The Agenda

Today’s Policy Agenda: Do Consumers Pay Attention to Health-Care Choices?

Do consumers even want more health-care choices?

At Wonkblog, Jason Millman considers the economic research on whether consumers actually seek out the best deals on health insurance.

Just 13 percent of seniors enrolled in Medicare’s prescription drug program changed plans during the annual enrollment period, according to an October 2013 Kaiser Family Foundation survey that reviewed the first five years of program enrollment… More than two-thirds of enrollees who faced the highest premium increases stuck with their plans… And less than 2.5 percent of people enrolled in employer-sponsored insurance in 2010 had changed health plans that year in search of a cheaper or better-quality option, according to a survey released last year by the Center for Studying Health System Change.

These studies get at the heart of the debate between a more static and prescriptive health system and one with some disruption but also more choices. At first glance, the data might suggest that consumers’ unwillingness to switch to cheaper plans would sink market-oriented health systems by not putting as much downward pressure on premiums as such a plan would need to be viable. Additionally, if deep down Americans aren’t interested in being active consumers and would rather the government just design a one-size fits all insurance product and pay whatever price, conservative health reform won’t get very far.

But . . . it’s impossible to gleam anything about the behavior of American consumers in a health care market because they’ve never experienced a true health-care market, or anything like one. The employer-sponsored insurance data come from an insanely distorted system that since World War II has operated under a third-party-payer system and with a tax deduction that gives you more of a subsidy the more expensive the plan you buy. But a market-based system isn’t a fantasy: Switzerland’s consumers have succeeded in utilizing market forces to lower premiums and reach universal coverage, Americans could too if in the right health-care structure.

Is the economy tanking?

At FiveThirtyEight, Ben Casselman sums up Wednesday’s appallingly bad revisions to first-quarter GDP:

U.S. gross domestic product, the broadest measure of goods and services produced in the economy, shrank at a 2.9 percent rate in the first three months of the year, the Bureau of Economic Analysis said Wednesday…The first quarter now stands as the worst since the middle of the recession… Economists have been mostly unfazed by the news. The weak start to the year was almost certainly due in part — possibly in large part — to the brutal winter in much of the country. Other indicators, such as hiring, didn’t drop off nearly as much, and the ones that did generally have looked much better since the snow melted. Most economists expect growth of 3 percent or more in the second quarter…But don’t be too quick to dismiss Wednesday’s rotten GDP number. Last month, I noted that negative quarters are rare outside of recessions. Quarters this bad are even rarer. There have been only two other non-recessionary quarters since World War II when the economy shrank at a rate over 2 percent. Both times, the economy entered a recession the following quarter.

While I’ll leave thorough analysis of the data to the economists, it goes without saying that a mini-recession now would becoming at the worst possible time: We still are trying to heal the labor market and allow the economy to rebuild wealth. There’s also not a better time than the present to promote pro-growth policies in the realms of regulation, energy, and the labor market that could help get us back on track.

The gaps between our richest and poorest counties are massive.

Today for the Upshot, Allan Flippen has an interesting post and interactive map that breaks the United States down at the county level by standard of living based on education (percentage of residents with at least a bachelor’s degree), median household income, unemployment rate, disability rate, life expectancy and obesity:

The 10 lowest counties in the country, by this ranking, include a cluster of six in the Appalachian Mountains of eastern Kentucky (Breathitt, Clay, Jackson, Lee, Leslie and Magoffin), along with four others in various parts of the rural South: Humphreys County, Miss.; East Carroll Parish, La.; Jefferson County, Ga.; and Lee County, Ark. . . . At the other end of the scale, the different variations on our formula consistently yielded the same result. Six of the top 10 counties in the United States are in the suburbs of Washington (especially on the Virginia side of the Potomac River), but the top ranking of all goes to Los Alamos County, N.M., home of Los Alamos National Laboratory.

For as much as we talk about concentrated poverty in urban areas, this exercise serves as a reminder of how poor some of our most rural, isolated counties are. Kevin Williamson has reported for National Review before on the suffering ubiquitous across rural Appalachia. Both the stories and data are brutal coming from these parts of the country.

The county data also nicely illustrates a recent point made by AEI president Arthur Brooks (in a recent talk soon to be posted online, check in coming days) that there are two Americas with two different growth rates. In Williamson County, Tenn., unemployment is at 5.4 percent and only 0.3 percent of the population is in the federal disability program, a notorious poverty trap. On the other hand, Humprheys County, Miss., faces an unemployment rate of 15.9, and 6.5 percent of the population are in the disability program. 

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