A Thought on Healthcare


Mark of New Jersey

Mark is a Founding Editor of The League of Ordinary Gentlemen, the predecessor of Ordinary Times.

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38 Responses

  1. Avatar Jaybird says:

    Imagine everybody in the country getting a voucher for $100 to buy a television. What do you think would happen to the average price for a television? From where I sit, it seems likely to me that the average price of a television would jump about $100.

    Not a fair comparison, you say? Okay, groceries, then. Let’s say that everybody in the country got a voucher for $100 worth of groceries per year. It seems to me that the average price of groceries would go up enough to make a years’ worth of groceries cost about $100 more. Maybe peanuts would go up 4 cents a pound and cornbread mix would go up 2 cents a box but, after a year, all of those cents would add up.

    Maybe that wouldn’t happen the first year… but I bet that it’d happen by the third.Report

    • Ah, but I’m not talking about a voucher to everyone, but a means-tested system. Yes, it’s a subsidy, but expense-wise, it’s the exact same subsidy we already give to health care. The difference is that we’re giving the subsidy to individuals to decide how best to spend their health care dollars rather than to employers, insurance companies, pharmaceutical companies, and doctors.

      It’s essentially the same rationale as I’ve been giving for education vouchers – instead of having government (or insurance companies) centrally plan the treatments individuals should and should not get, we get a truer social safety net that allows individuals to decided for themselves the treatments that they should and should not get.Report

      • Avatar Jaybird says:

        Ah, I gotcha. That probably would not have the (surely unintended) consequence.

        If the demand is not, effectively, increased, I expect that this program would not, effectively, raise the price of health care.

        I am certain that the best long-term solution remains “increasing supply”, though.Report

    • Put another way, the subsidy argument doesn’t really apply because we’re already subsidizing health care in the amount that I’m proposing. The difference is that instead of a direct subsidy paid from government to the provider and/or pharmaceutical company, the subsidy is paid to the actual consumer to spend as she wishes.

      Also, allowing unused expenses to carry over from year to year is pretty important, the more I think about it. If you don’t allow that, then you get people spending all sorts of money they don’t need to spend just for the sake of spending it.Report

  2. Avatar E.D. Kain says:

    Okay some thoughts:

    Rather than an open-ended voucher like you propose, I say that those who fall within a means-tested income group will get a voucher in the form of government-purchased (not provided) insurance. Customers can still choose who they purchase the plan from, but they will have to pick a plan that falls into the price-range the voucher provides. In the private market, multiple plans would exist, from your very basic to your much more expensive. If you were unable to purchase any of these plans yourself, the government would buy the basic one for you. Perhaps there would be some very skeletal plans available for just this very sort of thing. The government could then do either of two things:

    A) Also purchase a catastrophic insurance plan for you (as these would likely become separate in a market. Health care: check-ups, immunizations, etc. is not the same as insurance in many senses.)

    or B) Offer “reinsurance” to cover bills outside of that basic plan (keeping costs low for the plan, and ensuring providers that those customers with bad pre-existing conditions would not too horribly inflate their costs).

    I like the voucher idea because it still leaves competition open, government overhead is comparatively pretty low, and you still get universal coverage. Most people are still required to buy their own insurance but they have choice.

    Of course, I think we also need to tax employer benefits before any meaningful reform can take place.

    And this absolutely needs to be means-tested or Jaybird’s TV analogy would be correct. As it stands, though, I don’t see that happening.Report

    • I had considered an idea similar to that, but I rejected it on the grounds that I’m not at all sold on the idea that anything other than high-deductible insurance is a good thing. The question I suppose is whether the lower rates insurance companies are able to obtain from medical providers and pharmaceutical companies are lesser than or greater than the amount of waste that comes through using a profit-seeking middle man. I tend to think the answer would be less, but I don’t know that this is a claim I could prove.

      As things currently stand, that is also a profit-seeking middle man with a strong incentive to deny coverage since its customer is not the consumer but the employer. But I assume that under your proposal, we’d still be getting out from underneath employer-based health care, so that second objection is somewhat irrelevant.Report

      • Avatar E.D. Kain says:

        Okay, so you suggest just paying doctors directly with said credit card? And paying for drugs directly, etc.? The only thing I see wrong with this is that, in many sense, these basic insurance plans I’m talking about would give people purchasing power. They can buy in bulk, which can drive costs down. Said voucher could go to joining a health-care co-op, give people bargaining power, etc. Just purchasing it on your own can be extremely expensive.Report

        • And that’s a valid objection, for the reasons in my previous comment. There’s a tradeoff there that I’m just not in a good position to appropriately evaluate, although I think there’s a significant unquantifiable value in leaving health care decisions entirely up to individuals in consultation with their doctors rather than have to worry about whether their insurance company will approve the treatment.Report

  3. Avatar North says:

    I like it. But I’d suggest that the question of what services could be paid for with said voucher and which services were mandatory to purchase with the voucher funds would become a mighty big political fight. For instance: would vouchers cover birth control? Abortion services? Hollistic medicine? Cosmetic surgery? What about reparitive plastic surgery?Report

    • Yeah, that’s the big concern I have, which is why I’d like to leave the standard deliberately vague, something like “reasonably related.” I wouldn’t put any restrictions on it beyond that – no specifics. Over time, a judicial common law would develop interpreting whether specific procedures and expenses are “reasonably related.” What would be “reasonably related” would be a pretty large universe of potential expenses. In the event that the judicial common law got to the point of allowing absurdities to get covered (for instance, automobile purchases), then you could pretty easily do specific legislative fixes to overturn those decisions.Report

      • Avatar North says:

        Sounds good. Thank you. I still think it sounds more good than bad and heavens knows it’d be an improvement on the status quoe.Report

  4. Avatar Philip H says:

    I’m not sold on your voucher scheme, though I think you’ve laid out the possible pitfalls and objections much better then some other have for other proposals. I also don’t get the objection to government run health care – Medicare and Medicaid seem to do a reasonable job, especially for retirees, as does the Department of Defense system. granted, the VA system is a mess internally, but I think that’s more a funding issue then anything else.

    As to your market innovation issue, I remain unconvinced that our present market based system has any incentive for innovation. If it did, there would be more emphasis on preventive care then we currently see, since many report and articles I’ve read over thelast five years say that preventive medicine is the best way to lower costs (and thus potentially increase pofits if premiums remain neutral).

    Finally, you don’t really touch on the rationing arguement, and that’s a shame. Many folks fear rationing with a government system, but I have to ask – if 35 million (or 50 million) Americans have to rely on emergency rooms and walk-in clinics for health care – an doften don’t seek it because o fthe cost – are we not already rationing care under a mostly market system?Report

    • Avatar E.D. Kain says:

      The problem with a government system as I see it are as follows:

      1) Entitlements grow. At some point the economy starts to get hit by all the money needed to pay for them. We have a lot of entitlements as it stands, and we’ve been taking out a lot of debt, and at some point taxes across the board will need to go up. To pay for what the government says we need to pay for, not what we choose to pay for. Sometimes that’s necessary, but if better solutions exist, we should pursue them.

      2) Big government solutions almost always cater to big business, which drives down competition, drives out innovation, etc. A government system will drive down costs, but often those cost-savings will be temporary, as choice and competition dries up and prices start to rise. Government essentially creates monopoly when it either takes control of an industry or subsidizes an industry. In Mark’s proposal, at least you’d be subsidizing the consumer rather than the supplier.

      3) This is a market solution with a safety net that Mark is proposing. That is very different than the subsidized employee-benefit program we have now that is both tightly regulated and highly (though invisibly) subsidized by tax breaks. In many senses, the very driving force behind the market has not been introduced at all to this industry – essentially, the power of consumers being able to choose and thus driving suppliers to compete. That does not exist. And it quite honestly can’t exist without the government providing the safety net, because health care is simply too vital a product to leave – not to markets – but to the ability of all classes of people to pay for….Report

    • On Medicare and Medicaid, I actually agree with you; I was actually trying to hint at this in the second paragraph. I didn’t get into it directly, but I would argue that one of the main reasons that they do a reasonably good job is that they don’t interfere much in health care decisions – they’re a middle man, but not a particularly active one. This is why the whole issue of Medicare and Medicaid having as much as a 30% inefficiency may actually be more a feature than a bug; as I understand it, that inefficiency is largely because Medicare and Medicaid don’t inquire particularly far into the need for a procedure (a good thing, in my view). In a way, you could even view my proposal as a significant expansion of Medicare and Medicaid, just with most of the remaining bureaucratic hurdles removed.

      On the issue of market innovation, I don’t want to use our current system as a model, one way or another, because I think it’s a really idiotic system that combines the worst excesses of socialism and capitalism in many ways. Still, the US ranks tops in the world in terms of quality of care under the WHO study that is otherwise an indictment of the US system. That’s fairly strong evidence that innovation is not a really big problem under the current system, although the direction of that innovation may or may not be the wisest direction.

      As for the rationing issue, I may not have directly touched on it, but I think it’s an underlying theme of this post. The thing about rationing is that it happens under any conceivable system – whenever you have a scarce resource, you have rationing. The question is how those resources should be rationed.

      What markets do is to allow those who most value a particular resource (not just health care generally, in this case, but really I’m talking about specific treatments, drugs, etc.) to obtain those resources. Now, the objection to this approach is that different people have different abilities to pay for various things that they may value the same; while this may be acceptable when the “resource” is a Mercedes, liberals would tend to argue that this is an unacceptable result when discussing life or death issues. This is an argument that carries a lot of normative weight, and I don’t really dispute it. But the the liberal solution to this problem is, I think, to throw the baby out with the bathwater by having government make the rationing decisions. In other words, the liberal critique, while valid and correct, does not really dispute the central argument for market-based rationing, i.e., that it allows people to obtain goods and services based on their individual valuation of those goods and services. So the liberal solution of government rationing answers problems that the liberal critique (which is correct) does not find, thus losing the advantages of market-based rationing even as it cures the disadvantage of market-based rationing. My proposal is an attempt to take the liberal critique seriously, since I think it is basically correct, without losing the central benefits of market-based rationing. It essentially is an attempt to provide everyone with the same level of access to quality health care while also allowing them to make the decisions about what elements of quality health care are most important to them, rather than having a bureaucrat (either in an insurance company or in Washington) tell them what elements of quality health care are important to them.Report

  5. Avatar greginak says:

    So given Jay’s analogy the places with national health care should have far higher costs then our system. Analogy fail.

    Mark- You note that McArdle claims that the private nature of our system leads to figuring what works and how much it should cost. That is wrong in practice and theory. Medical treatment should not be decided by marketing but by science. We need far more research on efficacy to determine what works, but that should not be dependent on the business bottom line or quarterly profits.Report

    • Avatar Jaybird says:

      “So given Jay’s analogy the places with national health care should have far higher costs then our system.”

      Not necessarily. They may also deny (or merely not have available) the most expensive treatments found thus far.

      If it is the case that the US has available treatments that other countries do not have, the analogy may still hold.

      Do we?Report

    • Well, like I said, I’m not entirely persuaded by McArdle’s argument on that specific point….Still, I think when you have decisions being made by individuals in consultation with their doctors, you wind up with a situation where demand is going to follow the science. I just don’t like the idea of government deciding for the individual what treatments are and are not medically appropriate any more than I like the idea of insurance companies doing the same. Especially not in our system, where those government decisions are inevitably going to be the result of massive lobbying campaigns by various narrow interests either seeking access to the government-approved market or seeking to monopolize a corner of the government-approved market.Report

    • Avatar Jaybird says:

      I mean, if we count “people who come here from other countries to get treatments they can’t get there” as part of our “national health care expenditures”, I’d say that that actually helps my point.

      Do we?Report

  6. Avatar willybobo says:

    A few reactions… rationing based on absolute dollar amounts seems like the wrong mechanism to use. We want to allocate care, not dollars. Within a large enough pool, we can do a reasonably good job projecting how many heart attacks will occur, how many ingrown toe nail surgeries will be necessary, how many AIDS cases there will be. What we can’t do very efficiently is predict who will have those problems and allocate the proper amount of dollars to individuals to cover those treatments.

    Secondly, I’ve read and heard many times that the government will get in the way of innovation. I’ve never really heard a good argument for why that’s true beyond a philosophical (rather than empirical) belief that it must be. I consult to both corporations and governments on innovation, and I haven’t in practice really seen the consequences of the monopsony problem playing out much differently whether it’s the government as the single buyer or a few dominant corporations controlling an industry. Either way, you lock out creative individuals seeking to challenge the status quo with better models or more excellence but lacking the customer base, capital, and policy protection needed to get established.

    In any case, we don’t seem to worry much that the government as the single buyer of defense products and services has stifled innovation. Military technology has progressed extraordinarily over the last 50 years. Granted, we haven’t done very well at cost containment, but we seem to have collectively decided that defending us against the threat of foreign enemies is worth the danger of overspending. I’m not sure why defending us against the threat of disease is not worthy of the same logic.

    So I’d say we need to worry a little less about innovation in health care, and a little more about efficient distribution of the good enough products and services we’ve developed. And that means taking out the artificial walls we’ve created by controlling through plans who gets to get which treatments (or no treatment at all in a high number of cases), and instead allow more open access for consumers. In that sense, I think your idea is on the right track, but I think your dollar allocation method just pushes the problem to a different, equally problematic mechanism of controlling distribution.Report

    • Ah, but care costs money no matter what you do! What this proposal does is to allow individuals to decide what care is most relevant to them rather than having the government tell them what care is best and most relevant to them, with care below a certain threshold being paid for by voucher, and above that threshold by private insurance. Government may be able to predict the number of cases of a particular disease that will arise, but it cannot predict where those cases will arise, nor can it predict what treatments will be best in each of those individual cases.

      As for the issue of competition, the military is really not a good parallel to make. Although we all have differing opinions as to what level of defense and what style of military operations are best, whatever that decision, we are all impacted equally by it. But in the case of health care, each of us is impacted differently depending on the array of options to which we have access. So national defense is an area where one-size-fits-all is not only appropriate, but also necessary; that logic just doesn’t apply to health care, though.

      Moreover, military spending is one area where competition is a very real factor in government activity. The American military is almost always in a very real competition with other countries (whether I think we take this competition a bit too seriously is another story, but I digress), so it has a tremendous incentive to innovate. There is, indeed, an argument to be made that for several decades in the 50s-70s, there was virtually no innovation in the private sector because production was completely dominated by various regulation-protected oligopolies that could count on steady revenue streams from year to year if they did almost nothing. This left the military as the primary element of the economy that found itself in a real competition requiring it to innovate, and thus it was the primary source of innovation during that period.

      Also, the growth of military spending over the last 50 years is a pretty major knock against government-run anything. It suggests a tendency towards over-provision of those services that is self-perpetuating; eventually, though, you get to the point where it starts creating huge fiscal problems for your government (we long ago passed this point on defense, I’d say). While “we” collectively may have made a decision that over-provision of defense is acceptable, that is a decision that I personally think is one of our worst and most damaging collective decisions, pretty much ever. It’s a decision that I actively fear repeating in any other context.

      Moreover, again, the issue of health care is one where individuals, in consultation with their doctors, are quite well-suited to decide the appropriate level of care for themselves – overprovision of care is something that can be easily avoided.

      The bottom line, though, is that the two problems of the US health care system that are generally cited are those of access and cost (which are really just two sides of the same coin). Quality of care usually ranks as one of the system’s strengths. This proposal is an attempt to address the problems of access and cost without affecting quality; if we’re using military spending as an example of what would happen under a government provided program, then we’re talking about a system with escalating costs, which is exactly our current problem.Report

      • Avatar willybobo says:

        I’m not so sure that military spending benefits us all as equally as you suggest, nor that the benefits of health care access wouldn’t accrue to us in a similar fashion. If we’re spending a disproportionate amount of money to prevent Al Qaeda from killing people in New York relative to, say, Casper, Wyoming, it’s the New Yorkers that are benefitting more. At least if you belief that Casper, Wyoming residents have less interest in keeping those New Yorkers alive than the New Yorkers do themselves.

        Of course, Wyoming residents do have an interest in keeping New Yorkers alive. When it comes to security, our interests have been nationalized. It’s national security. Why isn’t this the case with health care? Why is an interest in protecting American lives not equally relevant when it comes to health care? Why should a suburban dad in Ohio be less interested in a single mother from LA dying from a preventable disease than in that same person being blown up by the unlikely event of a Russian missile hitting LA?

        I’m entirely with you on the problem of lack of cost control on government spending. But why does that problem become relevant when we’re talking about saving lives from disease, yet it’s somehow not relevant when we talk about saving lives from attack? Countries do compete on labor and intellectual capital as they do on military. But we don’t prioritize the importance of a healthy, productive, risk-accepting work force as much as we prioritize number of weapons. Certainly from a strategy point of view, the former matters a great deal to the amount of resources we’re able to capture in this country. But we don’t debate it that way. Maybe we should.Report

        • Avatar willybobo says:

          Moreover, we should more precisely explain what we mean when we say innovation in health care. I would say that innovation here has two components: achieving better health outcomes (without increasing spending) or lowering the cost of delivery. By those measures, the nationalized health systems of the G8 seem to be more innovative than our market-based one. They get both better health outcomes and do it at lower cost per patient.Report

          • Well, yeah, but I’ve got pretty much the same problems with our existing system as everyone else. I just have a different solution. Beyond that, as I’ve pointed out before, the health systems of most of the rest of the G8 aren’t really as nationalized as we are often led to believe; in many respects, some of those systems are actually more market-oriented than our system. The one absolutely critical difference between our system and others isn’t so much the private nature of it – as said, other systems run the gamut from fully nationalized to far more privatized than ours. Instead, the biggest difference between our system and others is that our system is employer-based whereas other systems are individual-based.Report

        • Well, if it were up to me (and of course, it isn’t) cost control would be very, very relevant when it comes to military spending. And I’m not just referring to wasteful military spending; I’m referring to whether the amount of stuff we get from military spending is totally overkill and causes more problems than it solves.

          That said, I don’t see how it would be even possible to have individual defense from foreign enemies, whereas I do see how it’s possible to have individual medical care. Beyond that, although it’s possible that the risk from foreign attack may vary significantly from region to region, it does not vary significantly from individual to individual – my next door neighbor is going to have precisely the same risk from foreign invasion or terrorist attack as I have, at least insofar as such can be prevented by the military. However, my next door neighbor is going to have a hugely different set of health care risks and priorities; government directed rationing, however, would treat us both the same.

          Beyond that, though, under my proposal, the question “Why should a suburban dad in Ohio be less interested in a single mother from LA dying from a preventable disease than in that same person being blown up by the unlikely event of a Russian missile hitting LA?” is largely irrelevant. I say this because, under my proposal, the answer is that “he shouldn’t,” which is precisely why that single mother in LA should have access to the means needed to obtain the health care treatment that best meets her personal needs. In other words, under my proposal, that gentlemen in Ohio not only has a responsibility to help protect that mother’s life in LA, he has no right to dictate to her how her life should be protected.Report

          • Avatar willybobo says:

            Two small points:
            >>Beyond that, although it’s possible that the risk from foreign attack may vary significantly from region to region, it does not vary significantly from individual to individual …

            By varying by region, it does vary by individual. Region is just a sorting of individuals.

            Secondly, I do think it’s possible to provision protection from foreign enemies on an individual basis. I wrote a big check for $200k to the federal government this year. I believe I could certainly use $108k to keep my family safer from attack this year than the government keeps them.

            More importantly, though, I’m grateful that you’ve further clarified your intentions in your response. I think it’s a worthy intention, and one which I share. We should encourage a system that lets individuals provision care instead of employers. I like your proposal for that reason. What I don’t understand is how you think the government will effectively determine how much money to allocate to an individual. If it’s simply a matter of allocating dollars, I have a hard time avoiding the libertarian conclusion that we ought not send the money to Washington in the first place. All that does is create more steps in the process; our healthcare is too expensive because we already have too many steps, too many expenses to reckon with, too many people that have to get paid.

            For contrast, why not simply have individuals their own allocate dollars directly to a local hospital in exchange for guaranteed treatment, with the entire amount showing up a tax credit? Higher income individuals could then overpay relative to what they use (eg, I used $0 in healthcare the last two years) simply for the tax credit, and the overage could fund individuals who need more care than what they can pay for. Individuals and hospitals thus would have better incentive to manage their own dollar allocations.

            So that I can better understand your proposal, why would like this kind of system less?Report

            • To be honest, I’ve never encountered anything like your alternative proposal, so I’d have to give it some thought. That said, it may well be better than my alternative – I’m enough of a libertarian to have serious qualms about even this level of centralization. But I think my proposal goes a pretty long way in the right direction, and would be politically viable were it not for the fact that it would really piss off the insurance industry. What’s important here is that this proposal takes the money that we already give to the feds for health care, but pretty much de-bureaucratizes it, although it largely does this by de-bureaucratizing the insurance industry by providing subsidies directly to consumers rather than to employers. It’s kind of a weird result, I guess – you get a small if meaningful de-bureaucratization of the government, but you get a huge de-bureaucratization of the private industries that benefit from the government’s subsidies.Report

  7. Avatar M.Z. says:

    This smells like an alternative funding mechanism for an HSA. Nothing wrong with the funding mechanism per se, but the jury is still out on HSAs. In my opinion that opinion will turn very negative within 5 years as it becomes clear that the cost shifting of expenses to the critically ill cannot be sustained by them, since they will exhaust their HSA in the first year and then have a $3000 or $5000 or greater “deductible” to pay for in the second cat. illness year. Additionally, the compensation structure has more expense than straight out insurance. Finally, the system is premised on the idea that the patients can make intelligent and corporately beneficial cost containment decisions, something we’ve tried to induce 3 or 4 different ways over the past two decades and have failed to do for the likely reason that patients are not a good and intelligent source for cost containment.

    They other fundamental problem is that this post assumes that innovations in medicine are being driven at the clinical level by thousands of invisible hands. Innovations in procedures are driven by the research hospitals that get much of their funding from states, universities, and endowments. It is in fact a part of the system under incredible stress right now because they aren’t able to recoup research costs from patients because they are competing against hospitals that benefit from their research but don’t have to pay for it.Report

  8. Avatar greginak says:

    Yes people come here for treatments. And people go to other countries for treatments and prescriptions. I don’t know of any data that can truly say how many are going in each direction. Mexico has a bit of a medical tourism industry.

    Any insurance provider, private or government, will have to have some list of what is paid for and what isn’t. That is just reality. The government list, as public info, can be open for all to see while private insurance companies surely don’t want to let on how they choose this or that.

    I don’t think anybody disagrees that doctors and patients should be the ones making the decisions. That is often not the case now with private companies. There is intense lobbying and marketing to doctors regarding prescriptions now. It is scandalous how much pharma does to get doctors to prescribe there meds now, so I don’t see how a national health plan would make things worse. At worst people are just saying a national health plan will have some of the same faults as our current system. That is weak sauce for trying stop a national plan that will cover everybody.

    Obama has been pushing to spend more money on efficacy research, which is what we all need to help make medical decisions. Hmmm sort of odd that all those wonderful innovative companies haven’t been doing that research….hmm I wonder why. It could be because newer , more expensive drugs aren’t always best and many treatments aren’t’ even about medications. They are surgeries or PT or dietary.Report

    • Avatar Jaybird says:

      “Mexico has a bit of a medical tourism industry.”

      There’s stuff available over the counter there that requires quite a bit of paperwork back in the US… steroids, viagra, all kinds of goodies. I’d put that “medical tourism” in the category of “stuff you can get there that you can’t get here”.

      Is there a chunk of medical tourism to Mexico larger than the pharma chunk? If not, is this particular example a refutation of the larger point regarding health care availablity in the US compared to in other countries?

      “At worst people are just saying a national health plan will have some of the same faults as our current system.”

      Oh, allow me to give you a new thing to say that people are saying: I think that this will stifle innovation and result in longer periods between leaps. The bleeding edge of the medical profession moves very quickly in the US and is responsible for far more than its fair share of innovation. Moving us to a system like other countries have will have the (surely unintended) consequence of the US becoming responsible for merely its own fair share of innovation.

      “They are surgeries or PT or dietary.”

      How many hours does the average surgeon put in in any given week? How easy is it to make a new surgeon?

      How about Physical Therapist?

      How easy is it, do you think, to get the country to change its diet? How responsible would you say that the government ought to be with regards to your diet?Report

  9. Avatar greginak says:

    The point I was trying to make, obviously not clearly enough, regarding surgery or PT, is that people are conflating pharma with all medical advancement. The fear, as I understand it, is that if pharma has less profits or the EVIL GOV says they won’t use a certain drug that will lead to less innovation among pharma. But medications are only one aspect of medical technology and treatment. PT or changing diet are often either prescribed or just as good as a medication for individuals. Those kind of measures are not dependent on the profits of pharma companies.

    As noted by MZ research in treatment is often done at research hospitals who get funding for the research from the NIH or other gov funding, from their endowments or grants. I have personal experience with an advanced medical procedure, a heart surgery for my son, that was developed at a research hospital. The drugs that were used were not cutting edge , but the surgery was. It was developed by doctor/scientists who were not going to be selling the surgery on the commercial market. They were doing what scientists often do: research. The other treatments were in the form of advanced ICU treatments. None of that had anything in particular to do with big pharma and its profit margin.

    As an addendum the hospital, Children’s Hospital of Philadelphia, would treat people who did not have insurance. So they had to eat the costs or pass them on to other peoples insurance. Now that does not seem to be an efficient way to finance health care. If everybody had insurance then the cost structure would have been more straight forward. Of course many of us parents who had insurance knew that we couldn’t’ leave our jobs if we had insurance since getting new insurance could be tricky since insurance companies don’t want to insure people who need a lot of medical care.Report

    • Avatar Jaybird says:

      And my question is how much new innovation is the US responsible for with regards to surgery and/or PT with regards to the rest of the world?

      How much of this medical advancement is due to the US and how much due to other countries?

      Is the US’s role disproportionate?

      If it is, can we then ask why?Report

  10. Avatar greginak says:

    I’m not sure how to even measure all those things. But if we are in the lead, we then have to admit that lead comes with a higher price tag then other countries and at the cost of 45 million having no insurance/ substandard care, millions of others having minimal insurance, bankruptcies, lack of job mobility and rising costs that are simply not sustainable.

    Medical costs are rising steeply every year. if something isn’t done soon 100% of our GDP will go to medical costs. Of course that can’t happen so something will have to be done at some point to get costs under control.Report

    • Avatar Jaybird says:

      If the role is disproportionate, I would wonder if, instead, the problem is the other countries “free riding” while we do the heavy lifting.

      I would then ask if the rate of advancement is too crappy a benefit compared to the percentage of people who go without health care coverage in our own country.

      Would you rather have the best treatments the 90’s could provide for free, or would you rather pay for the best stuff that the 00’s can give?

      I suspect that the implementation of a system similar to what the rest of the world has will result in a rate of technological advancement commensurate with what the rest of the world has.

      I don’t agree that this price is worth paying.Report

  11. Avatar James says:

    “If universal care is structured as a national health insurance plan or, God forbid, as a national health service”

    Yeah, heaven forfend that you establish an institution which in Briton has become one of the most popular one’s in the country’s history!Report

  12. Avatar HKgovt says:

    I saw more cogent opinions & analysis from reading 5 entries here than I have received in over 15 years of writing to 3 US Presidents, 4 Senators and 3 Congresspersons. I’d love to see your analyiss of my suggestion in for the umpteenth time over 15 years & 5th attempt with Pres. Obama & his Staff.

    Food for Thought on Healthcare. I’m seeking knowledgable discussion perhaps criticism of my simple, effective & lowest possible cost [I know of] solution to improve US health system! Your blog has thoughtful knowledgable folks I seek.

    I thought Obama cared about Healthcare, 1 1/2 years ago, in Iowa campaign. His health proposal now just proves all he cares about is getting drunk on the maximum political power he can possibly grab. I dont think he’ll listen & learn this time anymore then he & his staff did in 1st four attempts I made. See yesterdays letter to Obama below:

    Dear President Obama & staff,

    “I participated in your(Senator Thune’s) town hall phone forum, & because you didn’t get to my question at forums end I recorded my question & this morning a young & extremely ignorant woman from your staff called to explain that simple plan to enact LAW that requires Insurance Companies to place everyone insured into no more than 3 groups nationally. I assume insurance companies would from a marketing stand point decide if they will offer 3 levels of coverage high medium and low, or just 1 or 2 of them.

    I am ?? year old, retired Federal Government Financial Examiner who over a 25 year, career did regulatory & financial examinations of entities involved in banking & insurance for the Fed Govt. What the staff woman calling me knows & understands about insurance & how & why it works from Actuarial, Underwriting & Financial stand point could be engraved on head of a pin with blank space enough to add Declaration of Independence.

    It’s impossible to have intelligent discussion about insurance with someone whose monumental ignorance means they understand not 1 sentence you have said. Her completely irrational criticism of what I suggest is that “oh, that doesn’t work because the young and healthy would be paying for the sick and those with unhealthy life styles”…“this would be unfair”. I made futile attempt to explain that people paying insurance premiums but not needing to file claims are exactly what the entire idea & concept of insurance is based on. Her mind was concrete closed to learning or even gaining slight understanding of what insurance is & the Actuarial, Underwriting & Financial concepts Insurance is based on. It did give me great insight into why none of your office’s responses were ever cogent.

    Since Bill Clinton’s healthcare proposal & with Obama’s now, your office has repeatedly ignored and taken no action of any kind for legislation to increase the number of people insurance companies place in groups & use to Underwrite & Actuarially determine financial premium they must collected for the coverage being offered a group. My proposal clearly has received no serious thought or understanding by your office.

    I proceed to hold an Email “Insurance Class” for your staff and you because you demonstrated such a serious need knowledge & understanding going all the way back to at least 1994.

    INSURANCE EXPLANATION BACKGROUND REQUIRED for intelligent discussion or analysis: The ignorant & uninformed (the healthcare caller from your office) complains the sick uninsured will benefit at the expense of those who lead health lives by not overeating, drinking, smoking & who actually do regular exercise. Their basic complaint is where is incentive for those unhealthy people that get coverage to live right and why should I have to pay insurance premiums that cover these unhealthy people. Insurance is & exists Financially, Actuarially & the only reason insurance works with companies selling it, for a profit, is because insurance premiums are paid by MANY people that almost never HAVE A CAR ACCIDENT or people that never HAVE HOUSE BURNED DOWN or DESTROYED BY TORNADO or people that ALMOST NEVER GET SICK OR HAVE AN OPERATION. THIS FACT IS WHAT INSURANCE IS BASED ON!

    The insurance actuaries do huge studies every year on our whole population and determine what percent of the people actually have these things happen to them. They then refine it down to what percentage of the people to whom they sold insurance actually did file a claim for it happening to them over past 6 months or 1 year. On these figures the new insurance premium you must pay is set for when your policy renews. ONLY REASON INSURANCE PREMIUMS ARE LOW IS THAT MANY PEOPLE NEVER, HAD AN ACCIDENT, NEVER WERE SICK, NEVER HAD THEIR HOME BURN DOWN or HIT BY TORNADO.

    LESSON 1: Currently 100s of groups & probably 1000s of groups are underwritten individually as briefly mentioned in the background above. There are very large savings when each company only has to do this 1 to 3 times. Because no group with any real size can be radically different then the population as a whole on Actuarial Health Underwriting basis, getting the financial determination of the required Insurance Premium using the largest Denominator possible (which represents the total number of individuals insured) gives the biggest benefit in arriving at the Lowest Insurance Premium that is financially sound & sustainable. [For all govt employees (elected or hired) with no degrees in math or business administration: refusing to do this calculation every year & then adjust & collect the necessary payments from all those covered: Is Why Medicare, Medicaid & Social Security are guaranteed to go bankrupt]

    LESSON 2: Annual or semiannual adjustment of insurance premiums is part of why insurance works. If Congres whatever it does with healthcare now, doesn’t have it incontrovertibly permanently chiseled in stone that all premiums must be recalculate at a minimum annually and adjusted up or down as the Actuarial, Underwriting, Financial Calculation Requires it will also go bankrupt.

    LESSON 3: The groups an insurance company covers (with the 1 to 3 coverage’s they market under my suggested change in LAW) being National and Huge eliminates the typical problems causing premiums for smaller groups to skyrocket. Assume of the 340 million Americans, under 6% are diabetic, under 6% get cancer, under 3% have heart attack. Now assume in your little tiny group 20 to 130 employees by just pure luck or chance 8% become diabetic or get cancer or 4 or 5% get a heart attack or heart disease.

    Mathematically, Actuarially the Underwriter is forced to give your group a big premium increase. But when the size of the group nears or significantly exceeds 1 million, then 3 to 10 people coming down with a major health problem will not make the health characteristics of your group statistically materially different from the whole countries Health Statistics. Once the Denominator is large enough becoming statistically Atypical is Very unlikely & low probability but based just on size is high for small groups.

    Now I make the dangerous assumption the ignorant staffer I spoke to on the phone might have comprehended the benefit of being part of a huge group for insurance underwriting purposes. [I hope President Obama the learning also applies to you & your staff.]

    As my letters for going on over 15 years to you & to all the others that are or have represented SD & to 3 Presidents Clinton, Bush and Obama & 2 actual/proposed Health Secretaries, this simple new LAW will Mathematically, Actuarially, result in Underwriting and Financial benefits of Lower Insurance Premiums that will result in a significant benefit (Lower Insurance Costs) to vast majority of those currently insured in thousands or 100s of thousands of small groups. Now for an even bigger benefit to America’s overall health, all Insurance companies will be marketing their Lower Insurance Premiums due to the much Larger Group with much larger denominator the LAW forces to be used in the premium determination. Result anywhere from 1/3 to 2/3’s of employers without insurance can afford to offer it, due to lower premiums now offered by all insurance companies; another benefit Joe Blow American that could not afford any insurance because the only rate Joe could get was the highest the companies offered & was 25% to 33% of Joe’s income & Joe could not stop driving, his family could not stop eating, or go homeless to afford the ridiculous high premium. Under LAW Joe’s part of the huge group of everyone Insured by the Company Joe selected & Joe gets a premium he can afford.

    Result at least 1/3 to 2/3’s of uninsured vanish because Insurance Premiums are REASONABLE!


    Don’t argue with this LAW proposal that every hands on GS-12 to 14 Financial Examiner employed or retired who has for years worked regulating the insurance & financial industries and has always known the bigger the group the lower the premium & the fewer groups handled by the insurance company the fewer different kind of paperwork have to be handled. Huge economies of scale all around will benefit every, Insurance Company & every American paying Insurance Premiums.

    Only losers are Insurance Companies that do not get to gouge the Joe’s that had to pay sky-high premiums & could barely afford it. We will just enjoy MANY millions of Americans having healthcare at no cost to the taxpayer.

    Over a short period of time some tiny fraction of the 43, 47 or 49 million uninsured will be found to be unable or unwilling to afford or pay the resultant lower insurance premiums. Congress can then design a program to address a FAR SMALLER Uninsured number of Americans.

    Example of how proposal would & could work: Fed Govt employees with Blue Cross & Blue Shield (BC&BS) insurance compared to those people who are not Govt employees BC&BS covers & intentionally splinters into many groups all over USA & smaller groups all pay more. Fed Govt negotiates rates for all its employees nationwide & gets Lower Rates. This proposed new LAW forces companies to handle everyone they cover in no more than three groups nationally. All Government employees with BC&BS are now in 2 groups, medium coverage & lower coverage, these groups are so big they get lower rates & everyone thinks government employee are getting a great deal, even if as single with medium coverage they pay $152.06 a month on top of large sum the government pays.

    Put all covered by BC&BS nationwide (Govt & non-govt) into 2 or 3 groups and the size of the group will make the Government employee group look like a molehill next to Mount Everest. Under this idea or plan Big savings for Insurance Company are achieved because: they only have to underwrite 1 to 3 groups instead of dozens, hundreds or thousands of individual groups & individuals, if they offer 3 coverage levels there will only have to be 3 kinds of paperwork not hundreds of kinds.

    Underwriters & Actuaries will determine the estimated annual cost of medical treatment for all the group members plus the necessary profit & divide total by the largest number of group members that has ever been used. The Answer to the calculation is the premium we’ll be charged & pay. This will benefit nearly all, but especially the Uninsured. This will happen at all insurance companies big & small.

    Insurance Companies now have splintered coverage groups as small as possible & used that excuse to charge higher and higher premiums. Each insurance companies profits were increased by this extreme fragmentation of groups, but doing this they harmed the USA’s medical system, the coverage & care available & worst of all expanded greatly the uninsured in our country.

    If Taxpayers lucky the Govt will look at the Low coverage plans offered by hundreds if not thousands of Insurance Companies & put uninsured people into the low coverage plans offered & take a 10 to 20 percent government deduction from their paycheck or welfare check (what ever Congress decides is reasonable & just for low income individuals involved) so the government (taxpayers will have to pay what the automatic deductions do not cover).

    As a Federal Government Financial Examiner of twenty-five years I do not have the knowledge & expertise to suggest more.

    I do add a piece of important information resulting after democratic Presidents forced banks to make loans based on welfare income & required it be treated the same as any employment income. Congress & Senate please remember that the first three loans of this type the GS-12 & 13’s with whom I work had to review for safety and soundness & compliance with regulations that mandated loans must be made; found all exaniners working at bank needed 10 to 20% raise to match this unfortunate individuals income from 4 different govt assistance programs. In highest income case, our govt Financial Examiner with the longest 20 years on the job was getting $48,000 gross (take home was around $36,000) and this unfortunate individual & their 4 kids grossed $52,800 (all take home & figure did not include value of free insurance they got) & were not in violation of any of 4 programs rules, they got help from. Wasn’t a welfare queen & every dollar she got they were entitled to & qualified for. I will defend every dime she got as proper & more than earned because her husband was killed in combat in 1st Gulf War.

    We all however, did doubt that free insurance coverage for 4 kids was appropriate, when having to pay for it would have only brought them down to $48,000 (take home).

    The House & Senate must make sure that in all cases where the unfortunate are going to get FREE coverage, that it is reviewed by a Government Financial Examiner and not the normal do-good government give-away program employee. The 1st government do-gooder provided $28,600, the 2nd $14,000 the remaining $10,200 was from 2 programs & split I do not remember. None of the do-gooder programs knew of all 4, one knew of 3, two knew of 2, & last knew only about themselves. Do any of you in the House & Senate see the potential for waist, fraud and abuse? We taxpayers were lucky this widow was honest & never even considered doing wrong.

    We must please consider all sources of income & add all together before you give insurance coverage away. Add together welfare checks, food stamps, pensions (widows & all kinds), supplemental social security income for children, regular social security, earned income credit checks sent people under income tax code, grants to attend school or college that do not have to be repaid & at least 1 or 2 programs I’m forgetting.

    If bleeding hearts tell members of the House & Senate you cannot possible take deductions from any of the checks going to the unfortunate or people will starve, please remind them that the poor in America have incomes in the worlds top 20%. Tell them it is not rare for individuals they are defending to receive total income equivalent to or better than the take home pay of GS-8 to GS-12 government employees. You can assure them that the deductions made will not put any individual or family below the poverty line if all the many benefits they receive are added together.Report