Very good sentences

There are two unavoidable realities of making the American health-care system less costly: Americans must use less care, and our nation’s legion of well-paying, stable jobs in the health-care sector need to be both less numerous and less well paid. What no one can figure out is how to generate the political will to make this happen. The public option doesn’t fix that political problem.

That is from Megan McArdle, mostly on why the public option is no longer a viable…option.

Comments

Manufacturing figured it out - you simply don't care about such concerns and allow new supply to flood the market. Feels like we'd be a few regulatory changes away from that. When nurses complain you trot out an economist to tell them they are, in fact, better off since nursing wages fell.

Exactly. The public option would certainly lead to a reduction in the salaries of doctors, nurses, MRI machine operators etc. And that is a good thing. It happens in every European country that has a public option, such as England and France.

How to get this done? The key is to never openly care about the concerns of anyone in the health care sector. Generate a tidal wave of support for the public option and ride it home. The repercussions, in terms of salary lowering will be felt over many years, and by that time it will be too late for doctors etc to do anything about it.

Enjoy your trip to Venezuela.

No, that isn't how Europe did it. None of the OECD managed to put through massive sector wide price reductions. The difference in cost has a lot of causes, but one big on is simply that they had lower inflation in the 70s and 80s. If you use your government pricing power you can get medical inflation 1-2% lower, and that adds up over the decades. None of these countries simply came in and told doctors to take a 50% pay cut.

If you implemented the same thing here the best you could hope for is to stabilize prices at current levels, which are still way above the rest of the OECD. It also wouldn't deal with increased utilization at that same price level due to population aging.

Maybe a good idea, but much harder then you think. Especially considering the current size of the healthcare sector means its a bigger lobbying force then existed in the rest of the OECD 50 years ago. Even if implemented, it would not solve the problem overnight.

I think Megan did a fine job summing up the problem. I'm partial to reform myself, but not optimistic.

The only difference between "If you use your government pricing power you can get medical inflation 1-2% lower, and that adds up over the decades" and "None of these countries simply came in and told doctors to take a 50% pay cut." is time. There doctors are taking a 50% paycut compared to us due to the initial reason you gave.

And doctors in particular make way too much money because the supply is artificially restricted. We should start by eliminating the barriers to entry that the physician lobby has constructed. Sure, it is politically tough, but it needs to happen at some point.

Nurses, on the other hand, don't really need to have their pay cut. They just need to be doing more of the work that docs have constructed walls around with scope of practice laws.

I think a model that puts physicians in a supervisory role with mid-level providers and residents doing the routine work is probably optimal.

"Nurses, on the other hand, don’t really need to have their pay cut. They just need to be doing more of the work that docs have constructed walls around with scope of practice laws."

Defining the role of nurses and physician assistants is the tricky part. I certainly do not believe a nurse should be doing surgery. I don't want a nurse managing a complex disease without physician input.

Per this website, there are about 3.1 million professionally active RNs in the US. http://kff.org/other/state-indicator/total-registered-nurses/

Per this website, the average nursing salary is $69k. http://money.usnews.com/careers/best-jobs/registered-nurse/salary

So that means that the total salary the US pays all its professionally active RNs is something generally like $214 billion per year. That's about 7% of total healthcare spending.

I have a really hard time finding average physician salary, but this article claims that salaries of MDs constitutes about 8.6% of total healthcare spending. http://www.beckershospitalreview.com/compensation-issues/physician-pay-accounts-for-86-of-total-healthcare-expenses.html

As a first pass, this suggests to me that you aren't going to see a ton of savings by cutting the salaries only of doctors, versus doctors, nurses, and medical technicians/administrators.

It kind of depends on the response to getting wages cut. It would take more than a comment merely to list all the questions one would want to ask, much less to figure out where to start looking for the answers.

Don't look at it as savings simply from lower doctor salaries. Doctors are the single biggest constraint in health care delivery. There is no health care without doctors. Hospitals compete for them. They compete with each other in private practice. If there were more of them costs would go down across the board. There would be more hospitals, more practices, etc. because there would be more doctors to hire. The hospitals, etc. would compete with each other more than they do currently and work to keep overall overhead costs lower. That is, more doctors would push other costs downward.

I think you need to think this through a bit more. Your comment seems to be self-contradictory.

"Doctors are the single biggest constraint in health care delivery."

That part seems true. About 25 years ago a doctor friend of mine told me that more doctors would mean more prescriptions written, more tests ordered, etc. That seemed self-serving, but there is much truth in it. The effect another doctor (or several hundred thousand more doctors) would have on physician salaries is minuscule compared with the additional costs that would be generated by those additional salaries and the associated costs those additional doctors would generate. Suppose we doubled the number of doctors which would result in halving the total doctor salary bill (highly unlikely). The statement that "There would be more hospitals, more practices, etc. because there would be more doctors to hire." is certainly true. But, the conclusion "If there were more of them costs would go down across the board." is almost certainly false if what we are talking about is total cost and not per unit cost. It would be interesting to know what the average cost each doctor generates though his pen (or computer) by writing prescriptions, ordering tests, surgeries, admitting patients to hospitals, etc. My guess is that those costs are many times a doctor's salary.

You may argue that those additional total costs would be worth it because today Americans don't get enough "health care" and that it is therefore the per unit cost that is more important. I'm sceptical. Any additional legitimate and necessary "healthcare" would likely be overwhelmed by the costs of unnecessary "healthcare".

We are very close to the point where easily-available expert systems/AIs will be much better than MDs at diagnosis and treatment selection. We're going to have at least one or two decades of trying to legislate/regulate against that fact. But at some point there will be a massive disruption, and the health care industry will recognize that there is a huge mismatch in doctor training and what skills a doctor actually needs. (Surgery is another story, but probably parallel.)

Possibly expert AI's will start beating the docs, but I highly suspect that doc + AI will continue to be superior to AI only. Regardless, today's docs are far more often overseers than rote clinicians, regardless of who orders the tests and interprets them, you will need someone to provide the oversight.

Honestly, I suspect the far easier disruption will not be getting rid of the docs, but the other end of the system. Things like blood draws, pulse checks, etc. are already becoming highly automated and it is far easier to eliminate rote physical tasks.

Do you work at Theranos? How's that coming along?

I am not sure what Theranos has to do with blood draws. They were working with some on-chip technology that needed very tiny amounts of blood. Actually inserting a needle into a vein and drawing blood is something quite different, but is exactly the type of task at which automation is getting easier (locate blue prominence, gently restrain arm, drive needle forward following this pressure curve, open valve).

A lot of medicine is mechanical manipulation of a human body. We pay a lot for people to do this manipulation because doing it wrong has terribly large consequences, but I suspect eventually the same robotics advances that let robots be chefs and gardeners will eventually let them move human bodies as well. Having a human guide and direct them is vastly easier than having the robot take the lead.

But in a more near-term prediction, expect the pharmacy technician to vanish long before the pharmacist. Virtually all pharmacists do in retail settings now is double check things and work with a very dumb "AI" knowledge base. Pharmacy technicians - doing data entry and pill counting predominantly, are far easier to replace.

If our medical professionals are going to be forced to take paycuts, they'll have to enforce paycuts in the medical professional training industrial complex. One of the biggest rationalizations that doctors use for their generous pay is the extraordinarily long and expensive training and preparatory work.

"huge mismatch in doctor training and what skills a doctor actually needs"

Almost every aspect of our economy has been rationalized and made more efficient... with the exception of higher education. The professoriate has every incentive to expand requirements for their services and none to reduce or make training programs more efficient. No doubt training is essential for competent medical professionals, however if you ask many a doctor about an area outside their discipline, you will get a blank stare because they've forgotten everything they don't use. 4 years for undergrad 4 more years for the actual medical training and then finally the practical training during the internship paid for by federal medicare funds. Acquaintances have told me that as important as all the academic preparation was, they were still unprepared for their actual jobs and learned everything by doing it when finally thrown into the internships. Rather than teaching much more than will be used in practice, just-in-time training upgrades can make them useful to deploy in new or more demanding fields.

One major HMO (which as both provider and payer, should not be inherently biased in the matter) found that patient costs were not significantly different when the primary care provider was a family practitioner versus nurse practitioner. The MDs are more expensive as individuals, but the NP orders more diagnostic procedures. It's a classic labor inputs versus capital inputs tradeoff.

And thanks to other regulatory barriers, medical supplies and equipment are one area where capital is not getting less expensive.

Yes, this seems to be true, including in Medicare. Midlevel providers just order more diagnostics, particularly imaging, if I recall correctly. Theoretically, clinical decision support systems and stronger payer prior-authorization procedures could help address that problem. It wouldn't solve it, but it'd be easier than suddenly trying to pay docs less money for their time.

Not only do the additional diagnostic tests cost money, but many of them involve some risk such as needle sticks, ionizing radiation, time away from work/school etc.

Funny story. This is British Columbia, public system. Doctors would get a set fee for a childbirth, including neonatal stuff. GP's did it for years.

Nurse/midwives became popular and since childbearing age mothers vote (sick people don't, so ultimately they don't matter) the government brought in a nurse/midwife system with a fee schedule.

The doctors raised a bit of a fuss, because the midwife fees were about 1/3 more than the doctors got for the same job.

As an American, it blows my mind to learn that Canadians would even tolerate the idea of paying any health care provider less than a physician. That could simply not happen here--doctors control everything in health care. I find your the mechanism you describe unlikely (childbearing women vote, sick people don't??), but Canada is a weird place.

You could look at the UK's NHS. But I'll bet large sums of money that there is zero political will to do that. BTW, according to the WHO the UK ranks 20th overall in life expectancy and the US 31st.

Life expectancy isnt always the best measure of a countries health care system. Americans shoot each other and die in car wrecks at a higher rate than the UK, which lowers the life expectancy but has little to do with health care.

Also, different countries put a 490 gram baby who is born but dies on his second day in different categories. One might count it as stillbirth, one might count it as a dead baby. And dead babies really through off average life expectancies.

It is really really hard to compare results. There are entire economic journals about medical issues, and it's always contentious.

We should definitely try, but we should not take any findings as gospel, especially because it is probably someone selling their own scheme.

Of course. Guns. I should have known that would be the answer. According to the World Bank, the UK spends 9.1% of GDP on healthcare and the US 17% You seriously think gun crime explains the difference?

Excellent strawman. Actually, not so excellent. Terrible.

Guns alone? No. Lifestyle? absolutely

The leading cause of death and medical intervention in most Americans (something like age 16-45) is trauma which in turn is mostly caused by motor vehicle collisions and gunshot wounds. Americans lose something like .3 years of life expectancy just to gunshot wounds.

Obesity is another big difference. 34.3 % of Americans are obese. 24% of British citizens are. Being obese loses you about seven years of life expectancy (some studies say 8 years). In a nutshell, Americans lose about 2.4 years of life per person just to obesity. In the UK, they lose only about 1.7. The difference, .7 years, is the total difference in life expectancy between British women and American women. Obesity, of course, is one of the most medically costly lifestyle differences in terms of medical costs.

If you tally up excess deaths (the higher rates of death for each cause in the US vs the UK) from just gunshots, vehicle collisions, and obesity, I believe you still have more than the total difference in US vs UK life expectancy (though to be far there is some double counting in there).

Very little of your life expectancy is actually determined by medical care, particularly if we exclude things like public health. Getting rid of excess American gunshot deaths would do more for life expectancy than outright curing prostate cancer.

If anything the fact that the wildly more unhealthy habits and lifestyles of Americans results in such a small life-expectancy-at-birth should be evidence of better American outcomes strictly in traditional healthcare.

Per wikipedia the difference in life expectancy between the US and the UK is about two years. The difference in life expectancy between Mississippi and Hawaii is six years (among only whites in both states is it four years). So why should I believe the US-UK difference is all due, or even largely due, to health care systems?

http://stateofobesity.org/adult-obesity/ 35.5% obese in MS, 22.1% in HI

Hawaii is one of the biggest innovators (which is both good and bad) in the US, particularly because they can implicitly control immigration.

@MOFO You just expressed a problem with the American view of healthcare. Shooting each other and dying in car wrecks is absolutely about healthcare. So is getting off our fat butts to take a walk. When healthcare is viewed only as something we passively receive results will stay poor and expensive.

:

"There are two unavoidable realities of making the American governmental system less costly: Americans must use less government, and our nation’s legion of well-paying, stable jobs in the health-government sector need to be both less numerous and less well paid."

Looks like I win my bet. That was fast.

Yes, this comment from 647 proves it. You should get your study published.

Meanwhile, the adolescents at Vox are not only calling for the public option, but claiming that Obamacare is running $2.5 trillion under budget.

http://www.vox.com/platform/amp/2016/8/18/12520820/public-option-health-care-obamacare

If it's the form of public option that was originally proposed, where it's simply another insurance company, and it doesn't have any special powers or tax grants, sure. I think it will fail but I think its backers deserve a chance to prove me wrong.

I'd support it, provided its supporters do something to make sure that they really mean it's supposed to be independent of government power.

I wonder if rising health care costs really is a bad thing. 40 years ago, maybe 50, i dont know, if you had a bad hip the solution was to buy a cane, no matter how much money you had. Now you can buy a hip replacement if you have the $$$.

Maybe health care costs are rising because people can spend more money on health care, both because we have more disposable income and because there is more, useful health care to buy.

The consensus in the health care literature is that most of the cost increases are due to technological innovation. The problem is that a costly technology does not always produce dramatic improvement in outcome. We spend billions of dollars on innovative cancer therapies that keep old people alive a little bit longer. Is that justified? Economists are not capable of answering that question.

more disposable income and because there is more, useful health care to buy. I think both are true to some extent. But I'd add a third reason: the developers of new therapies (medicines, devices, surgeries) can often get away with charging more than those therapies are really worth--hard to quantify, but in general. But they are very good at marketing, so they end up being used in patient populations where they really aren't that useful and are actually sometimes harmful (e.g. spinal surgeries).

Maybe. Ill amend. 'more disposable income and because there is more health care to buy, both useful and not so useful.

Price pressure is very lacking in the American health care market. Like the higher education market. People have , er, bought in to the idea that the most expensive is the best and anyone trying to tell you otherwise is attempting to rob you.

I'm not sure why we are concerned with the cost of healthcare. From what I've learned in a previous thread, any increase in spending cannot increase price levels except at full employment, therefore any reduction in healthcare spending would not be shifted somewhere else but would simply disappear. If the public option saves money, that's a bad thing.

In fact, the Fed should simply target Nominal Health Care Spending...maybe add military as well.

Far be it from McArdle to think about adminstrative costs.

Two things, in addition to those mentioned in the "very good" sentence, could contribute to lower health care expenditures' FYI "Cost" is an accounting concept having little connection to expenses.

One, sharply reduce malpractice insurance costs and, concomitantly, the multi-million awards run-up by one huge Democrat Party special interest group: trial lawyers. In 1988, when my youngest son was gestational, our OB/GYN's monthly malpractice premium was $10,000. His bill for the baby was about $3,000, mostly covered by insurance. Assume my wife saw the doc six times over seven months, Dr. earned $429 a month and needed to be monthly treating 23 expectant mothers to pay for malpractice insurance. I think he made up that end of the business with abortions. I can only imagine what he pays today. And, now the insurance companies and Medicare, Medicaid, et al limit what they pay for MD procedures.

Two, abolish the thousands of mandatory codings which add much to overhead. These are is far more achievable than the two non-starters proposed.

You still want there to be damages in case of accident. But jury trials are expensive, and juries are more likely to make awards.

The best solution, and a good middle ground, would be similar to set up something similar to the vaccine courts. Have a specialized system where injured parties can take their case, that don't involve the massive headache and distraction that even a failed lawsuit will bring to a doctor's office.

To turn a phrase, "this was a Democratic idea first." Hillary Clinton proposed it in 1993.

The entire tort system needs scrapping. It's ridiculous, and getting more ridiculous. Unfortunately it's considered constitutionally protected as well.

In what way is it "ridiculous"??

8% of medical costs ridiculous.

How many drugs and procedures are done not for medical reasons but to avoid being sued?

It pays out thousands of dollars to people who have strain-sprain injuries that resolve in a couple of weeks. It has also spawned an entire industry of medical financing and litigation financing companies.

It's not just the direct costs.

http://well.blogs.nytimes.com/2011/12/15/when-the-doctor-gets-sued-2/ is a story of a doctor being sued because, "as a second or maybe even third opinion, I had written that the woman was a 'possible candidate' for surgery." Even without the lawsuit being filed, it colored all of her future recommendations. (The twist is that the lawsuit was because saying she was a "possible candidate" was insufficiently aggressive.)

http://www.nytimes.com/2009/12/29/health/views/29case.html describes how a lawsuit that was never going to win -- because the plaintiff's lawyers thought so -- still drained years away from a doctor's life.

You mean 1% of health care spending? Or 2-3% if we include "defensive medicine" (a made up term doctors use to explain away any over testing and treatment they might do for any number of reasons, like making more money)?

"Although the indemnity payments and administrative expenses of the system amount to less than 1 percent of health spending, the costs of defensive medicine are likely to be far greater—by one recent estimate, 2–3 percent of health spending"
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3195420/

FYI - the author is a Hoover Institute "senior fellow" so he has no reason to downplay the costs of the medical malpractice system.

Your link seems to be broken.

McArdle specifically mentions administrative costs and links to a previous post on the topic. Perhaps her thoughts on the topic are wrongheaded, but they are not non-existent.

Wrongheaded, incomplete, poorly thought out, do not deal with facts, etc.

Many developed countries have effective, popular public healthcare, and yet once again we're being told that the US can't do the same. Please explain again how the laws of economics don't apply in the US.

Oh, is that why the rich people from those countries come to the US for health care? One system for thee, another for me.

You're talking about top dictatorship officials here, not really the top 10 or even 1 per cent of people anywhere.

All the clinics south of the US Canada border that accept credit cards for medical procedures are serving the top officials of the dictatorial government of British Columbia. I understand they show up with their numerous wives and turbans.

People who can afford the best, and fly twice as far to get it, rather than the EU.

I wonder how much those countries do to advance the state of the art. I wouldnt be suprised if at least some of the 'sucess' of other countries health care is due to the fact that they dont innovate at all. Americans end up paying for the world's R&D.

That's utter nonsense. One receives state of the art care in western European countries that is equivalent to the US. In some of the those countries major innovations have taken place relative to the US (Germany pioneered sport hernia surgery that is now used world wide).

I have no doubt that one receives state of the art care in western Europe, i just wonder how much of that stat of the art care originated there.

Yet again, time to drag out a list of the world's top pharma companies. American pharma companies represent four of the top ten, by the way.

http://blog.proclinical.com/who-are-the-top-10-pharmaceutical-companies-in-the-world

Posting a list of foreign pharma companies is stupid. Because those foreign companies make most of their money selling to the American market.

This should be obvious to anyone who doesn't have his head up his ass.

Procedural innovation and technological innovation have two very different investment profiles. A majority of the advanced tools use by those German docs are invented and commercialized with an investment thesis that involves initial launch in the US, (relatively) high US sales volumes, and (absolutely) high US purchase prices.

We've gotten so good at driving innovation based on this thesis that the ecosystem of innovators have trouble even building a low cost anything. This has spawned the concept of (built) in-country, for-country.

It should be noted that solid medical research and technology comes out of Europe/European universities. Having said that, there are many more costs than R&D associated with new technology, some of which are unique to healthcare (regulatory, clinical, education) that take some serious investment (multiples of the initial R&D). It is US sales potential that anchor almost all commercializations in the space.

'A majority of the advanced tools use by those German docs are invented and commercialized with an investment thesis that involves initial launch in the US'

Interestingly, the Bartley J. Madden Chair in Economics at the Mercatus Center would disagree with this, having repeatedly pointed out examples where the FDA has hindered approval in comparison to European regulators. Though one can certainly agree that when it comes to profiteering - oops, return on investment - the American health care system is a golden goose in terms of revenue, and the entire world (like 6 of the world's biggest pharma companies) loves to suck as much American cash as possible, helped by an American political system which delivers such absurdities as forbidding the government from attempting to get lower prices from pharma companies.

God you are such a clown.

Who cares how many people die, as long as the pharma companies lose some profits!!

Yes, they do. But other developed countriesdon't have a separate Veterans Health Administration, a separate Tricare program for military retirees, a separate Federal Employees Health Benefits Program, a separate Indian Health Service, a separate Community Health Centers look-alike program, a separate Migrant Health Centers program, a separate Health Care for the Homeless program, a separate Public Housing Primary Care program, Medicare, Medicaid, and CHIP programs, plus a National Health Service Corps cherry on top. When somebody proposes to consolidate all those programs I'll believe there is someone the least bit serious about "making the American health-care system less costly."

The laws of economics apply to the U.S. just as well as anywhere else, and they say that there is a balance to be struck between costs, access, and innovation. Most developed economies choose to control costs by limiting access and foregoing innovation; in the United States, the will for doing so isn't there politically, so we muddle through with higher costs.

As the old saw says, when it comes to healthcare there's fast, good, and cheap. Pick two.

Please explain again how the laws of economics don’t apply in the US.

One of the biggest problems is that proponents of single-payer pretend there are no trade-offs, or just make a huge sarcasm dump when asked to describe the trade-offs.

I think there is a lot to be said about single-payer, especially every time I've had to deal with medical billing.

But there are really serious trade-offs, which typically involve care being denied for things that don't meet an economic threshold. These can be implicit (France, where you just don't get told about options) or explicit (the UK, where the NHS publishes a list).

Americans really hate this. And I don't mean Republicans or Democrats, I mean majorities everywhere. They want whatever they "need" to be covered.

So among the biggest problems? People like you. People like Bernie Sanders who tell voters that single-payer means no more fighting to get things covered. We can't ever get people to eat their vegetables and then dessert if there's another group out there lobbying for dessert right now.

Yes, the US can do the same. The sentences Tyler quotes point out that all we have to do is persuade (or force) Americans to consume less health care and force the providers to accept less payment for the services that are consumed. Those are the economics.

Coersion isn't economics.

Not sure if I agree.
I can imagine that any propsperous technologically advanced society is going to spend increasing amounts of money on healthcare because it is the biggest remaining quality of life issue. Everyone has enough food, clothing, and a place to live. What's left? Living longer, healthier lives. So even in a free market, people will choose to spend money trying to live longer and live healthier.

The problem right now is that people are spending other people's money trying to live forever. But even if you give people proper price signals they're still going to be willing to spend a lot, which means that well-paying stable jobs aren't going anywhere. The goal isn't to spend less money, it is to spend it efficiently. We could end up with a system that is just as expensive in total dollar terms, which constitutes just as much of the GDP, but is better at delivering real health improvements and longer lifespans.

increasing amounts of money on healthcare because it is the biggest remaining quality of life issue

We aren't deciding to do this. We have a crazy system in the US that has disconnected price signals from everything else. This isn't decided in the political arena or by the invisible hand of the market.

Maybe we'd make the same decision if we could do so rationally. But right now we aren't.

And at best we are squeezing one or two more years out of life with all our extra spending. I can see people choosing to chase that, but quite a lot of people would choose to have lower taxes, easier work lives, and shorter commutes for 40 years in rather than a few more months at the end.

I know, but the phrasing above "Americans must use less care" seems wrong to me.
There is no social imperative that we use less healthcare. There's a price signaling and cost-effectiveness problem. It's not necessarily the case that we "must" use "less" care to fix that problem.

Of course, the "legions" of well-paid workers in health care are the doctors, not the rest, who, if anything, are underpaid: health care is a microcosm of the high level of inequality in America. Does McArdle want doctors to take a cut in pay? Maybe your doctor, but not her doctor. And not my doctor. What McArdle and Cowen likely mean by political will is cutting the pay, not of their doctors or your doctors, but the doctors of "those people".

You are projecting. If you read McArdle, she frequently talks about how doctors would politically rally to push back on any government attempt to cram down their wages.

McArdle's piece is largely nonsense and anyone writing about Medicare who is not on Medicare usually doesn't know anything about how the system works. I've been on Medicare for what will be four years next week. It's interesting to see the quarterly statements with the various physician visits and medical procedures (and I'm a relatively healthy individual). As the result of a herniated lumbar disk it was recommended that I see a neurosurgeon just to get a consult even though I opted for the conservative treatment of physical therapy and anti=inflamatory medication (along with a epidural steroid injection). The neurosurgeon was very nice and put me through all the range of motion tests and checked for nerve damage in the affected leg. HIs conclusion, "you don't need surgery." 20 minute visit that included a look at the MRI scan was billed at $650. Medicare paid $220 which is probably reasonable. It would be interesting to know what an insurer of someone under 65 would have paid for that service.

As long as there are piece meal negotiations among all the third party payers for goods and services the system will remain inefficient. Pricing is all over the map depending on whether one visits a primary care MD or a specialist. None of this makes any sense at all. I'm in complete agreement with King Cynic's post above!.

I went through the same thing last year, but the surgeon said that I'd definately need surgery. Still had to go through the steroid injections that wasted 2 (painful) months before surgery.

Sorry to hear about your outcome. I'm getting to the point where I'm mostly pain free and back to walking 4-5 miles a day However, one needs to commit to the back exercises for the rest of one's life to insure that the spine is stabilized.

If everyone started reimbursing at Medicare rates, we would have whole hospitals going bankrupt all over the country.

My source on this is arch-conservative Ezra Klein.

Based on my experience, this is true (I work as a contractor for CMS). While there is significant variation, most hospitals lose a good chunk of money on their Medicaid patients, lose lots of money on uninsured patients, hover around break even on their Medicare patients, and make money on their commercial patients. Take away the profits on their commercial payers and most hospitals will be somewhere between break even and losing money on virtually every patient that walks in the door.

Or the costs of providing healthcare simply have to shift down to adjust.

If $220 is reasonable for a 20-minute visit with a highly skilled and highly experienced Medical Specialist it really makes me wonder about Bill Clinton's speeches that are worth almost an entire year of a specialist's time. Either specialists are underpaid by the government, Bill Clinton is the most phenomenal speaker of all time, or people who pay extra for Clinton speeches are paying for something other than the speech.

"paying for something other than the speech." Ya think?

I don't think this is true, generally.

The difference in healthcare costs between America and the rest of the world is primarily driven by the cost/volume of specialty care and pharmaceuticals. These areas are much less labor intensive than the bulk of the health care system.

You know we can measure exactly how much gets spent on pharma, right?

American health care is more expensive because everything. Every single part is more expensive. We do more stuff, we charge more for stuff, we have a lot more stuff, we employ a lot more people, our professionals make more, our doctors make a lot lot more.

Yes, I do. Thanks for asking. I really appreciate it!

The US spends 33% more per capita on health care overall than 2nd place Switzerland.
We spend 52% more on pharmaceuticals.

It accounts for nearly 1/5 in the difference in spending, despite only accounting for 1/10 of total spending in the US. So, yeah, it is a bigger deal than most things.

And frankly, should be an easy fix. Yet we will keep voting for "status quo." We deserve our indebted future.

The US spends 33% more per capita on health care overall than 2nd place Switzerland. We spend 52% more on pharmaceuticals.

Those two percentages are unrelated. Putting them together is just designed to confuse.

According to the OECD, as of 2012 the US spends $1010 per capita on drugs. Second place is Belgium which spends $736.

According to the WHO, as of 2014 the US spends $9,403 per capita on health care. It's spending less than first-place Switzerland, which is at $9,674.

There is also the question of how much innovation continues to happen if the US crams down their prices by 50% in order to reduce health care costs by 5%. Pharma companies are driven purely by money. The innovation happens through start-ups driven by VC money which pay close attention to the bottom line and compare returns to other industries. On the other hand, price signals are really weak so maybe a lot of that innovation is not really worth the cost. On the other other hand, several generic drugs that went off-patent within the past 20 years have vastly improved my family's quality of life, so we continue to enjoy the benefits.

In what seems eons ago, physicians used their experience and intuition to diagnose and treat ailments. This is no longer the case. Today people that work in medical facilities attach patients to interfaces that record physical data, interpret it and recommend treatment. These people aren't doctors as they were once known. They are technicians that operate machinery. There's no reason that technicians should be rewarded at the same level as the physicians that develop these interfaces and treatments. Most of them are little better than plumbers or electricians, if that.

[CITATION NEEDED]

Haven't you seen Star Trek?

My limited understanding of the history here -- Bill Clinton's pollster told him that to win over the Perot voters for his re-election he would have to give them something that would benefit them, something like healthcare. (They actually thought that's what they wanted, but later polls showed it alienated Perot voters even further.) So at the start of his presidency Bill put everything else on hold and applied all his political capital toward health care reform. Then he compounded the error by relying on his inclination of trusting the experts -- the 'experts' who in this case happened to be the guardians of the medical status quo. He really should have known better as his political idol JFK understood that taking office meant taking down some powerful faction so others would fall in line -- JFK took on the Steel Trusts and won the respect and fear of many. Ronald Reagan very much followed the same principle with destroying the Air Traffic Controllers Union. Clinton on the other hand raised the expectations of an already very powerful faction of a potentially massive windfall going into the future. Appearing weak, and appearing to have understood all the ~wrong~ lessons of the JFK administration, Clinton had made himself a target of those who were willing to go far enough to see just how weak he might in fact be, both in political sense as well as ability to wield power beyond the governorship of Arkansas. After much more 'triangulation' (i.e. caving in) impeachment followed. Eventually Obama was left with the situation of trying to get at least an appearance of a satisfactory outcome for the already considerable investment of Democratic Party capital sunk into reform. I was never inclined to think Obamacare could get passed without being mostly a sham giving the medical industry leaders pretty much everything they hoped for and desired. So as McArdle writes -- either cut payments, or cut benefits. If HRC is elected, no change. If DT is elected he will probably cut benefits. But he shouldn't be deluded into thinking it might count toward his earning respect of any of the elite power groups.

"Ronald Reagan very much followed the same principle with destroying the Air Traffic Controllers Union."

Reagan really shouldn't have had anything to do with it. Federal employees sign an oath not to engage in a work stoppage. The air traffic controllers violated that oath and their dismissal was mandatory under the law.

http://nailheadtom.blogspot.com/2014/09/robert-poli-who-led-1981-strike-that.html

At a top level to this quote and less money being made, sure, why not? That's just an accounting reality of spending less, a goal for most of us.

Diving deeper down, where is money made, in authentic life extension or quality of life improvement? Or does America excel at getting us that back surgery we don't really need faster than "socialist" countries? What about surgery in general, sold, as a solution? There is probably data somewhere, if there is a doctor in the house maybe he knows if the US is more surgery friendly, more expensive procedure friendly, than other countries.

In terms of the public option, if it does include rationing, and I think it must, then again, sure, why not?

Health care is very much consumer-driven in America, and consumers want stuff.

There are a lot of procedures with low or even negative outcomes that happen every day, because as consumers Americans want them.

Most people would be happier and healthier with a lot less done to them. But what kind of consumer experience is that?

It would seem worthwhile to educate people about these awful treatments with negative outcomes, so the medical industry can respond to the criticism.

"The one that got me thinking, however, was a study of more than a million Medicare patients. It suggested that a huge proportion had received care that was simply a waste."

http://www.newyorker.com/magazine/2015/05/11/overkill-atul-gawande

Government prescribed care is inefficiently?! Are you trying to ruin your fellow traveler's point?

You are assuming private insurance does a better job.

One reason Medicare is going to show a lot of useless procedures is that they are who is paying for stuff to happen to old people, and a lot of stuff done to old people is useless. But don't even suggest any kind of rational basis for evaluating care for seniors if AARP is in the room.

First you and your Trotskyite frienda can educate us (from your NYC mansions) about excessive toothpaste options and why the Trabant is the best car ever made.

Ms. McArdle's point on using less medical services can be fleshed out with an anecdote seen at Instapundit:

An Arizona man dropped more than 300 pounds — by walking a mile to Walmart to buy his food every time he got hungry.

“You walk to Walmart three times a day and you end up walking six miles,” said 31-year-old Pasquale “Pat” Brocco, who three years ago, weighed a gargantuan 605 pounds. “It’s amazing because I never walked six miles in my life and I was doing it every day.”

He also threw out “junk food and dairy in favor of vegetables, brown rice, quinoa, steel cut oatmeal and lean meats.”

Somehow "they" need to persuade people to lose strenuously exercise (at least) three times a week; limit caloric intake; monitor/lose weight, stop smoking, stop drinking/using drugs, stop shooting each other, etc.

FYI - I'd need to be walking to Walmart six times a day.

This ties to ... Denmark!

http://top10hell.com/top-10-countries-with-most-bicycles-per-capita/

.. OK, edged out by the Nederlanders.

And bronze goes to the country famous for Porsche, Mercedes, Volkswagen, and BMW.

First of all, this is like body shaming, secondly poor people shouldn't be forced to live in food deserts where they have to walk over one mile just to get their food from Walmart. Third, poor people should be buying their food from Whole Foods or a local mom-and-pop shop for double the cost of Walmart. How else can we afford to pay grocery clerks a living wage of $35 an hour?

The only reason anyone's fat in America is because they're poor and don't have a car and the only store nearby that accepts EBT sells only Twinkies and soda. Don't worry Hillary's plan to raise EBT 300% and give everyone a car paid for by big Auto will definitely fix this problem.

And when those people are "fixed" they had better not tell anyone else how they accomplished it because that would be judging an alternative lifestyle.

It would appear that administrative overhead throughout the healthcare system accounts for 20-25% of the spending due to complexity of billing. Arithmetically we could go to single payer and save nearly all of that, without reducing payments to providers.

What makes you think single-payer would save "nearly all" of the 20-25% administrative overhead?
it would be the first government bureaucracy to run at perfect 100% efficiency, would it?

What is Social Security's percentage overhead? What is Medicare's overhead (not including the programs where it is forced to deal with private insurers)?

Extremely high when you account properly?

"Extremely high when you account properly?"

The comments here and elsewhere have examined this question extensively every time the issue has arisen, and the answer is still, "No."

'What makes you think single-payer would save “nearly all” of the 20-25% administrative overhead?'

European experience? Or more specifically, German experience which is more or less single payer - no doctor's office has a payment or claims specialist, for example, because they don't need them at all. And the insurance companies don't either. Why does single payer have to be government run? Basically, a schedule of fees can be set, everyone uses them, and a notable chunk of America's excessive health care costs falls away. Which will never happen, of course - that would destroy far too much shareholder value, after all.

Probably an underestimate of total savings.

I hear at least one person a week spend several hours on the phone trying to straighten out their health insurance.

I've lived in several other countries - the amount of time Americans spend on healthcare administration is a just bizarre.

You know an easy way to decrease your overhead percentage?

Spend more money on anything else.

One of the major problems with Medicare and Medicaid is that there are fewer controls or "overhead" on procedures so their overall expense per patient is quite high. Now part of that is because they do cover many of the sickest patients, but the other part is that they negotiate a bulk discount and then have very little other "overhead" to reign in medical costs.

For instance, both Medicare and Medicaid could both do with more overhead to prevent fraud, we easily lose billions on outright fraud that could be heavily mitigated with millions in "overhead".

Of course efforts like that will make the overhead number far less impressive. Likewise, increasing the health profile of the average member of a system would result in roughly scaling increases in "overhead" without similarly scaled increases in per patient costs.

It is virtually impossible for single-payer to maintain the overhead numbers with more low cost patients.

Further, I would be curious to know where your 20-25% cost estimate comes from. The CBO & McKinsey estimated the figure for private insurance the figure was around 12% IIRC.

Or in other words, if we eliminated all of that, we would buy maybe half a decade before we are spending the same amount on healthcare.

Total administrative overhead of dealing with the whole private system on both the insurer and provider side. This is a typical estimate, for example, here: http://www.pnhp.org/news/2014/september/health-care-overhead-is-costing-us-big-bucks

This does not include the household "overhead" of dealing with the private system, some of which would be under unaccounted "transaction costs" and can be considerable.

Before Obamacare private insurers themselves were taking 20-40% of the total healthcare dollar

Before Obamacare private insurers themselves were taking 20-40% of the total healthcare dollar

So out of $3,000 billion a year, private insurers were skimming off at least $600 billion a year?

Good God, stop.

You would have to define "skimming off". And it won't be quite that much, because a portion of healthcare expenditure in the U.S. is Medicare etc.

So what did you mean by them "taking" $600 billion a year?

Did you mean it passes through them? This is irrelevant, unless you were trying to confuse the issue. It would be just as accurate to say that the Department of Health and Human Services is "taking" $850 billion a year of total health care spending.

Before ACA, the Medical Loss Ratio of private insurers was at maximum 80%, sometimes as low as 60%. Meaning that 20-40% of it was not spent on the actual healthcare. For no value added, it ought to be added. (Again, this figure does not include the expenditure by the providers themselves on administrative costs incurred by having to deal with the private insurance system.)

Okay, Medical Loss Ratio.

Encoding a MLR into law changes insurance from a normal industry into a cost-plus industry. The only way insurance companies can make more money is to make there be more business, even if it's not needed. Pretty much the largest reason the aerospace industry was a bottomless pit for decades.

Exactly, it brings out the inherent immorality of having an private insurance intermediary for a basic need that almost everyone will need at some point in their lives. Considering that private healthcare insurers provide no value added for their services, and considering that their function could be performed much more cheaply by a computer disbursement system with little overhead, why not go to a single payer?

1. Because my preferences might not line up with the single payer's.

2. Because single-payer still involves trade-offs, and when they are sold without trade-offs, it becomes harder to actually implement the real thing. We could end up worse than we are now.

Interesting post. Thanks

Sure, healthcare has costs, but so does everything else. You have to spend money to derive benefits. If rising medical spending is associated with us receiving more valuable medical services, why is it a problem?

Because it's not a choice we've made, either politically or through the market. It's just some side effect of the system.

Economists and pundits seem to think that the only way to solve problems is to throw cheap labor at it. Cheap labor that will both lower production costs and will have less money with which to demand stuff.

It's a sort of pre-modern, slave owner perspective in which the entire focus is on maintaining and maximizing rents for asset owners. Which is bizarre since we've gone through the industrial revolution and ostensibly still live in a technological society in which we solve problems technologically, not by pauperisizing labor.

Consider an actual case.

I'm 63, and had the first half of cataract surgery done this week. Its a one time procedure with lifetime results. I have very good private insurance (pays 80% of medically necessary fees).

In this case, Mono-Focal (optimized for distance, glasses for everything else) is what's considered medically necessary. The incisions are, I believe, done with a diamond scalpel, which was best available until a few years ago. That's what Medicare pays for, for those with Medicare coverage.

I chose a top of the line Multi-Focal lens, plus astigmatism correction, plus an additional laser measurement of the eye prior to lens insertion to ensure optimum lens selection. The lens I chose cost more than the basic Monofocal lens, by about $1000 per eye. Multi-Focal lens provide very good distance, good intermediate, and (probably) adequate near vision. The incisions are done with a laser (which runs about $500K in capital costs), but produces much more precise cuts. This option also includes a lifetime guarantee of lasik if needed to optimize the astigmatism correction.

The actual procedure runs about 10-15 minutes, and the doctor's role includes cutting the cornea flap ot access the eye, designing and making the cuts to the cornea to correct the astigmatism, breaking up and extracting the organic lens, inserting the new plastic lens, and closing the cornea flap. Besides the two outpatient surgeries, there were two pre-op exams with considerable testing, and will be two post-op exams on each eye. The surgeon is very experienced - he's done thousands of these - but all he does is the surgery, other doctors in the (very large practice) do the pre and post op exams.

Based on 3rd day post op on the first eye, the results are excellent. Not quite magical, but very good. I expect when the other eye is done, and both are healed, results may approach magical. A good chance (~80% is the statistical expectation) I won't need glasses anymore at all. And of course absent the surgery, the cataracts and vision get progressively worse, eventually leading to blindness.

What's that worth? What's the very best vision worth compared to what's medically necessary?

The basic option - monofocal lens, no astigmatism correction, no laser lens optimization - was (after insurance) $288 in doctors fees and about $2000 in all.

My out of pocket costs (after insurance) for both eyes is going to be about $9000 + anesthesiologist fees, which I don't yet know (I'd guess $1000 - all he did was prescribe a pre-op Valium). This includes doctor's fees (about $5500), lens ($2000), outpatient surgery center (~$1500).

It sounds like the surgeon's getting paid a lot - but his fee also covers 6 office visits, each of which involved a doctor and a nurse/tech, depreciation on his very expensive laser, and I'm sure a fair number of back office staff for billing, scheduling, etc. I don't consider his fees unreasonable.

Maybe you should have shopped around, and enjoyed a vacation at the same time. The Czechs have made a lot of money offering such services. Here is just the top result - https://www.medicalservicesprague.com/medical-treatments/vision-correction/prelex

Very good sentences:

"Once again, it is the supply-side problems in American medicine which are paramount."
http://marginalrevolution.com/marginalrevolution/2014/12/finding-good-medicaid-treatment-remains-difficult.html

That is Tyler Cowen, two years ago. Good to see McArdle finally agrees with him. 48 more and we've got ourselves a movement!

69 Donald Pretari January 24, 2016 at 3:14 pm
#4…There is nothing magical about a single-payer system. One can imagine a very expensive single-payer system based upon the voters desire to fund everything and anything. I took Krugman’s point to be that, if you want a single -payer system that saves money from our current system, some people, like doctors, are going to need to accept pay cuts. Fairness requires that, if you advocate such a system, then you detail where the savings will come from. Otherwise, you’re just like Paul Ryan and the case of the missing cuts.

The most amusing political argument, in my opinion, is when someone says that everything will turn out fine when we get to my perfect program. Communists used to claim that. When the entire world is communist, things will be fine. Until then, however, expect some rough patches. Nowadays, you’ll hear people say that, when the Fed is totally abolished or that when social security is no longer mandatory, things will get better, etc. Some of us, however, want to try a few things short of perfection on the way there, just in case, well, perfection, isn’t.

Prudence demands that we take short steps with verifiable results on our journey. I’m not a fan of the rough patches policy. Either things are getting better or they aren’t, as best we can tell. Consequently, to the extent that you make it harder to get going towards perfection, you’re not helping the cause, and this too, quite simply, must be verifiable. Either focusing on perfection without a roadmap of short travels helps or hinders getting there, and if it’s found to be hindering getting there, then maybe you should rethink your priorities.

Yup, bringing healthcare costs (as % of gdp) in line with other countries will be devastating for jobs. What are those people going to do next? Become computer programmers?

It will also devastate gdp growth.

Only conservatives can so actively seeking to cause negative gdp growth.

If it weren't for the pain of elected officials putting their constituents and corporate supporters out of work or into bankruptcy, while the ease of depending on Federal borrowing to keep gdp from shrinking, conservatives would have shrunk gdp by 2-5% of gdp while Obama was president.

Of course, tax cuts don't boost gdp very much, if at all. People with the incomes high enough to benefit from tax cuts are seldom struggling to survive, nor even have desires to consume far more, so tax cuts merely increase savings. Savings either goes to funding government deficits, or mostly in buying existing assets and then demanding labor cost cuts to boost profits to justify the higher market cap created by savers buying the limited supply of shares of old cor portions.

After all, very few conservatives call China's two decades of investment to create hundreds of millions of jobs and thus rapid gdp growth a great national policy the US should adopt, but instead predict China will end up worse off than in 1980 real soon now.

Nor are conservatives rushing to buy shares issued by Elon Musk ventures. I defy anyone to name corporations which have repeatedly sold newly issued shares to raise new funds to build new capital like Tesla and Solarcity have.

Instead, conservatives want as much free cash flow being used to buy old assets inflating asset prices, not paid to workers to build assets. Nor paid to shareholders with the requirement they buy goods for consumption to increase the number of workers paid, thus increasing gdp.

Donald Pretari writes: "There is nothing magical about a single-payer system. One can imagine a very expensive single-payer system based upon the voters desire to fund everything and anything. I took Krugman’s point to be that, if you want a single -payer system that saves money from our current system, some people, like doctors, are going to need to accept pay cuts. Fairness requires that, if you advocate such a system, then you detail where the savings will come from. Otherwise, you’re just like Paul Ryan and the case of the missing cuts."

they already do this whether it is under Medicare, Medicaid, participating in an HMO, or being part of a PPO network. the problem is that there are just too many different provider groups both federal and private that are all negotiating separate contracts. this is hugely inefficient and any economist worth his/her salt should recognized this. YOu also have some areas that are off limits to negotiation such as the Medicare drug benefit that prohibits negotiation for a best price even though Medicaid and the VA do.

Sure, its hugely inefficient. That's irrelevant. The question an *economist* would have asked is 'how efficient is it compared to the alternatives'?

And, with tons of practical data from experiments in countries across the world and through time, all those entities negotiating provide better outcomes, for less money than any single payer system that exists or has ever existed in the world.

And there are *more* efficiencies to be gained if we removed some of the regulations and incentive - like not being able to sell insurance across state borders or the 'pre-tax accounting' of medical insurance that makes it more cost effective to get insurance from your employer (and be locked into that job because of it) rather than a personal plan that is portable. A regulation that is a holdover from the wage-freezes of the Great Depression and is completely irrelevant today.

One of Aetna's complaints was it's inability to negotiate discounted prices for a preferred provider network for each policy offered, a problem created by other insurers already building their preferred provider network with discounted prices.

So, will Aetna find it easier to build a preferred provider network from one State for a set of policies sold nationwide?

To put it another way, would you buy a policy that had all its preferred providers in Texas and out of network bills would only be paid at 40%, if you lived 6 hours from Texas?

I can't remember the last time my employer offered a national health insurance plan, but it seems to me it cost something like $20 a pay period than the local HMO, a real HMO, with the HMO basically $10 copay, and $50 for an ER visit if you didn't call the HMO first, where they would tell you to go to an HMO night and weekend clinic three-quarters of the time for $10. I think the national policy was offered by Aetna, and it paid 80% of its standard fee schedule at any doctor or hospital anywhere.

In Peoria, that was the only option, and doctors accepted the Aetna fee schedule, and I paid 20%. In New England, doctors charged more than the Aetna fee so I paid their fee minus 80% of the Aetna fee until I was settled and could join the HMO.

"Revenge is mine", says the Lord. Tomorrow we avenge past humiliations. It will like WWII, but ths timethe Gerans lose.

* the Germans lose.

Remind me how Brasil fared in the Copa

Now that the CDC issues Zika warning for Florida, I wonder if we've been too caught up in politics, and we should have been responding to an actual emergency. Also points off to the CDC which seems to treat Puerto Rico as a travel destination, and not a territory of the United States:

http://wwwnc.cdc.gov/travel/notices/alert/zika-virus-puerto-rico

"If you are pregnant: Talk to a doctor or other health care provider after your trip .."

A bit here about "partnering":

http://www.cdc.gov/media/releases/2016/a0304-director-puerto-rico.html

I will correct a crucial omission. The well-paying, stable jobs in the health-care sector that need to be both less numerous and less well paid *are jobs currently held by people who are not friends or relations of MR commenters*.

"Less care" doesn't have to mean "less health". One of the unsung accomplishments of Obamacare is laying the groundwork for "outcomes based medicine" where healthcare providers are paid to get people well and keep them that way, rather than "payment for services" that incentivizes providers to give people more treatments than they really need, like prescribing antibiotics for viral illnesses like the flu, or a CT scan or MRI where a 2D xray will do perfectly well.

This was supposed to happen decades ago when pioneering HMOs like Kaiser Permanente showed that they could improve their members' health and reduce costs at the same time. Unfortunately that movement went astray when for-profit "HMOs" realized that they could save even more by implementing mindless, indiscriminate "care denial" instead of "health maintenance". It will be a challenge to prevent that from happening again.

When HMOs started being sued for denying radical chemotherapy, that was the end of their record of cost containment with no loss of patient outcomes.

HMOs deliver good results at good prices. But Americans get told "no" for a lot of things that they want and so they are hated. How are you going to get Americans to stop hating them?

Which HMO was sued for denying care?

My HMO was run by doctors and they were quite ready to refer patients to specialists at Dartmouth teaching hospital and to Boston teaching hospitals when the local hospitals the HMO contracted with were not considered best, mostly because the local hospitals saw too few cases to be good at handling the problem.

The HMO paid for quality care because it was cheaper. Doctors worked in teams, so out of a dozen or two dozen doctors in a specialty area, they knew where the best care was provided, the places with the fewest bad outcomes. Teams were rewarded for quality, which is cheaper, as Deming showed repeatedly.

And the HMO reinsured for pandemics, accidents, etc, so 3 patients showing up with bad cancer in a year would not blow the team budget. It would likely trigger a review of HMO screenings, and the possibility of a community risk.

I paid attention to the media coverage that you are referring to and it had to do with HMO insurance policies where an insurance company clerk with computer managed patient care. Doctors with their own practices were told what care to provide by people at the insurer who obviously never saw the patient.

I listened to my dad talk about getting calls and letters from his insurer telling him care wasn't needed, and then called his doctors office to hear, they were already telling the insurer the care was needed, don't worry. Same for my sister. Yeah, blah blah, HMO, blah blah. Now they call it preferred provider network instead of HMO.

And the insurers got Federal tax law changed to effectively destroy all the HMOs because insurers could not compete with integrated care management.

Which HMO was sued for denying care?

Alice Philipson, Esquire, sued a Blue Cross affiliate because they wouldn't pay 150K - 500K for high-dose chemotherapy for her client named Ricki. She won.

The punchline is that high-dose chemotherapy was eventually proven to be harmful to patient outcomes. Oops.

I have to be honest here: I didn't read the rest of your comment.

Except that 'unsung' accomplishment hasn't actually, you know, been accomplished.

Not the least because its damn near impossible to measure how much value the doctor added in 'keeping you healthy' rather than in performing specific tasks.

Why were real HMOs able to deliver better care based on patient satisfaction at lower cost in premiums and out of pocket than even not for profit Blues?

If HMOs provided more medical care but at lower cost, high patient satisfaction, and higher doctor and staff satisfaction, is it wrong to provide more care?

"Americans must use less care, and our nation’s legion of well-paying, stable jobs in the health-care sector need to be both less numerous and less well paid."

Exactly the same applies to higher education, by the way.

"What no one can figure out is how to generate the political will to make this happen."

Again, taking the higher education analogy, the solution is to have Tyler, Alex and other "educators" have no word in it. Same with medicine: just stop listening to doctors that want you to subsidize them.

Gdp need to be much lower!

Salaries of doctors on a per hour basis can never match those of tenured professors at the top 50 universities. A math professor at one of the UC campuses that I personally know teaches a single one quarter course a year and pulls in $195K for nine months.

And what else does he do? Not questioning your basic point - but professors don't just teach. For a research track PhD one or two courses a semester is not unusual - the rest of the time he's supposed to be researching and publishing. And if he's any good the university gets to brag about having him in the faculty.

Of course he does research and guides pre- and postdocs. But the number of hours per week that a doctor has to put in - not to mentions the lack of control over your schedule - cannot be matched by any professor.

I doubt, for example, that many physicians will have time to have the time to maintain a blog magazine like this.

So, it seems as if we have a natural experiment, in the words favored at this web site, of what happens when Americans use less health care - 'But the report singled out Texas for special concern, saying the doubling of mortality rates in a two-year period was hard to explain “in the absence of war, natural disaster, or severe economic upheaval”.

From 2000 to the end of 2010, Texas’s estimated maternal mortality rate hovered between 17.7 and 18.6 per 100,000 births. But after 2010, that rate had leaped to 33 deaths per 100,000, and in 2014 it was 35.8. Between 2010-2014, more than 600 women died for reasons related to their pregnancies.

No other state saw a comparable increase.

In the wake of the report, reproductive health advocates are blaming the increase on Republican-led budget cuts that decimated the ranks of Texas’s reproductive healthcare clinics. In 2011, just as the spike began, the Texas state legislature cut $73.6m from the state’s family planning budget of $111.5m. The two-thirds cut forced more than 80 family planning clinics to shut down across the state. The remaining clinics managed to provide services – such as low-cost or free birth control, cancer screenings and well-woman exams – to only half as many women as before.

At the same time, Texas eliminated all Planned Parenthood clinics – whether or not they provided abortion services – from the state program that provides poor women with preventative healthcare. Previously, Planned Parenthood clinics in Texas offered cancer screenings and contraception to more than 130,000 women.

In 2013, Texas restored funding to the family planning budget to original levels. But the healthcare providers who survived the initial cuts reported struggles to restore services to their original levels.

Indeed, the report said it was “puzzling” that Texas’s maternal mortality rate rose only modestly from 2000 to 2010 before doubling between 2011 and 2012. The researchers, hailing from the University of Maryland, Boston University’s school of public health and Stanford University’s medical school, called for further study. But they noted that starting in 2011, Texas drastically reduced the number of women’s health clinics within its borders.' https://www.theguardian.com/us-news/2016/aug/20/texas-maternal-mortality-rate-health-clinics-funding

A very good (and simple) explanation of why our health care system is so expensive and how to solve it. http://www.theatlantic.com/business/archive/2016/08/the-difficult-math-of-american-health-care/496667/ Of course, the solution isn't going to be adopted here, not least because so many people are subsidized under the current system. For those ideologically opposed to subsidies, one would expect them (of all people) to support the solution but they won't. Why? Is it ignorance, stubbornness, or because they are paid to oppose the solution.

That's why there was so much pent-up demand before the Obamacare exchanges launched: Many people had been declining to buy insurance on the individual market for years because they didn't think it was worth it.

He starts with this assertion, and then goes on to make a bunch of other assertions, all unsupported.

If I had had no assets in 2003, I would not have bought health insurance because it was insanely expensive compared to the employer coverage I'd had continously for almost 25 years. And paid for much less. And then the premiums increased by about 2.5 times from 2003 to 2012, a decade.

Luckily I had no preexisting condition, and my continous insurance coverage would not prevent denial for preX because NH took that option to comply with ERICA. My previous coverage would have qualified me immediately for the unsubsidized high risk pool, premiums about $2000 a month.

I paid about 10% of the value of the assets I was protecting for the decade. As with all insurance, I and the insurer were happy not to have a claim.

Note that 80% of the 40,000 homes flooded in Louisiana were owned by people who thought the flood insurance cost too much, and it's defacto heavily subsidized by Federal taxpayers. It started subsidized, but then conservatives got the subsidies cut in law, but then they objected to the rapid rise in premiums, stretching out the premium increases. Only to have more flooding creating more losses that need premium increases far too high to avoid screams of protests from home owners in 100 year flood zones with less than 1% odds of flooding, history being a guide....

...and ignoring climate change as required by Republicans.

"There are two unavoidable realities of making the American health-care system less costly: Americans must use less care,"

I don't see how this follows. Unless you think the way we currently socialize the cost of healthcare to be desirable per se rather than simply being one of multiple options for paying for it.

I would have said that the American *patient* needs to be responsible for the bill. That's it.

There's nothing that will bring health care costs down and spur innovation than 300 million people haggling over $5 Tylenol pills. France, for all its other bullshit socialist problems, seems to have a pretty good solution to keeping costs low while helping the low-income to afford care.

Instead we insisted on one of the worst possible models short of directly nationalizing the whole industry.

McArdle suggests we can't do what nearly every other developed country does and have a viable public option.

I've lived in several other countries, and didn't really notice much of a difference in the quality of healthcare. I can't speak to every experience, but I've had a range - my son born in the UK, I went to the hospital in France for a broken bone, broke another in Spain, visited the doctor in Germany etc.

The one huge difference I see, and have experienced, is administration. Overseas, it has always been one receptionist for multiple docs. At my local doc in NYC, there are several just to handle insurance. Likewise, at work I must hear one person a week spending several hours trying to fix a problem with their health insurance. It's a huge productivity suck.

But ... the economy will fall apart if a hundred thousands medical secretaries are released for service to other areas of the economy with little/no loss in the supply of the health care sector. Because when you do more for less, this is bad for the economy. Right?

McArdle suggests we can’t do what nearly every other developed country does and have a viable public option.

As long as people like you keep on causing confusion for the term "public option," no, we sure can't.

Man, just imagine if there were this thing called "competitive markets" that had a centuries-long track record of reducing costs to consumers without requiring the intervention of political authorities

Not all markets are competitive in the absence of intervention. Oligopolies, monopolies, etc.

It seems that the market system in health care prioritizes profits over societal benefit, as can only be expected by the legal obligations of a CEO. Political authorities are better positioned to view things from the social benefit perspective, but various other challenges may be associated with effective and efficient cost management and service delivery.

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