My oldest daughter is in her mid-twenties. She has a friend the same age who was stricken with cancer last year. She was treated with chemotherapy, Initially, the doctors thought this had worked, but now the cancer is back. My guess is that her prospects at this point are rather frightening.
That ends the anecdote. What follows is my imagination.
Imagine it were my daughter. What would be my attitude? I imagine that I would be walking into the oncologist saying, "Look. There has to be something you can try. I don't know whether it's bone marrow transplants or stem cells or some clinical trial somewhere. But we can't just sit here and watch her die. Either you give us something that has a chance of working, or we'll find another oncologist who will."
Next, imagine that the best hope is a treatment that costs $100,000 and offers a chance of success of 1 in 200. Would I want her to get that treatment? Absolutely.
But look at the issue from a rational, bureaucratic perspective. You have to treat 200 patients at a cost of $100,000 each in order to save one life, for a cost per life saved of $20 million. Is that what a rational bureaucracy would do?
A rational bureaucracy would not even tell the family about this treatment option. But I think that in the American culture regarding medicine, I would find out about it.
It's worth noting that, at least anecdotally, the internet means we're increasingly exporting our cost inflation to other countries. In the 1990s, breast cancer patients wouldn't even have found out about a treatment like Herceptin. Now they fight (and win) public relations battles with their governments to get their treatments covered, even when the treatment is not deemed cost-effective by the health care regulator. And the woman who fought that famous and "inspirational" battle in Britain recently died; the drug didn't buy her that much extra time, perhaps because she had to fight so long to get it.
If your mother or your daughter or your sister or your wife is dying of breast cancer, it doesn't matter to you how much the treatment costs relative to the benefit. And indeed, the political battle over health care is infused with the belief that you shouldn't have to think about cost--that it is immoral to deny anyone a treatment that might help them.
Unless we're willing to let health care expenses grow unchecked, someone is going to have to think about costs. But so far in America, I see no means to develop a culture which will allow bureaucrats to deny potentially life-saving treatments simply because they're costly--either in the free market or in a single payer system. Thus, I predict, costs will continue to grow.
TLDR version: Health care is expensive and will get even more so.
I have said 100 times that the fundamental problem in American health care is an ingrained cultural belief that health care is something that someone else should pay for. It doesn't matter if it's your employer or the government or hospitals giving it away for free, we as a culture simply refuse to look at health care and see a monthly budget line-item like food, heat, and transportation. Cost really is no object.
Let's turn Kling's hypothetical around. Suppose I am stricken ill and offered a fabulously expensive treatment option with a tiny (0.5%, as per the hypo) chance of success. Would it be a wiser decision for me to simply die, leaving my family with enough life insurance to pay off the mortgage and start a healthy college fund to boot, or run up monstrous debt which will consume that insurance, and die anyway? I can't say what my decision, or my wife's decision, would be in that instance, but it would at least be our decision because we're the ones who would have to pay for it.
To the extent that Americans have chosen not to pay for it, they have surrendered their right to make that sort of decision. You can't have autonomy without the concomitant responsibility.
Rationing will occur. It is occurring right now, and it is only going to get worse. Top-flight medical care has large opportunity costs which cannot be waved away.
The only question is how the rationing occurs.
Every time some Republican complains that a National Health Care Plan (TM) will lead to rationing, I point this out to them. Unless you have a net worth well north of 1 million your health care is rationed by somebody.
"Unless you have a net worth well north of 1 million your health care is rationed by somebody."
Well, yes. Duh.
The question is at what level the rationing will occur, by what criteria.
How many visits per month to a chiropracter do you allow? Do you allow cosmetic surgery to help someones self-esteem? How about alternative medicine?
As a Republican, I have no problem with the idea of a National Health Care Plan - I would just love to hear some discussion from politicians about what will and won't be covered. Quite understandably, they seem reluctant to go anywhere near this topic.
Good -- refreshing. Here's my guess: the national health-care effectiveness board established by the Bush Administration will determine how effective various treatments are. They will set a threshold level of cost to effectiveness. If a treatment meets that level, it will be covered. If you want to be sure of getting Kling's hypothetical $100,000 treatment that has a 1 in 200 chance of working should the situation arise, you will have to buy private supplemental insurance, like people in Europe do.
Some 15 years ago, my father (who was a physician for 40 years) in contemplating the way that healthcare dollars are spent, suggested that substantial savings could be realized by "buying out" the elderly; offering them 50 cents on the dollar of their actuarially predicted medical benefit, which they in turn could use for their own medical care, enjoyment, or pass along to whomever they wished. His prediction was that if given the choice between cash in hand, or medical care that would in all likelihood, only offer slight increases in length of life/quality of life, most people would take the cash.
Sweet... I'd be going in for every ailment I have, but deal with it anyone because who wants to risk surgery etc and get a nice fat check :)
No system where you give something for nothing can be protected from actions like this. Especially where there is a direct cash payout. It may "make sense" from an accounting perspective (cash in vs. cash out) but it certainly doesn't make sense from a culture/managerial/incentive perspective.
This is the system we already have, plus huge end of life care cost.
Sooner or later the growth will have to stop, if only because we can't spend more than 100% of our GDP on medical expenses (he says, as he looks at our current deficit levels...). In reality, it has to stop somewhere well before that because we have other essentials (food, shelter, etc) that we have to pay for as well.
The question is, where will it stop? And will it stop because it hits a brick wall and it has to, or will it stop because we've made a conscious choice of where and how to stop it? I prefer the latter, but I fear that we'll get stuck with the former.
Every time some Republican complains that a National Health Care Plan (TM) will lead to rationing, I point this out to them
Indeed. And when you meet a Democrat who wants to talk about miracle cost savings, you should point out that the only way to save money is to consume less, AKA ration.
Fundamentally, every able-bodied individual must be able to afford his own health care with his own earnings. We can have some degree of transfer from rich to poor, but we can't miraculously make the real economic costs of health care disappear.
Fundamentally, every able-bodied individual must be able to afford his own health care with his own earnings.
Why? It's perfectly reasonable for people to take out insurance against the possibility of significant losses. It could be no different from any other type of pooled-risk insurance. The problem is when the premiums paid by ALL members are insufficient to cover ALL costs, not when an individual's premium is insufficient to cover their own costs.
The problem is when the premiums paid by ALL members are insufficient to cover ALL costs, not when an individual's premium is insufficient to cover their own costs.
No premium could be high enough to provide top-flight care to all members of a pool which encompassed the whole population. It would have to be higher than the average income, which is just impossible. Like trying to collect 110% in taxes.
The choices we have are some combination of having less medical treatment, paying doctors less, and abandoning some end of life care. No other large-scale savings are there to be found.
I've got no problem with rationing, that's what we've got now. My problem is with the tying of health care to employment. There needs to be some level of health care for people who don't get insurance through their employer, or have no job.
For a small business such as a home remodeler it's cheaper to hire new people when someone breaks his leg or gets pneumonia than it is to insure that person.
I want to consume less of secretaries filling out forms. Also less of doctors hired by insurance companies to figure out whether payment can be denied in order to maximize corporate profit. Data indicates about 20% of America's health care spending goes to stuff like this.
Also, I saved money yesterday on a hotel room without consuming less of it: I bargained with the bookings agent. And I saved money the day before that by buying a sandwich outside the health club and bringing it in with me, instead of buying from the more-expensive vendors inside the club. US law prevents the government from doing either of these things with regard to health care.
You want to consume less of secretaries filling out forms...so a bunch of government secretaries is your solution?
As for doctors hired to figure out whether payment can be denied, a national health system would require exactly the same thing. Do you deny that $100,000 treatment with a 1% chance of success?
Incidentally, regarding bargaining: the US government saves money by not bargaining, and instead lets insurance companies bargain for it. Then they just demand the same price.
My guess is the breaking point will come in the next 10 years, when health insurance costs drive me and my wife either a) back into the job market; or b)off the grid entirely. Either way we take about 8 other jobs that are currently paying SS tax and insurance premiums out of the equation. Every other small business person I know in our age bracket is looking at the same thing. The demographics are stacked against our healthcare system being able to sustain this loss of revenue.
Why? It's perfectly reasonable for people to take out insurance against the possibility of significant losses. It could be no different from any other type of pooled-risk insurance.
Enter the pedants. Modify it to: you have to be able to afford your own premiums and deductible. The point is unchanged: health care is an expense like any other and its costs must be borne by consumers like any other.
The problem with healthcare costs is not the insurance, it's the unlimited payout.
Insurance is a bet with a bookie. He bets that nothing bad will happen to you. You bet that it will.
Insurance company behavior becomes crystal clear when you understand this. The problem with pre-existing conditions was due to the fact that no bookie wants to take bets on a race that has already run.
With health insurance, when the bookie loses a bet the payout can effectively be unlimited, and almost none of us have the information necessary to negotiate a bet with a limited payout.
Talk about Asymmetrical Information.
this is a great argument among health care providers. my wife and i have it all the time. She is a pediatrician and cannot bring herself to even conceive of telling someone, no we aren't going to try this on child because it's too expensive. I forsee, and truly agree with, rationing at the end of life. But it's going to take a massive shift in cultural thinking and these things do not happen overnight. it's taken thirty years to even bring us to the point where we are about to accept large scale health care reform...so I don't see us doing that until i'm old and decripit and asking for my 1 in a million shot of living for 2 more months.
There needs to be some level of health care for people who don't get insurance through their employer, or have no job.
I have never met anyone in any field of endeavor who would turn down cash, especially if it is literally waved under their noses.
The question for me is, do health care treatments get cheaper over time the way other innovations do? Everything else starts with boutique products for the rich, but those products eventually drop in price until they are affordable for everyone. Some things in health care do this -- I believe HIV drugs are one example.
Is there any reason this process doesn't occur for other treatments? I mean individual drugs and procedures -- it's clear that health care costs overall keep growing, in part because of the new capabilities the system has developed. (Nobody ever got an MRI when I was in middle school because they didn't exist yet.)
If the trend in health care IS for any given treatment to start as prohibitively expensive and drop in price over time, is anything we are contemplating in health care reform likely to derail that process? Or to limit innovations altogether? Surely we shouldn't assume that the technologies we have now are the ones we will be stuck with in 50 years.
It does and has. Examples: Cataract surgery has gone down quite a bit in price as it has gotten routine. Open heart surgery has gone down in price. Many lab tests have dropped as they figured out new ways to do them. Examples: pregnancy tests & many other hormone level tests used to be done by radio-immuno assay techniques that were time consuming and used radioactive reagents that were expensive. Some have new techniques that are much cheaper.
Speaking as a NZ citizen who is used to a publicly-funded health care system, the problem with dropping health care costs is that as a procedure becomes cheaper doctors order more of them. Eg cataracts - it's cheaper and faster to remove a cataract so cataract removal is ordered sooner and thus on people who might well have died of other causes before treatment in the past. Pregancny tests are cheaper, okay let's do them on the first day of the missed period not wait two months.
Good for health, perhaps, but it doesn't help in terms of paying for the health care system.
(I'm not entirely sure if that was a point M.C. was intending to make, M.C.'s comment seems more concerned with not preventing innovation, but I think it's an important thing to point out because for a while I believed that innovation would reduce pressure on health care costs.)
Medical procedures suffer from Baumol's cost disease, so it's unlikely that we will experience price drops comparable to those that occurred with consumer goods.
http://en.wikipedia.org/wiki/Baumol%27s_cost_disease
Drugs, however, don't suffer from this problem.
While Kling's argument is quite interesting, I am not convinced that it is rare highly expensive treatments that are leading the substantial medical inflation. The best data point I have is my own personal experience. I was laid off last year, putting my wife and I in a bind as to how we were going to get healthcare. My wife and I are both in reasonable health, and we have a young son who was born about a year ago.
Since my wife's employer doesn't offer insurance in CA where we live (it is a Tulsa based firm and she works remotely) we were out of luck. Buying insurance for all us, it became clear that were three basic tiers of insurance we could buy (we wanted a PPO with prescription drug coverage). The prices are for the whole family.
- Low deductible ($500), pregnancy, (about $2500 a month)
- High Deductible ($10,000), no pregnancy (about $600 a month)
- High Deductible ($10,000), no pregnancy (about $325 a month)
So if we wanted to buy pure insurance (take care of small bills out of pocket and get coverage in case one of us got hit by a car), and defer having another child until I could find other employment then the prices available were quite reasonable.
If we wanted the ability to walk into the doctor's office at any time and pay nothing, the bills were going to be exorbitant.
This implied to me that the large cost driver (at least for folks like us) wasn't the possibility of a single large event. Rather it was a series of $100-$300 bills.
Things turned out well in the end, I started my own firm and we are doing well. If you are interested.
"While Kling's argument is quite interesting, I am not convinced that it is rare highly expensive treatments that are leading the substantial medical inflation. The best data point I have is my own personal experience."
I agree, and although my own personal experience is coming at it from a very different angle, I arrive at the same place.
Whether for expensive and rare treatments (MRIs on my knee after a torn meniscus) or routine work (ultrasounds, blood work, a simple physical), I can't figure out why individual treatments cost so much. I've been in and out of the small business world myself, and have at least a clue about the kinds of costs that businesses have, and I just can't make the numbers add up. The plain reality is that most treatments just cost way more than they should.
Why do many kinds of routine blood analysis cost several hundred dollars? Some of these (insulin checks) can even be done with home test kits now, and yet we still pay crazy amounts for "professionals" to do them for us.
I blame insurance itself for some of this. Most Americans never see the bill themselves, so they just get it done right there at the doctor's office - or from whomever he sends them to. If we had to pay the costs ourselves, there would be a dedicated blood test laboratory down at the local MedMall charging $50 a pop for blood tests, and he'd competitively drive everyone else out of the market. I'll grant that some newer and more elaborate blood tests might cost more, but the price on the routine ones would drop like a rock.
Even here, however, I can't see insurance as the evil that causes everything. They make a serious effort to push doctors into lowering costs, and some costs are real. I think there's also a general shortage of doctors, which is at least partly fueled by our current medical school practices.
On top of that, add the costs of rare and expensive procedures and drugs that we can't say no to (as Megan has mentioned), the costs of medical malpractice lawsuits and insurance (it's definitely not the whole problem, as Republicans would have us believe, but it's just as certainly a contributor), and probably a dozen other items.
I'm vehemently against nationalizing health care, but I'll be the first to admit that our current system is broken, and getting worse year by year.
That's because you've "been in and out of" the wrong world.
Three letters: FDA
You can't imagine the red tape (and added costs) that all the government regulation brings. A similar thing happens in aviation, too: the same 1/4" bolt that you buy for 8 cents at Home Depot costs $14 if you need the "FAA-approved" version for your Piper Cub.
If you want to have another child, the cost difference would seem to cover the entire price within a couple of months. A solution I once read: call up doctors and hospitals, inform them you'll be paying a fixed fee in cash, and negotiate a better price.
Absolutely not. A standard natural childbirth in my area costs about $10K when paid cash up front -- no epidural, no complications for mother or baby, home within 48 hours. Need a c-section, as do 30% of births in this country? What if the baby needs a few hours in the special care nursery? Or what if you have pregnancy complications such as preterm labor or preeclampsia? How are you going to doctor-shop and negotiate advanced payments in any of those emergency scenarios?
It's relatively easy for a pregnancy to rack up bills of $50K or more. I know, because I've done it twice -- once for a twin pregnancy with the usual complications, and once for a singleton that was supposed to be easy but turned out to be a nine-month nightmare. Mine were, thankfully, covered by insurance, but the EOBs were frightening.
Maternity coverage isn't a bet against the cost of a normal delivery, but against the costs of one that goes haywire.
But so far in America, I see no means to develop a culture which will allow bureaucrats to deny potentially life-saving treatments simply because they're costly--either in the free market or in a single payer system.
Oh, I definitely do -- but it will happen invisibly. Once the bureaucrats are in control in the U.S., the expensive new treatments will no longer be developed in the first place (because the last big market willing and able to pay for them will have disappeared). So after a transitional period of a few years, the bureaucrats won't have to say no, the hypothetical expensive treatments they'd have to refuse to pay for just won't exist.
"Oh, I definitely do -- but it will happen invisibly. Once the bureaucrats are in control in the U.S., the expensive new treatments will no longer be developed in the first place (because the last big market willing and able to pay for them will have disappeared). So after a transitional period of a few years, the bureaucrats won't have to say no, the hypothetical expensive treatments they'd have to refuse to pay for just won't exist."
Or you go on a waiting list. No one has to actually tell you no. They just ask you to wait two years to see the relevant specialist. What, you think you're so special you should be allowed to queue-jump over all these other equally deserving patients?
I think this post illustrates several points.
(1) Liberals argue universal health care is the only solution for controlling health care costs, but I have yet to see them explain why. My understanding is that the reason is because universal health care means the government will ration health care. Thus liberals are caught in a lose-lose proposition. Universal health care will never pass if liberals admit the end goal is rationing. If universal health care does pass, the government will start rationing, and then the public (led by conservatives) will scream bloody murder about government incompetence, bureaucratic inefficiencies, etc. (Though, of course, it's not incompetence, inefficiencies, or whatever, it's a choice: control health care costs through universal health care. But conservatives will be very good at painting the issue as being about the government is incompetent at running health care while the magical free markets allegedly don't ration, as opposed to admitting that it's about choosing to control costs (and increase access) through rationing rather than to maximize the freedom to choose, when only a very few will have the wealth to exercise that freedom (see below).) I don't see how liberals win on this problem.
(2) Kling's example also demonstrates why the conservative answer to controlling health care costs -- health care savings accounts -- probably can't work. As I understand it, it's the few people spending gobs of money on rare and/or chronic conditions that are responsible for most health care inflation. Since any health care savings account will still come with a deductible, sick people responsible for the costs will blow through that deductible and still spend unlimited amounts of money.
(3) The people who benefit from choosing a free market system with no rationing are the rich, since they're the ones who can afford to spend the money. As so often is the case (Bush tax cuts, estate tax cut, etc), conservatives will be very good at painting the picture of government incompetence causing rationing when the only ones being rationed are the wealthy and the great majority will benefit from increased access to health care. Now my the slant of language probably make clear where I fall down on this issue, but to de-demonize the matter for a moment, health care presents a great test case for political philosophy: do you choose a system of greater rights and choice even though the consequence will happen to mostly benefit a select group of few individuals (i.e., the wealthy), or do you choose a system of greater social welfare based on taking away the freedom of choice from that select group (but note that it's not a systematic taking away as is the case with taxes, it's only the wealthy person who happens to get ovarian cancer or whatever disease that will actually have something taken away)?
(4) I've said it before, and I'll say it again, democracy just doesn't work, people. (This point also goes to MM's Fed independence post.)
but to de-demonize the matter for a moment...
But you then go on to re-demonize it by presenting it as a binary choice between benefiting the rich and benefiting the rest of us. You're completely ignoring innovation driven by early adopters willing to pay high prices (the "rich") and eventually benefiting the rest of us as prices come down.
I don't have an answer, mind you.
As I understand it, it's the few people spending gobs of money on rare and/or chronic conditions that are responsible for most health care inflation.
Most inflation, or most costs?
I remember when cars first started offering cruise control. High priced Lexis and Mercedes models and the like. I thought, "I'll never be able to afford a car with cruise control." Sure enough, I now own a Toyota Corolla with cruise control (and quite frankly, economy cars were offering cruise control at least as long ago as 10 years ago). So your point regarding "trickle down" innovation is a very good one. I'll have to think about how that affects my position.
As for the second matter you pointed out, a very bad mistake on my part. I meant "health care costs," not "health care inflation" (though in the context I was discussing, there's probably some overlap, or so I presume, I haven't actually read that anywhere).
I don't think the big issue is "catastrophic" care. I think it's preventative testing. A daily MRI would be crazy expensive, but it would ensure that they caught any tumor that might develop as quickly as possible (wasn't there yesterday, there today - time to operate!).
Obviously an extreme example, but you can extrapolate from there - some relative has/had cancer, the patient wants to be tested "just to be sure." Minor aches & pains - are you really going to take the risk that it's "nothing," or are you going to run the battery of tests to be sure? And would you take the risk just to save a few bucks?
I bring it up because catatsrophic illnesses bring with them cost/benefit conversations about end of life, life insurance concerns, etc.. Preventative medicine happens on young, healthy people - none of whom are willing to give up the ghost to save a few bucks in the prime of their lives.
For all the moaning about strict insurance companies, they're probably the biggest obstacle to this kind of cost/benefit >1 spending.
One idea playing out in the comments is that under any system there has to be rationing. True, but it does matter who is doing the rationing. I think it matters whether the rationer is a public monopoly that is essentially unappealable or a competitive market of insurers. Incentives matter.
Of course, the pivot point politically is the notion of equity.
Unless you actively stop free contracting in medical care, there will be tiered levels of care available based on ability to pay. This is no different than it is today, it is just that universal coverage will spread some healthcare to those who actually do without while reducing the amount available to everyone else by some amount. However, all new treatments that are costly will still be available to only those who can pay the higher price- those on the low end of healthcare, even universal healthcare, will do without those treatments until they either fall in cost, or society decides to extend them to all by performing the same healthcare adjustment as before.
What are the implications to tiered healthcare? The significant one to my mind is the competition for resources that results. Those that can pay more will get more services (shorter queues, more up-to-date care, etc.). The resources to provide them will either be redirected from other goods and services, or will be redirected from those who are only able to pay less. Of course, seeing the "rich" having to wait only two days to see an orthopedist while the "poor" have to wait 3 months is going to going to as politically unpalatable to some as the present system is today.
Yep. That's why private insurance is illegal in Canada.
A few commenters here have claimed, without offering any evidence, that we have rationing now. Would anyone care to provide examples? I've known non-rich patients with health insurance who have been treated with very expensive, (at that time) newly-developed drugs at world class hospitals and haven't been denied any treatment on account of cost (as well they shouldn't have been -- that's why they paid their health insurance premiums consistently). I've also known people who have treated Medicaid patients who get high quality care at no charge.
Perhaps there are some obvious, widespread examples of rationing that I am not aware of.
In any case, this is a subject that would benefit from a more empirical discussion. What percentage of health care spending really goes toward expensive, cutting edge treatments? What percentage goes to treat patients who are here illegally? What percentage of currently uninsured individuals are currently eligible for Medicaid or another government program?
Also, a meta-point: This is the wrong time to even be discussing big picture health care reform ideas. Without the economy on a stable footing, we'll be lucky to even be able to support our current entitlement programs. Even talking about adding a new one now is probably part of the reason why the Chinese are getting antsy about our debt. The U.S. economy is the engine that powers everything else. That should be the government's primary and secondary focus now.
Anyone who has an interest in a wonderful explanation of how rationing is already occuring in a sub-rosa fashion should read the Covert Rationing blog and particularly his introduction.
Dr Rich is a cardiologist and writes a fantastic blog on this exact topic.
I am not Dr. Rich and am not associated with the blog BTW.
Thanks. I skimmed his ~2,000 word intro and didn't see any specific examples of rationing mentioned. Has he mentioned any elsewhere on the blog?
As it happens, I AM DrRich, and I apologize to Dave in Hackensack that examples of covert rationing were not immediately apparent to him. I have posted a list of articles that, I hope, will directly address his question. The list can be found here:
http://covertrationingblog.com/general-rationing-issues/wheres-the-covert-rationing
You're completely ignoring innovation driven by early adopters willing to pay high prices (the "rich") and eventually benefiting the rest of us as prices come down.
Boy, the more I read, the guiltier I feel about living in Canada. We sort of have the ideal position.
We're large enough that most of us don't see the direct comparison with the American system, (which is nice, but three times the price). America operates as our second tier which is close enough that the rich aren't upset about going there for expensive health-care, but far enough away that the even the moderately well-to-do don't look at it as a serious alternative.
We're insulated enough so that when the doctor's say "there's nothing we can do", you can believe it without feeling guilty about not destroying your family's finances to pay for some sliver of hope. We benefit from the American innovations when they're finally brought down to a cost that our bureaucrats consider acceptable. The doctors don't have to cater to ridiculous demands for unnecessary tests, and have no incentive to give them.
We have a Corolla health-care system as opposed to the American Lexus, but it does a decent job for most of us, and ends up being an element of society that binds most Canadians together rather than becomes a source of resentment and distrust. (Tommy Douglas who introduced our health-care system was recently selected as Greatest Canadian ever by viewing audiences.)
That said, sadly for those few Americans that look at our health-care system as a model, I'm afraid it wouldn't work for you. You'd be missing the one ingredient that helps it work as well as it does... You.
Interesting comment, Tom. I've posted it on my humble blog.
Tom - I am an expat Canadian who is not as sanguine as you about the Canadian system, but agree 100% with your essential point. The Canadian gov't forces pharma cos to sell drugs cheaply in Canada - they can do this, because the US consumer pays the costs of development. The US consumer pays the costs of developing "radical" treatments, which will then be adopted in Canada in 10, 15 or 20 years when they cost a lot less. I imagine this is the case for much of the socialized world - we all freeload of the US system (or lack of system to be more precise) - without it, the whole world will be much worse off - which would perhaps be a lesson to the rest of the world to quit bitching so much about America, but it is a lesson I doubt they will learn.
In Canada, I am considered a radical, because I think there should be the option to purchase private care if one desires it (like in the UK and Oz) - instead, it is illegal for Drs to offer major procedures outside of the official Canada Health Act system. Of course, since Canadians are so heavily taxed to pay for the wonderful system that nearly killed my mom over a very routine ailment, few Canadians would be able to afford the better care, but at least they'd have a choice, and maybe the rich patients would spur some innovation, to help pick up the slack when the USA goes socialist.
Agree totally. I'm interested in the US healthcare debate for strictly selfish reasons. We benefit enormously from your innovation, paying the development of drugs etc. We get them cheap.
Another point worth making about the Canadian health care system, and by extension any government run system.
We up here have no idea of the costs involved. I pay around $1200 per year in fees to the provincial medical services plan. The portion of taxes going to health is substantial. Without looking it up, 40% rings a bell.
Politically, the small percentage of people who use the health care system, and who suffer as a result of rationing or degradation of care are unheard. The larger percentage, who care about increasing taxes, deficits (they are anathema up here. They will soon be down there), drive the political debate. Doctors are regularly demonized by the political class. The hellfire sermon that keeps us all in line is the 'american style two tier system'. One of the 'selling points' of the Canadian system is the low cost.
From what I see here and elsewhere, the reality of health insurance and employment, insurance premiums, having to pay for tests, etc. keep the costs of health care in the foreground for americans. It affects everyone directly, out of pocket or a determining factor in choosing jobs, changing jobs. So the political weight behind any health care reform is substantial.
Debates like this one happen because of the weight health care has in almost everyone's lives. In Canada, there is little or no debate. It's all looked after, until you get sick and see that in fact it isn't.
Derek
Thanks Megan, a great example from Kling that really illustrates his point well.
A little over three years ago, I started working for a company that I hope will eventually advance a concept that should bring some relief to health care costs. The concept is personalized medicine.
I work for Genomic Health, Inc. We're a medical lab that produces an assay, Oncotype DX, for breast cancer patients that provides them an assessment of their tumor at the molecular level. With this, they have the information they need to make a personal choice as to what treatments are necessary and effective and which will be superfluous.
This concept of personalized medicine could convert that problem of a $100,000 treatment with a 200:1 shot of working into a better situation. Where one patient realizes that that treatment is pointless for her condition and there's no need to fight for it, another patient might have a much higher response rate to that treatment making the expense worth it.
As long as the price of the assay makes sense, it's worth it for insurance companies, governments and even patients to determine the likelihood of a treatment's efficacy and appropriateness for that specific patient. This way expensive treatments become more targeted and less wasteful.
I don't normally go around tooting my horn or anything, but the company I work for is one thing I'm pretty proud of.
While Rob is right in the big picture, the cancer example doesn't illustrate it, because not everyone is dying of cancer. And even if the life saving treatment for cancer is expensive, it's still rare--and lo, this thing called insurance could cover it, if insurance worked like life insurance or car insurance works. The costs are in other places, not the rare stuff.
But re: Rob's issue of whether culturally we can change to where we ration care, I ask:
what do people do for their pets? It seems they are extraordinarily willing to consider pet health care as a line item in their budget, and a major one at that, and yet, finally, they ration based on dollars. Has anyone done any research on how people value the health care of their pets?
So we have a limited pool of resources which we are trying to allocate to best satisfy unlimited wants. Y'know, I think I've heard of something that's meant to handle that situation, but the name escapes me... "Parket"? "Farket"?
Oh, yeah! It's "Market"!
The problem is that we're working so hard to try to insulate people from the costs of their consumption of health care. This causes the quantity of health care demanded to rise, driving the price up. But instead of responding by curtailing our demand for health care, we instead try to hide prices even more thoroughly, leaving no market forces to check the demand increase.
Instead of trying to make expensive health care available to everyone, what we need to be doing is trying to make health care cheap. That means:
1. Allowing nurses and technicians more flexibility to handle simple diagnoses and treatments, leaving highly trained doctors to the situations that actually require their expertise.
2. Lowering regulatory costs of creating new drugs and treatments, and extending patent periods so that drug companies don't have to try to earn back all the costs of developing a drug and thousands of failed alternatives in less than a decade.
3. Removing barriers to becoming a doctor or nurse. This means reducing training and licensing requirements, removing any hints of quotas, possibly even subsidizing training in these fields, at least for a short time.
4. Reducing regulations preventing firms from entering the health care market. It should be possible to set up a clinic that can set bones and treat sniffles without any more red tape than would be involved in any other business.
5. Removing tax incentives that encourage companies to buy health insurance for their employees rather than giving them the money to buy health care themselves. This is the primary mechanism that isolates people from the costs of their decisions.
The tricky part is that doing #5 before #1-4 have taken effect could be disastrous, but I really think that's the best way out of this.
3. Removing barriers to becoming a doctor or nurse
An idea oft discussed, although (IME) unpopular with the public. In my limited experience, people find it more palatable that nurses (and, e.g., pharmacists) should do work that doctors currently do than that we should change the standards for any of the professions.
In a capitalist system, corporations are required to maximize profits for the benefit of shareholders. Allowing corporations to extend patents for a longer period will cause them to charge the same high prices they charged before, but for a longer period of time, in order to generate higher profits. They have a fiduciary duty to their shareholders to do so. If they dropped prices after their costs had been recouped simply because they could "afford" to, they would be violating their obligations to shareholders and behaving in an irrational fashion.
The price point set by a corporation for a drug is not related to the cost of developing the drug. It is determined by supply and demand. Extending the patent period might, arguably, allow corporations to develop some new ultra-expensive drugs which are not currently profitable with the shorter patent period. But that will drive overall health expenditures up, not down.
Extending the patent period might, arguably, allow corporations to develop some new ultra-expensive drugs which are not currently profitable with the shorter patent period.
Or, drugs that currently don't have enough demand because the disease is fairly rare.
Or, drugs that treat diseases that are very common, but typically affect poor people who can't pay much for a new drug (Malaria, parasite infections)
Or drugs that treat diseases that are common, but already have a bunch of treatments, that suit most patients, leaving the 5% who can't use existing treatments out of luck.
The solution to all of these is reducing the costs of drug approval, increasing patent times is a crude solution.
Every body is treating this like an individual service or good. The problem with health care is that my health is impacted by the health of people around me. We talk about individual diseases like knee injuries and cancer, when the real threats to a system that allows people to drop out of the health care system is communicable diseases. The only reason we can even talk about it in these terms is that we have had a huge century long collective public health effort.
That needs to be the basis of how we move forward. The issue is not delivering individual services, but what is the best way to treat the entire public's health. One family opting out of immunization to save money or other reasons isn't that much of a deal, but a whole community refusing to do so is asking for a tragedy, and a economic catastrophe.
The whole issue of buying healthcare for themselves ignores this, and ignores the fact that when people are sick, they cannot contribute economically,and can't make money. We don't allow children to be solely responsible for their economic well being, and we don't allow the disabled to be either. Why the sick?
Reducio ad absurdum -
What will be the market price of a doctor ?
Might that become the unit of the reserve currency ?
As that odious TV ad says, "Laugh, laugh hard..."
Laughter is the best, and only, medicine, when the last
dog-tired doctor has gone home for the night, leaving
you in the waiting room with a herniated disk, because
_there_are_not_enough_doctors_to_go_around_.
So, what do you do ? You hobble out of the building,
past the metal detectors and armed guards at the
heavily fortified entry, and go home, resolving
to be in line earlier the next day.
My point WAS about not inhibiting innovation, but on two levels -- the invention of new procedures in the first place, and the kind of innovation that drives down the costs of existing procedures. If a given disease costs $100K to treat now, we can argue all day about how to pay for it and whether we can afford such treatments for the poor as well as the rich. Or we can do everything we can do drive the cost down to $10K, and then $5K.
Ideally we do some of both. But the debate is often conducted as if the $100K were fixed for all time, which we know it isn't.
Of course, once that treatment has gone down in price so that everyone can have it, there will be another latest-and-greatest to debate. But the health status of everyone should have improved in the meantime.
I don't know of any evidence for this and indeed it seems counterintuitive that 'the rich' drive innovation. How much does 'innovation' cost to develop? How are those costs recovered? I'd like to see some evidence for these claims.
And in fact, there seems to be a rather hefty and coordinated pushback from all the usual suspects against a lot of 'innovation'. I speak, of course, of the concerted push to kill evidence-based medicine.
Here is a typical piece of reportage:
There seems to be a strain of thought that 'innovation' is just a matter of throwing money at a problem. That is very, very much not the case.
SOV --
Yes, throwing money at a problem often helps. The first person to do a new thing may have to build it from scratch, for just that one case. Or may have to do a ton of research to figure it out, research that takes people and lab time and equipment. So the first few cases treated are going to cost a small fortune. This may not mean that the individuals treated will be rich. Perhaps a foundation or government agency could subsidize the costs, or perhaps insurance will cover it in some cases. But if the treatment works, suddenly everyone (including the person who came up with it in the first place) will have incentives to get more efficient and increase economies of scale. Over time, costs drop. You go from the headline-making new thing at Big Fancy Clinic to something routine and available to everyone.
As for evidence-based medicine... should doctors have statistical information about what works in general? Sure. Should insurance companies be able to deny claims if Doctor X decides to do something different for Patient Y because of the details of the specific case? That's a different question.
Seriously, people really believe that the government can take over the health insurance industry and make it more efficient and cost effective? Wow...
Preventive care is more expensive. It may lead to longer, healthier lives, but it apparently costs more. You end up treating things that you may never have known about and taking a lot more tests. And people probably linger longer at the end.
When people talk about "health insurance" they are really talking about two things. Most people use health insurance to cover routine costs as well as unexpected costs. Health insurance for routine costs (known and/or planned) is not really insurance. It's more like a hidden HSA. It might be easier to discuss and/or solve the problems if the two were split and addressed separately.
I would rather have my health rationed by an insurance company that I can change if I don't like the way they are doing it than by the government. The government has a lot more bureaucratic inertia and once it takes over, changing it will be much more difficult. Also, if an insurance company denies payment, I at least have the option of paying for it myself. If the government takes over health care, it's possible that I could be denied treatment at any price (depending on exactly how the system works).
Supporters of nationalized health care need to pick a justification. Either it will reduce costs by rationing or it will make things more equitable but more expensive. Too often I hear that nationalizing health care will make things better AND cover more people AND be cheaper.
Note that I used the word 'just', as in 'just' throwing large amounts of money at these types of problems does not guarantee any useful innovation. I suspect that for large classes of drugs and procedures we've gone just as often as we can to that particular well. What is needed instead is a breakthrough in basic research, imho, something that a lot of these companies really don't do a lot of.
This is not "We'll take you off the statins and see if you respond to this instead." This is stuff like early detection of cancers, or hormone replacement therapy. Not one a one patient in seven or twenty, but one patient in maybe several thousand . . . or worse. I'm talking about procedures like this:
And it's not just the big splashy stuff that is often the subject of TV drama, it's lots of little stuff as well, small change that ads up to some significant cash from volumizing:
Twenty billion here, twenty billion there, pretty soon you're talking about some real money.
It sure would be nice if the body of evidence was clearly unambiguous and authoritative. There are always so many "studies" that "show" this or that - A is bad, B is good...until next year, when B is actually bad and A is good - that the medical science community seems to be almost schizophrenic.
"The same is true for bronchitis, sinusitis, and sore throats. Unnecessary antibiotics are still given to more than one in seven Americans each year for these conditions alone, at a cost of more than $2 billion and tens of thousands of serious adverse medication effects requiring treatment."
I am a little dubious about this. First, generic antibiotics are dirt cheap -- my local Stop & Shop even fills prescriptions for them at no charge. Second, antibiotics are often necessary for these infections. I had this conversation with a physician when I had a sinus infection last year. I had had them a number of times before, and in each case, it took antibiotics to treat them. He told me what "the literature" says, about how most patients presenting with these symptoms don't require antibiotics, but at least we came to a compromise: he wrote me a prescription which I agreed not to get filled until trying his other treatments (some sort of sprays) for a couple of days. Two days later, when his stuff didn't work, I got the prescription filled.
Probably, more patients would be inclined to leave physicians' offices without antibiotic prescriptions if they knew they could call a few days later if the condition didn't improve, and have the doctor call in a prescription. But if you have schlep back into the doctor's office and pay again just to get a prescription he could have given you a few days earlier...
If a nasty upper respiratory infection is viral, antibiotics don't do anything. If it's bacterial, they do. Viral is supposed to be more common, and bacterial more severe.
How much testing, and how many office visits, do you want to go through to tell the difference? In my experience as someone who gets these things, I only go to the doctor at all if it's really bad. And every time I've gone in, antibiotics have done the trick.