An Internet hub for moderates, centrists, and independents, with domestic and international news, analysis, original reporting, and popular features from the left, center, and right

« Weird World: Where Every Budget-Cutting Gesture is Worthless

Waterboarding “Guidelines” and CIA Prosecutions »

Naive Questions About Healthcare Reform

Posted by DAVID ADESNIK in Health.
Apr 20th, 2009 | Comments

My knowledge of our healthcare system is basically limited to my own experience as a patient. The actual health care has been quite good. But my experience with health insurance has been pretty awful, mostly because I’ve spent time at three universities and two different jobs over the past several years.

Right now, I have insurance through COBRA, which means I still have insurance through my previous employer, but have to cover my employer’s share of the cost. Basically, I’m now paying three times as much for the same insurance. With premiums as high as they are now, that really hurts.

Not surprisingly, I tend to believe that our healthcare system needs a major overhaul to make it more affordable. What kind of overhaul? I dunno. I know what I want — portable and affordable insurance that covers the same high quality services I get now. I just have no idea how to get from here to there. As such, my ears perked up yesterday when Larry Summers, the economics point man at the White House, said this on Meet the Press:

By doing the right kind of cost-effectiveness, by making the right kinds of investments and protection, some experts that we–estimate that we could take as much as $700 billion a year out of our health care system. Now, we wouldn’t have to do anything like that, we wouldn’t have to do a third of that in order to pay for a very aggressive program of increased coverage.

That seems like a silver bullet. Is it really possible that we could save that much just by being more efficient without consuming less healthcare? I sure hope so. But if healthcare is a business, why haven’t insurance firms noticed these mountains of inefficiency and improved their own profit margins by squeezing them out of the system?

But say for a minute that these inefficiencies really are there and ripe for elimination. Summers’ estimate suggest that if we get rid of inefficiency, we could either finance a government-supported program to provide healthcare to the uninsured, or we could build a much leaner private insurance system that makes coverage affordable for the currently unininsured.

My sense is that the Obama administration is learning toward the former option, but we may not know the details for a while. Personally, I don’t like the idea of the government taking charge of such a massive program if there is a way for the private sector to do it equally well. If inefficiency is killing the system now, I’m not inclined to believe that more government is the answer. But who is out there, leading the charge, explaining how to save the healthcare system in a way that encourages competition and entrepreneurship, rather than central direction?

I’m all ears

Cross-posted at Conventional Folly

  • It still amazes me that people actually still believe that a single payer government program would be less efficient that the current one. Medicare has an overhead of about 3% while around 25% of US health care dollars are spent on the overhead of private insurance companies. Eliminate the private insurance companies and you made the the US health care system over 20% more efficient at once. No more insurance company executives making 100 million a year, no millions being spent on marketing. The per person covered cost for medicare would go down because now medicare cover only the group over 65 that requires the most care. Expand the pool and costs will go down. I am one of the uninsured because I'm self employed and 63 years old. I could not buy an insurace policy for any amount of money.
  • "Personally, I don’t like the idea of the government taking charge of such a massive program if there is a way for the private sector to do it equally well."

    Well that's the heart of the debate, isn't it? One side claims it's "socialized medicine" (gasp!) and we couldn't choose our doctors and well I'll let them speak for themselves. As you note, it's not about who provides the care, just who assesses the claim and writes the check.

    Our government already manages massive check writing programs, from FEMA to Medicare to federal payroll. It's not rocket science. My contention is that the cost in dollars of for-profit insurance is way higher than the administrative cost of assessing the claim and writing a check, which is ALL I want them to do.

    The human cost is mainly in that insurance companies use every trick in the book to keep from doing exactly what you are paying them to do.

    Private insurance will always care more about their profit than your health. And THAT is the fatal flaw in the private insurance model. Our national goal--of providing the most cost effective care for the entire populace--is not their goal at all. Their goal is to maximize shareholder wealth, always at their customers' expense. I'm not demonizing them by that statement. ALL their profit is at their customers' expense. It's their income stream. The more they charge you and the less they deliver the better for them.
  • JSpencer
    My concern is that the Obama administration won't do ENOUGH to overhaul the system and will instead just tweak it here and there. I've been paying ridiculously high health insurance premiums for many years now and they only get higher, despite the fact that I am healthy. Yes, I'm middle aged, but I'm healthy. In fact they've finally broken the camels back and I was forced to switch to a less expensive but very high deductable policy, one that is of little practical value unless something fairly catastrophic happens. The only reason I even have the policy is so that I don't lose my house if something really bad happens. HELLO!!! What is wrong with this picture???? I am totally on board with a single payer system. I have friends in Canada who wouldn't trade thier system for anything. As for the inefficiency of the US insurance companies? I'm convinced they work it and and increase profits from the very inefficiency that puts premiums out of reach for so many people.
  • mikkel
    "But if healthcare is a business, why haven’t insurance firms noticed these mountains of inefficiency and improved their own profit margins by squeezing them out of the system?"

    Because healthcare has relatively inelastic demand and high entry costs. Same reason why utilities need to be regulated...

    If it takes hundreds of millions or billions of dollars to enter a market and people have to pay whatever you charge or have a threatened existence, then market theory breaks down.

    It's not just at the insurance premium level either, it's at all levels. Every step of the way companies charge 200%-500% more than they would otherwise simply because it's for medical use. I'm not exaggerating.
  • GreenDreams, you said "As you note, it's not about who provides the care, just who assesses the claim and writes the check."

    As it happens, I agree with David in the original post. I'd vastly prefer that we not have the US government in charge of managing healthcare. But my issue is not some knee-jerk freak-out about "socialism". It's ALL about the sheer screaming size of the beast.

    The bigger government gets, the more cumbersome it becomes. FEMA (and Katrina) comes to mind.

    And while this may not matter to some folks, I've found that even medium-sized bureaucracies (and their bureaucrats) are difficult to deal with. A national health-care, single-pay system boggles my bureaucrat-detesting mind.
  • It's always been funny to me that we have faith enough in the government to build and manage entire countries (Afghanistan, Iraq) as well as marshal millions of people and trillions worth of material in our "defense", yet we think government is incapable of providing an effective health insurance system. This despite the fact that the government already runs a gigantic health insurance system which achieves higher levels of customer satisfaction than private insurance.

    Moreover, how many bank failures and dead car companies do we need before we realize that the market is not an infallible magic factory of profitable efficient operations?
  • coxsackie
    Private insurance and the health care system is the antithesis of efficiency unless you include killing people.
  • coxsackie
    btw I always tell my "socialist" counterparts that private insurance in America is great until you get sick at which point you suffer the full weight of investor confidence.
  • PM, the task of assessing the validity of and writing paychecks for every military and government employee is handled by "bureaucrats" and done just as well by governments as by corporations; quite possibly better. This isn't about actually DELIVERING services (which FEMA must do in a timely fashion). Doctors and hospitals already do that. We are just talking about cutting and sending the checks. As for assessing the value of and need for procedures, that's done according to work already done. Both insurance companies and Medicare use the manuals developed by, that's right, the federal government.
  • DaGoat
    I’m not inclined to believe that more government is the answer.

    And you would be right. These opinions that the government is somehow superior to private insurance companies at managing health care are flat-out wrong. Politicians have been promising to fix Medicare by cutting out fraud, waste and abuse for decades. How is that working out? Medicare is still going to be out of money in a few years. This is despite Medicare setting it's own fees without negotiation and usually paying much less than private insurance does.

    In Illinois Medicaid hasn't paid doctors since July 2008, and Trinity Hospital in Rock Island hasn't been paid for three years.

    In my area there is one doctor out of fifty that accepts Tri-Care within a radius of 30 miles.

    At the VA they charge vets a co-pay of $7 for prescriptions they could get for $4 at Wal-Mart.

    I work in the health care system and I could go on and on. These are not rocket scientists running public health, they are bureaucrats just as bad and probably worse than the ones in private insurance.
  • GeorgeSorwell
    Wow--those people at America's Future Foundation hired David Adesnik, but they won't even pay for his health insurance!!
  • The_Master
    The New York Times ran a piece in 2007 that is as true today as it was then:

    "Proponents of single-payer national health insurance note that private health insurance has overhead costs of 10 to 25 percent of expenditures. Medicare, by contrast, has overhead costs of about 2 to 3 percent, and socialized European health care systems generally have low overhead costs as well. That is why single-payer supporters claim that we can save money by substituting government for private insurance. But this would shift overhead costs, not reduce them.

    The monitoring, marketing and overhead costs of private insurance are what allow more expensive medical treatments through the door. It is precisely because competing insurance companies spend money evaluating the appropriateness of claims that they are willing to pay for so many heart bypasses, extra tests, private hospital rooms and CT scans.

    Medical insurance, whether private or government, is always going to be faced with a fundamental problem: patients and doctors will try to get the most out of any system. When they aren’t paying directly, patients will seek extra care and doctors will be happy to oblige. To deal with that problem, health care systems can offer services indiscriminately and write off the resulting losses, spend money on monitoring, or limit services and prices."


    The article goes on with many good observations, including which sub-populations seem to be better served by a single payer system, and which benefit more from the "messy" (semi-)private sector market for health care. It also points out that Medicare has been notoriously slow to embrace new drugs and treatments (think CT scans), fearing the visible (often initially high) cost.

    On the shifting of "overhead" costs:

    "Health insurers cannot just offer expensive tests, technologies, hospital rooms and surgeries for older patients for the taking. Doctors will too often recommend these services and receive reimbursement, even to the point of financial abuse. Medicare has this problem to some extent.

    When it comes to these discretionary benefits, European systems are more likely to make people wait for them, more likely to make the service inconvenient or uncomfortable, or simply not make the services available in the first place. All of these features discourage those who don’t really need care, and, of course, some people simply go elsewhere and pay out of their own pockets. Either way, the overhead costs have been shifted onto patients and their families."

    Mikkel's point is also true. Pretty much anything having to do with human health care costs a multiple of what the equivalent product or drug does for veterinary, or for any non-medical use. Some of it is legal liability related, and some of it is "what the market will bear" pricing. If there are any good studies that try to separate the various factors driving medical "price inflation", links would be appreciated.

    When someone starts touting the benefits of a government run health care system, whether "Medicare for All" or a single-payer system a-la-Canada, be careful. One person's idea of efficiency may be another person's denial of care.

    This problem hasn't been solved in the past because it is complex. It won't be solved now by anyone's silver bullet for the same reason. Making choices is hard; making choices that affect other people's health is very hard.
  • Janjanjan
    The VA may charge $7 for those prescriptions, but my insurance charges me $15 for those same prescriptions. Generic drugs apparently have very low costs and are entry points for everybody from WalMart to the VA to Aetna. And, guess what? When the same drug is packaged differently next year, it stops being a generic and defaults to the normal formulary. That's what happened to Albuteral last year. A common asthma drug which is critical for managing emergency attacks for the millions with this condition, suddenly stopped counting as a generic drug and became a brand name prescription with the price to match. Apparently, they had to change the propellant-not the drug, mind you-just the propellant. The net result is a huge increase for me and for my insurer. This is the type of profiteering that seems just plain wrong. But it must be good business for all concerned, or one would think that the insurers would balk. The fact that they don't suggests that they lack clout, or that our system simply allows big pharma to set the financial terms of the deal.
  • Dr J
    Well said, The_Master.

    I have to think these folks who figure pots of money await liberation from the insurance companies are, well, optimistic. In my former position as Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), however, I came into possession of just such a fortune but sadly cannot get it out of the country. Perhaps one of them would be willing to help me, for a more than reasonable consideration.

    Or perhaps they'd like to start an insurance company themselves. Round up a few friends, maybe a million dollars in capital, and you're in business. You'll be rich in no time.
  • DaGoat
    The VA may charge $7 for those prescriptions, but my insurance charges me $15 for those same prescriptions.

    Then don't use your insurance for those prescriptions, just go down to Wal-Mart or HyVee or Osco and get them for 4 bucks, or 3 months for 10 bucks. I see this all the time, people say "Oh I have to use Medco or ExpressScripts or whatever". No you don't , take the prescription wherever you want and save the money. take advantage of the free market system. Just use your insurance to help with the more expensive name brand stuff.

    On the albuterol you are right, but that is a function of the drug companies and "green" organizations, not the insurance companies. The old propellant damaged the ozone layer so Congress mandated the new propellant which is now under patent. Why they decided to save the ozone layer at the expense of asthmatics is beyond me.

    Anyway your albuterol point is a red herring. There plenty of safe, cheap, effective generic drugs available and there is no reason at all for the VA to be ripping off the veterans charging them the $7 co-pay.
  • Dr J
    DaGoat, that's a great example of one of the big factors driving up health care costs: government regulation. By the same government that will presumably under a single-payer system reverse course and start driving costs down.

    Health care is the most regulated industry in America. Excessive regulation arguably kills more people than lack of health insurance does. http://www.cato.org/pubs/pas/pa527.pdf
  • Janjanjan
    So, DaGoat, if I can run down to WalMart (which I do, by the way), why doesn't the vet involved? And, the Albuteral, isn't a red herring--it is simply an example of how private insurance hasn't been able to rationalize the actual costs of health care.
  • DaGoat
    So, DaGoat, if I can run down to WalMart (which I do, by the way), why doesn't the vet involved?

    Not sure I understand your question. I have told several vets to just go down to Wal-Mart for their prescription as it is cheaper than what the VA is charging them

    On the albuterol, the price increase has nothing to do with your insurance company. I don't know how to explain it better.
  • Jim_Satterfield
    DaGoat doesn't mention the profit motive to let people die. I'm not surprised. The truth about how the private insurance companies function would pretty much destroy his argument. The private insurance companies come with a feature that the government agencies don't have. Departments that look for absolutely any reason they can come up with to dump anyone who suddenly becomes expensive and threatens profits. Corporate medicine is about profit, not health care. Profit is what matters, not human suffering or life. Never lose sight of that fact.
  • Dr J
    Jim, you have awfully high expectations of health insurance. For the few thousand bucks a year you pay them, they cover a wide variety of often very expensive treatments (since that's about the only kind there is), but they can't and don't sign up to go to the ends of the earth--costs be damned--to keep you alive a few months longer.

    They could offer you a different contract, of course. How about one that would pay tens, hundreds of millions for all sorts of experimental treatments and whatever you might imagine, but cost $50,000 a year?

    If you can't afford that, I quite understand, but how do you expect the insurance company to afford it?
  • Jim_Satterfield
    Few months longer? The insurance companies play those games with people who can live for years longer if they get treatment. I know that if they want to make the profits expected of a publicly held company they should be in another business. In fact I simply don't believe that health care and publicly held corporations are compatible.
  • Jim, the profit motive is a valid point, although I'm not sure how much weight to give it in light of the many people I've known who've been in care for many months and years with terminal illnesses.

    As long as you've brought that up, though.... Given the growing demands on the federal government to provide services to an aging population, and the shrinking ability of the younger population to support them, I could easily visualize a federally run program doing exactly what you describe. There'd be huge motivation to reduce the costs -- perhaps even more so than what you've ascribed to private companies.

    I don't like my brain at the moment for thinking that, but it is what it is....
  • DaGoat
    DaGoat doesn't mention the profit motive to let people die

    As Polimom suggests this would likely also be part of nationalized health care. The odds are high that guidelines would be set on dialysis, end-of-life ICU care, etc in order to control costs. Nationalized health Care would not be unlimited care any more than current private insurance would be.
  • Don Quijote

    As Polimom suggests this would likely also be part of nationalized health care. The odds are high that guidelines would be set on dialysis, end-of-life ICU care, etc in order to control costs. Nationalized health Care would not be unlimited care any more than current private insurance would be.


    It's very likely that teenagers who die from curable diseases today due to a lack of insurance would get to live to see their seventies, while 80 year olds who need quadruple bypasses would not get the chance to see their nineties.
  • Dave_Schuler
    David, is the problem that your healthcare insurance is 20 or 30% too expensive or is the problem that it's 100% (or more) too expensive?

    If it's the former, then the problem can be solved by going to a single payer system. If it's the latter, it's not nearly enough.

    Just an observation. If the salaries of healthcare providers had only grown at the general rate of inflation over the period of the last 40 years, we wouldn't be having this discussion at all. Healthcare costs would be less than 50% of what they are now.
  • DaGoat
    It's very likely that teenagers who die from curable diseases today due to a lack of insurance would get to live to see their seventies

    Every state I have lived in already has programs set up for this type of patient. Here in Iowa it is the Hawk-I program. It would be very rare to find teens dying from curable diseases due to lack of funds. I can't say it doesn't happen since there are always exceptions, but the number is much much smaller than the number of eighty year old bypass candidates.
  • jwest
    I would love to eliminate the health insurance business, but not for a government-run single payer system.

    The best plan for universal health care is one that provides the most cost effective treatment while providing people with the control and dignity of choosing the procedures and providers themselves. When you purchase a sofa you don’t rely on sofa insurance or hope that the government Bureau of Sofas gives you one that you’ll like – you buy the one you want. The same should be true for healthcare.

    Up until World War II, doctors sold their services just like anyone else. Competition breeds low prices, good service and innovation. Individual health care accounts coupled with a high end catastrophic coverage from Medicare would provide the best quality service with the lowest operating costs.

    Low income individuals would have their accounts supplemented by the government just as earned income tax credits work today. There would be a motivational aspect to the arrangement by allowing a portion of the unused money in each account to be withdrawn at the end of each year for personal use. There would be a gap between balance in the account and the point at which catastrophic coverage kicks in to place a further disincentive in sickness, but not enough to bankrupt families.

    Once people begin to truly think about how they want to treated in the new world of healthcare, the thought of a government run single payer or an insurance company run plan doesn’t provide the right mix of flexibility and personal control. A change is coming. Better take a long hard look at how you want the system to be when the change is finished.
  • DaGoat
    Just an observation. If the salaries of healthcare providers had only grown at the general rate of inflation over the period of the last 40 years, we wouldn't be having this discussion at all. Healthcare costs would be less than 50% of what they are now.

    According to the AARP, medical healthcare provider payments account for 21% of heathcare spending. Those payments of course also cover office overhead in addition to professional salaries. Even if they all worked for free there is no way health care costs would be 50% less.
  • Dave_Schuler
    I have no idea how AARP arrived at their number so it's rather hard for me to comment on it other than to suggest that they're wrong or, perhaps, they're defining things a little differently than I am.

    We pay three times for healthcare per capita what other comparable countries do. Something like two thirds of our total costs are accounted for by physicians, hospitals, and other healthcare providers. Roughly thirty percent of our total costs are accounted for by insurance adminstrative costs. The remainder is pharmaceuticals and other expenses.

    For the first 15 years of the existence of Medicare/Medicaid salaries in healthcare rose at something like eight times the non-healthcare rate of inflation. Indeed, healthcare costs accounted for a substantial proportion of the general rate of inflation.
  • Dave_Schuler
    Another possible source of part of the discrepancy is that the insurance costs rise directly with the increase in other healthcare costs. It seems reasonable to think that if salaries in healthcare were lower insurance administrative costs would be, too.
  • DaGoat
    I have no idea how AARP arrived at their number so it's rather hard for me to comment on it other than to suggest that they're wrong or, perhaps, they're defining things a little differently than I am.

    Well I told you where my numbers are from, where are you getting yours?
  • Dave_Schuler
    Mostly the BLS.

    Here's a graph, produced by Wells Fargo Insurance Services, that might convince you. From 1970 to 2005 the CPI has gone up about five times and healthcare costs have gone up nearly 19 times. Remember that according to the JAMA, insurance administrative costs are at most 30% of total healthcare costs. What makes up the rest?

    Legal costs and malpractice insurance costs are both in the small one digits so they don't explain it. Drug costs are rising fast but are only something like 10% of the total. What's your explanation. Mine is wages.
  • Dr J
    JWest: that's the sort of reform I'd like to see. Costs are skyrocketing because the people booking the appointments are not the ones paying the bills.

    Shrinking the role of insurance--private or public--and getting people paying for more directly would do wonders for the system. You'd get more people asking, "why are you charging me $200 for a 10-minute conversation and a tongue depressor?" and shopping around for a doctor who didn't. Quality, efficiency, and accountability would go up, prices would come down.
  • OK, some of you are clearly enamored with your private insurance. FINE. What's wrong with offering ME Medicare at my actual share of the cost? If you think the private model is better, you stick with that, pay more and MAYBE they pay for more expensive end-of-life treatment. Maybe not. But unless you actually doubt the superiority of your precious for-profit model, why not let those of us who HATE those companies opt for a federal program that you think is inferior? It's our funeral, right?

    If it does not meet the needs of its customers, it will fail as a business, right? Why are you afraid to let a non-profit model into the market? I think you know your insurance companies couldn't compete and maybe you're stockholders. Who knows why you are so intent on keeping us who can't afford or don't want their crappy and increasingly expensive coverage to try another model. I promise to pay THE FULL COST of covering me. Why are you so anti-competitive? I dunno; seems like you don't have confidence in your own model and think it needs government-protected monopoly to flourish.
  • DaGoat
    Here's a graph, produced by Wells Fargo Insurance Services, that might convince you. From 1970 to 2005 the CPI has gone up about five times and healthcare costs have gone up nearly 19 times. Remember that according to the JAMA, insurance administrative costs are at most 30% of total healthcare costs. What makes up the rest?

    Are you kidding? How about hospitals, nursing homes, home health care, physical/occupational/respiratory/speech therapy, radiology, labs, medications, durable medical equipment, etc, etc, etc.
  • Dr J
    GreenDreams, the problem is medicare doesn't charge you your actual share of the cost, so "let me have my medicare" implies "please pay part of my medical bills."

    If you want to bear the cost of your health care yourself, go for it. That's why God made checkbooks.
  • "I promise to pay THE FULL COST of covering me. "

    And you'll do that while I don't fund part of it how, exactly?
  • Dave_Schuler
    Ah, I think I see where the difference of opinion is. I assume that this is the AARP article you were referring to. Physician costs are 21% of the total. Healthcare provider costs (which include hospitals, nursing homes, etc.) amount to almost 70% of the costs.

    Wages are the highest costs in all of those organizations. Note I said healthcare provider not physician.
  • PM, are you saying there are hidden costs of Medicare outside the Medicare budget? If so, please point me to a source of the *actual* full cost. As I understand it, the Medicare budget includes all disbursements. Am I wrong? Additionally, since YOUR insurance company uses the work of MY payments, how do I not cover part of yours? Not let the insurance industry use the diagnosis and treatment manuals of the federal government? Ok, let them start from scratch and develop that de-novo. Believe me, it would cost a pretty penny.
  • BTW, here's a tidbit that you private insurance fans might like to know. While the insurance industry tried to push the meme that in "socialized medicine" we couldn't choose our doctors. The truth is, while many insurers insist you use their preferred providers, Medicare has no restrictions on the doctor or hospital you choose. Another distortion. While proponents of private insurance controlling access to healthcare, including polimom, claim the system would be too big for the inept government bureaucrats to handle, actual claims assessment and payment is handled by local contractors, just like private insurance.

    "Medicare provides coverage for items and services for over 43 million beneficiaries. The vast majority of coverage is provided on a local level, and developed by clinicians at the contractors that pay Medicare claims."
  • According to the insurance industry itself, private insurers have an administrative cost of 8.9%. Adding commission and profit takes that to 16.7%. Medicare is 5.2%. All numbers from the insurance industry educational nonprofit cahi.org. This is not a liberal group on "my" side, but an honest assessment by the industry itself. They admit that Medicare costs are going down, expected to reach 3.3% by next year. Their administrative and profit costs are "not expected to vary by more than a percent or two."
  • CStanley
    Maybe I'm just tired or dense, but @Dave Schuler-

    Why wouldn't the increased aggregate 'healthcare cost' be due to use of more services and higher priced services- meaning higher priced not in the sense of inflated prices for the same service that was previously available at lower cost, but 'higher priced' meaning newer technologies, imaging services, more surgical interventions like cardiac stents, etc that are naturally going to add higher dollar amounts to the per capita health care expenditure numbers?

    Am I missing something?

    It would just seem to me that in order to show inflation of healthcare prices independent of the effects of medical advances driving up total cost, you'd have to show a graph of prices for individual services rising over time, and compare that to CPI. If wage pressures were behind the total cost increases, then wouldn't it be seen in the increase of prices for strep tests, CBCs, vaccines, and physical examinations (perhaps that's also true, but I don't think you can assert that from the graphs shown?)
  • Dr J
    CStanley, it would be great if medical advances were driving up costs, but it's a hard case to make. Per-capita health care costs rise annually by 5 or 10%, and while some state of the art treatments have advanced, improvement doesn't show in the per-capita outcomes. We're not living 5 or 10% longer. The common cold remains uncured. We're getting fatter every day, and we can't even decide whether a good diet is high in carbs, low in fats, or the other way around.

    I think you will find that the prices for individual treatments like strep tests or basic office visits have risen considerably without a corresponding increase in quality, and almost all of the increase goes to wages. The problem is not that a few people are getting paid 10x what they used to (although groups like nurses' unions have gotten a hammerlock on their corner of the market and driven up wages), it's that there are too many people on the payroll. Government keeps minting new regulations, the system keeps getting more complex, and everyone has to hire more people to keep up. The bureaucracy expands to meet the needs of the expanding bureaucracy.

    As far as day to day expenses go, it's *lack* of technical advance that has driven up prices. Every other industry has been computerizing records, automating workflow, integrating information silos to drive higher efficiency for a decade or two now. The health care industry is dead last to abandon paper-based systems.

    Or rather, it will be once it finally gets around to it. I still cannot walk into a doctor's office without seeing a wall-full of patient folders and a staff of two or three people tending them, nor without being handed a clipboard with paper forms quizzing me about my medical history. Compare that with, say TurboTax, which automatically downloads my W-2 and bank statements, sends my return to the government, and settles my taxes via direct deposit (or withdrawal). Healthcare's backwardness is a scandal, and it costs lives.
  • CStanley
    Dr_J:
    I mostly agree, and as I said it may well be true that the cost of individual services that haven't advanced is increasing at higher rates than is warranted by normal wage/price inflation, and you give a good analysis of why that's likely occurring. I'm all for those kinds of analyses- but at the same time, analysis has to be based on solid sets of data and conclusions that derive logically from the facts. The conclusion that Dave drew on wages does not seem so to me because he leaves out the concept of the apples to oranges nature of comparing the services available in the 70s with what each patient currently receives as standard treatment protocols. Just anecdotally, my father had a massive heart attack in the mid 1970s when he was 40 years old, was in the hospital for two nights, no surgery, dismissed with instructions to go on the Pritikin diet and walk every day. Compare that to my father in law who had a mild heart attack a few years ago, was immediately sent to CCU and wheeled into the ER to have three stents implanted, stayed in CCU for a few days of post surgical care and then another week in the hospital to monitor his warfarin levels. Quite obviously the per capital costs in those two cases are vastly different, based on the different standard of care (and again just anecdotally, but my father died within 15 years of that episode and during his last few years was under constant medical care for the complications that had come from the damage from that first heart attack; we're not 15 years out from my father in law's episode, but I fully expect that he'll have a much better outcome.)



    It's true that the outcomes don't correlate in scale with the degree of cost increase, but that's where we have hard decisions to make. I can't imagine that anyone would say that none of this is working therefore we should have the medical profession turn back to the standard of care that we had in the 70s- so clearly we do feel it's 'working' in some sense. I think you could quantify that better if you look at each specific disease category and I don't know if there would be a 5-10% increase in longevity but certainly survival times have increased from the onset of diseases like CAD, many if not all cancers, and diabetes. Looking at overall longevity doesn't work because deaths from violent crime, accidents and suicide will skew dramatically. That doesn't mean that the extra years that we've bought with the medical advances are necessarily worth the extreme costs, but it should be the starting point for the debate on that, so that we can then decide what's cost effective and what's not.
  • Dr J
    CStanley, all good points. We can and do spend dramatically more money than we used to proving patients are basically fine. People blame defensive medicine and malpractice threats for that, but I see it as an IT/process reform failure as well.

    Globally, doctors see billions of cases of everything it's possible to come down with. That data should be put to work, and we should be learning from it. Diagnosis ought to be a finely-tuned probabilities business, and tests should be done based on how likely they are to tell something new. Of course, that can't happen so long as all the data lives in paper folders.
  • CStanley
    Yeah, I agree with you on the need to reform the recordkeeping and create databases of all of the useful information. I also think though that the analysis gets so politicized, and that's a problem for getting the right answers too.
  • Dr J
    Politicized indeed. A central diagnostic database and decisions made based on computer-assessed probabilities would reduce doctors' role considerably, making them look less like craftsmen and sages and more like parts of a factory. Don't expect their enthusiastic support.

    Which is another familiar pattern from other industries. As you computerize, rationalize, and centralize, you disrupt a lot of little fiefdoms where people are used to making their own decisions. They fight. Eventually the boss has to come in and tell them they don't really get a vote, and progress is made.
  • CStanley
    Hah, quite true, although that's a different part of the politicization than what I meant. I was referring to the data which is oft quoted to either support nationalized health care or reject it- eg, those who quote the stats about lifespan being shorter in US than EU even though we spend so much more (a difference that goes away when you account for accident, violent death, and suicide, which have nothing to do with quality of healthcare), or differences in infant mortality (which are due to different reporting threshholds for live births- changes in the denominator not the numerator), and on the other side of the debate, people who cherry pick data about long wait lists and rationing in the countries that have public healthcare for all.



    So what I meant was that even if we can get to the point of having good databases, there's still another hurdle to cross.
  • Dr J
    Yes, you're right. It's amazing how jealously people guard even very basic health care data.

    Various web sites will let you look up doctors and find out where and when they went to med school, but good luck answering even the very, very obvious questions: how many cases like mine have you treated? What's your success rate? How much do you charge? Do your patients think you're any good? Review sites like Yelp are rocking their world, and they're responding in some cases with lawsuits. This needs to change.

    Data on your medical history is overprotected as well, much moreso than your bank balance. HIPAA inhibits research, prevents us achieving integration efficiencies, and imposes an ongoing cost on basically the whole system. This also needs to change. If people are going to enjoy health care subsidized by someone else, it's reasonable they make some concessions in the area of privacy. Besides, at the end of the day, the world cares about your rheumatism rather less than you might like to think.
  • johnmayer76
    If you are uninsured and does not have insurance, you should check out the website http://UninsuredAmerica.blogspot.com - John Mayer, California
blog comments powered by Disqus
© 2005-2009 The Moderate Voice | Site design by Elegant Themes | Site customization, hosting, and security by Enxit Group, LLC