Grumble grumble, you are absolutely right, 1981. Serves me right for not checking first. And yes, that is the argument of 1981.
Wow, for such incisive and analytical folks when dissecting arguments you don’t like, you sure are complacent about arguments you do like.
Yes, it’s literally true that patients don’t demand tests.
It’s equally true, however, that patients without copays will see the doctor more often than a patient with a copay. And once there, the patient “demands” tests not by explicit direction, but by fear of lawsuit. “So tell the jury, Dr. Smith, why you didn’t order an MRI test when you knew that if Mr. Jones did have a tumor, it would be found?”
“Well, the chances of a tumor were so tiny at that point, and the test so expensive, that I thought…”
“Ah, you thought your insurance company’s profits were more important than the health of your patients, did you?”
I’m sure you just weren’t thinking of this when you raised this objection. I’m sure it just slipped your mind. So I am happy to remind you of it.
You can make all the pointless, fact-free, ideological hand-waving posts you like but the fact remains that this problem is not real. It does not exist. It is paranoia. UHC systems are not treat on demand.
It is all in your head. And I don’t think you believe it either. But shill, shill, shill away why don’t you.
Really?
There are studies and surveys that say it does.
“Defensive Medicine Among High-Risk Specialist Physicians in a Volatile Malpractice Environment,” D.M. Studdert, M.M. Mello, W.M. Sage et al, JAMA 2005;293:2909–17.
(emphasis added)
Here:
How did my head manage to influence the Journal of the American Medical Association? I mean, yes, I’ve been complimented on good head before, but I was sure my wife met something else entirely.
And your empirical proof of this is…? While I do not have any studies to rely upon, the military tricare system already operates without a required copay and does not seem to be beset with this problem. Your assumption is, so far, baseless.
When it comes to diagnoses, doctors can and do recommend patients getting second opinions. Even in a UHC world, patients would be free to see other doctors. Doctors, like lawyers, are allowed to use their professional judgment in the exercise of their practice, particularly if a requested procedure, test, (or for lawyers) motion has no apparent justification. The mere fact that doctors already practice “defensive medicine” now is a pretty strong indicator that they would continue to do so in a UHC system as well.
On the contrary: this is actually quite true, and well established in the economics literature. For the classic article, see Manning et al, 1987, on the RAND health insurance experiment—there, a 25% copay reduced total expenditures by about 20% on average, somewhat more so for higher-income individuals. This was with a relatively low stop-gap; in practice a lower copay could probably encourage similar drops.
(As a health economist in training, I regret not contributing more here—except to say that the medical care market is beset with weirdness that makes it quite inhospitable to a free-market approach. I would support a single-payer system.)
Not to get off on too much of a tangent, but I had a beer the other night with a libertarian friend that claims the insurance companies are not making too much. His daughter recently went in the hospital for a couple of days. They had a $200 co-pay and the bill, without specific Dr fees, was over 6 grand. He estimates with doctor fees it will be over 10Gs. His position is that it’s the providers charging far too much for services that is creating the crisis.
When UHC finally passes, I’m getting a full body MRI every day just to piss off Bricker.
Isn’t that a rather odd position for a libertarian to take?
What does “too much” mean? Absent specific, identifiable collusion between providers in an attempt to take advantage of a monopoly or oligopoly position, it seems to me that the libertarian, free-market position on health care (and on anything else, for that matter), is that there is no such thing as charging “too much.”
In a market system, prices find their own level based on supply and demand. If you charge “too much,” no-one will buy what you’re selling. If people are willing to pay the price you are charging, then by definition the price is not “too much.”
The problem being, of course, that what the person is paying does not equate to what the person is being charged.
It’s both. You hear all the time that insurance companies profits aren’t high because they are relatively small as a percentage of revenue. You hear the same from oil companies. However, if you are somewhat regulated, and thus are limited to a fixed percentage profit, the way to make more money is to get more volume. The way insurance companies can do this is to encourage, or at least ignore, higher medical bills. They are making more money and it’s not their fault.
The Bell System worked the same way. The operating companies and AT& were regulated, and could only earn a certain amount of their capital base. I started working for a Western Electric Research Center. We had it great, since every buck they spend on us went into their capital base and thus meant more profits, and since we were supposed to be making manufacturing more efficient and thus equipment cheaper, no regulator would ever object to us getting funded. It was paradise while it lasted.
sure it does, in the long run. Most of the charge just comes out of your paycheck, and in less salary thanks to high insurance premiums.
Lowering expenditures overall does not necessarily mean the drop came from people not going to the doctor as often. Considering that the reductions were higher among those with more expendable income, it seems likely the copay probably cuts down on some expensive and often unnecessary testing and procedures.
How the copay affects how often people go see a doctor at all is not clear.
As far as I understand, it goes in the way opposite to what you’re implying: a copay reduces the frequency of visits buts doesn’t much reduce the conditional amount of care received. In the experiment I cited, a 25% copay reduced the likelihood of any medical service use from 87% to 79%; the average number of outpatient visits was reduced from 4.5 to 3.3. Remember that the doctor has his own set of incentives and greater information than the patient, who faces a relatively low stop loss, anyway.
I think the difference was due to the highest-income individuals reducing inpatient admissions to a much larger degree.
Adding to what I said: Optimal insurance policies, derived rigorously, are extremely complicated. But I think it’s clear and very non-controversial that any such policy will involve some element of coinsurance. Presumably this will be combined with supply-side cost containment—whether salaried doctors or partial capitation—but it cannot be denied that medical care faces significant moral hazard that must be dealt with.
Thanks for that explanation. You’re aware we’re talking about health care right?
How do you suppose people refuse to buy what they’re selling?
Idealistic principles aside, even libertarians can recognize the economic problems in our current health care system. I think his point was that the $10,000 bill seemed ridiculous to him for the services and if his share was only $200 then the insurance company paid the rest. If insurance companies are paying those kind of bills they must in turn pass that on in the form of insurance premiums.
That’s exactly what my friend points out.
However, if you are somewhat regulated, and thus are limited to a fixed percentage profit, the way to make more money is to get more volume. The way insurance companies can do this is to encourage, or at least ignore, higher medical bills. They are making more money and it’s not their fault.
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This is very interesting but I’m afraid I’m not following. How does it work? How does encouraging or ignoring high medical bills help them?
Again, I’m afraid I don’t get it. Was WERC a subsidiary of Bell? What exactly is the capitall base and how does research fit in?
Are we talking about health care or health insurance?
You have only to read the posts to find out.
They are related ya know.
Hey, don’t shoot the messenger; I’m just here to keep you on track for that exact point. You’re the guy who replied to someone else with a breezy “Thanks for that explanation. You’re aware we’re talking about health care right?” – and if you think health insurance does factor in – as a matter of “They are related ya know” – then I merely want to make sure you don’t thereby limit the issue to health care when you should be factoring in how health insurance relates.
Which is it that you think the government should promptly bend further toward regulation and less toward free markets: health insurance, or health care, or both, or neither?