Wednesday, November 04, 2009

"Bringing Down the Cost of Medical Care"

Although it is cheaper to buy a pint of milk than to buy a quart of milk, nobody considers that to be lowering the price of milk. Although it is cheaper to buy a lower quality of all sorts of goods than to buy a higher quality, nobody thinks of that as lowering the price of either lower or higher quality goods. Yet, when it comes to medical care, there seems to be remarkably little attention paid to questions of both quantity and quality, in the rush to "bring down the cost of medical care."

There is no question that you can reduce the payments for medical care by having either a lower quantity or a lower quality of medical care. That has already been done in countries with government-run medical systems.

You can save money by cutting down on medications to relieve pain, as is already being done in Britain's government-run medical system. You can save money by not having as many high-tech medical devices like CAT scans or MRIs, and not using the latest medications. Countries with government-run medical systems have less of all these things than the United States has.

In the United States, the government has already reduced payments for patients on Medicare and Medicaid, with the result that some doctors no longer accept new patients with Medicare or Medicaid. That has not reduced the cost of medical care. It has reduced the availability of medical care, just as buying a pint of milk reduces the payment below what a quart of milk would cost.

But reducing these things is not "bringing down the cost of medical care." It is simply refusing to pay those costs-- and taking the consequences.

~Thomas Sowell latest column "The "Costs" of Medical Care: Part II"


11 Comments:

At 11/04/2009 9:08 AM, Blogger spencer said...

I do not know about you, but I generally pay a higher per unit price when I buy a pint of milk rather than a quart of milk.

Moreover, the quality of the pint of milk is usually identical to the quality of the quart of milk.

This analysis makes no sense.

 
At 11/04/2009 9:53 AM, Blogger jamused said...

That's pretty much the point, spencer. If all you're willing to spend on milk is a dollar, you might have to buy a pint of milk instead of a quart...but you wouldn't fool anyone if you claimed you found a marvelous new way to reduce the cost of milk. Our society and particularly government seems to be full of people who are claiming to be reducing the cost of milk, but all the schemes they're offering up amount to making sure nobody spends more than a dollar on milk.

 
At 11/04/2009 10:12 AM, Blogger Steve said...

The US pays more per service than other countries.

That IS a cheaper quart of milk. No unit confusion involved.

"There is a simple explanation for why American health care costs so much more than health care in any other country: because we pay so much more for each unit of care. As Halvorson explained, and academics and consultancies have repeatedly confirmed, if you leave everything else the same -- the volume of procedures, the days we spend in the hospital, the number of surgeries we need -- but plug in the prices Canadians pay, our health-care spending falls by about 50 percent."

Source

 
At 11/04/2009 11:21 AM, Blogger juandos said...

Well not suprisingly there is some question of who pays more and what one gets for one's money...

Steve claims (and is most probably correct) that Americans pay more for health care...

O.K., what does one get for that kind of layout of money?

Consider if you will this Becker-Posner blog posting: "...that the US health care system does deliver better control over serious diseases than systems in other advanced countries. Of course, American health care delivery is much more expensive, so a natural question would be whether the greater apparent benefits are sufficient to justify the greater cost?
To get a very rough answer to this question, suppose generously that the American health care system adds 1 life year on average to persons above age 50 compared to what they would have with the average health care system in the 15 comparison countries used by Preston and Hu
"...

 
At 11/04/2009 12:15 PM, Blogger PeakTrader said...

One reason U.S. health care is expensive (from articles):

"French doctors earn about 60 percent of what their American counterparts make, although they get free medical school tuition and don't face high malpractice insurance premiums."

"General practitioners in France earned about $84,000 in 2004, or $62,000 less than their American counterparts, according to the latest estimates collected by the OECD."

Another reason:

What neither the French nor the British system can overcome is the stark math of cost-benefit analysis. A cancer drug like Avastin, which can extend a patient's life by a few months, costs $48,000 annually per patient. It's far too expensive, by NICE's reckoning, to provide to all patients, so it's available to none.

(Looks like a "death panel")

 
At 11/04/2009 2:31 PM, Anonymous Anonymous said...

So lets take the cost benefit analysis a bit further. Given that all who have insurance pay for a treatment, at what point would you stop paying for a treatment that extended life one year 1 billion, 100 million, 10 million ... Clearly there exists such a point, its just what is it. So society has health care rationing its just where it starts as we clearly could not afford the 1 billion for one more year of life.

 
At 11/04/2009 3:59 PM, Blogger juandos said...

"at what point would you stop paying for a treatment that extended life one year 1 billion, 100 million, 10 million"...

Well how about up to the point that the person that is receiving treatment can afford to pay for it with either a truly great insurance policy or personal wealth?

That's why free market works so well...

 
At 11/04/2009 4:00 PM, Blogger Apolloswabbie said...

Spencer you can lead a horse to water but you can't make it think ...

 
At 11/04/2009 4:06 PM, Blogger Apolloswabbie said...

Steve - exactly. That's why we don't have the same quantitative and qualitative issues that are seen in places with even less market force at work. That's why we have more machines and better outcomes for issues like post-cancer treatment survival. That's Dr. Sowell's point, you illustrate it well.

On the other hand, if our system were not 40% socialized, and if the govt did not put so many obstacles in place to prohit the full power of market forces, we could get around the corner and get both better quality and better quantities of care -

 
At 11/04/2009 4:21 PM, Anonymous Anonymous said...

On the amount per year, you are now HR director of a large company, and given a legal requirement that the terms be the same for all, what do you set that limit at? Yes if one can afford it with personal funds one can buy whatever one wishes, but that will always be true because medical tourism will always exist. This question is one no one wants to confront but must confronted, as it is in design issues, if one adds to the cost of an item to make it safer what is the limit, double the cost, triple the cost 25% of the cost... Since in the US we dont want to confront the fact that we are all going to die we don't want to confront these issues

 
At 11/04/2009 4:38 PM, Blogger juandos said...

"Spencer you can lead a horse to water but you can't make it think"...

You just got to understand where the Spencer is coming from...:-)

 

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