Kevin Drum - June 2013

Obamacare Will Be a Disaster, Part 176

| Mon Jun. 3, 2013 11:44 AM EDT

Avik Roy, I'm told, is one of the good conservatives. He may oppose liberal expansion of the welfare state, but he knows his brief and makes honest arguments.

As it happens, I haven't read much of Roy's stuff. But I've come across him twice in the past couple of months. First, he was on Chris Hayes' show, where he offered up a criticism of Social Security's disability program that was so misleading that Michael Astrue, a former commissioner of the Social Security Administration appointed by George Bush, nearly had a heart attack on the air. Roy eventually had to retreat to a criticism of Britain's disability program, which, as Astrue pointed out, had nothing to do with America's, which had long since dealt with the problems he was talking about.

Strike one. Then a few days ago, Roy wrote a piece about health insurance prices on California's Obamacare exchange. His headline charge was that rates in the individual market were going up 146 percent. How did he come up with this? By powering up his browser and getting a couple of teaser quotes from eHealthInsurance.com for the youngest, healthiest consumers buying a plan with enormous copays. This is so misleading that it's hard to believe it was offered in good faith.

But there's more: nothing about this is unexpected. Under Obamacare, insurance companies have to offer coverage to everyone at similar rates. This means that some people will see their rates go up and some will see them go down. In particular, the youngest, healthiest customers will probably pay more, while older, less healthy customers will pay less. You may think this is terrible (I don't), but it's the way social insurance works, and it's been acknowledged as part of Obamacare from the beginning.

So to recap: Roy pulled up some bogus quotes; didn't acknowledge that rates will go down for some people; and didn't bother mentioning that Obamacare's subsidies will lower rates further for those on limited incomes, including plenty of young people. The normally mild-mannered Jon Cohn was finally driven (almost) into shrillness by all this:

Roy never acknowledged that, even as young and healthy people would have to face higher premiums, older and sicker people would face lower premiums. He said absolutely nothing—not a single word!—about the federal subsidies available to people with incomes below 400 percent of the poverty line. (That's about $46,000 a year for a single adult, or $94,000 for a family of four.) This has been a pattern with his writing and, unfortunately, much of what I read on the right.

....While all of us are susceptible to hyperbole or selective intepretation from time to time, Roy's column was something else entirely. He plucked out two examples of people who would pay more in California, pretended they were emblematic of the system as a whole, then accused other writers of being irresponsible. His argument hasn't held up well to scrutiny, but it's part of the political conversation and, I'm sure, will remain so for a while.

In his follow-up post today, Roy says “we’re finally having the intellectually honest argument about Obamacare that we should have been having all along.” If only that were true.

Strike two. More here from Ezra Klein.

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Room Service Dying a Well-Deserved Death in New York

| Mon Jun. 3, 2013 10:01 AM EDT

The New York Hilton Midtown plans to stop offering room service in August. Why? It's a money loser:

The decision to jettison room service at the New York Hilton, reported by Crain’s New York Business, comes as other large hotels have cut back menus or reduced hours in recent years, and many newer boutique hotels have opened without offering it at all. Some hotels have even made arrangements with nearby restaurants to act as surrogate kitchens and deliver food to their hotel rooms.

John Fox, a consultant for the hotel industry, said nearly all hotels lost money on room service, which requires maintaining a staff of waiters and kitchen workers throughout the day, even though orders typically dwindle after breakfast and come in sporadically afterward. “Everybody’s doing what they can to engineer their properties to make more profit while still supplying the services their guests demand,” he said.

I guess if you work in the hotel biz, this is common knowledge. But I didn't know this. I figured big hotels with in-house restaurants already had kitchens, so offering room service didn't cost that much as an add-on. Not so, apparently. In any case, this explains the fact that a small breakfast will run you something like $40 all-in at a New York hotel. That always seemed kind of crazy to me, but it makes sense if room service is really such an expensive operation to maintain.

I rarely ever used room service myself, and certainly not in New York, where decent food is never more than a block or two away. I won't miss it when it goes away completely.

We Pay a Lot More for Health Care Than Other Countries

| Sun Jun. 2, 2013 12:58 PM EDT

The graphic on the right won't come as a surprise to anyone who's read this blog over the years. It comes from the New York Times today, and it illustrates the fact that medical procedures cost way, way more in the United States than in other countries. But why?

In the case of prescription drugs, the answer is supposedly that other countries are free riding off of us. If everyone paid $6 for Lipitor, then Pfizer never would have developed it in the first place. It wouldn't have been worth it. It's only the fact that Americans pay full market value for Lipitor that allows other countries to artificially force down the cost for their residents.

There may or may not be something to this, but at least it's an explanation. What about MRI scans, though? MRI machines cost the same in the Netherlands as they do here, and they're utilized just as heavily in both countries. So why the higher price in America? Some of the answer is in the cost of the personnel: we pay doctors and technicians more than most countries do, and that all goes into the price charged for diagnostic procedures. But does that explain a 4x price difference? Or the stunning 26x price difference in an angiogram between the U.S. and Canada?

Probably not. So Times reporter Elisabeth Rosenthal decided to dive into one particular procedure: colonoscopies. Why are they more expensive in the U.S. than elsewhere?

Largely an office procedure when widespread screening was first recommended, colonoscopies have moved into surgery centers — which were created as a step down from costly hospital care but are now often a lucrative step up from doctors’ examining rooms — where they are billed like a quasi operation. They are often prescribed and performed more frequently than medical guidelines recommend.

The high price paid for colonoscopies mostly results not from top-notch patient care, according to interviews with health care experts and economists, but from business plans seeking to maximize revenue; haggling between hospitals and insurers that have no relation to the actual costs of performing the procedure; and lobbying, marketing and turf battles among specialists that increase patient fees.

While several cheaper and less invasive tests to screen for colon cancer are recommended as equally effective by the federal government’s expert panel on preventive care — and are commonly used in other countries — colonoscopy has become the go-to procedure in the United States. “We’ve defaulted to by far the most expensive option, without much if any data to support it,” said Dr. H. Gilbert Welch, a professor of medicine at the Dartmouth Institute for Health Policy and Clinical Practice.

The "turf battles" mentioned above are about the routine use of anesthesiologists in colonoscopies, even though most aren't done under a general anesthetic. This drives the price way up:

In Austria, where colonoscopies are also used widely for cancer screening, the procedure is performed, with sedation, in the office by a doctor and a nurse and “is very safe that way,” said Dr. Monika Ferlitsch, a gastroenterologist and professor at the Medical University of Vienna, who directs the national program on quality assurance.

....Dr. Cesare Hassan, an Italian gastroenterologist who is the chairman of the Guidelines Committee of the European Society of Gastrointestinal Endoscopy, noted that studies in Europe had estimated that the procedure cost about $400 to $800 to perform, including biopsies and sedation. “The U.S. is paying way too much for too little — it leads to opportunistic colonoscopies,” done for profit rather than health, he said.

Bottom line: if a colonoscopy is performed in a doctor's office without an anesthesiologist, the price is cut in half—maybe more. Cut the number of colonoscopies and increase the use of other tests that are frequently just as good, and the average cost of colon cancer screening in America might drop by three-quarters.

But don't expect this to happen anytime soon. After all, one man's outrageous costs are another man's Mercedes Benz. Welcome to the best health care in the world, baby.

Liberals and Lightbulbs

| Sat Jun. 1, 2013 1:10 PM EDT

A few weeks ago, in a post that was mainly a response to Jonah Goldberg's dismissive attitude toward renewable energy, I mentioned a recent study showing that although liberals and conservatives were about equally likely to buy an energy efficient CFL lightbulb even if it cost more than an old-school bulb, conservatives were less likely to buy the bulb if the packaging included the message "Protect the Environment."

That's what the abstract of the article said, anyway: "Conservative individuals were less likely to purchase a more expensive energy-efficient light bulb when it was labeled with an environmental message than when it was unlabeled." But Tim Carney points out that there's a little more to it than that:

Most of the coverage of this made it sound like only conservatives were turned off by the label, and that it was clearly for petty reasons. While really, most people, including generally liberal people, became less likely to buy the bulbs with the label.

The green line in the chart shows how likely people are to buy the bulb with the environmental message. And Carney is right: It crosses below the gray line at an ideology score of -0.6, right in the middle of the liberal spectrum. Just about everyone was turned off by the message except hardcore liberals.

That's actually kind of interesting. And it also shows the danger of relying on a journal abstract when you don't have access to the full paper. It's not that the abstract was wrong—increased conservatism was associated with increased resistance to the message—but there's more to the story.