121 thoughts on “The McAllen Problem”

1. This behavior by doctors helps explain why the cost of health care has accelerated faster than the rate of inflation of decades. Another cause is the amount of money siphoned off by the administration of insurance and payments to their CEO’s. Lastly we have the cost of bailouts for example AIG, which sells health insurance.

   In McAllen, some of the doctors are still blaming medical malpractice suits for the increase cost of health care in their community. But their arguments fail in the face of the substantially reduced cases filed under the Texas medical malpractice reform. This was pointed out in a radio program that I heard about the McAllen health care industry.

   One for the doctor’s interviewed in the radio show was an older surgeon who said that several years ago, a patient with gallbladder pain would generally first be treated with pain medicines and sent home. Many of their symptoms disappeared. Now the preferred treatment was to operate first. It seems that by operating first the surgeon earns more money.

   A word about Rep. Boner (R. Ohio) who claims that the government in health care would look like the DMV or Post office. This flies in the face of the Medicare and Medicaid programs nationwide, as no one in those programs stand in line for treatment. Additionally, those programs cost less to administer and pay far less for health care then the private programs.

   Competition is vital to our system. But many argue that the government should not compete against private industry while at the same time complain about the cost of government. During the lasts several many government services have been privatized with no bid contracts.

   Extensive audits should be performed to determine if this has been more cost effective than when the government provided the service. From what I have seen the taxpayer now pays far more.

   The government collects our taxes and uses the money to provide services. There is no reason that government should not compete for the best price including health care.

2. In the 1970’s the Rand study was done, and it determined that there was no relationship – AT ALL – between inputs and outcomes (i.e., medical practice cures very little, and causes a good many problems). Of course, it was too radical for the study authors to state that (they were after all affiliated with health care). Think about it – most serious diseases end in death. Most debilitating diseases are only marginally, if at all, helped by treatment. Most treatments don’t work, but that can only be known with assurance after trying them. Comparative effectivness studies won’t change that.

   But who wants to be told when they have cancer – accept death??? Most people will want whatever it takes to TRY and cure them, and aren’t too interested in hearing why it probably won’t work.

3. I can’t articulate it any better than Mr. Gawande did. I think there are so many variables involved. I do think many doctors (not all) are mainly interested in the profit motive. In fairness, they study earnestly for many years, they are above average intelligence, and some have an extremely high skill level. They deserve to be compensated for that. But when you become so jaded you recommend tests, schedule doctors’ visits, order surgeries that YOU KNOW do the patient no good, this is crossing the line. Not only breaking the Hippocratic oath, but really showing no compassion or warmth for your fellow man. And I do believe this is the biggest problem. I have a relative who visits the doctor once a month. They have a 5-10 minute conversation. It’s always the same, and it’s $30. Some doctors absolutely refuse to take Medicare patients because they know there’s no money in it. And this situation where doctors are investing in their own hospitals and slowly syphoning of the wealthier patients with better insurance IS THE LATEST TREND in healthcare now. And I have no doubt this new tact of doctors to syphon off patients to places where they get a bigger piece of the pie will grow exponentially. And of course doctors receiving kickbacks to recommend patients to specific places has gone on for years, if not decades.
   I think Hillary Clinton learned the hard way changing healthcare is a mammoth task. Frankly I don’t think Obama can change it. I would LOVE to see him change it, but I don’t think he can. And if Obama can pull off the miraculous task of changing healthcare for the better and creating more “accountable-care organizations” as Elliot Fisher calls them, I will be ecstatically happy to be wrong.

4. because there is no way to make patients internalize all of the costs of their care; they simply don’t have the money.

   I beg to differ. A lot of money is spend on unnecessary care; since the insured isn’t bearing the costs directly there’s no barrier to entry. (Of course this doesn’t apply to catastrophic illness.)

   I bet we could solve the whole healthcare problem with high deductibles. Most co-pays are minuscule. Instead, healthcare customers should pay the first, say, $5000 of their costs. To encourage people to save the money, let everyone build up the deductible through tax-free savings.

   There’s no better way to incentivize people than when their own money is at stake.

5. Status quo supporters (or free healthcare market supporters) don’t appreciate that health is not a “widget”, a tradeable good, whose manufacture has low barriers to entry, for which real competition is possible….it is life itself. It is life and death.

   Health must not be left to the market.

6. Max,

   Please reread the introductory paragraph concerning inability of consumers to judge the necessity of medical procedures. Also, please consider the difficulty due to lack of income, lack of control of family income, and poor financial knowledge for saving that $5000.00.

7. “What about payers (health insurers?) A “market” solution would be to change the reimbursement rates for different procedures – increase payment for things that doctors should do more of and reduce payment for things that doctors should do less of. Theoretically, payers should be doing this already. However, in the current situation, a private payer who tried to reduce the rates for popular, expensive procedures would find itself unable to attract providers. The only payer with any real negotiating power is Medicare. The private payers have little ability to control costs. Or, if they have the ability, they aren’t exercising it.

   “In short, prices will only go up.”

   Fortunately, the conclusion is a non sequitur. :)

   Also some claims in the previous paragraph sound doubtful. Are the insurance companies wimps? They already manage to negotiate huge discounts. They already manage to refuse to pay for treatment without examining the patient. Too often this happens after the fact. If the insurance companies have not reined in McAllen practices, it is not because of lack of clout. It would be interesting to find out why.

   One possibility is the fear of lawsuits. Suppose that they deny a test or treatment and something goes wrong and they get sued. You can be sure that there will be local doctors testifying that the test or treatment is standard medical practice. After all, they would recommend the same thing. And while doctors are reluctant to testify against other doctors, they probably do not feel the same about insurance companies.

8. The debate about healthcare is analogous to the debate about the causes of the financial crisis; as well as many other aspects of our capitalist system. When should professionals, be they bankers, rating agencies, mortgage lenders, and doctors, hospital administrators and insurers, perform services to maximize profits versus providing the best service to their clients. Free market capitalism functions generally well when all parties have symmetrical knowledge: when the homeowner has enough knowledge about the mortgage being sold to him by the lender and when the patient has enough knowledge about his various treatment options offered by the doctor. However, we know that knowledge in many of these cases are clearly asymmetric.

   We have come to believe, driven by the profit motive, that if something is not illegal, it is not unethical. We have come to expect this of our lawyers, accountants and bankers. Let’s hope that we can reverse this trend for our doctors.

9. Not an economist, so I find myself pondering the issue of pricing and things of that nature – as in why do gas prices go up in the summer (due to demand, apparently) but personal computer prices have gone down since they burst on the market 25 or so years ago (due to demand.)

   With health care – pricing is opaque at best. I cannot shop around for “the best price” because I don’t know what the price for a particular treatment or medication is until I sign up with an insurance plan. And then I still don’t know what the price is – my EOB supposedly bears no resemblance to the money actually handed over to the physician.

   I’m one of those self-insured people with a hefty deductible, so I don’t run to the doc for analysis of every sniffle.

   But because I have a high deductible, I perhaps put off going to the doctor earlier in an illness – and waiting perhaps means that the treatment for whatever it is I have will become significantly more complicated and pricier.

   We keep heralding the virtues of the ‘free market’ – but clearly, the profit motive can become quite costly to society as a whole. As James said, we live in a society where we accept as a given that lawyers, bankers, politicians, CEOS, top executives – and now doctors – are filled with greed and motivated solely by money.

   In the stories of most cultures, the characters motivated primarily by greed tend to be the bad guys in need of vanquishing. Not so in America….it’s just the best and brightest working the ‘free market’ to their advantage – to the point that it has crippled the economy.

10. All electronics get cheaper over time Anne. That’s a pretty well known fact. Watch what happens with Blue-ray discs. Now they’re what?? $30??? Not long from now you’ll get’m for $15. It’s useful to keep in mind with electronics in general. Remember the big mobile phone Gordon Gecko had in the movie “Wall Street”?? How much you think it cost at that time and it looked like he was holding a shoe box.

11. You leave out the supply part of supply and demand.

12. I disagree with the premise that consumers can’t make their own judgment calls. There are complex things like buying a PC or fixing a PC or navigating through an automobile purchase that can be just as complicated as healthcare. They problem is consumers are not armed with the information needed to make their own choices. Things like price transparency, and information services would be a big help. Then consumers can make rationing decisions that would drive down costs.

13. Imagine if we had a system where, whenever you bought a car, the out-of-pocket cost to you was identical regardless of which car you bought. Yet the dealerships still determined the prices.

    Within a few years, we would get articles about the “spiraling costs” of cars. We would get scandalous reports in the New Yorker about car salesmen pushing people into cars they don’t need. We would get posts on economics blogs, from people who should know better, that “this is what the old Chicago school” recommended.

    Of course, all of it would be nonsense.

    Health care in this country is a failure, but it is not a failure of the free market, because it is nothing like a free market. If it were a free market, health care would be a lot cheaper… And some people would get sick and die merely because they were poor. As a society, we are unwilling to allow that, which is great. But blaming health care costs on free-market ideology is ridiculous.

    Since resources are finite but the desire for them is not, the question is not whether health care will be rationed; the question is how it will be rationed. A free market would provide an efficient rationing (high overall quality relative to cost), but not a fair one (since the poor would receive inferior care).

    Is it possible to design a system with the efficiency of a market-based system but with top-quality care for everybody? I doubt it; in terms of efficiency, markets have a pretty good record relative to central planning (to put it mildly). But I also suspect we could do much better than we are doing, since our current system seems to combine the worst aspects of both.

14. Yes, electronics get cheaper over time. I understand that. What is different about gas? High demand product – the companies that provide it are extremely (excessively) profitable – in 2008 – the year of the crash – Exxon Mobile broke its own record for profitability – $45.2 billion in profit for the year. It was a profit attributable, supposedly, to the high price of oil last year – which seemed unattached to any real change in supply or demand.

    If I am wrong about this – please correct me! I’d love to know why the price of gas spiraled up so high last summer! Stats Guy gave me some articles to read, but they did not satisfactorily answer my questions. (Thanks Stats Guy for the links! Much appreciated…)

    Product pricing to me – an outsider to the theories and principles of economics – seems whimsical – not really based in any definable rule.

    Especially in health care. It is phenomenally silly to charge the most for a service or medication to the people who are without insurance. The Walmart theory of pricing – that only the VERY BIG GROUPS get a deal on costs – is sadly out of place in the realm of health care.

15. Things are not perfect in Canada. But lately, since joining Baseline, I feel a warm glow when I think how good we have it here.

    We spend 10% of GDP on health care and we have 100% coverage. Canadian citizens have access to some of the best healthcare a first world country can provide. Our healthcare is funded by income tax (corporate and personal). The maximum tax bracket in Canada is roughly 50%. Moreover, high-income earners can donate 50% of their income to a registered charity of their choice in lieu of income tax.

    Our financial system was “stress tested” by the recent financial meltdown. Here are some facts. The World Economic Forum has rated Canada as having the best banking system in the World. Not one Canadian bank has needed a bailout. Rather our banks continue to post healthy profits. For the past 11 years Canada posted budget surpluses (with 2009 being the exception). We are the only G7 country (whatever that is) to pay down its debt.

    Here are the miniscule “single payer” medical premiums paid in my province of British Columbia.

    – $54 for one person
    – $96 for a family of two
    – $108 for a family of three or more
    – low-income families and individuals get premium assistance

    While the province of Alberta (famously oil-rich, right-wing and debt free) — eliminated — medical premiums in January 2009.

16. I’ll add here:

    At one time the Europeans called the United States a hyper-power. The wealthiest most powerful country in the world. I don’t mean to sound patronizing here. Surely, with your wealth and vibrant intellectual culture, can create a financial system and a healthcare system, as reliable and stable as that in Canada. Surely, you can out perform Canada on these metrics. Get on with it. The world will breathe a sigh of relief.

17. If the Obama administration can implement healthcare reform in the United States that begins to approximate universal healthcare in Canada (10% GDO, 100& coverage, 0% medical-related bankruptcies) the Democratic Party will acquire immense political capital.

    It strikes me a for-profit healthcare industry qualifies as “rent seeking”.

18. Sorry, typos need editing:

    … (10% GDP, 100% coverage, 0% medical-related bankruptcies)

19. Wasn’t it Amy Chua (an American professor at Yale) who dubbed America a “hyperpower”?

20. “In a capitalist economy, the thing that is supposed to keep prices in check is the buyers. If someone offers me a product that costs more than it is worth to me, then I won’t buy it.”

    True. But health care different. It is not an inferior good; it is not a normal good; nor is it a luxury good. It is a good unto itself: When a doctor — a person you implicitly trust at a moment of great vulnerability — tells you something is wrong, and you have to do this, that and the other thing to survive, you will do this, that and the other thing regardless of cost. When confronted with one’s own mortality, one reverts to the anything-to-survive mode. We’re programmed that way. Same same for those we love — when doctor says this, that or the other is absolutely necessary for your loved one to survive and see another day, you no longer count the cost. You do whatever it takes to ensure your loved one survives to see another day.

    This is what makes medicine so unlike anything else in economics. Knowing this, some doctors take their responsibilities as a sacred trust — they minister to their patients as a priest or rabbi would minister to one of their flock. Others realize they’ve got the best of all worlds: Anything they say, any regimen they recommend, any test they order will be done without regard to cost. If you’re a profit-maximizing capitalist operator, this is nirvana.

    One could argue that, because of this, medicine is different, and should not be subject to the “marketplace” and the rules of expected capitalist behaviour. There is a huge asymmetry between buyers and sellers. And there is no competitive process that can be introduced to provide a “market” outcome, since every “competitor” will immediately recognize their best outcome is to maximize overutilization of the system — test, procedures, surgery and follow-up.

21. I pretty sure the phrase was coined by academics and think tanks working for the European Union.

22. three points, from a different angle:

    1. If the question is, why is US spending so much higher than other countries, the chances are good that the main explanations will be differences across nations, not across regions in the US. Other countries have substantial regional variation too; probably their highest regions are about the same as the American lowest regions. The answer is in characteristics of the American system as a whole, not interregional differences.

    2. Gawande said McAllen was high because of overusage, doctors did too many procedures etc. It is certainly true that rates of surgery are much higher in the US than any other country, and it is important to know why that is so (culture? the system provides different financial incentives?). But outside of surgery, usage is not particularly high in the US. One example given was that a doctor will ask someone to come in for an appointment (which is reimbursed) rather than talking on the telephone (which isn’t). But the rate of visits to the doctor is extremely low in the US compared to other countries. (The cost of the visit in the US is a lot higher, it is true.)

    3. Kwak wrote:

    What about payers (health insurers?) A “market” solution would be to change the reimbursement rates for different procedures – increase payment for things that doctors should do more of and reduce payment for things that doctors should do less of.

    I agree. This is exactly how Japan keeps its medical spending growth rate very low despite a rapidly aging society. The government modifies the fee schedule (which covers all procedures, drugs, products in the country) every two years, raising and lowering the price individually on every item for policy effect. THis is the main theme of the book I wrote on Japanese health policy with Naoki Ikegami, if anyone is that interested.

23. So I finally found the time to read the McAllen story in the New Yorker – and am left with multiple questions….

    Gawande points to McAllen as what’s wrong with American medicine today, but takes pains to point out that McAllen is actually the second most expensive health care market in America – coming in behind Miami.

    So why is McAllen – the “outlier” – actually proof of what is wrong? It is an extreme example of the problem, not necessarily a reflection of the ordinary, every day “average” world of the garden variety medical practitioner.

    Gawande compares McAllen to El Paso – in that they have similar demographics (poverty level, obesity rates, etc.) and though El Paso’s health care costs are half that of McAllen’s – the story focuses on McAllen, as if that is the “norm.”

    What I want to know after reading this story is how much El Paso’s costs have gone up in the last few years. (My health insurance rates – despite no change in family health – went up 25 percent this year – and I’m no where near McAllen.) El Paso seems to have a handle on controlling excessive tests – but how much have their actual costs risen in the last decade?

    In comparing McAllen to Mayo, I wanted to know what the obesity and poverty rates were for the patient pool at Mayo. Are we comparing apples to apples? The health care issues for the obese are a terrible problem. Is Mayo dealing with the same issues or are they more focused on cancer treatment – or knee replacement surgery – or heart surgery in thin, pre-retired people?

    As McAllen goes, so goes the rest of the health care industry in the US? Seems a stretch – but perhaps Gawande is right to assume this. Would like to see the facts to back up the assumption, though.

    Why is Medicare – the government program for retirees – the best source of pricing information for health care? If that is truly so – then we are negotiating health care reform from a position of ignorance. Truly. And that needs to change immediately.

    To point to McAllen’s “over use of medicine” in the second most expensive health care market in the country – within a community with a significantly high obesity rate and a per capita income of $12,000 a year – as THE example of the problems of health care in America is like looking at the Super Size me guy (the one who ate at McDonalds every meal for way too long for his documentary) as the poster child for the American diet. Great PR – but not necessarily providing the right icon for the issue.

    I’d frankly like to know more about El Paso’s story….

24. 1) One other failing of the application of purely economic modeling to healthcare: more than occasionally the alternative to using healthcare is DEATH. Participation isn’t ‘voluntary,’ ‘informed,’ etc,etc, if the alternate is DEATH.
    2) Sometime in the last few years I heard a broadcast of Dr. Andrew Weil addressing San Francisco’s Commonwealth Club. His grim assessment: the American ‘medical care’ system and its major players are so dysfunctional that it will only improve substantially after a complete collapse.
    3) In Melvin Konner’s book, ‘The Tangled Wing,’ he describes the grandiose, tacky, often unoccupied mansions of Malibu as emblematic of the lives and aspirations of a majority of Americans–writ large. The weaknesses of thinking and greed which caused the malevolution of our ‘healthcare’ system are shared by many of us, present company included.

25. This e-mail is not related to the thread. I was hoping someone could explain how Goldman Sachs is now projecting $2bn in bonuses to its employees? I understand the bank’s involvement in currency trading but this still seems amazing.

26. I think the problem is that a large share of health care expenditures comes in big chunks from very sick people. Most years of your life you probably consume a few thousand dollars’ worth of health care, and then when you get cancer suddenly you are consuming tens of thousands of dollars’ worth annually. That’s what I mean when I say patients can’t internalize the costs. We could have higher co-pays, but patients would still face only a small percentage of the real costs. And if you only pay a small percentage of the cost of something, you’re going to want more of it than is economically optimal. (And all of this assumes that patients can evaluate the value of medical treatments.)

27. I actually agree with you, mostly at least. I agree that we do not have a free market for health care. I tried to describe the market that we have – one where suppliers have the usual incentive to charge as much as they can, but the demand side behaves in screwy ways, so that we get terrible outcomes. So I don’t think I’m blaming the current situation on the free market.

    If we actually had a free market, we would have other problems, as you describe – seriously ill people (all of them, not just the poor, except the super-rich) would die the first time their insurer could non-renew their policies, because they would be unable to get affordable insurance after that point.

28. Anne, I answered that post about oil pricing a while back. If the answer didn’t satisfy you I’m sorry. You say it is “phenomenally silly to charge the most for a service or medication to the people who are without insurance.” Why would ANYONE bother buying insurance if they thought they saved more money without insurance?? That’s kind of the whole point of buying insurance isn’t it??? A lot of answers that economics provide don’t give us a warm fuzzy like a Disney animation film.

29. DISCLOSURE: It’s me again, the trauma surgeon who wrote a response to the original Baseline Scenario when the New Yorker article about McAllen Texas was revealed and discussed. Please don’t interpret my comments as condescending or that I’m wagging my finger at anyone as I write. I have enjoyed this blog and look forward to its feeds, and respect immensely the authors who know a whole lot more than I do about such things. But I know the practice of medicine, having been in the private solo practice of surgery for 20 years and now a salaried general and trauma surgeon at a public hospital, caring for the indigent as well as the horrifically injured.

    Anyone who talks about doctors negotiating their fees with third party payers demonstrates their profound ignorance about how the practice of medicine works.

    Fact: Insurance companies and Federally/State managed payers offer a fee schedule to physicians. The offer is to take it or leave it. Period. Don’t try to tell me that doctors negotiate anything, because you’re wrong…they don’t because they can’t; we haven’t had a seat at the table since the 1960s when “organized medicine” refused to help the Feds and the insurance industry with the cost of health care that even at that time was spiraling out of control. Today, individual doctors are laughed at when they approach an insurance company about negotiating anything, and when it comes to the Federal government or States, the guy in the cubicle in the basement of the huge State or Federal building on the campus with 75 other State or Federal buildings would probably turn you in as completely nuts and therefore incompetent to take care of patients if you said you wanted to negotiate anything. Doctor groups are limited by antitrust laws that are outdated: in the days of yesteryear, people paid their doctor bills, so it made sense to prevent doctors from setting prices; these days, third-party payers pay the bills, so it makes no sense to hold doctor groups to the antitrust laws that the insurance industry has been exempt from since the beginning of last century. Mr. Kwak suggests that doctors should be able to negotiate with third party payers as part of the Obama health plan, but the dirty little secret is that we are forbidden by law to do so. So the reason “some providers don’t like it” is because it means another round of fee cuts shoved down our throats.

    Fact: 85% of Americans are basically satisfied with our health care system. Fact: there are only 10M-15M people who need insurance who can’t afford it and don’t have it, and they all still have access to health care, so don’t say the system isn’t working. Fact: when consumers have some skin in the game, the efficiency and cost effectiveness of care improves. If folks had to pay for their health care, there’d be less of it and consumers would demand that their doctors convince them that the care they get is worth the price.

30. Of course, the actual logicl answer is regulating health insurance companies like other insurance companies, but nationally. If you pass strong enough regulation, then the system would work. Consider the following:

    1. A national treatment standard for every test and procedure, established by the medical community, along with an associated cost (fee).

    2. Standardized claim forms (the same for every carrier and doctor.

    3. Standardized rate filings, which can only vary by locale, but not by patient factors, except means and health habits (i.e. alcohol consumption, drug use, tobacco use).

    4. A requirement that all applicants must be accepted as insured, regardless of preexisting conditions.

    There are lots of other guidelines, but all other forms of insurance are rate regulated based strictly on actuarials. This would likely cause the most risky insured to be fairly evenly distributed among underwriters, and would force insurance companies to make money by being efficient. (the admin cost for Medicare is about 3%, while the health insurance companies have about ten times that percentage.)

    Otherwise, single payer would be best.

31. There you have it from Dr. Siegel, 85% of Americans are basically satisfied with our health care system…… We can move on to the next problem now. Dr. Siegel, would you care to share the SOURCE of that 85% number and where to find it??? We’re eagerly awaiting the SOURCE of that pearl of wisdom you gave us.

32. Rhetorical questions: What does it mean to be a citizen and not just a consumer?

    In Canada universal health care is a social contract won by a previous generation through a political process. Our universal health care is funded by personal and corporate income taxes.

    In practice it means, no one gets to opt out of paying for insurance (income tax) when they are healthy. It also means everyone is insured against the cost of “big chunks of health care expenditure” when and if the need arises.

    As stated below: The cost of universal health care in Canada is 10% GDP, 100% coverage, 0% medical-related bankruptcies.

33. Folks, get ready from the American Medical Association to come out with guns blaring (and heavy artillery) on this one. Yes, as Mr. Gawande mentioned in his article, the most expensive piece of medical equipment is the doctor’s pen. They will not have President Obama interfering with their accustomed lifestyle.

34. Gee, Ted, I sense a bit of, je ne sais pas quoi, anger, sarcasm, cynicism…is that tone really called for here? It is in the message boards I’ve happened upon for, say, the WashPost or the NYT, any time anyone challenges the party line, but I thought this place was different….

    The comment about patient satisfaction wasn’t even the main point of my post, and I added it at the end because it seems to me that blowing up a system that most folks find in need of adjustment but otherwise ok with it as throwing the baby out with the bath water. Anyway, there have been several editorials within the last week or so that threw that number out, with no references, but a quick Google search brought up at least 4 surveys (http://www.ama-assn.org/amednews/2006/11/13/gvca1113.htm, http://www.healthpolicy.ucla.edu/pubs/publication.asp?pubID=175, http://www.ncbi.nlm.nih.gov/pubmed/12468693, http://www.libraryindex.com/pages/1870/Public-Opinion-About-Health-Care-CONSUMER-SATISFACTION-WITH-HEALTH-CARE-FACILITIES.html) done within the last 4 years that show anywhere from 89-94% satisfaction with the care individual patients get. Of course, that was when politicians from the other party were trying to reform health care, so everyone wanted to believe our system really was ok. There was also an article (http://www.liveleak.com/view?i=7eb_1188036834) that came up about how Canadians are getting fed up with no access to specialists or testing. I’m sure there are more, and if you have a computer and internet access and are really interested, Ted, just Google it…

35. You know, Ted, it’s people with attitudes like yours that have made health care reform so difficult. Only about a third of doctors even belong to the AMA, by the way. The problem we face is much bigger than your fantasy of fat-cat doctors crying in their milk about the greens fees at their country club.

36. John Siegel: “Fact: Insurance companies and Federally/State managed payers offer a fee schedule to physicians. The offer is to take it or leave it.”

    OK. So the insurance companies do not negotiate discounts. Then where do the so called fees that are actually reported come from? If I get a bill for $500, of which my insurance has covered $300, and I pay $200, has my insurance company actually paid something like $50? If so, isn’t that misrepresentation, to say the least?

    “Fact: when consumers have some skin in the game, the efficiency and cost effectiveness of care improves. If folks had to pay for their health care, there’d be less of it and consumers would demand that their doctors convince them that the care they get is worth the price.”

    Sorry, you have revealed the fact that you are not a surgeon. No surgeon in his or her right mind would let a patient demand anything.

37. “The proposed public health insurance plan would have the power to negotiate lower rates with providers. That’s why some providers don’t like it.”

    It isn’t just about lowering rates overall. It’s about lowering rates on specific highly profitable services (such as imaging, or certain types of surgery).

    Some entities will suffer because they have focused on milking these profit centers. Others, including many hospitals, are concerned that they use these profit centers to stay afloat (since are losing money elsewhere). The latter concern is valid – if we remove the profit from these profit centers, we need to ensure that good hospitals can be paid fairly for other services.

38. “If folks had to pay for their health care, there’d be less of it and consumers would demand that their doctors convince them that the care they get is worth the price.”

    The article had an excellent response to this argument (from a surgeon no less). Asking patients to negotiate with doctors is like asking sheep to negotiate with wolves.

    Also, consider this: (good) doctors already hate the fact that they have to be businessmen first. If payment was dependent on negotiation, then the best-compensated doctors would become those who are best able to convince patients they need expensive procedures. And how many patients are really equipped to argue with them (even if they were fully healthy at the time)?

    Using patients as the primary tool to incentivize physicians not to overtreat seems profoundly dangerous.

    Yet you do have one point very correct: doctors respond to fee schedules. Much of the overtreatment occured in areas that are compensated with high reward relative to cost (imaging, cardiac procedures) and/or high total value. Any solution needs to shift the reward structure away from these to less costly options, so that profit is less of a factor in decision-making.

    Here is an important parallel for you: Prior to energy deregulation, the reward structure for energy companies was (proportional) cost plus. This meant that if an energy company could spend more money on equipment, they got the same fixed rate return on a larger total investment. The result was a large degree of excess base load capacity. Deregulation (although it had many problems) did succeed in changing the incentive structure. (There were other ways to change that incentive structure.)

    The important lesson for medicine is this: the reward structure for medical procedures needs to be COST-REGRESSIVE. That is, the more expensive the procedure, the lower the _margin_ should be in the fee structure. Even with constrant-margin rewards, a $5,000 procedure has a higher _absolute_ profit than a $250 office visit and scrip. Ideally, the doctor/hospital should have no financial incentive to elect the less expensive or the more expensive option.

    Also, if the fee schedule is set at a FIXED RATE, then it needs to ACCOUNT FOR COST OF LIVING. Otherwise, this will create variable margin rates depending on costs, which will translate into massive profits for low-cost-of-living regions of the country (aka, McAllen Texas) which will encourage more expensive procedures, while non-profits in NYC go bankrupt.

39. Mr. Siegel,
    The first site you gave (on AMA’s website) says that only 18% of people are satisfied with the cost of health care in America.

    The second site you gave only covers INSURED patients living in California.

    The third site you give is taken from a sample of patients living across the Atlantic Ocean in the country of Scotland.

    In the fourth site you give there is something wrong with your link, because there are no numbers given there.

    The fifth site you quote, the survey was done by the Canadian Medical Association (the largest association of DOCTORS in Canada) on patients living in Canada.

    I think you’d better leave this argument to the folks at the AMA (the largest association of PHYSICIANS in America). I think they can do a better job stating the doctors’ position than you have on this site.

40. Sorry, in the post above I meant to address you as DOCTOR Siegel.

41. Also, $5000 deductibles lead to people who wait until a problem is more severe before addressing it.

    Try telling someone with a possible myocardial infarction and a $5000 deductible to call 911 and go immediately to the hospital. They probably won’t.

    And as a result, they may live the rest of their life with a damaged heart.

42. Whenever I read about your health care plans I always wonder what makes you even assume that cost will be efficiently controllable.

    Does anybody ever look for example at Germany which has public health care providers dressed-up as semi-privates and who does try to keep the costs down since decades partly via keeping the premiums low through asking the patient to pay extra. To me from the patient side it just looks more and more incomprehensible and confusing i.e. for some years they tried competition via premiums now premiums are the same again for everybody and competition is supposed to work via extras being paid (extras being for example yoga classes).

    What the “market” of these quasi-private insurers after all these years of making the money side efficient does not offer is a down to the bare necessities insurance. The frills somehow manage to keep hanging on, the protesters always rallying around the battle cry of we want “no two classes system”.

    By now we have a health care system were the old ones are more and more afraid that dying is a no-no for them because they remain a cash-cow only as long as they can be made to hold on.

43. The reason people without insurance are charged exhorbitant rates for medical services is because of Medicare rules, which state that everyone must be “charged” the same fee. The rule does not state that everyone must “pay” the same fee.

    So, if your states Workers Comp fee schedule or Aetna allows $150 for a certain procedure or drug, your medical facility will charge everyone, say $175.

    Everyone keeps on missing the fact that large healthcare organizations have lots of business people who direct the billing. They review the allowables, the latest & greatest ICD-9 / CPT-10’s and then “inform” the employed physicians how they are to document & what procedure codes to use in charge for different “illnesses.”

    For every physician, who actually performs a service, they are supporting probably 5-10 non-medical personnel (i.e. non-income producing employees). In the case of the large “to big to fail” healthcare systems (look at Charlotte NC), most of the big bucks are going to MBA’s not MD’s.

44. I think I have come up with a way for buyers to influence the market and change the way health care is delivered in this country. Read below.

    Healthcare reform in the United States of America

    Serious proposals to reform healthcare in this country must take into account that the majority of a person’s healthcare costs are incurred in the last few years of life, which means that they are paid by Medicare or Medicaid. Also it is in the country’s interest to subsidize some of the currently uninsured. They include:
    1. Those employed who want insurance but their employer does not provide it.
    2. Those unemployed who are receiving unemployment benefits
    3. Those unemployed and are either beyond the term of unemployment benefits or
    unemployable due to temporary or permanent disability.
    This portion of the uninsured should be able to get insurance through government assistance as determined by a means test.
    Passing reform will be difficult because the vast majority of people who now get insurance from the private sector do NOT want government mandated coverage nor does the government need to provide it for them.
    The emphasis of reform should be to government provided healthcare. The question then becomes how to lower the existing costs and contain future cost increases of Medicare/Medicaid without lowering the quality of care. Medicare/Medicaid currently pays for medical care on a fee-for-service basis –office visits, tests, procedures but discount the fees paid to health care providers. Thus health care providers in order to recover lost income run more tests and procedures even if they add little to the diagnosis or treatment of the patient.
    Medical research studies have found that there are existing managed multi-specialty group medical practices that produce high quality care at considerably less cost. Studies have shown that these group practices save Medicare/Medicaid 25% to 40% without any decrease in quality of care. In addition some studies have shown that if all Medicare/Medicaid expenses were handled by such group practices all current funding shortfalls would be solved, more over Medicare/Medicaid would not find it necessary to discount payments made to health care providers and there would still be enough money in the system to pay for the additional portion (as described above) of the now uninsured. So it would seem that simply passing a law to make managed care for government provided healthcare mandatory would be an easy solution. However, passing a law that makes it mandatory that all Medicare/Medicaid be paid to such group practices does not address the problem of creating enough of those groups to comply with the legislated demand.
    THIS IS WHERE THE EXISTING PRIVATE INSURANCE INDUSTRY CAN PLAY A PART. The overwhelming majority of people and their families that now have healthcare insurance through the private sector are content with their coverage because it is either paid for by their employer or with their own non-taxed dollars. This insurance coverage has low co-pays and low deductibles. The insurance companies pay on a fee-for service basis the same as Medicare/Medicaid. The insurance companies take on the task of controlling the costs by restricting payments and imposing administrative constraints on the healthcare providers. (Despite these efforts the costs keep going up). All of these factors give the individual NO incentive to seek out or demand lower cost alternatives. These individuals also do not realize that the high cost of this type of coverage and healthcare delivery is costing them in lower pay increases because employers make decisions that trade off paying for health insurance and lowering pay increases.
    If individuals had to PAY TAXES on their employer provided healthcare insurance benefits that WERE NOT used to purchase managed group practice coverage then it would create a demand for such coverage and more groups would be formed. Individuals who purchased managed care insurance with after tax dollars would get a tax deduction for the cost of the insurance. Those who continued to purchase the other types of coverage would have to PAY THE TAX. The tax avoidance incentive would spur the free market to form more cost effective healthcare delivery systems without any decrease in quality.
    A complete reform will take time but the tax income could initially add to the Medicare/Medicaid funding pool. As the tax revenue decreases it will be exceeded by the outgoing payment savings.
    In this way, the costs of Medicare/Medicaid drop dramatically. People who want coverage now but can not afford it can get it. People who do not think they need it are not forced to purchase it. Those who are now covered by conventional insurance policies will influence the market to create more cost effective managed care solutions and make healthcare better for everyone.

45. First of all, thank you very much for the info on oil pricing – I appreciate it but it still seems mysterious to me.

    Now in my experience, the people who work at large companies don’t really “buy” health insurance. They sign up for the plan offered to them by HR and have a portion of their salary deducted. Most people, from what I understand, do not pay nearly the full cost of their health insurance – they get a hefty subsidy from their employer, who in turn, gets a nice tax break. (Which all may change – we’ll see.)

    People don’t get insurance to get the cheapest rate for a medical procedure. It is simply not possible to shop around for rates like that. If I use Humana, my doc charges me X dollars for an office visit. I have NO IDEA what that doc would charge for the same visit if I used Blue Cross. The costs are opaque and it is impossible to be a fully informed consumer, as the system is set up now.

    People buy insurance not to save money on the office visit – but to make sure they’re not bankrupt in the event of a medical emergency – like a broken ankle or cancer or a chronic condition like Crohn’s disease.

    But people who HAVE cancer or Crohn’s disease are SOL if they are self-insured and don’t fall under the umbrella of a large corporation. That’s not a good business practice for anyone.

    I believe with all my heart that the Wal-Mart approach to pricing health care – the biggest group gets the biggest discount – is a failure. To charge an uninsured person triple what an insured person gets makes no sense to me. I’m not asking for Disney. I’m a self-insured person – so I pay ASTRONOMICAL fees for my policy – and then a $4K deductible – and then health insurance kicks in.

    You know that if I NEED to have the policy kick in, I’ll be screwed next year. This year, we had only well-care office visits – everyone in my family is healthy – no preexisting conditions – and our rates went up 25% – that’s absurd and will become unaffordable in the long run. My husband and I are filled with anxiety about the “what if” scenario. What if one of us falls seriously ill? Because we are self-insured, we will be dropped. The fact that there is no “big group” for people like me – people who actually invest a lot of money in our health plan – who don’t view the ER as their doc’s office – is a terrible business model.

    Just call me someone on the front lines of this war….

46. Ted,

    Thanks for pointing out that the survey was produced by the Canadian Medical Association. A former CMA president Dr Brian Day operates private medical clinics in Vancouver, where I live. Dr Brian Day is in a conflict of interest because he is also a for-profit healthcare lobbyist.

    For-profit medicine is not illegal in Canada. But the law is, doctors must either opt in or opt out of the public system. They can’t have it both ways. This is to prevent for-profit health industry from “cherry-picking” patients.

    The bigger picture is, Canadians are happy with universal health care. They don’t want to spend their extra income on private medicine. They use their extra income to pay down their mortgage, invest in a tax shelter for their children’s university education, invest for retirement … take a vacation.

    Here’s a bit of black comedy:

    A few years ago there was a doctor who was president of the British Columbia Medical Association. (The group that represents doctors in BC.) The BCMA lead by this president was lobbying for more pay for doctors.

    Then a newspaper columnist found out this same doctor, the BCMA president (I can’t remember his name) had billed Medicare for — $600,000 — the previous year. Furthermore, this same doctor had reportedly gone on one or two expeditions to Mount Everest.

    Which begs the question: How can a doctor bill the government for so $600,000 in one year (when the average income for a doctor is $100,000-$150,000K) and still have time to train for his Mount Everest expeditions?

    I think this BCMA president claimed he practices rural medicine to explain his extremely high volume of billing.

47. Typo edit should read:

    $150,000 (not $150,000K)

48. Also, real world calling, a very large number of people could not possibly come up with $5,000 for a deductible. At double the minimum wage, a full-time worker would be lucky to make $30,000 a year gross, maybe $24,000 take-home. Take away at least $6,000 (very low) for rent which may or may not include heat and water, $2,000 for insurance, $800 for transportation, $700 for phone and electricity, and you’re already under $15,000. Most people like to eat on a regular basis and have warm clothes in winter; some have to feed and clothe someone else, besides paying for extra transportation, required school supplies, day care, etc. Those things mount up. And these days, even healthy people are lucky to work full time; someone sick, or with a sick child, is likely to lose income rapidly. We already have insured people bankrupted by medical costs. We do not need more.

49. The WSJ reported recently that Medicare fraud is estimated at >$200 billion per year. If that is true, then a good percentage of the cost of health care for all could be financed by better administrative systems.

50. Actually what happens is that the doctor charges $500, your insurance plan approves $300 and pays $250, you pay $50 and if the doctor has signed a contract with the insurance company (i.e., is “in-network”), he/she writes off the $200. So, the incentive is for patients to go to doctors in the network, and the incentive is for doctors to join the network, wherein they discount fees but see more patients. Major problems with this system are apparent: first, what happens when you take the time and make the effort to go to a hospital that is in your network, but you require the services of a doctor who is not in the network (e.g., anesthesiologists, radiologists, on-call specialists)? That’s clearly unfair for most patients, who then must try to get the insurance company to pay more, but who usually gets stuck with an unpleasant upside over which they have no control. Insurance companies are supposed to offer a fee schedule that attracts doctors, but many do not. If you want to pass a law that forces doctors to sign the contract or otherwise abide by the fee schedule offered by the insurance company, you’ll lose doctors willing to see those patients. It’s already happening in my field: the American College of Surgeons has been testifying to Congress for more than a decade that we’re not training enough general surgeons and trauma surgeons, many more are retiring than are going into practice. In Canada, I read a study by the Canadian Medical Association 3 years ago that estimates that they’ll need 2.8 new doctors to replace each retiring doctor, because the new docs won’t work those long hours and take off-hour call. In the US, physicians are opting out of Medicare, either refusing to see those patients or engaging in private contracts with them, where fees are negotiated and agreed upon going forward. By the time access to care becomes as much a problem as it is in Canada or Europe, it’ll be too late…it takes 10-15 years to train a trauma surgeon and other specialists.

    My comment about patients having “skin in the game” has been shown to be an effective way to control costs and improve satisfaction with care. Experience with Medical Savings Accounts and Health Savings Accounts have led many large companies to go in that direction (a recent article about Cisco Systems comes to mind, but I don’t have time to go find the reference).

51. OK, but I would like to see a citation for: “…according to the old Chicago economics department, everywhere should be like McAllen.”

    :-)

52. I am a doctor who has practiced in Australia, the US, Canada and worked in Malaysia and the UK.

    The US healthcare system has many problems which can be partially tackled by application of politically difficult but obvious cost control measures which have been applied in other countries with less money to spend many years ago. These solutions do not destroy fee for service medicine, preserve doctor choice for patients, and curb some of the worst excesses of the system.

    1. All Labs and Imaging (ie Radiology and Pathology) must be owned by non-clinicians. ie the financial incentive, ie kick back loophole left by the Stark II laws “in office exemption” must be closed. This loophole in the anti self referral legislation permits a physician to own a lab or imaging facility, and profit from his/her own referrals to this facility. Radiologists and Pathologists themselves (both Doctor groups) are not allowed to refer to facilities themselves, and have to garner referrals through the usual methods of pricing and service delivery competition.
    Remove self-referral and close the loophole. Apply this to multi specialty clinics as well.

    2. In order to see a specialist or get a test of any sort, all patients should have to see a Family Physician. All patients should have free choice of which Family Physician they wish to see. But whether to have the problem referred on to a specialist is something they should discuss with a Doctor they know and trust first. This will curb the excessive use of expensive specialists whom are only interested in maximizing utilization of their services. A Family physician is primarily interested in getting the patient to come back, thus establishing a busy, financially rewarding practice. Making sure a problem gets fixed is the way to get people to come back.

    3. The “public option” proposed by Obama is a good start. I do not support single payor only systems but I do support primarily not-for-profit hospitals and insurance systems. Shareholders may not want what patients need. That is conflict of interest that is not likely to be resolved.

    The statements I have made above are broad brush strokes aimed at getting people thinking about the relatively straight forward conflicts of interest that exist within the system as it stands. The political will to stop the gravy train is another matter. Remember:
    1)Stop self referred Lab and Imaging. Make the Radiologists and Pathologists stump up the cash and take the responsibility for owning them and competing with each other.
    2)Curb over utilization of specialist care by requiring Family Practitioner referral. Allow people free choice of FP.
    3) Shareholders and profit margins are not a good model for Health Insurance.

    I await your thoughts.

53. “Furthermore, most people don’t understand the health production function (the relationship between treatments and outcomes), so they don’t have the ability to select treatments that provide benefits that are worth their costs.”

    Arguments are always laying the blame on patients for demanding too much unnecessary health care, but the fact is that no patient can get health care that her primary or specialist won’t endorse. You may be able to hook an MRI at one of those traveling medicine shows they set up at malls, but only at your own expense. It’s only providers and insurers that have control over the rise in health care: for every person who deliberately ignores his doc’s life-saving advice, there is someone who got hit by a car, or fell into a hole. It’s time we acknowledged that medicine is NOT the place for capitalism and the free market. People die. That’s the difference.

54. “The overwhelming majority of people and their families that now have healthcare insurance through the private sector are content with their coverage because it is either paid for by their employer or with their own non-taxed dollars. This insurance coverage has low co-pays and low deductibles.”

    SHOW ME WHERE I CAN GET ME THIS POLICY! It does not exist for the self-insured.

    And I honestly do not know ANYONE who is pleased with their health insurance. Not a single person. Would love to know your source for that assertion.

55. Well played, Max; spoken like a person who has no problem getting health care. No barrier to entry? Who do you think tells the patient whether or not they can have the procedure/prescription in the first place? When I last looked there was no tsumnami of greedy, cossetted patients demanding extraneous and pointless medicine, just providers who line their pockets with them, and insurers who suck up the deductibles. First $5000 of health care costs? Who will you consign to this arbitrary amount? And what will you do about it when the cost proves so onerous that people wait until they are forced to seek treatment only when they are seriously, expensively ill? Maybe we should penalize them for not going into debt under the deductibles in the first place. Sure. We could fine them for waiting. Or take it out on them at tax time. How about another $5000? Or $10,000? I mean, just who the hell are you to condemn people for needing care in the first place?

56. “If we actually had a free market, we would have other problems, as you describe – seriously ill people (all of them, not just the poor, except the super-rich) would die the first time their insurer could non-renew their policies, because they would be unable to get affordable insurance after that point.”

    This is the system we have in place now for anyone who does not work at a large company. Self-insured people face a crisis if they actually become sick – health care becomes unaffordable or they’re dropped completely.

    I know a self-insured family dealing with cancer – they pay about $2200 A MONTH in premiums (includes one employee in addition to the family.) They are about to max out their plan, and don’t know what they will do when that happens. In the free market that we do indeed have right now, they will need to just buck up, I guess, and say good-bye to the cancer patient, who happens to be a mother with small children.

57. Those silly Texans! They are so mean.
    Let’s adopt communism. Maybe Canada can create the next round of effective drugs. They are so smart in Canada.

58. http://www.econlib.org/library/Enc/HealthInsurance.html is a pretty good background reading. It is important to remember that there is basically a duopoly supplier already: Medicare + BlueCross/BlueShield.
    Huge subsidies, lack of market pricing, existence of externalities, refusal to admit limits and effectiveness comparisons. These are huge and complex problems, and while Gawande tackles many of them, it is important to highlight his conclusion that extending coverage to the uninsured, and replacing private with public, actually are marginal issues at best!

59. “Currently, our health care system has high-cost and low-cost areas; the high-cost areas have no better outcomes than the low-cost areas. So theoretically we can solve our health care cost problem by making the high-cost areas behave like the low-cost areas.

    However, the market incentives go in the other direction;…”

    This is a stunning observation. It has a correlation to the mortgage crisis, being that there were greater incentives to put home buyers into riskier mortgages; in effect regardless their credit. The result of this, many who in fact had good or great credit and thus qualified for better mortgage rates, were steered into sub-prime products anyway. Doctors might convince themselves their conduct not as bad as the lenders, in that their primary concern was the health of the patient. All treatment options being ‘health outcome equal’, they enhanced themselves with no loss of “health” benefit. Even if the health outcomes for various treatments were equal, the financial ramifications of doctors’ advice, still had/have real world consequences for the patients in their care, only doctors typically aren’t there to witness them.

    “Remember all the people who said that you can’t blame mortgage brokers and investment bankers for being greedy, because that’s how a capitalist economy works?”

    For the lenders, self absolution might be harder. They ignored credit scores, which exist in part to establish “credit worthiness”. Ignoring good/great credit scores involves more than greed. They knowingly misrepresented the credit scores of their clients to their clients. They outright tricked some people into sub-prime products, when their credit scores clearly allowed for better borrowing rates.

    There has to be a code of ethics for those tasked with advising others. Especially when the advisor has the potential to enrich themselves, associates and/or business interest, more or less given the options on the table.

    In the medical field, patients should have to be presented with a cost analysis of the various procedures offered, before they sign off one way or the other. As with car insurance and repair, patients might not understand everything contained on an estimate, but if you’re telling them the results will be the same ideally, yet one option cost more than the alternatives, they would be more likely to choose the option with the lesser cost.

    What I would like to know is why it is not a good option to summarily review the cost of procedures and evaluate what some should cost period. For example, someone sitting in a waiting room for hours, to spend five minutes with a doctor to be told they have a cold, might not be worth $300 or $400 dollars. Doctors and hospitals actually have different rates depending on who is paying. Many find this out when their insurer takes their time and so doctors forward the billing to the patient. Once their insurance kicks in and they see what the insurer paid, vs. what their doctor was asking from them.

    This system has been all around broken and corrupt in some places for potentially decades. The prices that we’re seeing today are the result of this system. If the current system is in question, then the current prices of procedures should be in question as well.

    There also needs to be better information about doctors, hospitals and insurance companies so that the buying public can be more knowledgeable and make informed decisions about their care providers. This rewards better performance and should level the playing field. If you’re an insurer that’s “notorious” for rescissioning when clients develop life threatening read physical conditions requiring costly treatment despite client being in good standing for 20 years, and the public has the ability to determine this and pass you up, then the market does have the ability to decide.

    As it stands the insurers and doctors have all the information about patients and patients have none about the doctors and insurers they are entrusting their lives to.

60. Dear Tippy,

    Please post any information you may have on the following question: what is the quickest path two healthy, middle class, college educated American citizens can follow to immigrate to Canada?

    We’re exhausted by America’s irrational “systems” and “policies”. They just don’t make sense to us any more.

    Cheers!

61. I had a doctor fire me as a patient. During our initial visit, at which I provided her with a complete 12 page medical and lifestyle profile, she suggested that I should go for my annual blood work. About two months later I called her office to request the blood work request form. Her office asked me to come in for an office visit. I said I was just there and that if the blood work had any problems, I would make an appointment for an office visit. I asked the nurse to have the doctor call me. The nurse called back to tell me the doctor was firing me as a patient. I then received a letter terminating her service and giving me 30 days to find a new doctor. I wrote Medicare and my supplemental insurer but neither did anything.

    I also had my cardiologist insist that I have yearly stress tests and echo cardiograms “at his office”. I kept telling him that I felt fine and that my daily cardio workouts raised my heart rate almost to the level of a stress test without any discomfort. I was able to delay for three years (without him refusing to refill my prescription) but I fell playing tennis and broke my arm. I needed a plate put in which meant an operation. The surgeon checked with my cardiologist and who — guess what — suggested a stress test and echo cardiogram before he would say it was safe for the operation. Gottcha.

62. holly: “The reason people without insurance are charged exhorbitant rates for medical services is because of Medicare rules, which state that everyone must be “charged” the same fee. The rule does not state that everyone must “pay” the same fee.”

    Historically, is that a way of getting around legislative intent?

63. But suppose the free market is simply ill suited to healthcare insurance? We seem to accept that free markets are inappropriate for fire fighting, GPS satellites, lighthouses and liability insurance for atomic power plants, so all of them are socialized. Why not health insurance? After all, competition would lower prices it it could, but it doesn’t, so it can’t.

    If Medicare and supermarkets get by on markups of less than 4%, why do private health insurance companies need a 45% markup over the cost of the healthcare they pay for? What is the “value add” they deliver that justifies imposing total costs of $145 for every $100 of actual healthcare delivered? The only positive value they deliver is risk sharing, worth maybe 3-4%.

    Dr. Gawande shows that fee-for-service leads to abuse. Dr. Arnold Relman in “Second Opinion” agrees, and shows how to fix that: first, socialize health insurance with Medicare For All, then have government make annual payments to large competitive group practices on a per patient basis. The groups compete for patients based on service and outcomes. Everybody’s in, nobody’s out. We would have an efficient, economical healthcare system, and the $1 billion per day the healthcos now drain from the system could be applied to more meaningful purposes.

64. Anyone who has shopped for private INDIVIDUAL coverage knows that the problem with the high deductible policies is that the premiums are not commensurately lower. The total expenditure per year, before receiving even ONE dollar of benefit is prohibitive.

    We all know how expensive it is to treat cancer or other serious injuries or illnesses, but human nature being what it is, the thought of putting out 20% of income every year and receiving no current benefit has nothing going for it. As Katharine has pointed out, people have more immediate needs and declining income as well.

    This is why, for the majority of the people, HSAs are just as laughable as a yacht salesman telling one of them that now’s the time to buy because prices are down 50%.

65. Free market ideology isn’t directly to blame for high health care cost. However, it could be argued that those high costs are indirectly the result of free market ideology. And, yes, it can also be argued that the attempt to “fix” the problem contributes to the problem as well. The problem, IMO, is where we start.

    Employer provided health care benefit means private insurers. One looks at providers and insurers and says, “Free market.” In reality it’s not a free market, but these are private for-profit entities and free market ideology says leave them alone.

    Had we started with government involved, the dynamics would be different, as we can see in the European plans.

    There cannot be a free market when pricing is opaque. THERE IS NO MARKET PRICE. There are at least as many prices as there are for the occupants of a 767, flying coast to coast. As an uninsured person I must pay what they bill – up to three times as much as both insureds and insurers pay. Is that the market price? Is everyone else (the majority) getting discounts? Or is the price paid by most the market price, and I pay 2-3 times as much? Why? There’s no billing, no insurance paperwork. I’m less expensive as a patient. Oh! The reason lies with profit, not cost? I’m extremely profitable and I have no leverage. I could comparison shop till my phone gave up working, but I would never get a reasonable price. I used to be able to negotiate a small discount, but no more. Either they’re being bled dry by the insurers (my competitors in the “payor” role), or they realized that “we don’t have to.”

    Just as we accept that government is the best provider of police, fire, military, or highways, we must accept that health care, by its very nature, is a service best provided (paid for) by government.

66. Dr. Siegel,

    It doesn’t surprise me that doctors don’t have much negotiating power with insurers. Who does? Even the US Government seems not to have much power where insurers are concerned. That makes me wonder. Here we all sit, arguing about details, when it would seem we all have one major adversary: INSURERS.

    Perhaps doctors, who also have considerable clout, hope government will tame insurers for THEM and that’s all they care about? And maybe patients, who are just looking for better more reliable care at lower cost, believe something equally self-centered.

    It’s too bad. Single-payer advocates are the ones who most clearly see that removal of private insurers would benefit us all. And they have been shut out of the process.

    As for “skin in the game,” I know you meant financial “skin,” but the fact is that we ALL have Skin in the game when it comes to health care. Corporations have the most “skin” in the game now, but ironically, corporations have no SKIN at all. They are immortal, barring bankruptcy.

67. Anne,

    You’ve got it, partly, backwards when you say the Walmart approach to health care is wrong.

    The fact is Walmart is huge so it has tremendous bargaining power. So it negotiates the lowest prices it can get and passes this on to the consumer.

    That is also how single payer health care works. The government is the single payer. So it has huge bargaining power in bringing down the cost of drugs and medical care.

68. Anne,

    In Canada, we have the same problem with high gas prices, that rise even higher during summer driving months.

    The reason is there are a handful of very large oil companies that price in synch. There is no real competition because they move their gas prices closely together. I think it is called price fixing.

    Consumer advocates in Canada have called for the government to apply antitrust laws against the oil companies (or gas station chains or whatever). But the government does not do anything. During the run up in oil prices companies like Exxon were posting astronomical profits.

    I believe this is called Capitalism. The oil companies are for-profit. It is not their job to lower prices for consumers on a product (gasoline) that every driver needs. The oil companies exploit consumers for all it is worth.

69. Anne,

    Why don’t you check out a single payer lobby group in your area to learn more.

    If you lived in the province of British Columbia (where I live) this how universal health care (singlepayer) would work for you and your family.

    You would pay $108 dollars a month as your medical premium. There are virtually no deductibles for: primary doctor care, specialists, diagnostics, hospital care. Every genuine minor or major illness is covered. (Eg, sore throat, general doctors visit, childhood leukemia, fractures, cancer, surgery, post operative care),

    On top of this, if you or your husband worked for a company with a benefit package, it might include: paying for your premium, all dependents included, dental, vision, prescription, paid sick leave, additional maternity leave, bereavement leave, travel insurance and more. These additional benefits are not that uncommon.

    For example, some Starbucks cafes unionized under the Canadian Autoworkers. They are paid a bit better than minimum wage (eg, somewhere between $9-10 starting wage). But I’ve heard the CAW negotiated a decent benefits package for Starbucks workers.

    Once again, why don’t you check out a singlepayer lobby group in Chicago area where you live. If you wanted to throw your weight behind singlepayer, I’m sure the campaign could put your writing and PR skills to good use.

70. Al,

    I’m not an immigration expert so this is free information for what it’s worth.

    (1) We have a point system. The more points you have the sooner you get through the immigration paper work. A middle class, college educate American will get a lot of points. If you speak French you get more points.

    (2) Under NAFTA there are some professions that have no immigration restrictions. Americans and Canadians are free to work in either country. For example, architects registered under NCARB. You might want to find out what professions qualify.

    Lot’s of people immigrate to Canada. It’s not that difficult.

71. Anne,

    You are misinformed if you think people under universal healthcare go to the doctor over a “sniffle” (and are therefore abusing the system).

    Most people don’t like going to the doctor or the hospital. The tendency is not to go until it gets serious. For example, not catching cancer early by skipping out on annual tests. To me that is the bigger problem.

72. To: Linda R
    I don’t consider the insurance industry an adversary, nor do I want the government to “tame” anyone for me. When I was in private practice, I really wanted the contract to pay for health care to return to a covenant between the patient and the insurance company (like it is for homeowners or auto insurance), and I wanted health insurance to be a tax deductible expense for individual buyers or families, not part of a benefit package offered by employers. I know Ted is probably reading this and is about to have a stroke, so I won’t go on about how I think healthcare reform should be. BUT….

    Now I have a question for you: Presumably, we can agree that the reason we are reforming healthcare in the US is because of cost, yes? And if the Obama plan passes, it is very likely that the private insurance companies will be unable to compete with the Fed plan, so employers will push employees toward and individuals will opt for the Federal plan, yes? So we will end up with a single payer plan, yes? So, how is a single payer system going to bring down the cost of care? Before you answer, consider how Medicare works (we’ll take Medicare as the prototype government-run health plan, yes?). Medicare is a fee-for-service plan that has in place the same incentives for providing more care that our current system has. From my perspective as a physician on salary at a public hospital taking care of the uninsured and indigent patients, a single payer system that covers everyone would be a dream come true. But you can see that if we’re getting paid Medicare rates for patients that we previously didn’t get paid anything (or very little from the Tobacco Fund or other special funds set up to pay for indigent care) our revenue stream will increase substantially. Who pays for that? Taxes? Yikes! There goes the recovery and any hope of anything but European-sized GDP growth. Ok, you say, you’ll reduce rates, since now the Feds are truly a monopsony power in the market. Hospital profits go down, but they’re still in business. You reduce doctors’ fees, making it less lucrative to provide more care (although current Medicare fees have already been cut about 75% from what they were in the 1980s (example, anesthesiologists’ fees were $60 per unit, were cut to $14 per unit, were recently increased to almost $18 per unit). What’s to prevent the rest of the US from turning into a McAllen, Texas, providing even more care to generate more revenue on those assets? Everyone who sets foot in an Emergency Department gets a CT scan already…maybe they’ll start scanning the patients’ relatives looking for disease. Want to set up criteria and parameters that must be met to justify the test or procedure? No problem, they’ll be met: they tried that a few years ago, requiring physicians and surgeons to call a Medicare hotline 24/7 to talk to someone at a computer with a database, found virtually everyone met the criteria. No one is going to deny care over the phone that has been recommended by a doctor who has examined the patient. Second opinion? They tried that a few years ago as well, they had to pay the second opinion who just agreed with the first opinion almost every time. It seems there isn’t a lot of unindicated care being provided to patients out there, eh?
    Another problem that has occurred is that the opportunity cost of taking care of patients becomes too high considering the reduced fees, so while doctors don’t mind seeing as many patients as their office furniture and standing room will physically permit in their fixed-overhead office during business hours, no one wants to see them after hours, “…call someone else, I’m not available”. Did you know that these days, hospitals have been paying specialists a stipend to take call in the Emergency Departments? And that’s before any fee cut your single payer government mandates.
    One last thing, and then I’ll stop my rant: I can’t tell you how many times patients or their families have told me “we want everything done”. OK for the person who has more life ahead of him or her, but, for example, what about the 103 year old great grandmother who can’t see over the bed rails, doesn’t know what planet this is, hasn’t been able to hold a conversation for years, and has pneumonia…family insists on an ICU bed, a feeding tube, antibiotics, oh…EKG is abnormal, better get the cardiologist, on the respirator with the intensivist and pulmonologist who bronchoscopes the patient every day…you get the picture. Advocacy groups have been successful in getting legislatures to pass laws that provide hotlines for nurses or family members to call if they think their elderly incapacitated patient or relative is being denied care, and there’s always the threat of getting sued. Of course, if they were told the bill would be paid out of Grandma’s estate or if the family had to pony up some of the dough, would their decision to demand futile care be any different?
    There’s more than one reason our health care costs so much, it’s not just doctors pushing care to make bucks. So, given the current US healthcare scene, how does a single payer system save money?

73. Grrrrr … sorry to go on here.

    I am very upset with the for-profit American health industry for showing up in my province and causing such a huge ruckus for the past decade. It must have been NAFTA that made them think they could set up shop in Canada. They built these private clinics in my city that probably are empty.

    They are also afraid the United States will adopt universal healthcare so they trash and heap insult on our healthcare system and our culture. They drown out genuine dialogue on how to improve our healthcare system through better allocation of resources, prevention and education.

    I’ve learned new vocabulary since joining Baseline. My conclusion is for-profit healthcare is a “rent seeking” industry.

74. well …
    until the first(?) reform of our health care system decades ago (because the cost were unsustainable) I and all my office colleagues never ever paid for visiting a spa
    all you had to do was visit a doctor complain about back ache and get a free 6 times attendance to water gymnastics which would be extended to another 6 and another 6 as long as you wanted. The same applied to massages. Nobody minded visiting their friendly GP and exchange a wink.
    but maybe only us devious old European patients and doctors would behave in such system abusing ways. ;-)

75. Dr. Siegel,
    Your post prior to this one saying 85% of Americans were satisfied with their healthcare was a load of doggy doo. YOU KNEW it was doggy doo when you typed it and everyone on this site knew. It doesn’t even pass the smell test. When I read that, I thought you might be the official vote counter for Ahmadinejad in Iran.
    This post was BS also, but most of it was PLAUSIBLE BS. I suffered a heavy stroke about 1/3 of the way through it. Hope your liability insurance covers induced comas. haha

76. Gee, Ted, George Will, syndicated colomnist for the WashPost used the figure of 70% just yesteday in his editorial about healthcare reform. Our hospital does patient satisfaction surveys, as do most hospitals, and our “satisfied or very satisfied” rating among the uninsured and indigent and state-sponsored patients is well over 80%. The polls I suggested when I answered your other reply are legitimate polls, multiple ones by different sources. Polls aren’t scientific facts, and perhaps I should have just said “the majority of Americans are satisfied with the quality of their health care”, which is what all these polls said, and what my point was in my original post, even though it wasn’t the main point. So, Ted, can we agree that a majority of Americans are satisfied with the quality of their care, but the cost or that care seems to a concern to many?

77. This exercise has been very helpful. It might explain what might have happened to healthcare in my province over the past decade. Here is my “original” insight.

    With NAFTA the for-profit American health industry saw Canada as a potential market. 35 million taxpaying citizens covered by universal health care. American corporations have claimed Canada subsidizes industry with universal health care and therefore there is unfair competition. To level the Free Trade playing field Canada needs to dismantle universal healthcare.

    But that was going to be a very tough political fight.

    So the for-profit American health industry had to figure out a way to convince Canadians we would be better off with lower taxation and private healthcare. (Hence right-wing think tanks like the Fraser Institute.)

    Over the past decade, there has been a huge fight between the health care unions and the government over privatization of healthcare. There have been huge, confusing advertising campaigns telling British Columbians our healthcare system is failing.

    The campaign message is universal healthcare is “unsustainable”. Costs are skyrocketing. There is not enough — specialists, diagnostic imaging, laboratory testing, elective surgeries, lack of access to state-of-the art treatments, technology and drugs —- and this is causing long waitlists and patients untold suffering.

    In the meantime, British Columbians live in a place with some of the best — fresh-powder skiing and snowboarding, kayaking, windsurfing, whitewater rafting, mountain climbing, rock climbing, back country hiking, outdoor recreation — in the world. Much of our general population is very healthy. We don’t need a lot of medical care.

    In the meantime a “trojan horse” for the for-profit American health industry Dr. Brian Day immigrates to Canada and sets up shop in British Columbia. (Lately, Dr. Day has appeared with Rick Scott and Conservatives for Patients Rights in American TV ads explaining how bad universal healthcare is in Canada.)

    Now, I could have my facts wrong here, but I think Dr. Day immigrated from South Africa about the time Apartheid ended. I wonder if part of his problem is, he cannot get a grip on the fact he is not going to make as money practicing medicine in Canada as he would have in Apartheid South Africa.

    So what did Dr. Gawande’s McAllen study find? The huge cost of — specialists, diagnostic imaging, laboratory testing, surgeries, state-of-the art treatments, technology and drugs — does not equate with better health outcomes. But it does equate to higher healthcare costs (more profit-taking).

    This may be why for the past decade the for-profit health lobby has been trying to convince British Columbians our universal health care system is failing because we do not have enough: specialists, diagnostic imaging, laboratory testing, elective surgeries, surgery in general, hip replacements, knee replacements, state-of-the-art medical treatments, technology and drugs.

    Sound familiar?

78. I know that Atul Gawande uses Medicare costs as the “best source” of pricing info for health care.

    (Can someone please explain to me why Medicare provides the best source of health care costs? Why can’t we figure out costs based on the private market rates available to the rest of us?)

    And I know Gawande points to the conditions in a poverty-stricken town, with a high rate of obesity, as the poster child for “the cost conundrum” of healthcare.

    But as someone who is years away from Medicare, not old or obese or living within the poverty level – someone with three small children and a freelance career that requires us to self-pay for our insurance, I’d LOVE it if someone could explain to me why the five year well child check up for my twins was billed for more than $1000?

    We spent about 40 minutes in the exam room – each girl got two vaccines. The ped billed the insurance company $508 per child – so more than $1000 for two children – less than one hour in the office. The doc ended up getting $600 from insurance and wants $70 from us.

    Here’s a breakdown of the fees for a well care vist for a healthy five year old child:

    $79 for a polio vaccine
    -$159 for the chicken pox vaccine
    -$172 for the visit with the ped
    -$37 to check out their development (strange how that’s in addition to the visit)
    -$39 administrative fee to administer the first vaccine
    -$22 to administer the second vaccine.

    Keep in mind that this check up is required before my girls can go to kindergarten in the fall. And also be aware that my health insurance rep assured me these charges are the “norm” for this kind of checkup.

    Using McAllen – the outlier – as an example of “what’s wrong” is not the way to go. The idea that our healthcare is absurdly expensive because we overtreat the old and fat is in fact a smokescreen.

    Let’s start breaking down costs for treating healthy people. WHY IS IT SO EXPENSIVE?

    How’s Blue Cross’s profit this year? Pretty good, right?

79. Anne,
    I think Gawande uses the Medicare numbers because those numbers are well documented and it does give you a good general idea. And Gawande chose to visit McAllen BECAUSE it is an extreme example, and therefor it’s easy to pick out the problems there. It’s certainly not scientific research, but McAllen is quite instructional on the problems. It seems you’re very hungry for knowledge on this. Of course with 2 young children, I know it must be frustrating. I want to suggest an Economist/writer who has a blog over at the NYT to you. I think he is the best writer when it comes to questions of health costs. I think (I’m not certain) you can even ask him questions directly and he might choose your question to answer. But he has many many articles and books on healthcare. Here is the link.
    http://economix.blogs.nytimes.com/author/uwe-e-reinhardt/

80. Thanks Ted for the link.

    I have to disagree that focusing on the extreme end makes it easier to pick out problems. The problems are systemic – but to focus the discussion on an outlier community (filled with obese, elderly, poor patients) is like saying the health issues of Mt Everest climbers are “the norm.”

    When there are communities like El Paso who do the same for half the price – let’s talk about what they’re doing.

    And is that even enough? I was literally stunned to learn that the costs for the five year well child ped visit for my twins came to more than $1000. And let me say this again – they are healthy children! This was their annual visit mandated before entering kindergarten.

    To point to the “over use” of medicine on the elderly and obese in a very poor town as the example of what we face is (for me – and clearly, I’m an outlier in thinking this!) a terrible oversimplification of the issue.

81. Also, I could easily be wrong on this, but it was my understanding the Medicare costs are less than the going rate for the private market. Or at least I periodically seem to read stories about how the artificially low rates for Medicare reimbursement force everyone else to pay more.

    To get a real world sense of costs, I think it is important to look at costs in the private sector, not just Medicare.

82. Ted K: “Why would ANYONE bother buying insurance if they thought they saved more money without insurance??”

    Because they can’t afford catastrophic costs. And so they are willing to pay more than the average cost to be insured against catastrophic cost. Saving money is not part of the normal insurance calculation. Why it should be part of the calculation for medical insurance is bizarre.

83. Anne,
    I feel tired for some reason. Of course Medicare is cheaper Anne, but the quality of care they got is probably lower than what your children get. Many doctors absolutely refuse to take Medicare patients. So, which type of Doctors (generally) do you think take the Medicare patients????
    If you don’t get insurance through your employer I assume you have to do it the old fashioned way. Phone companies or search online and compare the cost of policies that are suitable for your family. The way I understand it, insurance can be quite different between the states, so you have to look yourself. Otherwise do a search or use the Uwe E. Reinhardt site. I know he has per capita for Medicare, per capita for privately insured through employer. I couldn’t find numbers for self-employed. They also have co-ops for self-employed. If you’re self-employed a co-op might be a very good choice. Just hunt around. I know some artists form insurance co-ops, and self-employed people in web design sometimes form co-ops.

84. My reply to you is below, toward the end of this thread.

85. Very good post and great comments.

    I’ve just included a link Jame’s post here in my own blogpost on Health Care Cost Reduction:

    http://findingourdream.blogspot.com/2009/06/good-healthcare-ideas-help-think-up-new.html

    where I offer some ideas on specific incentives that should work in the real world.

    Also, there is a big-idea about how to make a public plan *much* more affordable.

    I’d love to get feedback from readers here.

86. Anne,

    You need comprehensive healthcare that includes (1) family medicine, (2) primary and tertiary care, (3) insurance against the cost of catastrophic illness and injury. Furthermore, this healthcare must be affordable.

    This is called socialized medicine. You can’t find this in a free-market.

87. It’s called universal health care in Canada.

88. Pingback: Business Items :: Health Care and Whimsy

89. Ted:
    These are from today’s IBD editorial page, Lawrence Kudlow’s piece:

    -“…an ABC News-USA Today-Kaiser Family Foundation survey showing that 89% of Americans are satisfied with their health care.”

    -“In a new Pew Research Center poll, only 41% of those surveyed believe the U.S. health care system needs to be completely rebuilt.”

    -“In a new CBS-New York Times poll, 38% say the economy is the most important problem facing the U.S., 19% say jobs and only 7% say health care. In an NBC-Wall Street Journal poll on the same question, 24% say the budget deficit is today’s most worrisome problem while only 11% say health care.”

    -“According to the Census Bureau we don’t have 47 million folks who are truly uninsured. When you take college kids plus those earning $75,000 or more who choose not to sign up for a health care plan, roughly 20 million people are removed from the list of uninsured. After that you can remove the 10 million who are not U.S. citizens and the 11 million eligible for SCHIP and Medicaid but for some reason have not signed up for those programs. That leaves only 10 million to 15 million people among the long-term uninsured.”

90. Hey, anyone here ever heard of a guy named Milton Friedman? He was an American economist, rather well known, Professor at U. Chicago, Fellow at the Hoover Institute at Stanford, won the Nobel in Economics 1976, died 2006. A remarkable man. Anyway, he addressed the health care cost issue in a paper he wrote in 2001. He traces the government’s involvement in paying for health care to the root of the exploding costs that everyone finds so troubling. Here’s the beginning of his conclusion:

    “The high cost and inequitable character of our medical care system are the direct result of our steady movement toward reliance on third-party payment. A cure requires reversing course, reprivatizing medical care by eliminating most third-party payment, and restoring the role of insurance to providing protection against major medical catastrophes.
    The ideal way to do that would be to reverse past actions: repeal the tax exemption of employer-provided medical care; terminate Medicare and Medicaid; deregulate most insurance; and restrict the role of the government, preferably state and local rather than federal, to financing care for the hard cases. However, the vested interests that have grown up around the existing system, and the tyranny of the status quo, clearly make that solution not feasible politically. Yet it is worth stating the ideal as a guide to judging whether proposed incremental changes are in the right direction.”

    Here’s the link to the paper: http://www.hoover.org/publications/digest/3459466.html

    Perhaps our moderator, Mr. Kwak, would care to comment?

91. Hey, where did everybody go? Don’t you want to discuss healthcare reform anymore? Just when we were getting to be such good friends! Ted? Are you there?

92. The silence is deafening….and gratifying.

93. As the article (and Ella) indirectly point out, the existing Medicare system has a critical component missing: there is no transactional control of a Doctor’s choice to spend treatment dollars. It requires no genius to see that this is the opposite of standard private insurance practice. Those simplistic debating points about how the Government will use public health options to get between you and your doctor? They are clearly not true. Meanwhile, a few savvy small town businesspeople–doctors in this case–have clearly worked at being more effective at getting paid. The doctors “sell” more billable work.

94. John,

    Don’t feel so gratified so quickly.

    Ted K. probably hemorrhaged into unconsciousness while reposing on a gurney in the hallway of his local E.R.

    Unfortunately, the residents were unable to attend to him because code rooms 1 and 2 were occupied by 450 pound Diabetes T2 patients who had suffered acute MI’s.

    But it’s okay, because as you claim, 85% of Americans are satisfied with the present health care system.

    Oddly, I worked at one of the most respected hospitals in the country, if not the world, and I can’t remember a day when 85% of our patients were satisfied with the health care system. Then again, I can’t remember a day when 85% of doctors and nurses were satisfied with the health care system, either. Perhaps only surgeons are satisfied, but I think that’s because they’re copping something from the anesthesiologists.

    As for Milton Friedman, I’m familiar with Milton Friedman. (“I knew Milton Friedman, and Doctor… you’re no Milton Friedman!”) Unfortunately, old Milton wasn’t so familiar with Adam Smith, but that’s another story.

    And as the world has recently learned, it was the deregulatory fanaticism favored by Milton Friedman that contributed heavily to the GEC (global econ. crisis.)

    BTW, I question your earlier numbers for AMA membership. It may be a good ten percentage points lower than you claim.

    I also question why you didn’t respond to Ted K’s questions about your five bogus links. He brought this up on June 23 at 3:45 p.m., and you avoided responding to him at all.

    So be it. If he doesn’t respond to you tomorrow, I will.

95. OK. Disclosure required: I am a retired surgeon who took all patients regardless of insurance status or lack thereof [unless the patient was required to go elsewhere because they were in an HMO] for all of my 25 years in private practice.
    I would propose that there are two different issues here, one of which this blog is on top of and the other of which, though it is at the heart of Dr. Gawande’s brilliant article, hasn’t been mentioned:

    1) Ways to re-design the payment system so that it’s equitable to all players–remember the old saw that finding a compromise nobody likes probably means it’s a good compromise.

    2) Ways to change medical delivery so that it is more efficient–less, but appropriate, treatment at lower overall system cost. This REQUIRES finding incentives for physicians to ‘do the right thing.’

    I’ll ignore #1 because you’ve covered it pretty well. Many different redesigns possible, each with many plusses and minuses. For those of you interested in an optimal solution, please read “A Second Opinion” by Dr. Arnold Relman. Short, pithy, well-written, and a gem, it needs wider readership. Pay attention, because it’s not just about single-payer health care. He pushes medical groups just as hard, and for good reason, I think. His proposal is not politically possible, but would be the best systemic solution, in my opinion.

    Lowering payment rates causes more widgets to be made, not fewer. And causes fewer doctors to take your plan. Many Medicare patients are having trouble finding a doctor due to low reimbursement. If everyone were on Medicare, more widgets. You really want that? It’s not more efficient. In fact, it’s less so. And, according to the existing evidence, more dangerous to your health!

    Yes, most patients are satisfied with their health care. I suspect the patients in El Paso County are just as happy as those in McAllen. It’s like congress–hate congress, love my congress person. Hate profit-mongering, thieving doctors–love my doctor. Put it to rest.

    Currently large groups have negotiating leverage over insurance companies, particularly if they have a large market share. The large clinic in my area receives much higher reimbursement rates for the same care than the IPA doctors. And guess who are the more cautious providers. And guess who also takes the Medicaid patients? The IPA doctors. So the IPA doctors get NO benefit from being good, efficient providers. In fact, they get burned several ways. “If you can’t beat ‘em, join ‘em” which is what many local IPA docs have done.

    Outcome studies and best practices don’t solve the problem. They take too long to do, are subject to lots of bickering and mis-steps, and are susceptible to being irrelevant in the face of new technology or medication. Look at the current controversy over the PSA test, prostate drugs and prostatectomy. You get experts pointing fingers and who’s to know what the right answer is? Certainly not the patient.

    Incentivizing physicians to be, in Dr. Gawande’s terms, ‘negative deviants’ will change the market, costs and outcomes faster, and more surely, than anything else. Some possibilities are: 1) Salaries, like the Mayo Clinic 2) HMO medicine with capitation–though the incentive here is to NOT do things. You want your doctor to do the right thing, not nothing. 3) Local fund-pooling insurance plans, which is how Grand Junction has done it. This makes local collaboration imperative. Any other ideas out there? I’m currently researching this problem and would love some more suggestions.

    Thanks. Keep up the good work.

96. This for Comet Schmutz:

    Oh…there’s still someone out there…I responded to Ted…twice. I’ve never heard of the free market principles championed by Milton Friedman referred to as “deregulatory fanaticism”, and I think he understood quite well that “invisible hand”, but I guess I’ll just smile and roll my eyes. Same for Ted’s (and maybe your?) preference to ignore polls from diverse and reputable news organizations in lieu of anecdotal experience (doing what?) at some hospital, some time ago, where you don’t say whether data was even collected or how….smile and roll eyes….I’ve been doing that alot lately, in response to many of the posts here, and when I listen to the President’s rhetoric about healthcare reform, and most of the rest of what he and his band of thugs are doing to our economy and our country and our world… sigh…… what more can I do, elections do have consequences, alas.
    I hope when (if) you respond to me tomorrow as you promised (?threatened), you’ll have something to say about healthcare reform, and how we can improve quality while controlling costs…more government involvement ain’t it.

97. John, how else to put the 35% insurance company administrative overhead toward paying for care? That’s ‘wasted’ dollars because it doesn’t provide any care. Relman calls it ‘parasitic’. Take that factor out of our system and we might look almost competitive with Canada or Europe, which don’t have that large an overhead.

98. Okay, “Dr.” Siegel, I’ll take up your challenge.

    1) Since you claim that Friedman understood “quite well” what Adam Smith meant by “the invisible hand”, why don’t you tell us both a) what Adam Smith meant by the invisible hand, and b) how Milton Friedman interpreted it? You can reference “The Wealth of Nations” online through Project Gutenberg IF YOU DO NOT ALREADY OWN IT. It’s a great read, especially in conjunction with his “Moral Sentiments.” As you may notice in the text of “W of N”, Smith makes note that regulation is a necessary component of the free market. And rest assured Smith would have been appalled by what passes as the free market today – giant corporations squeezing small businessmen out of the picture. In fact, it was the tendency of large mercantile interests to squeeze out the small producer that forced Adam Smith’s realization that regulation was necessary. (Early trust-busting, if you will.) But if you haven’t read Smith’s Wealth of Nations, if you haven’t read what Adam Smith meant by the free market, you wouldn’t know that.

    2) At what point in modern history did Adam Smith cease to be recognized as a socialist, and come to be embraced by the likes of Milton Friedman? Please cite relevant economists and historians. Because contrary to your apparently limited understanding, Smith was regarded as a socialist for many decades before Friedman et alia decided that he was not a socialist. Again, if you haven’t read the book, or the history of economics, you wouldn’t know that.

    3) “Smile and roll… eyes…” ? (No surgeon, you; I suspect you’re a hack PR writer for the AMA – and not a very good one.)

    4) Ted did not ignore polls “from diverse and reputable news organizations” – he pointed out quite rightly that at least five links you provided did not support what you were saying in the lezst, and you ignored that post.

    5) If you are, as you claim, a surgeon, and not a hack for the AMA, where do you practice? Or, at least, where did you study medicine? Where did you do your internship and residency?

    6) You refer to the president’s “band of thugs”? I’m sorry, what on earth do you mean by that EXACTLY? Please explain how the current administration somehow out-thugs the past administration?

    7) Per your invitation to explain my position on healthcare reform and how to improve quality while controlling costs:

    You and the rest of the posters here are missing the point. The AMA, the Obama administration, the hospital corporations, the pharmaceutical companies, and well-meaning bloggers such as James Kwak (a McKinsey or a Bain consultant? I’ve forgotten which), Dr. Robert L39, etc, continue to frame this as a discussion of how we are going to pay for health care. There is relatively little attention paid to how we can work together ACROSS industries to PREVENT costly illness for which we taxpayers must pay in one way or another.

    Currently, the biggest budget busters for the states are Type II diabetes and heart disease – both are preventable. In California, the cost to the state of overweight and obesity related illness (largely T2 Diabetes and heart disease) was $23 billion in 2003. This number was not significantly reduced in the intervening years. Extrapolate that number out across the states and you are talking about hundreds of billions of dollars for the US on an annual basis.

    Every worthy doctor I know is interested in preventing these pointless and costly diseases. Unfortunately, neither the institutions they work within, nor the current administration is interested in addressing the issues.

    As Dr. Dean Ornish has pointed out, the heart disease patient can derive better results through a combination of diet and exercise than through invasive procedures (such as stents). Unfortunately, there are two problems:

    a) the hospital cannot bill for diet and exercise (although I think it SHOULD as part of a cross-industry educational prevention program), and

    b) there are far too many patients who are unmotivated, inactive, overweight, and uneducated about their own responsibility for their health care. This slovenliness is facilitated by a medical industry that would prefer to hand them a pill or a procedure – in part because it is more profitable than making them healthy.

    The obscene amount of money that goes into treating preventable illness drives up the price for people like Anne, who has brought up the (yes, anecdotal) issue of the enormous expense for her children’s basic health care.

    And SO, in conclusion, I DISAGREE that “more government involvement ain’t it” as you so eloquently put it. We need a force majeure government initiative to prevent T2 Diabetes and heart disease – this is going to have to be cross-industry, which means the processed food industry, the public schools, the medical profession, the nursing profession.

    The point is to reach patients before they get sick – so reinstate and rev up Physical Education programs, nutrition programs, restrict food coupons to healthy foods only – no hostess cupcakes with that food stamp – and a major public awareness campaign that will play 24/7 on television.

    That’s government intervention, and that’s what it’s going to take.

99. Robert (and others), I’ve done significant updates to my blogpost, both on what is “effective” care and on incentives. If you search on those terms there, I’d be curious for your thoughts. (I’m also considering more on incentives, and gathering information/ideas.)

    –Hal

100. Robert (and others), I’ve done significant updates to my blogpost, both on what is “effective” care and on incentives. If you search on those terms there, I’d be curious for your thoughts. (I’m also considering more on incentives, and gathering information/ideas.)

     –Hal

101. Preventative care is indeed important, and that seems to be your interest, but it’s not the subject of this discussion. It seems you are a true believer in the nanny state, where the government is the answer to all of life’s problems, but again that is not the subject I was addressing. So if all the “well-meaning bloggers” (is that to imply the rest of us are not well-meaning?) are framing the discussion on this website around paying for the care of those who need care now, perhaps it is you who are missing the point. Why do you blame us for “…patients who are unmotivated, inactive, overweight andundeducated about their own responsibility for their health care”? Is it possible that they will be motivated to stop smoking and lose weight if their health insurance premiums reflect a healthier lifestyle? That surely won’t happen with government-run health care or any health care where the patient is shielded from the cost of care. What do “…physicial education programs, nutritional programs,” and restricting “food coupons to healthy foods only” have to do with providing and paying for care needed by a patient in the emergency room now with appendicitis or in my clinic now with colon cancer? What does preventing T2 diabetes and heart disease have to do with being able to staff my trauma center with competent well trained surgeons 24/7 today? If your point is that a healthier population will require less care, I couldn’t agree with you more….but that’s not the subject here, and that’s not what my immediate concern is as Washington speaks of healthcare reform.

     Regarding the rest of your post, several points you make are interesting, the rest is horse pucky, and all of it is irrelevant. But thanks for playing….

102. “Dr.” Siegel,

     1) I know of no actual doctors who can’t make the connection between preventive care TODAY and reducing costs over the next six months and beyond.

     2) This is why I question whether you are actually what you claim to be. Again, I invite you to provide your credentials.

     3) Accusing someone of being a true believer in the nanny state is not an valid response to the serious health care issues I raised.

     4) You ask: “Why do you blame us for ‘…patients who are unmotivated, inactive, overweight andundeducated about their own responsibility for their health care”?

     I fault the medical profession for failing to make the connection that they are not successfully providing “health care” but only providing inadequate “fixes” to problems you should have circumvented through communication and guidance of the patient. If you were unable to do this on your own, you were ethically bound to coordinate with other groups to achieve this, instead of wracking up unnecessary surgeries to your economic benefit, and the patient’s misfortune.

     I am sorry that you cannot make money by coordinating with other industries to reduce heart disease. But as a physician, it is not your job to perform unnecessary procedures.

     5) “Dr.” Siegel, how can you claim that prevention “surely won’t happen with government-run health care or any health care where the patient is shielded from the cost of care.”

     It can, if the program is comprehensive and far-sighted enough to comprise preventive care.

     6) “What do ‘…physicial education programs, nutritional programs,” and restricting ‘food coupons to healthy foods only’ have to do with providing and paying for care needed by a patient in the emergency room now with appendicitis or in my clinic now with colon cancer?

     How many cases of surgery-requiring appendicitis do you have to deal with out in the ER or in the clinic every day? Or every week? Or even every month? (Are you sure you’re a surgeon?)

     The reality is that appendicitis sufferers make up a very small number of overall patients. Stents, angioplasties, insertion of pacemakers, knee surgeries, hip surgeries, et cetera are much more common. And the incidence of those surgeries can be dramatically reduced by prevention, as they are largely related to overweight and obesity. The incidence of those surgeries can be dramatically reduced not in a matter of years, but in a matter of months.

     7) “What does preventing T2 diabetes and heart disease have to do with being able to staff my trauma center with competent well trained surgeons 24/7 today?”

     Obviously, prevention of T2 diabetes and heart disease (the two tend to go hand in hand after a couple of years of T2) means that the trauma center you claim to work in will not be overloaded with people “requiring” stents. Do you get it?

     8) “Regarding the rest of your post, several points you make are interesting, the rest is horse pucky, and all of it is irrelevant. But thanks for playing….”

     You won’t convince anyone here with statements like that.

     But as long as you feel free to use the term ‘horse pucky,” I will ask: What part is “horse pucky”? Or are you simply too intellectually lazy to read Adam Smith and Milton Friedman, and to actually figure out what they wrote, and why they wrote it? Is it just that it’s easier for you, rather than looking into the issue, to simply dismiss anyone who questions your belief system, as “horse pucky”?

103. Thanks Comet for a brilliant defense.

104. This is a great post. Thanks for your perspective.

105. As I noted in my post above, it’s all about changing the incentives. Part of optimal care is doing preventive care. Primary care doctors largely understand that, and should get rewarded for making sure their patients have preventive services, but many do not and so those services are underperformed. Pay ’em to treat end results? They’ll treat end results. Pay ’em to do lots of preventive care? They’ll do it.
     And could you please tone it down or stop posting? Stop yelling and either talk or leave. Just because you can’t see the guy doesn’t mean you shouldn’t be civil, and you aren’t being the least bit civil. Knock it off, please.

106. I posted there today. Hope it helps. I’d like to see your post be a little more organized. It’s kinda’ scattered and hard to follow.

107. I think Schmutz was being more civilized than Dr. Siegel, and Schmutz presented a much better argument. But anyway, we’re not going to solve the world’s problems in blog posts. I think it’s very obvious to everyone that the current system doesn’t work, and it’s also obvious that much less than 50% of Americans are happy with health care now (instead of Dr. Siegel’s 89%). And the doctors who think that American Health Care should remain status quo are what I call “LUDICROUSLY LAUGHABLE LEECHES”. Take that William Safire!!! haha

108. RobertL39,

     Tone it down or stop posting? I appreciate what you’re saying, but do you think there might be a double standard here?

     I just want to be clear:

     1) if you call what someone writes “horse pucky” and dismiss it by saying “all of it is irrelevant” as John Siegel did, that’s okay? But I’m uncivil?

     2) Or if you call the current administration a “band of thugs” as Siegel did, that’s okay? But I’m uncivil?

     3) Or if, when your poor understanding of enlightenment thinkers is called into question, you write “I just smile and roll my eyes” as Siegel has done, instead of actually just acknowledging that you’re perpetuating false information about a book you’ve clearly never read, that’s okay? But I’m uncivil?

     4) Of if, instead of acknowledging that there is the possibility of a more comprehensive program that would actually reduce patient illness, you accuse them of desiring “a nanny state” as Dr. Siegel has done, that’s okay? But I’m uncivil?

     But someone who forcefully disagrees with Siegel – or who brings a perspective that holds medicine to the standard that it probably should be held – is uncivil? Are you perhaps a little sensitive about the profession you say you retired from?

     RobertL39, I’d be much more accepting of your criticism if I felt that you weren’t reading very selectively.

     I’ve given John Siegel many opportunities to respond point by point. I even numbered them for him. He responded by denying that preventive care would have any impact on his practice. This is mind-boggling.

     I do think it is worthwhile to ask questions when someone whips out his “credentials” as a surgeon, and then insists he has no problem with the insurance companies. That’s an unusual assertion, and people will ask questions.

     Or is the part you find most objectionable the fact that I, like many other Americans who have worked in health care, people who served physicians closely, and watched them attentively – now voice serious questions about the integrity not just of the AMA, but of the medical profession overall and the institutions in which it operates?

     And that we refuse to support your assertion that the majority of Americans are happy with the health care system as it exists?

     I can’t apologize for that.

109. Thanks. This whole selective focus on civility reminds me of the brouhaha when some congressperson was asked by President Bush “how his boy was” and the congressperson replied that he was concerned for his son because his son was being deployed to Iraq – and Bush became angry and countered, “That’s now what I asked – I asked you how your boy was!”

     And all the DC doyennes of civility excoriated the “bad form” of the congressperson, without ever acknowledging that the real issue of “bad form” was our hare-brained escapade in Iraq, which had already taken the lives of more US service people than ever died in the 9.11 attacks.

     Some guy in Harper’s wrote about it, I can’t find the issue.

110. anytime!

111. Here’s a link to the Mark Slouka June 2008 piece in Harper’s – while Bush was in office, but not entirely without relevance now. He gets to the Webb-Bush exchange I mentioned in paragraph six.

     I am thinking of physically mailing a copy to James Kwak, a good and smart man who, I worry, runs the risk of being finally broken by the white-glove docility expected of his corporate employers:

     http://www.harpers.org/archive/2008/06/0082039

     excerpt:

     “Hess wasn’t the only one to be shocked by Webb’s behavior. Letitia Baldrige, the “doyenne of Washington manners,” termed the whole thing “a sad exchange.” Judith Martin, a.k.a. Miss Manners, made the point that “even discussions of war and life and death did not justify suspending the rules,” then declined to comment on l’affaire Webb-Bush, saying, “It would be rude of me to declare an individual rude.”

     “But it was left to Kate Zernike, the author of the Times article, to place the cherry atop this shameful confection in the form of a seemingly offhand parenthetical: “(On criticizing the president in his own house, Ms. Baldrige quotes the French: ça ne se fait pas—‘it is not done.’)”

     “To which one might reply, in the parlance of my native town: Why the fuck not? Répétez après moi: It ain’t the man’s house. We’re letting him borrow it for a time. And he should behave accordingly—that is, as one cognizant of the honor bestowed upon him—or risk being evicted by the people in favor of a more suitable tenant…..

     After a worthwhile comparison of the how thoroughly the British press treats Tony Blair v. how our press corps babies the president, Slouka moves on to de Toqueville and finally concludes:

     “There’s another possibility. Maybe we’re not out on the street protesting this administration’s abuses of power because we’re no longer the people we once were, because we’ve been effectively bred for docility. Equality, Tocqueville pointed out, “insinuates deep into the heart and mind of every man some vague notion and some instinctive inclination toward political freedom.” And inequality? Might it not, by precisely the same calculus, insinuate “some instinctive inclination” toward political tyranny? Of course it might. Once the idea of inequality is allowed to take root, a veritable forest of ritualized gestures and phrases springs up to reinforce it. The notion that some bow and others are bowed to comes to seem natural; the cool touch of the floor against our forehead begins to feel right: from classroom to corporate cubicle to the halls of Congress, deferential way leads on to deferential way, and at the end of the road, as Tocqueville foresaw, stands a baaa-ing polity “reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.”

     “Lincoln had it right: “If destruction be our lot we must ourselves be its author and finisher.” We’re off to a fine start.”

112. Who are my “corporate employers?” I’m a law student, and for the summer, I’m a volunteer intern at a legal services organization.

113. James, thanks for your question. I’d reply directly under your question, but there is no little “reply” button showing up there, so please excuse the new location for this reply:

     You may not currently be employed by McKinsey, but you were.

     Given the vast network McKinsey lays claim to, it is reasonable to ask whether anyone ever actually leaves McKinsey.

     That network, and those connections, are very valuable.

     I have no doubt that you understand intellectually how people are shaped and influenced by their industries… but I question – sincerely, not snarkily – whether you are conscious of how that network and those connections affects your writing on the variety of topics you handle here.

     (Full disclosure: I happen to like your writing and I agree with a great deal of what you write – Posner aside.)

     On a minor level: most people understand that the management consulting sector “consults” individual corporations, including pharmaceutical companies, and that alone should probably raise questions when you are writing about health care reform.

     That’s not paranoia, James. That’s due diligence on the reader’s part.

     Separate from that, a smaller group of people remains aware of the influence that management consulting firms have with a variety of governmental agencies. You may disagree with this premise and I respect that, but with that in mind, I do think it’s relevant for readers to ask questions about your links to McKinsey and how that might shape you.

     On an individual level, when you get your law degree, do you plan to return to management consulting? I ask because your aims with this blog seem very clear – you want reform. But if you are to return to management consulting – an “industry” which neither produces any tangible goods nor actively works for anything resembling reform – we should know, and yes, it should raise questions about your goals.

     Given that this blog is also devoted to exposing the “oligarchic” interests of the banks, isn’t it also valid to ask what role management consultants play in that oligarchy?

     These are not frivolous questions. There is an element of public pressure here, James. If I can get you to discuss publicly your role at McKinsey, perhaps I can eventually rescue a talented and smart individual such as yourself from returning to an industry that AGAIN neither produces anything tangible, nor actually works for the reform you claim to champion here.

     Having said all that, I look forward to your response, and I hope you enjoy the Slouka article.

114. Robert, if you haven’t see it by now, there’s a new post there that is much shorter, on incentives and how to control costs via incentives alone.

115. I guess you read what you want.
     Nowhere does John Siegel assail you personally. He did call some of what you wrote ‘horse pucky’. Yes, that is an attack on your thoughts and writing.
     You attack him personally: “Dr”, “are you really a doctor”, “do you get it”, “how many unnecessary surgeries…”, “it’s not your job to perform unnecessary procedures”… need I go on? By very rough count, in his 20 paragraphs, he uses derogatory language twice, or 10%. In your 39, you use it, directed at him, in 13, or 33%.
     Your number 1 above is accurate. 2-4 are not personal attacks on you. But you nail me with “profession you say you retired from”. Personal again. “…being broken by the white glove docility of his corporate employers.”–personal.
     I agree with most of what you say. Interestingly, I’m probably more on YOUR side of the discussion than John Siegel’s. But I have trouble hearing it because you shout rather than talk.
     Given that, and that I share most of your criticism of the medical profession, no, I’m not reading selectively. Since I do mostly agree with you, I’m sorry that you can’t see that the way you discuss puts people off. Sadly, it does your case a disservice.

116. RobertL39:

     “Nowhere does John Siegel assail you personally.”

     Nowhere did I say he did? I wrote that there was a selective reading on your part of what constituted “civil/uncivil” speech. I also wrote that he dodged the questions, and repeatedly dodged admitting when he had purposefully posted links that did not in the least support what he claimed they supported. I also wrote that he claimed knowledge of material he clearly had no knowledge of.

     “You attack him personally: “Dr”, “are you really a doctor”,

     If I question whether someone actually possesses the credentials he claims, is that a personal attack, or is it in the interest of maintaining some credibility in the exchange?

     And “do you get it” is quite mild compared to some of the previous posts here, but you raised no objection to those posts, which leads me to believe you are reading very selectively. The question is why?

     “how many unnecessary surgeries…”, “it’s not your job to perform unnecessary procedures”…

     These are not personal attacks, and certainly not in the context in which they written (which you have neatly, even surgically, removed), but references to a specific problem noted not just by Atul Gawande in The New Yorker Magazine, but several other sources.

     “By very rough count, in his 20 paragraphs, he uses derogatory language twice, or 10%. In your 39, you use it, directed at him, in 13, or 33%.”

     That is truly a very rough count, given that you define “derogatory” and “civil” in a very, very selective manner.

     “But you nail me with “profession you say you retired from”. Personal again. “

     No, I did not “nail” you, nor do I desire to “nail” you. I simply acknowledged what profession you claimed to have retired from.

     But Robert, to quote me as writing “…being broken by the white glove docility of his corporate employers” ignores that I praised James Kwak in the same sentence. The full phrase actually reads:

     “James Kwak, a good and smart man who, I worry, runs the risk of being finally broken by the white-glove docility expected of his corporate employers”

     and that hardly constitutes a personal attack. It is much more of a fraternal concern.

     And I’m sorry, but to continually insist that someone is shouting rather than talking is to take the focus off of the questions that were asked. And that does more of a disservice to you than to myself.

     You are welcome, nonetheless, to address the issue of preventive care, and the percentage by which we could reduce overall health care spending now.

117. Maybe if you thought of it as respect for the other person it might sink in. You completely fail to distinguish between personal attacks and a difference of opinion on a topic. For example, did anyone question your ‘medical experience’ credentials? It seems nothing will sink in, too much schmutz I guess, so I’ll drop it.
     Preventive care is like motherhood and apple pie. Can’t find anyone who’s against it! All doctors I know support it! But it’s hardly the panacea you claim it to be. I’ll let YOU tell the 68 yo female with a severely arthritic knee that she doesn’t deserve knee replacement because she’s overweight. In the realm of prevention, you might remember that it took forever to get smoking levels down. And they’re STILL not zero. We continue to see LOTS of smoking related illness. Obesity will be no different; probably more difficult, in fact. And, in the interim, someone has to take care of the lung cancer, the emphysema, and the peripheral vascular disease, and, believe it or not, that’s what doctors are trained to do.
     Yes, we need to do it. Socially ingrained habits are hard to break. It will take a long time and the existing problems have to be treated before the effect of prevention finally kicks in. If and when it does kick in. Don’t hold your breath waiting for it.

118. I posted there today. “Pay for Performance” hasn’t worked very well. Hospitals get paid for a diagnosis now and my sense is that that doesn’t work all that well either; it gets gamed a lot.

119. The rate of “medical bankruptcy” in Canada is about the same as in the U.S., maybe a little higher. The research by Warren/Himmelstein/Woolhandler has long been debunked. The latest is at http://tinyurl.com/n4j545. In their criticism of the original study, Dranove et al. concluded that 12% or 13% of U.S. personal bankruptcies can be reasonably attributed to medical bills (http://tinyurl.com/mtgnjy). In Canada, the proportion is 15% (at least among those 55-years old or older, http://tinyurl.com/novaf7).

120. Why would you buy a policy with such a characteristic? If the government freed you to buy a health-insurance policy other than the one that your employer chose for you (and you lost when you left your job) you would buy one that is guaranteed renewable for life (as described by Prof. John Cochrane of University of Chicago or Prof. Mark Pauly of UPenn, for example).

121. totally not true. A large part of the problem we are currently faced with is that older and sicker people are living longer and longer. This drives up health care costs, obviously. Yes, at times quality of life may become an issue, but regardless, we are able to keep very sick people alive much, much longer than in the 1970’s.

     And most (greater than 90%) of people diagnosed with cancer are “cured” and able to live many years longer. After $1,000’s in chemotherapy, surgery and radiation.

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