Politics

Health Care Spending Is Out of Control

Health insurance doesn't just protect people from financial ruin. It insulates them from individual decisions about price and service quality.

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Health care in America costs too much because we pay for it the wrong way. And it's all but certain that we're going to continue doing so for a very long time.

The crux of the problem is third-party payment, or, as most people think of it, insurance. Health insurance doesn't just protect people from financial ruin. It insulates them from individual decisions about price and service quality. Those decisions become invisible, outsourced to a middleman—either a private insurer or a federal program—while the patient whose health is at stake is removed from the equation. The result is a system where prices are inscrutable, if they can even be called prices at all.

The dominance of third-party payment is almost entirely a result of two policy decisions that have warped the nation's health care system for decades.

The first was the decision, in the wake of World War II wage and price controls, to allow employers to provide fringe benefits, including health coverage, tax-free. This created an incentive for employers to provide more expansive and more expensive coverage. It made an extra dollar in salary, which would be subject to taxes, worth less than an extra dollar in benefits, which did not incur taxes.

The result is that most private insurance is provided through employers, and it tends to be reasonably comprehensive, covering everything from ordinary doctor visits to foreseeable surgeries to truly catastrophic events. Because employers and insurers manage the costs for everything, patients have little incentive to shop based on prices or quality, which can be difficult to determine anyway. In addition, employers typically pay a large share of the monthly premium, meaning that tens of millions of people are kept ignorant about not only the cost of medical services but the true price of the insurance itself.

The second policy decision was the introduction of Medicare (and, to a lesser extent, Medicaid) in the 1960s. Medicare expanded a system of government-run third-party payment to seniors, who, for understandable reasons, consume an outsized share of health care services.

Initially, that system was designed to ensure profitability for America's hospitals and health care providers, paying them based on self-reported costs plus a guaranteed-percentage markup. Later, the system imposed price controls, but not caps on total spending or volume.

The result was a huge new revenue stream for the health care industry, which rapidly reorganized itself around extracting funds from the program—which is to say, from American taxpayers—by any means possible. In the first year alone, average daily charges for U.S. hospitals shot up by 21.9 percent, according to professors Ted Marmor of Yale and Jon Oberlander of the University of North Carolina at Chapel Hill. The rate of growth of physician fees more than doubled in the year between the law's passage and Medicare going into effect. During the first five years of the program's existence, reimbursements through the program grew by 72 percent, while enrollment grew by just 6 percent.

And the program kept on growing, accounting for a larger and larger proportion of both the federal budget and total national health spending. If the latter had grown at pre-Medicare rates, the United States would be spending just $220 billion today, according to Charles Silver of the University of Texas at Austin and David A. Hyman of the University of Illinois. Instead, the figure is a staggering $3.4 trillion, or about 18 percent of the economy.

In their recent book, Overcharged: Why Americans Pay Too Much for Health Care (Cato), Silver and Hyman argue that the U.S. health system is best understood not as a means of delivering the best possible care but as a system for funneling as much money to health care providers as possible. Medicare, they note, will pay for countless expensive in-hospital tests and treatments for a dying individual but not less expensive palliative care offered in that same individual's home.

There are few meaningful checks on doctor reimbursements under the program; fraud and waste are pursued after the fact (if at all), which means doctors can always be assured of payment. The tax carve-out for employer-sponsored insurance pushes people into more comprehensive coverage, which increases overall demand for health care services, which makes health care providers more money. The American Medical Association, a lobbying group for doctors, controls Medicare's price-fixing system. In the case of some specific maladies, hospitals don't focus on preventive services, because the payment system is designed so that it brings in more revenue to treat patients who are already sick with a disease. Until very recently, Medicare had no system for judging the quality of the care it paid for.

It was as if the system was designed with only one goal in mind—maximizing not health or patient satisfaction but the amount of money Americans spend on health care. The fiscally ruinous results speak for themselves.

Silver and Hyman argue that retail delivery of health care services represents the best hope for injecting true market mechanisms into the current mess. Only retail—from cosmetic surgery to Lasik—has managed to keep prices down. They note that the Surgery Center of Oklahoma, a clinic that posts prices online and focuses on patients who pay cash, charges less than $20,000 for a knee replacement; the average price paid across the country is $57,000.

Direct payment by quality-conscious consumers is an effective way of bringing down costs and total spending. Which is exactly why it will never happen at scale.

Obamacare was billed as a way of solving some of these problems, but it has largely failed to hold costs down. Its primary attempt to mitigate the distortionary effects of the tax break for employer coverage, an excise tax on high-end plans, has been delayed repeatedly under pressure from unions and other groups.

Heading into the 2020 election, Democrats have proposed multiple ways of expanding Medicare, including pushing Medicare for All, a single-payer system in which the government finances nearly all health care services in the United States. The moderate position among Democrats is either to allow more non-seniors to buy into the program or to start a "public option"—a new government-run health care plan that would operate alongside the regulated plans sold through Obamacare's exchanges.

Republicans, meanwhile, often seem in thrall to medical lobbying groups, which vehemently resist any effort to reduce total expenditures. The failed 2017 effort to "repeal and replace" Obamacare would have left much of its infrastructure, including most of its spending, in place. President Donald Trump altered his plan to renegotiate drug prices after hearing from pharmaceutical lobbyists. There may be reasonable explanations for some of these decisions, but the larger pattern is clear: Any effort to slow the growth of, much less actually reduce, health care spending dies under a combination of industry and political pressure.

The best hope for change is very bleak indeed. Medicare is racing toward a predictable fiscal crisis. The program's actuaries predict it will be insolvent in 2026, able to pay only about 89 percent of its bills. That percentage will drop below 80 percent in the coming decades.

The system as it exists today, in other words, is unsustainable. It simply can't go on like it is—and if Congress continues to do nothing, it won't.

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  1. The author fails to realize that healthcare is rarely a discretionary expense. He uses cosmetic surgery which is voluntary as an example of holding down cost. But that is not the way healthcare happens. If you are sick or injured you can not shop around for care. You have to buy care ahead of time as health insurance and then use it as needed. Also using healthcare early can avoid higher cost procedures required when treatment is delayed. I don’t buy that we can save money if we just pay as needed.

    1. When a parent runs their child to an urgent care for having a 99 degree fever, it is discretionary. most americans flip out at the smallest sniffle or cough. What you’ve written is just ignorant.

      1. It is not at all ignorant.

        You know a lot about cows. I know something about humans.

        What mod wrote is about urgent medical issues, acute right lower quadrant pain, trauma, chest pain, acute shortness of breath, mental status change… in those situations there is no shopping around.

        The sniffles and low grade symptoms in a child can near always be handled easily.

        A popsicle, some special attention, kiddie Tylenol and chicken broth soup as tolerated. Thermometer. Mom would kiss your forehead in the day. Mothers have known this forever. If it gets past all that time to call the doctor.

        Children, bless their hearts, you have a low threshold to treat when they present acutely. They are resilient but can go down fast. Peds rotation 101.

    2. You don’t have to buy it to make it true.
      Us old farts grew up under the system of pay as you go, with insurance as true insurance, a hedge against UNEXPECTED medical catastrophes. It works.
      What we now call health insurance is actually pre-paid health care combined with health insurance. And as the article points out, it is impossible to shop because the providers have a different price for each insurance plan, due to “discounts” negotiated for each cartel called a ‘network’.
      So the first fix is to require all health care providers to charge all consumers the same price. That breaks the cartels and makes it possible to require the providers to post prices.
      The second fix is to outlaw employer provided insurance policies. Let them provide HSA funds, but not pick the actual policies. This allows for insurance portability as each individual picks their own policy. No more single men and post menopausal women paying for maternity/OBGYN coverage. No more women paying for prostate care.
      Those two changes alone will introduce price competition to bring down costs.
      The third ‘problem’ Obamacare was claiming to fix is the pretend pre-existing conditions issue. No one expects to go buy car insurance after an accident, but somehow they expect to wait until they are sick to get health insurance “as a right”. The most obvious fix there is to allow for reduced coverage during the first few years, like life insurance does now. There would have to be a transition period of a few years to correct for the existing government distortions, but after that time, you do not have to buy insurance, but if you don’t, you have to accept reduced coverage for pre-existing conditions.

      1. +100

    3. That is only partly true. Once the short-term crisis has been addressed, most patients and families do indeed consider different treatment options and providers. But they seldom consider costs, and almost never cost-benefit analyses.

    4. “The author fails to realize that healthcare is rarely a discretionary expense.”

      In fact, this is almost always wrong. True emergency care is likely around 2% but maximum ~10% of healthcare spending in the US. The vast majority of healthcare spending is long-term treatment, or treatment post stabilization of patients.

      We almost always have a choice of treatments- how much pain medication we take, whether we rely on therapy or more invasive surgery. Today those options are not usually given to us- the doctor is responsible for making a recommendation, and they tend to recommend the most risk-adverse option, regardless of cost.

      We definitely do have the options of shopping around, but as noted in this article, the system totally prevents that.

      1. But medical care is different!

        It’s not medical care that’s the staff of life, it’s bread. What’s more essential to life than food? But, despite Bernie Sanders’ faith that bread production and distribution is something best left to central planning, the government doesn’t have a program of providing food to the hungry – they have a food stamp program that allows the free market to actually supply the food. Choice and competition may not be perfect, but it’s the best way we’ve ever found to meet human needs. The best thing government can do is get the hell out of the way.

        1. Agreed. I have always argued that the best compromise is to remove the employer tax subsidy, and shift everyone over to HSAs that purchase private health insurance. Imagine the trillions of dollars spent in medicare, medicaid, and private spending directed to a private market. Rather than spending money setting prices, the government could concentrate on enforcing insurance fraud, etc.

          Instead of studying, funding and debating over public clinics and hospital subsidies, the government could just deposit money into the HSA of a person deemed to be truly “needy”. Hell, I don’t like the idea of a universal basic income, but if we were going to have something like that, I’d totally say it could only be deposited into an HSA and people would use that to buy the level of care they want.

        2. We shouldn’t have Medicare for all — we shouldn’t have Medicare at all. If people think private charity wouldn’t cover medical care for the truly needy, keep Medicaid around.

    5. Healthcare should be like any other service.

      You know where you want to go for minor medical stuff (annual physical) and pay cash.

      You know where you are going for Emergencies and Urgent Care near your home and work and pay cash for minor emergencies and have catastrophic health insurance for major medical stuff (heart attacks, cancer…)

      Then if you are traveling, make sure you have health insurance to cover any accidental injury.

      1. The problem was that before Obamacare (The ACA really put the nail in the coffin of anything that could resemble a free market healthcare system), no catastrophic insurance existed (maybe gov’t employees only?), All policies had an *out-of-pocket cost* limit and they were set pretty low, in some cases 100k or 300k. The out of pocket catastrophic kept getting lower and lower, from my memory since the late 90’s. Suderman’s better half has the solution. McArdle Care- a catastrophic single payer that kicks in on a high percentage of AGI with private policies for everything in between. Of course, congress would rather let the republic fold than pretend to have some kind of reasonable plan.

        In other news- Sanders and Warren are neck and neck and have passed Biden in polls. Oh yeah, and Sanders wants to nationalize the energy grid- Venezuela 2020.

        1. Or it was called lifetime limits or something

        2. And yet I’ve seen stories in the news that they’re not really “socialist” socialists, because they don’t want the government to run the whole economy. Just healthcare. And education. And maybe the power grid now. And the military, as always. And retirement. With those sectors growing as always, that’s pretty much the majority of the economy.

          1. There’s more…the entire power grid, and he will jail (gulag) oil and gas executives-cause global warming. They want education, transportation ( california bullet trains because that has worked so well, absolutely no private vehicles), public housing, agriculture (small family farms to feed billions of people), healthcare and energy. Its all in AOCs green new deal and its idiotic insanity.

    6. Healthcare is far more discretionary than people think. I agree cosmetic surgery is a bogus example/model. But the way other countries hold down costs of their system is by understanding the big difference between generalist (patient-focused) doctors and specialist (disease or body part focused) doctors. The specialist is transactional and profits by increasing spending/utilization. The generalist is relational and can be both patient agent and utilization gatekeeper to reduce spending and improve outcomes.

      The worst possible structure is for the patient to deal directly with the specialist – with someone else paying. That’s what we have and you can easily see the bigger problem that results if your parents are in that age group that has accelerating health problems.

    7. Moderation4ever
      August.26.2019 at 6:39 am
      “The author fails to realize that healthcare is rarely a discretionary expense.”

      Bullshit.
      When it’s “free” medical care, like any economic good, is consumed at random.

    8. Moderation4ever, you are wrong, they have the time to shop around for drastically different levels of insurance BEFORE they get sick. Think about car insurance, you can get a policy that either will or won’t cover rental car reimbursement while your car is in the shop getting fixed after an accident. You make that decision BEFORE you have the accident.
      The same could be applied to catastrophic health insurance. You could buy high priced insurance connected to a network of the most reputable doctors. You could also buy cheaper insurance that won’t cover getting the most expensive specialist in the country. You could research what an insurance plan will or won’t cover, the reputation of the doctors and hospitals that it will cover, the average satisfaction from it’s customers and make up your mind whether it’s worth the price for you and whether you want something lower end or higher end.
      Add to this the point that others have brought up that modern American healthcare is practically an all you can eat buffet and far from catastrophic only. All but time sensitive, emergency room visits do leave the patient an opportunity to shop around and compare prices, reputations and levels of care. If health insurance became catastrophic only again and regular checkups and minor doctor’s visits were directly paid for by the patient, you’d bet your ass they’d do comparison shopping.

    9. But health insurance itself is so heavily regulated (and so widely provided by employers) that there isn’t really a market for it either. Obamacare made it worse, by mandating that routine preventive care (which would provoke little to no economic hardship) and highly unlikely care and all sorts of non-health “care” be included. So it basically becomes a pre-paid plan with little consumer choice.

      Insurance should be for ruinous or financially painful risks, not your normal expected preventive healthcare costs.

    10. The vast amount of expenditures are are discretionary or trivial; they can be paid out of pocket. HSA accounts are a step in a direction that will help the consumer pay first dollar.
      Price transparency is also important.

      Yes, you have to buy insurance. The point is that we are severely abusing insurance today because most people in the U.S. have been led to believe you should pay zero for all medical services. Therein lies the problem. There should be insurance for catastrophes just like homeowners have insurance for fire or auto owners have insurance for unforeseen accidents. It’s the third party intervention that is costly and takes the patient out of the role of being the consumer.

      Many medical services can be provided much cheaper if the middle man is excluded. This is proving to be the case with Direct Primary Care and with the cash-only Surgical Center of Oklahoma.

      Insurance, government and private is the problem. Yes, there should be insurance for catastrophes, but for every doctor visit?

  2. There are incremental solutions that would push us towards a massively better health care market.

    1- Stop calling everything insurance. Routine procedures should not be called an insurance policy. It’s a subscription service.

    2- Put in a parallel mechanism to the FDA in the form of private, for-profit certification agencies. Medicine is almost completely technological in nature, and technology radically drops in price over time everywhere it isn’t regulated into a scarce resource.

    3- Indemnify review sites and reviewers that rate every aspect of our health care system including the for profit certification agencies. Tripadvisor works really well for steering me towards lodging that I both can afford and enjoy.

  3. “The crux of the problem is third-party payment, or, as most people think of it, insurance. Health insurance doesn’t just protect people from financial ruin. It insulates them from individual decisions about price and service quality. Those decisions become invisible, outsourced to a middleman—either a private insurer or a federal program—while the patient whose health is at stake is removed from the equation.”

    And there is almost no constituency for exposing the health care consumer to direct market forces. The Congress will not act because they will be punished for making the kind of reforms that eliminate the insurance middlemen.

    1. Mickey….The HSA structure starts to get at that problem: exposing medical consumers to the true cost of their care. This option is being offered by more and more companies. Their motives, however, are most assuredly not altruistic. HSA plans are cheaper for employers and more expensive for employees. It is all about cost savings.

      HSAs are great for younger, healthy people. For the middle-aged and up, or people with chronic health conditions, HSAs are not so great.

      Of course, in the People’s Republic of NJ, HSAs are taxable. NJ is only one of two states who tax HSAs. Unreal.

      1. Unfortunately the HSA was largely gutted by Obamacare. Prior to Obamacare, you could get a standard plan that generally paid 80 -90% of your costs for all problems. Or you could get a High Deductible plan that paid 0% of your costs until you reached a deductible, at which point it paid 100% of the costs.

        Obamacare forced the former plans to limit co-insurance, basically introducing the “Family” or “Personal” Max Out of Pocket that had existed on High Deductible plans into the standard plans. At the same time, the laws forced HD plans to lower the Max out of Pocket. So basically High Deductible plans became just a slightly worse version of regular plans, and have become more expensive as a result.

      2. Get into your HSA early and heavily. Save enough while you’re young. You can usually invest amounts over a certain limit into the market and watch it grow. That’s what I started doing once I realized I was burning money on an HMO when I could pay half the amount in premiums for a high deductible plant paired with an HSA. I just put the amount I was saving in on the premium into the HSA. Now I have enough to invest in the market and to cover my deductible.

        1. K2….Yep, like I said. For the young and healthy who do not live in the People’s Republic of NJ or CA, it is an amazingly good deal. For middle-aged and those with a chronic condition, not so much.

          If you are in an HSA, you’re young (under 37 y/o) and your plan allows it, I’d recommend investing in a low cost index fund of the S&P 500; either Fidelity or Vanguard S&P 500 index funds are fine. But I would look at HSA as a privately funded version of LTC insurance. The compounded growth of 3K annually for 30+ years at an average CAGR of 7% will give you a pretty big number.

          Once you pass 50, it would be time to start adding a low cost US total bond index fund to the mix.

          1. Yeah, middle-aged Americans got fucked by the ACA. I did too, but people in the middle of their careers were especially fucked.

            Solid advice, though. I’m literally doing everything you said, haha.

        2. The city I worked for had an HSA plan, but they took back anything you didn’t use at the end of the year.
          Leave it to leftists to destroy a good idea.

  4. What I am finding is that every doctor is jumping on the six month appointment schedule. I heard an interview where a dermatologist was saying people needed to see a dermatologist every six months. I always argue against it as I believe the worst customer service happens in the medical field. I hate having an appointment at a certain and then waiting more than five minutes past that time to go to an exam room, sit there for a while, have temp and blood pressure taken, wait again and then see a doctor for a few minutes. Typically the time consumed is an hour with about 10 minutes of actual exam time.

    1. That’s the one that pisses me off the most: Having to make a doctor’s appointment just to get a blood draw, and then a week later, another appointment just to be told, “You’re fine, see you next year.”

      Too many medical tests are routed through the medical cartel doctors are running, to enhance their revenues.

  5. Your spending on medicines depends on what condition your body is in

  6. “The program’s (Medicare) actuaries predict it will be insolvent in 2026, able to pay only about 89 percent of its bills.”

    Medicare already reimburses below cost. What will happen is that the reimbursement rates will be lowered and the cost will be further shifted to private insurance. And voila, the program will no longer be insolvent.

    1. Medicare does not reimburse below cost. The medical system has just so distorted and jacked up their cost structure that they charge for an enormous overhead

      1. Overhead is cost.

        1. Not when “overhead” is deliberately overstated.

      2. Don’t forget fraud.
        A lot of folks forget that part of the cost of all insurance, private or otherwise is fraud.

  7. One of the key components of markets and pricing is demand elasticity.

    For healthcare, it’s as inelastic as it gets. Never heard anyone say “that’s so expensive, I prefer dying”.

    Market based solutions are somewhat possible, but hard to set up. What is sure is that no solution around the “pay or die” sentence will be politically or morally acceptable.

    1. “For healthcare, it’s as inelastic as it gets”

      This is completely untrue. You can choose to go to emergency care or urgent care. You can choose to get heart pills, or get a bypass or get an angioplasty. You can choose to stay in a hospital, or choose to get care at home.

      Yes, some treatments are more effective than others- just like some CPUs are more expensive than others. And just as some CPUs cost 2 – 3 times as much to give you 20 – 30% better performance, some treatments cost 2 – 3x to get you marginally better results. The difference between electronics and healthcare is that there is a market for cheaper, but not top-of-the-line CPUs, resulting in a constant market force that provides incentive for companies to produce better, cheaper CPUs. Meanwhile, Health Care consumers are not price sensitive, so there is little incentive for providers to focus on finding cheaper alternatives to existing health care- most incentive is to create BETTER forms, regardless of cost.

    2. Well, then, time for adult humans to grow up. When g-ma is lying in a veggie state, and the doc suggests a very expensive treatment, we have to (1) ask what the likely outcome will be, and (2) accept reality.

      We cannot spend $100k’s in the last six months of life, and not only accomplish little in extending life, but also degrade the quality of that life.

      1. “We cannot spend $100k’s in the last six months of life”

        We can if people have the freedom to choose how their healthcare money will be spent on their behalf.

        Like it or not, rich people get better care than poor people. In publicly funded systems, the poor get herded into clinics with substandard care, while the rich and powerful get better healthcare publicly or privately provided.

        Only in a capitalistic system is there a vast market of people that healthcare providers have incentive to target. Yeah, the rich billionaire is going to get the newest, most effective treatments. But if the developer of that treatment sees a market of people barely able to afford that treatment, they will have incentive to make it cheaper and untap that demand.

        1. Overt….I actually think Skeptic above has this one right. Here is why I think that way. About a decade ago, the WSJ ‘Science Times’ published an article about physicians who were diagnosed with cancer, and other life ending pathologies. They were asked, “To what extent do you want life lengthening treatments (specifically, chemo)?” Their collective answer was simply amazing to me. The overwhelming majority effectively said “One round of chemo, then I am done”; and why not? They know the survival data. They did their round of chemo, and then got their affairs in order. All of them are now dead.

          Culturally, these kinds of discussions have been taboo. Now, we are having these discussions, and it is about time. Death is not just about the decedent – it is also about everyone around them, and how it affects them in the aftermath as well.

          If a person of means wants to shell out their money for exotic and expensive treatments…well, they can. Just don’t expect taxpayers to bail you out when you show up in the ER with severe side-effects of aforementioned exotic and expensive treatment. Sorry, you made your choice, and you have to own the consequence. For those of little to no means – most plans I have seen basically give you 1, maybe 2 shots at stuff like chemotherapy. After that, you’ve pretty much gotten to some very expensive and exotic treatments, which taxpayers cannot afford.

          People cannot choose medical care like we would a computer. When you lying these busted-up in an ER from a car accident, you are simply not able to whip out your smartphone and do cost comparisons. Some people simply lack the intelligence to do as you posit (shop around for price, or even understand the comparative difference between two different medical treatments).

      2. While I agree with Earth Skeptic’s comments it should be noted that its not as simple as it sounds. If grandma’s 85 and the doctors say her kidney’s are shot and she needs a transplant for $250K we could easily weigh the options and ask that she be made comfortable and allow nature to run its course. More likely course is that grandma will have a series of problems, cascading failures. Each will involve an ambulance ride to the ER and a short stay at the hospital. In that 6 months we will eat up $250K with no hard mark to say when to treat and when not treat. It really involves personal decisions to say at a certain age I will no longer accept treatment, minor or major. That is not as easy as it sounds.

    3. “For healthcare, it’s as inelastic as it gets.”

      Bullshit.
      When it’s “free” medical care, like any economic good, is consumed at random.

  8. If there are any problems with the American health care system post-Obamacare, they are the result of Republican sabotage.

    1. What no medicare for all hashtag. Very sloppy work.

      1. As a Koch / Reason libertarian who’s concerned about excessive government spending, I will only support Medicare for All if studies show it will make this country a more attractive destination for immigrants.

        #ImmigrationAboveAll
        #LibertariansForUniversalHealthcare
        #(AsLongAsImmigrantsGetItToo)

        1. Much better. You have been slipping lately.

  9. Suderman has it wrong, the real problem is not with employer-paid insurance, but rather the conflict between society as a whole being (1) unwilling to pay the price to provide themselves and others with the level of health care they want, and (2) society being unwilling to tell some people ‘sorry, we’re not going to pay for the health care you want.

    People want to decide for themselves how much health care they consume and from whom (if Junior coughs, I’m taking him to the emergency room, and if 92 year old mom needs surgery to keep her around for another couple of months, then she gets it and no government agent is going to say no).

    And there aren’t enough dollars to pay for that level of care. All of the fussing over who pays for insurance or even whether insurance covers some element of care is fighting over the edges… and won’t accomplish anything until society reaches consensus on what level of care someone who has no money or doesn’t want to spend their own money should receive. Resolve this and the rest should be a lot easier to deal with.

    1. The problem isn’t just that people believe they’re entitled to free shit, the problem is that people believe free shit exists. If you’re a grown-ass adult complaining about the tooth fairy not leaving enough money under your pillow, you’ve got bigger problems than unrealistic expectations about the value of teeth.

      1. Not just free shit, but magical free shit, especially when it comes to medical care. Americans turn into dumb little kids when dealing with injury and illness. You have the right to be a dumb ass, but not the right to expect the few adults in the room (and I know I am indulging my own fantasy that government represents an adult) to support your idiocy.

        1. “”Not just free shit, but magical free shit,””

          Doug Henning MD can help you with that. Welcome to the world of magic is on the door.

    2. This is the epitome, or perhaps epitaph, of public provided healthcare- society should be willing to make tough choices about who gets what care. People should be willing to let grandma die if it is an inefficient use of scarce resources.

      Society wouldn’t HAVE to make those choices if everyone was price sensitive. People would make their own decisions of what to do with scarce resources- expressed in the currency in their bank accounts. Society may collectively believe that grandma isn’t worth saving, but that is up to her and her bank account.

      The funny thing is that people actually believe the public funded option is more just. They want a board to review each person’s case and decide if a Supreme Court justice is worthy of cancer treatment vs some destitute living on a reservation. The former will still get the best care, even in a democratic system. (Check some time for the disparity in treatment afforded to Canadians in the city vs Inuits living on reservations). The public option merely hides this injustice behind a notion of collective shame rather than personal responsibility.

      1. People perceive decisions at the end of a process differently from the way they do at the beginning of a process. This is seen in competitive sports, wherein the performance of a player at the end of a contest is seen as more momentous than at the beginning, and when officials apply a different level of scrutiny at the end than at the beginning.

        So we view momentary decisions that could potentially determine whether someone lives, or whether someone is crippled, as more worthy of solicitation than the gradual processes that led to that point. If you can stop someone from dying at this instant, that seems to be worth more than all you could’ve done to make any number of people richer and likely to live longer and with less morbidity in general.

        Heck, it’s even the same for the death penalty.

  10. Has any other country managed to get into and then out of this trap?

  11. Well here’s the 60 yr spending trend in a couple dozen countries

    And no. They did not get themselves into the same problem we have.

    1. And if you adjust that healthcare spending by age, the US numbers look far worse because our average age is younger than most European countries

    2. Thanks. Interesting point of departure, 1980. I wonder what caused it.

      1. I suspect it was a combo of attempts to kill the early proto-reform of Medicare/Medicaid that was put in place by Joseph Califano in 1979 and the 1983 change in Medicare payments (to ‘prospective payments system’) and the introduction of DRG’s. The latter was part of the Greenspan ‘saving SS’ commission that started in 1981 and reported back out in 1983.

        Rather than actually reform Medicare/Medicaid and rethink what we wanted our entire healthcare system to look like (which was the end-goal of Califano’s complete reorganization of HEW) – we continued it on a nickel-and-dime everything to death. To have Medicare continue to pay for individual transactions/procedures and ask few questions – while most other countries were transitioning or had set their systems up as more of an actuarial ‘bulk-buy’ type of healthcare funding.

        If you (the payor) can reasonably predict the utilization for a large pool of people, then you can simply fund/buy the infrastructure needed to fulfill it. Those specialists now have a more secure future income stream and don’t raise prices as fast. And you (payor) get the return on that infrastructure investment (much of which is economic rent) and can use it to lower the cost curve over time.

        If you’re just funding one transaction at a time – and creating bureaucratic BS that can be gamed – then you can’t control costs.

  12. Our interventionist government policy of sustaining extremely high levels of immigration contributes greatly to the inflation of health care costs.

    All while lowering wages. NYT Admits Fewer Immigrants Means Higher Wages, More Labor-Saving Machines https://www.breitbart.com/politics/2019/08/25/nyt-fewer-immigrants-higher-wages-labor-saving-machines/

  13. Insurance is here to stay. The problem is not the insurance, the problem is the government bureaucracy and regulation that has grown up around health care over the past seventy five years.

    The solution is obvious, though hard. Get the government out. Providing universal catastrophic insurance is fine, but don’t try to provide universal everything coverage. I’m old enough to remember paying $5 a month for catastrophic coverage, with my employer kicking in the other $5 half.

    Get rid of the government monopsony [look it up] of Medicare, and replace it with premium vouchers for the poor. And means test the damned thing while you’re at it!

    Finally, to decouple the system for the employers, make all healthcare expenses and premiums tax deductible, and allow any group coverage for any group, not just employers. People could just join an organization to get group coverage. Churches, service organizations, mutual aid society, hell, even extended families could do it. “Dear insurer, we have one hundred members, what deal can you give us?”

    We can’t solve the problem overnight because we didn’t get into it overnight, but we can at least change the direction. And we don’t do that by demonizing insurance.

  14. When we define efficiency as spending as much money as possible, then Medicare is the most efficient healthcare system of all, and I, for one, look forward to enlarging it as much as possible.

  15. “Silver and Hyman argue that the U.S. health system is best understood not as a means of delivering the best possible care but as a system for funneling as much money to health care providers as possible.”

    Sound like anything else *cough*public education*cough* run by the government?

    “The U.S. public education system is best understood not as a means of delivering the best possible education but as a system for funneling as much money to teachers and bureaucrats as possible.”

    Rhetorical question: Why is spending less the goal for healthcare but not for education?

    1. Because teachers have a better union?

  16. Worth noting is that there is a huge amount of political inertia toward any proposed change.

    There’s the psychological inertia among individuals. For most of the healthcare-consuming public, “real insurance” is the kind where your employer provides it, your premium is just a notional number on your pay stub, and you pay nominal copays (if anything) out of pocket.

    Notwithstanding the fact that most people in the workforce today have never had anything like that, most have something that resembles it in broad outline, and are very nervous about the idea of going to a substantially different system, be it nationalized healthcare or private out of pocket.

    Then there is the economic inertia of the entire industries built around the current setup. Since that setup is entirely a creature of government policy, they fight tooth and nail to maintain it. And in fairness, any kind of “shock therapy” approach to changing the policy setup would cause very real disruption to millions of people’s lives and livelihoods.

    Thus even the relatively incremental changes of Obamacare had to be enacted at midnight, in an environment of complete political domination of government by a single party. That’s as good as it’s going to get, unless someone manages to sell the public on simply changing the future direction of policy, as some commenters above suggested.

  17. HSA/High Deductible plans should start changing this equation. It’s a whole different ball game when you’re no longer playing with the house’s money.

  18. Why not let the states set health care prices?

  19. Healthcare is out of control because the establishment republicans and democrats want more socialized medicine for us so they can control us more easily.
    Lenin said something that healthcare was one of the best way to control the masses.
    He was right, especially when it comes to life and death medical decisions like who gets life-saving surgeries, medication, medical attention, etc.
    Plus, socialized medicine is so much better than private healthcare.
    Just ask Michael Moore.
    I’m sure he goes to Cuba for his healthcare, and he wouldn’t lie.

  20. The essential problem with health care as described by Mr Suderman, is that a market for health care does not exist for the patient. Providers have little interest in cost vs value, and insurance companies who take a small 4-5% of every premium dollar, obtain more profit with more throughput. The government, which pays for half of US health care, has for now, the apparently infinite pockets of taxpayer and bond holders to reach into.
    The solution in my view is to incrementally introduce patients to a health care market. Patients need to have an interest in how much health services cost, and there must be price transparency for this to happen. Forget about deductibles. Wealthy Americans should pay 25% of all their own health care costs, and lower income working class patients should pay 1%. They will start to ask right away, how much is this CT scan, how much is this specialist consultation, how much is a day in the hospital? Those who cannot participate will be free to get Medicaid, which will be heavily regulated, bureaucratic and entail long waits and inconvenience.
    In the absence of a shift to market based healthcare, our system will continue to blow up until single payer and rationing by waiting line becomes the only feasible political solution.

    1. Agree with you doc.

      Is that not what we have now? If you look at employer based medical insurance the consumer has a deductible and Co pay. They do not have a list as to the less expensive nephrologist nor do they wish it.

      Those who pay nothing still get basic care if they walk into the ED door. There is Medicaid, Obamacare, I really cannot navigate all of that. ‘Recommend MRI pancreas’ and I am blinded about the revenue and wish to stay that way.

      Is it terrible? Perhaps the US does not need to change much.

      What should never happen is government takeover of medicine. It is too far gone already.

  21. Before the federal government got involved in health care, Doctors made housecalls – in Cadillacs. Now, if you can get an appointment, you’re in an assembly line, with maybe 15 minutes with the actual M.D.

    1. That can happen on your iPhone. It is already there without the government doing anything. Telemedicine. Check it out.

  22. Do not know how I got here from there. Medicine is the topic. Left ventricle, right ventricle. Skip that thought.

    A hymn or psalm composed by someone lost and found and we know it without the words.

    My music link nobody cares about.

    Duane Allman – amazing grace

    https://m.youtube.com/watch?v=y9OGNMJ0-Kw

  23. Healthcare industry is growing up with the latest technologies and provides a great way to the people who really need support. IoT is the future of the healthcare industry.
    http://blog.arthonsys.com/future-of-iot-healthcare-heading/

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