LTC Bullet: A New Cannon in Our Health Policy Arsenal
September 22, 2005
Comment: Michael F. Cannon,
director of Health Policy Studies at the Cato Institute, has just published a
book (with Michael Tanner) and started an e-letter, both of which deserve our
attention. More after the
QUESTION OF THE MONTH: McKnight's
Long-Term Care News has queried the LTC profession thus:
Who are the five most influential individuals in long-term care today?
McKnight's says "Please share your answer with us.
E-mail your response to firstname.lastname@example.org.
Your answer to this important question will be gathered with others' and
may appear in an upcoming issue of McKnight's Long-Term Care News."
We're interested in your answers too.
If you reply to McKnight's query, please cc us at email@example.com
and let us know whom you've nominated. ***
BULLET: A NEW CANNON IN OUR HEALTH
Comment: Following is information
from the Cato Institute's website at www.cato.org
and a sample op-ed by Mr. Cannon. We
encourage LTC Bullets readers who have an interest in general health
policy to subscribe to buy Cannon's book and subscribe to his "Healthy
the newsletter, Cato says "This periodic newsletter will feature health
policy news, commentary, and resources from a free-market perspective.
The dominant view in health policy is that greater government involvement
is required to make high-quality medical care more accessible.
This newsletter will present the view that individual choice and free
markets do the best job of making products of ever-increasing quality available
to ever-increasing numbers of people. We
aim to make this newsletter useful to those who make, influence, and report on
health policy." Subscribe at http://www.cato.org/healthcare/hc-index.html.
F. Cannon is the Cato Institute's director of health policy studies.
Previously, he served as a domestic policy analyst at the U.S. Senate
Republican Policy Committee under Senator Larry E. Craig (R-ID), where he
advised the Senate leadership on health, education, labor, welfare, and Second
Amendment policy. In addition,
Cannon has worked as a health care policy analyst for Citizens for a Sound
Economy Foundation in Washington, D.C. Cannon has appeared on CNN, CNBC, C-SPAN,
Fox News Channel, and NPR. His articles have been featured in USA Today, the New
York Post, the Chicago Tribune, the Chicago Sun-Times, and the
San Francisco Chronicle. Most
recently, Cannon coauthored the book Healthy Competition:
What's Holding Back Health Care and How to Free It.
Healthy Competition, the Book
health care sector has no shortage of vexing problems, including rising costs,
uneven quality, a lack of information for patients, and underuse of information
technologies. In addition, the
system places a large and growing burden on taxpayers.
a new book released by the Cato Institute, authors Michael F. Cannon and Michael
D. Tanner write: "We do not
claim to know any particular solution to these problems. We do, however, propose
a method of discovering them." Cannon
and Tanner then show how market competition provides the solutions.
people believe that health care is a special case, where market competition does
not work. However, the authors give
numerous examples of market competition making even acute medical care (such as
heart surgery) more accessible. Unfortunately,
in the health care market, government tax, spending, and regulatory policies
have created a dense thicket of rules and restrictions that disable the
competitive market process.
savings accounts (HSAs) are an important step toward restoring the necessary
conditions for market competition. Cannon
and Tanner offer proposals that would further restore market competition and
make quality health care available to an ever-increasing number of consumers.
Their proposals include the following:
Expanding HSAs to allow workers to control all their health care dollars and
Injecting choice, competition, and ownership into Medicare, and prefunding
Medicare through personal accounts;
Reforming Medicaid along the lines of the successful 1996 welfare reform law;
Deregulating health insurance by allowing people to purchase coverage from any
Creating a competitive certification process for new medical technologies;
Eliminating waiting lists for transplantable organs by allowing payments to
Making care more accessible by reducing barriers to entry for providers,
clinics, and hospitals; and
Allowing individual patients to choose the level of malpractice protection they
a foreword, former secretary of state George P. Shultz writes:
"Cannon and Tanner offer proposals that would further tap the power
of markets to make health care more valuable and more affordable.
That makes Healthy Competition essential reading."
Friedman, Nobel Laureate in Economics, lauds:
"Surprisingly readable, extraordinarily comprehensive, highly
persuasive. Read how the key to
improving health care in the United States is to convert the patient from a ward
of the state to an independent, self-interested customer."
copies of Healthy Competition: What's
Holding Back Health Care and How to Free It at http://www.catostore.org/index.asp?fa=ProductDetails&method=cats&scid=21&pid=1441272.
is Behind the Decline in Private Health Coverage"
Commentary by Michael F. Cannon
this time of year, the health policy world goes through a kind of ritual.
August, the Census Bureau releases estimates of how many Americans have health
insurance and where they obtain it. Every
August, some health policy wonks respond by bemoaning that the number of
Americans without health coverage is increasing, "even though"
government programs are expanding. Next, they bemoan the decline in private coverage, and praise
Medicaid - the government program to the poor - for "picking up the
slack." And every August, many
reporters uncritically quote this storyline, sometimes even repeating it as
the ritual is a con. Wonks know
full well that expanding Medicaid causes private coverage to decline, and can
even increase the number of people counted as "uninsured."
But they also know that portraying Medicaid as the hero in this narrative
may build support for expanding the program.
recent Census Bureau report showed the persistence of two simultaneous trends
that spell trouble for America's already troubled health care system.
The first is that the share of Americans without insurance continues to
rise slowly. The second is a slow
shift in sources of coverage from private to government insurance.
so began the ritual. One trade
publication, Modern Healthcare, ran the headline, "Uninsured total
up, even as government rolls also grow."
A story in the Chicago Tribune noted the drop in private coverage
and opined, "Government health programs have been picking up the
slack." A spokeswoman for the
advocacy group Families USA told the Detroit Free Press, "We would
have seen a lot more uninsured if we didn't have that Medicaid safety net out
there," and credited Medicaid with having "cushioned the impact."
The president of the Kaiser Family Foundation made similar comments in The
Washington Post, which, in an editorial, also opined, "Most of this
slack has been taken up by Medicaid..."
those articles, most coverage of the Census Bureau data treats the decline of
private coverage and the growth of Medicaid as if they were separate phenomena.
But most analysts know that Medicaid expansions, of which there have been
many, don't just "pick up the slack."
studies have established that as Medicaid eligibility expands, it "crowds
out" private coverage. In
essence, "crowd out" means that some employers stop providing health
benefits when Medicaid becomes available to low-wage employees or their
also means that even if workers are offered private coverage, some choose
Medicaid instead. USA Today
reports, "Many workers choose Medicaid over insurance offered by their
employers because it is less expensive. Wal-Mart
workers pay $273 a month for the company's family medical coverage and get fewer
benefits than Medicaid."
employers even encourage workers to enroll in Medicaid.
One survey by the Employee Benefit Research Institute found one in four
employers give low-wage workers information on how to enroll in Medicaid.
Robert Wood Johnson Foundation, a strong supporter of Medicaid, examined 22
crowd-out studies. More than half
found evidence of crowding out, and some even found that enrollment growth in
public programs was completely offset by reductions in private coverage.
The researchers concluded that crowding out "seems inevitable."
might say, "Isn't private coverage declining because the cost is
But here again, Medicaid contributes to the problem.
actually increases the cost of private care and coverage.
A study by the National Bureau of Economic Research found that Medicaid
increases prescription drug prices for private payers by 13 percent.
And as private insurance pools shrink, insurers are less able to pool
risk, which can increase the cost of private coverage even more.
private coverage erodes, some of those who lose it end up covered by Medicaid.
Others go uninsured.
speak of Medicaid as if it merely catches people who fall off the economic
ladder. But it also shakes that
ladder, which causes more people to fall.
policy wonks need to come clean about the role Medicaid plays in eroding private
health insurance, while reporters need to make sure they don't end up delivering
someone's ideological spin.
when the truth about the decline of private insurance comes to light will we be
able to have a debate about what that means, and how to move forward.