Recently I was invited by the law school at East China University of Science and Technology in Shanghai to come and lecture  about a nonprofit lawyer’s role advocating to provide healthcare for low-income people in the United States.   Teaching on the other side of the world was a spectacular privilege in many ways, but after going through how North Carolina and other states are currently rejecting federal Medicaid dollars to provide health coverage to our poorest citizens it was one student’s question that struck me the most:

The United States is the richest country in the world, so why exactly can’t you provide health care to the poorest citizens in every state?

Good question!

See my op-ed in the N+O today where I try and figure out just what the heck Governor McCrory’s new Medicaid director, Carol Steckel, was thinking when she said that helping poor people get Medicaid health coverage wouldn’t anyone healthier – after all they can just go to a community clinic.

Guest blogger Zarak Khan is writing a series of pieces for the Pulse about issues surround the new marketplace for health care under Obamacare.  After NC’s decision not to set up its own marketplace and reject federal money available for Medicaid, the marketplace or health exchange in NC will be run by the federal government.  People who don’t get health insurance through their work can get tax credits to buy affordable private health plans in the marketplace.  There are pretty important issues as to how this marketplace gets set up however.  The one Khan tackles this week is counterintuitive:  What the adverse effect might be of  having a choice of too many health plans in NC’s marketplace.

The idea of the free market is a powerful and guiding force in the US economy.  In theory a perfectly free market is one without restrictions or government interventions in the form of regulations, taxes, subsidies and other mechanisms generally thought to distort the market (i.e. make some goods cheaper or more expensive than they would otherwise be).

There are, however, several things that must be in place for a free market to exist and function fairly. Among them are:

• Perfect competition–the market cannot be controlled by a monopoly or cartel. There is a low cost to enter a market and transaction costs are low.
• Perfect information–consumers need to have complete understanding of what it is that they are buying.
• No externalities–there can’t be some additional cost or benefit that is not included in the transaction. Pollution is the most common example–without regulation, it would not be included in the price of producing a good.
• Public goods–some things, such as national defense, are common to everyone in the community and you would not want to move it into the private market.
• Perfectly rational consumers–people understand the decision and process information in a way that maximizes the benefit to themselves.

When one of these is off-kilter, the government will sometimes intervene in an attempt to correct the market and make it more efficient. This might come in the form of a tax or subsidy or in a new regulation. This is why we don’t consider the US economy to be a perfectly free market, but rather a ‘regulated free market’. Read More…

NC’s Governor Pat McCrory in his budget today filled in the hole in the Medicaid program left by two successive budgets from the NC General Assembly.  That’s good.  But the Governor also said in the budget that, “The state simply cannot sustain this rapid growth in spending.”

The problem with this statement is that it ignores the facts.  NC has the lowest growth in Medicaid spending in the nation, 3.5%.  For example, over the same period, Virginia’s Medicaid spending growth was 9.2% and South Carolina’s was 7.5%.   So, NC is doing pretty well saving money.

Sure, even the state best in the nation at controlling Medicaid costs could save more, but this shouldn’t be at the expense of our poor people who need health services.  We could control our prescription drug costs better by being more active in setting fair prices for drugs.  We could fund “academic detailing” or helping our medical schools teach other doctors about the pros and cons of using the latest and most expensive drugs instead of leaving that up to the drug industry.  We could allow providers to all practice at the top of their license,  so people like nurse practitioners could provide more primary health care services at a lower cost.

These are all things we can do right now to save money.  But let’s start from the facts – NC is already doing a very good job.