Monday, July 27, 2009

Cost Challenges

One of the Obama administration's biggest selling points for a centralization of health-care resources is the claim that such measures would limit the growth of health-care costs; the argument goes that the US system of health-care has led to rocketing costs, ones that more government-managed systems have been able to avoid.

However, as these pieces by David Gratzer and this Andrew Biggs post argue, American health-care costs may not be increasing at a rate beyond those of the rest of the industrialized world. Here's some data from Gratzer:

But health care has changed, and costs are rising worldwide without regard to each nation's health insurance model. In 2007, the Kaiser Family Foundation used OECD data to show that the growth of American health care spending slowed considerably in recent years. Between 1990 and 2003, America's per capita health care inflation was 3.6% (less than in the 1980s). America's "spiraling health costs" were in fact comparable to growth in France and Iceland, and even lower than many countries, including Australia, Belgium and Britain.

OECD data confirms that the trend continues through this decade, with American health spending increases being about the average for OECD countries (see below). And public systems continue to spill red ink; even with pharmaceutical price controls and rationing, limited access to technology, and minimal capital investments, Ontario's health budget is projected to grow by 16.5% over the next three years. Quebec's annual health inflation rate is almost 6%. In Britain, the NHS reports a 60-year average increase of 3% over inflation. Ireland's single-payer system has experienced constant price turbulence. Despite 4.7% deflation this May, Irish health costs still grew at an annualized rate of 3.5%.

By Gratzer's calculations, the US has experienced a health-care spending growth rate of 4.95% between 2000 and 2006, while the OECD (an organization mostly comprised of industrialized nations) experienced a growth rate of 4.9%. Yes, there's a difference there, but it is not exactly collossal.

Biggs used another method to estimate the growth of the health-care sector, and this one shows similar results:

Using OECD data, I calculated the rate of “excess cost growth” for 23 countries over the period 1990-2006. Excess cost growth is the rate at which per capita health costs grow “in excess” economy-wide expansion. When excess cost growth is positive, healthcare costs increase relative to Gross Domestic Product (GDP).

As it happens, the United States rate of excess healthcare cost growth from 1990-2006 is right about average among developed countries. U.S. health costs grew an average of 1.66 percent faster than the economy from 1990-2006, while the OECD average was 1.62 percent. Clearly, the U.S. has not had unusually fast health care cost growth over the last decade and a half.

Moreover, countries with far more government control over healthcare have had just as much difficulty controlling costs as the U.S. The UK, for instance, in which doctors and hospitals are directly controlled by the government, saw costs rise 2.08 percent faster than GDP.

These numbers seem to indicate that a centralized command-control approach to health-care need not reduce health-care costs. Indeed, some of the most centralized health-care systems (e.g., the UK) can be less effective in controlling costs than the slightly more market-oriented American one.

Thursday, July 16, 2009

Target: Health-Care Waverers

Even as the Blue Dogs start barking about the House's proposed health-care reform bill, the Obama machine is getting itself geared up for a fight. According to this AP story, President Obama's political organization will be running ads in support of health-care in the following states: Arkansas, Indiana, Florida, Louisiana, Maine, North Dakota, Nebraska and Ohio. So those look like some of the areas where he feels he could use some more support. He may especially be trying to apply some pressure to the states' various senators.
ARKANSAS: Pryor (D) and Lincoln (D)
INDIANA: Lugar(R) and Bayh (D)
FLORIDA: Nelson (D) and Martinez (R)
LOUISIANA: Landreiu (D) and Vitter (R)
MAINE: Snowe (R) and Collins (R)
NORTH DAKOTA: Conrad (D) and Dorgan (D)
NEBRASKA: Nelson (D) and Johanns (R)
OHIO: Voinovich (R) and Brown (D)
A number of the Republicans on this list are probably skeptical about some of the health-care nationalization message (Snowe and Collins are probably perceived as the Republican senators most open to Obama's vision for health-care reform), and a lot of the Democrats, like Bill Nelson, are concerned about the costs of this health-care measure and also about its implications for the private market.

Obama's organizing machine is also creating "house parties" in many of these states. His forces are beginning to increase the pressure---and trying to drum up workers for $11-16 an hour.

The Democrats listed above aren't the only possible Democratic skeptics "Obamacare" may be facing in the Senate (Joe Lieberman, for example, has voiced some doubts about the "public plan"), but it does seem as though the White House is concerned about them.

In the days ahead, we'll no doubt see more of where the undecided votes stand. Skeptics of this flavor of reform could do worse than contacting some of these undecided members of Congress, both in the House and in the Senate.

Wednesday, July 15, 2009

Losing It?

A Diageo/Hotline poll (as noted by Hot Air) shows Obama's approval rating dropping nine points from June to July---from 65% to 56%. His disapproval rating has climbed to 38%. Only 42% of those polled would vote to reelect President Obama; 39% would vote for someone else (this number jumped nine points from June). His support number from independents have fallen over 15 points in a month; now only 48% of independents approve of his performance. I don't know if pushing through a partisan health-care plan is exactly going to woo those independents over to Obama...Karl has some more thoughts on the Obama administration's psychology of passing a health-care bill. In any case, these falling number may provide even more incentive for the administration to try to get a quick vote on a health-care reform bill.

Tuesday, July 14, 2009

Use It Before You Lose It

How could these two headlines be connected: "Obama Open to Partisan Vote on Health-Care Overhaul" and "Obama: Unemployment Likely to Keep Ticking Up"?

Many have noted Barack Obama's falling poll numbers, and it may be plausible to suggest that the faster his numbers fall, and the less likely his administration thinks it is for the economy to turn around in the near future, the harder he will push for things like health-care and cap-and-trade to be done---like NOW.

As The Washington Post reports, Obama has begun lobbying Congress with a vengeance on health-care. Democrats are talking about wanting to have a health-care bill passed by the time of the August recess, though many are doubtful that this deadline will be met. Part of this urgency is due, no doubt, to the fact that members of the left have been dreaming for decades about some kind of "universal health-care" (or at least a nationalized system of delivering health-care, which is different from universal health-care). But part of it may be motivated by an anxiety that the Obama administration and, if they're not careful, Congressional Democrats may be on a trip to the negative side of public opinion polling.

Consider this CBS poll, which may oversample Democrats, that shows Obama dropping six points over the past month, from 63% approval to 57%. CBS polling also showed Obama dropping five points from May to June (from 68% to 63%). So that's an 11-point drop over two months. CBS is not an outlier in this; other polls have also noticed declines in support for Obama, especially among independents. Those polled also seem to have lost a significant amount of trust in Obama's handling of the economy.

Fast forward to the middle of early part of September, when Congress returns to work. Say the economic situation continues to worsen. Say the exploding national debt begins to weigh more heavily on the minds of Americans. Say other controversies gnaw away at the administration's public appeal. We could be seeing Obama's approval numbers in the mid-40s (57-11=46). At that point, he could have significantly less leverage to apply to recalcitrant members of Congress.

Therefore, Obama and his team may want to use what popularity he has now in order to push through bills. The faster his numbers decline, the greater the imperative to fight at this instant.

There are two implications of this dynamic. One is that in politics, as in other endeavors, a bird in the hand can be more valued than two or none in the bush.

The other is that those Democrats and Republicans Obama wishes to sway may be offered checks with uncertain political capital behind them. George Bush's support for a Republican officeholder may have seemed priceless in January 2005---by October 2006, not so much. The prospect of evaporating public support would add to the urgency of the Obama administration's push for "change," but this evaporation also makes that present public support that much more ephemeral and unstable. The renewed urgency of the administration on health-care may not be a sign of strength but instead may be motivated, in part, by a fear of growing weakness.

Thursday, July 9, 2009

Decisions, Decisions

The Politico highlights some potential good news for talent recruitment for the GOP in 2010 Senate races:
To me, the GOP Senate recruitment efforts in three other states – Illinois, New Hampshire and Delaware – is a telling indicator for how optimistic Republicans should be about their Senate prospects in 2010...

In Illinois, it was Congressman Mark Kirk, who had a knack of winning re-election in a suburban Chicago district – even when President Obama publicly endorsed his Democratic opponent (as he did last year). In Delaware, it’s Congressman Mike Castle, a moderate who has already won statewide elections to his at-large House seat for over the past decade.

And in New Hampshire, Attorney General Kelly Ayotte is expected to run in the mold of politically successful New England Republicans like Susan Collins and Olympia Snowe. Ayotte, who never held elective office, is far from a proven candidate and faces the likelihood of a tough primary. But she holds the highest approval ratings of any Republican in the state, and led Democrat Paul Hodes in a recent poll.

This week, Senate Republicans landed two of those top-tier recruits (Kirk and Ayotte), and have a shot at running the table if they can persuade Castle to run for the Senate. By putting two Democratic-held seats in play, and having a chance at holding onto one of their most vulnerable open seats, Republicans can now credibly argue they have an opportunity to pick up seats next election cycle.
These poll numbers suggest that Ayotte and former Congressman Charlie Bass would both be competitive running against Rep. Paul Hodes for Judd Gregg's Senate seat. In Delaware, Castle has a huge advantage over likely Democratic candidate Beau Biden; according to a recent poll, he leads Biden by 21 points---55-34.

A number of Republicans and conservatives are angry with Kirk and Castle for supporting cap-and-trade legislation in the House. Will disgruntled members of the right swallow their wrath and support these candidates (and other candidates like them)?

See also this Hill story on candidate recruitment in Virginia, where Republicans took a pounding in 2008.

Tuesday, July 7, 2009

Independents in the Balance

A recent Quinnipiac poll shows Obama's approval numbers falling in Ohio. Other statewide polls perhaps reveal some quiet shifts happening in Obama's approval rating. SurveyUSA has a number of statewide approval polls up (the most recent being dated from the middle to later part of June). Let's see what some of them are telling us.

In New York, Obama's approval rating seems a healthy 65%, though that number does represent a falling off from a 72% approval rating in May. The approval of independents, though, shows a more extreme decline. In May, Obama enjoyed a 64% approval rating from them. It's now fallen to a 48-48 split.

In New Mexico, Obama is at a 53-44 approval rating (down from 62-35 in May). A clear majority of New Mexico independents now disapprove of his performance on the job.

The other state polls, in places like Minnesota, Missouri (where Obama's approval has fallen to 51%), Oregon, and Virginia, tell a similar story for the most part: a falling approval rating for Obama with majorities or pluralities of independents disapproving. (The numbers are even worse for him in a deep "red" state like Alabama.) The loss of independents, particularly in swingier states, could be a sign of increasing public skepticism about the Obama administration's policies, one with possible electoral consequences.

UPDATE: This new PPP poll shows Obama at 38-52 among independents in Virginia; his overall approval rating is at 48-46. PPP has more results for independent voters in various states here; the independent approval numbers are all below 50%, and, for many states and the nation as a whole, Obama has more independents disapproving than approving.

UPDATE (x2): Welcome Hot Air and Michael Barone and Ace and Campaign Spot readers! Those of you with a taste for polling might engjoy this health-care polling analysis. Some other goodies include this essay on Mark Antony's political rhetoric and its relevance for today and this piece on why the political right should care about economic inequality.

Thursday, July 2, 2009

The Lever

In the face of polls showing significant public support for some kind of government-run "public" plan for health-care, what's a skeptic about the market-disrupting implications of such a plan to do? Dig a little deeper into the polling.

Aside from the distorting partisan numbers from this recent NYT poll (in which only 25% of respondents voted for McCain), this Washington Post-ABC News poll shows somewhat broad support for some kind of public option. At first blush, 62% of those polled support some kind of public plan. However, only 21% would support such a plan being run by the government (41% would prefer it to be run by some independent organization); those numbers already don't bode too well for supporters of government-run health-care.

And this level of support falls precipitously when respondents are asked to consider the hypothetical situation of this public plan driving many private insurers out of business, which many of the supporters of the public plan say it would do. Under that situation, public support plummets, from 62% to 37%. Opposition to the public plan climbs from 33% to 58%. That's a clear majority opposed to it.

The WP-ABC poll is not an outlier in this respect. This Kaiser poll from April 2009 shows a 67% majority in favor of some public option. But, "public option" supporters jumped ship when they were told that this plan could give the government "an unfair advantage over insurance companies." Support for the plan falls to 32%, and opposition to it doubles to 59%. While many Americans seem at first inclined to support some kind of "public option," they do not want this option to disrupt the free market of health insurance.

The advocates for the "public option," as they have declared again and again and again and again, have an endgame in mind, one for which the "public option" is a key vehicle: the destruction of much of the private insurance industry. Unfortunately for them, a clear majority of Americans do not support this goal. They want the private system of medical reformed, it seems, but not destroyed.

These poll results suggest that "public option" skeptics could be able to leverage popular support by drawing the public's attention to some of the very likely consequences of a market-distorting, government-subsidized "public option." If the "public option" would decimate private insurers, as Rep. Jan Schakowsky (D-IL) says, the public could very well turn against it. Making the public knowledgeable about the consequences of a badly designed public option could be a lever to pry away certain segments support for the option.

That said, there are other threats to competition in the health-care marketplace beyond certain variants of a "public option." The quasi-monopoly status of health-care coverage that seems to hold sway in many areas of the country (and the system of regulations that allows or encourages this result) offers another opportunity for reform in order to ensure that there is authentic market competition.