The US has slightly more nurses that OECD average, but less doctors and relatively low percentage of medical students (xls file from OECD health report published today)

I am definately not complaining about our healthcare system. My husband called our GP from work last Wednesday morning. He saw a little black spot in the corner of his eye and wondered wether he should make an appointment for a check-up. The assistant told him to come immediately so he travelled back from work. The GP checked, it wasn't the cornea but he wanted the opthamologist to do further tests. So he sent us to the local hospital, where the eye doctor concluded that it was a detached retina, with so much fluid behind it that she couldn't repair it with her laser. So she sent us immediately to one of the academic hospitals in Amsterdam (we live in Haarlem, 20 km from Amsterdam).

Husband had to stay in hospital and was told to exclusively lie on his left side so the retina could naturally find the proper place. The next day he was operated on. He is now home, with eye drops. We didn't need to have any contact with our insurer, we didn't need to pay for anything and the only costs will be new glasses for my husband in a few months time, because he will have a slight shift in myopia in that eye, but not bad enough to have the insurance pay for it.

We don't have health insurance via his work, but we have it via a consumer group - interest groups usually can get the same 10% discount companies can get, so now we pay 225 euro per month for health insurance (2 adults, 3 kids)

It is pretty common knowledge that a significant portion of nurses in this country are imported from places like the Pilippines. This link is a bit old....

I wasn't questioning the "nurses imported from Philippines" point - I was questioning as to the location of your proof for the elasticity you were claiming in their employment.

No, I'm basing my comments on the notion that being a monopsonist means the Federal gov't can force prices lower. Force them below where a firm can expect to cover its costs means you'll get less of that drug. People have been advocating this for Medicare Part D.

What makes you think it will force them below the production costs of the drugs?

And you missed my main point, which was that it's hardly as if these types of drugs are going to be the pharmaceutical companies' only drugs produced. They produce a whole bunch of drugs that aren't, and won't, be covered, and for which they can sell for whatever they want.

Sure, but then we are back to the problem noted earlier: rising costs. Now for drugs you want people to pay the full freight, but earlier you weren't for it. You want to have your cake and eat it too. Free market, no free market...both at the same time.

No, I pointed out that the drugs that would be covered under the plan are not the only drugs that these companies produce, which means that they have additional sources of revenues. I pointed it out because so much of that type of argument you are making seems to be "Woe is us! If we drive down drug prices on certain drugs, the companies won't produce them in any type of worthwhile quantities, and will go bankrupt!"

Sure it is. It isn't exactly like France's but there is a public and private component to our system like there is in France.

So? The English medical system has public and private components, but I don't you see saying that the American system is basically England's, only with more private hospitals.

People want to argue that "medicine" or "health care" is not subject to the laws of economics.

Balls.

Unless you are willing to discuss two fundamentals: the reintroduction of consumer price exposure/price driven decisions into health care, and returning "health insurance" to insurance, and not just a comprehensive health maintenance program.........then you are in denial (and based upon so many posts I read here, you are) and you are just jackin' off.

Conjecturing, I wonder if you are making the same mistake Greenspan committed. He assumed that bankers would not make decisions that ran counter to the best interests of their companies. Bankers actually made decisions in their own best economic interests, which sometimes ran counter to those of their organization. Perhaps insurance execs benefit more from passing along costs than controlling them. An exec at a $10 billion co. will earn more than one at a $5 billion co. on average.

No, what I'm assuming is that a priori consumers aren't going to want to pay high premiums. That firms are going to want to maximize profits. These two things tend to do good things. Sure you might get more if you have a $10 billion insurance company, but if you have to get to $10 billion by having $5 billion in losses I'm thinking you wont run taht insurance company for very long. Either you'll get fired or you'll find the company bankrupt and you'll be out of a job.

Granted, bad incentives could lead to serious problems in the insurance industry like with the finance sector. However, that is something that is outside the scope of this post and something I don't see Obama's plan addressing, at least not directly.

I still stand by my statement that private insurers have had plenty of time to compete and bring down costs, but have failed to do so.

Sure, but we also have a system where there are incentives to gold plate. Why are things like eye glasses, routine check-ups, and such part of health care packages? To reduce costs, or is it a result of employer provided health care benefits that get preferential tax treatment. If I'm going to buy glasses, get check ups, and other things, I'd rather pay for them with pre-tax dollars than after tax. As such, I, as an employee, would rather they be part of the plan than not. Remove that tax benefit and I'm indifferent as to whether the plan includes it or not. You've argued that we stop subsidizing unneccessary care--tax preferred employer provided health benefits are a subsidy.

It's when the most efficient market structure for a product is a monopoly - sort of like how power lines and distribution tend to be monopolies, because it's much better than having multiple, duplicate power lines.

No, it is when a firm can produce the total output for the market at a lower cost than multiple firms. Costs are not what determines efficiency...at least not alone. A monopolist is going to carry with it inefficiencies such as dead weight loss. This is why natural monopolies are regulated, to try and obtain the competitive level of output but at the lowest level of cost.

I've provided a link to my data - can you provide a link for yours?

It is pretty common knowledge that a significant portion of nurses in this country are imported from places like the Pilippines. This link is a bit old....

http://www.workpermit.com/news/2006_03_06/us/us_hires_foreign_filipino_nurses.htm

Here is wikipedia,

http://en.wikipedia.org/wiki/Filipino_American

Similarities in quality and structure of the nursing curriculum in the Philippines and the United States had led to the migration of thousands of nurses from the Philippines to fill the shortfall of RNs in the United States. Since the 1970s and through the 1980s, the Philippines have been a source of medical professionals for U.S. medical facilities. The Vietnam War and AIDS epidemic of the 70s and 80s, signaled the need of the American health care system for more foreign trained professionals. In articles published in health/medical policy journals, Filipino nurses comprise the largest block of foreign trained nurses working and entering the United States, from 75% of all foreign nurses in the 1980s to 43% in 2000. Still, Philippine-trained nurses make up 52% of all foreigners taking the U.S. nursing licensure exam, well above the Canadian-trained nurses at 12%.

The significant drop in the percentage of Filipino nurses from the 1980s to 2000 is due to the increase in the number of countries recruiting Filipino nurses (European Union, the Middle East, Japan), as well as the increase in number of countries sending nurses to the United States.[38] According to the United States Census Bureau, 60,000 Filipino nationals migrated to the United States every year in the 1990s to take advantage of such professional opportunities. Other Filipino nationals come to the United States for a college or university education, return to the Philippines and end up migrating to the United States to settle.

It is my understanding there are insitutions in the Philippines that exist for just this reason: training then exporting nurses.

Only if you assume that

A)companies are only going to be making drugs covered by the plan, and

B)companies are dependent largely on the drugs that would be covered by the plan.

No, I'm basing my comments on the notion that being a monopsonist means the Federal gov't can force prices lower. Force them below where a firm can expect to cover its costs means you'll get less of that drug. People have been advocating this for Medicare Part D.

Pharmaceutical companies, even under a single-payer plan, would have the opportunity to make quite a few drugs that wouldn't end up covered under the plan, and they could sell them for whatever they want.

Sure, but then we are back to the problem noted earlier: rising costs. Now for drugs you want people to pay the full freight, but earlier you weren't for it. You want to have your cake and eat it too. Free market, no free market...both at the same time.

True, but does it significantly change both the outcomes and supply of health care? And there are other factors than straight-up compensation - you might be able to lure in many doctors by offering them subsidized tuition.

If doctor compensation is a factor in health care costs, then we need to reduce it. Reducing compensation will likely reduce the supply of doctors. Now we could possibly get some help if we remove the barriers to entry for entering the "MD market". Right now the number of MD entrants is highly controlled.

What about the "highway construction" argument then?

I don't buy it either. Highways are public goods subject to conjestion. Medical care is largely a private good, with some positive externalities (disease vectors and such). If person A is injected with medicine you can't take that same medicine you just injected into A and inject it into B. You'd need another dosage of that medicine--you'd need 2x the medicine. With a road you only need 1x. If you have 50 people you need 50x dosages, with a road you need 1x. Public goods are goods where one person's consumption does not reduce another person's consumption. Much of health care does not have that attribute. Health care is not a public good, by definition.

Our system isn't anything like France's.

Sure it is. It isn't exactly like France's but there is a public and private component to our system like there is in France. And interestingly, they are having problems too even though they are cheaper. Switching to the "French system" would (hopefully) mean we simply slow down as we drive towards the cliff's edge. Maybe not a bad idea as a first step, but it wont be enough. I'm still doubtful in that various powerful intersts will still want to try and secure benefits thus possibly mucking things up so we don't get the savings or even worse, end up speeding up as we head towards the cliff.

Skew,

This is wrong. All insurance companies pay out far more in benefits than they collect in premiums. If an insurance company set their premiums ot cover benefits, their prices would be exorbiant and nobody would do business with them.

Insurance companies get money (some of which is profit, and some of which is paid out as additional benefits) from the investment income on the premiums collected.

If they are doing this, then they are doing it way, way wrong. I'd like to seem some serious evidence backing this up.

This is wrong. All insurance companies pay out far more in benefits than they collect in premiums. If an insurance company set their premiums ot cover benefits, their prices would be exorbiant and nobody would do business with them.

Insurance companies get money (some of which is profit, and some of which is paid out as additional benefits) from the investment income on the premiums collected.

Could you elaborate?

There isn't any information in this article to indicate how big this problem is. The article does say, "an estimated three-quarters of people who are pushed into personal bankruptcy by medical problems actually had insurance when they got sick or were injured" but that begs the question of just how many were pushed into personal bankruptcy by medical problems. I've read in other sources that it just isn't that many, certianly not enough to support the nationalization of health care, and frankly the NY Times effort to nuance the numbers this way kind of supports that.

No doubt it is a tragedy for some. In the Yurdin's case they did a poor job of selecting and buying insurance to begin with. In fact, the NY Times article clearly says that having insurance alone cannot prevent such tragedies. Do you imagine that the federal government can overcome the human condition and eliminate tragedy and suffering?

Clearly, in order to be profitable insurance companies need the amount of premiums coming in to exceed the amount of benefits being paid out.

This is wrong. All insurance companies pay out far more in benefits than they collect in premiums. If an insurance company set their premiums ot cover benefits, their prices would be exorbiant and nobody would do business with them.

Insurance companies get money (some of which is profit, and some of which is paid out as additional benefits) from the investment income on the premiums collected.

Annals of Medicine: The Cost Conundrum

Many With Insurance Still Bankrupted by Health Crises

Outcomes are not the same as health care resources. There may be very good non-health care reasons for similarity of outcome...or not. This is a questionable metric.

I never said they were. However, to dismiss all of that as "possibly from non-health care reasons" is stretching belief, particularly since the report looks at things like survival rates from diseases and the like.

Were it just life expectancy, I could believe you - America may be more accident-prone.

I don't think you are familar with that term. I see no reason to conclude this.

It's when the most efficient market structure for a product is a monopoly - sort of like how power lines and distribution tend to be monopolies, because it's much better than having multiple, duplicate power lines.

Doctors are not the complete universe of health care supply side.

I never said they were. They are, however, a critical component to health care, and much of the public debate seems to center around doctor compensation rates.

For example, nurses. We import them. Stop paying them so much and the imports drop. Less medical care.

I've provided a link to my data - can you provide a link for yours?

The reason is that there are quite a few complications in the health care market - it is far from a perfectly competitive market.

Drugs: pharmacuetical firms are going to behave like any other firm if their ROI goes down.

Only if you assume that

A)companies are only going to be making drugs covered by the plan, and

B)companies are dependent largely on the drugs that would be covered by the plan.

Both are nonsense. Pharmaceutical companies, even under a single-payer plan, would have the opportunity to make quite a few drugs that wouldn't end up covered under the plan, and they could sell them for whatever they want.

Doctors? Locally, yes the supply curve might be inelastic to a considerable degree, but take a longer time horizon and it will likely become more elastic as people who would have gone into the medical profession look elsewhere.

True, but does it significantly change both the outcomes and supply of health care? And there are other factors than straight-up compensation - you might be able to lure in many doctors by offering them subsidized tuition.

So I'm not sure your argument holds for health care.

What about the "highway construction" argument then?

We have a mixed system which makes our system somewhat like France's just more expensive.

Our system isn't anything like France's.

As to the why, you know as well as I do that the reasons are myriad. If there were just one cause, it would be obvious and we would not be discussing it. Limiting the discussion to costs, France and insurance we know a little and can conjecture much.
We know that France uses price controls(as does Japan I believe). We know that private insurers in the US have not held down costs. We know that we smoke less and have lower rates of alcoholism than France. We win on drugs. Are any of these enough to account for a 50% difference in health care spending? Probably cost controls. Do I want cost controls? Not especially, but I also do not want the system to go broke. France has a system that their people like, has outcomes similar to ours (better in cardiac care last time I looked) and keeps down costs. Do we copy a proven system or embark on something new? I still stand by my statement that private insurers have had plenty of time to compete and bring down costs, but have failed to do so.

Conjecturing, I wonder if you are making the same mistake Greenspan committed. He assumed that bankers would not make decisions that ran counter to the best interests of their companies. Bankers actually made decisions in their own best economic interests, which sometimes ran counter to those of their organization. Perhaps insurance execs benefit more from passing along costs than controlling them. An exec at a $10 billion co. will earn more than one at a $5 billion co. on average.

Last conjecture, of many possible. There is more adverse publicity in denied services in the US. Cutting costs is therefore too risky, so insurance companies here just pass on costs.

Steve

I am willing to bet the most fraud prone insurance system at the moment is medicare.

And just because the government runs it won't mean it is less fraud proof.

And like i said-my experience with military medical care and VA care leaves little to be desired with the government running the show. Thanks, but not thanks.

That depends on how elastic your supply is. Dave Schuler's made a good case over on his blog that the supply - at least in terms of doctors, etc - isn't very elastic.

Doctors are not the complete universe of health care supply side.

Similar outcomes (and I'm not just talking about Life Expectancy and Infant Mortality) for less than half of the US's per capita costs. I don't particularly care about the actual supply, as long as the outcomes are the same or better. Next question?

Outcomes are not the same as health care resources. There may be very good non-health care reasons for similarity of outcome...or not. This is a questionable metric.

1. You're attributing much more elasticity to the supply of medical care than actually exists, and

No. I think you are thinking the supply is far more inelastic than it actually is. For example, nurses. We import them. Stop paying them so much and the imports drop. Less medical care. Drugs: pharmacuetical firms are going to behave like any other firm if their ROI goes down. Less medical care via drugs. Doctors? Locally, yes the supply curve might be inelastic to a considerable degree, but take a longer time horizon and it will likely become more elastic as people who would have gone into the medical profession look elsewhere.

2. You're assuming that a monopsony can't result in good and/or better outcomes.

On the contrary, I'm arguing that monopsony will result in less competition and less health care resources. The question is will this be a good thing or a bad thing is far from clear. I think in some areas it might be good (we don't need that many plastic boobies and such) but if it is done badly it could be worse.

The latter, in particular, is nonsense. We get good outcomes in terms of military production and equipment, even though the market for military equipment (particularly things like planes and tanks) is largely monopsonistic (particularly since production lines are largely tailored specifically for military equipment these days).

There is still rent seeking (weapon systems we don't need, keeping weapon systems past their usefulness, etc.) along with waste. And health care is going to have far far more pressure to subsidize consumption vs. military spending. So I'm not sure your argument holds for health care.

*Some of us, in fact, would argue that much of health insurance is more of a "natural monopoly" than a true free market.

I don't think you are familar with that term. I see no reason to conclude this.

Odograph,

The counterfactual is better health, at lower cost.

Yes, that would be great, but is it possible. Everyone assumes it is, but never looks to see if perhaps it is due to other reasons. People look at life expectancy and infant mortality and use these gross statistics when even your own link points out that such comparisons are problematic.

And that is just the outcome side of the issue. Has anyone tried to take into account the pharmaceutical aspect? Does the U.S. health care consumer subsidize the rest of the world's consumption of new drugs?

steve,

I would have preferred a more market oriented approach, but private insurance companies have had the opportunity to compete and reduce costs for many years.

I'd also point out that we don't have a system anywhere approximating a "more market oriented" approach. We have a mixed system which makes our system somewhat like France's just more expensive. Why? Is it waste, fraud and abuse by insurance companies? I'm skeptical that profit maximizing firms are going to do that, not because they are saints, but because they want profits and that means reducing costs. Is it due to differneces in the population? Differences in behavior? Do more, less or the same proportion of Americans die/get injured in automobile accidents as the French?

There is alot going on here, and the rather flippant remarks I often see are often frustrating in the least.

Odograph again,

Not only that, these "conservative" complaints that we need more "health care" because we are a bunch of fat lazy substance abusers start to look even more strange.

Careful. I'm not arguing we need more per-capita, but that with many of the plans floated around we'll get more in total and possibly less per capita.

You really need to be careful with the simplifying assumptions you make.