So the Republicans have a deficit reduction and a health care plan, all wrapped into one, the “Roadmap for America’s Future.” It’s being pushed by Paul Ryan, in part because he’s the ranking member of the House Budget Committee, in part because he’s good-looking and articulate, in part to provide the party plausible deniability if it flops (like Bobby Jindal a year ago). The CBO says that it will balance the budget and even eliminate the national debt by 2080. Ezra Klein and Matt Yglesias have commented on it. Klein says, “I wouldn’t balance the budget in anything like the way Ryan proposes. His solution works by making care less affordable for seniors. . . . But his proposal is among the few I’ve seen that’s willing to propose solutions in proportion to the problem.” Yglesias says “it’s totally unworkable.” But they’re both being much too kind.
Ryan realizes that “the deficit problem is a health-care problem,” which he agreed to in an interview with Klein. That’s good. He realizes that to solve the deficit you have to do something about Medicare. That’s good. He also puts forward a logically coherent conservative position. That’s good in itself and especially refreshing after the Bush era (and the unfunded Medicare prescription drug benefit) and all the recent posturing of the Republicans as defenders of Medicare (Mitch McConnell: “Cutting Medicare is not what Americans want.“) Ryan’s plan is basically to cut Medicare like never imagined before.
But everything else about the plan is such an unmitigated disaster I’m going to devote a whole paragraph at some point to thinking about how to label this plan. It will be a long time before we get there, though, broken into a couple of blog posts, because there are so many problems to go over.
This is the key picture, from the CBO opinion letter, which Klein also focused on:
The dark blue solid line is the current projection for Medicare. The dark blue dashed line is Medicare spending under the Roadmap. How does he do it? This will require a bit of context.
The problem with Medicare isn’t that Medicare is particularly generous (with its 20% copays, Medicare is worse than many of the PPOs working people get through their employers), or that it’s getting more generous. The problem is that per-person health care costs are growing faster than government revenues, and to a lesser extent that the ratio of beneficiaries to workers is going up in the medium term. The Obama administration’s approach to the Medicare problem is to try to reduce the growth of health care spending–“Cadillac tax,” Independent Medicare Advisory Commission, experiments in pay-for-performance, cost effectiveness research, etc.–so that cost growth can be reduced while preserving the basic existing level of insurance. A reasonable argument against this plan is that we can’t be sure that the cost reduction measures will work, so the government still bears the risk that the deficit will continue to grow. Fair point, but Peter Orszag would respond that they are trying almost everything that any sensible health economist has proposed.
The Roadmap takes the opposite approach: it puts all the risk of rising health care costs on beneficiaries. In concept, it takes the current amount that the government spends on Medicare and turns that into vouchers that are distributed to individual beneficiaries, who are then free to buy whatever health insurance they can in the free market.
The vouchers are designed to grow slower than equivalent insurance would cost
The trick is that the vouchers are indexed to “a blended rate of the CPI and the medical care component of the CPI.” The plan is to have vouchers grow slower than health care cost inflation. According to the CBO (p. 21), vouchers would grow at an annual rate of 2.7% over the next seventy-five years, while Medicare spending would otherwise grow at an annual rate of 5.0%. (Those are actually nominal numbers; see page 10). This means that over about twenty-eight years, vouchers will double while the value of current Medicare would have quadrupled.
Let’s use some real numbers. When the plan kicks in in 2021, vouchers will average $11,000 per beneficiary (in 2010 dollars). (65-year-olds will only get $5,900 vouchers; $11,000 is the average across the Medicare population. More on that later.) According to the Census, 2008 median household income for households (where the householder is) over sixty-five was about $30,000. Assume median household income grows at about 1% per year (in real terms). By 2021, when the shift starts, median income will be $34,000 and an average two-person household will get $22,000 in vouchers. Assume (and this is a huge assumption, on which more later) that the average household will be able to buy a policy as good as Medicare for $22,000.
By 2049, median income will be $50,000; the vouchers (growing at 0.7% in real terms, after subtracting 2 percentage points for inflation) will be $29,000; and health insurance premiums (for equivalent coverage, assuming 3.0% annual growth) will be $72,000. So after buying Medicare-equivalent coverage, the household will be left with $7,000 for all other expenses. Under current law, by contrast, the household would have $50,000 for all other expenses (since current Medicare is picked up by the government).
What will happen? People won’t be able to afford coverage as good as Medicare is today. People will die.
The vouchers start out too small for equivalent coverage
Now, there is already one huge assumption built into the above: that, in 2021, $22,000 in vouchers will buy you a family policy as good as Medicare would be. This assumption is patently false. Remember that 65-year-olds will start out with $5,900 vouchers, so a household of two would get $11,800 in vouchers. The average family plan bought through an employer today costs about $13,000, and does not include anyone over the age of sixty-five (meaning that equivalent insurance for older people would cost more if there were a market for it). Furthermore, the $5,900 number is being set today, and will grow from now until 2021 according to the Roadmap formula (average of the CPI and the CPI-M for medical costs)–which means it will be growing slower than health care inflation. So even before the shift begins in 2021, seniors will already be deep in the hole; even in 2021, the vouchers will not be able to buy equivalent coverage to Medicare. (On top of this, insurance will be provided by private insurers with higher administrative costs and less buying power than Medicare, meaning that beneficiaries will get even less bang for their buck.)
People get dumped into the individual market with no protection from medical underwriting
OK, what else is wrong here? For one thing, it dumps all seniors into the individual market. The Roadmap creates state-based insurance exchanges (like the Senate bill), which helps a bit. But it doesn’t address the core problem: the ability of insurers to charge more to people who are sicker, even though it tries to make you think it does:
“Guaranteed Access to Care. The Exchange will require all participating insurers to offer coverage to any individual regardless of the patient’s age or health history.
“Affordable Premium. Under the status quo, plans offering coverage to individuals often charge exorbitant premiums. This proposal solves the problem through independent risk-adjustment among insurance companies. A non-profit, independent board will penalize insurance companies that cherry-pick healthy patients while rewarding companies that seek patients with pre-existing conditions. This solution will ensure health insurers compete based on superior products and price.”
Do you see anything in there saying that insurers can’t set prices based on medical status? Risk adjustment is a valuable tool–if you eliminate medical underwriting in the first place. In that case, insurers “compete” by cherry-picking the healthy people. But if they can price based on medical status, they’ll just charge you whatever they think you will cost them in claims. If you need $60,000 of chemotherapy and they charge you $70,000 for your insurance policy, they get to keep all that money under risk adjustment, because you really are riskier. And chances are you can’t afford a $70,000 insurance policy.
And here’s the entire section on “Protection for Those Who Need It Most”:
“Uninsured individuals with pre-existing health conditions have the most difficult time finding and affording health care coverage. As a result, many individuals with pre-existing conditions often face bankruptcy to pay for health care expenses or, worse, go without treatment. If these individuals are fortunate enough to have group health insurance, their high costs are spread among their coworkers and employers in the form of ever-higher premiums, making coverage expensive for all.
“Ensuring that “high-risk” individuals – those with the greatest medical costs – can obtain high-quality coverage is critical to the success of any plan to reform health care. High-risk individuals face an insurmountable burden in medical expenses themselves, and that burden is often transferred to taxpayers in the form of uncompensated care expenses from hospitals, or the placement of these individuals in Medicaid after having exhausted their financial resources paying for their medical costs.”
Do you see a proposal in there?
The only real backstop for sick people is this:
“Establishing High-Risk Pools. State health insurance high-risk pools will offer affordable coverage to individuals who would otherwise be denied coverage due to pre-existing medical conditions, making coverage affordable for those currently deemed ‘uninsurable.’ States may offer direct assistance with health insurance premiums and/or cost-sharing for low-income and/or high-cost families.”
This is like high-risk auto insurance pools: if you are such a bad driver that no insurer wants you, the state will give you insurance. This is better than nothing, but it’s a lousy solution. People end up in high risk pools because the actuarially fair cost of their insurance exceeds their ability to pay; if they could pay it, the free market could serve them. That means that the state ends up taking a loss on them. So the Roadmap’s solution for sick people is to dump them onto the states–who can decide if they want to let them live (which costs money from state budgets) or die.
The subsidies are insignificant
To recap so far: Median seniors won’t be able to buy Medicare-equivalent coverage when the shift begins. With every decade that passes, the problem gets much worse. Poor people are stuck in the individual market, which will dump them into state high-risk pools. People will die–unless the states step in to fill the gap, which basically means shifting the Medicare cost problem from the federal government onto the states.
The Roadmap does have some help for poor people. People below the poverty line can get about $6,000 in a subsidy to cover out-of-pocket expenses through a medical savings account. People up to 150% of the poverty line get 75% of that subsidy. The problem is that the poverty line for a two-person household with the householder over 65 is $13,030, and 150% of that is $19,545. (By contrast, the Senate bill provides some amount of subsidy to families up to 400% of the poverty line.) But even if this threshold were raised, the subsidies are insignificant compared to the gaps that open up by 2049.
In short, the Roadmap balances the budget by slashing medical benefits to seniors far, far below where they are according to existing law. So far that most seniors will have to use up virtually all their income if they want to buy Medicare-equivalent coverage. People will die. Unless, that is, health care costs can be brought down just as fast, which I’ll address in my next post.
By James Kwak
The Baseline Scenario 
I am pretty sure “people will die” regardless of what the government does. It’s sort of part of that whole human condition thing.
Any proposal regarding health care mostly just trades around who is going to die when. So “people will die” works great as a sound-bite critique of any proposal whatsoever.
What you mean to say is “poor people will die sooner than rich people” under the Republican proposal. Is this supposed to be a surprise?
This makes a remarkable contrast to David Brooks’ “Geezer” column in today’s New York Times . . .
I give Ryan credit for an actual plan. And his interview with Klein was not bad either. He had a good line – “We ration today!” Amen brother…we ration based on ability to pay.
And it’s Death Panels (TM) tomorrow, I guess. At least they put it on the line, out there for all to see.
So it’s a convoluted, cowardly way to achieve the same effect Hitler sought, killing the undesirables.
Except that even the Nazis gave what they called a “mercy death.” I guess today’s Republicans would bill the family for the gas.
To clarify a bit…
All resources, including health care resources, are finite. All of these debates come down to how to distribute them. If you think health care to be delivered “to each according to his needs”, you will favor a different set of policies than if you don’t.
At the risk of repeating myself, again… The only way to reduce costs is to increase supply or reduce demand. The Republican proposal does the latter (“people will die!!”). The Democratic proposal does neither, although it does include a huge array of tiny measures that just might add up to a fraction of a percent in cost reduction.
Personally, I find it unlikely that if the government decides to spend $1 trillion buying something — like health care for everybody — that the price of that something will go down. But maybe I just do not understand how the health care bill manages to repeal the most fundamental law in all of economics.
I would be far more interested in proposals to increase the supply of health care. Train more doctors, weaken patent protections, etc. But as far as I can tell, nobody seems to be talking about such things.
States already have high risk pools. In my state it has a long wait time, so that some people never get on. My wife and I, both physicians, tried, unsuccessfully, to help him get insurance before he died. Unless you fund those pools, they are meaningless.
Steve
Oops. Him meant my brother-in-law.
Steve
You seem to assume this is a zero-sum problem. The Rolls Royce care for some could turn in to a lot of Ford Focus care for many, with a net increase in life expectancy. Eliminating the perverse incentives of legal-defense and fee-for-service could also generate longer life expectancy. There is also too little research in creating equally effective but more affordable treatment.
The Republican plan doesn’t reduce the cost of health care. It just reduces the government’s costs by shifting them onto individuals. So if you accept that it’s a zero-sum game, it takes a system where we all pay a lot in taxes (taxes will have to go up because of the deficit) and everybody gets care to one where we don’t pay a lot of taxes but more people die. Basically, it goes from a social insurance system (everyone contributes, everyone gets care) to an everyone-for-himself system (rich people get care).
“increase supply or reduce demand” ?? What about a third factor: bringing the incomes of medical professionals down to approximately what the average worker lives on? Hospitals and the medical elite charge outrageous fees. I am still mad about what they charged me for each bit of gauze when I had a baby in the US, many years ago!
This is why, from a Republican perspective, “people will die” is a feature, not a bug. More precisely, *poor* people will die, and Republicans just don’t care about poor people. I mean, if they were such great people, they wouldn’t be poor, now would they? Their poverty is proof that they are taking more from society than they are contributing–certainly, they are taking more from Republican society (which is the society that counts) than they are contributing.
Just call it the Scrooge system of population control.
undeniable truths…
1. Everybody dies.
2. The unspoken rule is that rationing is occurring based on the individuals ability to obtain medical services. This can be attributed to location, income and level of education.
3. The current state of medical insurance is to make money. But, most folks want best medicine but don’t want to pay for it. This creates a feedback loop from medical establishment want to make money and individuals wanting ex-ordinary measures taken to preserve life hence the cost of medicine goes up.
4. Columbia University paper on medical cost vs life expectancy as a measure of the effectiveness of a countries health care.
http://www.stat.columbia.edu/~cook/movabletype/archives/2009/12/healthcare_spen.html
The US is way down the list as far as life expectancy and most expensive.
5. It is not logically to continue the same course of action if the system by all analysis is deeply flawed. However, the same status quo forces that the Republican Plan represents — are extremely happy to keep things as they are — very profitable for the medical establishment. You can shop around for medical services and a voucher is a lousy insurance policy as a way to go on the “cheap”. There is no “cheap” here…if a patient shows up needing medical services the medical provider is obligation to provide those services. If the patient can’t pay then the medical provider will have to find another way to make up the deficit. The Republican Plan serves as an idealogical solution to a complicated problem.
I sort of hate to say this, because the whole Death Panel rhetoric was (is) odious, but what’s good for the goose is good for the gander. How about let’s call this the Death Star plan?
That just depends on the size of the voucher & what it’s indexed to, none of which is set in stone.
The US health care system has a lot of ridiculous features that inflate health care costs — opaque pricing, insurance & hospital monopolies, & all the other things health economists talk about. But some of it is just that we pay more for better care, & care that is improving faster.
http://gregmankiw.blogspot.com/2009/07/keeping-animial-spirits-alive.html
The fact that spending on veterinary care, which is a completely free market with almost zero government intervention, is rising just as fast as human health care, goes to prove that. The big question is — in most industries, improvements in technology drive down prices — why does that not happen in health care? Human or animal?
You must also be familiar with Ken Arrow’s great paper on why health care costs are doomed to higher inflation. The truth is we don’t have answers to the most fundamental questions of all. Every single nationalized health care system in the world is being squeezed, money-wise. Until we answer these questions, I am glad that at least Paul Ryan is saying: in order to keep providing health care for seniors & simultaneously balance the budget, this is what we need to do. Are we as a nation ready to do it?
As you also give him credit for, he is not shying away from the big questions, unlike almost everyone else in Congress, Rep & Dem alike. There may be other solutions. But there will never be a free lunch.
Inflation occurs because of too much money chasing too few goods or services. So if health care costs are inflating, it must be that too much money is chasing after medical services. If you could statutorially limit the amount people can spend on health care, prices would come down. Demand would be effectively limited.
While it would be difficult in our system to cap people’s healthcare expenditures, we can certainly give them incentives to spend less. That is exactly the intent of the tax on expensive health plans.
So the Senate bill, at least, has not completely abandoned basic economic theory.
I just read Prof Kwak’s “Part II,” in which he disputes the effectiveness of removing the tax breaks on _all_ insurance. So you may disregard my prior comment if you choose. Still, the effect is present, however small.
You said: “This means that over about twenty-eight years, vouchers will double while the value of current Medicare would have quadrupled.”
The hedonic adjustments which BLS makes don’t go nearly far enough. Medical care is probably the most egregious example. Nowhere in the data for medical inflation are there adjustments for life expectancy, which has risen by 4.8 years just since 1995.
Therefore I can argue that indexed increases to Medicare spending (based on Ryan’s vouchers or otherwise) OVERcompensate for supposed medical cost inflation. In REAL TERMS, people are far better off than they realize. What has greater real value than extra years of life?
“Peter Orszag would respond that they are trying almost everything that any sensible health economist has proposed.” Yes, but the problem is obviously political. And because they didn’t try almost everything any sensible macroeconomist suggested to reign in Wall Street, the American public was easily manipulated against doing anything about the problem because they clearly see the system is rigged against them in other areas. Therefore, they don’t trust the government to do the right thing. Obama is right there is a deficit of trust. He is part of the problem, however, in that he failed to show leadership when the country needed him. Oddly, he probably would have been able to get healthcare reform if he had pushed financial reform first with a bit of anger.
Thanks, Wafa. That information about vet cost inflation is pivotal. But — animal or human — rising costs are not just about higher professional charges and demand for more kinds of treatment. I remember waaay back when cats and dogs really were healthier — before animal food was full of chemicals. We are eating, drinking and breathing poisonous substances, and this factor bears on our future in ways almost never considered by the money thinkers.
Right no free lunch. Is that why the Republicans said that Obama’s plan was putting in place “death panels?” His plan is death by another name.
“People end up in high risk pools because the actuarially fair cost of their insurance exceeds their ability to pay; if they could pay it, the free market could serve them”
And how would this formula be calculated? Who determines what the ability to pay is?
Since when was the purpose of health care reform to stop people from dying?
All of these long term scenarios are rooted in the supposition that longevity will continue to increase, but that everyone still retires at 65 and spends the rest of their life using SS and Medicare to steal from their grandchildren.
What happens if we raise the retirement age by 1 month every 3 months for SS and 1 month every 6 months for Medicare until the minimum age for for SS is at least 75? How does the graph look then?
Why does everyone assume that 65 is some inviolate biological law?
We need automation to solve the health care problem. It’s not perfect, but neither is the doctor. Basic health care should be mass produced and we know that machines are best suited for that task. In addition we need preventive health care education in elementary schools on how to keep oneself healthy. This probably has the best ROI.
Several people have mentioned this before, but essentially all plans on the table now would shift the costs onto the individual-and that’s ok because I’d rather pay for better coverage than suffer under a govt controlled system. We need to start looking at health care as a commodity or product not unlike anything else. There are going to be people who can afford more of it or better insurance for it. And why is it such as foreign concept that insurers would want to pick healthy people and charge sick people higher premiums? It’s a business, they are supposed to make money. That’s the point.
I agree with this heartless idealist, but for different reasons.
Hands off Medicare and SS.
Cut the bloated defense budget, and tax the rich.
Says James Kwak: “But everything else about the plan is such an unmitigated disaster I’m going to devote a whole paragraph at some point to thinking about how to label this plan.” Label nominee #1: Predation. Label nominee #2: Abomination.
Or a ROTC-like bill that pays for med school for doctors, but requires them to practice for less money for x number of years to “work of the debt”.
These Medicare vouchers look a lot like conservative’s beloved school vouchers.
They are both based on the ideological assumption that somehow a private plan is going to be at least twice as efficient as the public one.
Anyone who has paid private-school tuition knows that private schools do not operate at half the cost of public ones. They are generally much more expensive.
Some religious schools are priced lower, but that is due to subsidies coming from elsewhere (such as current tithes and long-held endowments.)
Historically, Catholic schools also benefited from the artificially low labor costs of nuns who took a vow of poverty, which is effectively also a subsidy.
Do conservatives envision some new source of subsidies that will magically appear to take care of sick old people?
Last week I underwent total hip replacement surgery. By sheer dumb luck I chose a surgeon who represents the cutting edge in this technology. My surgery involved no pain whatsoever, had me up walking within twelve hours, demanding to leave the hospital within three days and living a completely normal life on this my eighth day after surgery. Believe me, you do not want this surgeon discouraged from practicing his profession by crimping his income. On the other hand, you could impoverish (or hang) every politician, economist, insurance executive and banker and suffer no noticeable reduction in quality or efficiency of surgical outcomes.
The best way to lower health care costs is to discourage trivial medical interventions, routine examinations, endless tests, medicare mills in which one finds patients stacked like cord wood awaiting a routine test and/or a vial of pills. Extend access to common drug therapy without prescription and you could probably reduce the cost of medicare by 25%. Raise annual copays to discourage unnecessary doctor visits. Before this need for surgery I had not seen a doctor for ten years, and I have no intention of seeing another one unless something else breaks down. Doctors are not health care providers. They are radical intervenors whose services should be reserved for crisis situations. It is the demand for an all purpose medical daddy that has threatened medicare with bankruptcy. Why can’t people take basic care of themselves? First and foremost, I suspect, because they are encouraged not to.
not so sure we pay more for better care, cause the results don’t show that. we pay twice the next highest. but we don’t any where near the top in results.
i think we are seeing demand being limited now. people will not go to the doctor unless they really have to (meaning its a dire necessity). but it hasn’t seemed to slow medical inflation much. its still at about 5%+
i am thinking you are describing what we have today. without any changes. the only thing we have today is that those who are 65+ can still get health care, cause no insurer will touch them, ever as there is no chance of not needing care
Republican or Democratic, the plans share the same flawed premise: “The government should forcibly confiscate money from some people and give it to others because there is a moral obligation to help those who can’t help themselves. Additionally, government force is an efficient and moral way to redistribute wealth.”
Whether you give the money directly to the beneficiaries or filter it through the federal bureaucracy, it really doesn’t matter. Federal spending is totally out of control, we’ll spend $1.40 for every $1.00 in revenue this year. You can’t fix that hole by threatening more producers with higher taxes and jail time. The US system will collapse under its own weight as predicted by this quote from Lord Thomas MacCauley:
“A democracy cannot survive as a permanent form of government. It can last only until its citizens discover that they can vote themselves largesse from the public treasury. From that moment on, the majority (who vote) will vote for those candidates promising the greatest benefits from the public purse, with the result that a democracy will always collapse from loose fiscal policies, always followed by a dictatorship.”
Surely this is now the case in the U.S. The majority pay little or not taxes and view the rich as an endless source of new entitlements. With only 20% of the population paying 90% of the income taxes, the system is doomed to collapse as long as Ryan and/or Obama continue to make promises with other people’s money.
What was the name of the recent republican politician from South Carolina who said that his grandmother (an uneducated woman – in his own words) told him that you shouldn’t feed stray animals because then they would breed, and that the same applied to poor people, especially kids in schools, receiving food subsidies. Looks like this health care plan takes the same approach. If you are too poor to afford it, then natural selection should take its toll.
This whole discussion misses an important factor. We keep getting lost in what this is or that plan costs the US government, versus what it’s costing the entire US economy.
Here’s a relevant question: what would be the effect on the overall US economy, if the US were to shift over to a medical system that already has a proven record, say Britain, or Canada? Make adjustments for age distributions, etc. – we *already have* practical models that have been up and running for decades.
Why can’t some economist build a model inserting a known system onto the US case and show what the effects would be?
All this crap that has been going on with these unknown obscure Obama plans, and now this Ryan quasi-social-Darwinism plan (it largely misses attriting people while they are still of reproductive age) only obfuscates real factors, and diverts attention from basic thinking that can actually improve the situation.
What would be the effect on the US economy if the British or Canadian model were imposed?
Nemo – on supply and demand, there is plenty of talk about it. Particularly over supply of procedures, tests, etc., which is a large part of why our system is so expensive. While it is true that there is a shortage of GPs, more doctors doesn’t really solve the cost problem, assuming they continue to be on a fee per procedure payment system. Producing more doctors can exacerbate the issue as they will need to do more procedures in order to make up for the income loss due to increased competition.
“in part because he’s good-looking and articulate”
yeah, so is obama
it just seems the entitlement programs are going to be the end of america.
Interesting analysis… but it just seems we have a NO win solution anyway you slice it.
HC spending increasing…
1) baby boomers – higher % of elderly vs. young working
2) medical innovation – more and more expensive procedures to extend life
3) Since people live longer… more opportunity to need to spend more on healthcare!
It seems unfortunate older generation didn’t think of this problem sooner and save a little more! Now the younger generation is going to be burdened by the total lack of planning of the older generation. This next generation will work their whole life in large part to pay for affordable healthcare and social security for their aging parents and all of the expensive life extending procedures which are their “right” to have paid for by affordable health insurance plans.
I wonder if this ever turns into a generational fight.
“versus what it’s costing the entire US economy.”
Agreed!!! COST CONTROL. Lots of ways to do that that must be done, but ultimately at some point someone needs ration care. Yes.. RATIONED CARE. but HOW? and WHO?
Canadian systems seems just to ration care by making the care so slow to obtain… you just give up. At a radiology symposium in Montreal I learned people wait like 10 months for a CT scan and seem to just give up waiting! So Canada they ration care by delaying care and people that don’t really need it either die or give up waiting for the CT.
I’d like to see a healthcare plan entitled “RATIONED CARE” the roadmap to sustainability. That would go over like a lead balloon.
We’re just like frogs in a boiling pot of water…
You hear these stories all the time about “rationed care”. If the Canadian and Brit systems are so bad, why do they cost way less than the US system, and have better population health stats?
AS for US rationing, there’s a great deal of it with people not seeking medical care until their problems have progressed to a serious level, and rationing by corporate clerks wanting to win points for vacations by denying coverage to people.
I forget the exact number, but isn’t it somewhere around 50% plus of a person’s life costs in medical care are in the first and last year of their life? Anyone listen to the Fresh Air podcast dated 4/2/09 with the ER doctor? Highly recommended.
A lot of our costs could be mitigated if we dealt with the mentality of applying aggressive, advanced technological interventions to keep someone alive long after their body/mind is beyond real repair. How many people know older relatives who continued to ‘stay alive’ hooked up to machines for weeks or months, in a hospital bed, when they had no real quality of life?
Doctors are trained to keep people alive no matter what, and as long as the patient doesn’t say no and don’t have a medical directive, or their relatives won’t say no, they keep applying treatment. But who wants to say no when it’s your aunt, uncle, brother or grandmother? The problem is, most elderly patients don’t want to be ‘kept alive’ they want comfort care, a high quality of life before they die (think hospice).
I think if we confront the reality of our own mortality with dignity as opposed to fear, which could be why doctors and staff fight so hard to keep patients alive, the quality of people’s lives, and therefore care, would be much greater and yet cheaper. Patients and relatives need better counseling on end of life care, and they need education about what the quality of life likelihood is with intervention vs. comfort care depending on the circumstances and the patient.
Personally, if I ever reach the point in my life where I know I will likely die, I would rather die with a quality of life and dignity than a drawn out, lifeless existence in some nameless hospital room.
Anyway, I highly recommend the podcast, it’s informative, has a real human element, and very relative to the debate.
Isn’t it true that unhealthy people aren’t working to their fullest potential, aren’t earning their full potential, aren’t spending their full potential, aren’t contributing tax revenue to their full potential?
How big is the effect? How much productivity is lost? How much wealth is sitting out, because healthy people aren’t there to generate it?
Seems to me it should be worthwhile spending some money to improve the general health and welfare of the country. No matter which way like wealth spread around, having more wealth seems like something everyone would be in favor of.
Once again, single payer wins, health care costs get controlled, service providers find innovative ways to deliver treatment, pre-existing conditions don’t count, young and healthy insureds are carried at the same cost as old and sick insureds. Everyone makes out, no one looses, and the federal debt doesn’t go up because they adjust taxes each year to meet the costs that must be paid. And, we don’t have to worry about insurers profiting at the expense of the insured, and invoking descriminatory practices. The only other reasonable alternative is the Dutch plan where insurers are required to accept everyone, and their premiums are contolled by the government. If you want to play in that way, you must play fair, and, once again, everyone is covered. This is not rocket science, AND, it’s not socialism, except ethically. The same rationing occurs in every system, although, if you listen to Republicans, that is what they say will happen, while not acknowledging that it is the current state of affairs.
OR, WE CAN JUST GO AHEAD AND DO EUTHANASIA ON EVERYONE ON THEIR 65TH BIRTHDAY, IF THEY’RE NOT WEALTHY.
This applies to people of working age. If you look at the size of the budget dedicated to Medicare, no they usually no longer work, but yes they do spend, and it is mostly on their health care, even after Medicare.
So there is no issue of productivity lost if you only worry about Medicare. Basically you can even argue that letting the baby-boomers die sooner might be a good long-term fiscal strategy for the US, although a cruel and heartless one esp. if you are a not extremely well-off baby-boomer yourself.
It will.
He does say:
1) medical costs need to be addressed
2) benefits need to be on the table in any discussion
There cannot be a serious discussion of fixing our fiscal situation without facing up to these points. I am disappointed that rather than finding common ground on these points and then disagreeing with his prescriptions, James turns into a Death Panel nut and demonizes Ryan. I don’t think his roadmap is the solution, but lets allow someone to admit these hard truths without being attacked.
If a system is established which shifts the cost to the individual, it has the potential of changing the behavior of individuals. This seems to be unacknowledged in the debate. The assumptions for care remain based on current trends and the growing population of older Americans. Changes in our behavior could have a very significant impact on these projections.
We must admit the reason for the high cost of healthcare in America is a direct result of our relative affluence which has caused over-indulgence in what are historically items of complete luxury (sugars, refined grains, meats, alcohol, etc.) and an accompanied diminished demand for physical labor leading to obesity, cancers, and heart disease at an unprecedented level. Our current approach of socializing the risk does not create the required urgency or immediacy to change individual behaviors.
Can a system be devised (perhaps not this roadmap) help shift the responsibility and risk back to the individual- perhaps supplemented by increased social programs for preventative care anbd education? How do we as a nation encourage ourselves as individuals to become more involved and disciplined in our own health? Socializing the risk seems to lead to inevitable failure, or at the least a prescription to be lead by the least responsible.
It seems reasonable the market would respond with an insurance product geared to cover unforeseen medical costs that would consider an individuals behavior in establishing costs exactly as our current market prices life insurance.
We DO have the cost shifted to the individual. Most companies now require the employee to cover at least a portion of their insurance costs and the employee has to pick up co-pay and out-of-pocket costs up to certain limits. Our insurance premium costs (and we work for an insurance company!) went up 25% in January over 2009 costs. Pay increase? Hah! We have a net loss of that health insurance premium increase. That hurts our pocketbook and the economy.
Medicare revenues have not kept up with medical costs because Medicare taxes have not increased since 1986, which is most of my adult working life. Think of how much medical costs have gone up in that time period. This is not well-known by the average American and, to my knowledge, hasn’t even been acknowledged by anyone involved in the health-care debate. Republicans and Democrats have been kicking the can down the road and now we’re finally having to deal with it.
Single-payer (Medicare for All), even with an increase in Medicare taxes, would be a LOT more cost effective for individuals. There would still be room for private insurance, because there will always be those who want private rooms if they have hospital stays. We also need to allow the importation of cheaper drugs from other countries, but with stringent testing guidelines so we don’t end up with adulterated products. Let’s be honest and have the government (using our tax dollars) provide research grants to drug companies rather than allowing them to gouge individuals for their research dollars.
if you are viewing these plans side by side {the senate bill vs the Ryan plan} why would you gravitate towards the plan that doesn’t have any actual potential cost saving measures to try and systemically lower the cost of healthcare versus the one that just shifts the cost to the individual? For the life of me I do not get this.
And Nemo, I posed this on a previous thread way after the post so I don’t think you saw it – you always come back to the ‘it’s a basic supply/demand issue’ – is there any universal care country you can point to that has demonstrated this in action that does have lower costs than the US? Doesn’t the UK independent panel that deems what they will and will not treat/cover act as this lever to control demand/supply of healthcare? I am just checking to see if this fits within your framing of this, because if so, it seems to work pretty well for them but we can’t do that here because it’d be a ‘death panel’ to the nth degree.
Ah, I see.
The US Treasury reports the total Center for medicare/medicaid cost services was 972 Billion for the last fiscal year. That is more than the 5.x percent of GDP indicated in the plot.
Increasing health costs is not just the problem of the US budget, it is the problem of the US economy.
The health industry at this point is in fantasyland when it increases its share of GDP. It will not continue.
Increased health care spending is not a bad thing. Most people look at increased spending on cars, clothes, or airlines and see thriving markets. Economic development, etc. The US spends more on health care (and vet care) because people are becoming more wealthy in general and they obviously want to spend their money on more health care.
The payment system is horrible and hides the real costs from the people purchasing. The majority of people now have no problem with a $20 copay for a doctor’s visit that actually drives 20x or 30x in real costs. Medicare actively makes the situation worse by reducing users’ costs and reducing providers’ incentives with low mandated payouts.
If people had to pay more of the real costs and insurance covered catastrophes and excessive out of pocket costs then competition in insurance and provider costs would reshape all of these cost estimates. See: auto insurance, fire insurance, and just about every other type of insurance you can buy. “Health insurance” hardly deserves to be lumped into the same market anymore.