Paying for health care

Representative Paul Ryan’s (R-WI) plan to address the U.S. federal deficit is an opportunity to reflect on fundamental questions of what we’re trying to buy and how much we’re willing to spend when it comes to the role of the government in health care.

Let me begin with two premises that I take as given.

(1) The historical growth of federal expenditures on health care is unsustainable. Over the last 20 years, Medicare and Medicaid expenditures grew at an 8.4% continuously compounded annual rate (data source: CBO). That’s 3.75% faster per year than GDP grew, and for that difference in growth rates, federal health care expenditures as a percentage of GDP would double every 18.5 years. If those historical growth rates were to continue, federal health expenditures would rise from their current 5.4% of GDP to 10% of GDP by 2027 and 20% of GDP by 2045. Something has to give.

(2) Changing the path requires denying some medical services for someone who would otherwise receive them. Many of the partisan advocates try to claim that their proposal can solve the problem by eliminating inefficiencies or fraud. I am not going to deny that there is some potential for improvement. But pretending that this is the sole issue we need to address is a disservice. The basic reality is that we have found some ways to prolong life and reduce suffering that are very, very expensive. What we need, in my opinion, is a social and moral framework for deciding which of these are worth doing and which are not.

And there are three ways to determine which medical services don’t get provided.

  • (a) The government can limit the procedures it will pay for and the people who are eligible to receive them.
  • (b) The insurance company or other third party can limit the procedures they will pay for and the people who are eligible to receive them.
  • (c) If (a) and (b) both say no and you don’t have the money yourself to pay for it, then you do not receive the treatment.

Each of those options is morally troubling to many of us. But reality forces us to choose some mix of the three. Pretending that there are no tough choices just digs us deeper into a debt that can’t be repaid.

The radical aspect of Ryan’s plan is, instead of specifying which procedures the government will pay for, the government limits the dollar amount that it will contribute, beyond which, it’s left to (b) and (c). Here are key elements of the plan as communicated by Ryan’s staff to the CBO:

Starting in 2022, the proposal would convert the current Medicare system to a system
of premium support payments… The payment for 65-year-olds in 2022 is specified to be $8,000, on average, which
is approximately the same dollar amount as projected net federal spending per capita
for 65-year-olds in traditional Medicare under current law in that year. People who become eligible for Medicare
in 2023 and subsequent years would receive a payment that was larger than
$8,000 by an amount that reflected the increase in the consumer price index for all
urban consumers (CPI-U) and the age of the enrollee.

Alice Rivlin favors a larger federal contribution that would work within the existing Medicare system. Here’s the recommendation of the Debt Reduction Task Force of the
Bipartisan Policy Center
:

Transition Medicare, starting in 2018, to a “premium support” program that limits
growth in per-beneficiary federal support (to GDP-plus-1 percent, as compared to
current projections of GDP-plus-1.7 percent). The new system maintains
traditional Medicare as the default, but will charge higher premiums if costs rise
faster than the established limits. Alternatively, beneficiaries can opt to purchase a
private plan on a health insurance exchange.

We can and should debate how much we’re willing to spend on health care and the form in which it will be delivered. But changing from a system in which we pretend we can provide everything for everybody to one in which we explicitly acknowledge the limits on how much we’re willing and able to spend is in my opinion a necessary step to bring the long-run U.S. fiscal path to sustainability.

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67 thoughts on “Paying for health care

  1. W.C. Varones

    Great post.
    This deadly serious issue deserves serious, thoughtful discussion.
    It’s a shame that most in Washington and many in academia and the media will take this issue as an opportunity for more partisan mudslinging.
    The tone Prof. Hamilton sets is what we need if we are ever going to solve this nation’s fiscal problems. Pity there aren’t more around who set the same tone.

  2. Addicted

    Wasn’t the ACA discussion a better time to have this debate? The ACA tried to institute such reforms but at the time Ryan and his cohorts responded with death panels.

  3. eightnine2718281828mu5


    (2) Changing the path requires denying some medical services for someone who would otherwise receive them.

    How about the healthcare equivalent of sin taxes?
    As in refusing bypasses for the obese or lung cancer treatment for smokers?

  4. CoRev

    Dr Hamilton, let me explain an older man/person’s reality. As we age the chronic conditions appear. many are treated by a GP and 2 or more specialists. When those conditions are controlled, often for years, the monitoring by the specialists continue. Office visits occur usually every 6 months with associated labs. That is ~6 office visits and ~6 labs per year for conditions that are unchanging/under control.
    Why not put monitoring under one Dr’s purview? That eliminates 8 Dr visits and labs, a 2/3 cut in office visit/lab costs. For those patients where conditions are stabilized over several years the visits/labs can be cut back to once a year. That represents a significant percentage of those higher cost healthcare recipients.
    Common sense cuts do not take federal/state laws. Your solutions to limiting service need not be draconian.

  5. Ricardo

    JDH wrote:
    (2) Changing the path requires denying some medical services for someone who would otherwise receive them.
    …What we need, in my opinion, is a social and moral framework for deciding which of these are worth doing and which are not.
    Professor,
    I was extremely surprised that you would write this. It totally seems out of character for your other posts.
    Let me begin by saying that I agree with your first premise but your second premise is both dangerous and destructive. Now I will grant that you do not say who will make the “social and moral” decisions but in your list you limit such decisions to government and insurance companies. This establishes a totalitarian trap of logic.
    Government support of health care has locked health care into a rigid structure based on the medical care of the past. It gives virtually no room for the patient and doctor to determine care and it severly limits innovation.
    You speak of inefficiencies and fraud but you totally ignore the fact that unlimited supply lends itself to unlimited use. There is no doubt that health care must be denied “ome medical services for someone who would otherwise receive them,” but returning the patient doctor relationship is the best alternative socially and morally.
    You wrote: Each of those options is morally troubling to many of us. But reality forces us to choose some mix of the three.
    This simply is not true. If the patient-doctor relationship returned it would not be morally troubling. Any person who has been to a doctor knows the importance of this relationship, but today the doctor’s employer is either the government directly or through an insurance company as the surrogate of the government.
    Now I would like to see much more done to return the patient-doctor relationship than Paul Ryan is proposing, but it does move us closer as it shifts decisions away from the rarefied air of Washington DC and closer to the patient by placing funding in the states.
    I am saddened that you seem to believe that the mega-HMO of centralized federal government control of health care is the right direction to go. The irrational belief in the omniscience of government is always troubling.

  6. John Hunter

    The very frustrating aspect of this problem is that it has been an enormous problem for decades. It isn’t that we have just discovered we have a fatally poor health care system in the last few years. The broken system has been obvious for decades and keeps getting worse. Costs need to be removed from the system. Hundreds of billions a years should easily be removable by reducing paperwork and reducing waste in the system. As you say some reduction will also have to come in limiting spending that is being done now for worthwhile and worthless procedures. That should also easily save hundreds of billions a year. However in the decades of allowing this broken system to get worse and worse, it is not at all certain that merely taking $500 billion a year out of the costs will be enough.
    It might well require eliminating even more medical work and reducing the income of those that are taking from the system now. My guess is the most logical places for reducing income come from massively overpriced drugs (just look overseas for examples), overpaid specialists, overpaid executives in insurance companies. I suppose some might think nurses should be paid less, that isn’t my belief, but we will see what happens.

  7. GregL

    This isn’t rocket science; other first world nations have systems that spend one third to one half per person of what America spends and have better health outcomes.
    Why are such stiff necked idiots unable to learn from the rest of the world?

  8. Robert Bell

    Ricardo, JDH: Unless I am missing something I don’t believe you can finesse the issue of cost by talking about the doctor patient relationship unless you assume that everyone pays for their own health care individually.
    If one attempts to pool risk across individuals either through some sort of group self-insurance (anything from an informal co-op to Medicare) or private third party insurance, the benefits of diversification become inextricably linked with deciding how much individuals in the pool contribute and how much is covered. So I believe both of JDH’s core assumptions hold still hold.

  9. KarmaPolice

    “The basic reality is that we have found some ways to prolong life and reduce suffering that are very, very expensive”
    Let me be the first to say that the US healthcare system is caught in a very expensive bubble which is going to pop.
    This is NOT a government problem. Expectations/compensation in the healthcare industry has been set way too high and that is going to change…..rapidly.

  10. Bob_in_MA

    What I find mind boggling is that here we are with a system that costs twice as much as a share of GDP compared to those of most other developed countries, and the only way we can see of changing it is by making it more convoluted and multi-tiered.
    We can’t figure out how to get costs under control in a system where hospital centers have the money to buy multi-page advertising spreads in the Sunday NYT’s magazine and pharmaceutical companies spend billions advertising products that will cost their insured costumers not a single penny.
    We are going to have a single-payer health plan some day. The only question is, how much money and pain we will go through before hand.

  11. Rob

    Professor, I think you nail the macro issue quite succinctly. Some seem to think that we should “control” prices of things, e.g. pharmaceuticals. Two questions: how’d that work out under Nixon and would you agree to have the govt set the price of your product/labor.
    Too, pharma prices are a bit misunderstood by many, other than, “they’re too high.” It depends…
    http://www.econ.jhu.edu/people/ccarroll/Courses/365/Topics/4-SocialInsurance/Health/ReadingsRecommended/SharkFin.pdf

  12. FVB

    John Hunter writes: “The very frustrating aspect of this problem is that it has been an enormous problem for decades. It isn’t that we have just discovered we have a fatally poor health care system in the last few years. The broken system has been obvious for decades and keeps getting worse. Costs need to be removed from the system…It might well require eliminating even more medical work and reducing the income of those that are taking from the system now.”
    Gee, this sounds like the many calls for reversing the size and impact of the the TBTF banks…and has failed for the same reason. The U.S. puts its public policy up for auction, and the entrenched players in the affected industries are the highest bidders. (Note: financial services and health care are #1 and #2 in terms of campaign contributions and lobbying expenses; I hope that completely explains why those industries take the highly profitable forms that they do for their insiders: to wit, they are using the government to transfer rents to themselves, guys).
    I don’t understand why economics as a social science can’t model this phenomenon and give us projections that are more likely to come true, rather than relying on the foolish idea that the U.S. government (or any government) actually is responsive to the common good.

  13. DFC

    As GregL says the health care system in US is the most expensive in the world, far away from others systems, which provided universal health care protection
    US expends in health care around 16-17%GDP, and the average of the developed OCDE countries is 9%GDP
    That means if the US health care system would have same “productivity” than the rest of developed countries, the private companies could expend much less money in health insurances for their employees and then having more money to invest and improve their competitiveness
    On the other hand the US health care system is an outlier in most of the scores compared to others countries= less life expentancy, much higher people outside protection, higher child mortality, much higher pharma costs, etc…
    Why do not try to reduce this costs?
    I think it is necessary to widen the scope of the real problem, not only limiting the service provided

  14. Lord

    I don’t see why it is necessary to limit the procedures that will be paid for and the people who are eligible to receive them. It is necessary to limit how much is paid for these procedures, and that may mean some are not performed for some people or all people, but that is no different than placing a value on life. It is our refusal to do so that creates our predicament, bur payment of these procedures must come from the real economy and their value must be measured by the real economy. The real reason we refuse to do this is not that many would be unaffordable, but that many would be unworthwhile and we would have to face our mortality.

  15. Ivars

    I think its obvious from the USA debt dynamics that are unsustainable ( super-exponential) that USA debt ( without or with SS and Medicare and Medicaid) is going to crash ( that is experience >20% reduction in 1 year) no later then 2013-2014,or even earlier?
    http://saposjoint.net/Forum/viewtopic.php?f=14&t=2626&start=100#p31678
    Thats given. Then the question is , how it will be achieved.
    What comes to things Prof. Hamilton mentions, imagine that true middle class takes over power in the USA in 2012 elections. By true middle class I mean not people by income , but by leverage level. People with relatively less debt than average USA citizen. People who are prudent, results oriented and proud to live within own means and control own destiny.
    Now this is exactly the class that supported Hitler both in 1931 elections AFTER 1929 crisis struck and , more unacceptable to us, supported him throughout in MAJORITY up to 1942 or so, when realization that he may have made a mistake with 2 front war started to settle in.
    Now imagine a softer modern American version of that German middle class elects people to the highest offices in 2012 who do not accept having debt or paying for dreams and ideas after 2008 crisis has materialized in a disaster including applied solutions.
    Let us say ,Tea party takes over the country. House, Senate, President.
    Given that the USA liability crash ( sharp reduction) is a given, what would they do with the programs prof. Hamilton have looked at? Besides devaluating loans to foreign countries while trying to keep oil prices at check?
    Remember, these people are results, not process oriented, as Steven Kopits noticed here very properly. They prioritize things according to results.
    I think they will stay in undecision little less and prioritize little harsher. Like engineers. ESTJ or ISTJ type primarily. They hate unfunded future liabilities . But what will the total change be? Where?
    But may be I am totally wrong since I am not in the USA and do not feel the nuances of American thinking , thinking of its different society layers.

  16. Tristan Bruno

    Dr. Hamilton, thank you for this insightful post on health care expenses and sustainability. As a physician, here are some of my thoughts on this topic:
    I agree with your first premise and your conclusion. On premise #2, I would differ in suggesting that some medical services need not be denied to someone who would otherwise receive them. One could, instead, dramatically slow or stop medical growth to bring costs inline with GDP growth. In this fashion, for example, a person could continue to get a cardiac stent for a heart blockage, but would not be automatically covered for some future $1million heart stem cell transplant. It is generally more palatable to not give someone something than to have to take away something already given. Perhaps the GDP denominator could grow will holding the medical expense numerator in check.
    It is a common misconception that there exists a positive, more-or-less linear, correlation with cost of medical care and life span. The data, instead, support strong diminishing returns on health care investment. For example, sanitation, clean water, vaccinations, reductions in smoking, aspirin use, treatment of high blood pressure and cholesterol are all rather cost effective on a per capita basis. Many of these are actually public health issues and not strictly medical. More so, the most cost effective are those in the domain of public health and these are also most responsible for gains in years of life over the last century.
    There are a several major reasons that costs continue to grow unsustainably in the United States, but most of these actually do relatively little to increase life span. Looking at CBO data, one would see that one of the biggest problems has been our growing appetite and adoption, over the same last 20 years, for new medical technologies and services. The United States in 2003, for example, had 68% of first-in-class launches and 45% of biotech launches, and is by far the largest pharmaceutical market. As with any new innovative item, innovative chemical entities and therapeutics come with a large first user premium price. Oncology (cancer) drugs now account for the greatest number of first-in-class drugs, and U.S. companies are the primary source of these with more than 50% from 1982-2003 (source: H G Graboski, Y R Wang. The Quantity and Quality of Worldwide New Drug Introductions, 1982-2003. Health Affairs, Vol. 25, No. 2, pp 452-460.) About 60% of national health care expenditures are spent on hospital care, physician and clinical services, and other professional services that highly utilize these new medical technologies: angiography with new contrast agents, drug eluting stents, high rates of dialysis, joint replacement, stem cell transplant, neonatal intensive care, first-in-class diagnostic imaging (MRI/CT/PET). When looking at the population as a whole, these are very expensive but add little to life span.

  17. Daniel Greenwood

    Actually, we are nowhere near the point where we need to discuss how we are going to deny medical care to people who need it. We are the richest country in the world; we can afford to provide ourselves medical care.
    What we cannot afford is to pay twice as much for it as any other country does. We need to reduce the astonishing inefficiency of our market-based medical insurance system, in which insurance companies waste stunning sums attempting to exclude people who might require care from low-cost pools, and where providers and payors create enormous duplicative bureaucracies to process (and debate) individual claims. We need to reduce the inefficacy of our market-based hospitals, driven by fee-for-service payments to ignore results and focus instead on returns to investors and executives. And we need to replace our horrendously costly system of subsidizing drug companies with legally-created monopoly rights (patents) in the vain hope that, contrary to all economic theory, they will use the resulting rents to subsidize useful research rather than inflate marketing costs.
    We may even need to reduce the pay of our actual doctors, who are paid far more than their international counterparts — although not nearly so overpaid as the executives and investors who mismanage private payment systems, medical bureaucracies and pharmaceutical production.
    If we reorganize our failed medical sector to get its costs in line with other countries and its incentives in line with human needs, the problem of funding Medicare will be trivial. If we do not, then medical care will be unaffordable regardless of what we do to Medicare.
    Ryan’s plan avoids all the difficult issues of reducing the abuse by powerful incumbent economic actors or the failed systemic incentives. Instead, he proposes to concentrate the pointless and cruel pain of the private system’s failure on those least able to defend themselves. Instead of reforming the medical care system, he wants to shift administering the medical payment system to individuals. The obvious (and presumably intended) result will be to make reform less likely: no individual is in a position to negotiate fees, let alone change the perverse incentives of insurance and pharmaceutical companies or medical providers.
    Thus, Ryan manages the extraordinary feat of proposing extraordinary cruelty, unjustly distributed, in order to promote unsustainable inefficiency.

  18. 2slugbaits

    JDH Very well done. You said it much better than I could or did. The studies that I have seen suggest that the lion’s share of the growth in medical costs is in the last two months of life. I realize that I’m a heartless bastard, but that seems like a good place to begin the discussion. And I’m always reminded that a dollar spent keeping an old man alive and in a coma for another day is a dollar not spent on healthcare for a child. On a personal note, some years ago, at approximately the same time both my father and my then 6 year old son were in a life & death situation in the hospital, for unrelated reasons. Obviously it was emotionally tolling to have to make decisions for my father, who was in a coma and had been pronounced dead three different times and coming back each time. But my son was also in a coma and they couldn’t tell us if he would live or not. I’m lucky in that I’m a govt employee with a good healthcare package, so his costs were covered and eventually he was released from the university hospital and is in college today. But my wife and I spent a lot of time in the pediatric intensive care ward and there were many cases far worse than ours, and for which the families did not have insurance. So was it right that Medicare should be paying to keep my father on a respirator and in a deep coma at the expense of young kids? If you want an eye-opening experience, I suggest people visit the intensive care ward for kids with cancer. Then visit the intensive care ward for seniors with cancer. Then ask yourself which experience rips your heart out the most.

  19. Tristan Bruno

    Daniel Greenwood brings up a good point about subsidizing drug companies. I am a bit less concerned with monopoly rights, since even if high prescription costs did fully subsidize useful research, this would likely still lead to even more expensive novel therapeutics that continue to exceed GDP growth. In the United States, at least, the lack of purchasing power that would be afforded on brand name medications still under patent, as Rob’s article notes, often carries prices of 25-50% higher than other countries with national health care. In effect, the United States subsidizes the health care systems of the rest of the world. While this means that medical research grows faster, it also means costs do as well and we shoulder a disproportionate burden in the world.
    On the issue of doctor pay, it is true that U.S. physicians are overpaid relative to most of the world. In our defense, I would argue that this is a small percentage of the total cost, that we spend more years in total training than most countries, and that our process is fairly selective (fewer medical school/residency training slots). Ultimately it is the decision of our populace to decide whether this is sufficient justification and whether this really justifies higher costs and if we need to open more training slots. Medicare subsidizes the cost of graduate medical education so there would be an up front cost in opening more slots, though it could pay dividends down the road.

  20. aaron

    We must also address the supply side. We need to produce more care providers and doctors, and encourage more top practitioners to instruct.
    Reduce the risks to entry, etc. as well.

  21. Ivars

    Daniel Greenwood :”Actually, we are nowhere near the point where we need to discuss how we are going to deny medical care to people who need it. We are the richest country in the world; we can afford to provide ourselves medical care.”
    That is very fast becoming a transitional stage. Debt is exploding, revenues are falling. Its not the absolute values, but rate of changes that destroys the empires. Or afford ability to waste money because of trillions in IOUs.

  22. aaron

    Another demand side possibility is subsidized low-interest loans for certain higher-cost treatments. The debt would be unforgivable. For certain health categories and risky treatments, a healthy co-signer required.

  23. rjs

    i would reword your first premise slightly:
    (1) The historical growth of expenditures on health care is unsustainable.

  24. Joseph

    Funny, the rest of the developed world has figured out how to provide health care at one-half to one-third the cost with equivalent outcomes.
    And the answer isn’t privatization as Ryan suggests. We have already tried that with Medicare Advantage and its cost is 15% more than traditional Medicare.

  25. wallyfurthermore

    You must answer the question of why medical costs in the US are close to twice those in other advanced countries for no better – and sometimes worse – outcomes.
    This isn’t just a government spending issue.

  26. tj

    2slugs,
    Have you ever considered that the cost of healthcare in the last 2 months of life is independent of age?
    Terminal is terminal.
    My mother was 67 and diagnosed with a brain tumor (glioblastoma). We had 2 choices. One choice was no surgery and most likely death within 18 months (average). The second was a surgery that could remove the cubic centimeter mass in here left temple and she would survive for many more years.
    Which choice would the 2slugs healthcare plan make for me?
    After you answer, I’ll tell you the outcome.

  27. rehundt

    I think you’ve left out this possibility: that aggregated purchasing of medical care by government can lead to more care per dollar of expenditures. Call this single payer or not, it’s pretty clear that absent aggregated purchasing the seller will obtain monopolistic prices, and that putting the buying decisions in the hands of the insurer splits the monopolistic price between the insurer and the service provider.

  28. Ameircan Attitudes

    A huge problem is also attitudes on the part of the patient. I just admitted a 101 year old to the hospital last week. He demanded full resuscitation in the event of cardiac arrest, and wanted all treatment options possible. His family became irate that I even dared to bring up possible end of life issues. I gave up and just wrote the order for “full code” in his orders…
    I’m just sayin…

  29. Jay

    It is obvious that big government proponents are willing to faithfully assume ceteris paribus across countries and to limit the only factor that effects health outcomes is the health care system.

  30. DRAverett

    Professor,
    Thanks you for addressing a key issue that our society must face. Some may object on moral grounds to the requirement that treatment ultimately must be limited, but there is no reason that these limits should be unreasonable. The morality of every person requiring from society the maximum possible expenditure for some minimal benefit is as much a part of the discussion are the question of limits to treatment that you pose. The dedication of extreme resources to individuals can limit our ability to provide large numbers of others in society access to health care that can afford many more quality adjusted life years. For example, the cost of new cancer treatments is an exemplary conversation, as recently outlined by D. Malakoff in SCIENCE (331:1545-1547).

  31. benamery21

    My healthy as a horse 35 y.o. cousin died of complications from the flu in Washington state last month. Don’t try to tell me that self/financial rationing of care is going to reduce costs or improve outcomes if catastrophioc care is still covered. We DO NOT have the best healthcare in the world. We have the most expensive.

  32. 2slugbaits

    tj Under Rep. Ryan’s voucher plan the decision would be made for you by the value of the voucher and nothing else. So if the voucher only bought you $1M in medical coverage but the operation costs $1.1M, then the patient is out of luck regardless of survivability prospects down the road. Insurance company “death panels” would make the decision based purely on the value of the voucher and whether or not it would cover the cost of the operation. On the other hand, a govt run “death panel” would (under Obama’s proposal) pay for an operation if survival prospects were good and if the procedure had a good track history.
    I suspect that you misunderstood my main point. I don’t have a problem with Medicare paying for expensive operations (well…okay, within reason). What I have a problem with is spending a lot of money on end-of-life operations that do not materially change the result. I don’t think Medicare should be paying nearly unlimited bills for extreme end-of-life costs just to buy a few more days or weeks of a very poor quality of life.

  33. beezer

    He who has the biggest shopping cart dictates prices.
    That said, there’s still discrimination regarding what’s sold. And therein is the rub when it comes to medical care. Wal Mart customers aren’t looking for pricy Italian shoes.
    Therefore, government should use purchasing power to reduce medical care prices, including the care equivalent of Italian shoes.
    From this point, alternative strategies can be tried to soften the discrimination. But they will always exist.
    One idea here: Why can’t the government simply buy the patent for a new, valuable drug? It may cost billions (it would cost billions anyway) but an upfront purchase would be less expensive because it relieves the pharma company of selling/marketing costs while immediately moving forward the income that otherwise would take years to generate.

  34. tj

    2slugs,
    Neither plan is the answer. Perhaps the addition of a catosrophic insurance policy to vouchers would work.
    IIRC, Glioblastoma is the same thing Ted Kennedy had. Once metasticized, this type of brain cancer runs its course in about 18 mos. My mom had surgery in Dec 1995, the cancer returned in April 1997 and she passed on Independence Day 1997.
    I suspect this type of cancer will be left to run its course, regardless of age, under the new government reg’s.
    A bit of advice for those who find themselves with a terminally ill and bed-bound parent. Try Hospice before pushing your parent into a nursing home. Your parent took care of you when you were young. Now it’s your turn. Hospice is a wonderful thing. I am proud to say that my mother didn’t have to spend a single day in a nursing home, and was able to pass peacefully in my apartment. That’s how it was done before we had modern health care, and I suspect that’s where we are headed in the near future.

  35. Ricardo

    Robert Bell,
    I believe you are missing something very critical. A third party should never be making decisions in health care issues. That should only be between the patient and doctor.
    One of the problems people have today is believing that the health care system we have today is what we have always had and that it is the best we can get. That is not true.
    If you study health care you will find that prior to the progressive era there was not health insurance. There was the general understanding that health care insurance would lead to massive over use of health care services resulting in huge inflation in health care cost.
    During the progressive era governments began to support the use of health care to hide taxable income. Corporations and businesses began to use health care as a benefit that would side-step the income tax.
    The biggest change came with the introduction of HMOs in largely Republican administrations. HMOs were proposed by left wing organizations as the stepping stones to nationalized health care. This agenda was never even hidden by those proposing the changes. Their plans have been very effectively instituted.
    Today we essentially have nationalized health care. All that is needed is to pull the various dispursed government programs under one umbrella which is what the Democrats have essentially done though it will take 10 years or so.
    Health care between a doctor and paitient is essentially a thing of the past. Today the bureaucracy sucks mega-bucks into political coffers as services and actual health care suffer. Health care services are more like assembly lines than health care and that is not the nature of health care but the nature of bureaucracy.

  36. fladem

    What I find interesting in this analysis is the extent to which health care cost increaes can be explained by Baumol’s equation. Baumol predicted that “In a range of businesses, such as the car manufacturing sector and the retail sector, workers are continually getting more productive due to technological innovations to their tools and equipment. In contrast, in some labor-intensive sectors that rely heavily on human interaction or activities, such as nursing, education, or the performing arts there is little or no growth in productivity over time. As with the string quartet example, it takes nurses the same amount of time to change a bandage, or college professors the same amount of time to mark an essay, in 2006 as it did in 1966.”
    Of course, those portions of the economy that are least likely to see productivity increases are the same ones that have come to see some sort of government guarantee. So if Baumol is right, health care and education costs will continue to rise, and with them associated government expenditures.

  37. Johannes

    The solution is to take from the rich and to give to the poor, and nothing in Xchange.
    This is called social instinct and a distinction of human behaviour. As we are not animals – but in the US …

  38. mclaren

    James Hamilton’s post can only be decribed with words like “insane” and “evil” and “demented” and “appallingly stupid.”
    Fact: A routine visit to a doctor’s office in America costs $151. A routine visit to a doctor’s office in Germany costs $22. A routine visit to a doctor’s office in France costs $32. A routine visit to a doctor’s office in Canada costs $30.
    So James Hamilton’s solution to the problem that American health care costs 5x to 7x (not 5% or 7%, that’s 500% per 700%) of what it costs in other advanced countries is “force sick people to make less visits to the doctor.”
    That’s insane.
    Do you know what will happen?
    The studies show what happens — people won’t make as many routine trips to the doctor, horribly expensive diseases like cancer won’t get caught early enough to treat them simply and effectively, and it will cost millions upon millions of dollars in fantastically expensive treaments when the cancer gets so advanced that the old person has to be hauled into an Emergency Room by a team of paramedics.
    That’s insane.
    That’s so stupid, no words exist in the English language to properly describe how stupid it is.
    That wastes money, it doesn’t save money.
    A CT scan in America costs $1800. The exact same CT scan using the exact same machine costs $319 in Germany, $212 in France, $258 in the Netherlands, $530 in Canada.
    So James Hamilton is telling us that the way to fix America’s broken health care system that charges 900% as much for a routine scan as the French health care system does is…
    …(wait for it)…
    …To do less CT scans.
    That’s demented.
    It’s so foolish and so counterproductive, even a clinical mental patients suffering from hallucinations and paranoid schizophrenia would rebel at the sheer craziness of James Hamilton’s suggestion.
    America’s health care system is broken because greedy corrupt cartels fix prices, use sweetheart contracts to lock in grossly inflated prices, use bribes to induce doctors and hospitals to use wildly overpriced services and drugs and medical devices, and then force doctors and hospitals and imaging labs and blood labs to sign nondisclosure agreements so rival firms can’t even find out how much those services cost in order to compete on price.
    Source: Ezra Klein: “An Insurance industry CEO explains why American health care costs so much.”
    Source:
    “The Fix Is In: The Hidden Public-Private Cartel That Sets Health Care Prices,” Slate magazine online.
    American doctors make twice as much money per year as doctors in any other advanced country — and James Hamilton’s answer to this crisis is to tell sick patients to see the doctor less often.
    That’s crazy.
    There’s a simpler solution: shut down the AMA’s restriction on the number of people who can enter medical schol every year in America, which artificially inflates doctors’ salaries to 200% what they are in Japan or Germany or France or the Netherlands or Spain.
    Source: “Why are MD salaries so high? The medical cartel.
    “The planned spike in health insurance rates by Anthem Blue Cross in California is just the tip of a Titanic-size iceberg of exorbitant price increases, secret pricing and consolidation not only by insurers – but by the hospitals, doctors and medical devicemakers that send the bills to the insurers.
    “Insurers, who strike deals with providers, pass the bills on to patients, businesses and governments. The nation is fast being bankrupted by a medical money machine that costs $2.5 trillion a year and takes more than $1 of every $6 that Americans earn. (..)
    “Insurers blame hospitals and doctors, doctors blame insurers, and hospitals blame doctors and medical devicemakers in what academics call an inscrutable medical-industrial complex that rivals anything the defense industry ever invented. All these groups are combining into what many experts describe as cartels.
    “Many industry insiders are afraid to speak on the record for fear of antagonizing the medical groups they rely on for their survival. Contracting practices are draped in secrecy. Prices are almost impossible to obtain because of `confidentiality agreements’ among hospitals, physician groups, insurers and devicemakers who do not want their markups exposed to competition or public scrutiny. (..)
    “Christina Bernstein, a medical-device engineer and independent sales representative based in San Francisco, sells disposable surgical tools made mostly out of plastic that she estimates are manufactured for about $40 each. These are marked up and sold to hospitals for as much as $350, she said, for a single use in a surgery on a patient.
    “But if you were to get a detailed bill of what the hospital was charging the insurance company for the insured patient, those things get marked up to something like $1,200,” Bernstein said. “It’s ridiculous. There’s no open competition.”
    Source: “Experts warn of medical industry cartels’ power,” Carolyn Lochhead and Victoria Colliver, San Francisco Chronicle, February 21, 2010
    And what is James Hamilton’s solution to this massive problem of corrupt secretive cartels using monopoly pricing and bribes and sweetheart contracts to enrich themselves by driving up the cost for common medical devices like disposable medical instruments used in surgeries by 1200% above what any other advanced country pays?
    James Hamilton’s answer is to blame the victim. “Cut the amount of medical care we give those greedy irresponsible sick people!”
    That’s sick. It’s evil. It’s twisted and demented and deranged.
    The solution is obvious, and everyone sees it except James Hamilton — we need to control costs by cutting out the greedy collusive price-fixing cartels.
    We need to cut costs by moving to a nationalized single-payer health care system.

  39. westslope

    Decide who not to serve so as to serve more people better.

    The Canadian system is also unsustainable. Family reunification immigrants, mostly older, receive ‘free’ health care. Lengthy queues continue to allocate in-demand surgery.

  40. Lord

    Ryan’s plan is not about cost control at all, only spending control and only by the government. This is why it is doomed to failure. Insurance is as much if not more the problem than government. We need to stop paying by cost and start paying by value as difficult as that is to determine.

  41. Robert Bell

    Ricardo: The problem I have with the normative assertion that there should be no third party involved in the doctor/patient relationship is that some conditions are both rare, treatable, but expensive to treat, which creates the opportunity for risk pooling.
    So to contrive a contrived example, if there are ten people each of whom have $10K in extra cash, and a disease, expensivitis, that affects one in ten people but cost $100K to treat, the ten people could collectively agree to pitch in their savings if one of them gets the disease.
    Absent that agreement, if one of the ten gets expensivitis, he/she can’t afford the treatment. With the agreement, he/she can, but it requires a conversation with a third party.
    As an aside, a comment I read this morning had a nice description of this idea from Hayek:

  42. Jonathan

    How does Ryan’s excescence hold down overall costs? That is the real issue, not capping government payments to shift the burden to families.
    As I see it, a subsidy / voucher is a floor not a cap because that means the market can afford x plus, meaning the system will tend to grow to extract the full potential price. This means even more resources diverted into medical and of course marketing and administration. Take the simple point that shifting people from Medicare into the private market increases just the admin load by 15 -20%. That means we must increase payments dramatically – by over $100B in current dollars – or simply reduce payments for care by that much. This doesn’t count the additional costs of staffing to handle the increased load, which also means creating a large quasi-government bureaucracy of paper pushers engaged in unproductive middlemen work.
    As for changing treatment at the end of life, great. Problem is the subsidy / voucher system doesn’t actually address that; it merely makes that care prohibitively expensive for many. It would still exist. Any projections would need to consider how much people would be paying in addition to the given amount. I see little reason to believe any reduction on overall cost levels.
    Part of the problem is rising cost levels but another is the excessive diversion of our economic resources into this area. This plan makes that dramatically worse; it amounts to the socialization of insurers, making them little more than unproductive conduits paid out of tax dollars. Why create a vast layer of middlemen?

  43. tj

    @ Robert Bell,
    Your post and link have me thinking.
    With social insurance, society must be sufficiently callous to deny certain medical procedures to a person in need, because the person does not fit the socially defined profile. (e.g. age, prognosis, etc).
    Should it also be the case that society denies medical services to individuals who choose not to enroll in the social insurance program?
    The reason this becomes an issue, is the adverse selection problem. Given a choice, many individuals will choose not to enroll in a social insurance program (and avoid paying the premium) until they become sick. Thus, society ends up with a group of individuals who do not pay premiums until they are sick. Then, once cured, they stop paying premiums until the next affliction strikes them.
    Under current law, with low penalties for non-insurance, the above scenario is possible.
    If society is going deny end-of-life procedures to individuals who paid a lifetime of premiums, then society must also deny procedures to those who choose not to enroll. Correct?

  44. frustrated MD

    Hello idiots…
    Fact: A routine visit to a doctor’s office in America costs $151. A routine visit to a doctor’s office in Germany costs $22. A routine visit to a doctor’s office in France costs $32. A routine visit to a doctor’s office in Canada costs $30.
    B.S. Medical care in Germany, France and Canada are government subsidized. Easily debunked. The cost of rent, lights, phones, paper, malpractice, office staff and paper for the toilet was $28 US 15 years ago; it’s probably close to $40/patient today… billing in the U.S. costs the provider about $8/claim. If your provider is worth $200/hr for his/her time, add $50 for the provider and you get the cost of an ofice visit about $100.
    The biggest current driver of health care costs is cancer care. Cancer is mucho expensive. PET CT scans, modern biologics, radiation, chemo, all very expensive and we are only doing paliative care… buying people a little more time. You can’t cut health care costs without addressing the exploding costs of cancer care for the incurable patient.

  45. peggy

    How health care is organized and delivered in a society is an ethical and moral issue. We must regain our humanity and do what is right – learn from those who do it better and thus save lives and improve quality of life for every single citizen.
    Human life is not about making a profit. Let’s get rid of for-profit insurance companies and use our health care dollars to save lives and ease suffering.

  46. JDH

    mclaren: I see that your preferred form of discourse is to invent quotes that other people did not say in order to express positions they do not advocate. You then attack your contrived strawman with unrestrained personal viciousness and count yourself morally and intellectually superior for the exercise.

    My position, though I do not expect you to understand it any better for hearing it a second time, is that we need to set limits on how much we’re willing and able to spend. You may have particular ideas on how said sum might be most efficaciously spent. But the mere suggestion that limits need to be set is neither evil, nor twisted, nor demented, nor deranged.

    Rather, it is the necessary first step to approaching some very real challenges in a grown-up way.

    Please also be advised that, if you wish to continue your rant, you will need to find another forum in which to do so.

  47. Robert Bell

    tj: All your comments about insurance and adverse selection are on point, but at a higher level, I think JDH puts it about right.
    “What we need, in my opinion, is a social and moral framework for deciding which of these are worth doing and which are not.”
    Social insurance, charity, and taxation / redistribution might all play a role in such a framework, but I think the key points is that this social / moral issue:
    1. It might be possible to exceed one person’s individual budget constraint, but that implies a social arrangement.
    2. It is not possible to exceed the aggregate budget constraint. In my contrived example, this would correspond to there being two or more different expensivitis type diseases, but the group of ten can only afford to insure against one, so again, a social arrangement is needed to decide which one.

  48. Charles St Pierre

    I am afraid @McLaren, for all his rudeness and his confrontational presentation, raises important points, and you would be ill served to ignore them. The AMA, for instance, has restricted the entry of doctors into the profession. The number of Med schools in the US, is less than it was 100 years ago, despite a tripling in the size of the population. The “experts” warning of the powers of the “medical industry cartel” are not to be taken lightly.
    Simply, the US suffers from an inadequate health care system, unable to take care of all the demands placed on it. As with any shortage, this drives up the price of those services, creating the paradox of inadequacy combined with high prices, and enables the profuse rent seeking we see.
    I am not sure if it is intrinsically inadequate, or only organizationally inadequate.
    If intrnisncally inadequate, some restriction on services must accompany a transition to universal coverage. Except for discouraging (by a tax, perhaps) some/many of the pricier and more dubious treatments, such a restirction should not need to be permanent, and certainly no more restrictive than in other developed countries.
    For universal health care not to aggravate this shortage, the supply side must be addressed. But this is politically infeaseable. Rising healthcare costs are thus a political problem, since political action is required to break up the cartels, and expand the supply of medical services.
    More generally, effective political action is required to bring down costs, but the government is captive to the medical industry cartel, and so we will not see this, to our ruin. This is why the debate has focussed on the issues it has, and Obamacare has taken the form it has, instead of addressing the real problem.

  49. Apinak

    A simple fact. The US spends $7500 per capita for health care most other OECD countries spend $3500 or less per capita. For a country of over 300 million that is about $1 trillion in excess health care spending each year. Given that the onus should be on the proponents of free-market health care to explain why private health insurance is worth $1 trillion a year. If they can’t justify it, and they can’t, then we should institute a single-payer system. To eliminate health care for the poor instead is simply immoral.

  50. D. F. Linton

    Very little of health care is paid for out of pocket. We either are spending mostly other people’s money or paying lump sums for “buffet” access. Neither of these payment modes provides much incentive for price shopping or for making marginal utility judgments. This has created an ever-growing level of spending which has attracted labor and capital likes flies to honey. Until the inputs stop ratcheting up, there is no reason to believe that health care prices communicate any real information. It’s kind of like the recent housing bubble. It’s certainly a perfect example of the socialist calculation problem.

  51. Tristan Bruno

    One has to be a bit suspicious of cost per capita estimates in health care. I practice in both the military and civilian health care systems in the U.S. In the military, we use a system called Tricare, a form of socialized medicine not altogether different than other OECD countries. Estimates are that we spend very close to what other OECD countries spend per capita in the military. In fact, if you look at just our similar medicare age population, age 65 and older, this apparently “costs the government $3,874 per patient per year” (http://www.freerepublic.com/focus/f-news/2653168/posts). Of course, anyone who works in military health care knows we spend far more per capita than in even the U.S. civilian sector. It’s a matter of accounting voodoo similar to what “frustrated MD” suggests. At our military treatment facilities, one will have a hard time finding that cost estimates per capita account for not having to own or rent our buildings, the costs of electricity, water, sewage, communications and IT systems, security, maintenance, ancillary support, etc. It’s a game of slight of accounting hand. If our military health care system were so efficient, we would not continue to have such a large reduction in military treatment facility services and continue to send our patients out to the civilian sector for treatment in larger numbers, and our administrative officials recognize this. I am not suggesting that our healthcare is on par with per capita costs of other countries, but the differences may be exaggerated.
    With regard to physician salaries, in the U.S., our average salaries are up to twice that of comparable OECD countries. At most, physician salaries represent 10% of the cost of healthcare, so halving the salary would reduce costs by 5% at best. That’s not a reason not to do it, and every percent counts, but it will not come close to solving the problem. Every component of health care expenditures needs to be evaluated, but most health care economists recognizes that our growing appetite and adoption of new medical technologies and services, and the premiums we pay for them, as bigger issues. Opening up more training slots for physicians would address the physician costs, but one should be know that it will not be a complete panacea. Whereas most of the physician of yesteryear practiced medicine mostly for the satisfaction of the job itself, it has become more about lifestyle, including financial compensation. Like the business/economics/ finance industry today where many of the brightest have increasingly followed the money to certain industries, these trends seem that they hold for many physicians too.

  52. Ricardo

    Robert Bell,
    I am not arguing against health care insurance when I say a third party should not be making health care decisions. If individuals want to pool finds to cover such needs that can be done easily without a third party making the health care decision. The insurance should provide funds to an individual but the individual and doctor should determine the treatment.
    I believe this is more consistent with Hayek’s view than the “death panels” that were mentioned in your link.

  53. Ed

    I think we need to have this discussion. In this discussion we need to tread carefully as morals and ethics are involved. However your second given where:
    “What we need, in my opinion, is a social and moral framework for deciding which of these are worth doing and which are not.”
    I do not think economists should be dictating morals. Every time economists and business men dictate morals we end up in a situation that is very dangerous. As an example, morally coal companies should make sure their mines are safe for the miners. But we still have accidents that take many lives which could be prevented by spending a little money.
    Who should receive care? EVERYONE! because we are human. We are above animals and shouldn’t only be concerned with ourselves. It is very easy for the wealthy to say that a poor persons life isn’t worth as much. However to the family and friends of the poor person there life is far more valuable than the wealthy persons. If the wealthy and companies get to put values on peoples lives we are all in for trouble.
    When I hear statements like:
    “What we need, in my opinion, is a social and moral framework for deciding which of these are worth doing and which are not.”
    I think:
    What he is saying is that we need to change the moral and social framework so that it is ok for sick people to suffer. Change our morals so that is ok for us to pull the plug on poor people who don’t wish to die. So that society can deal with the fact that many poor people will need to die because they were born into financially impaired families. So that the Death Panels everyone was scared of will be acceptable.
    Again I think this is an important discussion however to make light of our humanity is very dangerous.
    The solution to the health care problem has been mentioned over and over again by other posters. Socialized medicine. It controls costs, provides good quality care to everyone. The wealthy don’t like it because they may have to pay for much of it.

  54. bobsnodgrass

    I am a 73 yr old academic physician, I read Econbrowser and generally find JDH easy to understand and agree with. However, he has made a serious error IMHO. His two fundamental provisos are correct: Healthcare costs can’t/ won’t keep rising at recent rates; some limitation of services will be necessary. I mostly agree with Daniel Greenwood. Because I now work half time I had to transfer to Medicare and went into a Medicare Advantage plan so that my wife and I could keep our same internist. I saw that Medicare advantage is corporate welfare – our specialist choices were much more limited than in regular Medicare; we got no “extra benefits”; everyone agrees that patient outcomes are no better in Medicare Advantage. Many Americans make unreasonable demands for the care of their elderly relatives- I know of knee replacements for demented Alzheimer patients: the only beneficiaries were the surgeon and hospital who collected sizable fees- when I asked about why the families agreed to the procedure I was told – Dr. X contacted the family and said that Mr. Y would be much more comfortable with knee replacements so they insisted on it; they didn’t pay for it
    Leaving Medicare Advantage, we went into Kaiser and have been pleased with them. They avoid dubious surgery and overblown treatments. I turned up with prostate cancer; they went to great lengths to inform me that my robotic prostatectomy would be followed by a tempo-rary period of incontinence and impotence, that maybe I’d prefer something less invasive- I know a few peers who had “private prostatectomies” who were never clearly told this. My surgeon has done over 2000 cases, unlike most costly private urologists. I went home the next day; the temporary symptoms were indeed temporary. I have a neighbor, a Kaiser subscriber, who had pancreatic cancer, got the very complex Whipple procedure, done by a high volume surgeon and is doing remarkably well on chemotherapy 12 months later. Of course Kaiser doctors and nurses vary, but they provide what you need- they don’t cover Lipitor, rather generic Simvastatin. If you can’t tolerate Simvastatin they’ll authorize another statin, but you must try Simvastatin first
    If profiteering insurance companies, hospitals and doctors were forced out and programs like Kaiser, structured as utilities, took over all care, we’d be healthier and save money. Kaiser subscribers can’t do emergency room hopping because the electronic medical record is there for every Kaiser facility. Greedy doctors are bad, but remember that many finish their training with enormous debts of several hundred thousand dollars. I didn’t; I’m not greedy but maybe I would have been if I started out with huge debts. The largest annual income that I ever realized from medicine was $154,000 in 1998 (I’m a neurologist). If you want to control greedy doctors, subsidize their education in return for future service.
    I fear that the Obama administration has decided that real reform is too risky. Goldman Sachs told Dwight Eisenhower (look it up), a reasonable President, who to name as treasury secretary. They got their message to Clinton and Obama, but ironically not to W. Bush- remember Paul O’Neill? At a time when big finance has gotten too big, Obama eliminates the possibility of government correction and effective regulation. It pushes us down the road toward a dangerous Egyptian correction. Obama wanted healthcare reform and made an awkward start. He named talented Dr. Don Berwick as CMS head. He never submitted Berwick’s name to Congress (“too risky”) and now he’s being forced out. We get signals that the big O feels that he must compete with the loony Ryan plan (loony because it includes sizable increases in defense spending, further reductions in taxes for the richest, would take most of what savings he has outlined from the small people, and because claims of saving through competition are bogus- there is no medical free market). Maybe Obama got the idea that he can personally survive by playing the role of the lonely misunderstood ‘adult’ at the top. He hasn’t worked to either explain or expand HCR which is seriously incomplete at present. Berwick could have helped there (Congress would still be a problem). Insurance companies are Ryan’s largest contributors.
    Pols must be careful. Spanish Judge Baltasar Garzon issued a 1998 warrant for the arrest of Mr. Pinochet on charges of authorizing murder and torture of Spanish citizens in Chile. He issued similar warrants against Argentinean authorities and spoke of indicting the “Bush 6”, Bush, Rumsfeld and the attorneys who advised them that torture was legally OK. It didn’t happen. He became headstrong and began investigating past crimes by Generalissimo Franco. The socialist Spanish government quickly gave him the hook. He was fired and charged with lying and prosecutorial misconduct. He argued that the 1977 Spanish law declaring amnesty for Franco’s crimes was invalid because they were crimes against humanity. You can indict foreigners but not former heads of your own state. No US official will indict the Bush 6; they must respect Government Sachs, GE, Boeing and the big insurance companies, who have the power.

  55. REP

    Good Lord, does no one remember the principle of scarcity? I think that is one of the major points of Professor Hamilton’s post.

  56. Tudor

    The single-payer system simply works better than the US system almost everywhere delivering unambiguously more and better care. I will never understand the American obsession with making huge transfers from the sick and poor to shareholders and executives of for-profit insurance and medical companies.
    The solution is clear, health risks can only be shared universally, across society, on a cradle-to-grave basis. That is the only mechanism that can simultaneously eliminate adverse selection and introduce market discipline.

  57. CoRev

    Want to save 20%-27% of annual health care costs without any draconian changes? Consolidate Dr visits and lab tests for those who are the biggest users, the 45 to 85+ in age.
    That age group accounts for 53% of all Dr office visits. That is because they also account for the bulk of the patients with chronic conditions.
    That age group also accounts for 65% of over all annual health care costs. For those patients with controlled chronic conditions, let’s use 1/2 of them, in today’s health care system still see their General Practitioner, and 1-3 specialists twice a year. Those visits will typically include a lab test. That’s on average six visits and six labs each patient every year.
    For the patient with controlled chronic conditions, the Dr is just monitoring for a change. Since any of the Drs is capable of determining if the labs have changed. So any of them would be qualified for this.
    So why not consolidate those visits and labs to just twice a year to one Dr? That cuts costs by 2/3. If the patient has truly controlled their chronic conditions, then why not consolidate to one visit per year? That is a 83% cut in Dr and lab costs.
    The bottom line is for that 1/2 of the 45-85+ age group with controlled chronic diseases a cut of we can achieve a cut of health care costs of 21.8% at the 2/3 consolidation level, and 27.1% for the 83% consolidation level.

  58. switchboard

    Dr. Kervorkian, please report to intensive care. Paging Dr. Kervokian – to the ICU please.

  59. CoRev

    switchboard, if your comment was aimed at my proposal, you clearly do not understand it. In simple terms what it proposes is to treat healthy elderly as we treat healthy others. Chronic conditions can be controlled for years and even decades depending at the age of onset. It doesn’t take a specialist to determine a change in conditions as shown by the lab results.
    If I had phrased the situation as let’s stop paying for redundant and unnecessary services, would you be more receptive? This proposal was just one example of how they permeate the health care system.

  60. dave

    Single payer systems are generally better then what we have in the US.
    Single payer systems still have to make decisions on what to pay for and how much. They sometimes set prices too low and cause scarcity. They even deny outrageous end of life care sometimes. No single payer system in the entire world provides unlimited benefits at any price for any purpose.
    So even single payer systems require choices about trade offs. Americans haven’t been willing to give the government the ability to make those choices.

  61. David Penwell

    Professor Hamilton,
    This has certainly been a posting that created conversation. I have thought about this for a couple of days, just to make sure I measured my response. The real problem I believe is the total amount of medicine that is practiced. For example; my wife is a stay at home Mom, (a counter-cultural position that we know our child is worth). Our school district requires a doctor’s note for any absences. If not, the absences is unexcused and bad things can start to happen with just ten of them, (required make up days that the parent is charged for, etc.). Now, my wife and I have enough common sense to know when our child requires medical attention. Just because my child has a fever does not mean we have to run to the doctor. We treat the symptoms and monitor the situation. IMHO, a big problem comes when the child is taken to the doctor, given an antibiotic just to break the fever, so they can go back to school or day care because Mommy can’t miss another day of work. (Those McMansions and new Suburbans are expensive, and goodness knows, we have to have them.) On any given day, you can go into the local doctor’s office, and it is full with just this type of scenario. The doctor’s cannot even get around to treating the really sick people.
    Also, I believe that a lot of elderly care is just because the elderly person likes the attention and feels so alone. The doctor is a source of comfort. Usually an elderly person’s family is scattered all over the country, chasing the next better job.
    When I was growing up, you just did not go to the doctor. I went one time that I can remember for required school shots, the next time I went, I was inducted into the Navy. I can remember my Dad calling insurance, “hospitalization”. Insurance only kicked in when you went into the hospital. When you went to the doctor, you just paid them and/or ran an account with them and made payments. In fact, people would make money when they went into the hospital because the insurance pay out was more than what the hospital charged. Going back to the 1950’s, nobody had insurance, and the doctor came to your house. Now, you pay premiums, pay deductibles, just to wait in an office for two hours.
    I do believe we have enough resources to take care of the chronically sick regardless of age. I believe the root problem is our lifestyle choices and the third party payer system, be it insurance, or government. One suggestion, since we have a huge demand for physician’s services, why not increase the supply of physician. Any qualified physician that would like to immigrant to the US, give them a green card and put them at the top of the list, a foreigner in a US Medical School, give them a green card upon graduation. I would even say, why not help with expenses for them, their spouse, and children. I also agree with one commenter’s suggestion to forgive student loans of doctors.
    I believe the bottom line in all of this is not so much a resource problem, as it is a problem of people’s heart and attitudes. We have enough resources for the truly sick; it is just how we use them. People need to realize, even if you have the very best of health care, you are not going to live forever. As Jesus Christ asked, “what shall a man give in exchange for his soul? “ The answer; everything he has, everything his insurance company has, and everything the government has.

  62. Main Street Muse

    That you think we currently have “a system in which we pretend we can provide everything for everybody” leads me to believe you’ve never been self-insured or have a full understanding of the exceptionally flawed system we have today.
    We are today – and for many years previously – letting insurance companies dictate what is covered and what is not. Insurance companies have been rationing health care for years and years.
    With more than 40 million Americans who are uninsured, and the increases in the cost of health care having reached the point of unsustainability, the private sector has failed to deliver efficient, affordable and adequate health care.
    The issue to debate is how a costly system offering poor outcomes should be reformed. And dumping elderly people with fixed incomes back onto the private market means you won’t need death panels. Our elderly will find health care to be out of their reach completely.

  63. Nightrunner

    Changing the path requires denying some medical services for someone who would otherwise receive them.
    Excuse me? If an apple seller cannot charge million dollars per apple, some people will not be able to get apples they want? Are you by any chance claiming US medical services are a commodity?

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