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Why Nationalized Health Care Is Coming

I’ve argued for years that the combination of unsustainability high growth in health care costs and the enormous competitive disadvantage that puts on American business means that our current system of quasi-private, insurance-based medicine will collapse of its own weight. Like it or not–and I mostly don’t–Americans will wind up with some sort of government-centric model, likely one that provides basic coverage at a fixed price with some option for private supplemental coverage for those who can afford it.

Ezra Klein points to another harbinger: a soon-to-be-available test that will let individuals map their DNA and know their predisposition to any number of diseases.

As we sequence more genomes, mine more data, and conduct more studies, we’ll find a lot more of these connections. Eventually, genomic testing will be a powerful predictor of future illness. And it raises the potential that young people will get themselves tested and then purchase insurance based off the result. So those with a clean genomic result might go for a cheap catastrophic plan, while those with a high risk of developing pricey illnesses will opt for more comprehensive insurance.

The result would be, in insurance terms, an “adverse-selection death spiral,” as the healthy opt out of expensive insurance, the sick opt into it, and premiums spin out of control.

Now, this is too glib. Our health is based on more than genetic factors. And, unless the Supreme Court strikes it down, ObamaCare essentially requires people to carry health insurance. But the combination of federal laws mandating coverage regardless of pre-existing conditions and forbidding insurers to discriminate on the basis of genetic testing does further skew whatever “market” exists in healthcare.

And, as Avik Roy points out, there’s really not much of a market left, anyway. Indeed, “per-capita state-sponsored health expenditures in the United States are the third-highest in the world, only below Norway and Luxembourg. And this is before our new health law kicks in. ”

That’s right: Even though we have a substantial private investment in healthcare, we spend more  government money on healthcare per capita than the likes of Germany, France, Canada, Sweden, and Holland!

Further, Roy notes, “If anything, the U.S. figures understate government health spending, because they exclude the $300 billion a year we ‘spend’ through the tax code by making the purchase of employer-sponsored health insurance tax-exempt.”

How can this be? Most of us, after all, have expensive private insurance. Well, “The thing to remember in America is that we have single-payer health care for the elderly and for the poor: the two costliest groups.”

Additionally, contrary to myth, the vast majority of these other systems are not along the model of the British National Health Service, where the government runs the hospitals, pays the doctors, and decides who gets what treatment. For example:

I’ve described Switzerland as having the world’s best health-care system. In Switzerland, there are no government-run insurance plans, no “public options.” Instead, the Swiss get subsidies, much like “premium support” proposals for Medicare reform or the PPACA exchanges, from which Swiss citizens buy health care from private insurers. The subsidies are scaled up or down based on income: poorer people get large subsidies; middle-income earners get small subsidies; upper-income earners get nothing.

My guess is that the big driver in forcing change in the US will be from the right, not the left. That is, big business is going to start lobbying hard to get out from under the crushing burden of having to finance health coverage for their employees. Since no other major country operates their healthcare system that way, it’s a major competitive disadvantage.

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About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He has a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. DC Loser says:

    Agreed. I’ve been saying for years that the push for single payer will be from corporate America and their argument for global competitiveness.

    Highly-rated. Helpful or Unhelpful: Thumb up 16 Thumb down 0

  2. Herb says:

    My guess is that the big driver in forcing change in the US will be from the right, not the left.

    Who’s going to lead that charge? I can’t think of anyone (off the top of my head) on the right who would even dare to flirt with such an idea. Not in the current environment.

    Like or Dislike: Thumb up 11 Thumb down 0

  3. J-Dub says:

    If you presented a Swiss-style medical system to most people they would probably find it reasonable and preferable to our own system. But then politicians wade in and everything becomes skewed. Irrational hatred for Obama leads some people to both rail against the socialized medicine of Obama-care while simultaneously saying “keep your hands off my Medicare!”. It’s maddening.

    Like or Dislike: Thumb up 15 Thumb down 3

  4. J-Dub says:

    Of course, if you described it as Swiss-style, the same people would hear “European!” and automatically be against it. We need to come up with a good plan and then tell people it was found in a trunk in Ronald Reagan’s attic.

    Highly-rated. Helpful or Unhelpful: Thumb up 31 Thumb down 0

  5. PogueMahone says:

    Why nationalized health care is coming?

    Because it’s the right thing to do?

    Did I win?

    Highly-rated. Helpful or Unhelpful: Thumb up 26 Thumb down 4

  6. James Joyner says:

    @Herb: I’m thinking Wal-Mart, but it could be any number of big companies with lots of employees. And recall that there was much less corporate opposition to ObamaCare than to HillaryCare.

    Like or Dislike: Thumb up 3 Thumb down 0

  7. Moosebreath says:

    Since the plan passed in 2010 was effectively change driven from the right (not merely in the sense that the ideas involved were proposed by Heritage and passed by Romney, but in that they bought off the insurance companies as part of the package), I am not sure what you are saying would be different than current law.

    I also agree with Herb’s point — since the right has moved further away from nationalized health care, by embracing the Ryan plan to eliminate the nationalized elements in place now, I don’t see any Republican embracing this for at least a generation.

    Like or Dislike: Thumb up 7 Thumb down 0

  8. Herb says:

    @James Joyner: That was my first thought, too, but then I considered the nature of Wal-Mart. Of all the companies out there that are equipped to absorb or offset rising healthcare costs for their employees, I think Wal-Mart’s at the top of the heap. They seem more likely to address the issue with business innovation rather than legislation. I can see them opening Wal-Mart run clinics where employees get a steep discount, say.

    But then again, I do see them being amenable to legislation that reduces costs (for them). Just not sure that pushing for it would be their first instinct.

    Maybe the smaller firms, who are less able to absorb the costs, will be the genesis, but again…which Republican is going to speak for them and when do they graduate?

    Like or Dislike: Thumb up 6 Thumb down 0

  9. Moderate Mom says:

    There’s a great blog post up at the Atlantic comparing the French health system to ours. Both it and Roy also address the difference in taxes paid by the middle class as well. A plan like the French, or the Swiss, would go a long way towards broadening the tax base, because that will be required in order to pay for that type of program.

    Like or Dislike: Thumb up 3 Thumb down 0

  10. Rob in CT says:

    MM – got a link to that story in the Atlantic? For some reason I’m not seeing it (I suspect user error on my part!).

    Thanks.

    Like or Dislike: Thumb up 1 Thumb down 0

  11. Hey Norm says:

    Well yeah…except the drive from the right will not be for single-payer…it will be to leave everyone to fend for themselves. In order to get to single-payer you would have to acknowledge the FACT that we pay a lot more for lesser results.
    The so-called right will never admit that. Witness the year long fight over the PPACA when the conservative party line was that we have the best system in the world. Hell, Tsar Nick was spouting that crap this am on another thread.
    We cannot make smart decisions as long as one party is delusional. That requires a 4th estate willing to call Bullshit when it is warranted. Currently we have stenographers who do not think it is necessary for Candidates to be factual. You know who you are.

    Highly-rated. Helpful or Unhelpful: Thumb up 30 Thumb down 0

  12. OzarkHillbilly says:

    My guess is that the big driver in forcing change in the US will be from the right, not the left.

    Sometimes James, I wonder at your ability to write such balderdash. The “Left” has been driving for this for years while the “Right” has fought back tooth and nail. Business is neither right nor left. No matter who is in office, they generally write the rules.

    What is going to happen is that eventually “Business” will realize that the only way they can get out from between the rock and a hard place they currently exist in is to align with the left on health care. THAT is when it will change. The Right will still be screaming “SOCIALISM!!!” but nobody, least of all Business, will be listening.

    Highly-rated. Helpful or Unhelpful: Thumb up 16 Thumb down 0

  13. Rob in CT says:

    Of course, this is just government spending. As we all know, add in US private expenditure and we’re off the freaking chart.

    Last I saw, the average Eurocommie country spends 10-12% of GDP on healthcare, total. We spend something like 18%. I don’t recall seeing a similar analysis (public + private healthcare spending) on a PPP basis.

    Like or Dislike: Thumb up 5 Thumb down 0

  14. Brummagem Joe says:

    that our current system of quasi-private, insurance-based medicine will collapse of its own weight. Like it or not–and I mostly don’t–Americans will wind up with some sort of government-centric model,

    Like you JJ I’ve long thought that the US model could not survive. Btw those are PPA numbers not straightforward real numbers based on current exchange rates. This is why it’s better to express as it as a % of GDP imho. In those terms we’re spending around 17% and the Europeans are spending 7-10%

    Additionally, contrary to myth, the vast majority of these other systems are not along the model of the British National Health Service, where the government runs the hospitals, pays the doctors, and decides who gets what treatment.

    Anyone who knows anything about this knows all these systems are not organised like the NHS. Those who know nothing about it have no idea how other systems function… period.

    Like or Dislike: Thumb up 3 Thumb down 0

  15. Brummagem Joe says:

    My guess is that the big driver in forcing change in the US will be from the right, not the left.

    It’s already happening. And is GE or GM on the right? As someone above observed you do talk balderdash at times JJ.

    Like or Dislike: Thumb up 1 Thumb down 0

  16. Blue Shark says:

    …About 30 years past time.

    Like or Dislike: Thumb up 3 Thumb down 0

  17. OzarkHillbilly says:

    @Brummagem Joe:

    Nod.

    Like or Dislike: Thumb up 1 Thumb down 0

  18. mattb says:

    @Herb:
    I think you’ve hit the nail on the head. Walmart has already mastered the art of offering internal options when external ones don’t meet it need. For example it’s “private/corporate jet” fleet is essentially an internal low cost airline that they created after realizing that they can’t get fair rates for flights to and from their corporate headquarters.

    I’d be very surprised if Walmart doesn’t already have plans for it’s own internal clinic/insurance program.

    I do expect the push to come first from business and then from the right — though I expect that a generation will need to pass before that happens. So this is a dead issue (publicly at least) until somewhere around 2020.

    Like or Dislike: Thumb up 2 Thumb down 0

  19. Lomax says:

    Here are some ideas that could work in terms of helping people with their medical bills:
    Full tax deduction for medical bills, not a percentage
    Let people work at the hospitals to pay off their bills. Work, such as clerical, preparing food, passing books and magazines, visitor services, making coffee, transportation, grounds keeping, painting, even remodeling and new construction work: many of these people have prior work experience that the hospital can use.
    Government funded low interest loans that can be repaid over time.

    Like or Dislike: Thumb up 1 Thumb down 8

  20. CarolDuhart2 says:

    If it weren’t for the Limbaughization of so much business, the logic of single-payer would occur to them. Single payer would free business from so much of the burden they now carry regarding health insurance. No more having to choose plans, pay for such plans, dealing with increasing fees, and the financial burden of administration. Just pay the appropriate taxes, and be done with the deal. No more issues that compromise the medical privacy of employees with all of the potential morale that entails.

    Like or Dislike: Thumb up 9 Thumb down 0

  21. Tsar Nicholas says:

    Nationalized healthcare in the U.S.? Hmm. Well, one thing’s for certain: Wealthy Canadians and wealthy Europeans will be most negatively affected. To where will they go for their life-saving operations?

    Here’s a way to save the U.S. healthcare system without getting in touch with our inner Fidel Castros:

    1. Comprehensive tort and medical malpractice reforms. We all agree that cost control is a major problem, right? Well, if we took California’s MICRA statute and made that a national reform law and then if we barred class actions and also barred strict liability claims against medical device, vaccine and Rx manufacturers, lo and behold, Captain, we’d radically reduce the overhead for healthcare providers and in turn we’d radically reduce the costs to healthcare consumers. Guaranteed.

    2. Block grant Medi-caid money to the states and let them figure out how best to spend it.

    3. Raise the eligiblity age for Medicare from 65 to 75, for anyone born after 1965.

    4. Repeal Obamacare.

    5. Radically increase the annual contribution caps for health savings accounts, from the current levels of $3,100 / $6,250 all the way up to $5,000 / $10,000. Separately, allow non-prescription drugs to be subject to HSA spending. Exempt interest earned from HSA account deposits from state and local taxation.

    The more pre-tax money people can contribute to their HSA accounts the more money they’ll have when they’re older and more likely to need healthcare services. The more money people have for healthcare spending when they’re older the less need there will be for Uncle Sam to ration out and pay for those services.

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  22. Moderate Mom says:

    @Rob in CT:

    Rob, it’s a posting by Pascal-Emmanuel Gobry, on of the bloggers filling in for Megan McArdle while she’s on book leave. It was posted on March 6 at 11:10 am. I didn’t try to link, because you would then get the entire blog, but you should be able to find it easily.

    Like or Dislike: Thumb up 2 Thumb down 0

  23. David M says:

    @Tsar Nicholas: Here’s the quick rebuttal:

    1. Might lower costs slightly, not enough to make a significant difference though.
    2. Will only result in poorer people getting less health care but spending more for it, doesn’t save money.
    3. Will only result in older people getting less health care but spending more for it, doesn’t save money.
    4. Will only result in people getting less health care but spending more for it, doesn’t save money
    5. Will only benefit the extremely well off

    All in all, it doesn’t seem any of those would really do average Americans any good, let alone anyone not very well off.

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  24. Jay says:

    The Federal Government has proven itself incapable of regulating our healthcare industry. It has managed to allow a system with little cost control, little quality control, and little accountability crowd out what should be a local issue.

    Anyway, my biggest issue with nationalization is that it does not actually solve the cost issues. “Medicare For All” may be cheaper than what we have, but there is no convincing evidence that it would bend the curve. The Euro systems have the same problem, but lucky for them, their systems started at cheaper levels (Howard Dean actually made this point recently, among others). Let the States figure out cost…build in incentives for States to cut costs and improve outcomes.

    P.S. one of the best defenses of Obamacare was written by its Godfather, the economist behind the MA plan. He wrote a comic book to explain why he thinks it will work. Actually very informative (but unfortunately it doesn’t include sources). http://www.amazon.com/Health-Care-Reform-Necessary-Works/dp/0809053977/ref=sr_1_1?ie=UTF8&qid=1331255413&sr=8-1

    Like or Dislike: Thumb up 1 Thumb down 1

  25. Peter says:

    Health care reform will be worse than useless if it does not include outcome-based rationing.

    Like or Dislike: Thumb up 1 Thumb down 0

  26. dennis says:

    @CarolDuhart2:

    Carol, I proffered your declarations in the form of a question here once and got smoked for it. I’m in total agreement with this. It only makes sense.

    Like or Dislike: Thumb up 1 Thumb down 0

  27. An Interested Party says:

    Wealthy Canadians and wealthy Europeans will be most negatively affected. To where will they go for their life-saving operations?

    Yes, of course, because they all die when they can’t leave their own countries…

    Here’s a way to save the U.S. healthcare system without getting in touch with our inner Fidel Castros…

    Can’t you come up with anything more original than the tired and flawed communism allusion? Perhaps not, I have to remember to whom I am addressing that question…

    Let the States figure out cost…build in incentives for States to cut costs and improve outcomes.

    Where is the evidence that states could do any better than the federal government regarding health care?

    Like or Dislike: Thumb up 4 Thumb down 0

  28. Robert Levine says:

    “The Federal Government has proven itself incapable of regulating our healthcare industry. It has managed to allow a system with little cost control, little quality control, and little accountability crowd out what should be a local issue.”

    The Federal government (aside, of course, from its role in Medicare and Medicaid) doesn’t regulate health insurance markets; the states do. And they do it very badly.

    Like or Dislike: Thumb up 9 Thumb down 0

  29. Jay says:

    @Robert Levine: Good point, but I’d add that some of the most important laws are federal (like restrictions on interstate insurance contracts) and that Medicare effectively drives private insurance reimbursements.

    Like or Dislike: Thumb up 1 Thumb down 0

  30. James says:

    @James Joyner:

    Like it or not–and I mostly don’t–

    I’m curious James, where do you get your healthcare coverage? Has it always been through your employer, or have you ever tried purchasing a plan as an individual?

    Like or Dislike: Thumb up 2 Thumb down 0

  31. Herb says:

    @David M: “Here’s the quick rebuttal:”

    Yeah, those ideas are all horrible. I mean, before we get to tort reform (which helps the industry), maybe we could do something about price transparency (which helps the consumer).

    Leaving the decisions to the States? Awesome if you live in a reasonable state. A disaster if you live in a place ruled by asshats like California or Arizona.

    Raising the age to 75? Great way to reduce costs, true….but it’s not really reducing costs. It’s just not incurring them. It’s like that commercial where the guy trains the guinea pigs to row a boat. “There’s an easier way to save money” on healthcare.

    Repeal Obamacare? Not gonna happen….Reform? Yeah, it will…eventually.

    Health savings accounts? Also known as “My insurance has a high deductible” accounts? To me, they just complicate the issue. I certainly wouldn’t ask for more of them.

    Like or Dislike: Thumb up 5 Thumb down 0

  32. James says:

    @Herb: You’re correct, raising the Medicare age to 75 is not “cost-savings” just cost shifting.

    More importantly, in my mind, is that it will mostly like only increase costs overall, by reducing the amount of seniors receiving long-term preventative care.

    Like or Dislike: Thumb up 4 Thumb down 0

  33. Herb says:

    @James: “it will mostly like only increase costs overall, by reducing the amount of seniors receiving long-term preventative care.”

    Yep, that’s true from a cost perspective. But I’m looking at it from a quality of life perspective. The average lifespan for men is 75 years, which means we’re defining benefits in such a way that even in theory only half the male population will ever qualify. Good policy? Yeah, if your primary goal is pinching pennies. If it’s providing healthcare services to the elderly….not so much.

    Like or Dislike: Thumb up 4 Thumb down 0

  34. al-Ameda says:

    I honestly think that the Swiss system is the way to go. That said, I do not believe that we’re smart enough as a nation to get it done. We’ve been dumbing down for the better part of a generation now, and I have no reason to believe that we would get rational and adopt a Switzerland style of health insurance here.

    Like or Dislike: Thumb up 2 Thumb down 1

  35. Ron Beasley says:

    @al-Ameda: What has not been mentioned here is that the Swiss don’t allow the insurance companies to make a profit on the basic policy the government subsidizes. They can make a profit on upgrade plans. That alone would make it impossible in the US.

    Like or Dislike: Thumb up 7 Thumb down 0

  36. Herb says:

    @James: PS….after a second reading of my comment, just wanted to clarify that I’m used the editorial “you” as opposed to addressing you specifically…just in case that’s muddy.

    Like or Dislike: Thumb up 1 Thumb down 0

  37. @DC Loser:

    Agreed. I’ve been saying for years that the push for single payer will be from corporate America and their argument for global competitiveness.

    Unfortunately “for years” we’ve seen a stable dynamic … that the lower cost option is off limits for ideological reasons.

    I mean, it’s nice for James to stand this four-square, but I’m not sure that changes the stability.

    Like or Dislike: Thumb up 3 Thumb down 0

  38. superdestroyer says:

    @Moosebreath:

    ACA is designed to fail. That is why most of the implementation was pushed off until the second Obama Administration. It is designed so that business and people will be tempted to game the system and to make sure that spending quickly out of control.

    The real question for the future is what happens when the U.S. has unlimited legal immigration, single payer health care with vary lavish benefits, and healthcare is a career field that only the desperate will do.

    Like or Dislike: Thumb up 2 Thumb down 6

  39. superdestroyer says:

    @Brummagem Joe: ‘

    In looking at the Wikipedia entry on Healthcare in Switzerland, I was laughing about the complete misuse of the term “health insurance.” http://en.wikipedia.org/wiki/Healthcare_in_Switzerland

    The is nothing about it that has to do with insurance or actuarial ideas. Switzerland is just a prepaid health care with some cost sharing with the patient.

    There was also a mention of what the mandatory “pre-paid” portion will not pay for such as dental and I suspect optical.

    Of course does not mention that if Switzerland has any pharmaceutical companies or medical equipment manufacturers. The article also does not mention how medical education works.

    Like or Dislike: Thumb up 1 Thumb down 0

  40. Stan says:

    I’m at a loss as to how the Swiss system differs from the Affordable Care Act, apart from the fact that older people and the poor in the US get their health insurance through taxpayer supported single payer systems and active duty and retired military personnel in the US get their health care through systems like the British National Health Plan. Why is it that some libertarians and conservatives profess to love the Swiss system and hate the ACA? Why is it that some libertarians and conservatives like our method of providing medical care for the military but hate the ACA? Can somebody explain things to me?

    Like or Dislike: Thumb up 2 Thumb down 0

  41. Hey Norm says:

    @ SD…
    “…ACA is designed to fail…”
    Which is why it has been woldly successful in Massachusetts…you know…where the Republican Presidential nominee instituted that Heritage Foundation program.
    Why is it that you insist on taking stands that can only be supported by making up fiction?

    Like or Dislike: Thumb up 7 Thumb down 0

  42. Brummagem Joe says:

    @Jay:

    @Robert Levine: Good point, but I’d add that some of the most important laws are federal (like restrictions on interstate insurance contracts) and that Medicare effectively drives private insurance reimbursements.

    Good point? He just proved you haven’t a clue what you’re talking about. And your second statement here just confirms it. Far from Medicare driving up private insurance reimbursements they are consistently lower which is why some doctors won’t take Medicare patients. Further more the Republicans are currently engaged in an attempt to kill one of the provisions of the ACA that will hold down Medicare costs.

    Like or Dislike: Thumb up 2 Thumb down 0

  43. Brummagem Joe says:

    There’s one magic ingredient that’s common to ALL these other programs which is largely absent from ours. It’s called the government. As James has previously observed demand for healthcare is highly inelastic. This means its purveyors (who remember are all running businesses even the ones that call themsselves non profits) can charge more or less what they want for services and have an incentive to drive up costs by over prescribing tests and procedures. There’s very little brake on this from the insurance companies who are oligopolies who also have a vested interest in a rate of healthcare inflation that exceeds that of general inflation. This leaves Medicare (which accounts for around 20% of healthcare funding) and it’s ability to contain costs if fairly limited because of of the political clout of the medical industry (eg. the annual doc fix). The only institution with the muscle to provide a countervailing force for all this economic and monopoly power is government. And that’s what happens in all these societies where however funding and delivery is organised government is effectively underwriting and controlling the entire process. In Japan for example they have literally telephone directory sized books which detail every single medical procedure known to man and set the price which can be charged for it by providers. And the standard of care in Japan is very good. So yes in this case Government is the answer but I don’t see Republicans being convinced of this anytime soon. However, in this case as in so many others they (as JJ points out) are on the wrong side of history.

    Like or Dislike: Thumb up 3 Thumb down 0

  44. superdestroyer says:

    @Hey Norm:

    It is designed to fail because it is designed for cost to quickly get out of control. http://reason.com/archives/2012/03/06/sorry-liberals-romneycare-is-still-not-w

    The future of health care are activist like Sandra Fluke lobbying Congress to expanded required coverage with no thought to controlling costs.

    Look up the history of Tenncare and you will see the future of ACA.

    The only way to control costs is to have massive lower pay for healthcare workers. Do you really see the Democrats pushing for lower incomes or for higher premiuns and taxes.

    Like or Dislike: Thumb up 2 Thumb down 1

  45. superdestroyer says:

    @Brummagem Joe:

    Those books listing procedures and costs exist in the U.S. All of the care providers pay consultant to help them game the system. In addition, most healthcare providers are really price takers. The government, thru CMS,, sets the lowest reimbursement rates and all of the other insurers follow suit.

    the last thing that providers other than cosmetic surgeons of Oby/GYN endocrinologist can do is charge what they want.

    In the coming single-payer world, why would anyone other than a third world immigrant want to be a physician and face the same economic situation as grain farmers.

    Like or Dislike: Thumb up 1 Thumb down 3

  46. Rob in CT says:

    You gotta love the Tsar’s belief in the magic tort reform fairy. Didn’t Texas do tort reform and find the impact to be slight?

    We need to figure out how to lower the cost of a medical education & get more docs (importing is one option), we need to pay providers less (which is why lowering education costs is so key), and we need more cost-benefit analysis of treatments.

    There is no reason we cannot have a single payer system where the government provides a baseline level of care and then you have a private supplemental market above it. You preserve the right of those with $$ to seek more treatment than the governmental plan will pay for (thus muting the concern about innovation), while providing universal coverage.

    But we can’t do that, because Communism!

    Like or Dislike: Thumb up 5 Thumb down 0

  47. James says:

    @superdestroyer: Why Reason is a terrible sources on healthcare policy:

    The problem with RomneyCare is that after destroying the market’s natural incentives for prudence and efficiency, it is trying to recreate them through bureaucratic fiat.

    The idea that there’s a “free market” for health insurance is one locked in the dogma that market failure does not exists. Numerous incentives in the “free” health insurance market push imprudence and inefficiency. This is why US health outcomes are twice as expensive and worse in outcomes compared to our OECD cohorts.

    The only way to control costs is to have massive lower pay for healthcare workers.

    A statement that is absurd on it’s face.

    Like or Dislike: Thumb up 5 Thumb down 0

  48. superdestroyer says:

    @James:

    If you are going to nitpick a cite, then please provide your own that shows that Romenycare is one budget and inside the projections for spending. Even a liberal cite would probably be OK.

    Like or Dislike: Thumb up 2 Thumb down 0

  49. superdestroyer says:

    @James:

    If you are saying that the U.S. can cut spending on healthcare by 50% without cutting either staff or payroll, then you are delusional.

    Single payer if it bothers to limit spending will result in a huge push to lower head count in healhtcare and to lower pay. The Doc fix is just a way to keep people employed. Without the Doc Fix, no healthcare provider could afford to accept Tricare or Medicare.

    Like or Dislike: Thumb up 1 Thumb down 0

  50. Rob in CT says:

    We haven’t had “free market” healthcare/health insurance for a long time now (at least since the tax preference for employer-provided health insurance came to be, which IIRC was in the 40s).

    And back when we did have one… how well did it work?

    Has anyone bothered to do a serious review of the lay of our healthcare land prior to that point? Is there even enough information available to do such a review?

    @James:

    James, to be fair, there probably will have to be reductions in healthcare worker pay. If that’s coupled with lower education costs, I think it would work out. The fact is that we pay our doctors a lot more than other countries do. Some of the savings has to come from there. Supe’s not completely wrong about that. Comparing them to wheat farmers is pretty silly though.

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  51. Related:

    Comparing Medical Procedure Costs in US vs Overseas

    Like or Dislike: Thumb up 1 Thumb down 0

  52. James says:

    @superdestroyer: I’m not sure where you get your 50% figure, but I never said reducing lowering physician reimbursement isn’t a competent, just not the only aspect for cost controlling. As for you citation, I make no claims about the cost-control mechanisms of the Commonwealth Care Act. Simply that your Reason citation is certainly wanting, for the reasons I’ve stated above. You’re happy to quibble with that if it pleases you.

    @Rob in CT: Oh, lowering physician reimbursement it’s an essential aspect, but it is certainly not “only way to control costs”.

    Like or Dislike: Thumb up 1 Thumb down 0

  53. superdestroyer says:

    @john personna:

    The only way to lower costs is to lower pay. If the economics of medicine become the same as the economics of grain farmers, will anyone at the Ivy Leagues want to become a physician or will being a physician become the same as nursing or pharmacy: something left to the state universities and second tier private universities.

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  54. Brummagem Joe says:

    @Rob in CT:

    You gotta love the Tsar’s belief in the magic tort reform fairy. Didn’t Texas do tort reform and find the impact to be slight?

    Tort reform as big issue is another Republican smokescreen. Total malpractice insurance payments and payouts are less than 1% of total healthcare expenditures.

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  55. James says:

    @superdestroyer: At any rate, the demand for a source “that shows that Romenycare is one [sic] budget and inside the projections for spending” misunderstands what the goals of the Commonwealth Care was, the key differences it has with the Affordable Care Act in terms of exchanges, and the fact Massachusetts has little market power in the national health insurance market via-a-vis controlling cost inflation.

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  56. James says:

    @superdestroyer:

    The only way to lower costs is to lower pay.

    You keep saying this, implying you really don’t understand healthcare economics.

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  57. Brummagem Joe says:

    @James:

    There was a study published a few months ago that indicated that US doctor’s incomes are 2- 2.5 times those of doctors in Europe and at bottom this comes down to fact that doctors in the US are in many case essentially engaged in running businesses. Whenever one of these Medicare fraud case breaks it’s usually either doctors or hospital systems. And au contraire our healthcare expert there are plenty of doctors living very nice life styles in France, Germany and Britain …..in fact one of the British ones is godfather to one of my kids and I can assure you he’s not a grain farmer although he lives in a very nice restored Georgian farmhouse.

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  58. Rob in CT says:

    Look, the money is going somewhere. Given the healthcare outcomes here versus countries that are paying a lot less, we’re getting ripped off.

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  59. superdestroyer says:

    @James:

    I will take that as a no. Romneycare is not on budget. Image what happens at the national level when the ACA results is spiraling costs and with some providers adjusting their practice. The call for single payer will become stronger. Given the demographic changes of the U.S., single payer is already a done deal. The only argument is when the U.S. will get there.

    Ok, if you can cut healthcare spending without lowering either headcount or salary, then how do you think it will occur and please give a reference.

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  60. @superdestroyer:

    You mean, like, with immigration?

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  61. superdestroyer says:

    @Brummagem Joe:

    Grain farmers and physicians who treat the elderly face the same economic situaiton. They are both price takers. The only way to stay in business is to increase output. But ACA is only to lower the reimbursements of many procedures to below costs so that care providers will not offer the proceudres (See Bexxar today).

    In the future of single payer, health care providers stay in business by either offering boutique services to the rich or cutting costs.

    My guess is that school teachers and healthcare providers will face the same low pay, bad working condition employment prospects.

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  62. Rob in CT says:

    For one thing, we already HAVE spiraling costs, pre-ACA.

    If we see post-ACA price increases *above* that trend, then the ACA can be accused of making the cost situation worse.

    So, Super, how does France do it? How do any of those other countries do it? Rationing, in case you were going there, is a non-answer, as a “free market” system rations too, just in a different manner (by ability to pay).

    These other systems WORK. None are perfect. But on balance most of them are superior to our own. If single-payer is such a disasterous idea, HOW CAN THAT BE?

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  63. James says:

    @Rob in CT: Yes, the money is going somewhere; it’s going to poorly coordinated care.

    @superdestroyer: Watch T.R. Reid’s latest report on the pockets of success in the United States on healthcare. Take your time to try and find the individual who advocates that “the only way to lower costs is to lower pay.”

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  64. Brummagem Joe says:

    @superdestroyer:

    My guess is that school teachers and healthcare providers will face the same low pay, bad working condition employment prospects.

    Take up your problem with someone else. I don’t dispute that the amount of income that healthcare providers receive for the provision of their services and that drug manufacturers receive for their drugs is going have to fall. Oxes are going to have to gored. However what is totally fatuous is your suggestion that this means there can’t be a large and flourishing healthcare system. France, Gernany et al prove that your bogeymen are as usual total bs.

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  65. James says:

    @superdestroyer:

    Romneycare is not on budget.

    Three points:
    A) You haven’t really established that. You’ve just submitted a Reason article whose author misunderstands healthcare markets.
    B) Massachusetts can’t control nationwide healthcare cost inflation trends. I’m really not sure what you’re point is supposed to be about Commonwealth Care’s budgetary situation beyond using it as a smokescreen for your own ideological assumptions.
    C) The Affordable Care Act differs form the Massachusetts plan specifically in how it approaches cost control.

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  66. al-Ameda says:

    @Stan:
    I believe that Switzerland has a national tax of 8% to pay for the insurance. Citizens can purchase the basic government mandated coverage plan from any private insurer, and purchase excess coverage if they desire – that sounds so sensible. No wonder we we’ll never adopt a system like that.

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  67. al-Ameda says:

    @Ron Beasley:
    Thanks Ron, it is my understanding that the Swiss permit the insurance companies to make a very limited “profit” on the basic plan. You’re right though, that would present a problem here.

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  68. al-Ameda says:

    @PogueMahone:
    Pogue, you’re a winner.

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  69. Stan says:

    @al-Ameda: The Swiss pay for the subsidies in their health insurance plan from the proceeds of a flat tax, we will pay for them out of general tax revenues, so the tax base for our plan is slightly progressive and more “socialist”. On the other hand, the insurance industry in Switzerland and in other countries with Bismarck type health insurance plans is tightly regulated, unlike ours. All in all, there really isn’t much difference between the Affordable Care Act and the health insurance plans in Switzerland, the Netherlands, and Germany. But those plans are being extolled by a few conservative policy wonks, and I can’t imagine why, apart from partisan politics.

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  70. Brummagem Joe says:

    @Stan:

    You guys keep focussing on how it funded. That’s not where the main cost problems are. Ultimately the reason these systems cost less is not how they’re funded, it’s intervention by the govt to keep the cost of delivery down. This is often via the medium of state directed insurance providers but ultimately it’s delivery where the cost containment takes place.

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  71. WR says:

    @Herb: “Leaving the decisions to the States? Awesome if you live in a reasonable state. A disaster if you live in a place ruled by asshats like California or Arizona. ”

    Right. Because California just decided to defund all women’s health clinics on the off chance that some slut might want an abortion at some point. And passed a law saying that if a women is carrying a deformed child or is at risk of death from the pregnancy her doctor has the right to lie to her and can’t be sued, even if this lie causes her death. Oh, and passed that other law saying that sluts have to be raped with plastic wand if they want an abortion.

    Oh, wait. California hasn’t done any of that. But they must be asshats, right? I mean, you said so. What kind of health care asshattery has my state committed? Oh, it must be San Francisco passing some ludicrous law ensuring that all residents have access to affordable care, even if they can’t get insurance. Oh, those asshats, how we should hate them.

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  72. george says:

    Nationalized healthcare in the U.S.? Hmm. Well, one thing’s for certain: Wealthy Canadians and wealthy Europeans will be most negatively affected. To where will they go for their life-saving operations?

    Life expectency in Canada and most European countries is as high as in the US, I don’t think the gov’t health care is affecting them much, if at all. And at least in Canada, the percentage going to the US for surgery is small, with one exception – cosmetic surgery. Lot’s of Canadians go to the US for that. Which suggests that cosmetic surgery isn’t handled as well by Canadian hospitals as it is in the US. This may indeed be an important issue for some.

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  73. jl says:

    @James Joyner: I haven’t seen recent updates but as of several years ago WalMart employees made up a large percentage of medicaid payments in the state of GA. That was probably due to the CHIPS program. WalMart has become a better employer but their health care plans are still too expensive for most employees.

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  74. jojo says:

    @James Joyner: As a peon employed by Wal-Mart, I disagree, although I wish you were right. The WM board is as ideologically driven as a publicly traded corporation can be; they will push for single-payer only if medical losses really, really impact profits and defeat their commitment to feudalism. And they can push an awful lot of the costs onto the majority of their passive and cowed employees for a long time yet.

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  75. Brummagem Joe says:

    @jojo:

    And they can push an awful lot of the costs onto the majority of their passive and cowed employees for a long time yet.

    I think this is true of Wal Mart because as you say they have their employees completely cowed (one of the reasons I never go there) but it’s becoming an increasing problem in industry. Management is coming to the end of the road in how much more of the burden it can shift onto employees so in that sense JJ has a point but it’s a matter of economics not politics as he suggests.

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  76. Jay says:

    @Brummagem Joe: Medicare reimbursements are lower that those of private insurers, but the insurance companies and hospitals peg their reimbursements/charges to the Medicare rates. So the prices charged by insurers are whatever the Medicare cost is + 10% or something.

    Medicare is less than the cost of the private insurers at any given moment, but the rate of growth is still higher than inflation.

    Assuming that oligarchies, lack of outcome-based-pricing, barriers to entry in the insurance market, market-warping tax breaks, and corrupt law-writing are bad things, then yes, we need to reevaluate how the government regulates and controls healthcare.

    Euro doctors certainly do well for themselves. I won’t argue that American doctors could take pay cuts. But thanks the Medicare reimbursement scheme (which again, sets the price structure for the entire industry), we have a small % of docs getting reimbursed at a very high rate, with many of our most important docs (OB, internal med, peds) being under-reimbursed.

    Finally, citing Japan is just overreach. They have a very different system that relies largely on their docs working 100+ hours and a very high rate of patient compliance. Neither of those states are tolerable in our culture. And if you think our Fed Gov could actually set specific reimbursement for every condition and not do so according to the highest bidder (AMA/Big Pharm/Big Insurance), then please, by all means, let’s get more Federal involvement. If not, you need a way to build price sensitivity into the system. I’d argue that our Fed Gov has proven incapable of doing so.

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  77. pcbedamned says:

    @Tsar Nicholas:

    Nationalized healthcare in the U.S.? Hmm. Well, one thing’s for certain: Wealthy Canadians and wealthy Europeans will be most negatively affected. To where will they go for their life-saving operations?

    Oh please, this again?~? Time for a new talking point, as this one has been overplayed. It is amazing that anyone other than Americans make it past infancy…ugh. As a Canadian, I have had a life saving surgery. Oh, and it didn’t cost me a cent (yeah, yeah, but the taxes!!!). When the taxes the average Canadian pays in comparison to the premiums paid by Americans for Health Insurance are weighed, it seems that Canadians come out ahead. Far more ‘bang for our buck’ if you will. Knowing that if I or any other Canadian, will not lose their home or their life savings if they get sick or injured, is worth my taxes. And as for the whole ‘rationing’ talking point, I for one have never been denied any type of health care. Nor has anyone that I personally know. See, it is the Doctor who makes the decision – not the government (or insurance company). As well, I don’t know or have heard from anyone that I know of having to seek care in the States. Instead of taking the wingnut talking points (and spewing them verbatim), research from both sides and listen to what actual Canadians (and Europeans) are saying. You will find that most are satisfied with the care they receive.

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  78. steve says:

    1) Medicare pays, on average, about 20% more than private insurers for the same procedure.

    2) On Massachusetts, its premiums have increased at about the same rate as states in the region, for group plans. For individual plans, they have slowed. SInce the plan was aimed at access, this is pretty encouraging.

    http://theincidentaleconomist.com/wordpress/a-summary-of-the-massachusetts-health-reform-experience/

    Steve

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  79. David M says:

    @steve:

    1) Medicare pays, on average, about 20% more than private insurers for the same procedure.

    You mean Medicare reimbursement rates are %20 lower than private insurers, right?

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  80. superdestroyer says:

    @David M:

    I know that for the clients I consult with, Medicare is the lowest reinbursement rate for procedures such as PET scans or heart stress tests. Medicare also limit the total number of tests in a year. If you have cancer, Medicare will reimburse for a maximum of three PET scans per year.

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  81. Carson says:

    One way to cut costs is to cut out all of the fancy frills and extravagance from health insurance. Many plans cover cosmetic surgery, fitness club expenses, “Viagra” and similar perverted trash, counseling, gym shoes, etc. If people want this, they could pay extra for insurance riders. Cut out all of the frills
    and just cover the basic needs. Develop cafeteria style plans with more choices and payment options. We can’t have it all and we can’t have itfor free: somebody has to pay and it should not always fall on the taxpayers!

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  82. @pcbedamned:

    As a Canadian, I have had a life saving surgery. Oh, and it didn’t cost me a cent (yeah, yeah, but the taxes!!!). When the taxes the average Canadian pays in comparison to the premiums paid by Americans for Health Insurance are weighed, it seems that Canadians come out ahead. Far more ‘bang for our buck’ if you will. Knowing that if I or any other Canadian, will not lose their home or their life savings if they get sick or injured, is worth my taxes

    Ah, but you see American conservatism is trapped in a “proud to be stupid” intellectual backwater.

    That you have better outcomes only makes them double-down on their “values” argument.

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  83. (In other words, “Better dead than Canadian.”)

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  84. Brummagem Joe says:

    @Jay:

    Medicare reimbursements are lower that those of private insurers, but the insurance companies and hospitals peg their reimbursements/charges to the Medicare rates. So the prices charged by insurers are whatever the Medicare cost is + 10% or something.

    Would you like to produce some evidence to back up this claim? Pricing for healthcare is set by the providers who are supplying a product for which the demand is inelastic. I’ve personally experienced a situation where a hospital system dropped an insurance company because it wouldn’t pay the prices it demanded. The idea that the entire pricing structure in the healthcare system and consequently medical inflation is driven by Medicare that buys about 20% of the product is total nonsense. Far from Medicare setting the prices it essentially gets dragged along behind the private sector.

    Finally, citing Japan is just overreach. They have a very different system that relies largely on their docs working 100+ hours and a very high rate of patient compliance.

    It’s not over reach it’s a fact in a very advanced society and I merely mentioned it as an extreme example of govt control of the process. But all Japanese doctors work 100+ hour weeks. I’d agree it disadvanteges the medical profession but this is fantasy.

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  85. Brummagem Joe says:

    @Carson:

    Many plans cover cosmetic surgery, fitness club expenses, “Viagra” and similar perverted trash, counseling, gym shoes, etc.

    Get out of fantasy land. Some may cover viagra but gym shoes and cosmetic plastic surgery?

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  86. Brummagem Joe says:

    @steve:

    Medicare pays, on average, about 20% more than private insurers for the same procedure.

    Another fantasy. Medicare rates are consistently below those of private insurers which is why some doctors won’t take Medicare patients.

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  87. superdestroyer says:

    @Brummagem Joe:

    Some physicians also limit the number of mediciare patients they take to limit the down side exposure.

    However, specialist like oncologist deal mainly with Medicare and hire consultants to tell them how to schedule patients and how to complete the Medicare claims to maximize reimbursements.

    That is why Medicare for all would be a disaster for health care. Many specialists would have to cut the expenses so much that they probably could not afford to continue.

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  88. Brummagem Joe says:

    @superdestroyer:

    That is why Medicare for all would be a disaster for health care. Many specialists would have to cut the expenses so much that they probably could not afford to continue.

    Nonsense. All these alternative systems essentiallly cap the price of treatments either by fiat (Japan), control of the entire delivery process (UK), or a controlled insurance pricing mechanism (France). And yet all of provide the full range of specialist treatments including oncology. The general philosophical point which you don’t get and JJ was attempting to explain is that ultimately government intervention in one of these forms will be required if the cost of delivering medical treatment is to be contained and brought into line with these other societies.

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  89. anjin-san says:

    I’ve personally experienced a situation where a hospital system dropped an insurance company because it wouldn’t pay the prices it demanded.

    Been there too. One of our regional medical groups had a massive expansion at their flagship hospital, and they were going to punt my carrier from our local hospitals because they would not pay higher rates to help fund it. No problem, we we assured, we could still use an ERs 20- 25 miles away and be covered. Very reassuring.

    They said they needed higher rates “to provide world class, cutting edge care.” In the pursuit of that goal they were willing to deny quite a few folks any care at all.

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  90. matt says:

    @Rob in CT: Yes despite the strict tort reform in Texas healthcare prices are as high as ever. Texas has some of the highest rates of uninsur4ed in the nation. So what do the right wingers do? They double down on “WE NEED MORE TORT REFORM!!!!”. I’m not even joking I’ve ran into some articles in the local paper from people saying that the tort laws down here are too liberal and need restricted badly…

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  91. WR says:

    @Brummagem Joe: It’s not fantasyland. It’s Foxland.

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  92. superdestroyer says:

    @Brummagem Joe:

    The government can demand that a procedure like Sirpheres be offered. However, it the drug cannot be manufactured for the price of reimbursement, then no one will manufactured.

    Currently there are several drug shortages in the U.S. because the cost of meeting of the government demands cannot be recovered due to the reimbursement rate of CMS.

    See http://pain.com/library/2011/02/17-pain-medication-shortages/

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  93. Brummagem Joe says:

    @superdestroyer:

    Currently there are several drug shortages in the U.S. because the cost of meeting of the government demands cannot be recovered due to the reimbursement rate of CMS.

    You should read your own links. Absolutely

    NOWHERE

    in this summary does it say that there are drug shortages because of the price of reimbursement. All it says is that the government doesn’t have the power to force companies to make drugs. Generally speaking non generic drugs in this country sell for 2-3 times what they do in Europe, so if you can’t sell them here and make money you can’t sell them anywhere. Now stop wasting our time with your idiotic non facts.

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  94. Brummagem Joe says:

    @WR:

    It’s not fantasyland. It’s Foxland.

    Maybe. But do these people have NO reasoning capacity whatever. This is an issue that could affect themselves or any menber of their family at any time. What do they do, just blank this out and believe that these issues are just something that affects other people. At bottom it’s a paucity of imagination, a not uncommon characteristic of conservatives in my experience.

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  95. WR says:

    @Brummagem Joe: “But do these people have NO reasoning capacity whatever. This is an issue that could affect themselves or any menber of their family at any time. What do they do, just blank this out and believe that these issues are just something that affects other people.”

    How many times have you seen a Republican legislator spend most of a career fighting against any government aid for, say, sufferers of any illness. And then someone they know comes down with a certain kind of cancer, and all of a sudden they’re introducing bills to fight that particular cancer. Because now they have empathy for those particular victims. But if someone presents a similar bill to fight a different disease, once again that’s a waste of government money.

    Which is a long way of saying: Yes, that’s exactly what they do.

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  96. reasonsformoving says:

    @Rob in CT:

    Of course, lowering the cost of medical education and lowering physician reimbursement also lowers the standard of living for one of the main avenues for working and middle class people to ascend to the upper class.

    Is there such a thing as trickle down economics?

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  97. Jay says:

    @Brummagem Joe:

    One thing we haven’t discussed is the difference between the price of something and what it actually “costs”. As I said in (I think) my first post, the UK, Canada, and the US all have trouble containing cost inflation. The other countries do it better, but their curve is pointed up, as is ours. Cost inflation exists in all the Western healthcare systems, and were we to magically have the Canadian system, we’d bankrupt eventually (it would take longer though, which is not insignificant I realize). The socialized systems have the ability to set whatever prices they like (particularly in the closed UK system), but they haven’t figured out how to bring down the actual cost/value of healthcare goods. The manifestation of that same thing in the US is cost shifting. Here’s a good discussion from NEJM: http://www.nejm.org/doi/full/10.1056/NEJMp1107019

    Cost shifting also explains the relationship between Medicare reimbursements and private reimbursements. Since a given Medicare reimbursement is considered to be the minimum rate tolerated by providers, the private insurers can only negotiate as low as Medicare + some percentage.

    Also, while Medicare doesn’t control the majority of the industry, it is the single largest player. The Gov programs together (SCHIP, Medicare, Medicaid) account for ~45%. So they have more negotiating power than any given insurer. Also, their political power matters…a well-know academic hospital can’t drop Medicare patients without risking a lot of things (like it’s not-for-profit status for example). But these large academic centers, which have grown over time as consolidation has become more profitable, can sometimes afford to reject a given insurer (like what you experienced).

    The rest of the suppliers (providers) cannot negotiate well enough to dictate prices as you say. Insurance companies are exempt from anti-trust laws. Docs aren’t. So they can’t out-negotiate the insurance companies.

    Finally, the goods that doctors sell aren’t really inelastic, right? The “good” isn’t just the medical procedure (which is inelastic). The “good” is providing that service according AND doing to according to a 3rd party contract (the insurance plan), to which the patient is cost-insensitive. And many of the more “optional” goods that would be elastic were they bought directly by the patient are, unfortunately, easily deferred until they become a potentially inelastic good, that then gets paid for by someone else, i.e. I don’t take my diabetes meds (which are relatively elastic/not-urgent), but when I need my foot amputated (inelastic good), I go to a hospital and they have to do the surgery via charity or get me on Medicaid).

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  98. Brummagem Joe says:

    @Jay:

    The socialized systems have the ability to set whatever prices they like (particularly in the closed UK system), but they haven’t figured out how to bring down the actual cost/value of healthcare goods.

    Cost and value are different things. You obviously don’t know the difference. And while all these government controlled systems face cost pressures (more because of aging populations than anything else) they have self evidently been far more effective than than us at containing the cost of delivery as JJ’s chart demonstrates and the whole point of which is that we’re going to go bankrupt far sooner than Canada or anyone else if we continue along the current trajectory.

    You’re also mistaken is believing that all govt programs function as one purchasing agent.

    Finally, the goods that doctors sell aren’t really inelastic, right? The “good” isn’t just the medical procedure (which is inelastic). The “good” is providing that service according AND doing to according to a 3rd party contract (the insurance plan), to which the patient is cost-insensitive. And many of the more “optional” goods that would be elastic were they bought directly by the patient are, unfortunately, easily deferred until they become a potentially inelastic good, that then gets paid for by someone else, i.e. I don’t take my diabetes meds (which are relatively elastic/not-urgent), but when I need my foot amputated (inelastic good), I go to a hospital and they have to do the surgery via charity or get me on Medicaid).

    This is gobbledegook. And btw most diabetes meds can’t be deferred.

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  99. Brummagem Joe says:

    @Jay:

    The socialized systems have the ability to set whatever prices they like (particularly in the closed UK system), but they haven’t figured out how to bring down the actual cost/value of healthcare goods.

    Cost and value are different things. You obviously don’t know the difference. And while all these government controlled systems face cost pressures (more because of aging populations than anything else) they have self evidently been far more effective than than us at containing the cost of delivery as JJ’s chart demonstrates and the whole point of which is that we’re going to go bankrupt far sooner than Canada or anyone else if we continue along the current trajectory.

    You’re also mistaken is believing that all govt programs function as one purchasing agent. Btw you might actually want to read that item you linked to. Much of it is about the monopoly power of healthcare providers to set prices.

    Finally, the goods that doctors sell aren’t really inelastic, right? The “good” isn’t just the medical procedure (which is inelastic). The “good” is providing that service according AND doing to according to a 3rd party contract (the insurance plan), to which the patient is cost-insensitive. And many of the more “optional” goods that would be elastic were they bought directly by the patient are, unfortunately, easily deferred until they become a potentially inelastic good, that then gets paid for by someone else, i.e. I don’t take my diabetes meds (which are relatively elastic/not-urgent), but when I need my foot amputated (inelastic good), I go to a hospital and they have to do the surgery via charity or get me on Medicaid).

    This is gobbledegook I’m afraid. And btw most diabetes meds can’t be deferred.

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  100. Brummagem Joe says:

    @reasonsformoving:

    Of course, lowering the cost of medical education and lowering physician reimbursement also lowers the standard of living for one of the main avenues for working and middle class people to ascend to the upper class.

    Now one of the purposes of the healthcare system is to provide a means of social and economic advancement for the working and middle class? LOL. Not that doctors in all these other societies aren’t generally at the higher end of the social/economic scale. In fact in many ways they are the sole holdover from the old village power structure of squire, parson and doctor.

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  101. Jay says:

    @Brummagem Joe:

    “Cost and value are different things. You obviously don’t know the difference.”

    Not sure what you mean here. I was arguing that cost and prices are different things. R u agreeing? And I enjoy these discussions to a point, but your snark is distracting and getting old.

    “You’re also mistaken is believing that all govt programs function as one purchasing agent”

    I don’t think I claimed this.

    “Btw you might actually want to read that item you linked to. Much of it is about the monopoly power of healthcare providers to set prices.”

    So most of the article is about how large systems are fighting back against the insurance companies by creating monopoly power. But these systems do it by cost sharing (which explains partially the relationship between private and Medicare reimbursements). But the majority of providers do not have this luxury, and, in any case, the ones who do are still not keeping prices down.

    “This is gobbledegook I’m afraid. And btw most diabetes meds can’t be deferred.”

    Le’ts try again. You keep saying the good is inelastic. So starting with a diabetes med, which is a common medical good, and also not inelastic, since most people don’t feel like they absolutely need it: if I have insurance, then I am not affected by the price in the way I am in your Micro 101 textbook. I pay a copay and my doc bills my insurance. If I don’t have insurance, then I am free to defer (aka procrastinate) in my medical care and not take the med. In either situation, if I ever get to the point where I require the truly inelastic procedure (leg amputation to prevent life-threatening infection), then the insured pt is again covered by insurance and is price-insensitive, so, to them, the good isn’t actually inelastic in the economic sense, since they didn’t negotiate for the price, which therefore does not reflect their need for the good. So all those great economics from 101 that talk about elasticity do not apply. If I don’t have insurance, then I go to the hospital, get admitted because the ED can’t refuse me, and get the operation by charity care or by Medicaid. So from the patient’s POV, the good was never elastic or inelastic, since the pricing was set beforehand by other factors.

    I’m taking the time to explain this so you understand why most providers do not have the power to just set prices. They are very sensitive to insurance companies (unless, as the articles states, they are part of a large hospital) and totally unable to negotiate with Medicare at all.

    And despite this climate, our prices are still not going down.

    Again, I said that other countries do a better job than us in controlling costs, but that they haven’t solved the problem. We would still bankrupt under a Canadian or UK system; it would just take longer. Here is the oft-cited graph (buried within an Ezra Klein article!) that shows the rates of growth. Our rate is horrible. The other countries show growth rates that are less-bad but still unsustainable. That’s the problem. http://www.washingtonpost.com/blogs/ezra-klein/post/health-care-jobs-are-growing-fastest–and-that-might-not-be-good-news/2011/08/02/gIQAby3kwI_blog.html

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  102. Brummagem Joe says:

    @Jay:

    “Cost and value are different things. You obviously don’t know the difference.”

    Not sure what you mean here. I was arguing that cost and prices are different things.

    No you weren’t. you said

    The socialized systems have the ability to set whatever prices they like (particularly in the closed UK system), but they haven’t figured out how to bring down the actual cost/value of healthcare goods.

    There is no way any govt can bring down the value of healthcare. It’s an abstract perception. Prices are to a large extent a factor of cost in govt controlled systems (and obviously it’s an ongoing battle which they are better at than we are) whereas value is something totally different. It’s not snark, you obviously don’t know the difference and therefore debating the economic framework of the healthcare industry is futile.

    So most of the article is about how large systems are fighting back against the insurance companies by creating monopoly power. But these systems do it by cost sharing

    As I recall it doesn’t mention fighting back this is another of your inventions. In fact the article just contradicted the central premise of your argument that providers aren’t setting prices. But don’t let that stop you making the same claim.

    Look if you don’t want to believe the overall demand for healthcare is inelastic and that this doesn’t confers enormous economic leverage on the providers it’s fine by me. But it’s one of the basic economic facts of the healthcare business as anyone who knows anything about this will tell you.

    We would still bankrupt under a Canadian or UK system; it would just take longer.

    So what are you arguing for….. going bankrupt sooner with the US system?

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  103. Eric Florack says:

    National healthcare is coming because 60’s radicals are running the show.
    Period, full stop.

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  104. James says:

    @Eric Florack: mmm…yes. All those radicals with their comparative effectiveness studies.

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  105. An Interested Party says:

    National healthcare is coming because 60′s radicals are running the show.

    Oh, woe is me! Wherever is the Great Conservative Hope to save us all…

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  106. Anthony says:

    Well…there’s the alternative of medical tourism ;) Going to India to be treated can literally save not just your life but your bank account as well, CMRF are experts (www.cmrf.in).
    On a different note, funny how providing basic healthcare for the citizens are always viewed as “European” while on the other side of the pond they call it “American” when someone is brave enough to suggest that the citizens should begin to pay for certain healthcare services. Food for thought…

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