Did the War on Poverty Stop the Drop in Poverty?


Robert Rector and Rachel Sheffield of the Heritage Foundation have written an analysis of fifty years of the War on Poverty. The result: It looks like the number of poor people was falling dramatically in the years before President Johnson declared War on Poverty; and that the drop stalled soon after.


Hospitals Respond to Obamacare’s Perverse Incentives: ED Use Up, Charity Care Cut


Physician and Nurse Pushing GurneyHospitals, inveterate lobbyists for Obamacare, have responded rationally to its incentives: They have increased use of their emergency departments, and cut charity care.

NPR had a feature on hospitals’ using online services to allow frequent flyers to book appointments at the ED:

Three times in one week, 34-year-old Michael Granillo returned to the emergency room of the Northridge Hospital Medical Center in Southern California, seeking relief from intense back pain. Each time, Granillo waited a little while and then left the ER without ever being seen by a doctor.

Narrow Networks Found to Save Money


National health expenditures are rising faster than the economy. Most economists believe this is due to perverse incentives that encourage unnecessary medical spending. More than 30 years ago the RAND Health Insurance Experiment showed that patients spend nearly one-third less when exposed to significant cost-sharing. Yet, health plans continually look for new ways to save money in the absence of a health care market where patients act like consumers.

One such cost-saving method is the increasing use of so-called narrow networks, where health plans restrict the choice of providers in return for lower premiums. Narrow networks are sort of like when you were in high school and your mother took you to Walmart to buy a pair of jeans. She may have refused to shop for jeans at the mall where she knew they would be more expensive. Obama Administration advisor, Jonathan Gruber, wrote about the use of narrow networks in Massachusetts health plans. He found that patients used fewer resources when required to see general practitioners rather than specialty care. According to Gruber:

Congratulations NCPA!


IV_2014_Top50BlogList_Banners_300x300_v1-157x157Here at the NCPA we are proud to announce that CDW Healthcare, “a leading provider of technology solutions and services focused exclusively on serving the healthcare marketplace, [with] customers [that] include more than 15,000 healthcare organizations nationwide — ranging from small physician practices to large hospital systems,” has recently ranked NCPA’s Health Policy Blog in its Top 50 Health IT Blogs in 2014.

Thank you everyone for the unconditional support and for making this the premier right-of-center health policy blog on the Internet!

We’re Number 44! Bloomberg Ranks Countries on Efficient Health Care


Bloomberg (the media business, not the former mayor of New York, although the latter appears to have regained control of the former), has ranked 51 high- and middle-income countries on healthcare efficiency. The U.S ranks 44th.

44 of 51 is pretty bad. (Indeed, we are bracketed by the Dominican Republican and Bulgaria). However, the Bloomberg rankings suffer from some of the same problems that we see with other rankings. NCPA has never thought the U.S. healthcare system was efficient, but neither do we think that other countries do a great job. NCPA scholars addressed this in a monograph published in 2009: Health Care Reform: Do Other Countries Have the Answers? My criticism of Bloomberg’s rankings draws largely from that monograph.

32 Percent of Employers May Move to Private Health Insurance Exchanges within 3 Years


Mature Businessman Seated at a TablePricwaterhouseCoopers has released new results from its 2014 Touchstone survey of employers. The major take-away is that one third of employers are considering moving their active employers to private health insurance exchanges in the next three years.

I have been excited about private exchanges for a while now. Private exchanges are a way for us to solve a problem that we’ve been beating our heads against for years: Employers’ monopoly control of our health dollars is the “original sin” of U.S. health care. Nevertheless, it is so deeply embedded in our culture and business practices that anyone who threatens it by advocating individual choice in health benefits faces fierce blowback.

Medicaid Spending Will Be More Than Advertised


According to the Centers for Medicare & Medicaid Services, spending on Medicaid, the jointly funded state-federal welfare program that provides health benefits to low-income people, increased 6.7 percent in 2013 to $449.5 billion. And it will keep growing at a fast rate:

Total Medicaid spending is projected to grow 12.8 percent in 2014 due to increased enrollment of nearly 8 million beneficiaries. Primarily driving the increase in enrollment are states that chose to expand coverage to adults up to 138 percent of the federal poverty level.

As some states are expected to expand their Medicaid programs after 2014, an additional 8.5 million people are expected to enroll in the program by 2016. Medicaid spending is expected to grow by 6.7 percent in 2015, and 8.6 percent in 2016. For 2016 to 2023, Medicaid spending growth is projected to be 6.8 percent per year on average.

This comprises a massive increase in welfare dependency. I think it’s a low-ball estimate. The Office of the Inspector General of the U.S. Department of Health & Human Services has just released a Spotlight article on Medicaid, summarizing a decade of research on how states game the system to increase spending beyond that which the federal government anticipated.

The incentive lies in Medicaid’s perverse financing merry-go-round. In a rich state like California, for example, the federal government (pre-Obamacare) spent 50 cents on the dollar for adult dependents. So, if California spent 50 cents, it automatically drew 50 cents from the U.S. Treasury. And most states had a bigger multiplier. What politician can resist a deal like that?

Obamacare Will Devour Your Pay Raise


Mercer’s latest National Survey of Employer Sponsored Health Plans reports that the cost of employer-based benefits will jump significantly in 2015

Employers in the U.S. are predicting that health benefit cost per employee will rise by 3.9 percent on average in 2015, preliminary results from a new survey by Mercer reveal. Cost growth slowed to 2.1 percent in 2013, a 15-year low, but appears to be edging back up. Moreover, a higher percentage of employees signing up for coverage through the worksite could be a wildcard driving costs higher.

The projected increase for 2015 reflects actions employers plan to take to manage cost. If they make no changes to their plans for 2015, they predict that costs will rise by 5.9 percent on average. However, only 32 percent of respondents are simply renewing their existing plans without making changes.

Commonwealth Fund: Most Who Visited Obamacare Exchanges Rated Them Fair or Poor


The media have cheered the latest Commonwealth Fund survey of Americans who have tried to enroll in Obamacare plans on health-insurance exchanges. For those who actually read the report, the results are significantly worse for Obamacare than championed by the press release.

To put it bluntly: Visiting an Obamacare health insurance exchange to choose coverage is an experience you would not wish on your worst enemy. Things have gotten a little better during the year: Last October, 61 percent of respondents reported that it was “very difficult or impossible” to “find plans they needed and could afford by end of open enrollment,” and this had dropped in the April-June quarter to 54 percent (Exhibit 2). That is a significant improvement — but it is also a tricky question.

Dartmouth Debunked? Providers Don’t Drive Variation in Health Spending


Central planners love to cite the Dartmouth Atlas of Health Care. The Atlas is an impressive, decades-long effort to study geographic variance in health spending. The famous Atul Gawande, MD, is likely responsible for the fact that the Dartmouth results are better known among lay people than any other research in health economics.

The reason central planners love the Dartmouth results is that they easily feed into a narrative that goes like this: “Medicare spending in McAllen, Texas, is about twice as much as it is in El Paso, Texas, even though their populations are similar. The doctors in McAllen must be twice as greedy as the doctors in El Paso. So, we need to tighten the screws on Medicare payments until costs in McAllen are cut in half. If we do that nationwide, we solve Medicare’s fiscal crisis.”