The Future (Cost) of Medical Care in the US?

Politics and religion
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Since we’ve been talking about the large share of federal expenditures taken up by federal entitlements, including the medical benefits provided through Medi-Care, I thought this article was timely:

Overall, the cost of medical care in the US has been rising at about three times the rate of inflation for roughly 25 years, and with the boomers retiring (and the pattern being that medical care usage increases dramatically with retirement) the trend should, if anything, increase. The US already spends roughly double the fraction of GDP on medical care as other industrialized nations (roughly 16% to 17% US, with 6% to 10% for most other industrialized nations).

So what’s this going to lead to?

I am very concerned about the trend of increased utilization of “free” services as described in the article. I believe its human nature to take what is offered and that there are a variety of reasons, other than just pure health concerns (social competition, fear of aging, a sense of entitlement for having paid taxes for many years) for the seniors in the article to keep increasing their consumption of services. I believe that when there is no cost for a service, and no dis-incentive to use the service, even if the service is only of modest value to the recipient, people will maximize their utilization over time. If there’s no downside to maxxing out Medi-care, why not do it? And once the fraction of the population who is naturally going to maximize their self interest as fast and extensively as possible has started doing it, I believe a snowball “keep up with the Joneses” effect kicks in so that people who aren’t that interested in min/maxing start doing it as well. I’ve seen it in CA administrative law a in number of areas: massively spiking workers’ comp treatment costs, Medi-Cal costs, even private health insurance.

This tendancy of human nature is one reason I am very very skeptical about single player plans: I like the idea but every implementation I’ve heard of didn’t take into account the “infinitely increasing utilization” tendancy of most people.

I don’t know - part of me feels like just like in the tax and spend area (where voters tend to expect more services than they are willing to pay taxes for) we are reaching a divide between the public’s expectations on health care and what they are going to be willing to pay for. Right now, someone “else” (employers and other tax payers mostly) are paying for the rising health costs but eventually this is going to bite us in the ass on a national level (it already is with the Medicare prescription debate).

Does the public need to rethink its expecations on health care? Are we going to end up with a rationing system? Is there a market system that will work? (As an aside, its my opinion that the actual market for health care, where the consumer of the service negotiates the price for the service, even indirectly, has broken down several decades ago and that we don’t actually HAVE a free market in health care now - we have a mostly broken market tangled with a combination of employer obligations, state required insurance coverage, and government regulations.)

Dan

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Does the public need to rethink its expenditures on automobiles? After all, those rose faster than inflation for years back in the early part of the century.

Wondering why those other nations that spend half what we do on medical care are ahead of us in every stat tracking health well-being is productive, too.

Putting in reasonable co-pays for non-catastrophic care would probably be a good idea, though.

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I believe that comparison was there to give a sense of scale, rather than as a de facto rule to calculate bad rates of expenditure.

Wondering why those other nations that spend half what we do on medical care are ahead of us in every stat tracking health well-being is productive, too.

But only if you put it in perspective with the vast number of other factors that tie into that situation, such as the opportunity cost that arises from taxing the shit out of your population, and the relative rate of medical innovation, and the amount of good old fashioned waste that occurs within a system where there is no incentive to control consumption of medical services. Then take into account the cultural factors that have made it work this long, and think how much worse the situation would be in a society like ours.

Sharpe I am pretty sure I agree in general with your grim assessment. There have been some serious attempts to come up with privatized solutions (like this Mandatory Universal Health Insurance? ) that would avoid the incentive pitfalls of socialist health care, but they are difficult to take seriously when they don’t take into account, up front, your reservations about the current state of affairs in private health insurance. To your critique, by the way, I would add the need to undo the cozy cartel system that allows for price gouging and irrational (ie not market based) exclusion.

I am not (any more) reflexively hostile to the idea of universal health care. I have a host of moral and philosophical objections to it, but I am mostly interested in seeing some pragmatic proposals in that direction that address the problems with those systems as they exist now. Like, for instance, some credible incentives for frugality, and some realistic assessments of the taxation requirements it would have. Not to mention a section on what you plan to do with immigrants just joining the system.

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I believe that comparison was there to give a sense of scale, rather than as a de facto rule to calculate bad rates of expenditure.[/quote]

I think it’s a misleading example, because it implies something like “this trend is unsustainable.” If its growing much faster than inflation + GDP growth, maybe, but it’s not.

After all, wouldn’t you expect people who’ve already mostly satisified their other needs - housing, food, transportation, etc. - to spend a bigger part of their income increases each year on health care? Like right now, we spending 10% (or whatever) on health care, but since we don’t have much else we want to buy, we spending 20% of every extra dollar on health care.

Also, if medical innovations mean there’s a lot better quality-of-life stuff to spend medical dollars on, you’d see people reallocate spending from other fields to medical spending, even if income was flat.

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I can’t believe I’ve been put in a situation where one could perceive me as defending the NYT on anything. What’s this world coming to?

Also, in another sign of the impending apocalypse, I think you are pretty much right in your take on that statement. However, I don’t think debunking what an article vaguely implies is at the same level of importance as dealing with its main points, although it certainly points to a certain level of sloppiness in the conceptualization of the article.

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I think Dan is right about this, and it scares me too. Free services are easy to take advantage of, and lots of people are doing it. Because money seems to be the only concern in these situations, both the medical community and the consumers want the system to keep going the way it is right now. Everyone gains in the short term. In the long term, though, everyone loses (except of course the older people, who will be dead).

What really scares me is the abuse of medicine in general right now…not just the problem of medi-care and similar programs. People are taking anti-biotics for viral diseases, which can (but doesn’t always) help alleviate some symptoms but does not do any real good. It does, however, do a LOT of harm because it lessens the affects of antibiotics down the road. Because doctors want the money, they don’t deny the patients these “placebos” (affectively), even though it causes problems. Anti-bacterial soaps and air-sprays are also contributing to tougher diseases. Because viruses and bacteria mutate so fast (through generation), all this antibacterial crap speeds up the natural selection process and makes for some real problems.

sorry…got lost on a tangent there. At any rate, my point is that money over responsibility is causing all sorts of problems with medicine in the U.S. Dan’s article just points out one of them (though it could be a big one).

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[quote=“Lizard_King”]

I can’t believe I’ve been put in a situation where one could perceive me as defending the NYT on anything. What’s this world coming to?

Also, in another sign of the impending apocalypse, I think you are pretty much right in your take on that statement. However, I don’t think debunking what an article vaguely implies is at the same level of importance as dealing with its main points, although it certainly points to a certain level of sloppiness in the conceptualization of the article.[/quote]

Oh, this article isn’t that bad about it, but really, you can get two rather disturbing assumptions out of every article on health care:

  1. All health care spending is a cost, not a benefit. When you spend $100k on heart surgery, you’re not gladly paying that to buy yourself another ten years of life; you’re actually pissing money away, somehow.
  2. Eventually medical care will be all anyone buys - and this will be a bad thing! It’s possible, but I wouldn’t say it’ll necessarily be bad.
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Future cost of medical care in the US? Higher, of course!