Posts Tagged ‘Arnold Kling’

Arnold Kling outlines his “two-tier” health insurance system,

1. Currently, government programs for health care involve open-ended commitments to reimburse doctors for whatever services they deem appropriate. This is too expensive (although you can see why key constituencies would find it popular).

2. The government needs to get control of its health care budget. It is likely to do this by reducing its reimbursement for discretionary health care services, such as diagnostic screening, futile late-stage care, and other procedures that have been found to have high costs and low benefits.

3. Regardless of how government draws the line between necessary procedures and discretionary procedures, it will not allow people to be deprived of necessary procedures for lack of money. Nor will it prevent people who can afford discretionary services from obtaining them using their own resources.

4. Hence, we will see a two-tier system. Necessary procedures will be available to all (which is pretty much true today, through the proverbial emergency room). Beyond that, wealthier people will be able to purchase more costly discretionary medical services, just as they can purchase fancier cars or more expensive food.

To those who study health policy, and even to those who only understand the basics of the American health care system (ignoring the tin foil hat types), this is indeed a “blinding glimpse of the obvious.”

What Kling fails to acknowledge is that we already have a two-tier health care system and that while the PPACA changes some things, the beast remains. In general, Medicaid is for the poor, Medicare is for the formerly working elderly, and private insurance is for the middle and upper classes with prestigious jobs or high incomes.

As much as Obama likely idealizes a complete health care overhaul, Medicaid and the various state-only plans for specific poor populations will continue to generally provide less coverage than Gold and Platinum Medicare plans.  In turn, these will offer substantially less coverage than many private insurance plans. Medicaid participants will continue to be less affluent than private health insurance consumers.  Those with high-paying jobs and post-secondary education degrees will be far more likely to receive or purchase private insurance with coverage above and beyond the coverage of Medicare and Medicaid.

My disagreement with Kling comes from his point #1.  Despite his allusion to the grandeur and limitless supply of public health insurance subsidization, reality’s contrast is stark.  Medicaid frankly isn’t that great for most people.  Medicare Part A isn’t that great either.  This is because each is in fact not a black hole of money and endless coverage.  We ration via limits on services, deductibles, and blatant limits on coverage (for example, catastrophic coverage is different than long-term care).

What we ultimately will see with the PPACA is more of the same: a two-tier system in which the poor largely depend upon Medicaid and state health insurance plans while the middle and upper classes receive better treatment with better Medicare plan options with peripheral private health insurance coverage or employer-provided health insurance plans. The PPACA is a plan to make John Rawls proud: the poor will continue to receive less health coverage than the rich, yet even the poorest will receive better coverage than before. That is, until we perhaps realize that we cannot afford our promises and must decide how we will truly ration health care.