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In the Nation's Interest

Two Newspaper Columns on Health Care Reform

By Joseph Minarik

Within the past week, there have been two opinion columns in leading newspapers presenting distinct opinions on healthcare policy and reform thereof.  Each has something to offer (in my view), but each also has the potential to steer us wrong (also in my view).  I’d just like to discuss both briefly and see what we can learn.

One appeared in the New York Times, written by Ezekiel Emanuel (the physician brother of Rahm Emanuel, current Mayor of Chicago and a former Clinton Administration colleague, in the interests of full disclosure).  Ezekiel (forgive the first name, to avoid ambiguity with his brother) is a very bright guy, by all indications an outstanding physician, and worked with the Obama Administration in its work on the development of the Patient Protection and Affordable Care Act (henceforth ACA).

There is much in the column that is enlightening and potentially very useful.  My quarrel with it is mostly the headline: “In Health Care, Choice Is Overrated.”  Considering that writers often have nothing to do with newspaper headlines that appear over their own words, I don’t want to push too hard, or to be personal.  For that matter, the word “choice” occurs a grand total of one other time in the column, and having read the entire column I half wondered where the headline came from.  But because I (following CED policy) believe that choice is extremely important in long-term healthcare improvement, this point seems worth discussing.

Ezekiel makes the following useful points in his column:  “...[M]any Americans ... are nervous that the Affordable Care Act ... will ... restrict their choice of doctors...  But selective networks themselves are not a problem. The problem is that not all networks are of consistently high quality...  [E]xchanges should require that networks meet a minimum level of adequacy...  Insurance companies should have to publish the measures they use to select their “high performing” or “efficient” networks...  We need more reliable ways of measuring the quality of networks...  Insurance companies ... should allow any enrollee who develops a serious condition like cancer to obtain a second opinion at a recognized center of excellence.”

Useful ideas from a bright physician.  Just two general points, and then a defense of choice.  Ezekiel’s first broad point, that the quality of networks is the issue, is a little like the Lake Woebegone theme:  Why can’t all U.S. physicians be above average?  And why weren’t the further specific recommendations included in the ACA, which is billed by some – and Ezekiel himself is a fan, with a book (literally) of praise just published – as the answer to all our health-system prayers?

But those arguments aside, consider why choice among healthcare plans is important.  Imagine that all Americans have the choice between one U.S. health-insurance plan and emigration.  They ask for the good things that Ezekiel recommends.  The one insurance plan replies, “No, you cannot influence who is in our network.  You cannot see our evaluation of our physicians, or how it was derived.  You may not have a zero-cost second opinion.  And you can take this health-insurance plan, or you can leave it.”

Admittedly, this vision is rather extreme.  But contrary to the subtext of the column, consumer choice can be the powerful force that makes insurers shape up.  Hearing that a particular plan refused its enrollees second opinions about serious conditions would be enough to make me look around.

One might argue that consumers likely would not have enough information to make intelligent choices among competing plans.  But given that one of the column’s points is that consumers should be given more and better information, that argument would seem to be internally inconsistent.  Or one might argue that consumers are not capable of making such judgments.  In which case we are lost no matter what healthcare system we have.

Again, I don’t know that the author of the column wrote the headline.  It does not seem to fit the column all that closely in any event.  But I do believe that choice is a key potential driver of healthcare quality and affordability – it very much underlies CED’s approach to healthcare reform – and it is worth emphasizing that point.

The second column was written by George Will, and appeared in the Washington Post (among other papers, I’m sure).  Will’s argument is that Americans put excessive faith in medicines (or perhaps procedures) as the saviors of their health; he contends that more often it is good behavior that yields the most important improvements, citing as one example the recent reduction in reported childhood obesity.  Roger that.  He also cites the bankruptcy of the company that made Bon Vivant brand vichyssoise after outbreaks of botulism in 1971 as an example of wise changes in consumer behavior.  I’m not sure I buy that one (as it were); I’d bet more on Wall Street knowing a rash of liability lawsuits when it sees them coming.

But a third example that Will uses to document the power of consumer behavior is the decline of smoking in the wake of the 1964 surgeon general’s report.  From this example, Will suggests that “ lesson of the past 50 years is that one of the most cost-effective things government does is disseminate public health information concerning behaviors as disparate as smoking and using seat belts.”  I’m glad to hear that said.  Some people refuse to give government credit even for the generation and dissemination of information.  Economists will use our exclusive jargon to explain that information is a public good; once generated, it can be repeated almost costlessly (especially in these days of the Internet).  Therefore, it frequently does not pay the private sector to incur the cost of generating information in the first place, and so it falls to government to do so.  And sometimes government gets a bad rap even for such theoretically unimpeachable activity; for example, recent Administration proposals to create technology information centers for small firms have been decried by some as “picking winners.”  That could be the case, but like everything that Sportin’ Life wanted to poo-poo, It Ain’t Necessarily So.

But for today I’d like your indulgence to praise a different form of government activity.  It wasn’t only the surgeon general’s report that helped to slay the smoking dragon.  It also was government’s willingness to tax the living daylights out of cigarettes.

Because cigarettes are addictive, and because their price is mere mad money to many adults, increasing the price has only a limited effect on adult smoking.  However, many young people who are not yet addicted have less mad money to throw around.  Therefore, economists have argued for some time that increasing excise taxes on cigarettes might deter from beginning to smoke even young people who have been convinced through various channels of popular culture that smoking is cool.  It also has been argued that once people reach young adulthood without beginning to smoke, they stand a good chance of never taking up smoking.  So raising cigarette excise taxes, it is argued, could save many people from the ill effects of smoking.

In addition to releasing the surgeon general’s report, the federal government in fact has increased its excise tax on tobacco, including through the substantial tobacco settlement in the 1990s.  By deterring young people from taking up smoking, those steps, over time, have quite likely reduced the number of smokers.  And given the several channels of harmful influence on hearts, lungs, and other internal organs, it is likely that the substantial increases in tobacco prices have played a key role in promoting good health.

To provide some background, please look at the following chart.  As was noted above, the surgeon general’s report was published in 1964.  Cigarette consumption per capita was above the 1964 level as much later than that as 1982.  The price of a pack of cigarettes increased at just about the average rate of inflation between 1954 (when all of the presented data first were available) and 1982.  But there was a big jump in cigarette taxes effective in 1983 (as a part of a major 1982 deficit-reduction law), which caused an equivalent jump in the price of cigarettes in that year; and it was then when cigarette consumption began to plummet.

I do not want to understate in any way, shape or form the importance of the surgeon general’s report.  Nor do I want to downplay the importance of government’s role in generating and disseminating information; heck, think about public education (or what it should be).  But I do want to point out that government can do other things that promote the public welfare – including raising the prices, through taxation, of commodities that impose costs on society.  That is not a step to undertake lightly, but neither is it one always to ignore.