Sorry, I mis-stated my thought on UK taxes. I know we spend more for healthcare, and I know not all money from taxes goes to healthcare. I should’ve fleshed out my thought more. My point is that Americans really don’t want to pay for healthcare. They say they do, but the electorate writ large doesn’t want it. My comparison to the UK was that they are already taxed a lot, in general, and that many Americans would not want to approach that level of taxation. It may be possible (how likely, I haven’t really read up on) to re-direct our taxation more efficiently or to do so without creating another bureaucracy, but many Americans would find such a general plan to be dubious to say the least.
My point was just that due to the unique inefficiency of Americas current setup, Americans are already paying much more in tax for healthcare then the British. The difference is more than half the US military budget, in fact.
In fact Americans pay more towards government healthcare than most developed nations, all of whom provide universal coverage. The difference is just extra large when comparing with the UK, as the UK system is one of the cheaper ones.
That is, I just want to illustrate how immensely LARGE the spending difference between the US and the rest of the world -Britain in particular- is.
A problem in these debates is that many intelligent posters have grown up knowing only the extreme outlier of the US system and have their idea of “normal” from that extremely abnormal setup.
So I try to illustrate just much of an outlier the system is, not just in terms of having things like limited coverage, risk of not having healthcare, medical bankruptcies, networks etc, but also in economic terms. The sheer gulf in spending.
Arrow was behind the seminal studies of medical care as an industry, and I’m sure he had plenty of enduring theories regarding the costs of health care including this one, but he never once suggests that the entire field is immune to economic principles. That would be weird.
The evidence today suggests that there is a great demand for more affordable elements of health care and that the consumer is often paying for it directly. That could lead to Universal Health Care, or Wal-Mart Health Complexes, I don’t know which. But I do not see how the industry, going forward, remains unaffected.
http://www.medicalprogresstoday.com/assets_c/2012/08/health_spending-thumb-800x365-41.png
US public spending on health care is higher than all but 3 countries (Norway, Netherlands, Luxemborg). Plus we have a ton of private spending on top of that too.
That chart is pre-ACA though, the public share is higher now.
Actually that’s not really the reason. Having healthy living people donate kidneys is a bad thing when there are thousands of people who die with still functioning kidneys every day. The problem is allowing “ooga booga” religious beliefs to set *default *healthcare policies.
The default policy should be that if you die, any organs you have that are still good should be donated to other people. You should have to show evidence that you are a member of an organized, established religion that has established beliefs prohibiting this in order to opt out. (not just check a box on a form)
If this was policy, so many organs would be available that there would not even be waiting lists.
I think one big problem is that the US health care system does not reward the actual desired outcome (healthy population). There is no incentive for doctors and hospitals to make the patient healthy. They make money by performing tests and procedures. Drug companies make money when doctors prescribe their medication. It doesn’t even matter if the patients benefit from those procedures and drugs. If I go to a doctor and ask “do I need this procedure,” the doctor has financial incentive to answer “yes.”
Though I understand there are exceptions. Some hospitals have fixed salaries for doctors, rather than their pay being dependent on how many patients they treat.
Thanks all. When I asked about “harms” from excess spending on health, I was allowing for arguments that health care spending results in employment, innovation, I’m not sure what else. The same way that I feel military spending is (in part) an employment stimulus.
And scr4, what you post as to incentives is pretty consistent with my impression.
Ain’t capitalism grand? 
Broken window fallacy. Excess military spending - spending that doesn’t result in actual changes to the risk of an enemy nation coming and beating up the USA and taking their stuff - is just lost money. Some military is needed, or theoretically Mexico or Canada or Russia could invade or blockade the U.S. from access to it’s trading partners.
But the needed size is smaller. Much smaller. The rest of the spending is just wasted money.
Now, the military does have another function. It’s a way to provide a welfare/job training program to the deserving poor. America has a powerful social safety net, but culturally it believes only the deserving deserve help. To deserve help, you either need to put your life on the line for the military (and be fit enough to even be accepted), or live long enough while working a job, and you get free money and healthcare for the rest of your life.
As for healthcare, no. Wasted money is wasted. If of that 18% GDP, half of it was spent working on a cure for aging and a way to cryopreserve the recently deceased so there’s a credible hope in future revival, I’d say it would be money well spent. But no, all that money is just lining the pockets of people in the industry for no net benefit. Americans don’t live longer than countries that spend a lot less.
The medical system is stealing our money and basically giving us false hope until we turn into a corpse like everyone else.
The fact there there are problems with markets does not mean that they are automatically worse than other solutions. In order to show that markets do not work you have to do more than show that they are not perfect, you have to show that other solutions have fewer problems and that the problems markets have can not be worked around. Arrow’s work is good but not the end of the discussion. Markets have ways to work around difficulties. For example, the classic example of a market made impossible by asymmetric information is used cars. Akerlof showed how the lemon problem makes a market in used cars almost impossible, yet there is now a thriving market in used cars because of third party certification and such services as carfax. The asymmetric information problem in health care is much less of a problem than supposed because given some information actuaries can have as much information about future health as the person. Likewise there are solutions to such problems as high barriers to entry such as telemedicine, increased use of nurse practitioners, and services such as the Minute Clinic. Services such as car repair and plumbing could have the same problem of zero price elasticity yet markets work well in those fields. Meanwhile other solutions such as government run healthcare suffer from such difficulties as principle agent problems, monopoly or monopsony to name a couple.
The most efficient healthcare system in the world, Singapore is one of the most market oriented in that every service provided has a cost attached.
Yes, to some degree health care spending produces employment and innovation. A factor working against that is that we spend so much on old people’s health care.
If we spend a million dollars curing a sick child, and that child grows up and generates two million dollars of productivity over his life, then the million is an investment. If we spend a million dollars curing a 70 year old of his cancer, and he lives a further ten years collecting Social Security rather than working, then it is a net loss. That’s not to say we shouldn’t cure 70 year olds - just that we should recognize that some spending is deadweight, economically speaking. Of course we incur the same loss if the child never produces more than he consumes, or on cosmetic surgeries, or anything else that does not enhance productivity.
Otherwise spending a million dollars to employ doctors and nurses and to build clinics, that is the broken window fallacy.
The military is subject to the same thing - certainly soldiers and sailors are employed, trained to do things in civilian life that make them more productive after they muster out, etc. And we have the difficult-to-measure productivity of deterring war. It would be better if we didn’t need a military, but we do, especially to protect our economy. Making the unproductive healthy is not quite the same thing.
Regards,
Shodan
nm.
For most aspects of “healthy lifestyle” not true.
An “unhealthy lifestyle” in today’s medical world has fairly little impact on life expectancy, several years tops: we can and do treat people for the consequences of their unhealthy lifestyles and keep them alive nearly as long as those with healthy lifestyles, not quite but close. It aint cheap to do but we do it. Those with healthy lifestyles however more often experience what gets referred to as a “compression of morbidity”: they have many more disability-free years of life at relatively very low healthcare costs. They still eventually develop disease and die of course but that period of their lives is vastly shorter. The number of years consuming large amounts of healthcare dollars and being functionally (physically and/or cognitively) disabled is much greater for those with unhealthy lifestyles than those with healthy lifestyles even if the total years lived is on average slightly fewer.
As to “harms” … the harms of spending more than other countries do mainly are that the costs decrease our competitiveness.
scr4 in fact both the ACA and market forces even before it have been for years changing that incentive to a value-based system which rewards healthcare systems for population-wide “good health” metrics. Keeping people out of the hospital is the way for these systems to make money now. No doubt many systems are slow to embrace the model and fewer have been able to deliver the value well. Hospital-centric systems have done it poorly and small independent physician groups are often struggling to both provide the coordination of care required and to have the data that proves they did. But there actually is progress being made.
An interesting model using baseline data of the Netherlands (actual article here), about obesity only, not healthy lifestyle, whose authors also partly recognize the limitations of their approach.
First is that “obesity” is not the definition of healthy lifestyle any more than “normal weight” is the definition of “healthy lifestyle.” There is a correlation to be sure but they are not the same. At best it is a rough proxy. I count an obese individual who is exercising regularly and eating greater amounts of healthy food as having a healthier lifestyle than a “normal” weight individual who does not.
Second they note that other analyses that also account for the costs of extended life expectancy have come to other conclusions. There are more. For example:
And, sure one more:
Third and bigger is that these studies explicitly do not include the costs of physical and cognitive disability. They restrict themselves to healthcare costs. As the Netherlands study states:
Uh, yeah. Dementia and physical disability costs lots that is not usually counted as healthcare costs in addition to increasing those costs.
And that’s where the compression of morbidity comes in. A general audience articleon that, making the point exercise/fitness is a huge driver for how many years someone will live disabled. A more academic treatment here.
The fit live longer, are productive longer, and spend fewer years disabled, which translates into the big bucks.
Right, but what makes free markets worse than other solutions in health care is that they are demonstrably worse than other solutions. In the unique area of health care finance – not health care delivery, but how services are paid for – this has been shown over and over again in every industrialized country in the world, with the health care fiasco in the United States a spectacular example of the failure of a market approach to health care.
Specifically, the fact that health care economics doesn’t respond to ordinary market forces like supply and demand, and that it has a strong humanitarian component that demands an egalitarian approach in civilized societies. To be efficient, those goals have to be addressed systematically and not through half-assed band-aid solutions applied to a system that is fundamentally flawed at its core. Even countries that have some apparent market components in this area accompany it with tight regulation, so that if health care systems are not altogether public, they are highly regulated markets that are subject to public control in the public interest.
Even if this were indisputably true, “efficiency” is just one measure of a health care system and far from the most important one compared, say, to effectiveness, fairness, and true universality of access to all levels of services. Singapore on one hand does have the majority of its citizens benefiting from the public sector of health care, but on the other hand its inclination to capitalistic “efficiency” has disturbing features like limiting a person’s health care subsidies based on the value of their house. WTF is that about? If a person suffers a heart attack but has little money, presumably he might be required to sell his house to meet medical expenses. This is exactly the kind of outrageous concession to “free markets” that has doomed the US health care system to having medical expenses being the #1 cause of personal bankruptcies, along with numerous reprehensible incidents of collection agencies hounding poor people for medical debts.
This kind of “market” orientation is absurd. I’m not going to check my financial situation before deciding to have a heart attack. There is no “efficiency” gained here. Really, the most “efficient” system of all is simply to have everyone pay for their own medical needs, and if they don’t have the money, throw the bums out on the street and let 'em die. What could be more efficient than that? Yet few would advocate such a strategy and you’ll find that as you back away from it, the basic underlying concepts of free markets in pragmatic approaches to health care economics in a civilized society fall away until there’s nothing left of free markets at all. In point of fact, the most efficient realistic system is a universal community-rated model that guarantees health care for everyone and thereby takes useless, parasitic insurance companies out of the loop entirely.
If they are demonstrably worse than demonstrate them.
What has actually been demonstrated is that the US system is much more expensive than other systems. But there is not a free market in the US system, half of the population is covered by the government, and the rest of the system is one of the most heavily regulated areas of the economy.
Efficiency is a great measure because it take into account both inputs and outputs.
It makes sense to vary subsidies so that poor people get more than rich people.
There is no way to determine what is the leading cause of bankruptcy, but is unlikely to be medical bills. That is just propaganda.
There are plenty of free market solutions that do not involve throwing people out to die. That is just hyperbole. There are free markets in food and water and no one starves to death or dies of thirst.
Insurance companies are not parasitic they offer financial risk protection, which is a valuable service.
They are demonstrated in the public administration and/or strong public regulation of the health care systems in every industrialized country in the world outside the USA.
As noted many times elsewhere, Medicare is a major advance in the direction of taking an enlightened approach to health care, but its limitations compared to true single-payer are so severe that your statement is not supportable, and the economic side of health care in the US has virtually no regulation compared to the rest of the civilized world.
Efficiency is a terrible measure because it doesn’t measure the most important things about health care, like universality and fairness.
Your arguments don’t appear to be grounded in reality. Unless one believes that the Kaiser Family Foundation, Harvard University, and many other institutions that independently came to the same conclusion are all engaged in “propaganda”. :rolleyes:
This is the No. 1 reason Americans file for bankruptcy
Medical Bills Are the Biggest Cause of US Bankruptcies: Study
Top 5 Reasons Why People Go Bankrupt
Because very, very few cannot afford those things on their own, and those who are so unfortunate can be helped quite cheaply. The economics of health care are radically different and potentially of a completely different order of magnitude. Many, many thousands already die every year from lack of it.
That’s funny, I have full health care coverage that pays 100% of any and all health care I need with no deductibles and no co-pays and no annual or lifetime limits, and there is not an insurance company anywhere in sight. So clearly, with respect to health insurance, your statement is false. Furthermore, the single-payer system I’m referring to also ranks high on the scale of efficiency, because parasitic insurance companies are not being paid to stand in the way between me and my doctor.
In order to demonstrate something is the best you have to compare it to the other. Since there is no country that can be said to have a free market healthcare system, it is impossible to determine whether it would be better or worse than current alternatives. What is shown instead is that having the government pay for healthcare is politically popular.
Apparently those limitations are so obvious that they do not merit mentioning. Medicare and Medicaid are expensive programs that have not been shown to improve health at all. Medicare and Medicaid fraud accounts for more than most countries spend on healthcare. If the US were to go to government run healthcare completely they would be the model of what would happen. We would not get an efficient Swiss system, we would get a bigger version of Medicaid.
Efficiency is a great measure because it measure the two most important things, resources put in and health outcomes. If universality were a better measure than a system that let everyone die of a disease would be better than one that cured 80%.
All those studies are based on a study by a certain current senator who cannot be trusted to publish an honest study any more than she can be trusted to be truthful in stating whether or not she is an indian. For example, she says that 50-70% of bankruptcies are caused by medical bills despite the fact that only one third of the people in the data said it was because of a medical problem. In the period that was studied from 2001-2007 bankruptcies were cut in half, yet this fact is obscured in the study and the write ups. So unless people suddenly got twice as healthy in the time period, her study is a fraud.
There is no evidence that thousands of people die from lack of healthcare in the US. People on Medicaid are more likely to die than those without insurance, there was no spike in longevity after Medicare was implemented, and mortality has gone up since Obamacare was passed.
Insurance companies are not being paid to stand in the way between you and your doctor, government bureaucrats are. I’m sure where you are they are totally dedicated and never make a mistake, but our experience in the US is that they are not.
You’re comparing apples to oranges particularly if you’re comparing a universal health care system against a privately ensured system. My insurance cost more (per person) because I get more than someone in a country with universal healthcare.