I have said repeatedly that the PPACA does not address the real problems of health care and health care costs. I have also said that in reality the law reinforces the wrong behavior and perspective on who should pay for health care. The PPACA also further shifts costs from the government to the private sector both insured and self-insured. Take a look at what Steven Levitt says about health care reform (I added the bold highlight).
(Money Magazine July 2010) — Had Steven Levitt taught your college Econ 101 lecture, you’d surely remember more of it. The University of Chicago professor takes the basic tools of economics — reams and reams of data, and the understanding that human beings respond to incentives for gain — and applies them to surprising new subjects.
“Freakonomics” and “SuperFreakonomics,” are his bestselling books By turning economics into a good story, Levitt has become his field’s greatest popularizer — the Carl Sagan of number crunchers.
No wonder he was the hands-down readers’ choice for this month’s Visionaries interview. We asked Levitt to answer your burning economic questions; Money contributing writer David Futrelle chimed in with a few of his own. Edited excerpts follow.
Health reform
You write about how incentives shape decisions. How do you expect the new health reform to change the way we use health care? –Donna Sako, Taneytown, Md.
The law fails to address any of the important questions about health care. People are not paying on the margin for the health care that they are receiving — after they pay their premiums, the insurance picks up the tab. When neither the doctors nor the patients are directly paying for health care, people have no incentive to make careful decisions about how to spend money on the margin. That’s one reason we spend 15% of GDP on health care.
A reasonable health care reform would shift the incentives so that when I go and get expensive health care, I pay enough of the costs to get me to think twice about whether the benefits outweigh the costs. It makes sense to have catastrophic coverage. That’s the idea behind insurance: When someone is unlucky, you don’t want that to ruin their life financially. But we as a society often will spend vast sums at the end of a life trying to keep someone alive for an extra month. It’s not something society likes to talk about, but I think people should face a tradeoff: Do I want my mother to live another week, or do I want to have enough money to send my kids to college?
That sounds like a very personal version of the death panels we argued about in the last election.
People don’t like it, but inevitably we need to think about both the costs and the benefits of health care. We cannot avoid the financial consequences.
The other real problem in the U.S. system is that health care is tied to employment, and that leads to people getting locked into jobs. Everyone agrees that that’s not an ideal solution, and the current bill if anything makes the connection stronger rather than weaker. It seems like we did everything wrong with the health care bill.
We’d spend less on medical care if people had healthier lifestyles and avoided heart disease and cancer. Any way to create incentives for that? –J.P., St. Louis
The thing about chronic diseases is that most of the costs fall on the person who’s got it. If you have diabetes or heart disease or cancer from smoking, you bear the burden of being ill. It’s not so clear there is a role for intervention. You might say we could inform people of the risk, but the research suggests that smokers are well informed. They like to smoke, or they can’t help it.
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