The comparison of the US system to other systems would be appropriate if the US had a free market system but it does not. The US has by far the highest cost system and health system quality is very difficult to measure so no one knows if all the extra spending is worth it but it probably is not. Thus the question is how to improve the US system. Moving the US system towards the free market would lower costs and improve outcomes but is politically very difficult. If you look at why American costs are so much higher than other places there are two reasons. The first is that because America is richer than the rest of the world and richer countries spend more. The second is that other countries were able to slow the growth in medical spending during the late 70s into the 80s. Thus so while current medical spending growth is not much bigger than the rest of the world because America is starting at a much higher base the percentage increases represent more actual spending increases. Changing to a government run system would not bring any immediate spending decreases since the higher prices are already baked in. The only way to effect immediate spending decreases using a government run system would be to have a time machine back to the 1970s and start doing it then.
These are all correct but they show why there is not a free market but not why the market can’t be free. Because insurance premiums paid by employers are taxed differently than wages almost all insurance is purchased through employers. This encourages people to overbuy insurance since it is subsidized.
Prices are opaque because they are determined by a complex negotiation between the insurance companies and healthcare conglomerates. They are further complicated by laws governing Medicaid and Medicaid forbidding mandating low prices for those programs for certain treatments.
Hospitals can get away with pricing power because in many places the barriers to entry in the market are incredibly high. For instance he mentions certificates of need which make it impossible to open a new hospital without permission from a board make up of people from other hospitals. Obviously hospitals are loathe to approve new competitors and so they are in undersupply.
Most people don’t pay for their own health care bills. This is because insurance companies and doctors lobby government to include things to cover in the mandatory list. Thus since the marginal cost of healthcare is a fraction of the actual cost, people spend too much. Like the blog author I have a CPAP and the company that provides it calls me every three months and offers to ship me out a new masks, hoses, and filters. When the masks show up they include masks of several different sizes despite the fact that my face does not grow that much in three months. There is no additional cost to me if they send everything or just the stuff I really need. That is a crazy way to run a railroad.
Mandatory Emergency Care is not the huge money loser that some people like to claim. All ER care only represents 2% of total healthcare spending, most of it is not provided free, and from what I hear most of what is being treated for free is opiod withdrawal.
If the government stopped treating insurance premiums differently from wages, if they stopped blocking new entrants, if they stopped mandating what insurance has to cover, if they legalized real insurance, then we could have a market in healthcare. It can be a free market if the government lets it be a free market.
Upthread, Grim Render links to a paper by Kenneth Arrow which explores some difficulties of applying pure market principles to health care. I’ve just started reading the paper, but right at the beginning Arrow presents the example of vaccination. One hyper-libertarian who posted at SDMB didn’t understand the concept of “herd immunity” – that I want you to vaccinate your kids to protect my kids. In a purely libertarian model, should parents of the unvaccinated be sued when someone catches the virus? Or should citizens band together and bribe parents to vaccinate? Since the sign of cash transfer is opposite in the two cases, this example should put to rest simplistic models where all goods and services have a clear-cut market price.
Whenever a Doper expresses an unquestioning, almost-religious faith in the value of free markets I am reminded of this informative (and almost humorous) article from Atlantic Monthly.
Or perhaps BOTH employers and employees could pay for it.
I agree that there would be a backlash, as there is to any policy that requires people to increase their expenses in the short-term. A healthy single 28-year-old working at a startup and thinks he’s fucking superman won’t see the point of da gubmint forcing him to buy insurance ‘he doesn’t need’. That’ll change when he’s 35 and married with 2 kids, and if it doesn’t he needs his head examined. But what gets lost is that things can happen in between. The people who don’t need insurance suddenly, one day, ‘need it’, yet haven’t been paying into the pool. So what happens is that they increase the costs for everyone else in the pool by using insurance when they are a maximum liability. That’s why insurance doesn’t really work in the private sector market. Insurance is about actuarial math. It’s like gambling actually. The moment the odds work against the house, you get kicked out of the casino.
This is a statement as an assertion of pure ideology without any economic analysis as content.
To be frank you display no understanding of the actual analysis of a free market economics analysis.
It is better to say it explores issues of applying a completely non regulated approach to market principles.
There is nothing in contradiction to the actual free market economist analysis of markets- versus the religious belief of the non economist coming to the idea from the pure ideological understanding - to identify the parameters of potential negative equilibruim or market inefficiencies due to defects that may be structural or inherent (at least for a level of a technological development) to a market.
The idea that a free market analysis and principles excludes a market regulation or any measures to address the issues that can render market clearing inefficient in the normal human lifespan, this is without basis in the economics discipline and is political-ideological.
It is a good discussion that paper, going back to 1963.
Well yes the supposed arguers here for the ‘free market’ are not displaying a knowledge of the actual free market analysis from the view of the economist, but a politico-religious belief asserted a priori.
The discussion in any case would be more intelligent if it included the reference to the regulated systems like the French system and its mutuelles (mutual insurances) that are mandatory in the various forms. It also has the presence of the often employer bought supplements coverages from the mutuelle or another insurance for the added benefits.
It is a mixed public-private system and it performs overall on the basis of the service and on the basis of the aggregate outcomes for the price related to the overall health results. It is clearly much better performing htan the American system on price and on results (as I have had experience with both, it is true the American system they have the very consumer service orientation, but this is probably the different between the cultures not the sectors as the popular French attitude to service across all segments is not the same…).
In the place of a blind religious assertion about free markets - not founded in a real undestanding of the proper free market economic analsysis but in some university beginner class understanding - it would be better to engage with the actual economic data including of course the results adjusted for the cost.
And of course the definition of results involves no end of value-laden judgements.
So does any small action in the life, that does not say very much.
It is nevertheless very possible to focus an analysis on certain objective fundamental factors that should have the broad acceptance - as the OECD and the WHO analyses do such as the per capita cost of the health care overall against the broad public health results like the lifespan, the broad health status indicators for the healthiness of the population.
It does not take very specific ‘value judgement’ to have the preference for the market system that is delivering in the aggregate over time the most economicaly efficient positive outcomes where the positive outcome is a generally better health status for the population as this leads to better general economic productivity and thus better wealth results.
I’m glad to see that others have also addressed your numerous misconceptions about health care economics, and I’m just going to address your responses to me which also display rampant factual inaccuracies.
You’re making a very superficial and simplistic assumption there that drives you to an absurd conclusion. A Medicare system that is the foundation of UHC and supports the health care needs of the majority of the population becomes, by its very nature, fundamentally and structurally different from one that just piggybacks on top of a broken system based on* laissez-faire* unregulated free markets. It gives the government program the ability to negotiate uniform costs, rein in profiteering, and provide systematic oversight.
This is why it works in other countries, and if you don’t accept that, then the only other explanation is that American politicians on all sides are hopelessly corrupt compared to anywhere else in the world, and American health care providers hopelessly dishonest. Indeed, one would have to then hypothesize the dismally bleak assessment that in America alone, no government program – of any kind – can ever work. Is that what you believe?
No, it’s the exact opposite. Every country in the world with an efficient health care system that delivers excellent outcomes at much lower cost than the US has a high level of government involvement and strong regulation of private insurance, whose role is often minimal. It’s plainly obvious that each and every unnecessary cost and inefficiency in the health care system comes from dealing with insurance companies, from claims submissions to claims reviews to claims denials and appeals, medical providers having to maintain huge staff just to deal with billing matters, and then on top of that the inability to have any form of meaningful cost control. Medicare’s inefficiencies come from having to integrate with the existing system. The complexities of Medicare make my head spin. In the single-payer system I’m used to, there are no forms, no applications and options for different plans, and no discussion of money at all. I just go to see my doctor, present my health card, and then I go home.
If you’re going to ignore the mass of independent evidence I provided then we’re not going to make much progress in having a rational discussion. Not to mention that it’s pretty much self-evident that if medical care is often very costly and in many circumstances not fully covered or not covered at all, that it will cause financial stress for many families, so the studies and surveys I linked to should be no surprise. Persistent denial of strong independent evidence based on some thin rationalization that “people just like the story” isn’t very productive.
I think the idea that a person’s health is strongly correlated with their access to health care can be taken as axiomatic.
No, your example was bogus and misleading because the discussion was about your claim about the utility of health insurance companies, and I pointed out that in my situation there is no insurance company involved at all yet I get full coverage with no out of pocket costs of any kind, therefore health insurance companies are obviously not performing an essential service.
I then mentioned that insurance companies are actually counterproductive, in that they are a bureaucracy that stands between you and your doctor (and intervenes in clinical decisions). Single-payer has no such bureaucracy, and quite properly relies on the medical practitioner to be the gatekeeper to medical services in accordance with medical practices and ethics – in other words, the health care you receive is based on clinical decisions made by you and your doctor, not business decisions made by a money-grubbing bean counter working for an insurance company. This is a very important point.
At which point you introduced the irrelevant digression of the VA and the alleged downfalls of governments providing medical services. That has nothing whatsoever to do with the discussion. No one is suggesting that government should be in the business of providing medical services.
There’s a much better solution. What if there were no “list of providers”, and you could go to any doctor or any hospital that you wanted to? What if payment was always unconditional because claims were never scrutinized and questioned by bureaucrats charged with the task of saving the insurance company money? What if covered conditions were defined as pretty much all services provided by doctors and hospitals that could be reasonably deemed to be medically necessary, and that this principle was enshrined in federal legislation requiring health care coverage to be comprehensive?
Yes, what you described was the unfortunate way that health insurance works. What I just described is how single-payer works where I am.
Oh, it’s become fairly obvious that progress in rational discussion will not be had, and reasoned analysis and data will be ignored, but that does not mean that pointing out some facts is not worthwhile.
Interesting aside - Singapore’s system, beloved by many conservatives, is based on a government-run public hospital system, in which the vast majority (81%) of beds are heavily subsidized. Subsidized primary care at “polyclinics” is also a key feature. Nursing homes, community hospitals and hospices are also mostly funded by the Government. That government control of the institutions of the healthcare delivery systems is a large factor in their cost containment, despite the love some conservative sources have for their mandatory health savings accounts.
And despite it being a digression to to the digression, the VA, much publicized access issues notwithstanding, actually has been doing a pretty dang good job delivering cost-effective care, at least according to the nonpartisan CBO’s analysis. Will they continue to be able to do so? The CBO makes no promises.
The US, however, is the least regulated system out there. All the comparison examples feature heavier regulation, and deliver better efficiency. It could be said that the US run examples of every major system type within its borders but takes the regulatory brakes off each system before running it.
Its not that difficult to measure. Public Health studies do a lot of work on that.
Mostly, they use very large, overarching measures so that individual differences cancel out. There are several broadly agreed on measures. Lifespan, infant mortality, years spent in good health, maternal mortality, years lost to ill health, amenable mortality etc.
The point we are making is that economic theory say that this is not so. Practical experience with scores of systems across the world indicates that this is not so. The notion that it would be so is based on an understanding of free-market economics that is so oversimplified that it is not applicable to real-world solutions.
America is an outlier even among rich countries. The US spends 18 % of GDP on healthcare. Norway, considerably richer, spends 9.7 %. Switzerland spends less. It is true that richer countries spend more, but the US is by far an outlier on that too.
This is not true. Health care expenditure was fairly similar among developed countries until 1980, when the US costs started to accelerate. Cite, see exhibit 3.
There are many types of government systems, and many ways of phasing them in. I think a prediction that there is no economic space for lowering costs in the US is not supported by, well anything. Additionally one of the biggest if not the biggest cost adder in the current setup is the amount of bureaucracy generated by the interactions of the large number of entities and coverage’s.
In conclusion, I think you need to re-examine some of your basic assumptions. The things you assert are just not factual. You process them through an understanding of economics that seems slogan-based, and end up with predictions that are contrary to the way the subject observably works in the real world.
Returning to the actual op.
It would be interesting to hear an informed fact-based discussion of just how much of a country’s economy “should” spent consumed by the medical sector.
One advantage of the medical industry is that, like construction, many of the jobs do not outsource well and are not as easily replaced by machines as in many other industries.
From the Bureau of Labor Statistics:
(Bolding mine.)
So clearly the industry is an increasingly important source of jobs in the country. Unfortunately the biggest growth of those jobs are in lower paying ends of the industry - home health aides, personal care assistants, medical assistants, and medical secretaries - all jobs that pay below the median income level.
Offsetting those jobs is the impact of healthcare expenditures on other domestically located industries’ ability to compete competitively internationally, and on both net real income and the ability for those other than the 1%ers to accumulate wealth. It is in this regard that comparison to what other countries spend is most informative.
Also to be considered is the return on the investment in terms of productivity - from the economic perspective, as Wesley Clark had pointed out, living longer in retirement is a potential drain, living healthier such that workers are more productive and for longer is a potential gain.
The op also raises the related issue of return on investment in terms of quality as well as length of life. Again Wesley Clark had mentioned how some systems use cost per quality adjusted life year (QALY) to make decisions about healthcare expenditures. We of course ration healthcare every day; it would be nice to so more rationally than we currently do.
Oh the American system does do some cost-efficacy analysis, usually using QALY, we just both do it and apply it with great variability and inconsistency. We certainly often have a higher threshold than does the U.K.A 2014 NEJM article that discusses the history and application of QALY in America, arguing (perhaps out of self-interest) for a high number) here.
An as one aside issue to point out - the newer expensive treatment of Hepatitis C, (sofosbuvir/ledipasvir, roughly $95K for the 12 week course) is very likely cost-effective from that QALY perspective. As this LA Times article however points out, the net benefits are realized over many years and the cost is frontloaded. The insurer paying for the cost won’t see most of the savings, another payer will.
Yes, the Veterans Health Administration does an excellent job despite deliberate GOP efforts to impair its performance, but we wouldn’t know that from reading the media, main or lame. Fake News and Fake Facts now dominate all American political discourse; you can see that right here in this thread.
There is no way to measure the amount of regulations, The US probably has the greatest role for the private sector but even that is very heavily regulated at multiple levels.
Lifespan is a horrible measure for instance Asian Americans use the same healthcare system as Black Americans but have a 12 year difference in lifespan. The difference is genetic. If you adjust for genetics the US looks better since Japan has the longerst average lifespan in the world but Asian Americans live almost 3 years longer on average. Does that mean the US has better healthcare the Japan or maybe or it could be immigrants to America are healthier than those left behind or a lifestyle is effecting the numbers.
Since the US is a bigger country there are much higher rates of traffic accidents. This affects average lifespan and has nothing to do with health care systems. Infant mortality is not a standardized measure across countries. Years spent in good health and the others are also confounded by genetics and lifestyle choices. Measurement differences, genetics, lifestyle, and other confounds even make it hard to compare countries in various diseases. For instance the five year survival rates for breast cancer are 13% higher in the US than in Europe, it could be because the US has better breast cancer treatments or it could be that with more aggressive screenings American’s have their diagnosis earlier. It is very difficult to know. That is why when you say that it is not that difficult to measure it sound like you have not looked at the evidence.
Economic theory does not say it is so. Economic theory has explanations as to why it might be so, but those explanations also apply to other markets and are found lacking in those markets. Experience does not show us, in the US there are relatively unregulated markets like LASIC surgery where prices have been dropping and quality has been rising. Also there is no evidence that in other countries the more regulated the country is the lower its healthcare costs.
The US is a consumer society and healthcare is one of the things it consumes. The average american consumes 50% more than the average European. If you track healthcare spending per capita with individual consumer spending then America ceases to be the huge outlier and is only slightly above trend.
It is exactly true, the US starts to diverge from the pack around 1977 and continues after.
In his great series about why healthcare in America is so expensive Austin Frakt found that excessive spending on paperwork and bureaucracy cost the US 91 billion dollars more than expected. 58 billion of this was on private side. This amounts to 2-3% of total money spent on healthcare in the US. In order to cut costs substantially the US would have to cut paperwork and bureaucracy, cut hospital costs, cut doctor and nurses costs, cut drug costs, cut technology costs, and cut end of life care costs. Each one of these areas is backed by either the voting public or an influential industry lobby. There is just no way the government is going to do all that. Have you seen the people in charge?
You need to learn more about the complexities of the issue. The US is one of the largest and most diverse countries in the world. It has a crazily convoluted healthcare system that is the product of regulations at many different levels both public and private. The level of complexity makes it hard to know what changes will do to the system. For instance Obamacare was sold as making insurance cheaper and allowing people to keep their doctors if they want to. And that was just a small change to the system. Any large change would have to get through the gridlocked congress, survive court challenges, and be administered by the same bureaucrats that are messing up our current system. The notion that such a large change to such a complicated system would produce a great new system is a massive leap of faith that I am not able to make. However, that is the genius of the free market system. It does not need to have an all knowing central authority, it exists to process information about people’s needs and desires with the best possible efficiency. It has worked in every other commodity to bring the US a standard of living unprecedented in human history. That is the real world.
You don’t give up easily, do you? 
And yet, everything you cite in support of this obviously broken system continues to be fundamentally wrong.
“Heavily regulated” compared to what? Compared to the regulation of can openers, perhaps, but not compared to how every other country in the world regulates health care.
You don’t need to adjust for anything if you compare the US to Canada, with a similar economy and lifestyle, and health care that costs half as much per capita while delivering superior numbers on lifespan and infant mortality and quality of life in old age.
The subtitle of that article is:
“It’s a nation of consumers: Big houses, the latest gadgets, huge hospital bills.”
But again, this overlooks a close comparison available just north of the border. The article could make the contrary point with a different subtitle:
“Canada: it’s a nation of consumers: Big houses, the latest gadgets, small hospital bills.”
So what point are you left with? And, indeed, Canadians spend almost exactly the same as Americans in retail spending overall ($17,000 per capita vs $17,900) and more in other areas like housing – last April the price of the average detached house in Toronto hit $1.2 million, yet 69% of Canadians own their own homes vs. 65% of Americans. And yet, Canadians pay about half as much per capita for their universal health care system as Americans do for their limited one.
Here’s a conversation that has never happened in the history of the happy American home:
“Honey, I just got another raise today! Let’s both go spend the day at the doctor’s office tomorrow to celebrate, and then treat ourselves to a week in the hospital!” :rolleyes:
No, health care doesn’t work that way, and that absence of market orientation is the central point of this discussion. Why on earth anyone would think critical health care matters are subject to the same discretionary spending decisions as a trip to Disney World or a new washing machine is an eternal mystery.
I wouldn’t call it a “great” series if he gets fictitious numbers like that out of it. The considerably more renowned Princeton health care economist Uwe Reinhardt cites a figure of $477 billion for administrative overhead due to private insurance, and** total excess spending to be five times more than would be necessary to achieve a properly managed universal health care system**.
https://economix.blogs.nytimes.com/2008/11/21/why-does-us-health-care-cost-so-much-part-ii-indefensible-administrative-costs/?mcubz=1
Meanwhile the PNHP cites a study that total health care administration costs consume 31% of all health care costs, reaching the same conclusion that the waste alone could fund universal health care for all.
And what you need to do is learn more about the basics of the issue before trying to delve into the more subtle complexities citing right-wing talking points. The basics are these:
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In the experience of all other countries, the greatest savings historically come from a community-rated model of health care with uniform universal coverage for all medically necessary procedures – which of course is fundamentally contrary to the way traditional insurance works.
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The above model is essential in order to eliminate insurance bureaucrats from clinical decision-making and allow health care decisions to be solely between the doctor and his patient, so UHC addresses both the cost element and the medical ethics dimension.
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The above model allows regulatory oversight of medical fees, providing uniformity and cost control; the community-rating approach and negotiated fees together provide effective cost management over the health care infrastructure.
Those three things together are why the insurance model is so fundamentally wrong for funding health care.
The objection to the above, of course, is that conservatives don’t like that kind of stuff – sure it works, but to them it’s ideologically offensive because it contradicts everything they’ve been taught to believe about the omnipotent power of free enterprise to solve any problem. But instead of trying to refute the obvious success of such systems around the world with nonsensical counterfactual arguments, they should embrace it for its benefits to society, including economic benefits that derive from shedding unproductive waste.
It’s a relevant figure for contrasting with spending in other countries and noting how big the industry really is here. Aside from that, I’m not sure what kind of value judgment to put on the 18% of GDP. Assuming that includes consumption of services across the board – transplants, checkups, dental, birth control, mental health, plastic surgery, rehab, reiki, etc. - a lot of this is privately paid and really none of our business.
I don’t see that as unfortunate in an economic sense at all. Those jobs are needed.
It’s actually getting fun laughing at puddleglum’s confident statements of absolute fact.
This one is worth exploring some:
Now exploring this has little to do with the subject of the thread, but dang. Really? There are no sociocultural or lifestyle differences between those groups of Americans that might be some part of the difference?
Things like differences in education and SES (mean household income Japanese American $70,261 and Black American $36,544). Or adult smoker, 19.5% Black and 10.2% Japanese American. Obesity rates dramatically different. Homicide and accident rates.
Things like the fact that there are dramatic structural and implicit factors that result in many Black Americans not really experiencing the same healthcare system as either White or Japanese Americans.
Interestingly and possibly pertinent to the actual subject of the thread pre-ACA about 12% of Japanese American were estimated to be uninsured compared to an estimate of 18.9% of Black Americans.
Given all that what is most odd is that the all causes death rate for those who are 65 and over, for those who have not experienced very premature and often preventable, deaths, is actually lower for Black than for White Americans. That factoid really blows out of the water a genetic lifespan handicap for Black American compared to Whites anyway.
I would not argue that there is no possibility of any genetic contribution to the relatively long Asian American life expectancy. But a statement that such “is” the case is laughable.
From an economic analysis perspective the value judgement includes how much job growth the industry provides, what quality (e.g. lower than median or higher than median net income) of jobs. It’s a similar discussion to the one the replacement of higher paying manufacturing jobs with lower paying service jobs (like working the register at McD’s) The McD job is needed but an economic analysis will value the IT manager position created and filled at $89K/yr over the $18 job created working on the fast food front lines.
Thanks for all the responses, folk. Hard to understand why we have the system we do, and why so many folk seem to think it desirable.
Of course, health care is not unique in that respect. While waiting for the eclipse I struck up a conversation with a professor of agricultural economics. He plainly set forth the lack of any rational basis for most farm subsidies, as well as the negligible chance that they will be reformed… Ain’t America great?! :smack:
You are making my point that lifespan is a horrible way to judge a healthcare system because the sociocultural and lifestyle differences between Europeans and Americans are even greater than those between various groups of Americans.
Asian americans are richer, have more insurance, smoke less, weigh less, have fewer accidents, suffer fewer homicides, and are more educated than black americans so it seems simple to conclude that those are the reasons their lifespan is longer. But if you look at two other groups, whites and hispanics, all of those indicators are reversed. Whites are richer, have much more insurance, weigh less, have fewer homicides, fewer accidents, and are more educated than hispanic americans. Despite all this hispanics live on average three years longer. This is true internationally as well, for themost part lifespan tracks with GDPbut when it doesn’t african countries tend to have lower lifespans then there GDP predicts and Asian countries have longer lifespans.
Furthermore thegenetic component in longevity is not a controversial topic. It is also well known that different races suffer diseases at different rates, black Americans have a three-times higher risk of developing esophageal cancer; twice the risk of developing multiple myeloma, liver, cervical, and stomach cancer; and a 50 percent higher risk for cancers of the oral cavity and pharynx, larynx, lung, prostate, and pancreas. In contrast, white Americans have higher incidence rates for melanoma, leukemia, lymphoma, and cancers of the endometrium, thyroid, bladder (in males), ovary, testes, and brain, as well as postmenopausal breast cancer. Among the two most common types of cancer black women are 3 times more likely to get the most aggressive form of breast cancer, and the rate of aggressive prostate cancer is 33% higher in black men. This may be the cause of the black white mortality crossover since blacks are more likely to survive the more aggressive cancer types those who do get old are less susceptible to cancer for some reason.