Health Care Non-Solutions

By James Kwak

Ezra Klein makes an important point about our nation’s health care problem: it’s not just a government deficit problem. The underlying problem is that health care costs are not only growing faster than prices (inflation), but also faster than GDP (economic growth), and as a result the amount of stuff we as a nation will be able to afford, other than health care, will start to go down at some point in the future. (Picture originally from Joseph Newhouse in Health Affairs.)

This means that proposals to solve the long-term budget deficit problem by cutting Medicare benefits are not solutions: they simply shift the problem from the government to individuals–which means they shift the problem from us as taxpayers to us as old people or us as family members of old people.* If, for example, we increase the eligibility age for Medicare from 65 to 67, the government saves money, but only because people who are 65 and 66 lose money–or, alternatively, all of us lose money because their employers now have to pay more for health care.

Paul Ryan’s non-solution is a perfect example. By converting Medicare to a voucher program, he would insulate the federal government from health care cost inflation, saving money for taxpayers; but at the exact same time, this would expose old people even more to health care cost inflation, increasing costs for them and their families. Does Paul Ryan think that somehow “taxpayers” are different from “old people and their families”? Yet his proposal refuses to go away, my efforts notwithstanding. (And despite the fact that his proposal doesn’t actually reduce the deficit–it makes it worse–as Brad DeLong reminds us.)

* Yes, I know the argument that by shifting costs from the government to households, we reduce the incentives to over-consume health care. But if that’s your argument, then you have to explain how the private sector is better at managing health care costs than the government, and it isn’t. There are a lot of reasons for this, but the simplest is that in either case spending is mediated by an insurer (Medicare on the one hand, private insurers on the other), and Medicare has more market power than any private insurer.

110 thoughts on “Health Care Non-Solutions

  1. Are health care costs an exogenous factor, like the phases of the moon?

    If not, maybe somebody could devote some analysis to the causes of health care costs rising faster than inflation. Maybe even propose policies to do something about it.

    That would do more to save lives and improve quality of life than any shifting of the burden from the private sector to the public or vice-versa.

  2. P.S. Any answer that does not involve the words “supply”, “demand”, or both, is wrong.

    In particular, “collective bargaining” is not an answer any more than “price controls”.

  3. You state the government is better at managing health care costs than the private sector. Can you point to the evidence?

    Government will control aggregate health care costs with little to no regard for individual needs.

    The private sector institutions can do such control as well as the government. But as requirements change, private sector institutions will change. Government will not. Consumers can change private sector providers. Consumers can’t change government provided health care.

  4. Dear Mr. Lepp: You must know different consumers than I do. My circle consists of people whose health insurance is provided through a company plan, and our say in changing that is very limited, as in nil. Individual health insurance policies are just unaffordable.

  5. Let me take a stab at it. To meet your criteria, lets just say that the demand for healthcare services is unlimited (everyone wants to live forever, nobody wants to pay for it) and will continue to grow as demographics change in favor of old people, while supply is limited (physician and nurse shortages being the prime examples).

    Demand is a cultural issue, and can only change when Americans change their care preferences (i.e. being more willing to “let go” before exhausting every possible means of prolonging the inevitable), and their lifestyles. To many fatties in this country, smoking too many cigarettes and eating too much fast food. Supply, on the other hand, can be manipulated somewhat easier.

    Right now there is an insurance supply problem. The key to bringing down insurance costs is to get everyone (healthy and not so healthy) into the same risk pool–this is best achieved through single payer, but the private solutions in other Western countries seem to work well too. Whether it will work here remains to be seen, and current political trends suggest it won’t–this is the purpose for the “individual mandate” in the PPACA.

    Unfortunately, insurance also drives demand (people are insulated from the true cost of their care), which in turn increases costs. So…perhaps I should say that a large risk pool decreases the cost to the individual of being insured, but actually drives up the cost of care on the whole. A dramatic reduction in the role of insurance in the healthcare sector could ameliorate this effect, but thats probably not politically possible. I’d personally advocate for a nationwide “catastrophic” plan, on top of Medicare for the elderly (because they deserve it!).

    There are two other supply issues. First, technology drives the business, and is expensive to develop and implement. Once it is developed, EVERYONE demands access to it. This has led to a kind of arms race between providers, particularly hospitals. Some kind of technology management policy could curtail this effect to some extent, and that’s basically what Comparative Effectiveness research is supposed to do. However, culture is again an issue–everyone wants the most cutting edge medical care, and why shouldn’t they since their insurance company picks up most of the cost. Techno-obsession is a problem in other countries, but its the worst here. Neil Postman’s “Technopoly” explains this nicely for me.

    Finally, our delivery system for care is jacked. There’s too many specialists and not enough generalist, and they’re all really bad at communicating with each other. The result is often over-treatment, which is of course expensive and often damaging. The PPACA actually does this part of the reform pretty well…in theory. Having a more efficient “supply chain” should bring costs down in the medium term.

    Hope this passes your test.


  6. Employer provided health insurance is an artifact of government meddling in healthcare industry. Eliminating the tax incentives that promote corporate spending here will remove this distortion from the market place. This would almost certainly result in more choice in the individual market.

    Additionally government over-regulation of the healthcare industry makes it very difficult for innovations in health care delivery. Innovation right now is focused on shaking money from the insurers’ pockets.

    The continued power of the AMA and other similar industry trade groups that artificially limit the supply of possible health care practitioners is an additional problem driving up costs.

    I realize this is a left leaning blog, but you must acknowledge the great barriers to entry here to competitors to really meaningfully try to bring costs down here.

  7. Options for providers are limited to a localized oligopoly, since insurers are not allowed to freely cross state lines. Further, your employer almost invariably will only offer you one insurer if they offer any at all. If you don’t like it, tough. Finally, individuals’ costs are prohibitively high even without these other factors in the picture.

    Shopping for insurance isn’t like shopping for a car or a refrigerator. It’s like shopping for local phone, internet, or cable service. You have a limited number of monopolistic companies with tight control over the market. Even if you eliminate the laws that prohibit crossing state lines easily for sale, you’d have similar behavior due to momentum.

    I seriously don’t think “the market” can provide all on its own here. Health insurance isn’t like selling cars. You sell cars, you want to make the best product you can for the customer; you want to give them what they want in order to keep their business. In insurance it’s accepted practice to take the customer’s money, then do your damnedest NOT to give them what they paid for. Their motivation is to take in money and give little to nothing in return. Mine is to put money in and get help when I need it. Those two are diametrically opposed.

    You really think that with a motivation like that, private insurance is going to work things out that well? I’m really skeptical about that, particularly with how all the lobbyist solutions involve sacrifices being made only by consumers, hospitals, and doctors. Never by insurance companies. That *really* shows me what they’d do if we just trusted them to regulate and control themselves.

  8. Talking about healthcare costs without mentioning the link between employment and iNsurance – created by tax code- is almost
    willfully ignorant. Still the point is largely correct – we need to get slow the increase in health care spending. Indeed we will. The only question is how it happens.

  9. Reading James’ comment gives me a Yogi Berra minute. Places like Brookings and AEI, etc., were repeatedly pointing out that Obamacare did not provide the incentives to slow the increase — much less absolutely reduce! — health care spending. Most of these warnings went unheeded, especially by the Congressional majority who mindlessly plodded ahead. Like deja vu all over again! (Can you lip-synch financial reform?)

  10. James Kwak,
    “But if that’s your argument, then you have to explain how the private sector is better at managing health care costs than the government, and it isn’t.”

    Please read The Innovator’s Dilemma by Clayton M. Christensen and Jerome H. Grossman, MD for an example of a private sector company successfully managing health care costs.(page 209)

    “Quad/Graphics: Vertical Integration into Health Management
    … This system has slashed the company’s health-care costs, reduced morbidity and absenteeism, and demonstrably increased employee wellness. Quad/Graphics spends about $6,500 per employee on health care, compared to its midwestern peers, which spend over $9,000 per employee on average. “Instead of trying to put a Band-Aid on a broken model, we wanted to build primary care from scratch,” says Dr. Leonard Quadracci, brother of Quad’s late founder and head of its medical operations (QuadMed).””

  11. You very correctly describe the problem with limited consumer choice here, particularly with respect to limitations on crossing state lines.

    Health insurance could be a lot more like car insurance than selling cars. Auto insurance companies compete on price and customer service. I’m talking insurance here in its true definition.

    In aggregate Health insurance companies have a median 3.7% profit margin. People like to complain that they are high overhead, but any fat they may have in overhead is not going to survive increased competition if barriers to entry are eliminated.

    As we can see from MA, mandating that insurers are more efficient does not work..

  12. Can you say “Japan”? How about “Sweden, England, France, Germany, Canada, Spain” and even “Italy”, all of whom provide better health care for less per capita cost.

  13. You must be incredibly ignorant of the rest of the world to have made this post.

    Don’y you get it? The US has the 24th best system at more than twice the cost of the next most expensive system.

    Were you a conservative, like me, instead of a right wing nut job, you’d learn something before opening your trap.

  14. There are two fundamental issues that no one wants to deal with – because one is deeply disturbing while the other is merely unpleasant.

    First, almost one third of a person’s lifetime medical care costs are incurred in the last year of life. We as a society are going to very soon need to decide how much of our finite health care resources we want to dedicate to keeping the terminally ill elderly alive for a few extra months versus treating the young and healthy.

    Second, people are living longer. We need to raise the retirement age. There’s no getting around it. This is not the same thing as raising the Medicare eligibility age, and it would probably be possible to keep that constant while still requiring people to work (and contribute to total output) a few more years.

  15. Annual Costs of Health Care Per Capita

    2007 – Frontline

    In Australia, the annual cost of health care per capita is $2,886. In Canada, the annual cost of health care per capita is $2,998. In Denmark, the annual cost of health care per capita is $2,743. In Finland, the annual cost of health care per capita is $2,104. In France, the annual cost of health care per capita is $3,048.
    In Germany, the annual cost of health care per capita is $2,983. In Iceland, the annual cost of health care per capita is $3,159. In Ireland, the annual cost of health care per capita is $2,455. In Japan, the annual cost of health care per capita is $2,249. In Sweden, the annual cost of health care per capita is $2,745. In Switzerland, the annual cost of health care per capita is $3,847. In United Kingdom, the annual cost of health care per capita is $2,317.

    In United States, the annual cost of health care per capita is $5,711.

  16. Kwak wrote: “you have to explain how the private sector is better at managing health care costs than the government, and it isn’t.”

    The reason the “private” sector isn’t better at cost containment is because it isn’t really private but a complex mishmash of some private companies, i.e. private insurers, private hospitals, pharm, mixed with government controlled incentives such our new healthcare bill, Medicare and Medicaid.

    In addition, health insurance was given a legislated break from monopoly legislation a long time ago. That *isn’t* a free market.

    As a test of competitiveness, can you imagine any other huge industry who is *just starting to computerize?* I can’t. Let alone one that’s 17% of our economy. If it had been any other industry, it would have died a long time ago.

  17. Prior to the healthcare bills passage, 60% of all US healthcare spending was controlled by the government.

    If you want to look somewhere for the excess cost here, I would suggest looking there first. $60B in medicare waste alone, that would cover 1/3 of all healthcare spending for the country of Canada. Government bureaucracy is not a good steward for your money.

    For the record, I am not a right wing nut job, and I am not from the US so I am certainly familiar with the rest of the world.

  18. TR Reids’s book “Healing America” compares various systems and is well worth reading. I have a sister who has been a radiologist in Canada for 30 years. She thinks we have too much imaging in the US (and probably not enough in Canada). She is APALLED that radiologists in the US can own their own testing facilities. The conflict of interest is obvious and would not be tolerated in Canada. Radiologists in the US also get paid much higher rates for reading images. The US system is profit driven for the players. You can see the results in lack of access for many who need it and excess care provided to those who have insurance to pay for it. Simon Johnson’s comment to the Senate budget committee this week was spot on. Namely, the decision to spend an ever increasing amount of our limited resources on health care for the elderly is not an economic issue. It is an ethical (moral) issue.

  19. I’m entertained. All of this talk of government interference in or tinkering with the operation of markets and we produce a “health care bill” that is the quintessence of business interference in or tinkering with the operation of government. And now these scum intend to redesign Social Security in a way that transfers the alleged “savings” into the hands of the very interests that have been calling for the revisions all along. The game is simple enough to see for any that have the eyes to see it. It of a piece with the general trend toward privatizating public assets that has been going on for roughly thirty years now and lately at break neck speed what with the bailouts and other chicanery. And Schlemiel Of The Year in this respect just has to go to Ron Paul and to his legions of adolescent Tea Party enablers who have so wonderfully advanced the agenda of these criminal privitizers. Tell me, does Roundup work on this variety of weed?

  20. Wow, the next time I holiday in Australia I may need to put down a deposit for my parents in a soon-to-be-built Aged Care facility in Sydney with harbour views … inaction on my part may prove costly.

  21. “Government will control aggregate health care costs with little to no regard for individual needs.”

    Grade-AAA malarkey; government has EVERY incentive to bear individual needs in mind. Neglect enough individuals, and sooner than you thought possible, voters throw you out of office.

    Try to do that with private health care insurers.

  22. “We need to raise the retirement age. There’s no getting around it.”

    You know, 100% of the people I’ve heard make this argument (so far) are people who don’t do hard physical work for a living.

  23. How to control costs is well known; just apply the evidence-based findings of the colossal work done by the Dartmouth Research Group during the last 30 years.

    Why isn’t it implemented, you ask?

    Because of this:

    An article published online by Health Affairs is more frightening than a horror movie for those of us who try to bring reason to bear on health policy and the health system:

    The key finding from focus groups, interviews, and the online survey is that there is a fundamental disconnect between the central tenets of evidence-based health care and the knowledge, values, and beliefs held by many consumers. For health care experts, variation—in quality among health care providers, the evidence base regarding therapies, and the effectiveness and cost-effectiveness of treatment options—is a well-established fact of the health care delivery system, documented extensively in the published literature and well understood after years of careful study. Yet such concepts are unfamiliar to many Americans and may even seem threatening, to the extent that they raise unwelcome questions about the quality of medical care that people receive.

    The majority of consumers believe that all care meets minimal quality standards, that more care means higher quality care, that newer care is better care, that treatments costing less are inferior, and that medical guidelines “represent an inflexible, bargain-basement approach to treating unique individuals.”

    The news for health reform could hardly be worse! Reformers and consumers are talking different languages – the language of rationality and the language of faith.

    Oh! There is also the whole paradigm of distorted incentives.

  24. Beria, as you well know, those mutants are genetically modified and will not die with ordinary herbicide. You have exposed the root of the problem, as usual, my friend.

    “The “long-term budget deficit” is a phony problem, ginned up by politicians, some economists, and the historic enemies of Social Security and Medicare on Wall Street. For God’s sake, let’s not sacrifice our most successful social programs to the hysteria we’re hearing from them.” Excerpt from:

  25. Why is it that a rise in real healthcare costs is always portrayed, axiomatically, as a problem? Granted, Americans don’t seem to get as much healthcare per dollar as other advanced economies, but even if we did there’s a good chance that healthcare would consume a rising proportion of GDP over time, no? That’s partly because of improvements in healthcare: It costs more in real terms for the same reason a flat-screen HDTV costs more in real terms than the primitive Zenith you’d have bought in 1960. It’s simply a better product and therefore justifiably more expensive (not even accounting for the inflationary bias of service industries explained by Baumol’s Law). So what, if five years from now we’re spending three percentage points more of GDP on healthcare and three points less on SUVs and iPods? What’s more important than your health?

  26. I forget exactly what the breakdown is, but the cost of treating Type II diabetes (a disease which is directly related to being overweight/obese in most cases, therefore is also largely preventable in most cases) & heart disease (highly correlated with being overweight and smoking) makes up for nearly 60% or more of the total healthcare expenditure in the U.S.

    Without trying to be too inflammatory here and disregarding the socio-economic & demographic correlations for a moment, it is fair to say that the obesity problem is a cultural one!

    What does that mean? That means that the real answer to reducing healthcare costs, the one that will reduce demand over the long haul for good is nothing short of a “cultural revolution” against being fat. Of course, there is no government generated solution to that problem. It would be political suicide for any senator, republican, democrat, or otherwise to even suggest one.

    Taxing or regulating cola & fast food restaurants might help pay for more supply, but that marginal supply will be used up too and very quickly. Sidebar: the next person to tell me that McDonald’s now has healthier options like Salads – deserves to die. The calories are in the dressing and preservatives, duh. No company changes its stripes over night, they just get better at re-marketing themselves that way.

    Now, I know there are people for which genetics plays a role (thyroid issues and the like), but that is not the majority of people that are severely overweight. Those folks constitute probably 2% or less of the obese population. The problem is the other 98%, which is now nearly 30% of the population in some regions of the country.

    If we want a solution to the healthcare problem we need to take a look at ourselves. We need to stop being politically correct about obesity and recognize the cultural factors that contribute to furthering the problem. We need to encourage each other to stop shoving crap down our pie holes; stop adjusting the definition of what it means to be overweight higher & higher each year in order to make the statistics have better optics; stop blaming industries for marketing products that prey on our desire for immediate gratification; and stop trying to blame our government for not being able to solve a problem that can’t be legislated away.

  27. Dr Frankie quoted:

    “The majority of consumers believe that all care meets minimal quality standards, that more care means higher quality care, that newer care is better care, that treatments costing less are inferior, and that medical guidelines “represent an inflexible, bargain-basement approach to treating unique individuals.”

    “The knowledge gap that exists between a physician and a patient can prevent the patient from accurately describing his symptoms or enable the physician to prescribe unnecessary but profitable services; these imbalances lead to market failures resulting from asymmetric information. ”

  28. hurray! agreed. “I agree with Steve “everyone wants to live forever, nobody wants to pay for it.”

    Everyone dies from something, right! Now, if there is a treatment for everything which allows you to live a little longer and it costs $1MM… then everyone wants it. At some point if EVERY person in the healthcare system (regardless of how it’s organized) is consuming $10MM of services over their live… and putting in less over the course of their life in tax or premiums… then we run out of money. (unless china wants to pay for each of us to live 6 months longer so we can buy more stuff from them)

    The other thing I agree with is Dr. Frankie and evidence based guidelines. At some point doctors will stop thinking they are god… this will probably happen when computers begin doing a better job of providing self service care to patients then real doctors do. if enough cost is passed on to the consumer for Dr visits… they will begin using online tools more and more to do self diagnosis and get better results than physicians get. I’ll admit this is a half thought out plan… at some point getting meds and surgery is controlled by doctors. in the mean time if physicians adopt evidence based guidelines and decision support IT systems we’ll start making progress and maybe physicians will still have jobs 50 years from now, otherwise they will be left behind.

  29. Sort of tells the story, I’d say.

    If we went back to patients paying their own medical bills our of their own pocket, forget insurance or government, our costs per person would soon be well below the rest of the world.

    People would find ways to solve health issues for peanuts once they have to pay their own medical bills out of pocket. Surgery would cost a fraction of what it now costs due to supply and demand alone. Think about the foolish amount of drugs being consumed in this country.

  30. Chris Gay wrote:

    “Why is it that a rise in real healthcare costs is always portrayed, axiomatically, as a problem?”

    “If wishes were dreams, beggars would ride horses.”

  31. James, Don’t tell us we can’t get our X-box 360 Pro or Nintendo Wii so our children can be brain-dead by age 11.

    Don’t tell us we can’t get the latest i-Phone with 1/2 more Apps than the one that came out 2 weeks ago.

    Don’t tell me I have to check my credit card balance.

    Don’t tell me I have to take my bicycle or walk to get my breakfast at McDonald’s 2 blocks outside my residential area.

    Don’t tell me I can’t call 9-11 when I have a minor headache which I have decided to define a “migraine”.

    Don’t tell me I can’t use the emergency room to gain citizenship for my basturd child of Jorge Rodriguez “El Coochie Coochie”.

    Don’t tell me if I am diabetic I can’t have my large O.J. and 3 large cinnamon roles with 5 coats of sugar before I take my $75 diabetes pill.

    Don’t tell me if I’m a citizen or journalist I should know how much salary all of my city councilman are making, or how much my school district is spending for resources and maintenance compared to other school districts of comparable size. (How am I going to play Nintendo Wii then!!!! )

    Don’t tell us Ezra Klein can’t take a “journalism” tour of China to find out…………………………………………………………… well yeah, ALL those important things Ezra found out that you could find out while staying at five star hotels in China for 5 days, and hopping out to McDonald’s or the Hotel buffet to found out what the average Chinese NEVER eats.

    Next thing you’ll be asking us to read 1/4–1/2 of the newspaper Bio of some politician we’re voting for. James!! James!! Don’t even go there!!!!!!!

  32. Paul,

    I somewhat disagree with you that profit margins will be eroded by allowing consumers to cross state lines. They will be eroded for some companies and made better for others.

    While it is fruitless to argue a what-if scenario, it seems pretty logical that if consumers could buy across state lines, employers will just drop their plans and give their employees a bit more money to go shop on their own. Individuals with higher risk factors will shop for insurance from providers that offer the lowest cost plans; and those providers will pay out the least to keep costs low. The most well trained doctors will opt to only participate in provider networks that pay out more generously, which would bring down the level of care for those who are generally more sick or unhealthy than the rest of the population. In effect, you will have created a larger, private version of medicaid, which will be in perpetual bankruptcy requiring constant government bailouts or subsidization.

    The providers who are able to pay doctors more generously will be those with the healthiest risk pools, giving them the strongest balance sheets, lower cost of capital, and as a result more operating leverage & higher profit margins.

  33. Sorry, did I miss the part where you demonstrated how government has ever managed to control health care costs, or is it in an Ezra Klein footnote? And don’t think you can get away with using the term “private sector” as a direct substitute for “third party payer system with employer as intermediary” or “individual insurance market with limited entrants due to 50 sets of regulations.”

  34. Well, when the government decides it wants to get ‘real’ about wasteful spending across the board, especially the non-sustainable waste of resources dedicated to the pentagon and financial elite, I suppose TED K’s words would pack a real punch. But if we are only going to focus on wasteful government spending affecting common entitlement programs, while the banksters and elite get carte blanche entitlements/welfare/bailouts, socialising an astronomical amount of debt, I will have to take a pass on this brand of austerity. In the old country we say “what’s good for the goose, is good for the gander.” And, I’m going to give a nod to Mr Kwak, and a salute to Beria.

  35. This is correct Rickk; However, this knowledge gap exist everywhere.

    Hence, the question: Assuming the knowledge gap generate imbalances that leads to market failures, why would it be far more pronounced here in the US than elsewhere?

  36. “did I miss the part where you demonstrated how government has ever managed to control health care costs…?”

    In this country, it will be impossible to control costs as long as Congress interferes.

  37. There are many good ways to control the growth of health care costs. Among a large group of virtually ignored options in the debate preceding the bill’s passage into law were the followng: Eliminating all state boundaries relative to offering of private plans, single payer (as with Canada), the Netherlands solution (national control of insurance premiums, doctors must accept every patient, insurers must accept every applicant with no pre-existing condition discrimination), many othe effective European-style solutions, allow importation of any and all drugs, remore all pharmaceautical subsidies, require every doctor to accept any patient, with or without insurance, subsidize medical education substantially, prescribe uniform claim forms which must be used by every insurer and medicare, subsidize the development of uniform electronic medical records, make drug approvals less costly and onerous. There are many more possibilities. None of these are in the bill. It was a basic plutocratic clusterf**k. I’n an independent, but I believe that what passed solves a few problems and creates loads more, and, most important, it does essentially nothing to reduce the cost of care. This is what we get when we have a non-representative plutocracy to serve the rich and large corporate interests. Their election money and lobbyists control the outcomes of everything. Unless and until that changes, we, the average citizens, will move deeper and deeper into the abyss of absolute serfdom.

  38. You might check a story in the July 16 LATimes titled “Undone by the Numbers”. They did a story on Anthem Blue Cross’ 39% increase in health insurance premiums. This was the same year their CEO Angela Braly got a 51% year-over-year increase in her pay to $13.1 million (The CEO of General Electric makes 1.6 million less ). Again this story was done in mid-July.

    This was AFTER President Obama and Secretary of Health and Human Services Kathleen Sebelius had a meeting with Health Insurance CEOs asking them to be more transparent about their costs in early March.

    In California (which is a geographically huge state) there are only two places you can get details on health insurance rates: Los Angeles and San Francisco. In the year 2010, for some reason the current Insurance Commissioner of California (Republican Steve Poizner) doesn’t think it’s necessary to put a breakdown of rates anywhere on the internet. In other words, a breakdown of how rates are made in California is not available anywhere online.

    You can read about that here:
    and here:,0,4765675.story

  39. Olga,
    The fact that you label my little list “austerity” exhibits the attitude that has America and Greece in the fiscal mess they are in now.

    I might also add, it’s not an “either/or” choice. You can have both, and most likely to have a functional system you must have both. It is this “Well teacher, Johnny was throwing rocks at the cars also” viewpoint that is slowly ruining this country.

  40. Yes! Thank you! With single-payer Medicare I and many more like me could actually move back to America. While Thailand has a lot to recommend it — including excellent health-care at a low cost — it will never be home.

  41. Exactly. It’s a case of motivation.

    An insurance company’s objective is to make money. Period. Under all circumstances. Every insurance company has this motivation, and the best way to serve it is to take on people who are healthy and try like hell not to bother with people who will actually NEED insurance. Basically anyone that needs their product is the last person they want to serve.

    A government’s (ostensible) motivation is to help its citizens. If it fails to do so, it’s up to the citizens to fix that.

    I really don’t see how “the market” will ever resolve things by providing what customers need, much less want. The market will take care of extracting as much money as it can and paying out as little as possible. It’s already done that optimally and has no reason to change it.

  42. @ TED K
    “The fact that you label my little list “austerity” exhibits the attitude that has America and Greece in the fiscal mess they are in now.”

    Oh Ted, I think my points were persuasive by reasonable standards unrelated to any toxic ‘attitude’ somehow either directly or vaguely responsible for any part of the global fiscal crisis, and I managed to make them without offending anyone in particular. Your post, however, exhibits an attitude which is actually reflective of something less than benign, I’m afraid:

    Excerpt from Ted K’s post:

    “Don’t tell me I can’t use the emergency room to gain citizenship for my basturd child of Jorge Rodriguez El Coochie Coochie.”

  43. RJ – While I get what you’re saying, people are living a lot longer. If we do not increase the retirement age as the average life expectancy increases, then we are making a choice to take more and more resources from the working and shift them to the retired. There’s nothing necessarily wrong with that choice, but we need to recognize that we are making that choice.

  44. The post and thread labor under the absurd burden of trying to account for a world where private health insurance rackets exist. Once you accept that insane premise even the slightest bit, your entire train of thought, no matter how well executed, is bound to be gibberish. As we see here.

    We want to control health care costs? The fattest, ripest, rottingest, lowest-hanging, already-lying-on-groundest, is to PURGE OURSELVES OF THIS PARASITE. Institute single payer and eradicate the insurance rackets completely. Have this single-payer system pay only the social cost for pharmaceuticals, so purge all rents from that racket as well.

    Purge the system of ALL RENTS, meaning all profits, since there is zero legitimate “return” being “earned” by anyone here; there are only criminal parasites.

    Then, once we’ve done the obvious, the rational, the sane, the moral, and purged the system of all criminal parasite extractions; only then can we even begin to find out if the provision of health care itself also has endemic cost problems.

    But I’m not willing to listen for a second to any argument about the latter until we’ve carried out the former.

    In every case, we the people must be absolutely immovable on the line, “NO austerity for us until we’ve carried out total austerity for the rentiers, the parasites, the criminals.”

  45. Rick Scott, leading Republican candidate for governor of Florida this year, Founder of health care provider Columbia Hospital Corporation was forced out as CEO of Columbia/HCA by his board amid the Medicaid/Medicare fraud investigation, by Scott’s company, which resulted in the company paying $1.7 billion to settle the charges.

  46. I know all you readers are too intelligent to accept anecdotal evidence, but I will offer some anyhow. My experience of ‘health care’ suggests that what is out of control is hospital profiteering. Six months ago I had a hip replaced. 4 1/2 days in hospital. Apart from 30 minutes a day of ‘therapy’ (which involved walking next to a minder), all but seven hours of my ‘care’ involved being waited on (every three or four hours) by minimum wage servants (regardless of what they may have been paid). The hospital charge for this was $61,000.

    Incidentally, my surgeon charged $5900 and did a perfect job.

  47. Genuine care is the only thing we can really offer to our loved ones when they get old, more than anything they need you know.

  48. Olga,
    I can see reality is a very hard thing for you to grasp. You can do a count or research on how many women from Canada are having basturd children in American hospitals, in comparison to Mexican women if it makes you feel better. I doubt the results will be what Gloria Steinem, Oprah or whoever your women’s magazine cover hero is this week, told you they would be…..

  49. Anonymous,

    Thank you for the information and link which neither supports James Kwak’s assertion nor refutes the points made in the Christensen Grossman book.

    “Healthcare” is a large, complex, highly regulated industry in the United States and can’t be understood or changed by simple single sentence or one paragraph statements. Analyzing health care by simple statistics such as life expectancy or annual cost of health care per capita is no more useful than analyzing the automobile industry using average price per car or miles driven before recycled.

    Christensen and Grossman present the results of several years of detailed observation and analysis of health care and present examples of what is right, what is wrong and what is standing in the way of improvement – and it’s not just government. Quad/Graphics is one example of a private sector company making improvements in delivery while driving down costs in the current environment and “explain[s] how the private sector is better at managing health care costs than the government,” I encourage you and James to read the book.

  50. Everyone wants to raise the retirement age (what
    does that mean exactly anyway?), but it’s not that
    easy. And I agree for the most part. I think that
    “retirement age” ought to be indexed to life-expectancy.
    There is a problem, however, in that once one reaches a certain age, somewhere in the 50’s (if not earlier), it
    becomes really, really hard to find a half-decent job.
    Raising the retirement-age also increases the size of the labor pool. Already there aren’t enough half-decent jobs to go around.

  51. TED K spewed the following canned sarcastic vitriol: “You can do a count or research on how many women from Canada are having basturd children in American hospitals, in comparison to Mexican women if it makes you feel better. I doubt the results will be what Gloria Steinem, Oprah or whoever your women’s magazine cover hero is this week, told you they would be…..”

    Wow, what a condescending, arrogant, and pompous piece of work you must be, TED K. That may be your typical response to other posters who scratch your fragile ego, but I will call you out: I clearly see that you are a petty, insecure, and weak man hiding behind a keyboard whose intellectual capacity is marred by racist and sexist slurs.

    TED K: “You can’t help people who don’t have enough intelligence to make a water well.”

    TED K: ivyleaves, “racist much ?” I don’t know. Your words sound like a woman who can make her way through People magazine to get Oprah’s latest book recommendations but couldn’t make it through the front section of the NYT. Am I a “racist”?? Am I “sexist”??

  52. Single Payer, as mentioned several times in previous
    posts, is what we USAns should work for. “Old Guy”
    said it right when he cited all the countries which
    have Single Payer(sometimes modified a little) and
    which have health costs about 10% of their GDP,
    whereas with us it is 17% of GDP. And which have
    longer life spans, higher infant weight, better
    maternal care, etc.

    Some further short comments:
    1. Attaching health care insurance to employment
    was an artifact of WW II planning, when companies
    gave health insurance as a benefit because they
    weren’t allowed to give higher wages. It is clearly
    insane. We need higher labor mobility in this
    country, not people tied to their jobs because
    of their health bennies.
    2. I’ve had a hip replacement and a knee replacement,
    all under Medicare. If the cost of these replacements goes down, I am NOT going to go
    “Whoopee! Now I can afford to get some more joints
    replaced” ! ! Let’s not talk about “demand” for
    health care; everyone wants his/her illness to be
    dealt with, and then wants to stay as far away
    as possible from doctors.
    3. Doctors should be on salaries, like bank tellers,
    professors, truck drivers, etc. No payment per
    4. Our present new health bill is regarded with
    suspicion, and rightly so. We must all now pay
    money to big insurance companies, and who knows
    what we’ll get for it. But we have an implacable
    rule in the US: nothing can be done for the people
    unless some big business interest gets paid off
    5. How can we get our Peerless Leader James Kwak
    to read and understand this issue?

    Alan McConnell, in Silver Spring MD

  53. I can’t believe through all this discussion, although I only scanned some of the posts, no one has mentioned the true reason health care costs in this country are higher then elsewhere.
    TRIAL LAWYERS, have inflated the system through their many junk lawsuits against the medical community. If we could somehow eliminate 75% of the attorneys in this country, who later become politicians who write laws to bolster their professions, or judges who come up with some insane rulings that defy all notion of common sense, we would be far better off as a country, and our health care costs would be lowest, most available, and its quality would surpass any country in the world.

  54. Analyzing the causes would expose all of the TAKERS, and that would cause revolution. We will never find the real reasons out for this, but it’s because the higher you go, the more people are on the take. There are exceptions here and there, white-knights trying to change the flow of the river with a pebble, but the reason for all of this is everyone has to get their “fair share”. Only tearing it down will fix it. And even then, it will only be 50-100 years before it’s corrupt all over again. The only way this would help anyone would be if everyone was sick..the people rationing this health care aren’t sick, so what incentive do they have?

  55. That’s right, if health care were a gov. function they could refuse to be sued. And by the way, if med. insurance is tax enforced, take it off the top, before everyone else gets their greasy hands on it.

  56. The problem is that it isn’t really a better product, or at least not so much better as to justify the increased price. Certainly there have been a few marvelous innovations that have improved the health care product in recent decades. But much of modern American healthcare consists of overuse of treatments and tests in situation where they produce no good. Many other innovations, when carefully examined, produce only very minor improvements in health despite huge price tags. By the most conservative estimates, 1/3 of our health services are wasted. The real fraction may be much higher. We’re spending more, but we’re not getting nearly as much increased value. The information asymmetries others have pointed out above are a root cause of this problem. The US spends about twice as much on health care as other countries–but we are not the healthiest, our health statistics put us squarely in the middle of the pack. If we really were getting more value for our money, it would be a different story. Our health care system, for all its cost, is mediocre.

    “What’s more important than your health?” How about our children’s education? How about a safe, nutritious food supply? How about the opportunity for future generations to grow up healthy and prosperous? Health care is sucking up manpower and resources that could be used for these and other valuable purposes with greater social benefit.

  57. Social Security: More going out than coming in

    August 5, 2010: CNN – excerpt

    NEW YORK ( — “It’s official: Social Security will reach its tipping point this year.

    For the first time in nearly 30 years, the system will pay out more benefits than it receives in payroll taxes both this year and next, the government officials who oversee Social Security said on Thursday.

    And while Social Security cash flow will likely head back into the black for a few years after that, starting in 2015 it looks to stay in the red for the long haul, the trustees said in their annual report.”

  58. Well, seeing as the low end payees are out of work maybe it’s time to redesign our social network, or at least spell it out so we can choose sides.

  59. Hear Hear!

    Just like the job security and great real estate of the Catholic Church was invaded by – well, all sorts of fetishists –

    So has “health care” attracted the worst element in “Modern” society.

    Getting the IRS involved was SICK.

    As bad as all that is – SCIENCE is taking the biggest hit. Name ONE thing that for-profit health insurance companies have done to advance medical research! Their databases are about covering up real medical needs

    and providing medicines and therapies that DO NOT work, nor are the best that is available in SANE countries.

    Once again, the bad genes in USA prove themselves to be MEDICALLY CERTIFIABLE PSYCHOTICS and SOCIOPATHS.

    The Wrecking Crew’s dark hearted SADISTS need to be hauled out by the scruff of the neck from all corners of the care and NURTURE of human beings – AKA health care.

    There is NO COMPROMISE to be had with them – I agree.

    Look at how they took everyone’s $$$ – wait until you see what the banksters are going to do with “technology” in medical research and health care…

    The TRUTH is so bad about “the SECRET plan”, that the messenger of it will come across as “out there kookoo”….

  60. Re: @ Speed___”Healthcare” is a large, complex highly regulated industry in the United States and can’t be understood or changed by simple single sentense or one paragraph statements” – funny that the FinReg Legislation just used one paragraph to eliminate the “FOIA” from the public’s eyes – right before our eye’s? It is not healthcare their (these pathetic politicians) worried about but taking from the middle class to give to the illegals garnishing their “just-in-time” votes for 2012! PS. The hispanic vote is the largest vote in the country – growing exponentialy, and with jerrymandering the Supreme Court it’s about to get sweeter – sorry…the correct word should be “Hotter”?

  61. That’s why everyone is freaking out in the “elite” class – THEIR scam is going to be laid bare for all to SEE.

    I said it about 4 years ago – did the math – on a planet with 7 billion people – WAR is not the way to get rich quick…

  62. Re: @ Chris Gay____The problem is…in the interim we we’ll be spending 33% more of our GDP on the Military? That’s a wonderful tradeoff…don’t you think – 3% swapped out for 33% – how dare I make such a statement?

  63. Re: @ Rickk___Pure unadulterated hogwash! Garbage!!Just more trumped up lies to herd the populus into “Privatization”, period! PS. from the song…”Just say that You Love Me”?

  64. Likewise it is an accepted practice for policyholders to submit everything imaginable and hope the insurance company lets it through. Even for things as important as health insurance, I’m convinced that price is by far the most important factor in selecting a policy. One recurring frustration in health insurance business is the frequency with which dissatisfied customers were offered, but did not purchase, insurance products that covered expenses which later they are “shocked” to discover are not covered in the less comprehensive and cheaper coverage they did purchase. I am willing to bet that for every $100 of disputed rejected claims at least $90 can be shown to be specifically not covered in the policy documents. Of course insurance companies expend a lot of energy seeing that customers don’t get what they specifically did not pay for. I don’t believe that for-profit insurance is a good funding model for health care, but bad faith insurers are not a significant problem. The significant problem is that health care is so expensive that many, many customers are financially motivated to think unrelaistically happy thoughts about their health when purchasing insurance.

  65. Lots of great comments on healthcare economics above, but I want to point out another key piece of James’ commentary: “Does Paul Ryan think that somehow “taxpayers” are different from “old people and their families”?” Of course there are differences between public sector financing and private sector, but at the end of the day someone has to pay for services, and we should make explicit who. Just saving the taxpayers money doesn’t make the cost go away.

  66. Olga,
    I’m so flattered you like reading me. If I ever do a “Best of” compilation book I’ll be sure to contact you for the editing process.

  67. Do you think that the surgeon charged $5900 for the operation because the rest of the cost was BUILT IN to the overall experience ($61k!) or do you still think that hospital care on the whole is just way over inflated as you have pointed out? There is an easy revolution to have here if we wanted to…we could get groups of good doctors together that will still charge reasonable rates for their services, and open up a “revolutionary” hospital that would have more reasonable overall costs. These hospitals could have NON-UNION labor so that people would be affordable, care could still be first rate, and make enough noise and get enough media involved and this could be the beginning of a revolution to cut cost dramatically!

  68. Paul A while ago there was an interesting discussion here about Health Care Industry Margins. The Industry has a creative way of keep books that show it median margins at 3.1% (you say 3.7%). If you look at their assumptions differently it could be as high as 15% – 20%. Here are those former comments on this issue. Let me know what you think about Owen’s perspective. It seems reasonable to me.

    The continued reference to “small” profit margins by health insurance companies drives me crazy. The margins are always expressed as a percentage of premiums or gross revenue. It as always “overlooked” that approximately 80% of health insurance revenue is targeted for health care reimbursement. Only approx. 15-20% of revenue is actual reimbursement/profit for services performed by the insurer (risk charges, general overhead, etc.). Consequently, insurance companies are making a profit of 3.1% on real revenue for services of 15-20% of premium, equal to an actual profit margin of 15-20%. And this profit margin does not include investment income from pre-payment of premium combined with 2-3 months claims payment lag. Insurance company-provided profit margins are misleading and self-serving. It’s amazing they continue to get away with it.
    Bill Owens March 15, 2010 at 2:36 pm

    Could you explain this further? I’d like to understand more…
    scathew March 15, 2010 at 3:02 pm

    OK…when health insurance companies develop pricing for a product (premium), they first project anticipated claims volume. Reimbursement for submitted claims by covered insureds usually comprises 80-85% of the premium paid by groups & individuals to the insurance company. The remaining 15-20% is payment to the insurance company for the services the insurer provides (underwriting, collection of premium, claims administration, etc.).

    When health insurance companies compute their profit margin, they include the entire premium, including the 80-85% which is really just a pass-through of claims reimbursements, in the denominator. This significantly understates the profit percentage. A less misleading measure would be to measure profitability as a percentage of monies received for actual administrative/UW functions. This would create a more accurate picture of the 15-20% margin companies receive for the services they provide.

    Insurance companies also require pre-payment of premium. There is also a 2-3 month “lag” between the date a service is received from a provider of care and the date the insurance company issues the reimbursement. These “lags” are significant and allow the insurance company to generate investment income on premiums received prior to actual reimbursement.

    Hope that helps.
    Bill Owens March 15, 2010 at 4:18 pm

  69. The whole “average life expectancy argument” is a red herring. Most of the gains have been through preventing childhood diseases and have nothing to do with SS or Medicare. A person who made it to 65 today can expect to live 2.7 years longer then someone in 1940. We have already raised the age of retirement 2 years, so we are only talking about a little over 6 months of longer benefits. The rest is miss information.

  70. I sit on the governong board of a small non-profit hospital. Among the many things that I have learned is that there is an enormous amount of money spent on the “revenue cycle”. First insurance companies are in the business of not paying claims, so they hire people to figure out new ways to deny claims and make the claims process as difficult as possible. What compounds this problem is that each insurance company has it’s own rules and they are different in almost every case.

    As a result hospitals have to spend enormous amounts of money to figure out how to bill each payer differently. Then there are the computers and programs used to keep it all straight.

    There was no health care reform in the health care bill. We need to figure out ways to contain costs. Standard billing requirements would be one.

  71. The entrenched power of the insurance comapies would stop this from ever happening. So much for the invisible hand of the market providing benefits to society.

  72. Look, I’m no fan of the tort system, and I strongly advocate its elimination and replacement with a better way to deal with medical errors. But I have never seen a serious economic analysis of medical malpractice that puts it at more than a couple of percent of the health care cost explosion problem.

    It’s a serious irritant to doctors, it serves injured patients inadequately. We ought to get rid of it. But that will do very little to control health care costs. The claim that an appreciable part of the health care cost explosion arises from defensive medicine simply lacks evidentiary support beyond anecdotes. Some states have already put significant caps on malpractice awards–and they have nothing to show for it in terms of health care cost reductions.

    In fact, since one of the worst aspects of our malpractice system is that most patients who are injured by substandard care never get a dime out of the system, it should come as no surprise to learn that getting trial lawyers out of the system and replacing them with an administrative system that would actually provide fair compensation to injured patients is expected to increase costs, not decrease them.

  73. Write the memo in BOLD so that you can see it through the PAIN of your personal bout with illness that every single human being will have at least ONCE while in the skin suit.


    As a Vulcan would say, “It’s illogical”.

  74. Here is part of Warren Mosler’s health care proposal:

    “As a matter of economics and public purpose it is counter productive for health care to be a marginal cost of production … Therefore government should fund at least 90% of health care costs paid for by businesses.

    Long term vision subject to revised details:

    Everyone gets a ‘medical debit card’ with perhaps $5000 in it to be used for qualifying medical expenses (including dental) for the year.

    Expenses beyond that are covered by catastrophic insurance.

    At the end of the year, the debit card holder gets a check for the unused balance on the card, up to $4,000, with the $1,000 to be spent on preventative measures not refundable.

    The next year, the cards are renewed for an additional $5,000.

  75. Earle,
    Thank you very much for your clearly written, insightful and on-point reply. Keep up the good work.

  76. Anonymous, good point re: life expectancy

    And also good points re: increasing labor pool.

    I disagree, though, with the assertion that “everyone” wants to prolong life. I think this is going to change…there were a lot of DNRs on the chart the last time I visited my FIL in the nursing home.

    What I don’t understand is how this issue got so screwed up…why business doesn’t support single payer. The automakers have figured it out, that they can build cars cheaper in Ontario so they DO. Why is the US business community so opposed to something that would likely cost them less in the long run?

  77. The large share of our GDP already going to health care services and goods, is already negatively affecting what we can spend on other valuable things, like education and housing. Besides the direct impacts of those, they are also among the most important (moreso than actual health care services) determinants of our nation’s health. One of the most powerful speakers on this issue, Dr. Chuck Kilo of Oregon Health and Science University, co-authored this opinion piece in the Journal of the American Medical Association in 2009:
    As James Kwak points out, health care costs displace other spending–only it’s already been happening for a couple of decades, only recently beginning to impact things that matter to middle-middle and upper-middle-class folks among us, like the budget for our kids’ schools.

  78. It was a simple choice – and the choice was made.

    We could either “save” health insurance companies (the Health Care Bill was the TARP equivalent – “money-for-nothing and chicks for free”)

    or we could have pursued a NORMAL, NURTURE-based health care “business” for the human species inhabiting USA.

    You want “details” about how you’re going to get ripped off now that the IRS is involved?

    When the choice was made for Health Insurance companies to exist instead of providing stitches for a bad cut –

    I’d say that “choice” that was NOT MADE BY USA CITIZENS

    needs to go into the Declaration of Independence 2010 as a FREEDOM we want – freedom from PREDATORY

    (and what could be more predatory that making a fortune off of someone’s misfortune?!)

    Health “Insurance” Companies.

  79. Bleeder,

    They have exactly what you propose in the Puget Sound region: Group Health. It is a co-operative owned by the members and to which all physicians and staff must belong through their sub-membership in Group Health Permanente.

    GH provides excellent care but in fact its costs are very similar to those of other providers. It is NOT the cost of nurses and staff that drive hospital costs so high. Nurses make about $65,000 a year in Seattle, so if you had had your treatment in Washington, you would just about have paid one their salaries.

    Non-professional care staff make considerably less.

    Since you where there for five days, you occupied your bed for about 1/70th of a year. Assuming it was used 75% of the time, the hospital received 52 times what you paid for “room rental”. I doubt you were cared for by anywhere near fifty-two staff members, either directly or on a fully allocated basis.

    So get off the union hating. The real reason that hospitals are expensive is the demand from all of us — backed up by the threat to sue — that we receive the absolutely latest care, when in point of fact the conditions in which those high-tech miracles are most effective are relatively rare. In far too many cases they are deployed and the patient succumbs nearly as rapidly as she or he would have in their absence.

    We have met the enema and it is us.

  80. Has any consideration been given to the idea that the primary reason health care costs continue to rise is because of the employer tax deduction for employee benefits?

    Employees are separated from their health insurance dollars by this scheme. Employers will never drive as hard at bargaining as individual employees buying their own insurance. The employer tax deduction for employee health insurance began soon after WWII and was a scheme figured out by health care providers and insurance companies. This scheme has mostly benefited insurance companies and health providers and not the employee/citizen. Health insurance rates are high because ALL employees are not buying their own health insurance. Health provider costs are high because health insurance companies can charge higher prices than necessary because of this scheme. Everyone should buy their own health insurance just as they buy their own car insurance and other insurance.

    Another way to view this is that employees who get health insurance through employers are a captured consumer totally controlled by their employers, insurance companies, and health care providers.

    The single best way to bring health insurance and health care costs down is to eliminate the employer tax deduction for employee health insurance over the next 10 years. This along with a public option will “wring” the excess out of the health insurance/care scheme.

  81. what the heck is this….?

    My comments cut and pasted and taken out of context and now “linked” to god-knows-where on the freekin’ cesspool that is the “global” internet!!

    I’m NOT going to be silenced by another culture – EVER. What medical marvels and cures have YOU produced? We are getting OFF OIL one way or another.

    The Gulf of Mexico – a MAJOR source of food FOR THE PLANET – has been poisoned – a lot of it PERMANENTLY.

    That’s EXTREME – and not very God-like, now was it?

  82. Part of this proposal is along the same lines as health savings accounts, one of a really short list of good Bush Administration contributions to America.

    (Yeah, go ahead and flame me for saying Bush did a good thing for the US. Whatever. I don’t care and I won’t respond. Flame on.)

    Unfortunatly, HSAs are probably dead in the water now. Anyway, they were never really large enough to create a revolution in American health care payments.

  83. ““collective bargaining” is not an answer”

    Well that certainly explains why my EOB for the routine blood tests I had last week, for instance, reveals that the lab would charge me more than $700 but instead, my insurance company gets away with less than $400.

    Meanwhile, the causes of healthcare costs increasing have been analyzed to death, and the answers are always similar, although the exact numbers differ; at least half the increase is due to the forward march of technology and pharmaceuticals; an MRI and the latest statin drug cost more than an Xray and an aspirin. And since it is a forward march, there by the time the development costs are amortized and/or the drug is off patent, there is something “much better” to replace it.

    The other half of the increase: the aging of the population, of course, but also the conversion of medicine from interventions in acute situations to management of chronic disease, and aging of people who would previously have died young; the complex interaction of third-party payment, skyrocketing specialist fees, and increasing personal wealth with the expectancy of getting “the best health care”; and the expanding American waistline.

    In opposition, we have the drop in smoking, the drop in automobile-related death and maiming, and the efforts by health insurers to keep costs down, not just by the well-known nasty methods, but by managing the aforementioned chronic afflictions so as to keep the afflicted as healthy as possible.

  84. Except that you choose your own car insurance, you don’t choose your own health insurance, your employer chooses for you. What do you think your car insurance would look like if your employer had to pay for it? $5,000 deductible, and you would have to pay for half of the repairs yourself.

    If they were allowed to shop across state lines, a bunch of states would get into a race to the bottom to see who could legislate the cheapest/worst insurance, and pick up the vast majority of the employers’ business; it’s a familiar happening in the history of US business regulations.

  85. Yes, try telling the rightwing and their “No New Taxes” religion that the solution involves taxing healthcare expenses and insurance, and see if it’s the left-leaners who give you grief.

  86. This is a terrific example of what a lot of people point out; primary care, including preventive care, is dirt cheap, whereas hospitalization and specialty care is expensive, so primary care should be “all you can eat” with the restrictions appearing on unnecessary specialty care. If all the research says back pain is as effectively treated with aspirins, mild exercise, and waiting as it is with expensive, painful, and disabling operations, then the benefits provided the employee should reflect this. Or the benefits provided the citizen… But that would be “government control! socialized medicine! lack of attention to the individual case!” whereas the former case was just an intelligent employer’s reaction to the system.

    Think about this; where, in the current system, does anybody get paid for NOT doing anything? Whether you have a cold which will get better in a week no matter whether the doctor does something or not, or you are 80 years old with a slow growing prostate tumor that won’t bother you until a decade after you die and an operation will give you pain, suffering, and risk of death, impotence, and incontinence for no discernible gain in health, or you have diabetes which is under control so the doctor won’t needing to amputate your foot; in which of these cases does the doctor get paid for doing NOTHING, even though that’s the CORRECT thing to do???? In the ideal case under the current, system, if everybody was superhealthy; doctors would starve. That doesn’t seem like a correct system. Doctors are paid for doing SOMETHING, even if it’s wrong; and if it leads to their doing more things to fix what they did, they get paid MORE. That’s the contradiction at the basic heart of the system, regardless of third-party payers, private versus public, single payer, any way you dress it up.

  87. Check out Dr. Atul Gawande’s writings on the cost of health care. One thing he finds is that the more technology, the more it gets used, like if a hospital or doctor has invested heavily in MRI machines then everyone gets MRIs. And he has written about places where costs are not skyrocketing and the reasons why.

    60 Minutes reran a story the other day about health care costs, where they talked a lot about end of life and unnecessary tests. The example that sticks with me is the 90 year old woman who got a Pap smear while hospitalized for something totally unrelated…that gets billed to Medicare. Everything but the kitchen sink seems to be the modus operandi.

  88. Where’s the like button? I’m a conservative/libertarian type and i’d take a fair public option if you gave me emlinating non-taxable employee health benefits.

  89. wow, synchronicity! i was just rereading some of gawande’s stuff yesterday. you’re right about more technological equipment means more use of it (without any improvement in patient conditions). another thing he observed: when the supply of MDs in an area increases, rather than costs dropping, as the “law” would predict, in fact each doctor starts doing more per patient, and/or raising their fees! There are many ways that medicine does not follow the usual market rules.

    Imagine your kids need heart surgery “well, i could go with the best guy, but we’re going to try to go with a generic surgeon and see if we can save a few bucks”. Sure……

  90. If Kwak thinks that medicare manages costs like
    a private insurance plan, he knows nothing (i.e. 0)!
    Medicare’s size is more than offset by the discipline
    of actually looking at claims.

  91. “A Modest Proposal” (actually a number of them) re health care: create single-payer assisted suicide programs with free cremation; reward hysterectomy and castration; create age-deadlines; require citizens to wear body-mass-index badges on their sleeves; forbid doctors washing their hands or using notepads; sentence more death penalties; remove prison medical care; start and lose more wars; attack only nations with WMDs; leave the wounded behind; create negative-placebo programs; remove health care programs for high-level government officials; remove Nutrition Facts from product labels; remove Social Security, Medicare, and Medicaid programs; drop school lunch programs; create SAT and ACT tests in order to qualify for hospital admission; issue fast food vouchers; allow Food Stamps for soft drinks, potato chips, cookies, and candies only; create a new Cabinet position, Secretary of Triage;… Some are short-term solutions; others long-term solutions.

  92. I’m not sure the stuff about “fatties” and smoking cigarettes is correct. Healthcare can be very counter intuitive. In this particular case, some studies have shown that healthier lifestyles increase lifetime healthcare costs. That it is better from a healthcare cost perspective for people to live fast and die young.

    Also, the extrapolations of healthcare costs are very suspicious, in my opinion. I think they’re an excellent example of Stein’s Law: “If a trend cannot continue, it won’t.” In fact July is the first month in 35 years that consumer healthcare costs did not increase. Although that might be saying more about the punishing deflation that we’re about to experience than it is saying about the potential for continuance in trends in healthcare cost growth.

  93. Browsing the comments I noticed that someone brought up end-of-life care.

    Seeing this as a problem strikes me as seeing healthcare as a problem. The disease you die from is likely to be the one you should spend the most fighting, since it is obviously the most serious you’ve had.

  94. How about publishing another graph, this time plot the % of the health care cost covered by 3rd party pay (govnt. or insurance) on the same grid as the cost of health care over the past 65 years. I predict a direct relationship.

  95. The New Yorker of June 9, 2009 had an excellent article on the cheapest and most expensive places to get healthcare in the country. In both areas, care was mostly paid by government programs, but in the most expensive area (not a rich area, btw), more tests were ordered more of the time, by doctors who owned testing labs. I have not heard this mentioned in the rest of the debate over costs.

    It seems to be an area ripe for study. If found to be true, barring doctors or medical practices from owning labs might be an issue.

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