Health is the War of the State

Healthcare is a political football in every Western country to some extent.  In countries with extensive government healthcare the debate is about what the government should pay for, in the US it’s about whether the government should provide broad services at all.  Cost is a constant source of frustration everywhere and despite the significant differences between the US Frankenstein’s Monster system, the French government-subsided system and the British government-runs-everything system, each country seems remarkably fond of it’s own version.  I have a hard time beleiving this is simply due to differences in value judgements between countries.

In the case of the US system I think health care is causing some other notable economic problems.  Consider the stagnation of the American middle class.  The economic growth the US has had since 1970 is going somewhere, and there’s too much of it to all be going to the top 1%.  But consider this: the cost of US healthcare is rising rapidly, and the majority of healthcare costs for working people is borne by employers.  Since the healthcare cost is a cost of hiring workers, employers are just going to pass that cost onto workers.  And so as healthcare becomes more expensive, more of the employee’s growing compensation package is diverted from wages & salary (which is captured in the income stats) to benefits (which isn’t).  If I’m right (and I don’t have the data to check whether the magnitudes fit to make this work as an explanation), at least some of the reasons that only the very richest are getting real pay rises is that the healthcare system is consuming the residual.

But that still leaves the question of what to do about it.  I’m pretty sceptical of single payer as a solution for the US, partly because it doesn’t work as well as you’d think (it’s really expensive for one thing, and that’s without accounting for the fact that the US is bearing the burden’s of the world’s R&D expenses by paying higher prices), and the US doesn’t have the culture or institutions to handle it (as the “death panel” hysteria indicates, I don’t see the US government successfully telling people they can’t have a treatment they want).  That doesn’t mean I like the system you’ve got now either – if I didn’t know better I’d assume it was the product of a deliberate attempt to sabotage the health care market.

Now as much fun as it is to throw bricks, if I’m going to dump on both available options, I really should suggest an alternative.  And to do that, I first need to figure out what’s wrong with the health care market – why interevene at all?  Well, as far as I can see there are two potential problems for the would-be healthcare services buyer:

  1. Nasty Surprises: The major thing that separates healthcare from other essentials like food and shelter is that the future costs of your healthcare are risky.  Like owning a house, your expected medical expenses might be small, but there is a small probability of a very large loss.  This is what insurance was created for, and in the absence of a few truly perverse policies (I’ll go into detail below) I would expect health insurance to do the job here, just as it does for other large risks like your house burning down.  But that’s not the only problem.
  2. Poverty: By this I mean people who can’t afford even the expected cost of their future healthcare.  Maybe they’re really sickly, or already have a serious illness (since it would make no sense for insurance to cover a risk that has already eventuated) or just have really low income.  Whatever the reason, this isn’t all that different to people who can’t afford to buy enough food.  Insurance won’t help these people, their problem isn’t risk, it’s certainty.  The only solutions that will work here are those that work for any poverty problem: charity and welfare, and in all likelihood welfare will have to handle the bulk of it.

Where I think most systems go wrong is that they try to find one solution to both problems, when really what is called for is two different solutions, each tailored to one problem.   In the US, the solution is a twisted monstrosity you call “health insurance”, though it is no such thing.  Health insurance, real health insurance, is a risk management tool.  The insurance company works out how much it will cost to cover you on average, and charges you that, plus a bit to cover their overhead and margin.  Coverage only extends to unlikely but severe costs, if a loss wouldn’t ruin you you shouldn’t be insuring against it.  Basically the only true health insurance is what is known in the US as catastrophic health insurance, the rest is an attempt to make private companies pay welfare (say by making insurance companies charge less for insurance than they can expect to pay out), which works about as well as you’d expect it to.  Also, since insurers are contracted by the employer, there are 2 or more intermediaries between the health care provider and the consumer).  No wonder market signals are so weak.  And since price is hidden from the consumer, consumers have an incentive to over-consume healthcare services (aided by doctors who, understandably, want nothing but the best for their patients).

A lot of the reason for this is that health insurance is tax-deductible.  So what I’d do is either get rid of the deduction, or at least make employer contributions to a Health Savings Account equally deductible (but that’s a second-best option, there’s no reason you’re employer should be your health care provider).  After that I’d get rid of mandated items in insurance coverage (hell, I’d mandate catastrophic cover only if necessary, but I’d prefer it not come to that), and get rid of price controls that prevent insurers actuarially matching premiums to expected costs.  That way they won’t have an incentive to drive sickly people out of the health insurance system like they do now.

That should leave you with an insurance system that does what insurance is supposed to do, cover extreme risks.  But what of the people who need help that has nothing to do with risks?  That’s where welfare comes in.  The government could contribute money to a Health Savings Account for people on low incomes, or who have certain chronic conditions.  Alternatively the government could provide top-up insurance for certain conditions that are hard to insure (like diabetes, which has continuous costs for the rest of the person’s life), so as to ensure people are adequately covered.

So how would this help?  This is what I’d expect to see:

  1. No longer chained to their employers by their health insurance, it would be easier for people to quit their jobs.  This should make it easier to be an entrepreneur.
  2. With less distance between consumer and producer, price signals should be much clearer.  This would make competition on price a much bigger deal, doctors won’t recommend the more expensive option just because the insurer is paying for it, because that will come back to haunt you in your premiums.  Plus more expenditure will be out of pocket or through HSAs, fully disintermediating parts of the market.
  3. The health insurance market will be much less perverse.  Young people won’t be simply cash cows to be used as a way of covering older, sicker people.  This means young people might actually buy health insurance.  Also insurance companies won’t be constantly looking for ways to drive away their sickest clients since they can still make money from them.

As it happens this system has a pretty good parallel in the real world – Singapore, which by all accounts has a cheap and efficient health system, much more so than France or Canada (Murali, if you think otherwise set me straight).

I honestly don’t know know if this system represents an expansion or contraction of your government’s involvement in the healthcare system.  But either way, the involvement will be more sensible (more writing cheques, less central control of market mechanisms).

So what do you guys think of this approach?  I’d be interested to see how it rates with different ideological perspectives.

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163 thoughts on “Health is the War of the State

  1. The other main difference between a true insurance product and what passes for health “insurance” in this country–Medicare included–is that unlike health policies, every other insurance policy known to man has a limit. The carrier will pay this much, and no more, to cover your losses. You want a bigger limit, you pay a bigger premium. But with health “insurance,” there is no limit. You pay your premium, which the government is trying really hard to make unrelated to actual risks, and you get an unlimited amount of coverage both in any given year and over the life of the policy.

    This is insane. It’s impossible to underwrite that risk. It’s completely uninsurable. As you’ve said, what we have isn’t an insurance product, it’s a massively underfunded pre-paid services product.

    As long as price signals and costs are hidden from consumers, it will be impossible to do anything meaningful about health care expenditures unless, like the Brits, we simply start telling people that the government just isn’t going to pay for us. I can’t see that ever happening.

    So I propose that instead of having health insurers and Medicare pay providers directly, bills be sent to consumers, who can file for reimbursement. I would make it a law that no treatment can be provided without telling the patient or his next-of-kin exactly how much the treatment is going to cost, and getting consent to provide care at that price. Having the states regulate these prices, particularly for emergency care, would not be a terrible idea, but wouldn’t be required either. Let the states figure it out.

    Also, private insurance policies and Medicare would have annual limits. The consumer thus knows exactly how much health care they can consume this year, and because they know what things cost, they can make intelligent choices about which treatment, and how much treatment, to consume. Private policies could be set at whatever the patient is willing to pay for. Medicare could be a flat $100,000.

    Basically, put people in charge of limiting their own care based on cost. Let them decide what they want to happen, and give them the information they need to make intelligent, informed decisions about that. I guaran-damn-tee you that you see demand for designer drugs evaporate pretty much overnight as people realize that most of the generics we’ve got are 90% as good but only cost 5% as much. Same goes for excessive testing, etc.

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    • 1) you’re wrong on excessive testing. that’s a doctor fueled problem, caused by perverse incentives in the system (doctors can invest in the testing companies, and then profit from them).

      2) We can’t do anything about costs without the consumer knowing about it???? Bull Shit. 15% of every health care dollar goes not to patient care, but to overhead. I repeat. Those people calling up your insurance company to get coverage information Cost Money. Those people calling your doctor to get your last stats (when you’re at the hospital) Cost Money.

      We have plenty of inefficiencies that can be killed.

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    • How do you figure that commercial insurance is underfunded? Making this argument in the context of Medicare or Medicaid may be more legitimate due to the sources of funding, but complaining that BCBS can’t possibly forecast their collective member’s reimbursements with their teams of actuaries and statistical models sounds more than a little disingenuous.

      Further, putting the burden of reimbursement on the patient means asking the patient to be his own advocate when he is sick or injured, up against a bureaucratic nightmare of clerks and computer systems. You’re also asking an entire population to become fluent in an industry that healthcare workers have a hard time understanding. You might be able to read an EOB, but can your mechanic? And if he can figure out that his PT wasn’t reimbursed because the doc billed all 20 sessions as the same DOS or because some receptionist missed a digit in the provider number, how is he supposed to fight for himself on his own, as he’s struggling with being out of work and learning to walk again?

      I can’t even begin to discuss the absurdity of placing upper limits on Medicare coverage, as if $100k+ inpatient stays are a choice to be made.

      We do not have in this country a problem with overuse of medicine, we have a problem with overspending on medicine. Please pay additional attention to the difference between the two.

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  2. The problem with people limiting their own care based on cost is that it assumes that hospitals or doctors won’t inflate prices based on the importance of that care on top of the urgency.

    Most people when facing things like cancer or severe pain, are not the best or most rational consumers. It also opens the door to physicians jacking up prices because they know they have the consumer over a barrel.

    To think that won’t happen is simply naive.

    There is a fundamental disconnect between how we provide care and how we pay for it. We pay fee for service, which is the equivalent of your doctor being paid piece rates. We provide services based on a preventative tort model (what won’t get me sued) rather than on what is most cost effective model.

    We need to start compensating doctors and hospitals on the basis of their results as well as their services. Regulate pricing for base services to reflect reality ($5 for an OTC medication that I can buy a whole bottle of for $3, really?) and start tracking actual performance in the form of readmissions, infection rates, outcomes.

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    • I think a lot of the reason hospitals inflate their prices is that it’s the insurance company and not the end consumer that pays for it, and the insurance companies can’t pass the cost back at the moment. I don’t think hospitals jacking up prices as you enter the building is that likely (does this happen to people who pay out of pocket now?), but if it’s a concern then all you need to do is regulate so hospitals have to publicly disclose their price structure and can change it with a week’s notice. That lets them change their prices in response to market conditions, but doesn’t let them play silly buggers.

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      • The prices are indeed variable. For instance, you can often get a discount (even better than the “insurance negotiated discount” sometimes) if you just pay up front. The insurance carriers have negotiated discounts (at least in theory).

        But one of the problems with the American system is that there is no single price.

        If we went to a Singaporan system, we could change that as part of the deal, though. Or we could change it regardless. So it doesn’t have to be a problem, as long as you’re comfortable with that sort of price regulation (standardization, I mean, not amounts).

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  3. Health insurance should not be run for profit. Because… while you say “only catastrophic should be covered” I hear “you will be graded by how likely you will be to die in the next year, and then the number of hoops for reimbursement will be calculated.” Because that’s the way the programs work. And that’s if you’re lucky. The worse insurance companies will deny all charges over a certain number, no matter how “obvious” the treatment.

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    • The worse insurance companies will deny all charges over a certain number, no matter how “obvious” the treatment.

      That’s what insurance companies are supposed to do. You are insured for a limited amount of treatment, not unlimited treatment. If you want help from a non-profit, look for a non-profit. They are regulated differently.

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      • 1) your definition of insurance company is not applicable to my market (where 50% or so is nonprofit)
        2) Murali, we’re talking about deliberate fraud/cheating, claiming taht you’ll give X treatment, and then not providing it.

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        • Now, I dont agree with fraud/cheating and I’m not excusing it.

          I just dont think expecting unlimited funding from for profit organisations is realistic. Unrealistic demands breed false promises and corruption.

          your definition of insurance company is not applicable to my market (where 50% or so is nonprofit)

          Seriously? half of the insurance companies are non-profit in your state? or only in your own mental state?

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  4. I’ve been saying similar things for a long time.

    The oddest thing to me about this issue area is that health care is not, in fact, in a crisis in the United States. We don’t have the best outcomes in the world, but we’re pretty solid, especially given how much we drive, how little we exercise, and the way we eat.

    It’s a big, big mistake to think that there are any great gains to be made here. Little ones, for sure. But we’re close enough to the very top of the world as it is that we shouldn’t be expecting much.

    Note also that PPACA was sold as a response to a crisis. This should have been laughable, but it wasn’t.

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          • The average adult uses less calories and is much more productive.

            Sure, we could replace people who die prematurely by having more children, but raising them is such a drag on the economy.

            And again, there’s the question of why some countries have more outliers than others, or have outliers that aren’t really outliers.

            Disease and sickness are perfect examples of the frog boiling in a pot of water. We (people on average) attempt to insure against catastrophic health emergencies and terrorists, but not invisble threats like global warming or harmful pathogens.

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            • Its stupid to buy insurance for predictable sureties. Here’s why. If you pay $x in total to the insurance, the only way they can make a profit is if either

              1) they are able to invest and get phenomenal rates of returns and therefore payout as much or more than they collect or

              2) The pay out less than they collect.

              If you think it is 1), I have a bridge I would like to sell you…

              if 2), you could have saved money by paying the doctor directly.

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      • Even if they only get a bit more in return (and relative to some sub-Saharan African countries, say, the differences aren’t all that big), they spend so much less that it seems strange that, instead of trying to make our systems more like theirs’, the advice of James K or Jason is to make it less so.

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        • A big part of the reason we spend much more on health care is because health insurance is a tax-free way for corporations to compensate employees. Every dollar of compensation that goes through health care ends up going farther.

          Consider that if there were a substantial tax on cash salaries but not on salaries paid in gold, you can bet at least some employers would start offering salaries in gold and getting rid of cash where they could. This would allow them to compete for employees more effectively. A similar thing is happening here.

          My advice, and James’s, is to treat both portions of the salary equally — the health care part and the cash part.

          Granted, this does make our system more different from European systems rather than more alike. But it seems to address our particular problem. Does it not?

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          • I’m not sure, and quite frankly, unless you have a crystal ball, neither are you or James. It will, inevitably, create a whole set of new problems, and whether those new problems will create inefficiencies that leave our system still less efficient than, say, France or Italy or even Canada, is an empirical question that we can’t currently answer (Singapore’s system is an interesting case, but there’s more to it than just employer or non-employer related health insurance). My suggestion: go with what we know works. You and James seem to be suggesting, “Let’s try this thing that might work, but we don’t know for sure, much less how well it will work, because of our a priori principles.” I just can’t get in line with that. But then you and I have been clashing on this issue for, well, a long time, so that’s not surprising.

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            • This is exactly the point and needs to be repeated again and again because it isn’t a hard point. Western Europe (France, Germany, the UK, Switzerland, etc.) and Japan have solved this problem either though single payer or a very tightly regulated private market on a public utility model, achieving very comparable health care outcomes at substantially less cost. Ruling out a successful appraoch to this issue in favor of some untried one makes no sense. Everyone has recognized for the last 60 years that the private health care market in this country doesn’t work at delivering affordable health care in the most direct and efficient way for people who need it rather than the people who profit from it. Let’s stop coming up with the latest wonk-y attempt to tinker with or embroider on a failed system and recognize that it HAS failed, and substitute in its place something that has proven it will work.

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        • I’m just not convinced that making the cost of health care more apparent to individuals will do anything to actually bring it down.

          For some reasons James mentiones and many others, health care is a unique product (if it should be thought of one at all) that doesn’t necessarily fit the usual analysis. I’m not sure if people have to pay insurance/health care out of pocket that they’ll start getting more preventative care or being more healthy all of the sudden.

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    • @jason The oddest thing to me about this issue area is that health care is not, in fact, in a crisis in the United States. We don’t have the best outcomes in the world, but we’re pretty solid, especially given how much we drive, how little we exercise, and the way we eat.

      It is not the outcome of our health that is driving the debate, Jason. As far as I know the usage of stats to show we are not #1 is merely a response to the right’s insistence, for years, that the fact that we were #1 in every category was proof that no change was needed.

      The potential crisis is that costs are increasing 7-10% a year, every year, and not just recently but over the past 40+ years.

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      • And in that framing, the oddest thing is that we have this excellent cost-containment mechanism that’s hardly if ever brought to bear in this sector — the free market — and so few people want to try it.

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          • Several things.

            As already mentioned, no tax incentives to compensate in the form of health insurance.

            Health insurance is therefore no longer tied to employment. (Consider: Does anyone think it would be a good idea to tie auto insurance to employment? Of course not, so…)

            Change regulations to allow for competition across state lines.

            Change regulations to allow for more variety in products and services.

            We wouldn’t even need to scrap the public providers, although (with a voucher system to replace them), that’s an option I’d consider.

            The problem is that the health care industry would almost certainly shrink significantly — even if, as I think would happen, individual coverage levels would improve. So the industry is strongly set against it.

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            • Ya’ know what happens when you allow competition across state lines without any federal regulation above it all? The health insurance companies go by themselves a state legislature and all the health insurance companies move there.

              How do I know this will happen? Because it’s exactly what happened in the 70’s when deregulation happened to credit cards. They went and bought South Dakota’s legislature and every other 56% interest credit card came from there during the 00’s.

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        • The problem with relying more strictly on the “free market” to solve the “health care problem,” is that the free market is very ineffective when it comes to discriminating between ends.

          The health care issue is riddled with morality, for better or worse, because it’s at bottom about what people value, what they “should” value, and how we try to “engineer” society based on that.

          So on the one hand, Ron Paul is consistant to imply that someone without health insurance should face the consequences, because there’s no other way for the free market as a mechanism to function correctly.

          However, he also doesn’t like the idea of “saving people from themselves.”

          I think confusion comes in because there is disagreement about mechanisms (free market vs. exchanges vs. single payer) that has very little to do with the more fundamental problem of whether or not soceity can take it upon itself to articulate an end, a certain degree of health and access to health improving resources for its citizens, and then move towad that.

          I think this is why the “mandate” problem is such a large issue. While a select group of elites, wonks, and policy makers might argue that Obamacare doesn’t work, I think the majority of resistance to it has nothing whatsoever to do with whether it achieves it’s goals, but with the fact that such goals were laid out by “big government” to begin with.

          To bring this back to the free market, the reason why I think that is so often overlooked as a solution Jason is because it doesn’t address the morality problem, i.e. people themselves will make poor choices when it comes to health care, resulting in efficient outcomes (it is the free market afterall) but socially unacceptable ones (for many, dare I say most people).

          As a result, you can “fix” health care (in the moral sense) without controlling people in some way. How explicit that control will be is one issue and it invites all sorts of technocratic gymnastics. But I think this is why “free market” solutions are a non-starter for most self-identified liberals.

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          • And that’s where it gets dicey.

            My brother in law is on a weight loss program where there are “fines” if he doesn’t hit specific weights by certain dates. The ulimate goal is to get him down from “overweight”, which is itself annoying because he’s also an ex-football player so most of his weight is muscle mass, not fat.

            But it’s to the tune of thousands of dollars a year if he misses….

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              • You can measure body fat, of course, but then you wouldn’t have a bunch of stocky-but-fit people paying you thousands of dollars a year.

                When insurance is provided through the employer, there’s no real incentive for the insurance company to treat you fairly.

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                • To be honest I’m not sure how much of what he has now is fat vs muscle mass, but from what he said, they’re not really looking that closely at BMI. For what they’re doing they’re looking at weight as well as BMI so he’s working to get down to what the insurance company wants him at.

                  But that’s the nature of the beast. Even with non-profit insurers they have to run in the black and that means doing some very un-compassionate math.

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                  • yes, uncompassionate math is one thing. Stupid, “not working for humans” math is a different thing. Stupid math ought to get corrected, because forcing someone to diet who doesn’t need it is stupid. And forcing extreme mesomorphs to diet is just dumb. force them to work out, they’ll gain weight and be healthier.

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                  • Unless he can magically grow taller, reducing weight is exactly the same thing as reducing BMI.

                    Kimmi is right about BMI being stupid math. It’s a kludge that was developed for population studies and never intended be applied to individuals.

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                    • I worked in a psych lab. I know a LOT about central adiposity, body fat, and all sorts of measures of health.
                      Betcha anyone smart enough to bitch to a reporter gets out of that program toot sweet.
                      (honestly, I don’t mind it as an opt out program– you the patient have to schedule an appointment for a free body fat reading.)

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            • Indeed.

              If the public is going to provide it, we certainly should be discriminating.

              Of course, it’s usually the people who already have certain benefits who care most about protecting those who don’t from receiving them with government strings attached. None of the candidates who so feverently decry the mandate do so because they don’t want to have health insurance themselves, just the option for the poorer people not to.

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              • I’ve long shook my head at the idea that the only person that Republicans wanted 100% coverage for was Terri Schiavo.

                That said, the second I start pointing out that, maybe, some stuff ought to be paid for by the people who want the medical treatment (and if they don’t want to pay for it, they can do without), I get called a murderer or sociopathic or whatnot.

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        • you’ve got a sticky market, partner, with little feedback on quality of insurance company. I don’t think this market Can Be transparent enough to make a good “free market.”
          Consider: You only really know how good an insurance company is about disbursing claims when someone you know gets hurt.
          Consider: Even after that, you need to find a different company, and hope that they aren’t just as bad or worse.
          Consider: The incentives of most publically offered companies are to come up with the most profit per quarter. You do that either by getting more customers (low profit) or by denying service (high profit). Since a good proportion of your customers aren’t going to know about/be able to fix poor coverage…

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    • We pay per capita anywhere from 2-3 times on health care that the major industrialized nations in Western Europe and Japan pay. If we paid what they pay, ie we treated health care not like an unregulated commodity market like an IPad but like something that should be regulated like a utility, we would successfully deal with the human crisis faced by millions of people bankrupted by heath care costs and with the fiscal crisis facing Medicare and medicaid in the long term. Much of the austerity mania consuming our elites would be wholly unnecessary if we recognized this, but we don’t. So, yeah, it’s a crisis.

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    • In quality this may well be true, but my worry is cost. After all somethign must be done about Medicare soon or your government will have a serious problem. I take seriously Robin Hanson’s argument that your country is significantly over-consuming health care services.

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      • I suspect we are over-consuming if you look at certain sectors, but other large sectors are under-consuming to the point of not consuming at all.

        Medicare is a financial issue largely as a result of demographics and the current health care model. We can’t do anything about the former, though it will work itself out over the next 30 years, but we can do something about the former. And my suggestion is to go with what we know works, rather than something even less like what we know works.

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        • But we know Singapore’s system works. In fact, it seems to work better than France’s or Canada’s.

          Besides which, that argument can be deployed against any policy innovation. You could have used to oppose abolishing slavery in the 19th Century, or the establishment of a secular republic in the 18th.

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              • James, Singapore’s health care system only works with the price controls (ask Murali, the prices are cheap because they have to be). Without the price controls, along with the country’s wealth (it is a wealthy little country), the compulsory savings, and the 1/3 or so of the health care funding that comes from the government, Singapore’s health care system doesn’t work. There’s no reason to think otherwise, because the evidence is pretty clear.

                Now, I prefer some other systems, but Singapore’s looks more like France than the U.S., and certainly more like France than a free market approach.

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                • According to this article, Singapore spends 3% of GDP on healthcare. That tells me their wealth isn’t the issue, because their larger denominator isn’t enough to get you a percentage that small. Also, I don’t object to the government spending part, my proposal involves government spending on health care too, though 1/3 government spending would actually be less than the 50% the US government spends.

                  But I very strongly doubt that price controls do any good, largely because they very seldom do. If price controls were a significant factor I’d expect the system to be suffering from chronic shortages and poor quality and that doesn’t seem to be the case.

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                  • I’d also point out Singapore is a city-state of five million run quite autocratically by a government that has it’s hands in just about everything.

                    So, actually, I’m sure a small country with only a few dozen hospitals at most can institute enough price controls to drop percentage of GDP down that low.

                    A large country? Not so much. At least France, England, and Germany all have populations coming close to those of the US.

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                  • Jesse is right. The price controls likely work there because it’s a relatively small nation with a high per capita income (one of the highest) and relatively low income inequality. I suspect that with an income distribution similar to the U.S.’s, the proportion of government-funded health care would be similar or higher, as well.

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    • You upbraid someone for noe citing, but you don’t cite where it was sold as a response to a crisis. Not denying, it just point that out.

      There is a cost issue and there is an issue of lack of coverage. Together, I think they quite arguably amounted to a crisis. At least they amounted to a policy problem requiring action, and ‘crisis’ tends to be the needed scale of rhetoric needed these days to get action on anything. You can reject that as needless hyperbole, but the question of whether something us actually crisis, if a problem actually exists, seems to me a matter of perception. It can certainly be laughable to you; who else it ought to have been laughable to seems like something you can’t necessarily speak to.

      And Obamacare did indeed address the cost issue/crisis: it placed a tax on high-end plans. That certainly doesn’t go far enough, but goes in the direction you and James want. I’m not sure what I think about getting rid of the exemption altogether; the result absent further reform you don’t talk about would be that tons of people would be stuck trying to buy health insurance or otherwise manage their costs completely on their own. I’m not willing to advocate to my fellow citizens that the security of employer-provided health coverage is the problem, and what is needed is for them to be put out into the health market on their own. Sorry.

      Good luck selling it.

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      • You upbraid someone for noe citing, but you don’t cite where it was sold as a response to a crisis. Not denying, it just point that out.

        Hmm. That’s a real tough one.

        Have you really never heard the term “American health care crisis” in this context? Really? I find that impossible to believe.

        And Obamacare did indeed address the cost issue/crisis: it placed a tax on high-end plans. That certainly doesn’t go far enough, but goes in the direction you and James want.

        So we respond to expensive health care… by making it more expensive?

        In what other policy area would that be even remotely comprehensible?

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        • I didn’t say it would be tough. But were you going to pick out an entry on your “”health care crisis obama” Google search, or just assume an appropriate example must be somewhere on the first couple pages? Did you even look at the results? It’s mostly news analysis pieces saying, “Obama will have to suggest there is a crisis of some kind in order to get traction for this bill…” or “Obama will attempt to lay out what the crisis facing American health care is in his address to a joint session tonight…” etc.

          Google searches as citations are weak sauce. Either admit you are saying you think the thing you assert is so obvious that citation is not needed, or find a concrete example of the thing you are talking about. Say I.

          And… your solution is raising taxes on health spending to encourage frugality, is it not? This is an incremental version of that that doesn’t blow up the whole system in the short run. I am confused by your categorical rejection of the thing you propose.

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      • I freely admit that we pay way too much. In fact, I think I’ve done so several times on this thread. But there’s a reason for that — the tax break.

        We can pretend the tax break doesn’t exist, and maybe that will create the mysterious crisis you’re so longing for. Or… we can abolish the tax break as an obvious attempt to fix the problem.

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    • Gains in health care are always on the margins, and marginal gains in health care always have outsized rewards: look at the impact of Americans quitting smoking en masse, or the theoretical gains from putting breathalyzers and black boxes in cars that Tod Kelly wrote about a few years ago. These are all small changes that have huge rewards. I believe there are lots of little diamonds to be harvested from small structural changes in health care policy.

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  5. Spot on James!

    I agree with your division of the problem into two parts:
    1) The issue of the poor affording coverage
    2) The issue of a severed feedback loop between cost and benefits (employer paid and Medicare paid) leading to out of control costs, and I would emphasize a third:
    3) The issue of those not paying for insurance still getting treatment and thus further driving up costs

    These three issues are causing an out of control feedback loop that is driving more out of the insurance market and driving up costs. The current system will end in disaster, and recent “reforms” just hasten the demise.

    My recommendations (which track fairly close to yours):
    1) Eliminate the tax break for employer provided medical insurance — this addresses the cost/benefit issue and eliminates some of the middlemen and makes insurance fully portable and no longer job dependent.
    2) Provide catastrophic coverage (above an annual threshold) to all citizens. This would be paid for by an income tax or an automatic deduction from wages with some type of wage interruption protection. Citizens can opt out of this coverage/tax with a notarized document that they are 100% responsible for their own care. Insurers could compete on price and coverage with certain minimums. There will need to be careful controls to prohibit rent seeking (trying to get one’s services thrown into the mandatory minimum) and protocols/pricing mechanisms need to be established to control for individuals jumping to better plans after they get sick (no room for details).
    3) Replace medicare/medicaid with subsidized Health Savings Accounts insurance for non-catastrophic care. Again build in choices and protection against rent seeking.
    4) Eliminate or soften restrictions/licensing requirements for doctors and nurses and open borders to foreign practitioners.
    5) Replace malpractice insurance with a set of competing arbitration boards. Cut out rent-seeking attorneys completely.

    Of course once non-medicare individuals are responsible for their own care, they will predominantly buy HSA’s as well. They are MUCH cheaper because they encourage consumers to be price conscious. It is their choice though.

    These actions will provide full coverage for health care at more affordable prices, and will reverse the vicious cost cycle we are in.

    The devil is in the details, and in building the path to transition from where we are today to where we would like to go. For the record, I do not see a path to “there” from here. The rent seekers — various doctors, psychiatrists, lawyers, corporations, etc. will fight any solution — their livelihood depends upon it. I predict market collapse of health insurance — or at least full fledged catastrophe. I fear I will get my coverage in Costa Rica, Toronto, Tijuana or offshore.

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    • Perhaps I’m misreading you Roger but wouldn’t this system under #2 leave everyone below the middle class (and probably the middle class too) without any non-catastrophic coverage and leave the poor and unemployed without even catastrophic coverage?

      Also wouldn’t your #5 coupled with your general deregulation lead to the country being utterly packed with unclean and malpracticing hospitals? Regulation and litigation are the two sides of the coin of customer protection. If you reduce the former and outlaw the second then you essentially are telling the patients to suck it up and accept whatever the healthcare industry hands out to them.

      In toto it looks like a long term plan to enable for profit hospital rent seeking and eventually cause an angry electorate to throw the whole system out and enact single payer.

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      • North and Kimmi,

        North, everyone would have catastrophic (say above $X per year) coverage unless they signed a statement that they want out all together. The unemployed, poor and retired would have it subsidized of course — like today. This feature addresses the point that health insurance is different than auto and home. Eventually we all get big events, but it is usually much later in life.

        The middle class would have inexpensive HSA insurance (unless they want to pay more in premiums and less out of pocket — their choice). This helps them control costs. My personal HSA is cheap and works great (A non-cat HSA would be even cheaper.) I choose the doctor — based upon price and reputation — and get discounts in network. Doctors often lower the price when they know I pay cash up front (out of my HSA).

        North, why would anyone go to a dirty, packed, mal-practicing hospital or doctor in a world of free choice, competing alternatives and transparency? I wouldn’t go to a sleazy fast food joint, why would I go to a sleazy hospital? The choice is mine though.

        The arbitration board is to police malpractice without rent seeking by attorneys. There are other ways to solve this issue though. Competition, brand image and transparency are what provides better products for less in most other fields. There is no reason to expect it to fail in health care.

        Kimmi, I believe waste and overhead would be addressed via competition for consumers as in other non-over-regulated fields. Hospitals competing for my HSA dollars have to be efficient and effective or I go elsewhere. The consumer becomes king again with HSA’s. That is why the special interests hate them.

        The current predominant system rewards inefficiency and rent seeking. Mine penalizes it with (to quote from Chicken Run) “minuscule profits.”

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        • Roger,

          I still am scratching my head over #2 then. You seemed to link the tax/fee with the coverage so are you saying the poor/unemployed/retired would get free catastrophic coverage since they don’t pay?

          As has been noted before people with health issues in general and health emergencies especially do not typically have the capacity or wherewithal to somberly pick and choose from among a lengthy list of competing health care providers. This makes it a rather atypical market. Since under your plan regulation would be reduced the the minimum and litigation would be banned the health care poviders could likely throw some marketing dollars and some documents from their pet arbitration board to negate the problem from their point of view. Perhaps I’m being excessively cynical but healthcare is a pretty strange beast marketwise.

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          • North and Jesse,

            Yes, they would have “free” coverage. I emphasize free because the premiums would be adjusted for the fact that nobody works and pays taxes their whole life (nor is anyone unemployed or retired their whole life). It is kind of like a premium rider in life insurance. It is paid for you when you stop working, but that is because we all pay a little more when we do work.

            And why do you assume adults would not have knowledge of a reputable hospital before they have a bad heart valve? If this was a problem, market mechanisms would most likely rise up to address it. I could spit out a half dozen free market solutions on a napkin in 5 minutes.

            Arbitration boards need to be agreed to by both parties, and rent seeking — as you reference — must be defeated.

            The real challenge with my plan is dealing with the issue of pre-existing conditions and portability/competition in the non cat part.

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            • Because when you’re on the ground having a heart attack because of the broken heart valve you’ve not gotten any check ups because health insurance no longer covers preventive care, only catastrophic care, you aren’t pointing at a list.

              You’re going to the closest hospital and/or the hospital the ambulance company is contracted to go to. So, if you’re a poor person having a heart attack, it’s far more likely you’re going to a crappy hospital already – I have no doubt that situation will only get worse in a world with less regulation of medicine.

              As for arbitration boards, I only look at most arbitration boards that find in favor of the corporation in even larger percentages than our broken legal system and find humor in the idea than an arbitration board would be better for consumers than going to court.

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  6. Bravo James! A lot of great thoughts here. First:

    “If I’m right (and I don’t have the data to check whether the magnitudes fit to make this work as an explanation), at least some of the reasons that only the very richest are getting real pay rises is that the healthcare system is consuming the residual.”

    As far as I can tell you are correct http://www.theatlantic.com/business/archive/2011/10/who-really-robbed-the-middle-class-maybe-it-was-health-care/246606/

    “the rest is an attempt to make private companies pay welfare (say by making insurance companies charge less for insurance than they can expect to pay out),”

    I completely agree here.

    I’m pretty sceptical of single payer as a solution for the US, partly because it doesn’t work as well as you’d think (it’s really expensive for one thing, and that’s without accounting for the fact that the US is bearing the burden’s of the world’s R&D expenses by paying higher prices),

    This I’m not so onboard with. What makes single payer necessarily more expensive? Dollar for dollar, isn’t a nationalized system at least saving on admin costs (which are no small thing)?

    Also, the benefits of medical R&D seem unclear. For instance, it often seems as though innovation in medicine only means finding new ways to save/take care of life in new instances, rather than finding cheaper and more affordable ways of saving life in extremely common circumstances. I could be wrong here, but it seems like we should be doing more to make normal procedures…giving someone some stitches, blood work, MRIs, super affordable (i.e. increase efficiency), rather than seemingly investing so much more in the frontiers of disease prevention and cure, which, while important, certainly remain too expensive for most people ever to benefit from.

    “The government could contribute money to a Health Savings Account for people on low incomes, or who have certain chronic conditions. Alternatively the government could provide top-up insurance for certain conditions that are hard to insure (like diabetes, which has continuous costs for the rest of the person’s life), so as to ensure people are adequately covered.”

    I wonder how this would affect me. To explain some of the details of this approach, how would this system process my circumstance? I have repeatedly had trouble with my left knee which has been operated on (same operation) 3 times since I was 13. Insurance covered the 30isn thousand dollars each time, but this seems like a borderline case that is hard to qualify as either chronic or catastrophic. It certainly isn’t predictable, and yet by this point it’s pretty clear that something will happen again in the next so many years to lead me back to the orthopedist. Why would an insurer take on that risk, and why would the government subsidize it?

    My suspicion is that I would be in a lottery limbo or sorts (as would lots of other people) where I’d need to get some doctor to give me a golden ticket analysis that lists me as having a “chronic” illness. So someone somewhere is still making the call as to who get’s the limited amount of health care that’s available.

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    • Also, the benefits of medical R&D seem unclear. For instance, it often seems as though innovation in medicine only means finding new ways to save/take care of life in new instances, rather than finding cheaper and more affordable ways of saving life in extremely common circumstances.

      You may well be right, but that’s a non-trivial benefit. Still researching cheaper methods would be a good idea (some room for government funding there perhaps?). Another possibility would be to expand the range of things a non-doctor can do, after all doctors are expensive.

      I wonder how this would affect me.

      You raise a good point here, the tricky part with designing government policy is the multitude of edge cases. All I can say is that I’d expect a policy like this to get several months (at least) work by a team of policy analysts to iron out the wrinkles. There will inevitably be some people who fall through the cracks, but that’s true of current policy too.

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  7. James – I liked the spirit with which you tackled this thorny issue a lot, especially your instinct not to simply “throw bricks.” However, I have to disagree with most of the conclusions you have come away with, mostly because I think some of the underlying assumptions you start with are not quite correct (though are pretty common)

    The main problem arises from thinking of health insurance as being similar to classic types of insurance, such as home or auto insurance. It isn’t, and in fact relies on different mechanisms. Classic insurance is designed to spread the risk of catastrophic risk for events that, while possible, are unlikely to happen. (A quick tally of how many people you know who have lost their home to a fire should illustrate this principle, unless you know a disproportionate number of high unlucky people.)

    Health insurance, on the other hand, is a way to spread the inevitability of costs over time. Some of us will be hit by buses or drop dead of a heart attack at 27, but for most the catastrophic costs will come, eventually. A common problem people have with understanding the way health underwriters and actuaries is that they tend to think of those costs associated with, say, a 35 year old man. However, a healthcare system has to determine a way to pay for all of society’s costs, not just the sum of 35 year old men. (This, btw, is why people get it wrong when they argue that smokers cost society more in healthcare costs. They don’t; they cost society far less. A 40 real-old smoker might statistically have more healthcare expenses than a 40 year-old non-smoker, but over their lifetime the HC costs of the non-smoker are far greater. This is because smoker die far more efficiently than non-smokers, and because non-smokers live longer – thereby increasing their overall lifetime HC costs. This is a very, very good reason not to smoke.)

    One of the problems that is currently contributing to spiraling HC insurance costs is that as employers are less likely to pick up premium increase and pass them along to employees, a growing number of younger, healthy employees are opting out of coverage. But as noted above, HC insurance isn’t a mechanism to guard against the unlikely, it’s a mechanism to spread the costs of the inevitable. HC premiums are designed to pay for anticipated medical costs, plus 2-4% for administration costs and profit. The “pie.” if you will, dies not shrink when healthy people stop paying premium. The pie stays the same, but the cost-per-insured increases. In other words, having a way to prevent younger and healthier people from paying into the system makes the costs exponentially more unaffordable for those that need it than it is already becoming.

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  8. Brilliant Post James!

    As it happens this system has a pretty good parallel in the real world – Singapore, which by all accounts has a cheap and efficient health system, much more so than France or Canada (Murali, if you think otherwise set me straight).

    You’re right on this (at least as far as my own meagre knowledge goes)

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  9. For people arguing for catastrophic only coverage:
    Take an arbitrary example — someone with reasonably life threatening allergies.
    Cost to medicate: $100 a year (used to be $1000)
    Cost to Fix: $2000
    Cost of Leaving Untreated: $5000 per hospital visit, which would be frequent (due to depressed immune system, or systemic allergic responses)

    It’s possible that you can monkey with the numbers, so that this becomes something that’s easily treatable. But it seems to me, that going with catastrophic only plans is a recipe for this person costing a lot more than they would with a more reasonable plan.

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      • I don’t think they’d do it judiciously. Not if care for a “might be broken” sprained ankle cost over $1000. It’s fair enough to say “Yes, we can reduce costs”, but insofar as I know, more than 10% of current costs are overhead. Overhead likely to increase if you get rid of medicare/medicaid, I might add. That means that you’d have to reduce the baseline by more than 1 in 5 in order to actually get to something reasonable.

        CS person here, favoring CS solutions that fix actual problems, as opposed to “we incentivized stupidly.”

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        • Most of u know we are going to get a flu, a fever at least once a year. Many of us can expect to have something with a certain kind of annual or bi-annual regularity. This somethin is relatively minor and can be dealt with by any GP. Not everything requires a specialist in a hospital.

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          • If you don’t have health insurance and there’s no doctors in your area who accept new patients without health insurance, you have to go to the ER because that’s the only place that’ll take you.

            I hate to break this to you, but normal people don’t want to go to the doctor’s just cause. They go to the doctor’s because they feel sick. Hell, millions of people don’t go to the doctor’s when they should.

            People for the most part do use the system judiciously, it’s just that at certain times, you can’t use the system judiciously because health care is expensive sometimes.

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          • Can I remind you that 66% of Americans do not have $1000 in the bank right now? Capitalism at its finest. If we reduce the price of medical care, they stillw on’t have 1k in the bank, I figure, as they’ll just buy bigger cable, newer car, etc.

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  10. I don’t know about anyone else but back when I was in middle school (87ish) we had a project to write a budget and the budget had to have a “Medical” category. And then we “followed” our budget for 2 years and wrote out projections and expenses. The teacher had a deck of random “events” and if you couldn’t handle the “event” you failed the project.

    In short if you didn’t allocate $4000 for knee surgery over the 2 years you should have been saving for it, you were punished. Now we did have insurance but it was “catastrophic insurance”. So if you had a heart attack you didn’t pay for it, you only had to deal with lost income.

    What amazes me a little is that such a simple lesson in economics seems lost. Today we treat “insurance” as “something we pay a copayment for to provide all of our medical expenses.” There is a lot of hiding of costs and I do believe that the tax incentive has lead to a lot of this. Why pay someone more money in cash when you can just buy them better insurance ~And~ write it off?

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  11. I do agree with severing the link between employment and insurance that is very prevalent in America. It is downright cruel to take away one’s health coverage at the time when they can least afford to be without it. Beyond that, it creates job lock and artificially stagnates our economy by preventing people from taking a risk and going to new jobs or starting new businesses. Having a huge population of people without insurance likewise prevents these people from taking risks. If we want people to take risks, we need to give them a safety net so that they are willing to step on the tightrope.

    With that said, I think you’re wrong on what goes on in Singapore’s health care system. It is not a free market utopia; it is actually very heavily regulated. All citizens are mandated to contribute to their Medisave account, and the government controls what health care you can spend your Medisave funds on. The catastrophic insurance program, Medishield, offers identical coverage to everyone who participates in the program, and insurance providers are only allowed to vary their costs based on an individual’s age. There is a public option in the Medishield program that competes with a limited number of private insurance providers. Actual health care prices are heavily controlled thanks to about 80% of health care being delivered by the public hospital system, and all providers are mandated by law to publish all of their prices. The supply of doctors is strictly controlled with most being pushed into primary care rather than specialties. Other aspects of health care supply are heavily regulated as well, including hospital beds.

    If we are to learn anything from Singapore’s success at controlling health care costs, it’s not that putting skin in the game is vital. It’s that government regulation is the necessary and sufficient condition. The Medisave system started in 1984, and it was intended to allow the free market to push prices down and control health care inflation. What really happened between 1984 and 1993 is that people continued to demand the newest and most expensive treatments, and health care inflation was greater than 10% year-over-year for all ten years. The creation of the Medishield and Medifund (indigent subsidies to Medisave) program and the institution of the many supply-side regulations I listed above starting in 1994 rectified these problems, and health care inflation slowed to a crawl.

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  12. Lots of good responses here already, but I’ll add my $0.02 to the “markets aren’t a silver bullet for health care costs” argument:

    As others have correctly pointed out, our costs aren’t significantly higher than the rest of the developed world because we consume that much more health care. In fact, it’s often the opposite — we pay a lot more because many people have to use the ER for primary care, can’t get screening or preventative treatment for common conditions, and because our fee-for-service pricing model encourages late treatment and insufficient prevention (see our rate of hospital-acquired infections vs. most of the rest of the world…)

    Our huge incremental health care costs also don’t fund R&D for the rest of the world. That’s a canard. While a disproportionate amount of basic research is done in the U.S., this is primarily done outside the health care system via universities and institutions like the NIH and CDC that aren’t getting their bucks from Aetna and Blue Cross.

    Two things we do fund disproportionately with our health insurance dollars are drug marketing and shareholder equity for all the for-profit entities that take their cut of every health care dollar that moves through the system.

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    • The thing is that companies don’t do marketing for fun, they expect to make more money out of it than they put into it. So if you were to stop them from marketing, they should end up with less money to spend on other things, not more.

      As others have correctly pointed out, our costs aren’t significantly higher than the rest of the developed world because we consume that much more health care. In fact, it’s often the opposite — we pay a lot more because many people have to use the ER for primary care, can’t get screening or preventative treatment for common conditions, and because our fee-for-service pricing model encourages late treatment and insufficient prevention (see our rate of hospital-acquired infections vs. most of the rest of the world…)

      In many contexts (particularity cancer, and the very costly end-of-life stuff) the US does consume more healthcare than other countries. And preventive medicine doesn’t actually save money, the cost of the prevention spread across the whole population is more than the cost of the disease you’d prevent.

      And while it’s true that the NIH and CDC do a lot of precursor research on drugs, there’s a lot of extra work that needs to be done after they’re done. Actually turning a plausible target into a drug and then jumping through all of the FDA’s hoops is an extremely expensive operation, and that’s done by Big Pharma.

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      • The thing is that companies don’t do marketing for fun, they expect to make more money out of it than they put into it. So if you were to stop them from marketing, they should end up with less money to spend on other things, not more.

        Who said anything about stopping them from marketing? I’d prefer to see the incentive structures changed so that marketing doesn’t have such a large, wasteful ROI.

        In many contexts (particularity cancer, and the very costly end-of-life stuff) the US does consume more healthcare than other countries.

        Do you have hard data on this? I’ve been searching for these particular numbers for a while.

        And preventive medicine doesn’t actually save money, the cost of the prevention spread across the whole population is more than the cost of the disease you’d prevent.

        Now this is just plain wrong unless you’re assuming vastly increased mortality rates from disease, an outcome that I’d assume we’d want any health care system to prevent, not encourage.

        Actually turning a plausible target into a drug and then jumping through all of the FDA’s hoops is an extremely expensive operation, and that’s done by Big Pharma.

        This is a much different claim from “we’re footing the entire world’s medical R&D via the U.S. insurance system,” though, as these expenses are a small fraction of world-wide medical R&D spending, and aren’t exclusively paid by U.S. consumers (although we do pay more than our fair share here).

        Medical R&D won’t grind to a halt if the U.S. starts paying health care costs in line with the rest of the developed world.

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        • Medical R&D won’t grind to a halt

          Will it slow down? If so, that’s *BAD*. We want innovation to increase to the point where we’re complaining in 2026 about how inner city hospitals only have stuff that was considered bleeding edge in 2011.

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          • My question is, why should American consumers have to subsidize R&D costs instead of the rest of the world? I mean, isn’t this the argument against climate change laws since China and India will just continue to pollute?

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            • Jesse, which proposition do you agree with:

              (1) We shouldn’t pass climate change laws because other countries won’t follow suit and we should not subsidize the world’s R&D because other countries aren’t paying their fair share.

              (2) We should pass climate change laws regardless of what other countries do because it’s the right thing to do and we should continue to subsidize R&D because we can.

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            • You shouldn’t have to, it’s totally unfair that other Western countries aren’t shouldering their share of the load. But they won’t do it because it would stress their healthcare systems beyond tolerance, so unfair or not it’s you guys or no one.

              Sorry about that.

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          • I doubt anyone has enough information to say definitively what the net effect would be, but I’d venture a prediction that any overall slow down in R&D wouldn’t affect basic research or time-to-market of useful medications or devices.

            U.S. health care costs are going to come down one way or another. We can’t sustain our current levels of spending indefinitely, and we certainly can’t sustain our current levels of health care cost inflation even over the short term.

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              • No, for reasons I mention above. Most basic research isn’t funded by health insurance dollars.

                The stuff that is, mostly involving bringing new drugs to market, might be affected in a small way, but given that this encompasses the entire future revenue stream for one of the world’s largest industries, I have great faith that they’ll find a way to not kill the goose that’s laying their golden eggs.

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                  • By and large they’re not any more, due to our broken system. Pharma is focused on bringing the drugs with the most profit potential to market, not the ones with the most positive health impact.

                    Even so, Pharma still has very powerful motivations for keeping the pipeline of new drugs going. Maybe they finance it by squeezing Europe and Asia a bit more, or maybe we do reform right here and they save enough on marketing expenses that they can actually increase R&D rather than decrease it.

                    And again, what’s the alternative? Having the U.S. pay significantly more than the rest of the world in perpetuity?

                    Even if we as a nation decide that we want to subsidize drug development for the rest of the world there are much better ways of doing it than we are now.

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  13. James – this is all good, and I’ve said similar things myself. The trick is untangling where we are now. Right now, it costs way too much for basic medical care. So if you don’t have insurance, you’ll easily blow a few hundred dollars on a routine procedure. Or you may not even be able to access non-emergency healthcare at all. You not only don’t have insurance coverage ameliorate the cost, cash-paying customers pay more all across the board since they don’t receive additional discounts.

    So you’re left with a situation that nobody can extract themselves from. Because healthcare is a broken market, it’s expensive and extremely dangerous to exist within sans insurance. To fix the system we need to get the market working, but to do that we need to separate insurance from employment and to do that we need to put a bunch of people at risk in one way or another. The problem just keeps getting deeper and deeper.

    Add to that various supply-side issues. Highly protected drug market, medical device manufacturers with highly inflated prices on their goods, passing those on to hospitals which in turn pass those costs on to healthcare consumers. It’s just this impossible labyrinth of madness, the most broken of markets.

    In other words, some sort of plan like the one you suggest is necessary but probably won’t work without some major effort to avert risk for most Americans. A universal catastrophic plan perhaps. Special interests that profit off of the current system, such as doctors groups, will be up in arms as well, so there’s also that to contend with.

    Which is why I think single-payer appeals to people. It is a straightforward solution to a disastrous problem. No, healthcare is not in “crisis” but it’s headed that way on a cost front, and it’s most certainly that way already for people blocked from access to care (sick, poor, middle-aged, many children.)

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        • It’s a good question, but how does your universal catastrophic programme fare any better? I would expect that interest groups would bloat it into a covers-everything plan almost immediately. At least if the plans are private the government can’t be influenced into fiddling with them.

          The best mechanism I can think of is something is understand American hospitals already do – discounts for out-of-pocket patients. The high prices quoted for procedures are basically a fiction, no-one pays them because out-of-pocket patients can get a discount and insurance companies negotiate their own discounts. So in a world where insurance covers less, I would expect more out-of pocket discounts to the point where hospitals just start quoting prices that actually mean something. Failing that, I’d regulate to require transparent pricing.

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