Friday, April 22, 2011

Because They're Not Spending Their Own Money, Patients Aren't Consumers, But They SHOULD Be


Paul Krugman argues in yesterday's NY Times that Patients Are Not Consumers (link is fixed now):

"How did it become normal, or for that matter even acceptable, to refer to medical patients as “consumers”? The relationship between patient and doctor used to be considered something special, almost sacred. Now politicians and supposed reformers talk about the act of receiving care as if it were no different from a commercial transaction, like buying a car — and their only complaint is that it isn’t commercial enough. What has gone wrong with us?

Medical care, after all, is an area in which crucial decisions — life and death decisions — must be made. Yet making such decisions intelligently requires a vast amount of specialized knowledge. Furthermore, those decisions often must be made under conditions in which the patient is incapacitated, under severe stress, or needs action immediately, with no time for discussion, let alone comparison shopping. 

That’s why we have medical ethics. That’s why doctors have traditionally both been viewed as something special and been expected to behave according to higher standards than the average professional. There’s a reason we have TV series about heroic doctors, while we don’t have TV series about heroic middle managers.

The idea that all this can be reduced to money — that doctors are just “providers” selling services to health care “consumers” — is, well, sickening. And the prevalence of this kind of language is a sign that something has gone very wrong not just with this discussion, but with our society’s values." 

MP: Krugman is correct that patients are not consumers, but for a completely different reason that Krugman misses entirely: Almost 90% of health care costs are paid with "other people's money" (insurance companies, government and employers, see chart above, data here), and only about 11% is paid "out of pocket" by patients.  So patients are no longer the "consumers" of health care, and they haven't been for a long time, because the "consumer" paying almost the entire cost of medical care is a third party.  Over time, the "consumer" paying the bill for health care services has gradually become third party payers, and the trends projected in the chart above indicate that it won't get any better in the future.

But Krugman seems to be arguing that regardless of who is paying for health care, "there’s something terribly wrong with the whole notion of patients as “consumers” and health care as simply a financial transaction." Krugman's further claims that “'Consumer-based' medicine has been a bust everywhere it has been tried."

Well, what about LASIK surgery, retail health clinics, concierge medicine, medical tourism and cosmetic surgery, to name just some of the successful "consumer-based" medical services?  

When we think about soaring health care costs in the United States, isn't one of the main reasons precisely because patients have NOT been treated as consumers spending their own money?  In that case, I think Krugman has it backwards.  If the goal is to control health care costs, that will never happen until patients are treated like consumers

70 Comments:

At 4/22/2011 11:33 AM, Blogger Benjamin said...

I agree with the sentiments of this post.

Should the Veteran's Administration also be reformed, so that veterans pay out of pocket, or at least contribute to, their expenses? Can the VA be "voucherized" somehow? Or should the VA be eliminated, and veterans could use their vouchers at any medical facility?

Using the VA to explore less costly ways to deliver to medical care makes sense to me.

Perhaps if the VA had a mission of constantly declining costs per patient--an artificial market incentive, if you will--the VA could pioneer low-cost programs for the whole of society.

 
At 4/22/2011 11:38 AM, Blogger Colin said...

Excellent post. Peter Suderman has written a good response to Krugman here.

 
At 4/22/2011 11:48 AM, Blogger morganovich said...

benji-

the VA is a fly on the elephant's butt in terms of federal healthcare outlays.

you idea to use the VA to pioneer low cost treatments seems grievously flawed to me.

why not just let the free market do it? isn't it amazing that DVD players keep getting cheaper and have all the features you ant without any government programs at all?

this exact same thing would happen in healthcare is consumers actually paid for it. the excact same thing HAS happened in cash pay procedures. look at the price drops in lasik.

further, the VA treats ailments not generally representative of the major costs in the US. treating wounds and trauma is not the same as treating cervical cancer or diabetes.

you seem, as ever, to be so focused on your hatred of the military that you are missing the plot.

all you have to do is turn medicare and medicaid into lump sum grants to spend on healthcare, and the market will take care of the rest.

 
At 4/22/2011 11:52 AM, Blogger Jack said...

Great post. You should make the identical chart for higher-education expenses. Probably not as dramatic but would make a similar point.

 
At 4/22/2011 11:58 AM, Blogger morganovich said...

"There’s a reason we have TV series about heroic doctors, while we don’t have TV series about heroic middle managers. "

ah, but how many shows have we had about heroic lawyers? i'd wager it's comparable to doctors.

krugman is a disgrace. he was once an economist of note, but now he is just a populist muckracker.

 
At 4/22/2011 11:58 AM, Blogger Benjamin said...

Morgan Frank-

I do not "hate the military." I am for a appropriate military and suitable levels of mobilization, given our current global situation. Like George Mason, I have reservations about standing militaries, but such may be necessary in today's world.

Currently, all veterans get VA for life for free. Thus, there is no market incentive for anyone to reduce costs.

The VA budget is up to about $140 billion, more than double levels of 2004! It is one of the federal government's largest employers, with more than 250,000 employees--and every employee entitled to a pension.

It is very consistent classical economics to give veterans vouchers and let the free market provide the services--and wipe out the 250,000 federal employees who will end up drawing pension for life on the taxpayers dime.

In truth, I would expect the free market to evolve better and cheaper ways to treat veterans.

Oddly enough, most GOP'ers maintain the federalized VA, and federal employees, is the better and cheaper way to provide medical care for veterans, all at taxpayer expense.

This makes me think the GOP is hopelessly mired in partisan patronage, and has lost its bearing totally.

Donald Trump may indeed be the answer.

 
At 4/22/2011 12:00 PM, Blogger juandos said...

pseudo benny you have no clue what being said let alone agree with it..

FYI Professor Perry the link for 'patients are not consumers' is this: http://www.blogger.com/

Here's the actual link: Patients Are Not Consumers

By PAUL KRUGMAN
Published: April 21, 2011

Krugman whines: "How did it become normal, or for that matter even acceptable, to refer to medical patients as “consumers”?"...

I ask, 'when wasn't it except on television? Then came LBJ's Great Society and all of a sudden patients became parasites on the taxpayers' collective back, right'...

Krugman continues his whine: "The relationship between patient and doctor used to be considered something special, almost sacred"...

Did Krugman watch to much Ben Casey and Young Dr. Kildare when he was a child?

Now Krugman is both talking 'death panels' and then tries to B.S. his readers with this: "Hence the advisory board, whose creation was mandated by last year’s health reform. The board, composed of health-care experts, would be given a target rate of growth in Medicare spending"...

Health experts?!?!

Why is the federal government defining who might or might not be a supposed health expert?

Krugman continues his whining: "Now, what House Republicans propose is that the government simply push the problem of rising health care costs on to seniors; that is, that we replace Medicare with vouchers that can be applied to private insurance, and that we count on seniors and insurance companies to work it out somehow"...

Well if today's seniors had opposed LBJ's programs instead of sitting on their hands then this problem wouldn't exist...

What goes around, comes around...

 
At 4/22/2011 12:02 PM, Blogger Evergreen Libertarian said...

Does the Krug know that medical errors are a major cause of death? Does he even pay attention to what the rest of the world does?

Midwives deliver about 75% of children in Europe, but less than 10% here in the U.S. of A. thanks to laws and regulations that have just about excluded them from the market.

 
At 4/22/2011 12:10 PM, Blogger Mike said...

Soooo, are grocery store shoppers not consumers? Water service must be something more than a utility.
I know I'll need products from both of them to stay alive much sooner than I'll need a doctor.

BTW, Morganovich, I could be mistaken, but wasn't Krugman "of note" only after taking existing ideas from somebody else?

 
At 4/22/2011 12:17 PM, Blogger Benjamin said...

Juandos-

Every argument you make applies very much to the VA--even more so.

The VA is a federal agency, funded by taxpayers. It is not free enterprise.

How can we possibly expect a federal agency to perform better than the private sector?

I say give vouchers to veterans, and wipe out the VA. This is a perfect classic economics argument, of the kind Milton Friedman would make.

 
At 4/22/2011 12:19 PM, Blogger Che is dead said...

"Medical care, after all, is an area in which crucial decisions — life and death decisions — must be made. Yet making such decisions intelligently requires a vast amount of specialized knowledge. Furthermore, those decisions often must be made under conditions in which the patient is incapacitated, under severe stress, or needs action immediately, with no time for discussion, let alone comparison shopping."

Once again, Krugman erects a straw man for the purpose of knocking it down. No one is arguing that consumers have the specialized knowledge necessary to make treatment decisions or that we should be haggling over the price of individual procedures in the emergency room. What reformers are suggesting is that consumers be given a stake in the cost of decisions made about non-emergency routine care.

A family member of mine with a health savings account recently needed an MRI for diagnostic purposes. After being told that it would cost almost $5000 dollars at the local hospital, she immediately started shopping for alternatives. Eventually she found a clinic that performed the MRI for just over $500. The doctor got what he needed, the hospital got a wake-up call from the competition and she saved thousands of dollars without any impact to the quality of her care.

Socializing medicine is not about improving health care outcomes or access to care. It's about increasing government power and control over the economy and our lives. It's about creating a sense of vulnerability and dependence that will cause people to support those politicians that will sustain it.

 
At 4/22/2011 12:28 PM, Blogger Benjamin said...

BTW, according to the VA's latest budget, they now want nearly 300,000 federal employes in 2013.

Is this not about increasing the size of the federal agency, boosting the number of federal employees, and control over veteran's lives?

How about we give the veterans vouchers, and get the federal government off their backs and out of their lives? Let the vets decide how to spend their money.

 
At 4/22/2011 12:34 PM, Blogger Sean said...

Evergreen Libertarian,

My wife used a nurse midwife both times and was happy with the experience even though we ended up in the hospital for the first delivery because of complications that could have been serious without a full physician for backup. Why do you say that they are largely excluded from the market?

 
At 4/22/2011 12:38 PM, Blogger juandos said...

"Every argument you make applies very much to the VA--even more so"...

pseudo benny why do you take inordinate pride in your abysmal ignorance?

Why do your make these ridiculous and totally ludicrous claims about the VA (which is a mess of that's there's liitle doubt) but forget about the massive corruption of medicare, medicaid, and social security that is magnitudes more expensive than the VA could ever hope to be?!?!

 
At 4/22/2011 12:42 PM, Blogger Sean said...

Che is Dead says: After being told that it would cost almost $5000 dollars at the local hospital, she immediately started shopping for alternatives. Eventually she found a clinic that performed the MRI for just over $500. The doctor got what he needed, the hospital got a wake-up call from the competition and she saved thousands of dollars without any impact to the quality of her care.

One reason hospital case is so expensive is that hospitals are not allowed to turn away those that can't pay. This is one of the few problems ObamaCare actually addresses by making sure that hospitals get paid for everyone they treat so they don't do absurd things with prices to cover those that can't pay. We already have socialized medicine. It's just badly organized and we're not willing to pay for it.
But you can't even start an honest discussion on paid healthcare without first being willing to kick granny out of
hospital. Unless someone is willing to fight for the right of hospitals to kick out the patients, free market healthcare is a fantasy.

 
At 4/22/2011 12:44 PM, Blogger mike k said...

Benji, I think you are incorrect that all veterans get VA healthcare for life for free. Military retirees recieve Tri-care for life and veterans with disability are eligible for VA healthcare. As a spouse of a former military physician who served eight years, part of wich occurred during the second Iraq war, I know for sure we are not entitled to any VA benefits.

 
At 4/22/2011 12:53 PM, Blogger Sean said...

And by the way, as much as I agree with HSAs and the potential power of the market to make healthcare something other than the horrible monstrosity is, I can't imagine being the one to turn away a dying person that I could save because they couldn't pay. I suppose you'd file that under a lack of moral courage.

 
At 4/22/2011 1:00 PM, Blogger Jason said...

I wonder if Paul Krugman has heard the sayings "the customer is always right" or "the customer is king".

 
At 4/22/2011 1:21 PM, Blogger Benjamin said...

Mike K-

None of my comments should be interpreted as against individuals who serve in the military. They are fine people.

I only wish to curtail all federal outlays, including military outlays. I also believe in elimination of the USDA, HUD and Education departments.

A friend of mine served two years at Ft. Dix (NJ) in Vietnam years, and recently received cataract surgery for free at VA facility. I am happy for him, he lives on fixed income. He is my friend.

But, jeez, taxpayers are picking up a lot of bills. If after eight years your spouse can't get medical VA benefits, I think they need to consult with someone.

 
At 4/22/2011 2:20 PM, Blogger juandos said...

"ObamaCare actually addresses by making sure that hospitals get paid for everyone they treat so they don't do absurd things with prices to cover those that can't pay"...

You're talking about EMTALA...

So sean, show us...

Got a link to that particular item?

Why should ObamaCare be any more efficient than medicare is when it comes to paying in a timely fashion?

 
At 4/22/2011 2:52 PM, Blogger Sean said...

juandos,

You're talking about EMTALA...
Got a link to that particular item?

Not really, but my mother used to be a nurse, so I'm colloquially familiar with the requirement that hospitals can't refuse to treat for serious conditions based on ability to pay and that that raises prices.

Why should ObamaCare be any more efficient than medicare is when it comes to paying in a timely fashion?
I'm not even approaching the question of efficiency, just pointing out that with Obamacare, everyone must have insurance. So ability to pay at the emergency room should have less of an effect on costs.

 
At 4/22/2011 3:14 PM, Blogger Sean said...

juados,

Here's the wikipedia number:
" For example, it has been estimated that this cost shifting amounted to $455 per individual or $1,186 per family in California each year.[12]"

http://en.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act#Cost_pressures_on_hospitals

 
At 4/22/2011 4:01 PM, Blogger Jim said...

More to Krugman's point, in a freer market in other products, does Mr. Krugman believe those elements he finds in the doctor / patient relationship are not present?

Does he believe we rubes do everything only for profit, ready to conspire and deceive at any moment?

I find successful entrepreneurs and business folk to be deeply concerned with quality and reputation and fairness. It is their reputation and sense of dignity and pride in living that spurs them and obtains friendships, customer loyalty and yes, monetary success.

No one I know ever bragged because they ripped off a customer.

 
At 4/22/2011 5:07 PM, Blogger Sean said...

Jim,

No one I know ever bragged because they ripped off a customer..
"Caveat emptor" is the rule of the road in everything from finance to retail. Computer and graphics benchmarks, game ratings, car ratings, camera reviews, cleaning agents, or pretty much anything I know enough about to really scrutinize: it's all a massive spin job aimed at getting the best sales price at minimum cost. Few companies intend to peddle crap, but most want to get the best bargain they can from the deal, and taking advantage of information costs is a big part of the equation.
The whole money proposition of health insurance is to cover the minimum possible while still giving the consumer a sense of confidence... unless they become part of the 20% carrying 80% of the costs.
For medical professionals, most people expect quality to be the first consideration and cost a distant second (whether that's realistic or not). The are very few goods with such price in-elasticity or where such a level of trust in the provider is required.

 
At 4/22/2011 5:13 PM, Blogger morganovich said...

benji-

and have you seen what's supposed to happen to medicare and medicaid costs in the next 10 years?

sure, we could cut costs at the VA, but we could cut it to zero and we're still going to be completely bankrupt if we don't fix medicare and medicaid. it's expense alone is projected to be $4 trillion a year in 2035 (by the CBO, who has always been low with their numbers).

even if federal revenues double from now to then (which assumes 3% annual growth), once you add in medicare, it's going to be over 100% of federal income.

to argue that the VA is the thing we need to work on seems awfully silly in light of that.

it's of paltry significance in comparison.

 
At 4/22/2011 5:19 PM, Blogger morganovich said...

sean-

"I'm not even approaching the question of efficiency, just pointing out that with Obamacare, everyone must have insurance. So ability to pay at the emergency room should have less of an effect on costs."

this is a false argument. it's tenets have never been true. look as Massachusetts who implemented a similar plan. their costs SKYROCKETED. they have the most expensive healthcare in the nation by nearly a factor of 2 over the next highest state.

it's a cute talking point, but there is no substantive backup for it and a great deal of evidence that it actually works the other way.

it's alao a policy that is illegal under any but the most outlandish constitutional interpretations.

the commerce clause does not allow for the feds to force you to engage in commerce. not buying insurance is pretty much the definition of NOT engaging in commerce. the precedent such an interpretation would set is terrifying.

 
At 4/22/2011 5:24 PM, Blogger morganovich said...

sean-

"One reason hospital case is so expensive is that hospitals are not allowed to turn away those that can't pay"

while that may contribute slightly, it is nothing like the main cause. as someone who used to sit on the board of a company that did hospital administration services, i can tell you that that is not a huge cost item.

the big issue is that no one cares what the price is because they don't pay.

forcing everyone to get insurance and getting rid of high deductible plans will make this worse, not better. again, look at Massachusetts.

obamacare is just a trojan horse for socialized medicine.

it will drive medical costs up and insurance prices up (as in mass). this is intentional. once they push them up enough that they trigger the "Cadillac plan" penalties, it will wipe out private insurance altogether by causing the whole industry to fail. then, the feds can swoop in and save us from this "market failure" with socialized medicine.

you seem to have bought this party line, but i think you need to take a hard look at the data. mass was the test case and it has been a DISASTER.

 
At 4/22/2011 6:27 PM, Blogger PeakTrader said...

Sean says: "One reason hospital case is so expensive is that hospitals are not allowed to turn away those that can't pay. This is one of the few problems ObamaCare actually addresses by making sure that hospitals get paid for everyone they treat so they don't do absurd things with prices to cover those that can't pay."

How does someone else paying solve the problem of someone else paying?

 
At 4/22/2011 7:04 PM, Blogger Sean said...

PeakTrader,

How does someone else paying solve the problem of someone else paying?
Touche.

 
At 4/22/2011 7:04 PM, Blogger Benjamin said...

Morgan Frank
Pray tell, how do European nations spend less on health care but get roughly the same results as we do?

 
At 4/22/2011 7:08 PM, Blogger Sean said...

morganovich,

you seem to have bought this party line, but i think you need to take a hard look at the data. mass was the test case and it has been a DISASTER.
Maybe so. I live in MA. and I haven't seen a change personally, but that doesn't mean much.
And btw, I actually don't support Obamacare, but I thought at least making sure that "someone" was on the hook officially for paying for each person's care would reduce some market distortion.

 
At 4/22/2011 7:10 PM, Blogger Sean said...

morganovich,

the big issue is that no one cares what the price is because they don't pay.
Which doesn't change the point that you can't solve the problem unless you're willing to turn people away. Removing the current socialized means of payment won't affect that at all.

 
At 4/22/2011 7:24 PM, Blogger morganovich said...

banji-

they don't get anything like the results we do.

their cancer survival rates are lower.

on an apples to apples basis, their infant mortality is MUCH higher. they just try to compare apples to oranges by ignoring all premature births and not counting any babies that do not live through the first 24 hours.

look at premature infant survival rates and you'll see how much better the US is.

they provide fewer drugs and treatment options as well.

try getting a hip replacement for a 70 year old in europe.

they also wait in LONG lines for care. do you have any idea how long it takes to get an MRI in europe?

they save money by denial of care and by rationing.

there is not a health system in the EU that has anything like the breadth of benefits of speed of service of medicare, much less any kind of decent private plan.

your facts on this are just wildly off.

 
At 4/22/2011 7:35 PM, Blogger morganovich said...

"Which doesn't change the point that you can't solve the problem unless you're willing to turn people away"

i disagree.

if we spent our own money as opposed to the insurance co's, the whole market would change. doctor visits and hospital procedures would all drop dramatically in price. this has already happened in the pay for care space (lasik, cosmetic surgery, etc).

medicine is ultimately a technology business. costs should be dropping, not going up at 3-4X CPI. this would happen in general medicine if the market signal were re-introduced.

reforming tort law around medicine would help a great deal as well.

if medicine became cheaper, then more people could afford more care or alternately spend less for the same care.

sure, this may not solve the problem of someone with no money at all, but it sure makes the market as a whole better.

if medicaid was like an HSA, then the costs would be contained and predictable and the same money would buy more. this still provides money for those who "cannot afford it" but leads to it being spent well.

health care is not a right. it's a service. you cannot have a right that requires others to give up theirs. doctors should be as free not to treat you as a bar is not to sell you a drink.

they are not our slaves.

that said, they are free to give you free or cutrate care IF THEY CHOOSE, just as the barman can give you a free drink if he wants to.

food is even a more fundamental need than healthcare, but you'd never demand that grocers give free food to anyone who couldn't pay.

why should doctors be singled out for such extortion?

the hungry get food stamps, not a card that gives them the right to take anything they want from the supermarket regardless of price.

 
At 4/22/2011 7:38 PM, Blogger morganovich said...

my previous point was not that doctors should have to treat everyone, but that the free care given out is not responsible for the lion's share of costs.

hospitals WILL and do bill you for care, even if you claim not to be able to pay. they can garnish wages and put liens on assets.

try going to the ER and telling them you can't pay. see what happens. see if you can get out of the bill.

i'd be willing to wager that you can't.

 
At 4/22/2011 7:47 PM, Blogger morganovich said...

sean-

i'd urge you to take a look at the chart in this article.

http://www.coyoteblog.com/coyote_blog/2009/07/drum-roll-the-problem-with-health-care-is.html

there is a strikingly linear relationship between declines in copays and acceleration in healtchre cost inflation.

somewhere around 20%, the relationship steepened dramatically, which is precisely what you would expect. at a certain point, you stop really thinking about the cost and usage accelerates dramatically.

there is just no way that a correlation that tight exists without causality.

 
At 4/22/2011 8:22 PM, Blogger Sean said...

morganovich,

my previous point was not that doctors should have to treat everyone, but that the free care given out is not responsible for the lion's share of costs.
You don't count Medicare or Medicaid? But for the EMTALA, if the California example is accurate, it costs about 1/3rd of my health plan.

I don't take the coyote blog post as proof of the rate of correlation, because there is more going on, but it is interesting. I certainly do not claim people won't want much much more of a good if it's free!
Absolutely there must be incentives not to spend. My own health plan is essentially a combination HSA and high deductible plan. I'm presuming those will become preferred plan formats, and eventually we'll have to drop Obama's objections to caps on what the high deductible plan will pay.

Health care is not a right. it's a service. you cannot have a right that requires others to give up theirs. doctors should be as free not to treat you as a bar is not to sell you a drink.
I believe that in Arizona, the law is that no establishment can refuse a person a glass of water. That doesn't get too many complaints, because potable water is nearly free.
Obviously there must be some limit to what we can expect as a subsidy from anyone for Healthcare. The libertarian answer is 0. My personal answer for a desirable level of healthcare subsidy is above 0.
Something like the Ryan healthcare plan sounds good to me in principal, but I'd have to know more.

 
At 4/22/2011 11:44 PM, OpenID Sprewell said...

Krugman is an idiot and becomes especially deranged on health care, with lies flying left and right. The fact that anybody listens to that twit is a testament to their stupidity, period.

Sean, the notion that uncompensated care is a huge cost is a complete canard. The AMA themselves estimated uncompensated care of $50 billion in 2008, which is almost nothing compared to the $2.3 trillion spent on health care that year. Forcing people to get health insurance at the federal level is illegal, the Supreme Court is about to throw that out.

 
At 4/22/2011 11:46 PM, OpenID Sprewell said...

What I'd like to see is HSAs with only catastrophic insurance coverage, ie deductibles of $25k and up. That'll remove the insurance companies from most medical transactions. I think we'll see the rise of medical brokers, patient advocates who will pool medical information and advise the patient based on the experiences of other patients. I think many people false assume that the doctor is their advocate, only to get scammed by the doctors themselves. There's no reason a lot of this can't be done today, by using offshore websites to avoid whatever laws might be holding it back, just as people gamble offshore today. The only reason it isn't done is ignorance and apathy, just like anything else.

 
At 4/23/2011 6:02 AM, Blogger BCurious said...

I don't know about you, but I pay a LOT for healthcare insurance which, knock on wood, I rarely have used. Just about everyone I work with in the healthcare industry does the same.

Over the last decade, as health insurance premiums increased dramatically, employers shifted larger percentages of the benefit to employees. You read about this happening in almost every industry.

How does that figure into the percentage of people who are paying with their own money? It should be included, at least as a percentage.

Do we know what % of what we pay insurance companies winds up as profit for them? They don't seem to be going bankrupt.

The market IS at work here. The patient IS a consumer, albeit an indirect consumer without much clout. We need to encourage consumers to behave in the healthcare environment as they do in other aspects of their consuming lives.

 
At 4/23/2011 1:16 PM, Blogger Ron H. said...

Juandos

"Well if today's seniors had opposed LBJ's programs instead of sitting on their hands then this problem wouldn't exist...

What goes around, comes around...
"

In all fairness, I believe many did, however LBJ was just as pushy as the Wealth Spreader In Chief currently occupying the White House. We are still suffering after all these years.

I hope my progeny aren't still suffering in a similar manner more than 40 years from now.

 
At 4/23/2011 1:32 PM, Blogger Ron H. said...

To expand on an idea suggested by Mike's comment, and using a technique similar to the use of strikeout text, made popular by Dr. Perry,

This from Krugman -

"Hence the advisory board, whose creation was mandated by last year’s health reform. The board, composed of health-care experts, would be given a target rate of growth in Medicare spending"...

Becomes this:

"Hence the advisory board, whose creation was mandated by last year’s grocery reform. The board, composed of Food experts, would be given a target rate of growth in Grocery Allowance Benefit spending"...

 
At 4/23/2011 1:39 PM, Blogger Ron H. said...

"ah, but how many shows have we had about heroic lawyers? i'd wager it's comparable to doctors."

And there are even more about heroic crime scene forensic technicians.

 
At 4/23/2011 2:12 PM, Blogger Ron H. said...

"Morgan Frank
Pray tell, how do European nations spend less on health care but get roughly the same results as we do?
"

I assume this is a rhetorical question, that you already know the answer, and are merely testing us.

I give up. How do they do it?

 
At 4/23/2011 2:51 PM, Blogger Ron H. said...

Sean

"but I thought at least making sure that "someone" was on the hook officially for paying for each person's care would reduce some market distortion."

I think you have this backwards. I would expect that "someone on the hook", if other than the person receiving service, will almost guarantee distortion as the receiver of service has no direct interest in price, and will almost certainly spend more and ask for more service than they would if they were spending their own money.

Besides, why should you be on the hook for my medical care, especially knowing that I will spend more of YOUR money than I would of my own?

Keep in mind that sharing risk and expense through insurance doesn't answer the question. Just substitute "the group"'s money for "your" money

 
At 4/23/2011 3:03 PM, Blogger Ron H. said...

Sean

"Why do you say that they are largely excluded from the market?"

Perhaps 'discouraged' would be a better way to put it. I think it's an AMA thing. I believe some doctors are trained to gasp and turn pale when you recklessly suggest that a woman might be able to give birth without a doctor in attendance, although I have a suspicion they have been doing so for a very long time.

 
At 4/23/2011 3:27 PM, Blogger Ron H. said...

Sean

"I can't imagine being the one to turn away a dying person that I could save because they couldn't pay."

I don't think anyone is suggesting turning away people with true life and death emergencies, only those who can't pay but clog up emergency rooms for sniffles, cuts on their fingers, and booboos on their knees.

Non emergency treatment SHOULD be denied those without true emergencies.

An entire previous discussion of private charity and mutual aid societies could be dredged up here, if you would like. :)

 
At 4/23/2011 3:34 PM, Blogger Ron H. said...

"your facts on this are just wildly off.{"

Benji doesn't have any facts. Perhaps his question about EU healthcare being equivalent but cheaper was serious.

 
At 4/23/2011 3:41 PM, Blogger Ron H. said...

To help clear up some of the confusion about VA benefits, see here:

Do you qualify for VA benefits?

 
At 4/23/2011 4:05 PM, Blogger Sean said...

Ron H.,

Non emergency treatment SHOULD be denied those without true emergencies.
Well, I'm fine with that, but I'm not sure it would be enough to solve the problem.
I thought charging people $600/hr to put a cast on was a way to pay for MRI machines, not a way to pay for unwashed hordes needing band-aids. If hospitals can't make that cheap at high volumes, they don't deserve to be in business.

An entire previous discussion of private charity and mutual aid societies could be dredged up here, if you would like. :)
Yeah, I know. And I can perhaps be persuaded that one's responsibility to others is best exercised at one's own discretion rather than determined by others. What I don't buy is that a person has no responsibility to others. Government deciding what I should pay to others seems immoral, but it's the lesser evils of "how" and "how much" than "whether".

 
At 4/23/2011 4:26 PM, Blogger Ron H. said...

Sean

"My own health plan is essentially a combination HSA and high deductible plan. I'm presuming those will become preferred plan formats, and eventually we'll have to drop Obama's objections to caps on what the high deductible plan will pay."

A wider use of plans such as yours could lead to lower healthcare costs, as you have a stake in how much is spent. I believe, however that these plans are in danger, as they argue against the claim that Obamacare, and ultimately socialized medicine is the only solution.

 
At 4/23/2011 5:09 PM, Blogger Ron H. said...

BCurious

"Over the last decade, as health insurance premiums increased dramatically, employers shifted larger percentages of the [cost of the] benefit to employees. You read about this happening in almost every industry.

How does that figure into the percentage of people who are paying with their own money? It should be included, at least as a percentage.
"

No, it doesn't matter who pays for healthcare insurance or for prepaid medical care, it isn't the same as paying directly for a service yourself. There is still a third party paying the actual cost of treatment, not directly related to the amount of premium in each individual case.

"Do we know what % of what we pay insurance companies winds up as profit for them? They don't seem to be going bankrupt.

Yes, we do. I believe the average was 3.3% for 2009. You can read about it here, and you can find more detailed information about many large companies, including insurance companies, Here. Note that there are no health insurance companies in the top 50 companies, listed by profit margin. You can find what you are interested in from this page.

Here's more from Carpe Diem..

 
At 4/23/2011 5:14 PM, Blogger Sean said...

Ron H.,

I believe, however that these plans are in danger, as they argue against the claim that Obamacare, and ultimately socialized medicine is the only solution.
I hope not, for many reasons. I think you underestimate the clout of the right, and overestimate the intellectual dishonesty of the left. But I'm somewhat an optimist on human nature itself.

 
At 4/23/2011 5:44 PM, Blogger Ron H. said...

Sean

"I thought charging people $600/hr to put a cast on was a way to pay for MRI machines..."

That could be true to some extent, but $800 for a 15 minute MRI helps a lot too.

I have no idea what the cost to a provider is to immobilize my broken limb, and as with most other services I get, for instance haircuts, I shouldn't really care, unless I want to dictate to people how much profit they are entitled to. If, in my opinion, $600 is too much, I can chose to go without the service, or do it myself. I don't believe a broken arm is life threatening, so I should be willing to pay to have it fixed, & shouldn't expect others to pay the price for me.

I was thinking more of this type of care when I mentioned the unwashed masses, and really didn't consider that emergency rooms should provide bandaids at all.

"What I don't buy is that a person has no responsibility to others."

No one is suggesting that. We DO have a responsibility to others. Are you forgetting compassion? I just don't think this responsibility is best handled by the collective. One size doesn't fit all.

"Government deciding what I should pay to others seems immoral..."

Indeed it does!

 
At 4/23/2011 6:42 PM, Blogger Sean said...

Ron H.,


I have no idea what the cost to a provider is to immobilize my broken limb, and as with most other services I get, for instance haircuts, I shouldn't really care unless I want to dictate to people how much profit they are entitled to. If, in my opinion, $600 is too much, I can chose to go without the service, or do it myself.
No you can't! There is no up-front pricing. You can choose to get the service, or not. Then they bill you, and the bill may differ depending on your insurance or other factors that are not visible to you.
How can real competition operate in such an environment? Up-front pricing and stats on success rates would fix much that is wrong with the health care industry.


I was thinking more of this type of care when I mentioned the unwashed masses, and really didn't consider that emergency rooms should provide bandaids at all.
That's not cost efficient, the way things are set up. But really, why not? They've got a triage room to prioritize you behind real injuries. And since when should the economies of scale that go with a hospital prevent cheap care?

Healthcare is the most broken service model I can think of.

 
At 4/23/2011 6:44 PM, Blogger Sean said...

What I don't buy is that a person has no responsibility to others."
No one is suggesting that.
Ah, but that's not entirely true. Ayn Rand would argue otherwise, and many libertarians hold to Objectivism. I didn't know if you, or people like VangeIV, were among them.

 
At 4/23/2011 8:48 PM, Blogger Dan.Eliot said...

Why is cosmetic surgery so popular? People want to feel better about themselves. One of the ways people begin to feel better about themselves is by feeling better about how they look. Medical advancements in cosmetic surgery have made such surgery simpler and safer and it has become more acceptable in recent years to have cosmetic surgery. The price of cosmetic surgery is also lower today than it was in past years. 97% of plastic surgery patients report higher self esteem and a better quality of life.

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At 4/23/2011 10:21 PM, Blogger Ron H. said...

"No you can't! There is no up-front pricing. You can choose to get the service, or not."

"Up-front pricing and stats on success rates would fix much that is wrong with the health care industry.
"

That's it exactly! You have nailed it. That's the problem of the consumer not being the customer.

In your case, with an HSA and a high deductible catastrophic insurance policy, you could call & ask for a cash price. Although that usually stuns the office help, you can get it if you insist. I understand it might be tough to price shop when your broken arm is causing excruciating pain, but I think you get the idea.

Google 'lasik' or 'liposuction', two procedures that aren't usually covered by healthcare plans or insurance, and you see price info right up front. These procedures have gotten cheaper over time, not more expensive. That should tell us the market is working in those areas as you would expect.

"How can real competition operate in such an environment?"

Well, it can't, and it doesn't. That's why prices are high.

I don't know about stats on success rates, would you ask your mechanic to post such rates?

I don't know about other procedures, but I think the success rate for casting a broken arm is about 100%.

 
At 4/23/2011 10:36 PM, Blogger Ron H. said...

"They've got a triage room to prioritize you behind real injuries. And since when should the economies of scale that go with a hospital prevent cheap care?"

I was thinking of people who can't pay. An emergency room is designed to treat those who need immediate care, and yet are used for other medical care by prople who can't pay.

I suppose if you don't mind paying $35 to have your cut examined, washed, and a bandaid put on it by a medical professional, than it's probably good business for the hospital. You should be prepared to wait a long time, however, as the triage folks will put you at the back of the line, ahead of only other bandaid needers, and people with mild headaches. All those gunshot wounds and broken legs will get treated ahead of you, no matter how many come in while you're waiting.

"Healthcare is the most broken service model I can think of."

Yup, and that's really saying something, isn't it?

 
At 4/23/2011 10:47 PM, Blogger Ron H. said...

Sean

"Ah, but that's not entirely true. Ayn Rand would argue otherwise, and many libertarians hold to Objectivism. I didn't know if you, or people like VangeIV, were among them."

That's true, but I know I'm willing to help others, and I know it's because it feels good to do so. A reward of sorts. But, I'm not being forced to do it because someone else thinks we all must help.

I guess you could say that if you want to help, you help, and if you don't feel the need, you don't. Both of those positions are OK. They are personal choices. Luckily, I think most of us want to help.

You have an obligation if you believe you do.

 
At 4/24/2011 12:09 PM, Blogger hipparchia said...

just looking at empirical data...

all other industrialized countries provide health care for ALL their citizens by a combination of 1. govt-imposed price controls and 2. taxpayer-funded insurance and/or care.

they get better results, more actual care, longer healthier lifespans, and all for much lower costs.

and that 'longer waiting times' myth is just that - a myth.

 
At 4/24/2011 2:26 PM, Blogger Ron H. said...

"just looking at empirical data...

all other industrialized countries provide health care for ALL their citizens by a combination of 1. govt-imposed price controls and 2. taxpayer-funded insurance and/or care.

they get better results, more actual care, longer healthier lifespans, and all for much lower costs.

and that 'longer waiting times' myth is just that - a myth.
"

Wow! For what planet is the data you are describing?

Could you please provide a reference to that empirical data so others could have a peek also?

So, your take is that price controls really DO work as intended, and that incentives don't matter.

What about the supposedly immutable ecomonic law that if you limit the price of something, you will get less of it? Is that no longer operative?

Assuming you will accept that Canada is a member of the group "all other industrial countries", it seems that many Canadians don't agree with you.

Here are a number of posts at this very blog that seem to indicate that a large number of Canadians don't find their healthcare system adequate for their needs.

In fact, it appears that treating Canadian's medical needs is a booming business in the US.

I'm eagerly awaiting your responce.

 
At 4/24/2011 10:39 PM, Blogger hipparchia said...

Here are a number of posts at this very blog that seem to indicate that a large number of Canadians don't find their healthcare system adequate for their needs.

i'll just pick a couple of those and leave you to do your own research on the rest.

first - http://mjperry.blogspot.com/2009/06/ontario-sends-cancer-patients-to.html

yep, those are your beloved market forces at work! sometimes even governments get stupid and try to run govt 'like a business', saving a few bucks here and there. usually it's the conservatives who want to do this. of course, patients could always move to the u.s. and buy private insurance here:

http://www.statesman.com/news/content/news/stories/local/archive/1027medtourism.html

beats me why this behavior is considered bad when governments do it and good when private enterprise does it, but y'all 'the markets will solve everything' types do seem to believe that.

and this - http://mjperry.blogspot.com/2007/10/surgery-wait-times-in-canada-hit-record.html

oooh! it's the fraser institute! now there's a reputable source! not:

http://rustyidols.blogspot.com/2008/10/wait-times-and-fraser-institute.html

one more item on wait times, you can search paul krugman's blog yourself, he mentions it several times, but the wait time for hip replacements in the us is a bit shorter than the wait time for hip replacements in canada... but guess what, our medicare system pays for most of the hip replacements in the us, which suggests that our medicare system is better than canada's medicare system. the logical thing to do then is to just extend medicare to all of us.

why is health care cheaper in other countries? it's the prices, stupid.

http://content.healthaffairs.org/content/22/3/89.full.pdf+html

all those countries pay less per item/service than we pay here in the us, the patients/consumers get more care/services than we get here in the us, and still the total spending in those countries is lower than here in the us.

if you dig into descriptions of how health care works, and is paid for, in each of those countries, you find out that the govts set prices, either by 'negotiation' with providers, insurers, drug manufacturers, etc or by pure socialized medicine, where the govt owns the hospitals and employs the doctors directly.

want to read a little more about how some of those countries do it?

france:

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1447687/

canada:

http://www.correntewire.com/category/tags/canadas_health_care

spain:

http://pnhp.org/blog/2009/11/21/fadsp/

United Kingdom, Japan, Germany, Taiwan and Switzerland:

http://www.pbs.org/wgbh/pages/frontline/sickaroundtheworld/

there are some miscellaneous links you can follow here:

http://www.correntewire.com/what_paul_krugman_smoking_and_can_i_have_some

and here:

http://www.correntewire.com/just_world_ammut_would_be_slavering_over_paul_krugmans_soul

want a handy place where you can see how the us stacks up against other countries in all kinds of health statistics, like number of doctors, life expectancy, percent of population that smokes or is overweight, ... ? start here:

http://www.nationmaster.com/index.php

 
At 4/24/2011 10:44 PM, Blogger hipparchia said...

In fact, it appears that treating Canadian's medical needs is a booming business in the US.

oh yeah?

http://content.healthaffairs.org/content/21/3/19.full

 
At 4/24/2011 10:50 PM, Blogger hipparchia said...

What about the supposedly immutable ecomonic law that if you limit the price of something, you will get less of it? Is that no longer operative?

i've already given you a link to uwe reinhardt's 'it's the prices, stupid' but here it is again:

http://content.healthaffairs.org/content/22/3/89.full.pdf+html

yes, the govts control prices in other countries and yes the patients, or 'consumers', in other countries get more care/services. this is also reflected in the 'sick around the world' link and the link to the description of france's health care system.

yabbut, price controls would never work here in the us!!!!! oh, wait...

http://healthaffairs.org/blog/2009/07/24/all-payer-rate-setting-a-response-to-a-modest-proposal-from-uwe-reinhardt/

 
At 4/25/2011 3:22 AM, Blogger juandos said...

Sean says: "Not really, but my mother used to be a nurse, so I'm colloquially familiar with the requirement that hospitals can't refuse to treat for serious conditions based on ability to pay and that that raises prices"...

Ahhh, interesting since my mom was also a nurse and teacher for nuring in Laredo, Tx...

1999 and Doctor's hospital in Laredo refused to take a pregnant illegal alien since it was private, concierge medical facility sans delivery room or an ER and was of course immediately attacked by groups that pander to parasites...

Everyone thought EMTALA covered them also but after an extensive rounds of criminal and civil litigations that particular type of facility apparently wasn't covered...

The federal government's intervention in the health & medical marketplace just made medical care more expensive than necessary...

EMTALA pushed 'cost shifting'...

 
At 4/25/2011 8:51 AM, Blogger Sean said...

Ron H.,

All those gunshot wounds and broken legs will get treated ahead of you, no matter how many come in while you're waiting.
Absolutely, but in a sane market, you can adjust to staff to tune the size of the waiting list to something fairly tolerable no matter what the ailment. Obviously, low priority items will always be slower, but the mean waiting time should be in multiple hours.


You have an obligation if you believe you do.
That's not an obligation, that's generosity. Generosity is good, for sure, but it's separate from religious concepts of responsibility to others. That's why I tend to view Objectivism more as an ethical system than a moral one (although proponents would stridently disagree!).

 
At 4/25/2011 8:55 AM, Blogger Sean said...

juandos,

Nice link. And yes, it and especially the comments seem to correspond with what I was saying: that there's a lot of cost-shifting in the medical industry with significant overhead regardless of who is being asked to pay.
And one of the hallmarks of an effective market is low cost-shifting: more transparency, more competition.
But in order to get it, we have to be willing to refuse care.

 
At 4/25/2011 5:11 PM, OpenID Sprewell said...

I'm fine with refusing care. If the alternative is that I have to shell out money to pay for your million-dollar treatment that you didn't save for, screw off. Of course, there's always medical loans, you can sell off assets and take on loans based on your income to pay off the rest. If it's an emergency, they should be able to perform most procedures without checking price, as long as the cost isn't exorbitant. I know someone who got taken to an ER and they hounded him for the $1-2k they wanted for years after, so they do that now.

 
At 4/25/2011 5:12 PM, OpenID Sprewell said...

The problem is that the medical providers bump list prices up to crazy levels so that they'll get paid something by the insurance companies and govt, up to a 100 times their cost. Those prices have no connection to reality and are just made up as a negotiating tactic with insurance companies and medicare, but then many uninsured patients are forced to pay those very made-up prices. So the system perpetuates itself in this way, since nobody wants to be caught without insurance and then more crazy price increases recur.

 

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