.

I don’t see that happening, but like Obama, I can always hope …

Must hear and obey!!

Must hear and obey!!

This week I stumbled upon another one of many articles in the Guardian complaining about fat-shaming, which is apparently something society does unsuccessfully to try and force everyone to be skinny. In an interesting parallel, this week Rabbett Run has an article digging through the role of Big Tobacco in funding libertarians to talk up smoker-shaming. This “assault on smokers” is a common complaint of the Clarksons and Telegraph-letter-writers of the world: sure, smoking is bad for your health but the anti-tobacco movement has “gone too far” and now it shames and ostracizes smokers and treats them like second-class citizens (in the words of Rabbett Run’s libertarian scholar, they are parallel to the treatment of Jews in Germany!)

An interesting similarity of language exists between the anti-fat shamers and the anti- anti smokers. There is a lot of public debate about how to handle obesity, and a lot of it is denialism of varying forms:

  • Straight-up denialism, such as this book from one of the Lawyers, Guns and Money bloggers, which claims obesity is not harmful for health, the scientific research is wrong and there is nothing to fear. This crosses the political spectrum, but is usually also associated with suspicions about the diet and weight-loss industry and/or an ideology of personal health choices
  • Politically-motivated rejectionism, often feminist, which associates obesity concerns with body-normative biases and society’s obsession with controlling women’s appearance. An example of this is Fat is a Feminist Issue by Susie Orbach, which associates campaigns against overweight with historical attempts to control women’s appearance. These campaigners may deny the role of obesity in poor health (such as the Healthy at Every Size movement) or they may accept the increased risks and fall back on a logic of personal choice, but in either case these rejectionists are politically-motivated: their first concern is the ideological impact of scientific research on and public health campaigns against overweight, and this motivates their stance
  • Adaptationists, who think that it is too late to reverse trends to obesity, and/or that they are built into our society now, and so we are better off learning to adapt to these trends than try to undo them. In the medical field this manifests in a belief that we should find pharmaceutical solutions to the health challenges of obesity, rather than behavioral campaigns. This stream of thought is also common amongst anti-fat shamers and the Healthy at Every Size movement
  • First world shamers, who believe it is shameful of rich westerners to worry about eating too much when so many people in the world are starving. These deniers want us to accept that fatness is a sign of a stable and functioning society and something the world should (implicitly, usually) aspire to – similar to how some AGW denialists think that burning fossil fuels is an inevitable and necessary part of economic growth and something we should encourage the world to do, rather than trying to find alternative development paths. These first world shamers also usually ignore the fact that overweight and obesity is a heavily class-biased phenomenon in rich countries, and increasingly a problem of the poor only
  • Free choicers, who think that we should all be able to take any health risks we want if they don’t affect others, and who see obesity purely as a personal decision (i.e. fat people eat too much). Some of the adaptationists also take this view of fat as an entirely personal decision, and sadly so do a lot of public health policy-makers who want to fix the problem. Seeing obesity as a consequence of personal behavior inevitably means that public efforts to reduce prevalence of overweight will be seen as intrusive and restrictive of civil liberties, and enables these free-choicers to reframe the debate in terms of personal choices and freedom rather than the structural and social changes that are actually needed to reduce overweight. This argument is more potent when deployed in the obesity debate because it is much easier to claim that obesity doesn’t harm others
  • Skinny-shamers, the kind of hippy punchers of the anti-fat shaming movement, who see thinness as disgusting or at least present themselves in opposition to it. This fat and proud movement is distinctly political, though not necessarily associated with any party, and it is embedded in a broader cultural movement in the anglosphere towards rejecting any form of attention to appearance at all. This movement sometimes has an influence on the fashion world, especially in its attempts to redefine very thin and small models as wrong – it sometimes engages in its own form of shaming, attacking the skinny and small as wrong or ill
  • Anorexia bait-and-switchers, perhaps a subset of the fat-proud and feminist denialists, who associate campaigns against overweight with anorexia, and suggest that body-normative ideas drive young women to anorexia. In fact anorexia is a serious mental health problem not caused by social pressure or women’s magazines, and this link is spurious but it has a strong hold in popular culture, and is a powerful rhetorical device. Note that it also often relies on its own form of body-shaming, treating anorexic bodies as disgusting and accepting that they are deeply unhealthy, and often the spectrum of this body-shaming extends to women who are not unhealthy, just thin

Many of these types of obesity denialism seem to be similar in ideological composition to anti-vaccination or anti-AGW thinking. In AGW denial circles it’s common to read conspiracy theories about how the whole scare has been made up to transfer money and power to a clique; how it is cheaper and more effective to adapt than prevent; how attempts to mitigate AGW will lead to (and/or be driven by) restrictions on personal freedom. AGW denialists also often see AGW mitigation in terms of direct attacks on their personal choices rather than structural and cultural changes, for example in which they will lose individual direct choice over light bulbs and car makes, rather than seeing it in terms of industrial and community-level decisions such as changes in power generation or land use practices that no one individual can control. Arguments based on intervention in personal decision-making rather than group practices are much more amenable to conspiracy theories and assignment of nasty political motivations, and the obesity denial movement does have a fair share of such thinking.

In reality the battle against overweight and obesity cannot be won with individual changes: overweight and obesity arises only partially from personal choices, and a lot of it is driven by structural and social factors that individuals cannot change. You can’t make a decision to walk to work if your work is far away and there is no public transport; you can’t make a decision to eat healthily if there are no decent sources of fresh fruit and vegetables near your house, or if almost all the food you buy is poorly labelled and full of sugar. It’s also much much harder to stay thin if your job involves sitting for 8 hours a day, and personal decisions to do something personal to offset a structural factor are much harder to make than personal decisions that go along with that structural factor. Furthermore, cultural practices are insidious and hard to change: ideas about wasting food that come from a poorer time, types of food and eating practices are not easy to change by the time one is an adult steeped in a certain food culture. But because public health policy-makers cannot change broad structural factors outside of their discipline, like public transport and town planning, they have to focus on the things they can touch: personal behavior. This is easily construed as preaching or trying to restrict freedoms.

Of course fat shaming does happen in our societies but it’s not driven by health concerns: it’s another manifestation of a long-lasting and deeply-entrenched sexism in our society. It’s also a reflection of the fact that traditionally aesthetic values were of great importance, and people who deviated from certain aesthetic norms have been shamed for that. Compared to the way people with tattoos or men with long hair used to be treated, for example, fat shaming is nothing: no one obese ever got refused entry to Disneyland for being fat, for example. Public health campaigns do not, generally, utilize fat shaming as part of their repertoire, and the association of fat shaming with public health concerns about obesity is another example of denialism at work – and a very effective way to dampen the debate about what to do about this growing problem.

And make no mistake, it is a big problem. The continuing growth of overweight and obesity is going to have huge costs for health systems, and people who are proud to be fat now are not going to be so pleased with their personal health decisions when the musculoskeletal and cardiovascular problems start to bite in later life (when reversing the process is hardest). With the decline of smoking in the developed world, obesity is becoming the next big risk factor that will bring a wave of disease with it. Worse still, in many low- and middle-income countries overweight and obesity rates are also skyrocketing, but these countries have fragile health systems with weak financing that are not ready to manage a huge growth of chronic illness. This is a global problem, and denying it will delay the necessary steps to resolve it, leaving many countries facing an unexpected cost and health problems they aren’t prepared to deal with. Sound familiar?

I don’t think that obesity denialism is a product of Big Tobacco or Big Sugar, as was the anti-anti smoking lobby or AGW denialism. It also lacks a dimension of harm that the anti-vaccination movement carries with it (since fat kids can’t accidentally infect and kill other fat kids the way unvaccinated children can). But it has similarities with both, in terms of its scientific ignorance, the rhetorical tactics it deploys, and its blithe ignorance – or even celebration – of the problems it causes. The linked Guardian article is suggesting a need to add fat-shaming to the list of discriminatory activities that should be outlawed in Britain, which makes me think of the inclusion of “political” objections to vaccination in vaccination laws. Perhaps it’s time to start treating obesity denialism a little more seriously, before it gets a serious grip on our legislative and public health processes, making it harder for our societies to move out of a path that is ultimately not going to be good for us …

Vaccination policy through Republican eyes

Vaccination policy through Republican eyes

The recent outbreak of measles in the USA has brought on an epidemic of Republican anti-science blathering, this time focused on vaccination. First we had Chris Christie saying measles vaccination should be optional, then Rand Paul putting his libertarian principles where his mouth is and declaring all Americans should be free to give each other smallpox; now the National Review Online has stepped into the fray with the rather contradictory policy advice that vaccination obviously works but should be voluntary (and thus, in the case of measles, almost certainly be rendered useless).

Vaccination policy is one of those areas that is ripe for Republican chaos. As the National Review observes, it involves “elites” (a perjorative deployed in this case to describe doctors) making decisions about what parents should do, and pushing for strong laws to ensure that everyone does what they’re supposed to. Like public education, it is only of value if the overwhelming majority of people do what the “elites” want. In this case, we can calculate mathematically what proportion of the population need to do what they’re told in order to prevent the spread of disease and, unfortunately for libertarians everywhere, the required proportion for measles and whooping cough is so high as to require even strict religious types and conspiracy theorists to obey if we want to prevent everyone getting the disease. This article from the Bulletin of the WHO makes the case for herd immunity, which in the case of measles requires greater than 95% of the population be vaccinated. Allowing parental opt-outs is going to rapidly get the proportion of children vaccinated below this threshold, especially in a society where many people can’t afford medical care. This is particularly likely for measles, mumps and rubella, since the Andrew Wakefield scandal has put the fear of God (well, autism) into parents in the UK and the USA, leading to precipitous falls in vaccination rates for these conditions. Indeed, the UK is now experiencing endemic measles after a long period of only having imported cases, and recent epidemics can almost certainly be traced to the cohort of children who were not vaccinated in the years after the Wakefield scandal. Elimination of these diseases requires strong pressure for all parents to vaccinate their children, and in rare cases these children will experience usually minor side effects. We all literally have to take one for the team, because those black-helicopter “elites” at the WHO tell us to. It’s a Republican’s nightmare.

But Republicans never used to be so fragile about science. This rash of equivocal statements from potential presidential contenders and their lackeys in the media is a new phenomenon. I have a feeling that the Republicans are lurching slowly towards a new orthodoxy of denialism, to add to their creationism and global warming denialism: anti-vaccination ideology. I hope I’m wrong, but I have a suspicion that this next denialist lurch is going to be inevitable given three potent forces driving modern Republican political ideology: populist anti-government rhetoric, potent sexual morals, and a virulent anti-science culture.

The modern Republicans are steeped in anti-science through their long association with the tobacco lobby, anti-environmentalism in the service of corporate interests, and their deep commitment to global warming denialism. US libertarian and right-wing politics is notable for its foolish fixation on DDT built on a foundation of false attacks on Rachel Carson, its hatred of the clean air act, its increasingly fantasist opposition to the science of global warming, and its strict libertarian stance on smoking. Indeed, the link between these ideological strands is hardly surprising given that big tobacco has funded the network of climate denial and anti-environmentalist organizations for years. But as this web of denialism expands, and newer activists grow up and learn their trade in a political environment that is suffused with not just the rhetoric of anti-science activism but also with a deep disrespect for scientists and the scientific process, it is hardly surprising that the Republican political world will become vulnerable to new forms of anti-scientific crusade. Many Republicans seem to be opposed to any form of scientific research, not just that which directly threatens business. How can we forget Senator McCain’s derision for a study of the DNA of bears? It’s easy to imagine that the post-tea party Republican party is easily fooled by anti-science rhetoric posing as scientific critique.

I think this toxic atmosphere turned its sights on vaccination science proper for the first time when the HPV vaccine was introduced, and vaccination got its full attention for the first time. This happened because the HPV vaccine is aimed at a sexually transmitted disease, that is only harmful to women, and in order to prevent this disease one needs to vaccinate girls before they become sexually active. Somewhat alarmingly for those in our community who want to pretend that their daughters are all good little girls, the policy therefore requires vaccination at a surprisingly young age, the implication being that good little American girls might be getting laid rather early. This immediately drew the ire of the sexually conservative wing of the Republican party and associated organizations like the Family Research Council. Initial objections were based on sexual morality, but it entered Republican politics during the primary season for the 2012 presidential election. By this time arguments against the HPV vaccine had become more nuanced, as for example in this National Review piece where the author tries to argue that HPV is different to measles because it is intentionally transmitted and rare (wrong!) and questions why only girls get it, as if this is some evidence of a sexual conspiracy by liberals (in fact this policy is followed because the science suggests it is sufficient to prevent cancer, and more cost-effective). However, in the modern world debates on health policy inevitably require some kind of scientific rhetoric, so by the time of this primary season Michele Bachman had found the spurious scientific objection that it causes mental retardation. In four years opposition to the vaccine had gone from a purely sexual-morality-based principle to a general scientific critique of the safety of the vaccine and the validity and necessity of the policy. All these “science”-based arguments are wrong, but how is a modern Republican to know? They have a kneejerk distrust of scientists and they are so negative about science that it’s hard to believe they would understand or accept any science they read. So of course people who want to object to the vaccine on principle but feel the need to cloak their opposition in scientific rhetoric are going to be willing to believe any rubbish they’re fed.

Finally, overlaid on this mixture of christian anti-sex moralizing and distrust of science we have the libertarian arguments about agency and control over one’s individual choices. For most moderns, health continues to be seen as an individual choice, and decisions about healthcare are things that we take for ourselves when we are sick. Vaccination policy is the exact opposite of this: it concerns actions taken with our bodies when we are well to protect others. It’s all too easy for libertarians to fall prey to conspiracy theories and bad science where vaccination policy is concerned because it just doesn’t sit comfortably with their ideology. So the trifecta is complete, and the entire ideological sweep of the Republican party is vulnerable to anti-vaccination claptrap.

If my theory is correct, then we should expect to see more of this kind of rhetoric as Republican primary season heats up, and we should also expect to see the typical Republican approach to undoing long-standing laws they don’t like: administrative procedures to make them too difficult to enforce, followed by court challenges rather than direct political debate. If we start to see that happen then I think we need to throw vaccination into the large and growing dustbin of sane and rational policies that have become too tough for the Republican machine to handle – along with gun control, universal health coverage, and global warming. Once they take the step to anti-vaccination denialism, what bridge connecting them to the science community is left to burn?

Strange things are happening in Australian politics at the moment. The Federal government appears to be shooting itself in the foot with rocket launchers, and doing everything it can to become that rarest of entities, a one-term Federal government. There are many examples of the government’s reckless desire to consign itself to the dustbin of history, but most of them are beyond my ken. However, one that touches on an issue I’m vaguely familiar with – health – stands out as a particularly egregious example of policy-making stupidity, in which the government squandered a chance to implement a potentially important policy that would have improved the budget bottom line, then doubled down on an incredibly bad policy that is guaranteed to annoy essentially everyone. In an electorate with compulsory preferential voting and consistently high electoral turnout, this really is a recipe for electoral disaster – and completely avoidable.

The policy in question is the General Practice co-payment, and although it’s a politically tricky task – better governments have floundered over it – it has a sound public policy basis and with the right political guidance a new government riding high on popularity should be able to get this sort of thing introduced. That’s what first term governments in Australia do. So what went wrong?

A brief primer on Australian health financing

Very briefly, Australia’s health system is managed primarily through General Practitioners (GPs), family doctors in the USA, who are the first port of call for health concerns. In theory every time you visit you pay the GP and present the invoice to the government-run single payer health insurer, Medicare, who reimburse you a fixed rate depending on the type of service you received (this is called a rebate). Your GP can choose to charge you more than this rebate, in which case you have to wear the difference as a co-payment. Many GPs opt to provide a service called bulk billing, in which they don’t take cash from their patients but bill the government directly for only the rebate. This makes the service essentially free at the point of care for the patient, but reduces the amount of money the GP can make; it does however reduce the overhead for the GP, since they don’t need to manage a cash system in their office. GPs in Australia are essentially private health providers, claiming fees from a government single payer, and the system is deregulated sufficiently that many large international and national healthcare providers run large, multi-doctor and very modern clinics (often with allied health services attached), all charging the patient essentially nothing. Crucially for the health financing debate in Australia, hospitals are funded by State governments, while GP rebates through Medicare are funded federally. Note that Medicare is not like the US version (only for elderly people); in Australia it is the name of the universal health coverage scheme that all legally resident Australians can access.

One big problem with Medicare is that the essentially free nature of bulk billing services (and many non-bulk billing services, if GPs don’t increase their fees) is that patients are not discouraged from attending GPs for essentially irrelevant medical problems, have no incentive to wrap their problems into one visit, and have no incentive not to visit a GP for problems (like common colds) that the GP essentially can’t treat. This can lead to over-servicing, which causes congestion and reduces the efficiency of GPs as a service. It should be noted that compared to British GPs – who essentially run a poor-quality outpatient referral service – Australian GPs provide a wide range of services up to and including medical imaging, management of chronic and potentially fatal illnesses like cancer and HIV, and even minor surgery. They genuinely are the workhorses of the system, with a lot of responsibilities, and over-servicing is a serious issue. One solution often proposed for over-servicing is a mandatory co-payment that would force all patients to pay a nominal upfront fee to discourage frivolous GP attendance.

The Abbott government’s co-payment proposal and its aftermath

Into this policy issue stepped the new, first term government, run by Tony Abbott, a conservative ideologue who is probably better described as radical than conservative (as many conservatives are). Abbott won government on a platform of trust, promising “no surprises,” and certainly didn’t promise a major health financing change that I can recall (I can find no evidence either way that isn’t blatantly political, with a quick search). Immediately after the election Tony Abbott identified the classic “Budget shortfall” (every government since Fraser, except for Gillard, has done this it seems, and Gillard only didn’t do it because she was replacing her own party leader…) and started identifying “savings” that could reduce the deficit, which was in “crisis.” One proposed measure was the GP co-payment, which would be a $7 co-payment for all patients visiting a doctor. This unannounced and unsupported policy change attracted uproar, since it would fundamentally change the way that health financing worked, and no one was expecting it. After a long period of anger and clear messages from the Senate that the measure wouldn’t pass, the government relented and reduced this co-payment to $5, apparently voluntary. That’s right, the government was going to seriously go out on a limb for a policy that would give GPs the choice to become tax collectors for the government. Would you trust your doctor if they had volunteered to collect extra tax for the government?

Once this proposal had been sufficiently ridiculed the government canned that too, and introduced a nasty and cunning administrative change that will see the rebate for a 6-10 minute doctor’s visit reduced from $37 to $17. Obviously doctor’s costs won’t change, and so for a large proportion of their consultations they will face the choice of a $20 reduction in payment, or passing on all or part of that payment to patients. This is going to represent a huge increase in cost to patients, well above the $7 co-payment. Imagine, for example, that you are seeing a decent private doctor who charges you $50 for your service. Under the old system you pay the $50 and get a $37 rebate from Medicare; you end up paying $13, a fair whack of cash but no big deal. Under the co-payment system this would have increased to $20; under the new rebate revision, unless the doctor decides to carry the extra costs, you will now only be reimbursed $17, so your new fee is $33 – a more than 100% increase! Crucially, this move doesn’t need to go through parliament, so the government can effectively charge a rebate without getting senate approval. This is a hugely unpleasant change, and without huge numbers of concessions (for e.g. the elderly and those with chronic illness) it will lead to a huge increase in GP costs. If, for example, you’re taking statins for high cholesterol, your GP is your primary source of management and your management will probably require one of these 6-10 minute sessions every three months – so your medical bills will increase by $80 a year. This is actually a lot of money to some people.

The result of this should be obvious. While the $7 co-payment would discourage needless medical visits without necessarily significantly increasing costs for patients, the huge rebate change will destroy the bulk billing system, causing many poor people to drop out of GP service and shift to Accident and Emergency (A&E) departments in hospitals. GPs will attempt not to change their cost structure, and so will double the time they spent with each patient, massively increasing waiting times – except that their poorest patients will have disappeared to the A&E. This will mean that in the end GPs will see less patients who they charge more, and A&Es will become congested with patients attending for unnecessary minor complaints. With GPs charging more per visit for less visits, total medicare revenue won’t change – but less people will be seeing their doctor on time. The budget hole will not change in the slightest, waiting times won’t change at GPs, and A&Es will see an increase in pressure.

A&Es, as I mentioned above, are funded by state governments, not the Federal government.

So the government tried to implement a potentially important but unpopular policy, and when this failed switched to implementing a completely counter productive and unpopular policy that will seriously affect everyone through increased health care costs. They showed no policy sense and no leadership. Brilliant.

What does this tell us about this government’s policy approach?

As I mentioned above, getting a co-payment through Australian politics is a tough ask, and takes political skills, but it has two major policy benefits: it raises more money for Medicare, which is generally accepted to be underfunded, and it reduces unnecessary service use, which is a major problem in free or nearly-free health systems. With Australia’s growing burden of non-communicable disease and preventable health problems it’s probably a good idea, and $5 or $7 is not horrifically punitive, though for the very poorest in Australian society it’s tough. Australians in general are wealthy though and $7 is the price of a piece of cake – it’s really not the end of the world. Nevertheless, it represents a major shift in policy approach away from the bulk billing philosophy, and steering that policy through requires a nuanced debate in which the government prepares the public, then debates with the public, then compromises. It’s also potentially the kind of policy that involves expending a lot of political capital for not much gain – the co-payment is a good idea but not necessarily the best way to solve the problems it is intended to fix, and may not be worth any government expending political capital on. Instead, this government introduced it soon after an election, in an environment where it is accused of multiple broken promises, without any preparation or debate. It even managed to anger the Australian Medical Association, historically a very pro-conservative organization (one of its ex-presidents was a Liberal leadership contender, and an ex-Liberal health minister moved on to become one of its directors, I think). But then, having angered everyone who cares, the government dropped the plan in exchange for an even more punitive and vicious policy that will obviously fail to achieve any of the stated goals of the previous policy, and probably won’t raise any extra money but will put more pressure on Australian hospitals.

Is this not the very model of political naivete? To me this is an example of a government that has no policy framework at all. They were simply looking for ways to raise money and tried to cloak them in a policy goal that they didn’t really understand or care about, and when their mistakes were pointed out to them instead of backing down and finding a better solution, they simply dropped the cloak of policy rationality and turned vindictive. And this seems to be what they have been doing for much of their policy “development” since they won office. This is no recipe for sensible government, and the GP co-payment debacle is a classic example of how mean-spirited this government is, as well as its complete lack of interest in any real policy goals.

If this is how they go about all their policy development, the sooner they become a one-term government the better.

Today’s media are breathlessly reporting that the WHO is predicting 5,000 – 10,000 new cases of Ebola virus disease per week by the beginning of December. There is no written documentation on this, but I did find this study in the New England Journal of Medicine (NEJM) from the WHO’s rapid response unit which suggested 20,000 cumulative cases by 2nd November, which would be 10,000 more cases than we are seeing now (roughly) in just two weeks, so 5,000 per week in November. Given the doubling times in that study were estimated to be approximately one month, that does suggest a rough number of 10,000 cases per week by December (if anything that number is probably slightly optimistic). If so we can expect to see 40,000 cumulative cases by the start of December (20,000 to 2nd November, then 20,000 more in November), and 80,000 by the end of the year. Assuming the same doubling, we will see another 20,000 a week in January, which takes us to a rough 150,000 by the beginning of February, assuming that there is no successful intervention by then.

The case fatality rate is now estimated to be about 70%, so those time frames would give respectively (and approximately); 30,000 deaths by the start of December; 55,000 by the end of the year; and about 100,000 by February. Those are large numbers, but on a national basis what does that mean? In this post I want to look at the implications of these numbers under three different scenarios, but first let’s just look at the number of deaths by the end of the year, and do some rough calculations of the implications.

First, let’s look at just Liberia. The NEJM article puts about 50% of all cases in Liberia, so if we follow that proportion forward, we can expect about 27,000 deaths by the end of the year, and 40,000 cases. It’s not necessarily wise to assume that proportion is static, since the disease appears to have taken hold in the capital of Liberia and Liberia seems to be the worst affected, so the disease may spread faster there or may burn out sooner; but for lack of better evidence let’s just go with that proportion. Liberia, according to Wikipedia, has a population of 4 million, and its capital Monrovia has a population of about 1 million. At first blush, 27,000 deaths is not a lot of people in a country of 4 million … but in 2005-2010 Liberia’s mortality rate was 12 per 1000, for a total of 48,000 deaths in 2014 (my estimate). The 30,000 extra cases of Ebola in Liberia that will occur by the end of the year will cause 21,000 deaths, 50% of its annual total. In just 2.5 months the disease will kill as many people as usually die in 6 months. That’s a traumatic increase in mortality, such as usually happens only in times of natural disaster and war.

In addition, however, controlling the epidemic requires isolation and monitoring of an enormous number of people. Consider this report of an outbreak of Marburg disease in Uganda in September. The disease – which is very similar to Ebola – was identified in a single person in a small town in Uganda, and killed the index case after 17 days. Contact tracing was carried out, and the WHO reports that

As of today, a total of 146 contacts have been identified and are being monitored for signs and symptoms compatible with MVD. Eleven of the contacts developed signs and symptoms compatible with Marburg virus disease.

In order to properly contain this disease, the doctors had to track down 146 people, and of those 11 developed signs and symptoms (fortunately in this case none of them were positive). In the Liberian context this would mean that for every case, more than 100 people need to be traced and 11 isolated as suspected Ebola. Even if we assume that people are starting to catch on to the risks, and so are having less contacts and less need for isolation, we can probably still safely assume that to properly control the disease we need to isolate 4-10 people and trace 100 or so. For 30,000 new cases from now till the end of the year that will mean isolating 120-300,000 individuals, for a period of as long as 21 days. The top end of that figure is about 8% of the population of the country.

Finally, the toll on health care workers of the first 10,000 cases has been genuinely shocking. The latest WHO situation report tells us that 201 health care workers in Liberia have caught the disease, and 95 have died. Assuming that rate persists, adding 30,000 more cases will lead to the death of 300 more health care workers. Wikipedia, again, tells us that Liberia had 5000 full- or part-time health care workers in 2006, of whom 51 were doctors. By December Liberia will have lost almost 20% of its entire health workforce, leading to huge setbacks for health in one of only seven countries in Africa to have met its Millenium Development Goal 4 (under-5 mortality) targets.

So let’s bear those basic figures in mind. 40,000 cases= 28,000 deaths, 120-300,000 isolated individuals, 1.2 – 3.0 million individuals being monitored for signs and symptoms, 20% of the health workforce dead. Also, a very large number of foreign health workers coming in to help, and entire new hospitals being constructed in a country with no suitable infrastructure. Now let’s consider three different scenarios, based around the UN’s 70-70-60 goal, which is to be able to isolate 70% of cases and bury 70% of bodies safely, within 60 days. The low basic reproductive number of Ebola – below 2.0 in most cases – means that preventing 70% of secondary cases should be sufficient to kill the epidemic (just!) So let’s assume that if this goal is reached and maintained, the epidemic will plateau and then begin to decline, in about the same time that it took to escalate. For simplicity we’ll count that time period in terms of numbers of cases – so after the disease peaks, we will assume as many new cases occur as the disease fades away as occurred in its growth. This is not unreasonable – most epidemic patterns don’t crash, but tend to go through a decline that looks roughly symmetric to the increase. This may not apply with a disease as fatal as Ebola, but no one will know till we come out the other side, so let’s assume it will behave as most other epidemic patterns do. This means that if we have x cases by new year, and the UN goal is attained at new year, we should expect to see a further x cases before the disease is gone.

The best case scenario: Liberia meets the UN goal on time

If the sudden inrush of aid workers and soldiers enables Liberia to meet the UN goal on time, we will reach 70-70 in 60 days from now, i.e. by mid-December. That means there will have been 60,000 cases by the time the epidemic begins to decline, or maybe 100,000 by its end. This means 70,000 deaths, 300-700,000 isolated individuals, and pretty much everyone in the country being monitored. About 50% of the workforce will be dead. If we assume the decline takes a few months, say until March, we can guess that we will see nearly two years’ mortality in just 6 months. Between 10-25% of the population will have been isolated for about one month during this period, unable to work or care for others. The goal of safely burying 70% of the dead means 50,000 bodies will need to be buried by specialist teams. The difficulty of their work can be seen in this excellent brief report from the NY Times, but I think it’s obvious that burying 50,000 bodies is going to have to be done in a very different way to this. I wonder if there is even a protocol for mass burial of highly-infectious bodies?

This is the best case scenario. On the basis of the numbers alone it is clearly a catastrophe for Liberia, but it isn’t enough to bring the country to its knees (at least with outside help). Less than 2.5% of the country is dead, and although the economic effects are alarming and the long-term destruction of the health system will set the country back years from its health goals, it doesn’t appear to be a recipe for total collapse (at least on paper). There is hope here, and if the containment efforts are good so that the epidemic crashes really fast, then we can expect it to have a much less significant effect on the health workforce.

The realistic scenario: Attaining 70-70-60 a month late

Suppose instead that the UN goal is missed by a month, taking us to mid-January. That will correspond with about (very roughly) 100,000 new cases by the time the epidemic peaks, or 200,000 by the time it finishes in probably March or April next year. From our calculations, this means 140,000 deaths, 600,000 – 1.5 million isolated individuals, and the remainder being monitored. The entire health workforce will die in this scenario, and about 100,000 bodies will need to be buried safely. Only 54% of the Liberian population are working age, or about 2 million; it’s quite possible that a large part of the adult workforce will be in isolation for more than 3 months, with a large part of the rest involved in basic Ebola-combat activities (burying bodies, contact tracing, logistics). The death toll is equivalent to three years’ mortality in 6 months. What this would mean for the agriculture sector I cannot guess, but it doesn’t seem good. At this level of disease spread, I think we are looking at a society on the verge of collapse, where trade-offs have to be made between isolation/contact tracing on the one hand, and maintaining basic functions of civil society on the other. If the UN goal is missed by a month, alternatives will need to be found to isolation systems, and a huge increase in available health workers will be needed.

The worst case scenario: Failure to contain the epidemic by February

Failure to contain the epidemic by February means 150,000 cumulative cases by February, and probably at least 300,000 (maybe more) over the next few months, with no sign of a slowdown. Every month we will see another doubling of the rate (40,000 per week in March, and so on). Just taking the minimum value here of 300,000 cases, there are 210,000 deaths, 840,000 – 2 million individuals in isolation, and the entire health workforce decimated. In this scenario most of the adult working-age population is isolated, and the entire economy has shut down. Without a huge influx of foreign aid – in food, water, field hospitals, and probably thousands of medical staff – the disease will break out of any containment system that might be left in place, and the only limit on its spread will be its own voracity. This suggests to me that we have until January to get an effective containment system in place, or Liberia as a country will cease to exist in any functional sense. We should assume, furthermore, that in the general breakdown of the social order that will ensue many people will leave the country, and the risk of the epidemic spreading to Nigeria will be very great.

Caveats and limitations

These figures are all rough guesses based on huge assumptions. The number of people who need to be isolated will not scale linearly with disease spread, for example, because one individual will begin to have multiple case connections, and as the disease spreads and social contact reduces, the number of people a new case will have actually touched or been near will decline rapidly. So my estimates of effects on the working age population are inflated, and these are the key cause of social breakdown, I think. Without the effect of isolation and disease containment efforts, even 300,000 cases and 210,000 deaths is not a society-ending event in a country of 4 million people, though nobody wants to think about how horrible that will be. My assumption that the downward side of the epidemic will cause as many cases as the upward side is based on the assumption that the basic reproduction number will be reduced only just below 1 by the 70-70-60 plan; this means each existing case gets a chance to cause another, but if the epidemic is contained more effectively once the plan is in place that assumption could be an over-estimate. Also there are geographical limits on the spread of the disease (especially once things get desperate and all travel within the country is shut down); this will mean that the disease rapidly burns through its available cases and dies out before it can spread fully. And finally, I don’t know what the time trend in deaths of health workers is, but I suspect these deaths were mostly in the early stage of the disease before the word was out, and that deaths are now declining rapidly towards zero. Given all these constraints, I think that an aggressive plan enacted now, aiming to achieve the 70-70-60 goal, and followed through aggressively thereafter, will probably stop the disease somewhere before the numbers provided in my best case scenario. This will still cause a years’ worth of mortality in a couple of months, take up to 10% of the working age population out of work for isolation, and kill up to 20% of the Liberian health workforce. It won’t cause a national collapse, but it is a catastrophe easily as bad as a tsunami or some other huge natural disaster.

What should this mean for the future of health planning in Africa?

We often talk about “fragile health systems” and “extreme poverty” in Africa, but in the rich nations we’re used to thinking of health system failure as poorly-managed diseases and unpleasant medical experiences, but it’s worth remembering that at the extremes of medicine there are disasters: car accidents, pandemic influenza, and incredibly horrible diseases like Ebola. In the best of times in Africa, “fragile health systems” means excess deaths due to preventable infant, maternal, HIV- and malaria-related mortality. But in the worst of times it means huge waves of mortality due to natural disasters, war or epidemics. This Ebola outbreak is showing the rich world what “fragile health systems” really means, and also showing us that we are not able to completely disconnect ourselves from these failures. We can’t expect to isolate ourselves from emerging infectious diseases forever, except perhaps at the cost of our humanity, so instead of trying to isolate ourselves we should try to seriously tackle the fundamental problems affecting health systems in Africa and some parts of South Asia. This is not like a military intervention where the best of intentions can bring about the worst of results; we know what works and we simply need to find the political will to make it happen. Once this disease is back in its box, and all three affected countries are able to contemplate a return to normality, we in the rich world should make a serious, final effort to fix global poverty and most especially to end the grotesque inequality in health systems around the world. It’s almost certainly not going to happen, but we have to recognize that any country with a fragile health system is one weird event away from a terrible humanitarian catastrophe, and we need to start thinking about how to stop this from happening again. That means we have to act to help those countries to genuinely strengthen their health systems, and achieve the kind of economic state that is able to sustain them. This may mean we fat, rich westerners pay a little more for our chocolate, coffee and clothes, but it’s a price I hope we are all going to be a little more willing to pay now that the threat of dying horribly in our own body fluids has begun to make itself felt.

This situation should also serve as a warning about the dangers of ignoring very rare but high-risk events. Ebola has been known for 40 years, and this is the first time it has ever escaped containment. Work on a vaccine has been delayed or ignored partly, I think, because the risk of this disease escaping its bounds is so low that people considered it negligible. I hope my calculations show that the cost of this disease is only negligible provided it never happens, and that once it does happen all our risk assessments look incredibly stupid. We need a new way of assessing risk which puts a serious value on low-probability events. In the era of climate change the implications of this are obvious. At the tail end of some of the global climate models there are some extreme, civilization-ending events that have been largely overlooked by policy-makers because they are so unlikely to happen. Hopefully this Ebola outbreak will convince the world that it is time we started looking more at the tails of our probability distributions, and not at the comforting bulges down near the low-cost events.

From, a post summarizing recent findings about how well Obamacare is working on cost containment. There are two particularly interesting links in the post, one from the Kaiser Foundation about the expected 2015 health insurance plan costs, and an updated estimate from the Congressional Budget Office on the future costs of Obamacare. They both present slightly surprising news about how well Obamacare is working.

Falling health insurance premiums

The Kaiser Foundation reviews the cost of health insurance plans annually, and in 2013 it released estimates of the 2014 plan costs. This year it updated those estimates, using comparable methodology, and has found that the cost of some plans is going to fall dramatically, with a 0.8% drop in the cost of plans overall. The Foundation press release is available here, and includes a link to the report here [pdf]. This report is interesting because it looks at the cost of specific types of health insurance plan available through the health insurance exchanges (HIE) set up under Obamacare, so it is directly assessing the cost of plans that were introduced under Obamacare’s rules, operate within its mechanisms, and should be subject to cost containment and competition under the system established by Obamacare. The plans analyzed were the lowest-cost Bronze plan and the two lowest-cost Silvers. These plans are chosen because they are subject to subsidies, so the change in costs will directly affect the government’s budget bottom line, and they are also the plans poorer Americans are most likely to take up.

The system under which these plans operate is costly, but is explained fairly simply in the report. Basically people earning up to 400% of the poverty line are eligible for subsidies when they select these plans, which ensure they pay no more than 9.5% of their income for health insurance and as little as 2.5% for the poorest. Bronze plans get a stronger subsidy rule for people on up to 250% of the poverty line (I think). This is a kind of compensation for having been forced to take up insurance by the Individual Mandate aspect of Obamacare. Furthermore there is a nasty little competition-enhancer built into the act, which I didn’t know about and which is explained on page 4-5 of the document: if you are on a subsidized plan and some new insurer offers a cheaper plan of the same kind, your subsidy will be reduced by the difference in plan costs if you don’t switch plans. So as soon as a cheaper plan enters the marketplace, the insurer offering the more expensive plan will begin to bleed customers; and because there is now no way for an insurer to refuse to sell you a plan, the major blocker of churning (inability to switch plans due to pre-existing conditions) that used to exist will no longer prevent competition from being effective. As we will see, this nasty little trick buried in the law may have a significant role to play.

The Kaiser Foundation analyzed 15 plans from 15 states that included a major city and that have released their 2015 estimated premiums. It found major increases in the cost of plans in some states, from 8.7% in Tennessee to 0.8% in Los Angeles; and major falls in others, from 0.7% in New York to 15.6% in Nevada (page 2; unlabelled figure). Note that this means just in California and NY alone you are seeing no average change in plan costs in an area affecting a population of something like 60 million people. The average fall over the whole dataset was 0.8%; it’s not clear to me if this is a population-weighted average. On pages 3-5 you can see that these changes don’t affect people living on salaries up to 400% of the poverty line in most cases; all the changes actually affect is the size of the subsidy these people receive. It seems to me that this means all the competition pressure on health insurance companies arises from offering plans to people earning over 400% of the poverty line, to employers, and in attempts to grab market share through offering cheaper plans to the subsidized population. I think this is still a huge amount of competition pressure on the insurance companies, and the Kaiser Foundation offers some evidence that this competition is working. is all breathless about how “premiums never fall” and “this is unprecedented,” but I don’t know if that is true or not; it could just be that the health insurance companies miscalibrated their plan prices in 2013, when the HIEs were first opening, because they (like a lot of people!) misjudged how popular the Exchanges would be, and now they are able to lower prices because they have a larger pool of low-risk customers than they expected. If that is the real reason for these falls, then it seems likely future falls in premium price are not to be expected; but even if this is the case, it still points to a huge win for Obamacare, since getting low-risk young people into insurance plans to push down prices was a core goal of the policy.

I have a caveat on the future progress of premium prices under best-case scenarios; see my final point below for more on this.

Reduced subsidy cost to the government

The CBO report can be accessed here [pdf], and presents an interesting picture of both predicted costs to the government, and insurance numbers. This report is also an update on a previous report, calculated using the same methodology, so enables comparability over time. Basically the CBO over-estimated the cost to the government of subsidies provided to people taking plans on the HIEs, to the tune of $100 billion over 9 years (that’s a pretty big overestimate!!) The main reason for this overestimate is that the cost of insurance plans is lower than expected, and is expected to rise at lower rates than previously predicted. The average cost now is $3,800, which is expected to rise to $6,900 over the next 9 years; the estimate for 2015 is $3,900 where previously it was $4,400 (page 6), indicating that greater downward pressure has been exerted on prices than was expected, and driving future savings.

The CBO also provides estimates and predictions of health insurance coverage rates (Table 2 on page 4), which show some pretty amazing figures. Most importantly from a coverage perspective, the number of uninsured has been calculated to have decreased by 12 million in 2014, rising to 26 million in 2024 with the majority of those figures being made up in the early years. That’s a huge achievement for health reform in the USA, and if it is sustained will truly be Obama’s great legacy. From the perspective of other nations with 99% coverage of universal insurance it’s a poor outcome, but from the perspective of the USA it’s the biggest social welfare achievement in several generations.

The CBO estimates of coverage include estimates with and without illegal immigrants included, because undocumented immigrants are not eligible for subsidies or access to the HIE, and will form a larger portion of the pool of uninsured as time passes. However, even after excluding them from the pool of uinsured, by the CBO’s calculations the problem of the uninsured will not be fully solved by Obamacare at any time in the next 10 years: insurance coverage will increase to 92% of non-elderly legally resident Americans by 2024 (Table 2 on page 4, again). The exact increase in coverage over a world without Obamacare is not calculated, but it appears to be about 10 percentage points. Now, in 2014, with Obamacare fully functional for 6 months to a year (and some of its provisions in place for a couple of years) coverage is still only 86%. For the sake of America’s poor and sick, I hope that the CBO’s projections prove to be an underestimate.

From the CBO’s projections it is worth noting that Obamacare is expected to cost the government about $150 billion a year a decade from now. That’s not small change! But the post has some other figures from other reports which suggest that actually there are major cost containment outcomes beginning to show, which is interesting and in my opinion unexpected – I thought cost containment would be one major area where Obamacare would fail. I also didn’t think competition pressures would be effective in lowering prices at least in the short term, so it will be interesting to see if Obamacare exceeds my expectations. Watch this space!

These two linked reports between them do give a fairly good overview of the function of Obamacare, how it works in practice and where its limitations are. Obamacare is a complex beast and it’s worth reading them if you want to get a better understanding of how the new system works from a policy and financing perspective. Reading them also helps to give a sense of how complex the US health financing system is, and how difficult and delicate a task it is to introduce a law aimed at moving towards universal health coverage that doesn’t use a top-down single payer system. The more I see of Obamacare in action, the more I appreciate the challenge Obama faced and the skill with which he developed his signature policy.

A caveat on the future of Obamacare: where the real costs lie

At the bottom of the Vox post is a link to this related post on eight facts about America’s insurance system. It has some interesting material about different problems with the American system, but point 5) seems most relevant to the debate about cost containment under Obamacare. According to this post, hospitals and health plans have very low profit margins compared to drug companies and manufacturers. Part of this is probably just statistical anomaly: major hospital networks and health plans in the USA are not-for-profits, and by design cannot be expected to contribute to calculations of profit margins. But the broader point is important: while Obamacare focuses heavily on competition through health plans, the companies providing these plans don’t have the ability to cut costs through their own operations. If they achieve cost containment, they are going to have to do it through pushing down the profits of the people they purchase drugs and technology from. But these are the people furthest removed along the purchasing chain, and hardest for a fragmented insurance industry to force price reductions from. This suggests that in future the health plans will not be able to further compete on price without further structural reforms to the way the industry works, most particularly some kind of cost constraints on the medical device and drug manufacturers. While superficially this might seem antithetical to the modern capitalist system, it’s pretty standard in most countries with good cost containment programs (Australia and Japan, for example) to have fairly strict price controls on drug companies.

The problem for insurers in America is that they don’t have bargaining power. They need to exert price controls on companies that can sell to their competitors, and because they are offering a service in a fragmented market they can’t effectively withdraw their purchasing power as a last-ditch negotiating tactic. In future I think this means a US administration is going to have to step in to directly fix some maximum prices, or use innovative policy instruments to give defacto joint bargaining power to the insurance industry. I suspect one way that this could be done would be to make the HIE a vehicle for price negotiation – so all insurance plans operating through an HIE can use the HIE as an intermediary for price negotiations with device/drug companies, kind of like the Wheat Marketing Board that used to negotiate prices on behalf of all wheat farmers in Australia. You can bet that the pharmaceutical industry will fight such a change viciously. Another possibility could be to exempt health insurance companies from racketeering or anti-competitive practices laws when they are negotiating with providers, so that they are able to openly collude to fix prices. This would likely also kick up a huge stink, and could have serious negative consequences if other sectors of the economy managed to successfully demand the same right (I’m looking at Microsoft, of course). Another option would be for the government to find ways to encourage (or force) mergers of insurance companies until they reach a large enough size that they can effectively negotiate with providers; but the size required would likely lead to monopoly providers in some states, which would undermine the competition benefits arising from exchanges.

I think this is a fundamental problem of a free market in health, that is going to be very hard to fix without substantially altering the amount of “freedom” in the free market. Obama has shown, I think, that carefully-constructed law has the potential (not yet achieved!) to guide a free market system towards universal health coverage without completely breaking its fundamental structures, so maybe future extensions of Obamacare to resolve these cost constraint limits are also possible. But when we look at how difficult it has been to get Obamacare through, and consider the unique properties of the person who achieved it, it’s really hard to believe that after Obama leaves office there will be another person with the same talents and traits, and the same initial popularity, who will appear in the next 10 years and be able to achieve the next steps in health financing reform in the USA. Maybe Clinton could, though I don’t know; but certainly things will be dire for Obamacare if the next president is a Republican. I really hope that Obama is able to turn Obamacare’s political image around, and use it to win the next presidential election. For America’s poor, the next couple of years will be crucial, and the outcome far from certain.

The Hobby Lobby decision has opened up a pandora’s box of potential legal claims for exemptions from the Affordable Care Act under the umbrella of religion, especially since it’s very difficult for the court to rule on what is a deeply-held religious belief and what is not. There will be a whole queue of weirdos now lining up to get their particular weird tinfoil belief exempted from insurance, or looking for excuses to not offer insurance under the ACA, and you can bet that one of the first movements to get to the courts will be the anti-vaxxers.

When Obamacare was first being floated, Republicans made a big fuss about death panels, in which a body of old men with no experience of health care (federal judges, in fact!) would decide whether a person was worthy of care, and what care they could receive, on non-medical grounds. This, we were warned, is the inevitable consequence of socialism. Well, the Hobby Lobby decision – which was supported by Republicans –  guarantees that Americans get to experience just exactly that. A body of old men (federal judges) will decide whether a person is worthy of care, and what care they can receive, on non-medical grounds.

Because Religious Freedom!

Discussion on my last post about how well Obamacare is working led to the mention of a functional free market-based system to solve America’s healthcare problems. In this post I thought I would consider a few possible policy alternatives to Obamacare that might encourage a “free” market solution to the problems that the current system faces.

Obviously a true free market system doesn’t require any policy – just a let-’em-at-it laissez faire market – but nobody believes this is going to work, and most free markets aren’t really “free” in the strict sense, so some kind of policy prescriptions are required to get the whole thing in line[1]. The obvious baseline consists of basic licensing requirements for doctors and nurses, and mandatory minimum quality standards for hospitals. Obamacare appears to have added to this set of standards with mandatory minimum standards for insurance products on offer on the free market[2]. There is also an obvious basic public health and health management infrastructure – for drug licensing, monitoring serious infectious diseases and the like – that is usually government funded and run but of equal value to all players in health markets, be they private or public. But beyond this a free market-oriented policy framework can – and I guess most people would argue, should – be remarkably light touch.

The problem with health financing is that such a light touch system will not deliver cost containment and equity outcomes, and over the long term as health technology develops and demand increases more and more people will find more and more treatments becoming unaffordable. So if we want to have a functioning “free” market in healthcare, we will need some additional policy prescriptions. What do these prescriptions need to cover?

From a health policy planning perspective, a good health financing system should guarantee quality, access and coverage. That is, as many people as possible are able to access as much, high quality care as possible without facing undue burden. As the Chinese government found a few years ago, high coverage is meaningless if the system provides such poor financial protection that people are unable to access care; some nascent universal health coverage systems have good access and coverage but they only provide very low quality service. In contrast, the treasury generally wants to see a system that delivers quality, cost containment and equity. That is, the system is able to deliver high quality care at a reasonable cost, and to as large an extent as possible income should not affect your ability to access that care. These goals can conflict with or complement each other in any system, but in a free market system they’re particularly hard to achieve because of the problems of free riders, moral hazard and free choice. Any policy to manage a free market system has to find ways to handle these problems.

The main way that Obamacare aims to achieve the cost containment goals is through competition and widening the risk pool, by getting more young and healthy people to sign on for insurance. This is the least popular aspect of the plan, because it does so through the “mandate” – a legal requirement for everyone to purchase insurance, with a tax penalty for non compliance. Competition may also not push prices down – it could be for example that with prices already high and the size of the health workforce acting as a constraint on scaling up services, hospitals decide to compete on quality rather than price, offering boutique accomodation packages and better quality services at higher prices, rather than broadening and cheapening their services. In a truly free market system there is nothing to stop hospitals moving away from offering cheap services if the constraints suggest that’s a better plan. Sow what are some alternatives to the mandate?

Force back-payments of non-insured when they sign up

One option is to allow free choice, but to allow people to retrospectively enrol in insurance when they need it – but on the proviso that they pay that company for all the years they were uninsured, back to their last serious full-time insured period. So for example if someone leaves their parents’ insurance plan at 25, then doesn’t buy anything, but gets hit by a bus at 28 and suddenly needs a lot of expensive healthcare, they don’t have to pay it all out of savings – they can sign up to an insurance plan that will cover them. However, that insurance plan will charge them three years’ worth of back pay. Obviously payment plans would have to be generated, and it might be possible for those in need to sign up to some sort of government support scheme so that they are not bankrupted by the cost of insurance. Also, in order to discourage moral hazard in which every young person free rides until they get sick, past premiums would have to be anti-discounted to ensure there was some kind of penalty for late sign-ups.

This system would encourage sensible people to sign-on early, but would essentially guarantee universal coverage, since it would enable poor young people to go a few years without paying coverage in the hope that a future salary increase would cover the additional costs. It would be particularly useful for people like me, who were abandoned by our parents in our late-teens and have to make our way in the world with no capital and very limited income, but hopes of improvements in income in the future. It would also offer insurance companies some certainty about future income – they could do some fancy accounting on the basis of the market share of uninsured people they would be able to grab in the future as those people age, knowing that the income would be back-calculated. There would be an obvious risk that some proportion of the poor would become health insurance peons (HIPs): after a serious health scare, they had to sign up to a plan with such a huge back payment that they will spend the next 5-10 years up to their neck in repayments. Who would marry a HIP?

There would also be a residual moral hazard risk. If this system were only minimally regulated, then one would see the unedifying spectacle of insurance salespeople at the bedside of young, healthy people who suffered accidents and injuries. They would offer discounted past premiums in exchange for a promise of future guaranteed premiums, on the logical basis that these kids are not in hospital due to a long-term (expensive) condition, they’re just random bad luck. This would lead to a culture amongst young people of not signing up for insurance until you got injured, then taking the best deal on past premiums that the bedside dealer offered you. This creates a kind of moral hazard through competition, which, while it might suit the insurance companies, would be extremely unfair on sensible hard-working people who signed up from the start. But it would lead to a form of virtual universal coverage, and offer a way to reduce the pernicious effects of income inequality in free market health-financing systems.

HECS-style loans and late sign-up penalties

Another way to attack the equity and cost-containment aspects of free markets could be to offer loans similar to the Australian education system. Under this loan system, people who cannot afford healthcare could take out a loan from the government to purchase insurance, and then repay the loan when their income goes above a certain threshold, through taxation. This would remove all disincentives to signing onto health insurance for young and poor people, and help to deal with one of the biggest quandaries of health insurance systems: the people that the insurers most want to buy the product (the young and healthy) are the ones who least need it; and the people who least need it are also at the stage in life where they can least afford it (young people generally being poorer than older people). Whether HECS-style loans have reduced inequality in Australia’s education system remains a disputed point, I think, though as the cost of education increases I think they become increasingly important, but I think they’d have a clearer equity-improving effect in health financing.

This system would not alleviate the moral hazard problem of people just not signing up for anything until they are older, but it might be effective if combined with some kind of rolling penalty – currently in Australia if people over a certain income do not sign up for private health insurance, the cost of insurance when they do sign up will increase by a few percent for every year unsigned. This is not a “mandate” (you can “choose” to pay the excess) but it incorporates a big stick to encourage people to sign on earlier. In Australia private health insurance is a luxury, but in a free market health system it would be a necessity, so in combination with this stick the HECS-style system would help people who would otherwise be forced to spend years uninsured and then sign up at a grossly inflated price that they could not afford. A system of late sign-up penalties by itself leads to the unedifying sight of two completely equal individuals – same sex, same age, same health state – paying considerably different amounts for the same product simply because one of them comes from a poorer background. But a HECS-style system would alleviate some of this, by enabling the poorer person to pay back the cost of those earlier years of insurance later, when their income was higher. It’s also worth noting that some poor people might be able to afford cheap insurance plans, but unable to also cover the excess those plans contain, so just don’t bother; but a HECS-style scheme would alleviate the cost of the plan in the short term, making them more likely to be able to take the excess, and thus more likely to see even a low-grade insurance scheme as worth signing up for.

 Welfare-based systems

A very simple solution to the equity issues inherent in free markets is to have a public option for everyone below a certain income (i.e. medicaid) that protects the poorest. This won’t handle cost-containment though, and it creates a kind of drag on the private insurance market, since it’s likely that a lot of the potential customers of the private companies that those companies most want (the young and healthy) will be eligible for medicaid for a few years, and thus removed from paying into the private risk pool by the government. The government could make up for this by cross-subsidizing the private insurers for this pool, in exchange for conditions on e.g. adherence to a fee schedule for a set of basic services. By fiddling with the threshold and cross-subsidies, the government might be able to do something towards controlling the worst excesses of the private industry.

If I were running this welfare-based system, I would be surely tempted to also market my network as a private insurer to people above the threshold, or offer people on the network to buy into a “gold” version when their income goes above the poverty line. This would mean that the medicaid part of the health-financing system would slowly grow, and begin to put cost pressures on the private insurers. This would lead to a natural choice in the market place – the private insurers have to keep their costs near some government-set level, or slowly the market will be consumed by the government system until it becomes a kind of single payer. The insurers can then make a choice about what segment of the market they want to compete for. If this system worked, it might have a similar effect on cost containment to a single-payer system, but through the competitive pressure on multiple payers.

Specific interventions to distort markets

There are a range of interventions that governments can make relatively easily into markets to try and discourage certain activities and encourage others. Some examples include:

  • Tax breaks for companies that sign up their employees into selected larger insurers, in order to encourage the growth of a small number of large risk pools. Fragmentation of risk pools in private markets is one way in which costs grow, since a smaller risk pool is less robust to extreme events
  • Tax breaks for non-profit and industry-wide (industry-assocation) insurers, and support in establishing them. For example, the fishing industry might form a single industry-wide non-profit insurer, that covers all members in the industry. These kinds of associations often have associated mutual benefits – for fishers, for example, there might be low-cost financing to purchase or improve industrial equipment – which make them attractive to younger, healthier people (my industry association here in Japan, for example, offers low-cost mortgages). Again, this process would be partly intended to encourage the growth of very large risk pools, and the advantage of industry-based associations is that they target working-age people, who are healthier than retired people, and their pool of retired members is always in proportion to their employed younger proportion (due to cohort effects). The disadvantage is that they are restricted to the size of the industry, so there is a limit to the risk-pooling benefits they can obtain
  • Block funding for hospitals that sign up for government cost-containment plans, so that hospitals that agree to stick to a certain schedule for the provision of core services receive a guaranteed annual income in exchange. These hospitals will in turn become attractive to HMOs and other forms of restricted-network insurance providers, since they offer predictable and manageable costs, which in turn means that the services they bill are less likely to be scrutinized and rejected, reducing administrative overhead (which is apparently a large problem in the current US system). Such hospitals would also be attractive investment items since, though they don’t offer astronomical profits, they are a stable source of income for an investment portfolio.

Combinations of interventions

There is no reason that these interventions can’t be merged. I think it would be interesting to see how rapidly Obamacare expanded coverage if a HECS-style repayment scheme were added to the mix: getting people to sign up would then be simply a matter of overcoming laziness, and would be preferentially effective on the young and poor, improving coverage and equality. My guess is that a HECS-style system would be anathema to most Republicans and a sizable minority of Democrats, though. I also doubt that any Republicans of note have given an alternative, genuinely free-market healthcare plan that aims to improve coverage and access, while containing costs and reducing inequality, any more thought than I have put into this blog post. And that is the really sad thing about the American healthcare system today: while a classic universal health coverage scheme has so many enemies it will never get off the ground, a genuine free-market scheme also has so few friends that it will never happen. Which leaves only one alternative: the highly compromised, heavily contested and distinctly imperfect chimaera that is Obamacare.

fn1: Plus a blog post about a genuinely free market healthcare policy would consist of “we have no policy” which is pretty boring.

fn2: And it is astounding to me that the US government only just thought of this. The basic stipulation “you can’t sell products that are a complete rip-off” was only introduced in 2013 … wow.