Friday, December 19, 2008

A Feeling of Irony

It’s ironic how much English permeates the Chinese culture and yet, how nationalist the students feel. They wear T-Shirt’s with American words like “Cutie” or “Kobe”, they subscribe to magazines where it’s trendy to have English titles, and they terminate conversations with “bye-bye”. Yet, when asked about the future, most students say China will surpass America in the next 5-10 years.

Taxi drivers tell me about the people they know. People that went abroad but now are back because they “love the Chinese culture” and “couldn’t cope with a western one”. Yet, in the same breath, they convey envy for the opportunities I have as a Chinese American. Perhaps I generalize the Chinese as they generalize me but today, I feel this country’s irony.

Monday, December 15, 2008

Winter

The cold spreads like tentacles, chilling my bones so I can not move.

Thursday, December 11, 2008

Concerning the Uninsured

18% of the US population is currently uninsured. Though Medicaid commonly covers women and children, 28% of people ages 18-25 are still uninsured and anomalies exist because 64% of uninsured individuals have full time/full year jobs. The consequences of being uninsured is that these people are more likely to get reasonable coverage when they are sick. Thus, the uninsured tend to use more clinics and ER services, postpone care, fail to pick up prescriptions, and use less preventative services (Institute of Medicine Report). It has been shown that the uninsured tend to get diagnosed for chronic diseases too late and they are thus more likely to die of diseases such as cancer. In fact, the uninsured have 25% higher mortality rate then the insured- leading to 20,000 excess deaths per year. Given all this, it’s certain that we have to find a way to cover the uninsured in the US. I don’t really know how. However, I can discuss what we shouldn’t do and also, some suggestions as to where to start.

First, we have to note that there are clear differences between the personalities of those insured verses those uninsured. The insured tend to seek medical care more frequently while the uninsured tend to be more like population on Medicaid- poorer, less self sufficient, and underrepresented. Second, it is important to look at why people are uninsured: 64% say insurance is too expensive, many cite employer related reasons, and some even say they don’t want/don’t need it. About 1% of people simply are too sick to get insurance. In terms of not being able to acquire health insurance, it is understandable. A family of 2 may make only $10,000 per year which is around the annual cost for insurance so for the poor, there is a tradeoff between medical care and basic living needs. Thus, a simple way of providing coverage is to increase the income poverty line.

Third, people are not charged their individual average costs. Rather they are charged the group’s average cost so insurance often have a “high administrative” load for young, healthy workers. Also, since people know there are safety nets available to give them free care, a free loader problem could exist and contribute to current rates of uninsured (Feldstein Chapter 7). Finally, some of the insured are likely crowded out of private coverage because they drop coverage for free care. This happens when people opt into public programs such as Medicaid because it’s free even if the quality is worse.

In solving all these problems, there are also two political constraints. First, we are unlikely to get rid of private insurance which has very concentrated interests with over $500 billion in revenues. Workers in large firms are thus very content with their health insurance and are resistant to change. Second, the government faces enormous fiscal pressure. Social Security and Medicare will go unfunded soon and the federal budget has been in deficit for 30 years.

Possible solutions include expanding Medicaid, creating tax subsidies for group and non-group insurance, instilling an employer/individual mandate, or establishing universal access. Issues, however, arise with all these solutions. First, pubic expansion may be taken up by previously insured instead of the uninsured and employers may reduce/drop coverage. Take up rate is 10-70% while crowd-out can be as large as 50% so this is ineffective. However, the size of benefits and providing good information may help and simulations by Holahan and Zedlewski show that Medicaid expansions can reduce the number of uninsured. Second, tax subsidies for employers are tricky and not very elastic. Small employers may benefit but on the other hand, reducing tax subsidies hurts too. Take up rate may decline when workers have to share higher cost of health insurance and take up rate does not go up when net premium prices are lowered. Finally, individual mandates requires everyone to get health insurance with the government subsiding the process. Massachusetts tried this and failed. Even though they had a low uninsured population, government subsidies for the working poor were high.

I’m not sure where we go from here, but I know that we have to learn from our successes and failures. Good information is a must and we have to keep in mind that government actions may worsen effects but having health insurers compete on the basis of risk-adjusted premiums is desirable (Feldstein Chapter 7). Maybe the solution lies in having a national health insurance program that would eliminate high overhead and profits while making it possible to set and enforce overall spending limits. Still, I can’t argue for a best way to cover all of the uninsured in the US. I’m not sure this is even possible.

On Market Failure and Public Health

Regulation is about making sure the system works. This means limiting market failures like uncertainty, information asymmetry, externality (positive or negative actions of individual on society), etc. There are several ways of mitigating market failures but different interest groups hold different views making it hard for governments to intervene. First, the public interest view states that the government is suppose to protect us so they hold the government accountable for redistribution and efficiency. This is the regulatory perspective. These individuals feel that government ran monopolies are cheaper then the market driven economy and they push for the government to find ways where marginal cost is small. To a certain extent, our government buys into this view because natural resources like gas, water, etc. are controlled by the government as is the VA system, state, county, and municipal hospitals.

However, the alternative view or economic view believes that legislators just want to maximize their chances of (re)election by analyzing the cost and benefits of political support which might not be in the best interest of public health. Thus, economist think market failure is due to government failure and the government may be too power hunger to do much. They cite Medicaid and Medicare as examples: Medicaid is not open to all poor citizens and Medicare benefits the rich. Redistribution to the poor offends the middle class so the generosity of Medicare and Medicaid hints at the legislator’s ulterior motives.

Thus, we have two competing models (MCMC and CDHC) which both try to make the medical market competitive without leading to market failures. Under both models, selective contracting can be used. In MCMC, selective contracting would force hospitals to negotiate with health plans which, to a certain extent, show that the managed care system is making choices for its consumer. Under CDHC, things like Medical Saving Accounts arguably put more emphasis on the consumers and it increases price sensitivity, information, and consumer search.

Enthoven described the MCMC system as a way for sponsors like employers, government, or purchasing groups to work and overcome attempts by insurers to avoid price competition. To do this, they would establish rules of equity, select participating plans, manages enrollment process, and creates price-elastic demands. The success of this system depends on a number of high-quality, cost-effective, organized systems already in place which we do not have. Limitations are seen in historic events. For instance, according to Feinstein Chapter 20, in the 1970s, the government tried limiting rising medical prices and failed. In terms of price control, hospital rates were set based on conditions at the time of regulation. This leads to problems like changes in demand over time, cost (supply) changes, product changes, and imbalance between demand and supply when price is set too low. This resulted in up coding, and created over payments to hospitals in the early 90s when DRGs became profitable. We saw an unbundling effect where prices were shifted to unregulated sectors like long-term and post-op care. Finally, in 1997, the government laid down the Balance Budget Act (BBA) that led to payment cuts.

On the other hand, there are also limitations to the CDHC system. Consumers lack information and choices while Robinson et al. clearly showed that costs were higher in hospitals operating in more competitive environments at the local level. Left unmanaged, consumer-driven health plans may result in more technological competitions rather then price-based competition. As such, my view is that there needs to be an integrated plan. I want to see an MCMC system that creates an agency which can manage a number of competing insurance plans like HMOs so that citizens get standardized benefits. But, at the same time, as proven by Melnick et al., consumers must be made aware of the consequences of their choices. Thus, competition must be regulated such that there isn’t a “medical arms race” competition (Robinson et al) while still holding consumers liable for their choices.

Thursday, December 4, 2008

Cathy

I'm not sure how I fell into the good graces of Cathy but I am glad for her friendship. As one of the managers of the school, Cathy's acceptance of me has opened doors in my relationship with other Chinese teachers. She's ever helpful and unlike my other friends, she has an uncanny ability to calm me. I think she understands me because she herself is from a minority tribe in China and she's been abroad many times.

I ended up telling her the whole truth....what a relief. Apparently she had already known I could speak Chinese so she was just waiting for me to tell her myself. There are parts of Cathy I'd like to be: calm, collected, at peace with reality. Yet, my young self rejects these qualities. Never-the-less, she's been a good role model/friend and I'm glad for her acceptance.