Wednesday, February 1, 2012

American Healthcare Cost Dirvers

Well that last blog must have been too long for people to read, so let's simplify it.  American heathcare is incredibly expensive, for many people the access is pretty weak and quality varies.  J. believes that government is a key cost driver and I disagree as often is the case.  Here are some causes we discussed previously (blue) and some new ones.  Thoughts?  What am I missing?
Short enough?

30 comments:

Anonymous said...

One basic problem is that markets don't work in the area of health care, for a variety of reasons that have been understood for a long time by economists. There are a lot of reasons for this, but one obvious one is that there is no transparency. It's hard to get a price quote. They don't offer tonsillectomies on eBAy.

--Hiram

Anonymous said...

One possible solution is to make individuals responsible for their health insurance instead of the current employment model. And there are one or two good things to be said for that. Employer based health insurance is a bad idea. It's one of the things that makes American business less competitive with foreign business who aren't responsible for their health care. But that's the status quo, and in today's polarized politics it's virtually impossible to change the status quo. All we can hope to do it is improve it by small incremental steps.

Individual health insurance is a bad idea because it lacks economy of scale, and because there will be a natural tendency not to offer insurance to higher risk customers, at least not at affordable rates.

--Hiram

John said...

Ok, I am going to question Annie's comment over here.

""Get government out and costs drop by half. Get government MORE involved, and costs go up further."

. . and yet, in nations with comprehensive national health care, costs are half of ours here."
--Annie

Now is this because it is government provided or because they have different beliefs and rules that minimize some of these other causes? (ie max benefit limits, less liability, physician assisted suicide, etc) Or both?

Anonymous said...

Annie asks a good question. The simple answer is that in countries with government-run healthcare the government does not walk in its own trough, so to speak. That is, they do not set up cumbersome rules and regulations that they themselves have to follow and pay for, whereas in the United States the opposite is true. These cumbersome rules and regulations drive up the costs. The second thing that happens in countries with government-run health care is that they control costs by simply not paying for things that we wouldn't dream of rationing here, like mammograms, delivery rooms, hip and knee replacements, cancer treatment, and a whole host of other things. It keeps costs down but the words "death panel" spring to mind. I've spent enough time in Canada to know that there are too many things that are not only not "free" but that cannot be had at any price in Canada. You will often see collection jars set out for contributions to send so-and-so to the US for medical care.

Perhaps I have not been clear that the government of the United States already controls and regulates more than half of all healthcare delivery and, because of that, almost all private insurance systems pattern their insurance on that overly complex government reimbursement model. This roughly doubles the cost.

J. Ewing

Anonymous said...

So I was talking with someone who is looking at a Republican piece of legislation, which in a number of instances uses the word "substantially". What does substantially mean? How do you decide? Well what happens is that the department charged with enforcing this law, and also with advising people who must act under it, promulgates a specific regulation giving guidance. Substantially, as use in section so and so, means x, and some administrator now can do his job. But Republicans, and maybe it's the same republican who used the word "substantially" in a piece of legislation making an explanatory regulation necessary, are also proposing a freeze on new regulations. This is like one stop shopping. Republicans are both creating problems, and ruling out the solution of the problems they create.

Sometimes I just shake my head.

--Hiram

Anonymous said...

The second thing that happens in countries with government-run health care is that they control costs by simply not paying for things that we wouldn't dream of rationing here, like mammograms, delivery rooms, hip and knee replacements, cancer treatment, and a whole host of other things.

I believe you will find in typical government run health systems, at least in the west, all of these things are paid for.

John said...

Useful Links:
BB: Is Europe's Healthcare Better?
WSJ Europe's failling Health
EU Future of Healthcare
NYT: A Lesson From Europe
NPA Sweden Healthcare

John said...

Per the links above, it looks like all the systems have problems... They just vary from one to another...

Laurie said...

I believe one cost driver you left out is the tendency here to over test, over diagnose and over treat patients. And no, I do not have a link for this info.

My second point is that from what I've read the govt run VA rates high in both quality care and efficiency/cost.

Anonymous said...

Certainly, no nation's system is flawless. But across the board, we we pay the most (by far) and have the worst results (by far).

The US has excellent facilities for sick care (Mayo, Johns Hopkins)--which most of us will never need or have access to. Conversely, the US is terrible at every level of health care--obesity, diabetes, infant mortality to name a few.

This is a logical place for government to perform a public good. Health care (not only sick care), preventative care, public information on healthy diet and exercise--all these things can produce a healthier population. Healthier kids have more success in school, healthier adults take fewer sick days.

Building in a profit margin for shareholders and CEOs doesn't necessarily make things less expensive or higher quality. The goal for our nation's health shouldn't be profit.

--Annie

John said...

"across the board, we we pay the most (by far) and have the worst results (by far)."

Speaking for the well advantaged lucky folks, this seems quite the stretch. I have full access to every conceivable Specialist, Test, Procedure, Piece of Equipment, etc and I don't have to wait long at all. Seems pretty reasonable and the results have been great so far...

Success of a system is relative to the grading criteria...

Anon,
I added the tests.

John said...

Annie,
I forgot... The nation has been pushing health and nutrition forever. Yet we keep getting fatter.

I don't see more healthcare swaying us from our glutonous ways. I know a lot of well to do obese people. I don't see them lacking for healthcare. (well or sick care)

Anonymous said...

John-Regarding the healthcare grading system:

Here's a ranking of national health expenditures per capita (from two separate sources:
http://en.wikipedia.org/wiki/List_of_countries_by_health_care_expenditures

And here's a good apples-to-apples comparison of how we rank in several categories of health:
http://en.wikipedia.org/wiki/Health_care_compared#Cross-country_comparisons

Regarding changing habits: Smoking, seatbelts, kids sleeping on their backs--these were all public health and safety initiatives. If you're interested in how public policy can shape our nationals collective health, I recommend The Omnivore's Dilemma by Michael Pollan and Food Politics by Marion Nestle. There's absolutely a role for personal responsibility and good decisions, but there's also a role for putting our national money where our mouth is, and trying to ensure a bag fresh spinach or a pound of grapes as cheap and available as a box of macaroni and cheese or pop tarts.

--Annie

Anonymous said...

"I believe one cost driver you left out is the tendency here to over test, over diagnose and over treat patients. And no, I do not have a link for this info.

My second point is that from what I've read the govt run VA rates high in both quality care and efficiency/cost." -- Laurie

Laurie is right on BOTH counts!

The tendency in US medicine to over-test is called "defensive medicine" and is caused by the high cost of medical malpractice. The tendency to "over-diagnose" is caused by the fee-for-service model imposed by federal government insurance systems. And the tendency to "over-treat" is caused by the "first dollar coverage" and "third party payer" aspects of government insurance, which almost all private insurance plans have adopted. Get rid of those four government created/mandated aspects of our health care system, and costs drop by half.

The proof is in the VA hospitals, where the standard of care is to do what is right for the patient, outside all the hide-bound rulebooks and largely free from the threat of lawsuits, and there you are.

J. Ewing

Anonymous said...

Annie, if you are looking for why US "results" in the health care system are so poor compared to other Western countries, don't look at the health care system. Like John keeps trying to tell us about the schools, look at the "raw material." We have huge problems with drug use, alcoholism, obesity, lack of exercise, smoking, gun and other violence, and a subculture uninterested in such things as personal health and hygiene and even infant care. Changes to the health care system won't even begin to make a dent in those things unless we're forced into something like Obamacare, where you will be REQUIRED by law to go to the gym 4 times per week. And I'm not sure even that is going to help.

J. Ewing

Anonymous said...

".. . .unless we're forced into something like Obamacare, where you will be REQUIRED by law to go to the gym 4 times per week."

Care to source that tidbit?

--Annie

John said...

Wiki Spend per Capita
Wiki Healthcare System
Wiki Healthcare Compariosns
Wiki Omnivore's Dilemna
Food Politics

Annie,
I think I would prefer to separate food price fixing/subsidies from healthcare costs. I don't disagree that many poor are overweight because cereals are more readily available in their neighborhoods and cheaper than vegetables. Though I am not sure that their food preferences would change, even if they were both equally available. (ie back to why are poor poor?)

I am still waiting for them to get rid of the "Pizza" line at school...

As for my grading criteria comment, if the majority of us are getting good healthcare... Why would should we risk distruption for the minority? Shouldn't they get working harder and pull themselves up by their boot straps? These are valid questions.

John said...

Laurie,
Sorry for calling you anon... I have gotten so used to looking for names at the bottom that I forgot to look at the top. Oooopppsss.

Anonymous said...

Annie, Of course I have no source for the "forced to go to the gym" "tidbit." Remember, we had to pass Obamacare to find out what was in it? The point being that if government can force you to buy healthcare and force you to pay for whatever they think "healthcare" is-- both very real and essential parts of Obamacare-- then what else can they force you to do to "hold down costs"? Once government pays the bills, they decide what you must do to keep the bills down, whether it is exercise, eat right, or just die. If you don't like death panels, I'm not sure you will like the "good living" panel telling you what to do, either.

J. Ewing

Anonymous said...

"The point being that if government can force you to buy healthcare and force you to pay for whatever they think "healthcare" is-- both very real and essential parts of Obamacare-- then what else can they force you to do to "hold down costs"?

An interesting question often asked, rarely answered. What are the limits of governmental authority? They certainly aren't found in the commerce clause, where the authority granted to Congress is sweeping and unlimited. I think the answer is found in the bill of rights, in those parameters talked about in Roe v. Wade. The limits of government authority have to do with the physical person. The way I put it is that the government can make you pay for a peach, but it can't make you eat one. In the health care context, under the interstate commerce clause, the government can make us pay for the medical treatment of others as it does with Medicare, but it can't force us to accept medical treatment, at least not without raising a lot of legal and constitutional issues.

--Hiram

John said...

Back to VA hospital thought, as far as I understand there is little or no "choice" in that system. I wonder if American citizens would ever accept the loss of choice.

I am guessing it is pretty efficient if you are assigned a Doctor and clinic. And I wonder if they can be sued for malpractice. Finally I wonder what level of staff they can afford. Doctors don't seem to fit in as the basic civil servant. Surgeons for sure...

Anonymous said...

My understanding from my veteran friends is that they PREFER the VA because the standard there is to do what the patient needs, without all the red tape and paperwork of government or government-like programs. It makes a vast difference, I would think. And no, being the federal government, they can't be sued. As I said, the only thing not "perfect" about this system is that there is no competition, and there is some cost control in that the latest treatments are often not covered.

J. Ewing

Anonymous said...

Reasons why J's friends appreciate the VA healthcare services: "the standard there is to do what the patient needs, without all the red tape and paperwork of government or government-like programs."

Reminiscent of the Tea Party man at the town hall forum with the sign saying "Keep Your Government Hands Off My Medicare".

Irony, thy name is conservative.

--Annie

John said...

Now that is funny !!!!!

Anonymous said...

It IS funny.

But VA care and Medicare are worlds apart. If you want to convert Medicare and Medicaid to VA-like programs, I would say it was an excellent first start. The only problem would be that you would have to take more than half of US doctors "out of service" to the general public and make them government employees. That would be bad. Right now we have an increasing number of doctors refusing to even accept Medicaid or Medicare patients, because it costs more-- in time and trouble both-- than they get paid, and Obamacare will only accelerate that process.

It's amazing that the Medicare model of health care is such a cost driver for the rest of us, and that Medicare costs are escalating at twice the cost of private insurance plans, while doctor reimbursements are actually being cut. Crazy. I guess it shows the folly of having government arbitrarily setting prices, rather than a free market.

J. Ewing

John said...

I am assuming the Doctors can make more in Private Practice than at the VA. I wonder how / who they get?

Anonymous said...

The only problem would be that you would have to take more than half of US doctors "out of service" to the general public and make them government employees.

VA is generally regarded as high quality care. As always, the problem isn't whether we should provide health care, rather it's who should get the bill? And the reality is, it's the American people who will get the bill, one way or another.

http://www.youtube.com/watch?v=KXewIR7Y7cc

--Hiram

Anonymous said...

Ah, but there's a world of difference between giving each of us the bill that we accumulate and handing all of us the bill for everybody else. One big difference is, that if YOU are paying for mine, I'll have the large sirloin, thank you. If I'm paying for yours, You'll get tofu, but you may not find it very filling.

J. Ewing

Anonymous said...

Ah, but there's a world of difference between giving each of us the bill that we accumulate and handing all of us the bill for everybody else.

In theory, perhaps, but not in practical terms. And government always hands us collective bills.

--Hiram

Anonymous said...

I would say we have a world of evidence that anything "free" gets overused and abused, while what you pay for yourself gets used far more prudently and effectively. Start with emergency room care, for one example. Just a $10 co-pay would get rid of a lot of freeloaders on the system.

J. Ewing