The Cruz-Sanders Debate: Much Ado Over Nothing . . . and (Possibly) Something

1.  The Sanders-Cruz Debate


When I first heard Sen. Cruz and Sen. Sanders were going to be debating healthcare on CNN, my specific thought was, "Wow, that will be useful, a debate on healthcare, one between two men who are neither clinicians, nor administrators nor even healthcare lawyers nor health economists.  That should add a lot to the debate!"


My general observation over the years about  healthcare reform is that when people on the Left don't really understand the issue,  they talk about "single payer" and that when people on the Right don't understand the issue, they talk about "buying insurance across state lines."


After listening to the debate, as to both points (as we used to say at FT Sill): "Check."


2.  Why Don't the Exchanges Work as Pres. Obama Promised?


I don't think the Patient Protection and Affordable Care Act ("PPACA") is good or sustainable legislation.  I think there are significantly better approaches available.


To be brief, policies in the individual health insurance markets, that were offered in  "guaranteed issue," states, were often unaffordable (like the individual market in New York State after 1993 reforms).  On the other hand, health insurance on the individual market, in states where insurance coverage could be denied due to pre-existing conditions, were much less expensive, but were also much harder to get. 


Functionally, PPACA made the individual health insurance market in the entire country "guaranteed issue."  Predictably, this made insurance in the individual market easier to get but much harder to afford.


On the other hand, the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") did away with exclusion for pre-existing conditions in group insurance, requiring a 12 month waiting period that could be waived in the case of continuous coverage.


While this is less favorable to people with pre-existing conditions than PPACA it is both favorable and sustainable.  And, if there were mechanisms that favored continuous coverage (Sen. Cruz's point about "portability"), then waiting periods would become a fairly moot point.


3.  What Might Work Better?


At this point, it is worth looking at what other nations do about paying for healthcare.  A good reference is T.R. Reid's 2010 book, The Healing of America


In general, per Reid (and contrary to Sanders), the lowest costs and the best clinical outcomes tend to be, not is "socialized medicine countries" (like Great Britain, with the National Health Service, a government-owned delivery system, or Canada with Medicare, a government [Federal and Provincial]-run insurance program), but in countries with "Bismarck Systems" (like France, the FRG and Japan). 


Bismarck Systems are systems of government regulated and mandated universal private insurance.  To an extent, the employer-based health insurance that covers a declining majority of Americans is a sort of a Bismarck system. 


Introduced during World War II as a way around wartime wage & price controls, unions fought for its expansion during the 1950s and 1960s, but it never became universal.  This was probably due to the fact that even in the "Organization Man" 1950s, most Americans were employed by small businesses or were self-employed. 


Because of the general movement towards self-employment (the "Gig Economy"), those trends are getting even stronger than they were.  One way to cope with te trend is with PPACA which, either is the form of the Exchanges or in the form of Expanded Medicaid, is not employment-based.  However, as described above, an individual market for health insurace does not really favor the consumer. 


The Fundamental Questions, then, seem be to be: 1) how do you build a Bismarck System for the "Gig Economy;" and 2) how do you structure non-employment (perhaps more accurately stated, "non-employer")-based groups?    


To Be Continued . . . .


Bill Kamps Added Feb 8, 2017 - 1:38pm
My big complaint with Obamacare is that it messed with the private insurance market, forcing my premiums to double, with none of the extra premium going to the poor.  Why did that need to happen ?
It happened because plans were forced to have new minimum coverage features added to them, and the deductible was lowered.  I could no longer buy the plan I had before.
My plan should have been left lone.
Until the consumer is involved in keeping prices lower it wont  happen.  People now when they go to the doctor can not ask what a procedure costs, before it is done.  No  where else in our economy is this done.  No one has their car fixed, without an estimate first.
John Minehan Added Feb 8, 2017 - 2:08pm
Part of the solution to the phenomenon you talk about are health savings accounts and encouraging patients and doctors to haggle out a price in cash for routine (generally Primary Care) services, as seen a Urgi-centers and with Direct Primary Care.
Unfortunately, PPACA did not generally include provisions for HJealth Savings Accounts ("HSAs") to allow people to put away pre-tax dollars to pay or such services.
George N Romey Added Feb 8, 2017 - 3:08pm
What do your expect from CNN?  Get one candidate that was screwed over by his party and another candidate that lost to one of the most crazy candidates in US history for a little ratings? Really, next CNN will be showing Pro Wrestling. 
Billy Roper Added Feb 8, 2017 - 3:14pm
Did it bother anybody else that CNN fed questions to their debate "audience"?
John Minehan Added Feb 8, 2017 - 3:38pm
George, To some extent, "Politics is the new WWE."
Dino Manalis Added Feb 8, 2017 - 3:52pm
Americans need healthcare reform, but the main objective should be to lower expenses with market reforms, like import foreign prescription drugs; cap medical malpractice compensation; and streamline insurance bureaucracy and paperwork, to help the economy; shrink the deficit; ensure viability of Medicare/Medicaid; expand insurance coverage; and enable Americans to use preventive diagnostic care.
John Minehan Added Feb 8, 2017 - 4:05pm
"Americans need healthcare reform, but the main objective should be to lower expenses with market reforms, like import foreign prescription drugs; cap medical malpractice compensation; and streamline insurance bureaucracy and paperwork, to help the economy; shrink the deficit; ensure viability of Medicare/Medicaid; expand insurance coverage; and enable Americans to use preventive diagnostic care."
I think most people (as demonstrated by the Sanders-Cruz Debate) agree with that.
However, they disagree violently about how to do it. 

Bill H. Added Feb 8, 2017 - 4:10pm
Simply a show of extreme ideas from both parties, neither of which is the answer. It was basically just a staged WWF - type event. Strictly for show.
John Minehan Added Feb 8, 2017 - 4:17pm
Bill, Which gives other people, probably not at the extremes, an opportunity to debate what Wes Clark used to call, "a Plan that might work."
Donna Added Feb 8, 2017 - 4:17pm
I think that is half the problem in this Country. It has become the left versus the right, and no concern for we the people. The Obama plan did good for some but as you stated it did nothing for me. I had my policy taken away, had to go with a much higher deductible, and my Guy, who is a self employed, sole proprietor ,had to incur costs of up to 500 a month, the policy he had before that was a simple 200 a month, coverage was good, only co-pays..Now he has the same as me i have to pay the first 7500, out of pocket, he has to pay the first 5000 out of pocket. I just actually got a little lucky. My Primary care Dr. has had it with all ins. so he has a plan for all..No ins. accepted a flat yearly fee for all patients..He is in the process of checking with patients to see if most would stay or leave. His price?? $1,000.00 a year for any in office for me..i would save tons..Just had some tests done, cost to ins. 13,000.00 my cost, out of pocket..4,000.00 
I don't get CNN so i did not watch, but i heard all about it..I agree with you, France, is a good place to look, What about Denmark? Do they not have great coverage with little to no problems?
Billy Roper Added Feb 8, 2017 - 4:29pm
Socialism of any kind works best in homogeneous nations where the recipients and contributors are more equal, "from each according to his ability, to each according to his needs". :->
John Minehan Added Feb 8, 2017 - 4:35pm
Billy Roper, Given the fact that neither participant in the debate had much knowledge of that particular subject, at least the questions go them off the talking points ("Single Payer!" and "Buy Insurance Across Satte Lines!"), all of which is blather . . . . 
Thomas Sutrina Added Feb 8, 2017 - 5:18pm

I listened to the health care debate between Senators Bernie Sanders and Ted Cruz on Tuesday 2/7/17. You can see in at :

With the limited time they did not discuss the cause for the growth of healthcare cost. Restrictions put in place by FDR on salary resulted in employers offering healthcare that is the primary source of healthcare today even with PPACA. So the price of heath care was set by insurance companies and hospitals. No money passing through the hands of the patent. Without knowing the price of services a majority of patients did not shop for the best value. Those that were not represented by an employers told, “a 1956 AMA poll found that 43% of patients thought their doctor charged too much.” [1] Those self insured represented the 43%, the other had no idea what their health care cost since little came out of their pocket.
The following is also true for Medicaid, but I only found this on Medicare. Together these two effectively insurance companies dominated the market and thus set the price for the private insurance companies and the approach used to divide services and define fees. “Medicare does not rely on a competitive market to generate physician prices through the choices of millions of consumers and producers operating independently. Since the program began, physician prices have been set through a series of administrative calculations. ... Among the problems with this price-setting model are the following:
* Medical specialty groups dominate the AMA committee.
* The committee has no incentive to reduce the value calculations for services in which productivity has improved.
* There have been few reductions in the estimates of values even for procedural services in which physicians’ productivity increased and volumes expanded.
* The RBRVS work values are based on small, nonrandom samples of physicians that are not representative of the broader network of medical practitioners.
* The expert panels cherry-pick results, often developing more favorable (higher-cost) estimates if they deem the survey data to be “flawed or incomplete.”
Certain components of the estimates, such as productivity, are subjective and prone to error, and the AMA committee often overstates the intensity of effort involved in providing services.” [2]
Doesn't the clearly tell you why health care costs have been growing faster then inflation. Improve technology and increased life has an effect of both reducing costs for overall heath care for most but increasing the cost of the sickest. Today another AMA poll I expect would produce the same results as the 1956 poll.
We occasionally get an honest statement from politicians. I think this still discribe big government taking over health care since 1965. “In July 1969 the Senate held hearings on Medicare and Medicaid fraud, ... Later that month, Pres. Nixon decleard the first health care "crisis." John G. Veneman, undersecretary Dept. of Health, Education, & Welfare ... declared: "In the past, decisions on health care delivery were largely professional ones. Now, the decision will be largely political." [3]
Bernie Sanders is supporting government being the dominant provider of funding for heath care to the point of a single payer. Thus all the above history of health care and the history of the cost of heath care increase cost execeeding inflation will apply to Bernie Sanders' approach. I also find that Canadians come to America for health care that they can not achieve in a timely manor. I can recall a conversaton to another engineer that grew up and worked in upper state New York close to Buffulo. The company close its doors. He said that the hospitals competed for the Canadian business and advertise lower prices for procedures, many well below the cost charged Americans.
citation 1 & 3 http://healthaffairs,org/blog/2015/09/10/medicare-fair-pay-and-the-ama-the-forgotten-history/
citation 2
John Minehan Added Feb 8, 2017 - 5:28pm
Certainly true that there need to be more market forces involved. Direct Primary Care is a step in the right direction on the Primary Care side.  However, PPACA deemphasized HSAs that tended to facilitate direct contracting.
PPACA by attempting to develop a lot more "top down" payment methods (in the context of ACOs also helped to muddy the water (and be of marginal effectiveness to boot.)  
Thomas Sutrina Added Feb 8, 2017 - 6:02pm
John M. PPACA has a huge deductible to the levels of present day health savings account.  But the premiums associated to these private insurance is very and I am emphasizing very low.  Prof. Johnathan Gruber said that young people are paying for the sicker older people.  That is the reason for high costs and as you said top down medical care.  Also PPACA applies its rules to the out of pocket spending.  Thus the patient has no capacity to vote with their feet to find the most cost effective medical care even when the money is out of pocket, they can not choose their doctor and hospital and the procedures to be performed.  
So the simplest change to PPACA is to give the patents the capacity to have a health savings account with tax deductions and capacity to carry over and transfer money to others.   Then national health care insurance market.  The patient can choose the coverage and some demographics will be used to spread out a small portion of costs.  If we are concerned about the cost of pregnancy only effecting women.  It take a male to get pregnant so this represents a spread out cost, the demographics of fathers age will be used to supplement the female insurance.   
Portable is not as simple as the politicians state since it take time to get a new job.  Just as your employer thus YOU pay for unemployment insurance, health care will also have an unemployment insurance fund that will pay during the time out of work.   As some point welfare will become the provider of health insurance.   This also is made to seem more complex.  In reality hospitals can not turn away the ill in need of medical care, this is welfare as Bernie Sanders pointed out.  He is correct that early treatment would be cost effective.  
The state will have to supplement private insurance for the precondition patients (pregnancy not will be defined as preconditioned)   
John Minehan Added Feb 8, 2017 - 6:07pm
I thing you raise some good points but I think it would be better for all concerned to do that in the context of non-employer based group plans, the subject of my next post. 
Peter Corey Added Feb 8, 2017 - 10:32pm
>when people on the Right don't understand the issue, they talk about "buying insurance across state lines."
What about people on the Right who do understand the issue, yet often talk about "buying insurance across state lines"? For example, law professor Richard Epstein (formerly at University of Chicago, not at NYU Law). A few examples in which he mentions the repeal of the McCarren-Ferguson Act (which had the effect of cartelizing insurance companies in each state, effectively insulating them from interstate competition with other insurance carriers) as being a desirable and practical first step in reducing prices by encouraging competition across state lines.
See, e.g.:
The Forum: The Debate over Health Care Reform
(September 2009)
Richard Epstein: Obamacare's Collapse, the 2016 Election, & More
(September 2016)
Peter Corey Added Feb 8, 2017 - 10:59pm
>. . . per Reid . . . the lowest costs and the best clinical outcomes tend to be . . . in countries with "Bismarck Systems" (like France, the FRG and Japan).

France, FRG, and Japan are not compelling models for the US to emulate in terms of patient outcomes.
See these statements by Scott W. Atlas, MD (author of "In Excellent Health: Setting the Record Straight on America's Health Care" and "Reforming America's Health Care System The Flawed Vision of ObamaCare"):
"Let’s compare data for cancer, heart disease, and stroke, the most common sources of sickness and death in the US and Europe, and the diseases that generate the highest medical expenditures.
American cancer patients, both men and women, have superior survival rates for all major cancers. For some specifics...the breast cancer mortality rate is 52 percent higher in Germany than in the US, and 88 percent higher in the United Kingdom; prostate cancer mortality rates are strikingly worse in the UK, Norway, and elsewhere than in the US; mortality rate for colorectal cancer among British men and women is about 40 percent higher than in the US. Removing “lead-time bias,” where simply detecting cancer earlier might falsely demonstrate longer survival, death rates from prostate and breast cancer from the early 1980’s to 2005 declined much faster in the US than in the 15 other OECD nations studied (Australia, Austria, Canada, Finland, France, Germany, Greece, Italy, Japan, the Netherlands, Norway, Spain, Sweden, Switzerland, and UK). The inescapable conclusion from objective data is that US patients have superior outcomes from nearly all cancers."
Peter Corey Added Feb 8, 2017 - 11:00pm
"Treatment for heart disease is also superior in the United States.
First, a comparison of the US to ten Western European nations (Austria, Denmark, France, Germany, Greece, Italy, Netherlands, Spain, Sweden, and Switzerland) showed that 60.7 percent of Americans diagnosed with heart disease were actually receiving medication for it, while only 54.5 percent of Western Europeans were treated (a statistically significant difference).
Likewise, US patients needing surgery for heart disease receive it more frequently than heart patients in countries with nationalized insurance. For example, twice as many bypass procedures and four times as many angioplasties are performed per capita in the US as in the UK. A separate comparison between Canadian and American patients showed the same pattern: of patients diagnosed with coronary heart disease, a higher percentage of US patients actually received treatment.
But is there evidence that Americans with heart disease actually benefit from receiving treatment more frequently compared to patients elsewhere? The answer is yes. Specifically, the US shows a significantly greater reduction in death rates from heart disease than Western European nations, the European Union as a whole, and Japan."
Scott W. Atlas, MD (linked above)
Peter Corey Added Feb 8, 2017 - 11:27pm
Regarding health outcomes for patients in the US compared to those in other countries, see this television news item from Channel 4 UK:
"...The 2004 figures show that NHS had the worst figures of all seven countries. Once the death rate was adjusted, England was 22 per cent higher than the average of all seven countries and it was 58 per cent higher than the best country.
That meant NHS patients were almost 60 per cent more likely to die in hospital compared with patients in the best country.
“I expected us to do well and was very surprised when we didn’t,” Professor Jarman told Channel 4 News. “But there is no means of denying the results. They are absolutely clear.”
Of course, that was nearly 10 years ago and the NHS has been through several reforms and had record amounts of money poured into it until recently.
When Professor Jarman projected the figures forward to 2012, the hospital death rates in all seven countries had improved – England’s faster than some.
However, it is still among the worst and has death rates 45 per cent higher than the leading country, which is America."
michael d zitterman Added Feb 9, 2017 - 12:47am
PROBLEM: Escalating health care costs, and the insecurities of the populace regarding health care.

PROVENANCE: Greed, inefficiencies, ignorance, etceteras
1)     Greed includes fraud on the part of providers and patients: controls and severe penalties should be legislated to mitigate.
2)     Inefficiencies include, but are not limited to, inefficient utilization of personnel, equipment and facilities, administrative overhead, and profit motive on steroids.
3)     Ignorance on the part of providers and patients can be mitigated by a massive computerization of information, i.e., the “mind” of the computer is vastly superior to providers and should be made available to patients and providers.
4)     Etceteras to include, but not be limited to, better nutrition, responsibilities and behavior of recipients of health care, and preventative care.
RESOLUTION: To be determined, subsequent to discussing the problem
I believe that the Obama Administration is correct in recognizing that the accelerating cumulative costs of health care in our nation must be addressed.
Since we know where we are regarding this problem, most energies should be devoted to determining where we should be.
We must analyze the logistics and economics for the purpose of determining the most efficient and effective method of delivering health care, cost effectively.
First, a decision must be made as to who will bear the burden of the costs of health care.
The possibilities include businesses, the recipients of health care services, or the government.
If it were determined that all costs should be borne by businesses, the good would be that employees would receive health care at no cost, whereas the bad would be that the costs of providing health care would be included in the costs of goods and services produced, which would necessitate higher selling prices for those goods and services than if there were no health care costs.
For those businesses that compete against similar businesses in other nations, their ability to compete would be adversely affected versus if they did not have the burden of those health care costs.
Within a competitive world economy, the United States of America should be considered as U.S.A., Inc. and would be competing against Japan, Inc., China, Inc., et cetera, thus it would make pragmatic economic sense to mitigate costs of goods produced. 
If it were determined that all costs should be borne by the recipients of health care services, economic pressures would be placed upon businesses to increase employees’ remuneration to enable them to pay for their health care, thus whether the costs are paid by businesses or employees, the cost to produce goods will include the cost of health care.
If it were determined that all health care costs should be borne by the government, the good would be that all employees would have health care, and businesses would have their costs to produce goods and services devoid of any health care costs, while the bad would be that the government would inherit the obligation to fund these massive health care costs.  An incredibly important benefit would be the sense of security of the populace, which would affect all other aspects of their lives.
The transitioning from where we are to where we should be would cause serious upheavals and dislocations, e.g., employment reconfigurations, but subsequently we will have sophisticated and fine-tuned our current disparate montage of health care to an efficient and cost-effective system for the delivery of health care.
Our leaders are involved in the process of searching for the correct paradigm regarding the delivery of health care for our nation. 
Unfortunately, they appear to be in a triage quagmire effort rather than resolving to discover the appropriate paradigm.  They are attempting to reconfigure a condemned edifice, rather than tearing down the walls and allowing the light of day to expose truth.
Economics, rather than politics, religion, et cetera must be the leading factor directing our leaders to the correct paradigm, i.e., where we should be. 
Thomas Sutrina Added Feb 9, 2017 - 9:12am
Thank you Peter about the death rate data. I do remember finding articles that clearly support that and Cruz actually said it during the debate.
Michael Z. I reached back into the past of heath care to show that before PPACA the fact that government is the largest purchaser of heath care means they set the prices. So "Obama Administration is correct in recognizing that the accelerating cumulative costs of heath care in our nation must be addressed." An the way to address it is to NOT HAVE THE GOVERNMENT SETTING THE PRICES. That means Micheal that for the day to day health care need the people need to set the prices as they do in the shopping malls, grocery stores, car dealers, etc. We are not experts but in the whole make good decision. To do this the simplist way is morph PPACA is to make the deductable a health savings account that is totally under the control of the patent. If an expence fall into the health care box the account can be used. Those on welfare will have a credit card or can use the present card that will have a health savings account also.
One of the problems that a company I worked for with a health saving account system was to be a banker and provide a loan so that the full years accumulation was available for the full year. Thus if you have a medical need in January the money is their in January. A groups health saving account was in effect the banker that gave out the loans.
We know that people voting with their feet and own the money paid out, not unlimited. That causes people to find the best value. And since a lot of people are doing that and a lot of providers are trying to get their money the market find by trial and error the best value and then the majority of the market also uses the best value solution.
The next issue that Prof. Johnathan Gruber pointed out is PPACA is designed to get the young health to pay for the old and sick. Well Michael that does not work. Medicare exist because that does not work. The young and health pay into medicare through taxes. So you see PPACA principle of operation actually works when the young are forced through taxes to pay. They do not do in voluntarily. Private insurance is a middle ground where the price paid rises as one get older, but at the end taxes transfer some money.
John Minehan Added Feb 10, 2017 - 11:19am
There are a number of reasons why "buying insurance across state lines" (in healthcare) is a concept devoid of meaning.
1)  Before PPACA made the whole country guaranteed issue, a qualified person in a guaranteed issue state might could find a cheaper policy on the individual market in a non-guaranteed issue state.  However, all states are functionally guaranteed issue now, so that advantage no longer exists.
2)  Any kind of managed care plan (HMO, PPO, etc.) relies on having a panel of participating providers.  Functionally, only national players (The Blues, United and a diminishing number of others) would be able to give you access to a panel of participating providers in most other states. To provide a concrete example, MVP and CDPHP, MCOs in eastern NYS and western New England, don't have participating providers in CA or TX.
3)  But, you say, state insurance law may require various things I don't need to be covered, so if I could but insurance in a state that didn't do that it would be cheaper!  But the problem with that is that you get a race to the bottom where the law of the least restrictive state becomes the de facto national standard, hardly Federalism in action.
You could do that in a more consumer friendly way by creating non-employer-based groups under ERISA, which could design their own Plans and which would also preempt state insurance law.
4)  There is one narrow area where buying insurance across state lines MIGHT mean something.  That would be with high deductible indemnity health insurance and that might be what Prof. Epstein is referring to.  This model had been dying out until GE moved to this model (with HSAs) in the late 2000. 
For some other people's $00.02 on this: ,
John Minehan Added Feb 10, 2017 - 11:29am
Deaths rates from Cardiovascular Disease are higher than in any of the other OCED countries, so improvement has to be seen in that context, of something that gets a larger share of the funding and the attention here. 
Demographics are also generally worth considering in looking at other systems.
Demographics also come into things like "buying insurance across state lines as demographics differ among states, including M&M (morbidity and mortality) rates.    
John Minehan Added Feb 10, 2017 - 11:40am
Anything paid for by businesses or the government (at least in the US or any other state without something like a sovereign wealth fund) is paid for by the consumer, either as higher taxes, higher prices or lower wages.  
Peter Corey Added Feb 11, 2017 - 12:29am
>Deaths rates from Cardiovascular Disease are higher than in any of the other OCED countries
"the US shows a significantly greater reduction in death rates from heart disease than Western European nations, the European Union as a whole, and Japan."
In Excellent Health: Setting the Record Straight on America's Health Care (Hoover Institution Press Publication
Peter Corey Added Feb 11, 2017 - 12:36am
Economists Walter E. Williams (George Mason University) and Thomas Sowell (The Hoover Institution / Stanford University) discuss government involvement in health care.
Peter Corey Added Feb 11, 2017 - 12:38am
Podcast of Dr. Scott Atlas interviewed by economist Russ Roberts on the state of health care in the U.S.
Peter Corey Added Feb 11, 2017 - 12:47am
Milton Friedman - Health Care in a Free Market
Q&A excerpt from Milton Friedman's speech to physicians at the Mayo Clinic (1978).