*Catastrophic Care*

by on January 13, 2013 at 12:47 pm in Books, Medicine | Permalink

That is the new book by David Goldhill and the subtitle is How American Health Care Killed My Father — and How We Can Fix It.  I don’t actually like that subtitle, but still this is the best popular health care book from recent times.  It has a crystal clear account of what has gone wrong and how to fix it, with the author settling upon a version of the Singaporean system.  I would describe Goldhill as a market-friendly Democrat who is skeptical about ACA and for the right reasons.


1 Bill January 13, 2013 at 1:32 pm

I assume this tracks his article in the Atlantic: http://www.theatlantic.com/magazine/archive/2009/09/how-american-health-care-killed-my-father/307617

A television executive is probably not the best person to come up with a proposal–mandated HSA payments into an account to cover your old age. What he misses is adverse selection when it comes to purchasing insurance.

2 Andrew' January 13, 2013 at 5:29 pm

“What he misses is adverse selection when it comes to purchasing insurance.”

Maybe because there is none. And ACA certainly didn’t address it.

3 Bill January 13, 2013 at 5:48 pm

Andrew, under the ACA, the pool is open to all and there is mandated participation in the insurance market. A carrier that chooses to bid has to take anyone. You might want to look up adverse selection.

4 Cliff January 13, 2013 at 11:45 pm

Is actuarially correct pricing accurately described as adverse selection?

5 Ricardo January 14, 2013 at 2:41 am

Adverse selection is just information asymmetry prior to a transaction. Whether or not an insurance product is priced by actuaries has nothing to do with whether or not adverse selection is present in the market unless actuaries have perfect information about all potential clients.

6 Andrew' January 14, 2013 at 11:56 am

The entire discussion is entirely moot as insurance is now a complete cash transfer system. But let’s say it wasn’t. Okay, information asymmetry would be on the part of the patient. That has mostly been shown to be a non-problem. And then we have the assumption that ACA somehow addresses the problem. It doesn’t, it does my first sentence.

7 Andrew' January 14, 2013 at 12:01 pm

And that, btw, is after the government created the problem with mandated treatment/coverage so that the people can free ride. And does ACA “fix” that government-mandated problem? No, it just taxes everyone and forces the young and healthy to pay for the free-riders and expanded services (minus whatever the death panels decide shouldn’t be subsidized). Unless the free-riders are covered by $750 per year then the free-riding problem isn’t fixed. It is just that the non-free-riding numbers are large enough. That the insurance companies went along with it is further evidence that there isn’t any more than a theoretical problem.

8 Bill January 14, 2013 at 4:30 pm

I truly do not understand the comments above. Have you guys ever read anything about compulsory pools and adverse selection?????

I don’t want to download the Google articles on this subject, but do yourself a favor and Google “adverse selection and compulsory pools”

I am also thinking that there are no persons reading these comments, or at least anyone with a background in insurance economics.

9 Paul Zrimsek January 14, 2013 at 8:11 pm

While googling “adverse selection and compulsory pools” will indeed bring up a number of articles explaining these ideas to anyone who doesn’t know them already, they will not explain whatever significance Bill sees in them in the context of Goldhill’s book. Eventually Bill may figure out that only Bill can do this.

10 Bill January 15, 2013 at 11:29 am

Paul, if you rely on an insurance market after 70, carriers will adverse select against you and the population. If there is a compulsory pool, and the pool is put up for bid, there isn’t.

Too bad you didn’t read the articles or understand social insurance.

Google social insurance and Shiller and Yale

11 Bill January 15, 2013 at 11:41 am

Paul, you know there is a tax for no participation, right?

12 Paul Zrimsek January 15, 2013 at 1:47 pm

Hee: In the course of elaborating his smug assumption that anyone who disagrees with him about insurance must not know what adverse selection is, Bill proves that… he doesn’t know what adverse selection is. (Hint: it’s the buyers who– supposedly– select themselves out.)

13 Paul Zrimsek January 14, 2013 at 8:51 am

There’s mandated participation in the insurance market under ACA? Chief Justice Roberts is going to be fit to be tied.

14 Bill January 15, 2013 at 11:40 am

Paul, you know there is a tax for no participation, right?

15 Andrew' January 14, 2013 at 9:04 am

No Bill, I don’t need to look it up. You need to look up ACA. There is not mandated participation in the insurance market and that doesn’t fix adverse selection.

16 Andrew' January 14, 2013 at 9:36 am

No, you need to look it up as well as look up what ACA does.

17 Brian January 14, 2013 at 12:03 am

I remember that article in the atlantic. I also believe David Brooks linked to it a year or two ago in his annual awards

18 TGGP January 14, 2013 at 11:22 pm

Alex has discussed adverse selection a number of times at this blog. A good roundup is here, although it was written before the ACA was passed.

19 Vernunft January 13, 2013 at 2:53 pm

I suppose we could exile that demographic that contributes to excessive costs, but if Lincoln couldn’t manage it, how can we?

20 Michal January 14, 2013 at 1:39 pm

Are you talking about vampires?

21 Chip January 13, 2013 at 7:08 pm

I have a personal example of treatment I received in Canada (a single payer system run by the government) compared with the treatment I went on to receive in Singapore.

In Canada I had a sudden onset of severe pain and stood for four hours in emergency (no seats available). After being examined I was told I would need to see a specialist and the earliest appointment was 3-4 months after which I would need probably need surgery after another several months.

This is quite typical. Both my parents in Canada have waited well over a year for surgeries and even colonoscopies. I asked for a colonoscopy at the age of 43 and was told to wait till I was 50.

In any case, I flew to Singapore where I’m am a permanent resident. I received an appointment with a surgeon within two days, was booked for an operation at 9am the next morning and paid SGD90 for the former and SGD900 for the latter.

While there are many differences between the two systems fundamentally the government-run system in Canada is focused on reducing costs, which is why it restricts access to treatment by closing operating rooms on weekends and denying scans, whereas Singaporean doctors are seeking revenue and looking to maximize access to their services.

22 Jan January 13, 2013 at 8:53 pm

What was to stop you from going to a private clinic for prompt treatment? This article says they have been “exploding” in Canada: http://www.cmaj.ca/content/183/8/E437.full

Also, by U.S. standards you’re not supposed to get a colonoscopy until you’re 50, unless there are other factors putting you at increased risk for cancer. It seems like a reasonable policy–too many unnecessary scans and tests are part of what has driven up health care costs in the U.S.

23 ANdrewL January 13, 2013 at 10:30 pm

On one hand, the argument against High Deductible, low premium insurance (ie. Catastrophic insurance) is that people will delay low-cost preventative health care and only see doctors when they are sick. The thinking is that people will want to save money in their HSAs over paying for preventative care. On the other hand, you are arguing that too many preventative health screenings are driving up the cost of health care.

Which is the best? hope that you are within that 1 standard deviation for which all healthcare-policy is designed for? or You decide what you think is best for you?

24 chip January 13, 2013 at 11:29 pm

By law, private clinics are not allowed to offer services that are deemed essential or medically necessary. This is often circumvented for prominent athletes, policemen, and there is some looking the other way as government wait times get ridiculous. But generally access to private care strictly limited and would have been in my case.

I don’t think many Americans realize this but if I couldn’t walk because of a destroyed knee and needed a replacement, I could wait a year or more and be prevented by law from purchasing a knee replacement.

A single payer system depends on a significant amount of state coercion to function. Well, let’s not say function because it is increasingly not functioning.

25 mapowell January 13, 2013 at 11:53 pm

The Canadian system is probably the 2nd worst in the developed world behind the US. I don’t really know how it works in Singapore in practice, but the idea that you can pick and choose your medical provider the way you choose a dishwasher is preposterous. Suppose you go in for that procedure and some complication develops – quick negotiate with 3 different providers for the best rate! No, you take the advice of the medical professional available at the hospital to deal with your emergency and you use the specialist they have on staff. If you don’t have insurance, you pay what they bill you for. With insurance, you get a pre-negotiated rate and some promise that you won’t be pushed into unneeded procedures. Using the intermediary sucks but it is hard to see how the alternative would be better.

26 derek January 14, 2013 at 1:00 am

There are many many markets that work quite well with those same characteristics. Time sensitive and dealing with things that only someone highly trained can understand. What keeps a lid on the costs are the exigency of getting paid in the end.

Insurance isn’t an intermediary, it is a deep pocket. That is what creates the distortions. When government gets involved you end up with something akin to regulated monopolies, never known for innovation and low cost.

Canada controls costs by controlling access. And can get away with it because sick people don’t vote.

27 prior_approval January 14, 2013 at 12:10 am

‘I could wait a year or more and be prevented by law from purchasing a knee replacement.’

Or fly to Singapore?

The funny thing is, a large number of Americans realize they can’t afford a knee replacement (and a larger number can’t afford it, they just don’t realize it), and their best hope is to wait until they turn 65, when they enter a government run medical insurance program.

28 Da January 14, 2013 at 3:36 am

You think this is funny?

I think what I would smile on is a system that allowed people who need a knee replacement to get a knee replacement regardless their age. If this is system is to be found in Singapor, so be it.

29 derek January 14, 2013 at 12:48 am

If exploding means that I know where one is and can book an appointment, I’d say it is an overstatement. Most drive for a couple hours across the border and get it done in the US.

30 Andrew' January 14, 2013 at 10:18 am

It might be that things ‘explode’ because demand outstrips supply.

31 ad nauseum January 14, 2013 at 10:51 am

By U.S standards, they recommend that you get a colonoscopy at age 50, but you can do it earlier if you like. So, I have an unknown guy in a suit that “recommends” that I wait till age 50 in the U.S; compared to an unknown guy in a suit that “requires” that I wait till age 50 in Canada. I would much rather have the former.

32 Virginia Postrel January 13, 2013 at 7:28 pm

Bloomberg View ran excerpts over three days. The first, with links to the others, is here: http://www.bloomberg.com/news/2013-01-01/focus-on-health-care-costs-causes-more-spending.html

33 Peter Metrinko January 13, 2013 at 11:22 pm

Thank you Virginia.

34 Rich Berger January 14, 2013 at 5:38 am

Those excerpts are a good recommendation for the book.

35 Brian Donohue January 14, 2013 at 6:40 pm

Outstanding link!

36 Ryan January 14, 2013 at 7:10 am

Would anybody be able to elaborate a bit on what exactly the Singaporean system is?

37 Ricardo January 14, 2013 at 7:35 am

A quick summary is on the Singapore Ministry of Health’s website: http://www.moh.gov.sg/content/moh_web/home/costs_and_financing.html

A key thing to note about Singapore’s system is that the vast majority of working-age Singaporeans subscribe to a government-run catastrophic health insurance product called MediShield. Singapore effectively bans private insurance for people who are not already enrolled in the government-run MediShield. This is certainly an alternative to PPACA but it’s really tough to see how it is more “market-friendly.”

38 Andrew' January 14, 2013 at 9:16 am

Prolly because nearly all people would choose catastrophic. It would still be inefficiently provided and people would still have to trample conscientious objectors, but at least it wouldn’t politicize every g-damn thing.

39 Steve January 14, 2013 at 6:14 pm

“Of course, there’s no question what the competitive price would be for the service of killing my father: zero.”

Have not read the book only the excerpts. Hospital acquired infections should already be “covered” by the free market. Patients get to choose which hospital they go to and should be choosing the hospitals that have the least number of infections. In addition if the patient can prove they acquired the infection due to negligence they can get reimbursement for the injury. I am having a hard time understanding why health insurance causes an increase in this problem. Some of the authors other points may be valid but this one was completely unsubstantiated.

As I think about this more the point makes even less sense. Since the patient was using Medicaid the cost should be the same at any hospital. The patient should be basing their decision on which hospital to use entirely on issues such as this one. My initial take on the matter is the author is trying to put the blame for his bad choice of a hospital on the system rather than his own ineptitude.

Hopefully someone will explain how I am wrong.

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