jeffd
3461
You’re right - I’m a lot less concerned with the overall cost of our healthcare system. It’s a problem, but it’s not the problem - if it was the problem we’d already be fucked.
Currently our healthcare system is ~16% of GDP. That’s a lot - it’s more than pretty much every other developed country. We spend more per capita than pretty much any other nation, and we get worse results than most of them. Those are huge problems and it’s important to address them.
The apocalyptic problem though is the fact that healthcare cost in this country is growing by around GDP+3-6%. At that rate of cost growth it ends up consuming 100% of GDP within the century. Obviously that’s not going to happen, something is going too stop the growth of healthcare costs in this country, it’s just a question of what.
So yes you’re right - I’m not concerned by the absolute costs that health insurance adds to our system because there’s no evidence it’s driving cost growth. If we were to eliminate all of the costs of private health insurance tomorrow and leave everything else the same we get a one time reduction and that’s it. In math terms - the curve is shifted downward, but the slope remains the same and it’s the slope that’s really killing us.
That said, most of us agree more than we disagree. Our country’s healthcare system is a disaster. I’m not sure why you’re implying that I’m against letting the government have a hand in it, I’m pretty sure even a non-judicious reading of my posts in this thread will demonstrate that I’m all for a government takeover of our healthcare system! Or maybe that’s not what you meant to imply, in which case never mind.
Anyway: I focus on cost growth because that’s the real problem. Private health insurance is awful for all manner of reasons - it’s often inhumane, and often behaves unethically and those are very compelling reasons to take a heavy hand with the industry… However there’s not much evidence that private health insurance is driving long-term cost growth in our system; that particular honor goes to the delivery system - e.g., providers. IMO it’s important to be clear about what the problems are and respond appropriately to them.
To play devil’s advocate wouldn’t single-payor healthcare just mean a single-stop for drug/medical devices companies to lobby? WHY DO YOU HATE AMERICA? THIS CHILD DESERVES THE BEST CARE AVAILABLE.
Much is systemic (older population, and no matter how much you spend per person we all die sometime) but my gut tells me expenses have to do with overutilization. When Canadians (fairly similar demographics) have half the expenses and similar outcomes you can’t but help think half the money is wasted. The irony is Canadians seem to be embracing private health care so people with money get to jump the queue.
We probably need cheaper, lower-tech services and utilization management (and you know everyone LOVES it when HMO’s do it.)
P.S. I quit smoking, but I’ll see what I can do about the other one. I like to be helpful!
jeffd
3463
wisefool: overutilization is certainly part of the problem. But iirc the statistics regarding # of doctors visits per year, etc don’t really show that it’s the clear contributor. On the other hand, Americans pay more on a per-treatment basis than Canadians, regardless of how you define treatment. We pay more for a flu shot, more for 5 stitches, more for a night in the hospital, more for bypass surgery.
There is some amount of feedback in the system, actually. The higher the doctors jack the rates, the more worthwhile it is for the insurance companies to dick around trying to shave pennies, nickels, and hundred dollar bills off of the tab.
In other words:
-Insurance underpays/dicks over doctor
-Doctor jacks up rates
-Insurance now invests more effort into underpayings/dickings over, because that’s what’s most profitable
-Doctor jacks up rates more, has to invest in anti-dicking-over
I don’t know how much of the cost growth this fuels, but I have first-hand knowledge (from dealing with a GP’s practice and long conversations about the economics of the situation, which I used to sanity-check statistics) that there is some amount of cost growth being driven by the insurers.
JeffL
3465
BTW - when people compile statistics on the costs of procedures, etc. in the U.S., do they use the numbers for what doctors and hospitals charge, or what insurance companies pay? They tend to be consistently and dramatically different.
I figured the problem was an emphasis of specialization vs. generalization, the high cost barrier to entry, and expectations of renumeration.
IE, med student graduates with a 250k+ student loan, spends that again setting up his own business (at some point in the future), expects to make at least 150k a year, along with several staff on payroll, in his own office with relevant expenses, paying salaries of several staff, paying admin costs, paying self-employment and insurance costs, ect. You can’t run that operation on a shoestring budget, and you can’t run it at all unless you’re practicing in a profitable, and specialized, medical field.
But changing it is not, as always, just hospitals are “outsourcing” (which is an absurd and weird objection, considering most hospitals are overcrowded and probably couldn’t handle additional capacity), or that the tangentally correct observation that doctors are “charging more”, which is a systemic problem caused by the costs of entry into the medical profession and the inverse economies of scale faced by doctors setting up their own practices. And prescription medicine is screwed up for various reasons, but the panacea is not just government importing from other countries (which is i’m sure the implications of the graphic); that is, really at it’s heart, appealing to Walmart for medical care.
“The US government is LESS involved in price regulation.” What?
Medicare/Medicaid reimbursement sets a price for reimbursement for virtually everything procedure and medication (which sometimes that reimbursement is zero, but deciding not to reimburse is a form of regulation – because non-reimbursed interventions happen far less frequently). The private insurance companies follow Medicare and Medicaid’s lead on this. How could Medicare become more involved in price regulation? Need an example here.
Here’s an example of how Medicare unintentionally shapes physician behavior. Medicare unintentionally distorts the market. Performing a 10 minute cataract surgery pays you $2,000. Assisting an 80 year old woman with end of life decision making during a 45 minute visit pays you $75. Guess which happens more often?
“Doctors make around 5X more than the average patient, in other countries this is 3X more.”
Yeah, cut physician pay by 40%. That’ll fix the US doctor shortage. Like everything else in health care, it’s much more complicated. Dermatologists shouldn’t be making seven figures while pediatricians are busting their ass to make $120k. Current reimbursement values procedures and volume (so, specialists who can do a lot of quick procedures make the most, and those who don’t do relatively few procedures make the leat). Quality of care delivered is given no value.
Related.
Ezra Klein posted a super-long chart making this point yesterday, but it really can’t be said often enough. The overwhelming reason that health care is so expensive in the United States is that Americans pay high prices for health care services.
It’s not demographics, it’s not our bad habits, it’s not malpractice. The entire system is set up top-to-bottom to be run incredibly inefficiently, delivering low-value high-cost care.
Yeah, cut physician pay by 40%. That’ll fix the US doctor shortage.
The US has a “doctor shortage” because we have virtually unlimited demand for care, because someone else pays for it. That someone else (Medicare, private insurance) assigns very little priority to ROI, however. So doctors naturally go into lucrative low-value-delivered careers.
Cutting salaries across the board would serve no purpose, yes, but I imagine fixing the above would cut the long-term growth rate in overall doctor salaries by a significant amount. Doctors who actually deliver value will make more than before.
How could Medicare become more involved in price regulation?
I think it’s in line with what you’re complaining about. Near as I can tell, Medicare will pay “physician costs of production - X%” for everything, which is a terrible way to buy anything; you just create incentives to drive up production costs. If they paid on actual consumer surplus the numbers would be more reasonable for each category and create better incentives. Private insurance has a different set of strange incentives about long-term investment being worthless to them, because you’ll probably go to a different insurer.
If you want to listen to the oral arguments on the two appeals to the healthcare bill you can do it here
http://www.ca4.uscourts.gov/OAaudiotop.htm
jeffd
3471
Hiredgoons I’m not sure what post you’re responding to - but compared to most other nations the US government is absolutely less involved.
There’s more to it than “who pays for it,” since in most of the countries that have lower doctor salaries also don’t make the patient pay directly for health care.
How much it costs to become a doctor probably does. Last time I checked, getting a medical degree in England was about 1/4 the cost of getting the same degree here.
jeffd
3473
The price of getting a medical degree is definitely part of it. Doctors rack up a huge amount of debt to get their medical degree; they expect to be able to earn a huge amount of money.
You’d also get a lot less people willing to rack up that debt if they didn’t think they could pay it off.
jeffd
3475
That’s also true, of course.
In most countries other than the US medical school is much cheaper. Many nations even subsidize the cost. Probably that’s the direction the US will have to go. The world where healthcare doesn’t eat most of our GDP is a world in which doctors make comparatively less than they do today.
It’s not really just the salary / compensation of doctors, either, it’s the fact that specialists become in essence entrepreneurs with all the associated costs of running a business with several employees. The problem i encounter with this logic, though, is determining which is cheaper; it could be just as likely that an specialist running his own office could be cheaper than the same service provided at a hospital, if the hospital for ex., is in a border state and takes on a significant number of indigent or uninsured ER vists, or is poorly run and/or has various costs for whatever local reasons and conditions exist, outpatient treatment could very well be less expensive due to these relative local conditions. Or, of course, they could be much much higher; and office in a posh, affluent part of town with high property values and wealthy clientele is likely to be much more expensive to run and to bill than the same service in a poorer, less affluent, more minority driven office. The divide between private and public care is also greater in metropolitan areas, and drives costs as well; affluent dollars are likely to go elsewhere than public hospitals, and so Medicare compensation probably has a proportionately greater influence in public hospitals, while the lack of affluent dollars reduces the base from which they can improve and maintain their facilities and staff; just as, at the same time, private hospitals can turn away non-paying clients, while publics cannot.
I was under the impression that, when you take underpayment in all of its forms (including warring with paperwork), Medicare pays out higher than private insurance does.
AFAIK, the supply of US-trained doctors is constrained by the number of slots available in medical schools. That is, we’re training as many doctors as we have have schools to train, and there are more people who would like to become doctors than are actually able to do so.
As such, fears that the supply of doctors would be reduced by decreased pay seem mostly unfounded to me.
That said, I do think we should subsidize the cost of medical school.
A “shortage” is hard to define technically. From an economic perspective, I think what people mean is “there’s not enough doctors in the specialities and locations I want”, and the reasons are the ones I said on payment side. You could make it free to learn be a doctor and people would still go into the same distributions of specialties for the financial and lifestyle reasons. Same deal for increasing the number of slots at medical school.
Well, you could somehow subsidize becoming a GP/pediatrician and not, say, becoming a plastic surgeon or a dermatologist so much.
