Sep
16
Morgan kindly posted a link to this interesting piece in The New Yorker about the causes of America’s very high medical costs. I thought it should be brought to the main part of this blog because it warrants some debate. Because ultimately, America’s health care problems won’t be solved until the costs are brought down. Proof of this can be shown in this chart from Cato:
In it, you can see that medicare (the white box) is the fastest growing program in the federal budget. It is on an unsustainable path. Reforming the costs are essential, whether those reforms are conservative or liberal.
In summary, the New Yorker piece identifies that it is the capitalistic nature of health care in America that is driving the costs, that Doctors, who are paid by action and not result, arrange for expensive care because they get rewarded for it either by the insurance companies or by the government through medicare. The article goes on to note that more communitarian organisations like the Mayo Clinic provide the ideal for any future move towards decreasing the costs. The Mayo Clinic effectively pools the doctors, and rather than pay them by each individual medical intervention that they carry out, pays them a fixed salary. In that way the doctors are able to focus on patient care without worrying about how many unnecessary tests need to be ordered.
Although long (eight pages), the article is well worth reading and raises some interesting points. But I cannot agree with it’s conclusion. It concludes:
And that will mean rewarding doctors and hospitals if they band together to form Grand Junction-like accountable-care organizations, in which doctors collaborate to increase prevention and the quality of care, while discouraging overtreatment, undertreatment, and sheer profiteering. Under one approach, insurers—whether public or private—would allow clinicians who formed such organizations and met quality goals to keep half the savings they generate. Government could also shift regulatory burdens, and even malpractice liability, from the doctors to the organization. Other, sterner, approaches would penalize those who don’t form these organizations.
I’m afraid that this lazy first resort of the left-minded. To see every solution as being one in which people are forced to behave according to an ideological prejudice, or even a politically motivated conclusion. What this approach precludes, is that there may be another less coercive solution out there.
One which needs to be considered, and one which I favour, is to put people more in control of their own interactions with the health care industry. Less emphasis on employer provided or pooled insurance, more on personal insurance. Of course, this can only work if insurance premiums can be reduced by less usage. Something similar to the no-claims bonuses we have on car insurance in this country would be the ideal – the less you use the service, the less you pay (perhaps our American friends can tell us if something like this already exists or not). In this way, people are able to choose whether a treatment or test is really necessary and their insurance costs are positively or negatively affected by their choices.
There are two potential arguments against this. Firstly, I can see it being argued that people, particularly during economic downturns like now, may be prepared to sacrifice their own health in order to keep their insurance costs down. My response would be a) that’s their own decision and b) I’m not sure people really would do this if the illness is serious or life threatening. The second criticism is given in the article; that we are too reliant on the health care professional to make a true decision on whether a treatment or test is unnecessary or not. If a doctor tells us a test is necessary, who are to disagree?
The third class of health-cost proposals, I explained, would push people to use medical savings accounts and hold high-deductible insurance policies: “They’d have more of their own money on the line, and that’d drive them to bargain with you and other surgeons, right?”
He gave me a quizzical look. We tried to imagine the scenario. A cardiologist tells an elderly woman that she needs bypass surgery and has Dr. Dyke see her. They discuss the blockages in her heart, the operation, the risks. And now they’re supposed to haggle over the price as if he were selling a rug in a souk? “I’ll do three vessels for thirty thousand, but if you take four I’ll throw in an extra night in the I.C.U.”—that sort of thing? Dyke shook his head. “Who comes up with this stuff?” he asked. “Any plan that relies on the sheep to negotiate with the wolves is doomed to failure.”
This rebuttal doesn’t really wash. People will come to know which doctors are providing a principled service and which are not. People will gravitate to those doctors and the charlatans will be marginalised and put out of business. A watchdog could be implemented to monitor doctors interactions with their patients. Businesses who deal dishonestly with their customers don’t often survive long in the private sector.
So there are my thoughts. I hope you read the article and form your own conclusions. I’ll be interested to know what they are.
Comments
12 Responses to “The Cause Of Americas High Health Care Costs”
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I already read the New Yorker I found it compelling. On your point on lowering premiums, lifestyle should make a big diffence in lowering payments. You wait obesity will soon be a pre existing condition.
But surely when all the obese people, up to 40% in some states, are dead before their time, health care for the survivors will be easily affordable.
Do you have a chart splitting out health costs? I can’t believe doctors’ wages are the real issue, or indeed that anybody is going to cut any costs at all by any of the measures I have seen mooted. Not by ‘efficiency savings’, not by preventive care (actually a cost raiser, as hinted in my first para), not by tort reform. Competition just might keep a rein on costs, but reduce them?
Rhoda since are last spat on this I did some research, well I watched a debate on bloggerheads TV between David Frum & Megan McArdle from The Atlantic. According to Frum who had done the research the obese unlike smokers don’t actually die young, they live about the same amount of time as people in normal BMI. However they get lots of illnesses like diabetes and heart disease that doesn’t actaully kill them off but cost a fortune to treat and costs employers loads of money in sick days etc.
Rhoda the David Frum link
http://bloggingheads.tv/diavlogs/21958?in=20:52
Worth watching if you 10 mins
Type 2 diabetes doesn’t cost a fortune to treat, just a few pills. Type 1 is not caused by obesity, and it costs a little more to treat. Heart disease? They get it, but their life expectancy isn’t affected? The things you believe would boggle the mind of someone less used to it than me. Don’t you have a sceptical bone? Or a BS alarm? Even when listening to Frum?
Rhoda-watch the debate and to think that obesity doesn’t cost westetrn healthcare systems billions is frankly nuts.
Like a lot of the minority right you don’t like science do you ?
THX, I have no problem with science. But when I supect a statement to be part of a wider agenda I am sceptical of it. A lot of rubbish is written about obesity. You can quote studies, and so can I. Whom to believe? That’s the question. A scientist is sceptical, so he cannot believe anything just like that. I have seen in UK stats for obesity and the way they have been treated, in the way the press release varies from the paper, and the headline takes the worst angle on the press release, that there is an agenda going on. There is in fact a scare being promulgated about an obesity epidemic which is not supported by the facts, and I mean the government’s own facts.
The US is a different case. You only have to go there to see a high proportion of very fat people. You can see they don’t look healthy. And one’s tendency as a not-fat person (my BMI is 24) to look down on them, or indeed to be a bit repulsed by what is clearly an avoidable condition. But the fact is that studies show they don’t have reduced life expectancy unless they are very fat indeed. That they live longer on average than underweight people. Do you have any stats to say different? Something I can read?
Because I think a lot of anti-obesity material is based on the revulsion we feel, not on fact.
(I base my opinions on a long-running obestiy series on spiked, and on junkfoodscience.blogspot.com, both of which are worth a look if you have some time.)
THX,
The politician are now in the process of passing taxes on soft drinks, snacks, sugar laced products…claiming that it is meant cut down on obesity…Of course, we know it won’t work, but they’ll still have their billions in taxes to blow on their frivolous goodies for their constituents…must have those dog..poo..parks, ya know.
In all honestly…Americans are shockingly overweight…it’s sad to go to the grocery store and see women younger than me using the store-provided scooters to do their shopping…mostly because they obese or have joint problems from obesity. I read several years ago, that 50% of women who were age 50 could not walk around the block. But, all you have to do is walk into our grocery stores to realize the problem…90% of the groceries are carbohydrates…Americans are fast food addicts.
C. Cabbie,
Of course Medicare is taking more than it’s share. We have an aging society…people are living longer, because of the good medical care they are now getting.
Let’s face it, as a person ages, the body gradually breaks down and they need to go to the doctor more often than a younger person.
So…what to do? Do the Democrats cut Medicare? I know that Obama and the Democrats would like to take some 500 billions dollars away from Medicare and put it elsewhere…for illegals, and the underpriviledged…the people who vote for him/them. But, he/they have a delimma, a large number of elderly vote Democratic too. Will they lose they votes? Palin can be criticized for calling some of the healthcare plan a ‘death vote’…but she’s not far wrong.
I never dreamed that I would be thought of as a liability to my country…but I do now.
Rhoda,
Welcome to C. Cabbie…I’m glad you stayed with us.
I agree with you on overweight people…there is a stigma…but, perhaps that is a good thing. It pushs some people to take better care of themselves.
I’ve read the same articles that you have, overweight people do live to average age…but they have lots more health problems because of their obesity which, of course, runs up medical expenses.
What always surprised me is how fat all the nurses are in my doctor’s office.
Rhoda I agree science can be confusing and it’s easy to cherry pick to science based on our political views, look at your refusal to except the overwhelming evidence for AGW.
You make my point the obese don’t doie young they just carry on going getting ill costing everybody else a bloody fortune.
An American I find very fat children shocking I believe that it’s child abuse.
If anybody has some good stats about relative health costs of normal vs fat people, please share. I can see the type 2 diabetes link, that’s obviously true (although which causes the other is not really understood). Blood pressure meds? Heart surgery (or heart disease meds other than statins)? Do they take reduced occurence of Alzheimer’s in the obese into account?
Anyway, the basic principle is, you can’t presume to control health costs until you understand where they come from. And not many in this debate seem to have a clue about that, not excluding myself. Some of the things I’ve heard (from both sides)have been frankly very suspect indeed.