Avik Roy has shocking revelation: Healthcare is expensive and taxes pay for stuff!!

I've mused before about how Avik Roy has a tendency to write lengthy screeds which breathlessly report developments which seem, to him, to be shocking revelations which will no doubt blow the lid off of some sort of nefarious actions on the part of President Obama, the HHS Dept. or Democrats in general...but which, when looked at by a rational person, tend to be fairly innocuous developments which were either already known, patently obvious and/or pretty much non-events in the scheme of things.

For instance, check out this blockbuster from back in March, regarding the HHS Dept's contingency plan in the event that the Obama administration had lost the King v. Burwell case at the Supreme Court (spoiler: they ended up winning):

Avik Roy, today:

Something odd has been happening with the Supreme Court battle over the legality of subsidies for Obamacare’s federally-organized health insurance exchange. The Obama administration has been claiming—beyond credulity—that it has no “Plan B” should the Court side with the administration’s challengers. “We don’t have an administrative action that we believe can undo the damage,” said Health and Human Services Secretary Sylvia Burwell at a recent Congressional hearing. But contrary to those claims, sources familiar with HHS’ thinking say that the agency does, indeed, hope it has a way around the Court and the law.

...Two sources who have spoken to HHS about the matter have informed me that the agency does in fact have a “Plan B” to deal with an adverse ruling. It involves encouraging states to declare that they are subcontracting the management of an insurance exchange to HHS, thereby “establishing” an exchange as per the law.

Um, Mr. Roy? "Making it easier for the states to establish exchanges and attempting to convince them to do so" isn't exactly a Big Secret. Of course that's what the Obama administration would do in the event of such a ruling by the Supreme Court. The fact that Sec. Burwell didn't list this as a "contingency plan" doesn't mean she's trying to cover anything up. She didn't mention it because it's so blatantly obvious that it was barely worth mentioning at all--and if she had mentioned it during the Congressional hearings, she probably would have been chewed out by Rep. Pitts for "getting sassy" with him or something.

Heck, I've been posting the following "contingency plan" for weeks now; it amounts to the same "contingency plan" as "encouraging states to establish an exchange" would:

"Dear Republicans: Here's the solution to the "problem" you created for 7 million voters and yourselves: Add "...or the federal government" to the end of the sentence. 5 minutes. 1 page. "Problem" solved. (You'll even get to take credit for fixing the typo made by the Democrats.) You're welcome.

There. I hereby announce that Secretary Burwell and the HHS Dept. of the United States have my permission to use my "contingency plan" as their own. Here's the full language of said "contingency plan" for the HHS Dept:

"1. Convince Republicans in Congress to either edit the language of the sentence in question to clarify that federal tax subsidies are allowed for in states operating on the federal exchange, or 2. convince Republican Governors & Republican state legislators to agree to set up state-based exchanges with our assistance."

Anyway, something similar just happened earlier today.

Over at Forbes, Bruce Japsen has written about another positive Affordable Care Act development: Hospital corporations are starting to give their 2nd quarter earnings reports, and...

As hospital operators begin to report second period earnings — the sixth consecutive quarter of new revenue from once uninsured patientsthe number and size of unpaid medical bills continues to fall thanks to theAffordable Care Act. The health law last year began to provide subsidized private health insurance coverage on public exchanges and expanded Medicaid for poor Americans. With increasing numbers signing up to private coverage and more states opting to expand Medicaid in the last 18 months, hospital companies are seeing expenses for charity and uncompensated care fall. A snapshot of this trend could be seen in last week’s earnings report of Universal Health Services (UHS), a large multi-state investor-owned operator of hospitals, which reported uncompensated care declined in the second quarter “as it has the last six quarters now,”Universal Health chief financial officer Steve Filton told analysts on the company’s second quarter earnings call.

When asked for his take on this news, Mr. Roy's response via Twitter was the following:

.@matthewherper @brucejapsen those hospital bills haven't vanished. They've been transferred to other people. http://t.co/4l9nefR6UJ

— Avik Roy (@Avik) August 2, 2015

The link goes to his own piece at Forbes from February 2011 ( less than a year after the ACA was signed into law and almost 3 years before the Medicaid expansion & ACA exchange policies kicked into action), in which he lays out a half-dozen reasons why the claims that the ACA would eliminate "free rides" for people at the hospital (ie, getting medical treatment while sticking the hospital with the bill) were false.

His arguments range from the obvious to the perplexing, but I'll stick with the first one:

1. In the first place, “free-riding” is an artifact of clumsy government policy

People talk about “free-riding,” or uncompensated care, as if it were a law of physics, like gravity: a fundamental problem that has no other solution than forcing everyone to buy health insurance. But it’s not. In fact, “free-riding” is a direct result of a clumsy, unfunded mandate passed by Congress in 1986, called the Emergency Medical Treatment and Active Labor Act, or EMTALA.

...EMTALA is, indeed, the central factor in the “free-rider” phenomenon. The government forces hospitals to care for these individuals, without financially compensating hospitals for the cost of doing so. It is one of the largest and most coercive unfunded mandates in the United States.

I don't know about "clumsy", but yes, EMTALA is, indeed, the cause of most "free ride" care. Of course, Roy doesn't bother mentioning that EMTALA was signed into law by Republican President Ronald Reagan after being passed by a Republican-controlled U.S. Senate (53/47) and a Democratically-controlled House of Representatives.

As Tobias Buckell put it back in October 2013:

But the fact is, US medicine has been socialized since the year 1986.


In 1986, President Ronald Reagan passed a bill called the Emergency Medical Treatment and Active Labor Act, or EMTALA.

See, up until 1986, hospitals and doctors could turn people away if they didn’t have the money. So could emergency rooms.

Let’s repeat that.

Up until 1986, in the USA, hospitals could turn a dying person away at the door if they didn’t have money, or refuse to treat.

As you can imagine, costs were kept down.

In 1986, Republicans passed EMTALA. What did EMTALA do? It socialized healthcare and made emergency rooms just like police, or firemen, or roads. It said people showing up on a door step of an ER dying *could not be refused* treatment.

Why did this happen. Because patients were being, literally dumped, by hospitals to prevent having to assume the expense of treating them:

Congress passed EMTALA to combat the practice of “patient dumping,” i.e., refusal to treat people because of inability to pay or insufficient insurance, or transferring or discharging emergency patients on the basis of high anticipated diagnosis and treatment costs. The law applies when an individual has a medical emergency “and a request is made on the individual’s behalf for examination or treatment for a medical condition.”

Here’s what that looked like on the ground:

Ron Anderson, M.D., president and CEO of Parkland Memorial Health and Hospital System in Dallas, was the medical director of the emergency department at Parkland in the early 1980s, and he knew all about dumping. “I would see patients transferred with knives still in their backs, or women giving birth at the door of the hospital, simply because they were uninsured.”

...So basically, Ronald Reagan set up hospital emergency rooms as socialized healthcare, and then…didn’t fund them.

It’s an unfunded mandate.

So it’s illegal to let patients die on your doorstep. A step forward in society (Reagan at the time said it allied with American’s Christian principles and his own). But the Republicans of the time never paid for it. They kicked that particular can down the road.

As a result, hospitals saw emergency room visits drastically increase. Insurance companies, because many of the uninsured used emergency rooms as care (to which they’re legally allowed, it’s how to collect the payment later that’s in issue), try to refuse to pay for the increase. Hospitals got clever at burying costs into healthy patient’s procedures, or anywhere else.

Hmmmm...in other words, the costs were being covered by, wait for it: "being transferred to other people"...in this case, the "other people" were insured patients being charged, say, $5.00 for a single Tylenol and so forth.

Interestingly, in 2011, Roy stated that he agrees with the goal of the EMTALA:

Personally, I think it’s a good thing that we as a country ensure that everyone, regardless of ability to pay, has access to emergency health care.

...but he then comes up with some rather interesting proposed solutions to the funding side:

...Even leaving comprehensive health reform aside, there are many, many alternatives to caring for these individuals that don’t involve an individual mandate. The government could cut other spending or raise taxes in order to fully reimburse hospitals for EMTALA care. The government could require hospitals to check for Medicaid, Medicare, and S-CHIP eligibility, and then fully fund care for the remainder of the uninsured. You could repeal EMTALA and replace it with a PPACA-like expanded Medicaid program. None of these adjustments are optimal, but none of them impose a Constitutionally problematic individual mandate.

Huh. Now, that's interesting. He agrees that everyone should have access to healthcare coverage, and one of the proposals he finds perfectly acceptable to fund that care (which had gone unfunded for 27 years) is to...raise taxes. Another acceptable proposal to Roy is to...wait for it...expand Medicaid so that hospitals have fewer cases of uncompensated care, and then have the government fund the remainder of the cost by (I presume, according to his earlier sentence)...raising taxes.

And of course, since both Medicaid as well as the remaining uncompensated care costs are both paid for by taxes, and since people on Medicaid and/or who are uninsured have a tendency not to have a lot of money available to pay those taxes, that means, by definition, that those costs are being "transferred to other people."

He's absolutely correct: Someone has to pay for all this healthcare, and poor/low-income people tend not to have a lot of money to pay for it. That's kind of the definition of being "poor" or "low income".

"Free riders" fall into two categories: Those who can't afford insurance (ie, poor/low-income) and those who can afford insurance but choose not to.

Since everyone, including Ronald Reagan, Avik Roy and the 1986 Republican Party agrees that repealing EMTALA is not an option, that means someone has to deal with both of these categories.

Expanding Medicaid (paid for by taxes) and providing federal tax credits (paid for by taxes) covers the first group. The individual mandate covers the second group.

All of which begs the question of just what exactly Roy is complaining about here, because for the life of me I can't figure it out.

Furthermore, "bills being transferred to other people" basically describes not only the very concept of insurance itself (the whole point of insurance is that few people can afford to pay for major medical expenses by themselves, so the risk/cost is spread out among thousands or millions of people)...but the very concept of taxes

If there's no taxes for the military budget, how exactly is McDonnell Douglas going to get paid their millions of dollars for fighter jets, submarines, tanks or whatever equipment/weapons they produce for the Pentagon? Why, through taxes, of course. Paid for by "other people"...including people who may not be too keen on having such a massive military budget in the first place. Not a difficult concept.