A Few Words on Health Care Reform and Medicare Buy-In

From Ezra Klein:

“[Doctors] should be forced to work in a way that doesn’t hurt society. That, after all, is the guiding principle behind the insurance reforms: Insurers will have to live with a market that society can live with. Similarly, providers will have to live within a market that society can afford. That will mean a strict budget, at least within the federal programs (and over time, as the private programs become unaffordable, they will probably come on budget as well). …

“It’s that or national bankruptcy. And the problem, if left untreated, will only get worse, and the eventual correction, when it comes, will only be more severe. That, however, is exactly what they’re asking Snowe, and the rest of Congress, to permit. The fear with Medicare buy-in is that Medicare pays somewhat lower rates than private insurers because it tries to live within a budget, even if it fails. But like it or not, that’s the future, or one variant of it.”

Am I being hypocritical in allowing Ezra Klein to use the words “national bankruptcy?”

I don’t think so, because as I said in the earlier post, the long-term debt problem is, and always has been, about health care costs. The financial crisis and recession didn’t help by adding 40% to our long-term national debt, but in the long term even that pales in comparison to Medicare. So if you are serious about our nation’s fiscal problem, and there is a big, big problem, you have to have a solution to health care — which most of the most strident “deficit hawks” don’t.

Ferguson, for example, goes on ominously about how entitlements (including Medicare) will eventually force us to reduce defense spending, marking the end of our superpower status; but all he says is that we need to balance the budget within the next five to ten years, without saying how, and without mentioning health care. This is silly. Balancing the budget in the next decade would be nice (from a fiscal standpoint), but it’s of questionable relevance. Successful measures to reduce long-term health care costs (“bend the curve”) will have little impact in the next 5-10 years (although the sooner we start them, the better), so the only way to balance the budget in that timeframe is by tackling second-order problems. There’s nothing wrong with solving second-order problems, but it won’t solve the long-term problem.

Whenever someone writes about the national debt and the decline and fall of America and doesn’t talk about reducing health care costs, I wonder what the purpose of the article was in the first place.

(OK, enough getting worked up. Now I have to do some real work.)

By James Kwak

55 responses to “A Few Words on Health Care Reform and Medicare Buy-In

  1. Dr. Kwak –

    The long-term fiscal problem is trivial to fix: Have government stop paying for people’s health care.

    I guess you do not like that solution? Well, in that case, there are only two ways to reduce health care costs: Increase supply, or reduce demand. All proposals, no matter how convoluted and “clever”, either (a) do one or both of these or (b) will not work.

    Could you explain what approach you advocate, exactly, for controlling health care costs, and how that approach will increase supply and/or decrease demand?

  2. Reduce demand by reducing payments for procedures of questionable or negative value. Demand in health care is driven by physicians as well as consumers, so if you reduce payments, you will reduce demand. Obviously there are a lot of details, but that’s the basic formula. It’s also what a lot of the cost-cutting measures in the reform bill do.

    I guess you might call this “reducing supply,” since with lower payments doctors will supply less in the way of service. But it works out to the same thing.

  3. Every doctor we train, probably anywhere in the world, takes the hippocratic oath and agrees to take care of people, not to let them die etc. As part of their professional code of ethics doctors have already socialized medicine. What they need is a structure that allows them to prosper, and attract the smartest people, so that their good deed does not go unrewarded by society.

    Thoughts

  4. Nemo: Don’t forget that demand for health-care services (at least in the US) is incredibly elastic. Higher supply leads more often to higher consumption, not to lower prices. I believe there is good data on this, not just anecdotes, but I have misplaced the references. (Perhaps another commenter can help me out.) Part of the problem is asymmetrical information (patients do not know whether services are effective or necessary). But to rely on supply and demand without fundamental structural reform is unlikely to work, either.

  5. Professor Kwak: I wouldn’t get too worked up over Ferguson. He is, after all, not an economist but a historian. By nature of his profession he is much more likely to get it right when he has the benefit of considerable passage of time.

  6. It strikes me as unlikely that, should the government decide to spend $1 trillion on something, the demand (and therefore) price of that something will go down.

    In particular, if the government decides to spend more on certain types of health care but less on other types (“procedures of questionable or negative value”, say), then the price of the former should rise and the price of the latter should fall.

    Here is my prediction. This health care “reform” will result in an increase in health care costs. Eventually we will “solve” the problem with price controls.

    We can check back in a few years to see how my prediction pans out.

  7. The problem in healthcare is obvious: we finance (expensive) cure while ignoring (cheap) wellness care. See: http://bit.ly/8NxWYG

    Moving America from a cure-focused society to a health-focused society is a huge undertaking, and one worthy of a major (government-finaced) effort. The mindset it requires would play an important role in restoring American competitiveness as the effort required means the acceptance of responsibility for consequences, goal orientation, and individual empowerment. If anything will bankrupt America, it will be our passive, blame-others mindset.

    I certainly don’t think that we have laid the health and wellness infrastructure necessary to allow us to make health care a right for Americans. A culture of wellness would be a big step in making this possible.

    If healthcare is a right, wellness is a responsibility.

  8. some guy in a cube

    Ferguson has an imperialist fetish, he’s not meant to be taken seriously by adults.

    As for health care costs and physicians whining about Medicare payouts, consider this: Open up the flood gates, import as many doctors as you can, drive physicians pay into the dirt!

  9. Nemo: Do I infer you advocate absolutely no role for the government? In your solution do we eliminate Medicare and the tax deduction for employer provided plans? Do we expose the populace to the ‘true cost’ and then just let the chips fall where they may?

    How do you set up the incentives in a health care ‘market’ to get efficiency? Do you think the average middle class family actually wants to bargain over emergency care? How do we ‘discover’ prices as we are being rushed to hospital?

    Criticizing the government from within the bounds of a model that is fatally flawed with respect to health care seems a little to Ayn Randian for me!

    Let the rich get care. As for the rest …

  10. … and offshore all medical education.

  11. Do I infer you advocate absolutely no role for the government?

    No. I am sympathetic to the notion that if (e.g.) you have blood in your urine, you should be able to see a doctor irrespective of your current employment status.

    But I object to people claiming that reaching that point will somehow not involve enormous costs and/or rationing of care. When the guy with blood in his urine gets to see a doctor, somebody else doesn’t. Who is that going to be? Do we let the market make that decision, or the state? Apparently, the answer is going to be “the state”. So just say that and stop giving me this B.S. that you are going to “reduce costs” by spending trillions of dollars.

  12. The larger problem about the cost of health care seems to me beyond the reach of economics because it entails a discussion about ethical choices and not simply supply and demand. As Nemo points out the supply/demand aspect can be fixed simply by allowing the market to rip free. The problem with this is that market based rationing would drastically cut into most people’s access to care. ‘Engineer’ hits the nail on the head: demand is incredibly elastic. Surprisingly, people do not treat the health as a regular ‘good’, they see it as a more basic requirement and thus do not behave ‘rationally’ in the face of sickness. This may surprise economists who see the world through the utopian lens of equilibrium and perfect information. It doesn’t surprise anyone else.

  13. i’m waiting for the day when someone creates fun, exciting, enjoyable medical procedures.

  14. One parting comment…

    I guess you might call this “reducing supply,” since with lower payments doctors will supply less in the way of service.

    With due respect, this misses my point. When I say “increase supply or reduce demand”, of course I am talking about supply and demand curves, not the absolute quantity supplied or demanded at any moment.

    For example, when you “reduce waste, fraud, and abuse”, you make the same health care available at a lower price. Equivalently, you make more health care available at the same price. That is, you shift the supply curve.

    My claim is that if the government gives lots of money to people to buy health care, it shifts the demand curve. If you want to talk about controlling costs, you need to explain how you intend to shift it in the other direction… Or how you intend to shift the supply curve in the same direction.

    All health care proposals — from tort reform to “financing preventative care” — need to be analyzed in this framework, IMO.

  15. Nemo:

    So we agree that rationing is inevitable. You prefer market rationing and I prefer state rationing [in this case]. The only problem I have with the ‘market’ advocates is that rather than admit to the existence of rationing they use elliptical phrases like ‘let the market decide’. I assume they do this to wash their hands of the ethical taint of rationing.
    I agree that the supply of health care is expensive and that we should suffer no illusions in that respect. In the context of our current ‘debate’ neither side seems to want to come clean and say what James began this thread by arguing: the entire point of reform is budgetary.
    All we seem to differ on is who should bear the brunt of the cost control.
    This is a discussion that should take place honestly and not behind the veil of ‘market’ jargon. People need to know that, under any plausible solution, they will have to pay more and consume less.

  16. I would just want these experts to describe how this national bankruptcy is supposed to play out? (If it’s the US will default on Social Security Treasuries obligations, then maybe I will grant them some intelligence).

    Also do some simple analysis – such as how many people are treated per Medicare dollar vs. private insured dollar.

    Maybe it’s not the doctors are demanding too much, but we would be more efficient with a more balanced distribution of public and private health care choices.

  17. I’m having a hard time not throwing my hands up in the air in frustration with James and these comments. With all due respect to Ezra Klein, if he thinks physician reimbursement is the primary problem, he’s either A) ignorant or B) an insurance/pharmaceutical shill.

    Please, please, please, can anyone here tell me how much of the total healthcare dollar physicians make? This is a rhetorical question, since I’ve posted on this multiple times. Given that amount, can anyone tell me how much cheaper the total cost of healthcare becomes if you eliminate physician income ENTIRELY? Assuming that your answers to the 2 previous questions are correct, do any of the comments regarding “reducing payments” make ANY sense?

    I’m for BETTER healthcare. Reducing payments will most definitely NOT achieve that goal.

  18. Pacr,

    Your point about rationing by the market is crucial.

    However, the point of reform is not soley about the budget, though the budget is important. Part of the point is that for a very high national price the US gets a mediocre outcome, with many people shut out of insurance and, consequently, shut out of regular health care, too.

    For this reason your comnclduing line is not quite right. You say, “People need to know that, under any plausible solution, they will have to pay more and consume less.” But clearly some people – quite alot of them – will (certainly should) get more health care than they get now. And a goodly number of people will get health care for less than they pay now.

    A final point re Nemo: His belief in rational markets that operate by universal laws of supply and demand is belied by the fact that other countries pay less for health care than the US and get better health care services (societally speaking) and better outcomes.

    The US is ranked in the 30s in most indices of health care outcomes, but far and away first in terms of highest costs. The US health care market is not rational, and its rules of exchange are not immutable.

    There are alternatives.

  19. Reduce waste fraud and abuse? How about eliminating the rent-paying that IS health insurance? ALL OF IT. Insurance does not contribute to the quality of medical care – it is nothing more than a middleman.

    In addition, tying health care payment (it’s not insurance!) to employment means that the people who use the most care are only marginally covered, meaning the critically injured/ill, the very young, and the very old. Very few of these people WORK.

    Figuring out how to pay for health and medical care is step 1. Haggling over prices, malpractice, etc. comes after step 1, since they true costs are muddled by rent-seekers.

  20. “The long-term fiscal problem is trivial to fix: Have government stop paying for people’s health care.”

    I am surprised at the apparent non-systemic nature of that statement from you. We face spiraling health care costs in the U. S., regardless of who pays. If we do not manage them somehow, the “fix” could be catastrophic.

    I have not seen a good explanation for our hyperinflationary health care costs in our public debate, which is more than a shame, since it is the central problem. Instead I see sloganeering and fighting words.

    Some countries in the developed world do not have such spiraling costs. Why not?

  21. Have you tried an upper colonic?

    Seriously, some people are addicted to them.

  22. IMO doctors, nurses, PA’s, deserve to be well compensated because it is difficult to become a doctor, and their support people have to be well trained and deal with sick people.

    I find it appalling that “insurance” providers make as much money as they do (OK, make money AT ALL) because all they do is pocket a % of the “covered” patient’s money and a % of the doctors office’s profit.

    I see only two ways to change the status quo: simplification by way of single payer or elimination of health “insurance” altogether.

  23. Commentators on health care do not often bring up the facts of life that huge investments have been made on credit to put together the present medical system. Right now, even a low marginal decline in revenues of providers of health care would force a restructuring of health care debt. How much of a decline before systemic failure is unknown but it is not a big decline. Health care investment is fixed and long term. Present heath care revenues will need to be maintained for a very long time. Revenue needs of heath care drive medical costs. Big pharma requires a huge long term financing to continue to provide present products. Present products are driven by revenue needs to finance pharmaceutical financing. Medical Centers are very long term financing institutions and revenue needs are driven by financing here as well.

    Does anyone have a source on what revenue decline percentage would cause financial collapse of the health care system?

    I very much suspect that the money has already been largely spent for facilities to keep geezers alive until the last possible moment after the last possible billable for the geezer has been billed. On this basis alone, I see nationalization of medical care after financial collapse or simply scrapping the medical system. That is we revert back to 1955 medical simplicities.

    The nation was never able to afford the present idea constructs underlying health care. That idea is that we should not let nature claim back people without undue interference. My mother is 94 and I have never lost a maternal blood relative yet to natural death. The medical system has had a very long billing cycle with my maternal family. I shudder at the costs of keeping my brother, cousins and myself alive. We are all in our seventies and not one has yet died of natural causes. All of us look a decade or more younger than our actual age. We alone will cost the state many millions . Many millions more than we all paid in Medicare taxes and insurance premiums and income taxes. My point is that the investment has already been largely made to service our further survival and the creditors already rely on future revenues to be paid their Vig and principal.

  24. while ferguson speaks of “how entitlements (including Medicare)”

    he omits the noteworthy entitlements

    the profit entitlements enjoyed by those who make their money from the illness of others

    examples include

    the entitlement of pharmaceutical pricing in the united states

    the entitlement of employer sponsored healthcare

    the insurance company entitlement in the small business and individual person insurance market

    the patent protection entitlement accorded to pharmaceutical companies

    the lack of regulation entitlement provided to health insurance commpany medical-loss ratios

    the patent entitlement whereby the US government pays for basic research and for-profit companies patent discoveries

    the fee entitlements congress routinely provides american medical doctors and hospitals whose income far exceeds their peers in europe

    the labor supply entitlements whereby the government and doctor and dental associations restrict the supply of trained physicians and dentists

  25. Reading these comments of americo-centric economic thinkers discussing the economics of US healthcare is pretty appalling to an American expat living in France who thinks about a lot of things, but mercifully, rarely about the quality or cost of healthcare.

    On the other hand, if I were an economist, I probably wouldn’t be able to figure it out either.

  26. Agreed. It’s the outcome[s] we should focus on. Your point is well made. But the American public seems to think our outcomes are the best. No amount of international statistics alters that perception. Not only does that distort our ‘debate’, but it also prevents our implementing at any credible improvement.

  27. Part of the Orszag argument is that the efficiency improvements are so large that we can avoid cuts – and, indeed, that expanding coverage by itself creates its own efficiency. This is partly true, but I suspect that there are limits to the efficiency gains before we again need to start doing some rationing. But let’s give Orszag some credit.

    I’ve been thinking of a way to visualize this…

    Imagine a Pareto Frontier between Equality and Efficiency. A classical free market economist would argue that you have a continuously downward sloping line. Any increase in equality costs efficiency – either through tax deadweight losses or moral hazard or whatever.

    A real world economist would argue that is only true in a narrow range. For example, if the costs of excessive malpractice/risk valuation/denial of coverage/litigation over denial of coverage/rescission/information asymmetry/bankruptcies/ER overuse/etc. are high enough, we may be able to get rid of so much cost associated with _distributing_ the resource that we can see improvements in BOTH equality and efficiency.

    So, if you had equality on the vertical and efficiency on the horizontal, then from the point the pareto curve touches the vertical axis, it may be upward sloping for a while (that’s right, adding more equality improves efficiency). But, at _some_ point, the curve has to inflect and become downward sloping again. (e.g., we need to ration)

    I think there are a number of pragmatic “conservative-progressives” who are for wide expansion of the most cost-effective care, but are against giving everyone the “best” care.

    But, like Nemo, I worry the current bill has many bad features. It expands coverage without controlling cost. It also creates an IMMENSE resource shift – expanding Medicare coverage to 55 year olds, WITHOUT cutting benefits…

    That creates a massive, huge, unconscionable resource shift from 25 to 55 year olds (you know, the ones with the huge college loans and limited job prospects and kids/families and… oh, yes, the ones who inherited massive debt from the Baby Boomers who (generationally, not necessarily individually) failed to save for retirement).

    And are we _actually_ cutting adminsitrative costs? Financial costs? Risk-cherry-picking-costs? Well, judging from the valuation of health care stocks, um, no.

    So when the DNC called me asking for a special donation to show I’m on board and help stop the Republican attack ads, I said no this time, and explained that I think the health care bill is bad legislation. The person on the other end nearly choked.

    I’ll give a little extra to Doctors Without Borders this year to soothe my conscience.

  28. Oh, the efficiency/equality tradeoff isn’t the new idea, it’s the upward slope and the inflection point that is.

  29. That may solve the Federal governments deficit problem by cost shifting entirely to the individual. It does not contain or change the curve of cost to the society.

    BTW what are the benefits to society of moving back to having 3/4 of the elderly in poverty?

  30. You REALLY want to know what a death panel looks like??? Do you REALLY want to know what a death panel looks like??? A REAL death panel??? Go visit the Board of Directors conference room of Aetna. http://www.huffingtonpost.com/2009/12/04/aetna-forcing-600000-plus_n_380130.html

  31. Have you even noticed how expensive u.s. health care is relative to other nations, per capita, and yet still get better health outcomes and cover everyone?

  32. In all the talk about health care reform, I don’t feel like there’s enough discussion about understanding the real costs of health care. Why don’t we ever know the costs of health care procedures and treatments? ?” I got a kick out of this fun, short video. Check it out. It makes you wonder why our health care system is set up the way it is.
    http://www.whatstherealcost.org/45secondstoshare

  33. The part of the discussion that is never discussed is the societal role in health care costs. People as a whole assume that more is better. This is best exemplified by the recent uproar regarding the change in screening protocol for breast cancer. People were up in arms because they felt that this would lead to patient neglect.

    The data is sound, yet people were upset. Until people modify their expectations, our health care system will continue to be expensive, and less effective.

  34. CBS from the West

    Beautifully said, Stats Guy. Saved me an hour trying to write a similar idea, and I never would have said it as well.

    And bravo for telling the DNC caller what you thought!

  35. CBS from the West

    Well said. But it appears that as a nation we are not ready to listen to this like adults. Just think about the hysteria that followed the recent recommendation by the US Preventive Services Task Force that, in light of the minimal benefit and substantial harms attending mammography in women ages 40 to 49, doctors and women patients should actually discuss the pros and cons to reach an explicit decision reflecting individual risks and risk tolerances instead of mindlessly doing them as a matter of routine.

    Unfortunately, the Democrats seem to feel compelled, I guess for political reasons, to pass something they can call “Health Care Reform,” even if it makes things worse than the status quo. The public discussion about the issues is, at its best, inane.

    It doesn’t appear to me that the country is ready to move towards rational health care. Things will have to get a lot worse before we will do what it takes to make them better, I’m afraid.

  36. CBS from the West

    Yes, the physician is only a small part of the total cost. But the physician controls much more than just his/her own fees. Every time a surgeon choose to do a procedure, that decision entails payments for the hospital, the anesthesiologist, pharmaceutical expenses, and possibly pathology charges, outside laboratory fees and home care fees. If that surgeon had less incentive to do such procedures, we would save all of that money. Similar considerations apply when a physician sends a patient for an MRI. Etc., etc.

  37. CBS from the West

    The health care industry has done a fabulous job at public relations. While our health care system produces mediocre results it is, without question, the most innovative in the world. Innovation in health care, as in other fields, is sometimes useful and sometimes not. But do you notice how many new discoveries, no matter how trivial and remote from real application, ends up on the nightly news touted as a “breakthrough?” Most of those advances never bear fruit in practice. And many of those that do end up in use are later found to be ineffective or deleterious–but that rarely makes it into the news.

    Part of that is media capture by the drug industry, which is one of the largest, if not the largest, sources of advertising revenue. Part of it is due to the inadequate scientific training most science journalists have. Physician professional groups do a lot of messaging, too. And the adoration societies bestow upon shamans, physicians, and healers of all sorts is so universal that one suspects it is somehow encoded in human DNA.

  38. CBS from the West

    This is an excellent point. In addition to requiring an ever-growing revenue stream, the effects of debt-financed health care affect the very nature of the care delivered. For example, when hospitals face declines in revenue, they do not close operating rooms or MRI facilities–because they would still have to pay the debt service on them whether they use them or not. Instead they cut things like nursing services.

    This is not in the interests of patient health. For example, it was long ago shown that compared to regular observation by a nurse, instrumental monitoring of the fetus during labor and delivery does not improve maternal or fetal outcome, but does lead to more Cesarean sections. But obstetrical nurse patient ratios have declined over time, and monitoring has grown explosively.

  39. Oh Nemo, do you not believe the great Pelosi when she says health care reform means a cap on costs and no cap on benefits? Supply will be unlimited! Costs, of course, will be strictly limited.

    All you have to do is believe.

    I’m sorry I do not read this blog every day. Has Mr. Kwak ever commented on the landmark Atlantic Monthly cover story, How American Health Care Killed My Father?

    The author of that article suggests a transition to people paying more of their own costs, for obvious market reasons. This would entail forced health savings accounts, and catastrophic insurance coverage. It seems obvious to me that this would work better than what is being proposed in Congress, besides being better for individuals who want to choose something other than what the government dictates they ought to have.

    It makes sense, and therefore it doesn’t have a ghost of a chance.

  40. If you confiscated all the profits of the health insurance companies, it would only pay for a few days of health care for Americans. If you think this is the problem, think again.

    But I agree, we should pay for our own routine medical care, and insurance should only be for truly catastrophic occurrences. That would mean insurance is involved in fewer transactions, and their bite out of patient and doctor would be drastically reduced.

  41. I think that the whole debate has, thusfar, been substantially bogus. It’s time to find realism before it finds us. The conservatives love to talk about rationing. The liberals love to talk about the great body of those without effective care (no insurance or access). Meanwhile, almost every other developed nation has it figured out.

    We WILL END UP WHERE CANADA OR THE NEATHERLANDS PRESENTLY ARE. The choice is to have single payer, and peg tax rates to cover all expenses incurred (Canada), and allow providers to remain private but tell them what they get paid to do what they do (cost control). Or to have insurance companies insure everyone who applies at standardized rates, with no allowance for pre-existing conditions, no cancellations, and all must by basic coverage, and the providers must accept what is permitted as fees for specified services. Without the confinement of these structures, there will never be a realistic attempt for efficiency and efficacy among either insurers or providers.

    The present legislation does almost nothing to control either insurance rates or provider fees. Without that nothing new happens, there is just a shift in the rip off scheme (insurance/treatment arbitrage).

    The new plan sounds doable, but only until the next time we realize that it can’t be afforded either, which may easily be less than five years.

    The reason why the final bill will be over a thousand pages is to make it possible to do a lot without really changing anything. That way, everybody on the Hill can brag that they participated in the solution, or voted against it depending upon what their perceived constituancies need to hear.

  42. That is fantastic, and what Congress is doing won’t really change that.

  43. And, this is an HONEST company. All of the insurers do essentially the same. Anything for profits. Actually covering people is the problem, that takes money, money that they could be adding to the bottom line. Sorry, but that is the business of insurance, and therein lies the rub, and is why our health should not be a matter of underwriting.

  44. Nicely presented, and I could add more, but suffice it to say that we are going so broke supporting the unregulated finance industry that we have little money left over to give to the health care industry. So, yes, they first make us half broke or fully unemployed, and then they say, by the way, there’s an ever growing doctor bill you need to pay.

  45. Profits, yes, but if you eliminated the _costs_ incurred by that industry, as well as the costs incurred by hospitals and providers in dealing with remuneration, that’s a different story by far.

  46. In September 2009, my husband’s hip replacement surgery with a 2 day hospital stay cost $48,000.00 in Seattle, reduced by contract with our insurer to around $30,000.00. Many of the various payers, medicare, medicaid, insurers have different reimbursement rates. It is difficult to know what the true cost is given the different reimbursement rates.

    On November 24, 2009, the Seattle Times published an opinion piece with the following cost for hip replacement:

    Two Seattle-area providers quoted prices around $40,000, a third, Virginia Mason, quoted $32,000 after examining the patient.

    The lowest price was $8,500 at a clinic in India. Others included $17,060 in Quebec (at the only clinic that does private-pay hip replacement in Canada), $21,000 in Belgium, $25,000 in Los Angeles (no overnight stay), and $29,000 in New Zealand, including airfare, room and physical therapy.

    The Canadian patient who was about to sign up for New Zealand when the scheduler called. Luck, again. The specialist did the surgery earlier this month, and it went well.

    The patient’s room, however, was a four-bed ward, common in Canada. Two of her roommates were men — she was not happy about that — mixed-gender rooms being cheaper to administer.

    The price was right: only $2,100, all of it for an upgrade to a new ceramic hip, which probably will last her lifetime. The older metal-on-plastic technology, which ran a much higher risk of wearing out and causing her trouble, would have been free, courtesy of the government.

    Cost containment cannot be too difficult if other countries can manage it. Having four people in the hospital room, at this low cost surely is not a hardship. Most Americans would readily accept, a four person room in exchange for a lower cost.

  47. Ella, in Canada, hip replacements are covered by universal health care. No payment of any kind is required for this procedure. (Our health care system is funded by taxation.) A private hospital room costs about $200. The cost for a private room is an “extended benefit” that some employers will cover. Having said this, there is more demand for private hospital rooms than are available.

  48. Wait times for elective surgeries in Canada are due to cost containment. Priority is based on medical need (not ability to pay as in the United States). We spend 10% of GDP on healthcare. Wait times would be reduced if the government raised healthcare spending by 1-2% GDP. But the government has not done this to contain costs.

  49. I agree that de-incentivizing this high volume-based healthcare system is necessary. But the powers that be think that simply paying less for each widget will solve the problem, when it will actually only make it worse. It here is defined as the gap between cost and quality.

  50. CBS from the West

    Yes, we are in agreement here. Experience has already shown that just lowering the price paid for each procedure leads to an increase in volume and net expenses either stay the same or increase.

  51. Sorry Ella, now I understand, the Canadian had to pay $2100 to upgrade to a ceramic hip replacement. (The older model using metal is free.) $2100 is — just over 3% — of the stated $48,000 cost for the procedure in Seattle.

  52. CBS from the West

    Robert Reich has an easy-to-read commentary on the health care legislation:

    http://robertreich.blogspot.com/2009/12/how-few-private-health-insurers-are-on.html

    It’s not very detailed, but I think it makes some of the most important points.

  53. I say we solve this problem the way the private sector solves all their problems. We out source all the expensive federally funded interventions(surgeries, cancer therapy) to other countries that can do it for less. We don’t use the lowest bidder but we move down the chart and introduce price competition. The airline tickets would be cheap in comparison. Now that is a solution even Ron Paul can get excited about

  54. That’s the point I was attempting to make. Thnx SG

  55. We have Come to The End of the Road. As I see It, we have Only One Option, Properly Deployed HIT Solutions, to Contained our SkyRocketing Healthcare Spending, or this Nation is headed for Bankruptcy.

    We must Used some of the Stimulus Funds, to Build Smart/Intelligent Infrastructure Services for: Smart Grids, Transportation Systems, Broadband, and Healthcare IT. This Investment will Enabled New Jobs Creation and Economic Recovery.

    Healthcare IT, now it is the Time to Implement HIT, with Harmonized Inter-State, Privacy, Confidentiality, and Security Laws/Policies for the Protection of Individual’s Electronic Health Records (EHR)/Electronic Medical Records (EMH)/Personal Health Records (PHR).

    Proper Deployment of Health Information Technology Solutions and Training will Increased Productivity (i, e, medical data mining/warehousing, risks treatment, service delivery), Efficiency (i, e, medical errors, redundant and inappropriate care), and have a Costs Savings of around 20-30% of our Annual National Healthcare Expenditures (2008, $2.5 Trillions).

    The Engine of Economic Growth in this 21st Century is “Broadband.” We can start by, Deploying a pure Packet-based, All Optical/IP, Multi-Service National Transport Network Infrastructure, using Optical Ethernet throughout this National “Network of Networks.” This will Connect All Optical Islands, Nationwide.

    The Investment in this “Network of Networks”, in addition to New Jobs Creation and Economic Recovery, can also Serve as a Business Driver for: Transportation Systems, Energy Systems, e-Commerce, e-Education, e-Healthcare, Social Networking, Entertainment, etc.

    This type of Investment is like the Investments that were made in ths past, in Electrification of Rural Areas, and the National Transportation Inter-State Highways, which Increased Productivity and our GDP.

    Please See: http://www.gkquoquoi.blogspot.com for Summary Deployment Plan, for the Nationwide Health Information Network (NHIN).

    Gadema Korboi Quoquoi
    President & CEO
    COMPULINE INTERNATIONAL, INC.