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July 02, 2012

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"If you're used to being at the front of the line, having to wait will indeed feel like a downside of "socialized" medicine."

If you're used to being at the front of the line, having to wait will indeed BE a downside of socialized medicine. No "feel" about it, it's not a mere perception, it's a real downside.

The question, of course, is, "Does letting some people pay for faster service actually slow down service for others, or not?" Is there one line, and some people are permitted to line jump, or are there simply two lines?

It matters, because if paying for faster service doesn't slow down other people's service, complaining about it is just spite.

What I take from your scatter there, is that the delay in getting a hip replacement likely isn't a functional delay. There's nothing particularly necessary going on during the delay, there's no reason you can't do 5000 hip replacements a week after they're determined to be needed, instead of six months later. It's still the same amount of surgery, after all...

It seems likely some of those countries with long delays are using delay as a rationing mechanism, hoping that during 6 months to a year of delay, some of the hip replacement candidates will simply die, or for some other reason go away.

It's true that price is also a rationing mechanism. However, the advantage of price as a rationing mechanism is that it links getting something, to your paying for it. And, yeah, if you think that's unreasonable, you pretty much are a socialist.

What I take from your scatter there,

Not that you are going to listen, but I'd recommend you take a look at the pdf rather than talk about what you 'take' from the scatter. It has a range of things that impact waiting times and not all of them are evident from the scatter.

Over here we had complaints by functionaries that the costs go up because those delay tactics for hip replacements are illegal and that the state, please, introduce a general ban for hip replacements above a certain age.
The result was a public firestorm against this kind of thinking and the term coined in connection with this became the un-word of the year.

People in Britain are allowed to queue jump too. There are strong private health insurance and health provision industries in Britain, and if you can afford it, or if your job gives you private coverage, which is quite widespread, you can have your hip done very quickly indeed.

American opponents of HCR obviously have a vested interest in denying that this is the case, but such denial is entirely dishonest.

The "one year waiting list" for non-critical hip replacements is the worst case scenario for people with no other resources. It is, in my view, far too long, but it's hard to reduce it without constraining surgeons to do less private work, which would be generally regarded as an unconscionable restraint of trade, or employing far more of them, which the present government is unwilling to prioritise.

People in Britain are allowed to queue jump too. There are strong private health insurance and health provision industries in Britain, and if you can afford it, or if your job gives you private coverage, which is quite widespread, you can have your hip done very quickly indeed.

Yes. It seems that the model in the UK is to spend substantially less money on health care overall, and then those with more money (which they have because the country doesn't spend much on health care, so it doesn't eat into your compensation as much) can use that extra money to get around the wait lists, and you'd still spend less money than you would have to if you were covered by an American 80-20 plan.

Also, it's been almost 20 years since the Clinton health plan was proposed, and people are still talking about how these things will "interfere with the doctor-patient relationship." That ship sailed a looong time ago. The people who were 18 then are almost 40 now and have never had some kind of "personal relationship" with a doctor, particularly not one that they care particularly strongly about.

The same situation that was described by Chris y goes for Finland, too. It is possible to get treatment quite fast, if you pay out-of-pocket or have a good insurance. Such insurance is not even very expensive: I pay ca. 150 euros per year for such insurance.

The actual problem here is not really the availability of medicine. Instead, it is the costs of hospitalization. A day in a public hospital or in a elderly retirement costs, I think, more than 150 euros. The fee is adjusted according to income so that at the end of day, you have 90 euros per month left after the hospital fees and taxes. In practice, it means that anyone who undergoes prolonged hospital or elderly care will end up with 90 euros per month, whatever the income.

Currently, the hospital fee adjustment does not take into account the assests of the patient, so the assests will not end up with the government, but the Ministry of Treasury is pushing hard for this change.

The people who were 18 then are almost 40 now and have never had some kind of "personal relationship" with a doctor, particularly not one that they care particularly strongly about.

indeed. the whole idea that i should have a close relationship with a doctor seems crazy. i don't even know who my primary care physician is. i know who it once was, and i still go to his practice, but i haven't seen that doctor in a decade - i only see whichever Physician's Assistant is available. i don't know if the doctor even works at the practice any more.

and it doesn't matter. i don't go there expecting a relationship - i just want someone who can refill prescriptions and fix whatever occasional acute problem i've determined isn't going to fix itself.

Meanwhile, here in the U.S., I've known of two people (one I know personally, the other is a blogger I follow) who have had issues where the primary doctor referred the person to a specialist for pain control or evaluation for surgery. The specialist set an initial appointment for 2 months later in each case.

And in both cases, the primary doctor then said that they could not prescribe painkillers in the interim, because that particular issue was now in the hands of the specialist - the specialist that wouldn't see the patient for 2 more months.

In one case, the specialist's office had already said that the specialist didn't write prescriptions at the first visit, and that the second visit (if the doctor chose to accept the case going forward) would be a month later.

Two people referred to specialists and left without any prescription pain control for at least a month (from the time the primary care doctor's last at-most-a-month-at-a-time prescription runs out).

Then there are whatever further delays there were before getting the needed surgery. And the person I knew got to the hospital the morning of her scheduled surgery (which was pre-arranged, not an emergency) and was told *for the first time* that she had to pay her deductible amount in advance, or the surgery would have to be rescheduled. Fortunately, she had the money and was able to pay. Unfortunately, the hospital billed the full amount to the insurance company without specifying she'd paid the deductible, and she got told she was supposed to pay her deductible to the anesthesiologist rather than the hospital. The hospital's reaction? "We'll get you a refund within 2 months."

Yeah, here in the States, we're SO much better off than folks with waiting lists!

I honestly don't understand how the ACA can be so very frightening, when the real lives of many real people will become *less* frightening, stressful, and anxious because of it.

I think it's actually pretty easy. ACA is very frightening simply because it was Obama who implemented it, and he's a Democrat.

Yes, there are some people with real concerns about specific parts of the act. But consider that the vast majority, when presented with most features of the act and not told that it is part of the ACA, are in favor of those parts. So what they are objecting to so fiercely is not generally the substance of the act, but where it came from.

And while they may dislike a few features of the act, my observation is that most of them are not even impacted by those features. If you already have health care thru your employer, the mandate doesn't impact you at all. If you are old enough for Medicare, the mandate doesn't impact you at all.

Sure, you might have a philosophical objection to the government forcing someone to do something (or pay a penalty). But have you objected to any of the myriad other things that the government demands that you do or not do? All you libertarians out there may be able to answer yes to that. But you are a tiny minority of the country (for better or worse) and you know it. You are not what is driving objections to the law.

I'm female, by the way. This is relevant because I had two babies on the NHS.

One was a planned Caesarian, for a number of extremely sound reasons. The second was a normal delivery, followed shortly by a blood transfusion because things were less fun than they could have been.

I have no complaints whatsoever about the care I got before, during, or after the births. The doctors in my local surgery, to whom I had already been going for some time, were all helpful and knowledgeable. The midwife whom I also saw both before and after the birth (she was a health visitor too, and did home visits after both births -- a standard practice) was a particularly good resource.

It's true that I shared a hospital room with one woman (+ baby) after the C-section, and five (+ babies) after the second delivery, which made sleeping a bit challenging. But neither birth was complicated enough to require a long stay in the hospital.

But what I really adored about the NHS is that none of these benefits were the product of my socioeconomic status. Our medical practice covered not only private housing, but also council housing (rent-controlled), where some of the poorest people in Edinburgh lived. And an unwed, unemployed teenage mother in one of those flats would get the same standard of care that I did.

(It's true that someone in England might not -- the NHS is increasingly Balkanized. I gather it's part of the drive to privatize it, introducing market gubbins into the situation. Can't say I'm impressed with how well that's working.)

Brits may abuse the shabby old NHS, but frankly, they also fiercely protective of it, and for very good reason.

(I live in the Netherlands now, and that is also very, very good, albeit with a completely different structure.)

I often feel, reading these discussions, that Americans don't believe the experiences of the rest of the world. It sounds too good to be true. But you know, I am an American, albeit an expat. And I'm not blowing smoke here. It really is possible to have a society where medical care is affordable and reliable for everyone, where a single illness is not a bankrupting event, where a basic minimum of health care is assumed.

I should see if I can get my friend Jen, who lives in Vancouver and is currently being treated for colon cancer, to post something about her experience, which has been overwhelmingly positive.

Brett:

In addition to reading the actual OECD report, which discusses correlations for waiting time, notice this: the international and the Swedish study are both part of efforts to reduce waiting times -- it's viewed as a meaningful concern that needs to be dealt with.

In the US, on the other hand, one reply to this post said:

I knew someone in the US with reasonably good health insurance (as in, they did pay for everything in the end) who waited over six months, with an unrepairable dislocated hip, before she finally got her replacement, while her doctors had to try everything else that might possibly be cheaper, and the insurance companies tried to convince her there was no point in replacing it, first.
We haven't been able to address problems like what happened to this woman except by making a massive political effort -- the ACA.

There is no lever for a truly conservative, cautious approach to solving US health care problems, no way to do just a small, significant change.

I was on facebook this weekend and was lucky enough to read one of those shared images with nothing but text on it from an unknown source. It mentioned the mythical 16,000 new employees and some silly dollar figure of new taxes associated with the PPACA. The comments compared Obama to Hitler. (I'm sure you all know that Hitler made sure everyone he murdered had health insurance beforehand.) I just can't fathom what the hell people are thinking, not simply for disliking the new law (I dislike it, myself, for various reasons, even if I think it's an improvement), but for the perspective and context they seem to lack. It's just crazy and, for me, depressing to see.

(I should probably just unfriend these people I sort of knew in high school but have nothing in common with now. Facebook friendship generally hasn't led to meaningful interaction where it wouldn't have already existed in the absense of facebook - not for me, anyway.)

I'm sure you all know that Hitler made sure everyone he murdered had health insurance beforehand.

With Hitler named as beneficiary, no doubt.

Another Downfall remix in 5...4...3...

cleek: the whole idea that i should have a close relationship with a doctor seems crazy

As a former nurse who's worked in primary care, I strongly disagree. The relationship that matters isn't about hugs and remembering each other's birthday, it's about the doctor being familiar with the patient's health history to a degree that a 30-second chart review or a one-minute verbal history can never convey-- including things like personality and family circumstances, that aren't strictly medical but can be very important in understanding what's contributing to a health problem or whether the patient is going to be able to keep up with some proposed treatment. That knowledge can be passed around between multiple health-care providers in the same facility if they all see the same patient fairly often and if they communicate with each other really well, but in a typically over-busy practice these days that's really tough.

I would like to point out to McKinneyTX that that chart compares waiting times for *elective* surgery. When you break your hip, or have necrotic degeneration of the hip joint, the surgery is *not* "elective". They get you into the operating room right away. I have personal experience of these events. On one occasion I was rushed into the operating room more or less directly from my doctor's office.

I don't even think that's the part of the relationship people are talking about. ACA isn't going to keep you from having a doctor you know and who knows you and your situation and history. It's just going to keep you and your doctor from deciding what to do based on that knowledge, because some faceless Washington bureaucrat (TM) is going to have to approve everything.

"No colonoscopy for you," says Big Brother. "You do not fit the federal-government actuarial healthcare-rationing profile. Check the boxes on this confusing and opaque 37-page form if you wish to request a waiver."

As you know, you propagandize with the boogie man you have, not the boogie man you might want or wish to have at a later time.

You'll notice that the figure of "a year's wait" would only apply to England, and also that evilrooster's evidence suggests that waits for *emergency* hip replacements -- where "you actually have a broken hip and have to live with immobility and excruciating agony" are very short.

You will also notice that the wait times for a hip replacement in all reporting countries begins at about 100 days and climbs to 280 days. As for the inference you draw from a single instance of timely intervention, i.e. an actual broken hip produces a minimal wait time, that inference is in error. Hips aren't replaced until they fracture, become dislocated or a disease process renders them nonfunctional and the patient is experiencing intense pain.

The article notes protracted wait times for knee replacements as well. This is another case in which quality of life remains significantly impaired, with much attendant pain (and ancillary depression), yet the wait times are ridiculously high.

[for the US] unlike all the other countries surveyed, the average waiting time cannot be calculated because some people wait forever.

This sentence is worth revisiting. This number can absolutely be calculated for those with insurance and on medicare, which is most of the population.

I assume McK has "gold-plated" health insurance, because he said the ACA will be:

much more intrusive into the doctor/patient relationship and, generally, more oppressive than anyone can imagine.

This assumption is defective also. I have a small business. We shop our firm's health insurance every year. We get as much coverage as we can for an amount I can afford to pay. Every employee, from the bottom up, gets the same coverage. I pay just under 90K a year to insure my firm, me included.

My concern about the doctor/patient relationship has nothing to do with having one's own personal physician on a long term basis.

Rather it is based on the not-much-discussed notion of evidence based medicine where physicians will have their treatment modalities determined by preset criteria as opposed to the patient's often highly individualized clinical picture.

That said, Hob makes a very valid point. A physician's knowledge of his/her patient, and having followed a patient over a period of years, makes a huge difference in the patient's care. This ought to be self evident.

Delay, deny, defend is a core value for private insurance, because that's a major way they make their money.

Really? Like the problem Obama's dying mother had with her health insurance carrier that turned out to be, well, somewhat overblown? Doc, if this were the widespread problem you assert, several things would be true: people would not report overall satisfaction with their health insurance, there would be sustained, broad based anger at health insurers and there would be a ton more litigation against health insurers because, unlike Medicare and Medicaid, you can sue your private insurer if they breach the contract.

Basically, if you aren't terrified of the power of life & death and suffering your medical insurance company has over you, you are young, lucky, or gold-plated.

Doc, are you under the impression that ACA is going to fix this, even leaving aside that your list of horribles is a bit overdone? Are you aware that Medicare has specified limits on what it will and will not pay for that are not even up for discussion?

And if your driving worry is about costs

It is one of them. Medicare is unsustainable. How can anyone take comfort in your limited cite?

More generally:

It is a fact that the current system is far from perfect and that some insurers are much more problematic than others.

The remedy for this is not a total overhaul of the system. The cars we all drive are much, much safer than they were 20 years ago because auto manufacturers found the cost of building a safer care was a lot less than paying the freight on the body count occasioned by substandard design and materials selection. A national insurance code providing for treble damages and attorney's fees would fix a lot of your complaints.

ACA, once it becomes fully operational, will be irreversible. It will be the only game in town. If we want a change, if we want flexibility or if it simply doesn't work very well, we will have to depend on congress and a president to make it right. Good luck there.

If it turns out that all of the happy economic projections turn out to be just so much BS, then not only will we have an institutionally moribund and inflexible system, but it could well turn out to be Medicare on steroids from a cost standpoint.

No country the size of the US purports or attempts to deliver modern medicine to its citizens as a universal right. Countries with less than a third of our population struggle to deliver universal healthcare and some of those countries are in real trouble. Why anyone thinks tripling the size of the enterprise will make it more efficient, responsive and affordable is a complete mystery. Talking a about faith based belief system.

it's about the doctor being familiar with the patient's health history to a degree that a 30-second chart review or a one-minute verbal history can never convey-

but that can simply not happen, when a person sees a randomly-selected PA twice a year for routine concerns. there is simply no way for any kind of relationship to develop.

like i said, i haven't seen my doctor in literally a decade. he wouldn't know me from Adam. in fact, the PA's don't even have records going back to the last time i saw him. the PA's don't know me. the nurses don't know me.

maybe it would be better if they did. and maybe it would be possible if i was in there more often. but right now: no way. and i'm sure i'm not alone.

I would like to point out to McKinneyTX that that chart compares waiting times for *elective* surgery. When you break your hip, or have necrotic degeneration of the hip joint, the surgery is *not* "elective".

You are correct and I need to withdraw this statement: "an actual broken hip produces a minimal wait time, that inference is in error." I learned this by calling an orthopedist friend of mine. If you break a hip, you get surgery with minimal wait time. The 'elective' hip replacements are people whose hips are degenerated by arthritis and who cannot ambulate without a cane, crutches or a walker. They are in great pain and typically have been for several years. Typical side effects from delayed surgery are pain medication dependency and joint contracture which, the older a person is, produces permanent decreased range of motion.

So, if you are going to have hip problems in this Brave New World, hope it's a fracture and not degenerative.

In the course of chatting with my doc friend, he told me of an interesting process the feds are doing to doctors and hospitals. I'd be willing to write a guest post on the topic. Fans of ACA might find it interesting just how not-so-benign the feds can be.

No country the size of the US purports or attempts to deliver modern medicine to its citizens as a universal right.

by what do you mean "size of the US" ?

population-wise, there is only one country the size of the US: Indonesia. it's poor, but it will have universal insurance in 2014.

Brazil is 2/3 the size of the US. and it has free government-provided primary care.

it has free government-provided primary care

I think that "free" as used here isn't quite as accurately descriptive as I'd like it to be.

TANSTAAFL

/petpeeve

Medicare is unsustainable.

How so? Will it require the consumption of actual physical resources, be they human or material, that will be particularly scarce in the future? Or are you talking about running out of money?

In the course of chatting with my doc friend, he told me of an interesting process the feds are doing to doctors and hospitals. I'd be willing to write a guest post on the topic. Fans of ACA might find it interesting just how not-so-benign the feds can be.

I'd love to see a guest post, but I would hope that you have something to back your factual assertions with besides your friend's anecdotes and assumptions.

And it would be nice if you wouldn't ignore obvious points made by people with whom you're arguing, McKinney. For example, you talk about the cost of Medicare rising and being unsustainable (It is one of them. Medicare is unsustainable. How can anyone take comfort in your limited cite?) but as we know (and as Doctor Science pointed out when she said: this despite the fact that Medicare patients are a good deal older and sicker than private insurance customers.), Medicare covers a demographic of old and chronically ill people, people whose life spans are increasing because new expensive medical technology prolongs it, without necessarily providing for better, health (therefore less medical intervention) in the meantime to these increasingly long-lived debilitated people. In other words, people who are already in need of a great deal of medical treatment and intervention are living increasingly longer to want more of it.

In contrast, health care costs for the rest of the population (although forecast to increase no matter what insurance system is available) theoretically could go down if preventive care can ward off chronic illness such as high blood pressure, Type II diabetes, etc. Clearly we're not there yet, but it's much more likely that medical costs can be controlled in the segment of the population which is not routinely experiencing end-of-life chronic illness issues.

Again, a guest post would be interesting, with all of your friend's horror stories, but please have some factual basis and more rigorous analysis for the claims you make than the kinds of assertions you make in your comments.

McTex: "Medicare is unsustainable."

Speaking of pet peeves, let's add this one to the list too, shall we (TALOFH*)? It is simply not true. Now, if you project recent trends into the far future, then the costs of our HEALTH CARE SYSTEM (the discerning will note this is not identical to "medicare")we indeed have a grim future....We have a broken health care delivery system, not a broken government program picking up the tab.

Speaking of saving costs, Dean Baker posits that if we reformed our patent system wrt prescription drugs we could save $250 Billion per year.

Stick that in your unfunded future liabilities and discount it to infinity if you are so inclined (another concept that is TALOFH.

*That's A Lot Of Fr*cking Hooey

I think that "free" as used here isn't quite as accurately descriptive as I'd like it to be.

well, obviously nothing is truly free.

you can have all the nothing you like. good luck keeping it, though.

Will it require the consumption of actual physical resources, be they human or material, that will be particularly scarce in the future? Or are you talking about running out of money?

Both. Reimbursement rates will make it increasingly less likely that doctors and hospitals will be able to afford to treat Medicare patients, and the aggregate cost of treating so many people costs more than we can afford to pay.

Sapient--I took two points away from your comment. First, you seem to be agreeing that Medicare is unsustainable by pointing out some of the reasons why. Second, you posit that preventative healthcare in the non-aging portion of our population could actually reduce long term healthcare costs. This seems, as a practical matter, highly unlikely. It hasn't happened anywhere else AFAIK. Moreover, if anything, Americans are more sedentary, fatter and less healthy than ever. Diabetes and hypertension are byproducts of obesity.

BobbyP--ok, Medicare is on solid financial and gov't funding of drug research would be far superior to the private market. It's well established that nearly every worthwhile drug on the market was developed by some gov't, somewhere, gently and wisely guiding a private sector entity.

Please.

Both. Reimbursement rates will make it increasingly less likely that doctors and hospitals will be able to afford to treat Medicare patients, and the aggregate cost of treating so many people costs more than we can afford to pay.

I don't see where "both" comes in. It sounds like you're talking just about money. Do you think there will be any real resource constraints involved, or are we discussing self-imposed financial constraints? (Not that the latter wouldn't be a problem, but it would be a political problem rather than a physical one.)

Do you think there will be any real resource constraints involved, or are we discussing self-imposed financial constraints?

Well, where does one end and the other begin? In theory, if we had unlimited funds, we could provide unlimited healthcare up to the point where the rest of the economy becomes impaired by a misallocation of personal and resources. So, I suppose it's a money thing, but that is more than enough to make this grand experiment terminal. Eventually we run out of money and lenders. Then what? Did anyone see Greece coming ten years ago?

Diabetes and hypertension are byproducts of obesity.

Well, it's a lot more complicated than that, since many people are hypertensive and/or diabetic who are not obese. However, even to the extent that the conditions are related to obesity, obesity rates have stalled.

As to the "sustainability" of Medicare, I don't believe that Medicare is unsustainable. What might be unsustainable is prolonging the life of geriatric patients without improving general health and quality of life. That's something that better preventive care, and early intervention for chronic illness, might address in a positive way.

McTx: It's well established that nearly every worthwhile drug on the market was developed by some gov't, somewhere, gently and wisely guiding a private sector entity.

Patents?

In theory, if we had unlimited funds, we could provide unlimited healthcare up to the point where the rest of the economy becomes impaired by a misallocation of personal and resources.

In theory, we do have unlimited funds. But what you wrote was exactly what I was driving at. The next question would be whether we would ever reach the point where the rest of the economy would become impaired, at least sufficiently impared such that our quality of life would actually be reduced by providing more health care. Would be be sacrificing food, clothing or shelter (or, God forbid, beer) for lack of resources, or would there just be a few less iPhones or fighter jets to go around?

Did anyone see Greece coming ten years ago?

Yes, at least the distinct possiblity of what is now happening was recognized by some when Greece gave up its monetary sovereignty more than 10 years ago and became, in financial terms, more like the State of California than the United States of America.

Did anyone see Greece coming ten years ago?

Actually, many economists pointed out that monetary union between such diverse economies without fiscal union or persistent transfers was unsustainable. This precise problem was foreseen long ago.

McT, I'd love to see a guest post on this topic and I'd ask everyone else to give him a bit of space to do so. That means not getting involved in a back and forth in the comments. I do realize that giving someone the last word feels like you are giving up, but the operative word is 'feels like', and it doesn't actually mean that.

and gov't funding of drug research would be far superior to the private market. It's well established that nearly every worthwhile drug on the market was developed by some gov't, somewhere

Given the level of direct government research and grants, yes, this is pretty much true. I really appreciate the fact that you agree with me on this point.

Many thanks.

I really don't understand the mentallity of people who oppose the Romney/Obamacare act. It seems like people would be glad to know that some thirty million of their fellow citizens who are working but can't afford insurance would now get a chance to be insured.

McT, I'd love to see a guest post on this topic and I'd ask everyone else to give him a bit of space to do so.

Thanks, LJ. I will try to put something together, assuming the facts are as indicated. Who do I send it to?

send it to me is fine. libjpn at theGspot (well, you know what I mean). If you don't mind me formatting it a bit, a text file and whatever graphics you want to include as attached files is fine. Also, let me know if there is a day/time you'd like it up so you can have time to wade into the comments.

Would be be sacrificing food, clothing or shelter (or, God forbid, beer) for lack of resources, or would there just be a few less iPhones or fighter jets to go around?

Money can be created at the click of a mouse, so yes, the question is one of allocation....not "affordibility".

Much as I hate to say it, we could probably make do with fewer golf courses.

Did anyone see Greece coming ten years ago?

Try 20 years ago:

What happens if a whole country – a potential ‘region’ in a fully integrated community – suffers a structural setback? So long as it is a sovereign state, it can devalue its currency. It can then trade successfully at full employment provided its people accept the necessary cut in their real incomes. With an economic and monetary union, this recourse is obviously barred, and its prospect is grave indeed unless federal budgeting arrangements are made which fulfil a redistributive role. As was clearly recognised in the MacDougall Report which was published in 1977, there has to be a quid pro quo for giving up the devaluation option in the form of fiscal redistribution. Some writers (such as Samuel Brittan and Sir Douglas Hague) have seriously suggested that EMU, by abolishing the balance of payments problem in its present form, would indeed abolish the problem, where it exists, of persistent failure to compete successfully in world markets. But as Professor Martin Feldstein pointed out in a major article in the Economist (13 June), this argument is very dangerously mistaken. If a country or region has no power to devalue, and if it is not the beneficiary of a system of fiscal equalisation, then there is nothing to stop it suffering a process of cumulative and terminal decline leading, in the end, to emigration as the only alternative to poverty or starvation

The general problem with a currency union is obvious. Most people weren't cynical and pessimistic enough to think that the members of a European currency union wouldn't quickly take the simple but painful steps to deal with the problem once it arose, but certainly others were that cynical.

Score one for the cynics.

Now the real question is did anyone see the US coming 20 years ago? By which I mean, was there anyone claiming in the early 90's that it was a real possibility that the US could experience a financial crisis that led to over 14% of its population being unemployed or underemployed for close to 4 years, during which time the Fed would choose to focus on keeping inflation under 2% rather than dealing with the problem?

Could anyone have predicted that in 1992 without being called insane?

The Fed could just bring in helicopters full of money and start dumping it, couldn't they?

hsh: Would we be sacrificing food, clothing or shelter (or, God forbid, beer) for lack of resources, or would there just be a few less iPhones or fighter jets to go around?

Not even. I mean there would not be "a few less" of any of those things.

Consider:
1) In 2012 dollars, the GDP in 2012 is $15T, say.
2) In 2012 dollars, 2012 "health care costs" are $3T, say.
3) Suppose that 2032 GDP (in 2012 dollars) turns out to be $30T, say. That's an annual growth rate of about 3.6% over the 20 years.
4) Suppose that ALL of this growth in GDP goes to "health care costs", so that 2032 "health care costs" (in 2012 dollars) are $18T. Over 20 years, that's a 6-fold increase; you get that from a 9.4% annual growth rate.

So, in this hypothetical year 2032, after 20 years of 3.6% GDP growth (meh) and 9.4% "health care" growth (yikes), the US economy is 60% "health care" and 40% everything else. But the "everything else" is EXACTLY the same aggregate quantity of iPhones and fighter jets and food and clothing and shelter and transportation and beer and pornography and legal briefs as we are producing now. Not "less".

For McKinney's benefit: there's NOTHING in this model about the government budget or taxes. "The nation" is you and me and our 300M closest friends. Our 2032 "health care costs" could be 100% private spending and 0% government spending, or vice versa, or anything in between, and two things would be true:
1) American health care spending in 2032 would still be equal to American health care income in 2032. You can calculate GDP on either side of the ledger you choose, but whether you do it on the income side or the expenditure side makes no difference to this analysis.
2) An alternate 20 years in which non-healthcare GDP grows 3.6% annually (doubling from $12T to $24T) and healthcare "costs" are held constant by the magic of The Free Market would make the 2032 GPD $27T (rather than $30T) in 2012 dollars. In a nation where "health care" is a business, "health care" growth is GDP growth.

--TP

Well Tony, it depends.

In 1999 you were called a stupid fool for buying Treasuries and not advocating the dismantling of Social Security to invest those savings in 'high return' common stocks.

In 2012 you are called a stupid fool for assuming that stocks, now that P/E ratios are fairly low, can reasonably be expected to yield returns that are about average for the last century or so.

This proves that we cannot afford socialized medicine, or perhaps any medicine. The market is God. You simply must get with the program.

The trend is your friend, my friend! Past performance is no guarantee of future results.

I haven't read the thread and I only skimmed the post, so maybe someone has cited this already, but there was a NYT story about what amounted to a health care experiment in Oregon which supposedly refuted two beliefs, one held by liberals and one by conservatives. Some working class people were chosen by lottery to receive Medicaid. Some liberals hoped that preventive care would in some way cut costs and some conservatives apparently said that it wouldn't make any important difference in the lives of the people who received the benefit.

Well, it didn't cut costs, but it did make a big positive difference in the lives of the people who were put on Medicaid. I assume this is relevant to the thread. Here's the link--

Oregon study reveals benefits and costs of insuring the uninsured

Tony P.,

Great minds think alike (and so do we!). Here's a quote from a comment I made a couple months ago.

Regarding health care, I'd like to get the ObWi commentariat to consider a mental experiment involving real GDP per capita growing by, say, 50% over the next 30 years, all of which could be accounted for by health care. So we'd have all the crap we have now, plus a lot more health care.

Would we have the real resources to sustain such an economy? What would unemployment look like? Would people have challenging and rewarding work to do? What would be our standard of living, or, more importantly, our quality of life?

hairshirt,

I'm sorry I missed that. The last many months, I've been flat out, working on a couple of non-health-care-related projects. My next project may very well be a medical device instead of a yuppie toy. If so, my personal contribution to the GDP will shift from the "everything else" fraction to the "health care" fraction. Like you, I don't think that will represent yet another (tiny) step toward dysfunction in The Economy. My nephew who just graduated with a Biomedical Engineering degree could spend his career working on artificial hearts or on virtual-reality videogames; either way he would be adding to GDP. But some people sound like they believe the second thing would be somehow better for Free Enterprise and The American Way. I don't understand "some" people.

--TP

"The market is God."
Actually, the market is a daughter of Mother Nature. And she doesn't like to be screwed with either. :)

My next project may very well be a medical device instead of a yuppie toy.

I thought medical devices were yuppie toys. ;^)

I think it was pretty clear that Greece lied its way into the union from the start. What came as a bit of a surprise was HOW BIG those lies were. It shocked even some professional cynics. As I have said more than once, Turkey with all the problems that state has would have been a better choice of member than Greece.

libjpn at theGspot (well, you know what I mean)

Well, I probably should know what you mean, but I could use some help. I will try to get something going this week and see if I can wrap it up next week. Starting early August, I will be under water for some number of months.

BobbyP-golf courses are stimulative. Everyone knows that.

Ezra Klein made this point when he did his healthcare around the world series of blog posts: when Americans think of healthcare systems in other countries, they tend to think of the UK and maybe Canada. But both those systems are outliers: other western countries generally don't look like them.

In particular, the UK and Canadian systems are extremely cheap and also have a much larger role for government (these are not unrelated). The UK system in particular is just ridiculously, unbelievably cheap. Most systems involve spending more money (and thus getting shorter wait times) and also have a much larger role for private actors. But American pundits generally assume that the world outside the US is just Canada and the UK....

In the long run, I think it is much more likely that we'll end up with a system like that used in the Netherlands or France than one from the UK or Canada.

Sorry, a weak joke to suggest gmail.

And that Ezra Klein series was a good one. You can find parts of it here I think. If you just hit the tag he used, you'll be redirected to the final post announcing the move of his blog, so this is a search that gives you most of the posts in the series. He actually started off with thumbnail sketches which were expanded into a magazine feature, and additional bloggers riffed on the topic in various ways.

My nephew who just graduated with a Biomedical Engineering degree could spend his career working on artificial hearts or on virtual-reality videogames; either way he would be adding to GDP. But some people sound like they believe the second thing would be somehow better for Free Enterprise and The American Way. I don't understand "some" people.

I think there's a subconscious and sort of inverted Quantity Theory of Money thing being employed in people's minds such that, say, if we do X number of surgeries we wouldn't otherwise have done, I can't have a speedboat. Just a guess, of course.

The general problem with a currency union is obvious

Duff, the problem isn't really currency unions. It's currency usions without political unions and the institutions that come with them.

The United States, after all, is a curency union. But it works economically, where the euro zone does not, because it is also a political union -- even though the economic differences between Greece and Germany are not that far different from those between, say, Mississippi and Connecticut.

cleek: the PA's don't know me. the nurses don't know me. maybe it would be better if they did

Sure - I wasn't saying that a good provider/patient relationship is currently the norm or even common. But when it does happen, it proves its value. I read your original comment as dismissing that value even in theory.

I don't really want to play "my owie is worse than your owie", but I'd like to clarify my remarks above, about "elective" surgery.

Severe arthritis runs in my family; my mother's hands were frozen into claws in her old age. I have a number of arthritic joints, and yes, they are painful. But necrotic degeneration is worse. My hip joints died in my body. Necrotic material sloughed off and entered my bloodstream. The remains of my trochanter clogged up what was left of the socket. Then I got surgery -- yes, I went to the head of the line. Because it was not in any sense "elective". "Elective" means, not necessarily that you don't need surgery, but that you don't need it *right now*; you can *elect* to have it when it's convenient for everyone.

More seriously, though, where I live (in the US), no one has to wait a long time for surgery. So may be it's not the system. Maybe there is some other variable, like, say, number of surgeons available to do the operations.

My grandmother got a couple of artificial hip joints many years ago. They were only elective in that she needed to have them in order to walk and, yes, to relieve the intense arthritic pain. Her sister was not so lucky: her hip joints are both gone, but she cannot have any form of anaesthesia (they kill her), so she's in a wheelchair for the rest of her life.

So: yes, I agree with Older's comments above to the effect that "elective" doesn't necessarily equate to glamour-surgery.

I guess I'm confused on what we mean by "elective" surgery.

A bunch of years ago I broke my arm while I had a gap in my insurance coverage (I was unemployed, young, healthy, and stupid). The paramedics that picked me up actually asked what hospital would be cheapest to take me to, as I was stable enough that I had time. Once I got to the ER and the x-rayed me it turned out I had a serious spiral fracture in my humerous that required surgery, and after I was given a splint and a painkiller prescription I was released. Shopping around for the best deal on orthopedic surgery *sucks* when you have a broken arm. Lucky for me the private hospital I had been taken to had a charity program that I qualified for, and I got the plate I needed in my arm. Otherwise the alternative looked to be going to the county hospital, and at the time the average wait was two days to see a doctor.

PPACA has lots of nice stuff in it, but I have to say that the Independent Payment Advisory Board scares the crap out of me. This appears to be the principal way that PPACA intends to hold down Medicare and Medicaid costs, and it's clearly designed to assert price controls in order to meet the Medicare budget.

Price controls cause shortages. I'm tempted to say that they always cause shortages, but I'm sure that somebody will come up with a counterexample.

I can't say that I waded through the entire OECD report that LJ referenced, but the key takeaway seemed to be that waiting times were largely caused by doctor shortages, with acute care bed shortages as a second-order effect. It also noted that countries with fee-for-service models simply don't have shortages, while salaried models do. That's not quite the same as saying that price controls are causing the shortages, but it's getting pretty close.

Anybody who thinks this is going to end well needs to look at what happened when the Medicare Part B legislation added a tiny little provision that limited increases in reimbursement to providers for drugs to 6% of the previous quarter's prices. Shortages of vital drugs went from 58 in 2004 to 211 in 2010.

The vast majority of these are generics, which are manufactured on extremely thin margins. Without the ability to increase prices in the face of rising demand, there's very little incentive for generic manufacturers to jump through the investment and regulatory hoops necessary to initiate or expand production of a drug with high demand. Result: shortages.

I suppose that it's possible that the IPAB will be staffed with people of superhuman wisdom, who will foresee spikes in demand in time to relax price controls as they're needed. On the other hand, it's also possible that it will be staffed with people who are owed patronage, or who've been advanced for purposes of regulatory capture. But if that's the case, I'm sure that everything will work out somehow.

The Wikki on the IPAB is quite informative, and I see nothing in it that scares "the crap" or anything else out of me. If anything, it points out that the Congress, not the bureaucrats, is hugely in the thrall of the medical provider industry.

For what it's worth, the CBO scored the savings from the IPAB as a mere 0.4% of projected $7trillion in anticipated medicare spending through 2019....a mere piffle in the overall scheme of things.

If you think the IPAB is scary, you must find private insurance absolutely terrifying. I mean, I have very good private insurance through my employer. The total outlays of that insurance are limited: it can't pay out benefits that exceed premiums. Before IPAB, people on Medicare don't have to worry about that; their insurance (which I can't use) was backstopped by the federal government.

This is, frankly, insane. Either everyone should get medical insurance backstopped by the federal government or no one should. I'm very sorry that you think that having to live with the limits that I (and everyone under 65) live with every day scares the crap out of you. But I'm not sympathetic. Welcome to my world.

McK said:

[waiting times] can absolutely be calculated for those with insurance and on medicare, which is most of the population.
But the *point* is that in the US it's not everyone.

Indeed, it turns out that Texas "leads" the nation in uninsurance: *one-quarter* of the population lacks insurance, including Medicaid.

I reiterate: we can't calculate waiting times when a large fraction of the population may have a waiting time of infinity.

Older wrote:

where I live (in the US), no one has to wait a long time for surgery

Unless you live in Massachusetts, this is untrue. A significant percentage of Americans are uninsured and may have to wait *forever* for surgery.

Those people may be invisible to you, but they exist. If you think "no one" has to wait for surgery for financial reasons, you are willfully ignoring a horrible problem.

The pain specialist problem is more likely related to the fry war than anything special about the insurance market in the US. Now that the DEA has decided it can throw doctors in jail prison if they are prescribing to 'drug seekers' you have a lot more doctors who won't take any risks to themselves over pain meds.

Hmm. I don't know why I said fry war instead of drug war. But they sound tasty.

I once inadvertently referred to a penguin as a coconut without realizing it, at least not until no one could figure out what I was talking about. Weird.

Ha. Well. I also said jail prison. Which was clearly some kind of editing thing in my head that made it to the comment.

Just guessing, but you are probably a fast touch typist, and instead of hitting d, you hit the f next door, then r and instead of u, you hit the neighboring y, and your brain said 'ok, that's a good English word' and you left it. I bet if you hit frk or even fri or gry, you would have caught it.

bobbyp@7/4 1:59:

IPAB's charter is to make "recommendations"--which HHS must implement unless there's a better-scoring congressional override--to ensure that Medicare costs don't rise above a "target rate". That target rate is the average of the urban CPI and the medical CPI until 2018, then it's 5-year-averaged per-capita GDP+1% thereafter.

If the CBO can score that accurately, I'll eat a copy of the budget.

Furthermore, the only trick in the IPAB's bag is price controls. The law prevents raising premiums or "rationing care", but of course price controls are an indirect, albeit inevitable, form of rationing. (No doubt there will be some juicy litigation on this topic...)

The current drug shortage ought to be very instructive. The moral of the story is that medical pricing is near one of those unfortunate economic saddle points where small perturbations lead to big consequences. People monkeying around with medical prices when nobody has a clue about what will happen seems to me to be pretty good grounds for fear-induced fecal expulsion.

Turbulence@7/4 10:57:

I too have pretty good insurance, but there's a difference between what insurance companies do and what the IPAB will do.

Insurance companies negotiate rates with medical providers. The rates are negotiated based on the provider's market, the amount of business they do, their reputation, and the value of the insurance company to the provider (i.e., how many patients they lose if they're not a preferred provider). If they can't come to agreement on the rate, then the provider stops being a preferred provider, or in some cases a reimbursable provider at all. As an insurance subscriber, either I or my employer can decide to switch insurers if things get too obnoxious--this is one of the good things about PPACA.

With the IPAB, HHS simply says, "the rate for CPT xxxxx is $yyyy." End of story. At that point, every insurance company in the country goes to their providers and says, "IPAB set the rate on this, so I'm not negotiating any more. If you don't like it, bite me." All the market forces that ensured a reasonable negotiation vanish. The provider no longer has an option of withdrawing from the insurance company, because he/she/they are going to get the same IPAB-mandated rate everywhere.

The only option the provider has is whether to provide CPT xxxxx, or not. If they can't make money at that rate, the answer to that is "not". Welcome to shortage-land.

I'm not advocating a fear-free rate system. The only system that's fear-free is one where somebody else is picking up the tab, and that's how we got into this mess in the first place, 30 or 40 years ago. Discomfort and uncertainty are essential to innovations that will drive prices lower. If I had my way, everybody would have a health savings account funded by some combination of the government, their employer (using after-tax dollars), and themselves, with enough money to buy catastrophic insurance and cover some (fairly small) fraction of the deductible. Then people would actually have to shop for non-emergency medical care, and understand the prices of the services and products that they were consuming.

The IPAB goes in exactly the opposite direction. It doesn't require that anybody know the price of anything. Even worse, it assumes that consumers will be so bewildered about their inability to obtain care that they won't be able to assign the blame where it will belong.

At that point, every insurance company in the country goes to their providers and says, "IPAB set the rate on this, so I'm not negotiating any more. If you don't like it, bite me." All the market forces that ensured a reasonable negotiation vanish.

Alas, that's not true. Providers and insurance companies still have to negotiate. IPAB only affects Medicare.

The idea that insurance companies can negotiate to get exactly the same deal that Medicare gets is just silly. Insurance companies can't do that now. They don't have the market power that Medicare does. IPAB won't change that in the slightest.

The provider no longer has an option of withdrawing from the insurance company, because he/she/they are going to get the same IPAB-mandated rate everywhere.

This is a complete fantasy.

If I had my way, everybody would have a health savings account funded by some combination of the government, their employer (using after-tax dollars), and themselves, with enough money to buy catastrophic insurance and cover some (fairly small) fraction of the deductible. Then people would actually have to shop for non-emergency medical care, and understand the prices of the services and products that they were consuming.

I think this model is more than a bit insane. Purchasing healthcare is not like purchasing a TV. Most people cannot make good cost/benefit decisions in this domain; if the doctor tells you, "you need this surgery", then you're going to get it, whether or not you need it.

if the doctor tells you, "you need this surgery", then you're going to get it, whether or not you need it

Really? You don't ever seek a second opinion?

Really? You don't ever seek a second opinion?

Sometimes I do. But surgeons opining on whether you need surgery are not exactly statistically independent, now are they? If the surgeons all face the same incentives (more surgery = more profit), than getting a second opinion will likely just reinforce the first.

This isn't academic. There are some classes of surgeries that have been shown to yield no significant improvement in patient wellbeing. Why exactly do you think thousands of people who willingly undergo such surgeries?

Turbulence is absolutely correct about this. Example, certain types of http://www.msnbc.msn.com/id/39658423/ns/health-pain_center/t/back-surgery-may-backfire-patients-pain/>back surgery.

Really? You don't ever seek a second opinion?

Beside Turb's response, that's simply an extension of the same process. Whether you go with the first or second opinion has no bearing on whether or not you're deciding based on a cost/benefit analysis. You're just doing what one doctor, one of two doctors or both of two doctors told you to do. It's beside the point.

Plus, whether I personally ask for second opinions is irrelevant. I have a PPO and I live within 2 miles of at least 3 different teaching hospitals and I have a lot of education and experience demanding that professionals justify themselves to me. Most people aren't like that though.

Someone who barely graduated high school is not going to feel comfortable telling a highly respected authority figure that they need to justify their explanations better. Someone who lives in a rural area where there's one hospital with one surgeon who does back pain operations within 200 miles is not going to feel inclined to blow a whole workday just to go hear a surgeon tell them exactly what the first guy said. Especially if they have to wait another 6 weeks to get an appointment. And someone with crappy insurance or difficulty getting time off work or finding someone to watch their kids is going to be disinclined to even try.

whether I personally ask for second opinions is irrelevant

As is anything TheRadicalModerate might personally do, as related here:

if the doctor tells you, "you need this surgery", then you're going to get it, whether or not you need it

The assumption that people are generally inclined to bow to authority might be generally true; I don't know. But it is, in my view, an implicitly contemptuous assumption.

But it is, in my view, an implicitly contemptuous assumption.

Why? Doctors go through medical school and rigorous training. I have not been through that. Although I like to check the Internet to diagnose my own symptoms and would certainly try to do research (if I had time) on my own ailments, many other people don't have the time to do that. Moreover, sometimes there aren't studies available in the popular press like the one I pointed to. As we have discussed on this blog previously, scholarly scientific information is expensive and hard to come by.

The fact that people should go through life distrusting other people's expertise and experience is what I find contemptuous. Certainly, caveat emptor in all things is the safest way to conduct one's life, but it's not very practical in a complex society which tries to make the best use of people's diverse talents, skills and training.

Doctors go through medical school and rigorous training. I have not been through that.

Auto mechanics go through some fairly rigorous training, yet I can still occasionally know bullshit when I am hearing it. Ditto with the air conditioning guy.

Ditto with doctors, by the way. You don't have to be a doctor to insist on good reasons why, or to recognize an appeal to authority when you hear one.

The notion that you have to have equivalent training to absolutely every person you consult in life in order to question their opinions is, in my view, a complete abdication of personal responsibility.

The fact that people should go through life distrusting other people's expertise and experience is what I find contemptuous.

But...but...you just linked to an msnbc article why those experts aren't to be globally trusted, didn't you?

Turb--

I'll accept your argument that IPAB decisions won't immediately couple to the private insurance market, although I wonder if that will hold up longer-term. But for now--Uncle.

One other thing to think about wrt IPAB is its ability to declare certain procedures ineffective--which I admit is not a price-control mechanism. But I wonder what the effects of that are on innovation. Once IPAB has come in and blessed a particular procedure or drug as the most effective, I'd guess that the risk associated with development of a new procedure or drug goes up substantially.

As for purchasing healthcare not being like purchasing a TV: I like to divide the healthcare market roughly into quarters. There's routine care, chronic care, catastrophic care, and end-of-life care. Of these, the only part that you can't shop for is catastrophic care. If somebody tells you that you need surgery right away, that's a catastrophe. I frankly don't see any way of controlling costs in that segment, but it was 31% of total expenditures in 2009. (McKinsey, mostly behind a pay wall.)

You can usually shop for end-of-life care, and you can always shop for routine care. Lifestyle-related chronic care's an issue, but it's less of an issue if you know you're going to have to pay for it. But for more than half of all healthcare purchases, it can be exactly like buying a TV set--as long as you buy TV sets intelligently.

Finally, you said: "Someone who barely graduated high school is not going to feel comfortable telling a highly respected authority figure that they need to justify their explanations better." There's an underlying chauvinism in this statement that I find floating through huge chunks of the healthcare debate, one that assumes that most people are too dumb to make important decisions about their lives. It's more than a little bit offensive, and it's surely completely poisonous to any kind of genuine reform.

People, even uneducated people, are smart... when they have to be. It doesn't take a lot of incentive to get people to ask, "How much will what you're recommending cost me?" And once they ask that, you'll find that the media very rapidly starts providing quality information to make good decisions, and you get an aftermarket of advocates that will help you navigate through the process, and pretty soon there's a (private) infrastructure in place. But it's an infrastructure that empowers people, rather than one that infantilizes them.

Auto mechanics go through some fairly rigorous training,

I don't think that surgeons have a comparable level of respect and recognized authority in our society as auto mechanics or HVAC technicians. Note that we have a specific honorific for doctors (Dr. Smith versus Mr./Mrs. Smith). Where I'm from at least, there's a lot more social status associated with being/marrying a doctor than an HVAC technician. I've heard people gush about how so and so was marrying a doctor but I've never heard anyone gush about marrying an HVAC technician.

Perhaps you live in a place where being an HVAC technician carries as much social prestige as being a physician? Where HVAC technicians earn comparable amounts of money to surgeons?

yet I can still occasionally know bullshit when I am hearing it. Ditto with the air conditioning guy.

Yes, you, a working engineer occasionally recognize when an auto or HVAC technician is bullshitting you. That's great. But most people do not have degrees in engineering. Most people have not spent their working career dealing with engineers and learning to suss out whether their advice is bullshit or not. Moreover, technicians report to engineers. They defer to them.

Ditto with doctors, by the way. You don't have to be a doctor to insist on good reasons why, or to recognize an appeal to authority when you hear one.

Let's say you have back pain and get referred to a surgeon. He talks a good game and convinces you. Why would it even occur to you to believe that the surgery he's proposing will not improve your symptoms?

The notion that you have to have equivalent training to absolutely every person you consult in life in order to question their opinions is, in my view, a complete abdication of personal responsibility.

No one has proposed this notion.

It's one thing to question; it's another to assume superior knowledge. That's my point. Why is it contemptuous to think that most people don't assume superior knowledge compared to professionals who have spent their adult lives in a particular field? I think that most people question.

For example, I go to the dentist regularly. I see various spots and marks on the x-ray. Sometimes a small cavity is found, and I say, okay, fill it. I'm old, and some of my old fillings have been replaced with crowns. I have no idea whether this work was necessary at the particular time when it's been done. Since my insurance has a cap on benefits for particular procedures, I ask my dentist to space them out so that I can get coverage, and I've never had a problem because I've waited for a procedure. The only way I would know for sure if I weren't being taken for a ride is to wait until I get an abscess. At a certain point, one assumes that a professional is going to be trustworthy.

That said, I'm sure my dentist is pleased to do some procedures that serve to help pay her mortgage or fund her children's education. I realize that she has an interest in doing work on my teeth. So if she suggests something I don't feel that I need, I might get a second opinion or put it off. Usually, I just go with the flow. That's how most people behave, I think. And it's even more likely that they'll go with the advice of a physician if there's a chance that they will be relieved of chronic pain. "My back hurts! Can it be fixed doc?" "Yes, we'll do some surgery that has helped most of my patients, and thousands of other people." "No, doc! Don't do that! Let's wait a few years to see what the stats are between people who have surgery and people who don't!" That's not the conversation most people have.

While all this second opinion stuff is interesting, isn't it true that it is completely separate from the question of whether or not people find out what a given treatment costs in an attempt to determine whether or not it's worth paying for, which was the point Turb was addressing?

When Turb wrote 'if the doctor tells you, "you need this surgery", then you're going to get it, whether or not you need it' I don't think it really mattered whether it was the first or second doctor you asked. It's the same damned thing either way.

The point being that it's not like buying a TV.

People, even uneducated people, are smart...

Sure, people are smart. But not necessarily informed. And why should they be? And uninformed smart people don't perform much better than dumb people.

It doesn't take a lot of incentive to get people to ask, "How much will what you're recommending cost me?"

You can't do a cost/benefit analysis without considering both the cost and the benefit. So, even if you could make costs completely transparent, how do you propose that people should reasonably assess the benefits. What do you do when the doctor says "I think you should get this procedure done, but it will cost you $10,000. If you don't get it done, there's some chance, probably less than 5%, that you'll die in the next 3 years and some chance, probably less than 10%, that you'll incur more than $20,000 of medical costs because you didn't get this procedure done"?

I mean, we have studies that show that the vast majority of adults in the US are functionally innumerate. They can't make sense of probabilistic assessments, especially when the probabilities are embedded in text. So what do you expect millions of people to do?

And once they ask that, you'll find that the media very rapidly starts providing quality information to make good decisions,

I'm sorry, but this is just completely absurd. The media does not "rapidly provide quality information to make good decisions".

and you get an aftermarket of advocates that will help you navigate through the process, and pretty soon there's a (private) infrastructure in place.

These advocates, do they work for free? If so, who pays for them? What keeps them from falling subject to the same sort of capture that doctors fall to? I mean, drug company reps will be talking with them and buying them lunch and taking them on all expense paid "seminars" in great vacation locales, right?


Slarti and TheRadicalModerate, I'm really curious what you folks think of this. There are millions of people being prescribed drugs for high blood pressure. Many of them are being given expensive drugs with more side effects than much cheaper drugs. Is it insulting or offensive or an abdication of personal responsibility to believe that normal people are simply not likely to (1) discover this information on their own and (2) confront their physicians and ask to be placed on cheaper less dangerous drugs?

Turb, I've been on ACE inhibitors for more than 25 years (since my late 20's), and the reason that I've never looked at the alternatives is that my price has been $5 a month for the whole time. That's because first my insurance company was less freaked-out about the cost in the late 80's when enalapril was still on patent, and then it was a generic. If I'd been forced to bear more of the price, I would've been more interested in cost-benefit, but nobody ever gave me an incentive--and what I'm prescribed works. There's no willful ignorance going on here--there's simply no incentive to be informed.

We're gonna have to agree to disagree on the medical competence of the American public. If you design a system where people have to care about being informed consumers, they'll be informed consumers, and secondary--cost effective--markets will spring up to help them. If you design a system where people are rewarded for behaving like sheep, they'll behave like sheep.

Seriously, you don't find your assumption that people can't understand this stuff even a little arrogant?

Turb, I've been on ACE inhibitors for more than 25 years (since my late 20's), and the reason that I've never looked at the alternatives is that my price has been $5 a month for the whole time.

According to the NYT, average costs for ACE inhibitors is $250/year.

nobody ever gave me an incentive--and what I'm prescribed works. There's no willful ignorance going on here--there's simply no incentive to be informed.

Did you read the bit where alpha blocker users have been shown to have a substantially higher rate of congestive heart failure than diuretics users? I mean, doesn't a substantially higher risk of congestive heart failure matter at all? Isn't that a cost?

I get that you're using an ACE inhibitor and not an alpha blocker, but do you really think that all alpha blocker users are aware of this study and appreciate the fact that they're paying a lot more for the privilege of having a much higher risk of congestive heart failure?

Seriously, you don't find your assumption that people can't understand this stuff even a little arrogant?

Can't? I never said "can't". I said they "don't" because in practice, most people don't have medical training and don't have lots of time to read medical journal articles and tend to defer to doctors.

I don't know a damn thing about car racing or basketball or football. That doesn't mean I'm stupid. It doesn't mean that I "can't" learn about those things. But in practice, I have no interest in doing so. When people get sick, they don't magically get more money and more free time and the ability to confidently assess complex statistical analyses.

One more try and I'll give up. I completely agreed that they currently "don't" understand this. That's because there's no incentive to understand it. Their outcome is the same whether they're well-informed or not, at least financially. But if you provide a financial incentive to be better informed, a majority will become better informed, which will put downward pressure on prices--and coincidentally improve outcomes, as well.

agreed-->agree. Typo.

Their outcome is the same whether they're well-informed or not, at least financially.

Not meaning to tag team you, but that's not the case, at least when international comparisons are made. When discussing the unit price of care, the US is much higher, but in other countries, the unit price is much lower. Yet in those other countries, they have much better outcomes. Ezra Klein discusses this here. He notes

There is a simple explanation for why American health care costs so much more than health care in any other country: because we pay so much more for each unit of car

Certain tough decisions are required and they are required over the whole of the industry and can't be outsourced to individuals, which is why I believe every other OECD country has some group similarly tasked in what the IPAB does. In Japan, it is The Central Social Insurance Medical Council which is know as Chuikyo. In the UK, it is Primary Care Trusts. While this can have the effect of blocking effective treatments or diagnostics because of conservative concerns, they also prevent the novelty factor and they certainly, judging from the evidence, work a lot better than the system the US has.

Ideally, the IPAB will work together with speciality societies to develop the best recommendations. Given that the US has almost 2 times the per capita health costs as all other OECD countries with much worse outcomes, arguing that the absence of an IPAB is going to improve outcomes seems to be disproven by the evidence.

On wait times in the US

[I've told this story before but long enough ago that it's doubtless new again :)]

Back in 2002 I got sick. Really, badly sick. One key symptom was that my cognitive functions got really, badly impaired. I was fine in a superficial way but couldn't think deeply about anything -- a problem when you're in grad school -- and had mild retrograde amnesia, among other fun things.

Now, thanks to my union, I had one of the best insurances (i.e. most highly rated HMOs) in the nation. Despite that, it still took me two months to jump through the various hoops to get a consult with a specialist. At which point I was told two things:

  1. I might be sleep-deprived, I might be depressed, or I might have -- and I quote -- "an irreversible neurodegenerative disorder"
  2. Despite potentially having an irreversible neurodegenerative disorder, I could not actually get tested for said disorder for another six months.

I do not exaggerate when I say those six months were the worst of my life and that I'm lucky to have survived. Fortunately for all concerned, it turned out that the problem likely was sleep deprivation and not an irreversible neurodegenerative disorder... but had it been the latter, given the rate of my decline, I would almost certainly be dead (physically or spiritually, take your pick).

So, for those who boast of our minimalist wait times: I assure you they're not as good as you might think.

On overhead in healthcare

The following is anecdata so take it with whatever grain of salt you deem appropriate. My girlfriend and I work for a medical software company. She works in medical billing, I do database work including some database modelling and design work for our medical billing module.

Anyway, the relevant observation here is that sheer amount of overhead involved in getting the claims correctly allocated, scrubbed and submitted is staggering. From my vantage point there are two main reasons for this:

  • Doctors, particularly in an inpatient setting, are notoriously bad at charting the procedures they've actually done with the granularity required for billing.
  • There are a ridiculous number of modifiers that have to be applied, absolutely precisely, for each different combination of insurance plans, coverage, procedure, etc, or the claims will get denied.

[The first problem is exacerbated by the second. That's why IME the outpatient clinics do better: fewer coverages and modifiers come in to play for outpatient visits.]

Some of this can be solved by EMRs and other forms of electronic medicine (obligatory shilling but true nonetheless) but fundamentally, the only way to reduce the overhead is to simplify the panoply of options that face hospitals and clinics. The irony is that that panoply of options isn't even useful from a market standpoint; it's difficult even for trained professionals to determine what the "right" (=cheapest) coverage for an individual will be, it's outright impossible for the average person to figure it out for themselves. It's a classic confusopoly.

[I've heard unofficially that the billing associated with non-American countries is quite literally orders of magnitude less complex, but I haven't worked with our international billing departments enough to say for sure.]

Long story short, my worm's-eye opinion is that if we want to rid ourselves of the bureaucratic overhead associated with the US medical system, we need to simplify the requirements of coding and billing. That can happen in a number of different ways -- single-payor would obviously be the best, though in theory things like RHIO/HIEs could cause enough convergence to produce a similar effect -- the key is that the ACA isn't going to make anything worse on that front and could well make things a lot better.

[That's separate from other reasons to support ACA like continuity of care, expanded coverage to the uninsured, etc, all of which are great wins at the national level but uninteresting to me in my professional capacity.]

To McKinneyTexas

Upthread you said this:

Rather it is based on the not-much-discussed notion of evidence based medicine where physicians will have their treatment modalities determined by preset criteria as opposed to the patient's often highly individualized clinical picture.

If you think evidence-based medicine is not-much-discussed -- or "determined by preset criteria", for that matter -- you're not talking with many physicians or healthcare experts.

> One more try and I'll give up. I completely agreed that they currently "don't" understand this. That's because there's no incentive to understand it.

Hold on a second. I'll agree that in the current system that there are limited *financial* incentives to understand your treatment, but that's not the same as no incentives. Isn't a lower risk of heart failure and strokes a powerful incentive? Isn't that more powerful than any financial incentive could ever be? Personally, if the existing health and well-being incentives aren't enough, I don't see how adding a (relatively) small financial incentive will improve what people learn about their treatment options.

It's also worth noting that prescription drugs are one of the areas of health care where people have the most exposure to the financial consequences of their alternatives (through things like formulary tiers and coinsurance). Is there any evidence that this has improved their knowledge of their drug options? The blood-pressure case sounds like evidence of the exact opposite. I wouldn't be surprised to find out that there are more people who make the mistake of thinking more expensive means better than there are people who learn more about the underlying effectiveness of their drug alternatives because of the cost.

P.S. Some of the discussion seems based on a false premise: If you go past the TAP article to the NYT article you'll find out that it wasn't just the alpha blocker - the ACE inhibitor was also less effective than the diuretic: "And those receiving the ACE inhibitor from AstraZeneca had a 15 percent higher risk of strokes and a 19 percent higher risk of heart failure."

LJ--

When discussing the unit price of care, the US is much higher, but in other countries, the unit price is much lower. Yet in those other countries, they have much better outcomes.

You're kinda missing the point. All I'm talking about is the price in the US, which, for most people who have insurance, is roughly the same, irrespective of which treatment is selected. That's because the insurance company may poke at the provider a bit about the choice of treatment, but it's going to ensure that the patient pays the same (fairly small) out-of-pocket cost, whatever treatment is chosen. From a cost and unit price standpoint, the system is completely opaque to the patient--and that's the way the patient likes it, because it relieves him of the responsibility of making a choice, which is uncomfortable and time-consuming. That has to change.

That has nothing to do with the actual outcome, but it has everything to do with cost control. Now, I will assert (but cannot prove) that forcing patients to have more skin in the game, so they actually care about the cost of treatments, will also force them to care about the effectiveness of treatments. But that's really just gravy. Cost is the thing that's the most out-of-whack in the US, and it's the thing that needs fixing first.

Actually, if you look at the link I suggested, it shows that the 'gold plated' insurance plans charge much higher than what Medicare reimburses, and Medicare reimbursements are higher than other OECD countries which have much better outcomes than the US does. Thus, your argument that we must have the people paying for these costs work to rachet down the costs has it precisely backwards, I think.

LJ, I think we're misunderstanding each other. Ezra's charts look right to me, but they're the insurance company's view of prices, which a) have a very high mean rate in the US and b) have a very wide standard deviation.

The (insured) patient's view of those prices is quite different. There, prices are a) not so bad if you're insured, as most people are, and b) have a very narrow standard deviation. In short, the patient is being insulated from full force of the pricing.

Of course, the patient is actually paying the whole (average) bill, because the insurance premiums are sky-high. But even that is mostly hidden by the patient's employer, who's paying a big chunk of the premium without it ever showing up on a paycheck.

No doubt the insurance companies would gladly negotiate better prices, but, in the US, there are simultaneously too many of them to get monopsony pricing and too few to operate in a statistically meaningful market. On the other hand, exposing each patient to more of the actual pricing will generate a statistically meaningful market. Even if that only narrows the standard deviation, that's likely a huge savings. But the pricing history of medical treatments that aren't insured (cosmetic treatments, plastic surgery, Lasik, etc.) implies that there's a good chance that a clean market will also force the average down more than a little.

Finally, let's get real about an important point: We're not really talking about a medical insurance system in the US. Insurance charges small premiums from all of its subscribers to cover the cost of a very small number of improbable events. What we have in the US is a payments-transfer system masquerading as an insurance system, because the average amount of medical expense each person incurs each year is large and clustered fairly closely to the mean. Insurance companies merely compute that mean, mark it up to cover the cost of fighting with the providers, and toss it into the "premium". Then the actuaries go to work figuring out what the tails of the distribution really are, and working out what the real premium should be.

There is very little reason why the patient shouldn't be paying that payments-transfer portion of the "premium" directly to the providers. It's obviously less convenient for the patients to have to fight with providers directly, but they'll wind up paying less in the long run. More importantly, no healthcare provider is going to get away with the crap that they're currently able to pull if patients are calling them daily demanding to know why their bills a) make no sense and b) are ridiculously high. (Today, while the bills make not sense, there's no incentive to try to understand them because the copayments are pretty small.) Simple customer service issues will force providers a) to make things intelligible and b) start to offer a better deal than their competitors.

Note that this doesn't require allocating a single dollar more to healthcare, either at the employer or the government level. (Figuring out how to insure more people is a whole different issue.) It merely requires taking that payments-transfer money and dumping it into a health savings account, then substituting the cushy, You'll-Be-Happier-If-You-Don't-Ask-Questions plan for a higher-deductible plan with a premium that is equal to the cushy plan minus the HSA money.

RadMod, I appreciate you trying to attribute this to a misunderstanding and I hope that this reply isn't too sharp. But when you talk about different views of prices, you are really missing the point. The fact is that no one knows how much a CAT scan, or an x-ray or a suture or an aspirin should cost in the context of a hospital bill. This is because the insurance company will bundle everyone's payment together and then will negotiate a discount not on the individual items charged but on the total owed.

To give you an example, my daughter fell ill when we went to the states several years ago, coming down with Kawasaki syndrome. This is an auto immune reaction caused by an unknown agent and strikes children of Japanese and Korean descent much more often than Caucausians. So, when she came down with it in the states, they were unable to diagnose it, and she went into the hospital for an extended period. What happened is that she ran a dangerously high fever, so aspirin is administered to keep the fever down, but had to be administered every day. When they finally figured out what it was, they administered intravenous immunoglobulin (IVIG), which then seems to cure it.

For a number of reasons not really relevant here, I had to deal with the hospital. Japanese national insurance covers this, but only up to how much is covered in Japan. Japanese coverage was about 10,000 dollars and the initial bill I got from the hospital was $35,000 dollars. Japanese health insurance would only reimburse the payment I had made, so I had to get in the weeds with the hospital billing and go over the bill.

IVIG was billed at $6,000 dollars for the course of treatment. However, checking on the standard pricing, it was between $1,500-2,000 dollars. Aspirin, was charged at $50 dollars a tablet. Now, I understand that there might be a markup, because administering the aspirin or making sure that there was no allergic reaction to the IVIG requires trained staff. However, _everything_ received a similar markup. So I spent the better part of a year writing back and forth asking for justifications for the various prices and the bill was eventually moved down to $17,000 dollars. I probably could have worked harder and said that I just wasn't going to pay it unless they brought it down to the Japanese insurance level, but that would have been unfair, because in Japan, the condition would have been diagnosed much more quickly and would therefore have not cost as much. Though if I knew then what I know now, I would have started with that as a take it or leave it offer, and then maybe paid a bit more.

Why would the hospital charge so much? Well, if the bill were bundled to an insurance company, the insurance company would negotiate to pay a certain percentage, so listing a price that no one pays is better than listing a realistic price. If I had just paid because I didn't understand what was going on, the hospital is making money. If I just blew it off and told them to try and make me pay, they could send it out to a collection agency which could have tried to get the money from me. It would have been unlikely, given that they would have to negotiate the Japanese legal system to try and dun me (though people in the US would not have been so lucky), so, when the agency tells them it is uncollectable, they can write all that $35,000 off as a loss. They can also take that money and claim that because they are not collecting it, they deserve their tax free status, because they've just provided $35,000 dollars of charity care. This is win-win-win for the hospital. This is why, if you have to go to a hospital, you don't get one bill, you get any number of bills from any number of people.

So when you talk about 'the patient's view' of the price, that suggests that you have an idea that there are these fixed figures for these procedures, and they vary a bit depending on location. But what I'm telling you is that this is not the case. This is why you can hire a patient advocate to go in and bargain your bill down.

Now, I agree that if we 'allocate' the same amount of money that we have been spending on health care and it all went to health care, we could probably provide health care to everyone. However, we would have to create a system that has transparent pricing and we would have to cut out the amount of money that went to insurance companies, not simply the profits, but the huge amount of overhead that goes with the system. That is what the IPAB represents, so being frightened to death by it suggests that you aren't really aware where the money is going. More importantly, that is what the Medical Loss Ratio is going to impact, and I think, as bobbyp points out, the IPAB is going to be small peanuts.

LJ--

Turb more-or-less convinced me upthread that the coupling of IPAB prices to the private insurance market is lower than I would have guessed. My big concern about IPAB--even for Medicare--is that overzealous price controls will cause shortages of services because, well, that's what price controls do.

Making consumers pay for more medical services is a separate argument. Two things:

1) Somebody check me here, but I'm pretty sure that insured patients don't pay the uninsured price on services that apply to their deductible. So converting everybody to high-deductible plans doesn't cause the situation you encountered as an uninsured payer (at least in the eyes of US providers). Having said that, the non-negotiated pricing model is crazy, and the reasons that it's crazy are exactly those that you stated.

2) You said, "So when you talk about 'the patient's view' of the price, that suggests that you have an idea that there are these fixed figures for these procedures, and they vary a bit depending on location. But what I'm telling you is that this is not the case. This is why you can hire a patient advocate to go in and bargain your bill down." This is a correct statement today, but the reason that's it's correct is that most price discovery is occurring between providers and insurance companies, not providers and patients. I've had enough family members hospitalized over the years to know what I do with the four or five different bills, most below $100, that dribble in following such an event: I pay them, because it's easier than losing a couple of days of my life figuring out what the hell they mean. I suspect that most people do the same, and hence those that actually do call in and argue are no more than a minor annoyance.

Now imagine that, with catastrophic insurance plus a stipend going into an HSA, those four or five bills are now each, say, $1000, cut off at some point when the deductible is reached. Suddenly, everybody is calling the providers, because it's worth their time. There are two major effects:

a) The provider has a choice between quintupling its billing staff--and still annoying its patients to the point where they'll think twice about returning for the next non-emergency procedure--and simplifying the pricing structure. The providers will still hide as much stuff as they can in the pricing structure to maximize revenue, but the fact is that billing labor is expensive. Simplification will occur--perhaps a lot of simplification.

b) The patient is going to go through this process exactly once. The next non-emergency procedure, he's going to go shopping, and the provider that provides that package that's the cheapest--and most understandable--is likely to win. Again, simplification occurs, and prices also fall.

These two effects, taken together and multiplied by millions of consumers, are what price discovery is all about. This does not happen today, because the number of price negotiations the provider engages in are in the low hundreds, not the tens of thousands. Obviously, you can't just wave a magic wand and have everything get instantly rationalized. But over time, the increased volume (four or five orders of magnitude) of actual pricing events makes a real market.

Note also that you've got less money filtering through insurance companies as a result of this, which means that your medical loss ratio improves.

I'm not trying to pretend that this is cost-free to patients. There are two things that make their lives worse: First, they have to expend time, effort, and worry on actually obtaining a good deal. Those who don't are going to wind up paying more. Second, converting some insured coverage to cash is a good deal for those who routinely consume less medical care, but those who routinely consume more will pay out of pocket for it. (Those who consume medical care catastrophically or chronically will be affected very little.) Both of these tradeoffs seem warranted to me if they lead to a healthcare market with transparent--and declining--prices.

Forgot to close an italics tag above--sorry.

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Whatnot


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