State of Health

Featuring The Hidden Kristoff

The WaPo has an editorial anticipating one of the big policy pushes of tomorrow night's State of the Union address by President Bush--taming health care costs--and it has some warnings:

[T]he president's team is also enthusiastic about the trend toward out-of-pocket payments, which it sees as a way of driving down health costs. Its enthusiasm is misguided.

The theory behind out-of-pocket payments is that patients who pay their bills themselves will shop carefully. This is likely to hold true some of the time but not most of it. Most consumers aren't equipped to distinguish between good medical service and bad; the results of poor service show up only after they've paid for it. A minority of motivated consumers may do the research necessary to judge whether a doctor's advice is sound, but even this minority can't be expected to start poring over medical journals when they are hit by a medical emergency -- and emergencies account for a large chunk of health spending.

Indeed, in many cases the doctors themselves can't be expected to know how much treatment will cost until after the fact. They admit a patient, perform some tests; those tests lead to new tests, and so on. So even if the White House could conjure superhero patients who assiduously researched their options even when in pain, the superheroes couldn't discover what sort of bill they faced before they checked into a hospital.

Nor is that all. No vision of consumer-driven health care assumes that all payments will be out of pocket; above a certain ceiling, insurance would take over. There are limits to how high that ceiling can be. People may be expected to pay $3,000 or $5,000 a year, perhaps a little more if they are affluent. But many medical procedures cost more than any of those ceilings, so the incentive to economize vanishes.

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If the White House is determined to go down this road, it should at least rethink the tax incentives it uses. To encourage out-of-pocket payments, the administration wants to give them the same tax treatment as health insurance costs, which employers are allowed to deduct. Since the object here is to restrain America's extraordinary rate of medical spending, ending the tax deductibility of insurance so that all health spending comes out of post-tax dollars would be logical. But the administration wants to go the other way, allowing all health spending, including out-of-pocket costs, to come out of pretax dollars. This would subsidize medical consumption, deprive the Treasury of revenue and constitute yet another favor to the affluent: The tax deduction is worth most to people in high tax brackets.

The BushCo administration is currently focused on what happens after medical procedures, and this is rightly important to tackle right now. (It would be even better with a more expansive health coverage/insurance scheme, but I won't even go there...) But, as they say, an ounce of prevention is worth a pound of cure. Globe-trotting NYTimes columnist Nicholas Kristoff takes time out of his travels to Pakistan and Sudan to visit Arkansas, where Rebublican Governor Mike Huckabee is coming up with some creative incentives to get people to reduce their health risks, which in turn reduce health spending by the state. (Here's the link to Mike Huckabee Lost 110 Pounds. Ask Him How.--available in full to Times Select subscribers.)

In 2003, Mike Huckabee, the governor of Arkansas, learned he had type 2 diabetes.

His doctor told him he would probably be dead in 10 years — and that terrified him enough to start exercising, eschew sugar and lose about 110 pounds (at 5 feet 11 inches, he's now 180 pounds). His first attempts at jogging left him dizzy after a few hundred yards, but now he is running marathons.

That would be a nice, inspiring tale if it ended there, but instead it has been the starting point. Mr. Huckabee has become a health care policy wonk, and with the help of national experts he has begun a series of clever initiatives to fight obesity. They are among the most creative steps under way in America at any level of the political process.

Arkansas has become a national laboratory for using policy levers to try to encourage healthier lifestyles. Other states and the federal government should adopt the same steps — like curbing soft drinks in schools, informing all parents of their children's body mass index as a step to encouraging fitness, giving exercise breaks as well as smoking breaks, paying for preventive health checks like mammograms and prostate examinations, subsidizing efforts to quit smoking and seeking to give food stamps more purchasing power when they are used to buy fruits or vegetables.

I know all this sounds banal. Perhaps I should be using this journalistic real estate to thunder about grand issues like the Iraq war or Middle East peace or corruption in Congress. But remember that fat kills far more Americans than terrorists. Indeed, The New England Journal of Medicine reported last year that because of rising obesity, life expectancy in the U.S. might soon stop rising and could drop.

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"I don't want to be the sugar sheriff," Mr. Huckabee explained in an interview in his office. "I don't want to be the grease police. That's not my job. But when I look at our state budget, and I see that every year our Medicaid budget is increasing by 9 to 10 percent, and I look at state employees' health plans and I see that those costs are escalating at double digits and twice the rate of inflation — as a fiscal manager, I have not only the right but frankly also the responsibility to see what can we do to improve this bottom-line cost."

Repeatedly, Mr. Huckabee came back to the same argument: Obesity is reducing not only the quality of life of Americans, but also the fiscal soundness of our government and the competitiveness of our businesses.

"This year, G.M. will spend more on health care for employees and pensioners than on steel," Mr. Huckabee noted. "Starbucks will spend more on health care than on coffee beans."

Obesity is linked to 112,000 deaths a year in the U.S., according to the Centers for Disease Control and Prevention, and leads to an extra $75 billion in direct medical costs. Mr. Huckabee argues that it would be worth paying small sums — for a session with a fitness trainer or a diet counselor — to avoid paying the far greater costs of heart disease and diabetes later.

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Imagine if Al Qaeda had resolved to attack us not with conventional chemical weapons but by slipping large amounts of high-fructose corn syrup into our food supply. That would finally rouse us to action — but in fact it's pretty much what we're doing to ourselves.

When I get a chance, I'll do a posting on some interesting ideas by Ezra Klein in the latest issue of the American Prospect on expanding Medicaid to help deal with lower-income health care users. (I've got the magazine with me, but don't have time to type it out right now--as I'm no longer at the wi-fi cafe--and I've got to go play some cards with Mrs. F and her grandmother, Paps.)