« Book notes | Main | Great game » Your surprising news of the day04 Feb 2008 08:37 am Sit down. You might want to have a tranquilizer handy. And a phone, to call a doctor. Remember, it generally starts with a numbness on the left arm . . . Now that you are braced for the shock, here it is: comprehensive health care program costs much, much more than the government anticipated. Not shocked? You must be one of the rare few who knows that government health care plans tend to double their costs in short order, and then keep going. TrackBackTrackBack URL for this entry: Comments (20)
MarkT, In general I agree with you, health care is a sticky wicket. However, there's no shortage of people who make the claim that we should switch to single payer because it would save a huge amount of money. This post is useful to the extent that it reminds people that there's no free lunch. 
Sure, the program is going over costs. Though I wonder why you didn't also mention all of the private insurance plans who's costs are dwindling, while coverage is soaring... Oh yeah, that's because everyone on private plans is also paying more and more every year, while getting less and less coverage. Seriously, how blinded are you by your ideology that you point to the MA plan costs rising as some sort of vindication of your supposed "libertarian", let-the-markets-do-what-they-will-because-they're-oh-so-efficient
The idea that public insurance is cheaper than private is nonsense. Wait until the politicians start loading up the public company with patronage workers and friends of the politicians and sweetheart consulting deals. Also, studies show that public insureds go to the emergency room more and stay in the hospital more than privately insured patients. By the way, my private insurance didn't go up this year. But I'm sure Mass. taxes will triple. Good Luck...
Now that you are braced for the shock, here it is: comprehensive health care program costs much, much more than the government anticipated. No, I am one of the rare few (commenting on this blog) who knows that piecemeal efforts to address health care costs state-by-state are unworkable. Cost containment will only happen when costs are no longer determined by the free market; if Massachusetts' costs are determined by the "going rate" of services elsewhere in the country, having a single-payer plan only in Massachusetts will not control costs.
"...piecemeal efforts to address health care costs state-by-state are unworkable...." So until we can go worldwide, it is futile....
Cost containment will only happen when costs are no longer determined by the free market If only costs actually were determined by the market in the manner of all other goods and services: buyer reviews price list, decides what and how much to buy based on need and ability to pay, and does so, perhaps haggling a little in between. The fundamental structural problem with health care is twofold: first, the marginal consumer is almost never the same as the marginal payer (the consumer paying fixed, not marginal, costs for health care), and second, Americans have come to regard free and technologically advanced health care as a fundamental human right (as demonstrated by the occasional commenter of retirement age who complains that health insurance is expensive: duh! Flood insurance on the banks of the Mississippi is expensive, too!). But in any case, "cost" containment is impossible. We can shift costs from one group to another (perhaps by redistribution), and we can shift costs from one type of cost to another (e.g. lower monetary costs in exchange for care rationing), but we can't change the fact that providing a good or service consumes a certain quantity of economic resources, and that can't be altered by fiat.
"Cost containment will only happen when costs are no longer determined by the free market" Ah, another person who doesn't understand that price controls and other attempts to hijack a free market to contain costs will never work as planned. So Liberalrob, once you have said that all health care prices are frozen, how are you going to find supply once doctors and manufacturers realize that their time might be better spent at home with their families rather than at the clinic. What if doctors decide that working 50 hour weeks for the government maximum of $40.00/hour isn't worth it, and instead they cut their hours to 30 per week. Where will you find the additional doctors necessary to keep up the level of health care coverage? And what about the pharmacutial manufacturers. If you tell them that they can only get cost+10% on the sale of their drugs, do you expect any of them to develop any new drugs considering the massive costs in testing and documentation required to obtain FDA approval? And what happens once people who previously avoided using the doctor for all but serious cases decide that since they have to pay taxes for it, they might as well get their moneys worth start rushing to the doctor for every sniffle and sneeze. How will you ration the care? Point blank to all who think you can "contain" health care costs. There is no way you can limit the costs without in some way limiting the usage and/or ending up with a greatly reduced supply. The fact that we continue to see people who believe that you can use government fiat to fix an economic market issue is proof of their lack of education.
I can admit a very strong case for universal, single-payer health care. I think it is more fair, and more humane than our current system. Having said that, any expectations that costs will be somehow lower, or that services can be delivered more efficiently are just nonsense. It takes a government - like NYC - to lose money on a wagering operation - like off track betting. Health care will be no different. Proponents are wildly overselling it. They claim it is not just the right thing to do, but it will - magically! - save money and improve quality as well. It is just nonsense.
Megan is the Dr. Jekyll and Ms. Hyde of bloggers. Lots of smart, insightful posts, and then one like this.
peter, Can you list those which are better, in what objective standard, and how their cost structure will scale up to provide this care stateside? Also, can you point out how brand new techniques, new prescription drugs and external sources of treatment are handled? I've never seen anything convincing on this front, simply magical hand-waiving...
The problem with international comparisons is that most on the left make the completely unvalidated argument that Americans can get health outcomes of the French, for example, by copying the French medical system in regards to method and cost. What if implementing the French system caused the health of Americans to decline? In other words, it may take more spending on healthcare, on a %GDP basis, in order for Americans to not fair even worse than other countries that spend less.
Mvargus wrote: The fact that we continue to see people who believe that you can use government fiat to fix an economic market issue is proof of their lack of education. I disagree. I've seen many educated people espouse cargo cults. All the pearls of education in the world are quickly nullified before the swine herds of idle money-tree dreams. Peter wrote: The world is full of government run health care systems that deliver better care for a lot less money than ours. True, but not the way you intended. The world is indeed quite full of government-run health care systems that deliver better care for a lot less money than our own government-run healthcare systems. Which does not bode well for any effort to turn more of the industry over to said entity.
If Megan had gotten as far as the very first sentence of the article, she would have seen: The subsidized insurance program at the heart of the state's healthcare initiative is expected to roughly double in size and expense over the next three years - an unexpected level of growth that could cost state taxpayers hundreds of millions of dollars or force the state to scale back its ambitions. So, the program is simply covering more people, the per person cost of the health care program doesn't seem to be an issue at all.
According to the Boston Globe article Megan linked to, the Massachusetts plan is currently covering 169,000 people at a cost of $618,000,000/year. That's 3657 per person per year, or about $305/person/month. I've had a number of health insurance carriers over the past few years, living in New York and New Jersey, and none of them have charged as little as that. My premiums have generally been in the $350-400/month range. So if I had the option of paying $305/month for an equivalent health insurance plan (either through taxes, or by buying in), that would save me between $600 and $1200 a year. Sounds good to me.
Ah, another person who doesn't understand that price controls and other attempts to hijack a free market to contain costs will never work as planned. Ah, another innumerate historical illiterate. Do you realize how snide you sound? And with so little to base it on too. I suggest you try to retain a modicum of civility. And what happens once people who previously avoided using the doctor for all but serious cases decide that since they have to pay taxes for it, they might as well get their moneys worth start rushing to the doctor for every sniffle and sneeze. How will you ration the care? I would suggest that perhaps seeing the doctor _before_ a case became 'serious' might end up in a)a better health outcome for the patient, and b)a lot lower cost for treatment all around. That being said, I find the notion that people would schedule an appointment out of whim or an idling sort of panic to be a curious one. Most of the people I know have pretty good insurance, and have absolutely zero financial qualms about footing any possible overage that their plan does not cover. And yet, oddly enough, I observe a certain reluctance to schedule those visits, even routine once-a-year checkups. For that matter, I know doctors and nurses who don't like making those types of appointments. I'm going to go out on a limb here and say that most people, probably the vast majority, simply don't like going to a clinic or an office or hospital, and will do whatever they reasonably can to avoid going. I know, I know, it's completely contrary to the notion that hordes of the undeserving poor will descend like locusts upon our medical facilities and overwhelm them with demands for TB tests at the slightest cough, liposuction to remove the effects of all that cheap, fatty food they consume, resource-intensive physical therapy because they don't exercise properly, etc. But I'm thinking my opinion models reality just a little bit more closely.
My Brother sends her kids to the doctor with so much as a sniffle. They have 3 kids. All on state health care. They don't even pay a co-pay! SoV, you can not tell me that this is preferrable. That every kid with a sniffle goes to the doctor on someone elses tab. Meanwhile I pay for private insurance and have been to the doctor once in the last 1 year, and only after I had been sick for 3 weeks. I don't feel like paying the co-pay, and then the 20% of the drug perscription when I know 9 times out of 10 my body fights off whatever infection I have before the drugs have a chance to do anything. It's a simple fact of economics that when something is free, people use a lot of it. When people use something a lot, it creates scarcity. I don't like the idea of free health care for all. I don't mind so much some kind of safety net. But this whole concept of a "right" to free health care is a joke.
Ezra begs to disagree: ttp://www.prospect.org/csnc/blogs/ezraklein_archive?month=02&year=2008&base_name=your_world_in_charts_oh_that_w#comments
Aghhhh! http://www.prospect.org/csnc/blogs/ezraklein_archive?month=02&year=2008&base_name=your_world_in_charts_oh_that_w#comments
Sam: After all, it may make sense to use more of something when it's free, but it also makes sense to actually use the service you're already paying for (in monthly fees), when the marginal cost is only $20.
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I agree sarcastic blog posts are fun. For example, I could add:
"My private health plan premiums doubled and then kept going up during the early 2000's. Not shocked? You must be one of the rare few who knows private health care premiums tend to rise at double digit percentages year after year."
But seriously, I wonder if you would care to address why this program was over budget? The article says they "underestimated the number of uninsured".
My own speculation is that part of the problem is that gov't (like everyone) tries to make the program look good by producing optimistic estimates to make the sale.
In general, delivery health care seems like a really difficult problem that cannot be reduced to "government bad, private good".
Posted by MarkT | February 4, 2008 9:21 AM