The Real Problem With Health Care

Or one could say, the more serious problem with health care is the growth rate of health care expenditures. Projections for health care expenditures by Health and Human Services show health care spending growing at a rate exceeding 6% out to 2016. Keep in mind that GDP grows at about 3 – 4% each year. If this kind of growth holds steady long enough you have a growth path that is unsustainable. For example, consider an economy with a GDP of $100 and where health care expenditures are 16% of GDP (like it is right now in the U.S.) and you have an economy growing at 4% (a strong assumption in terms of economic growth) and you have only 6% growth for health care (a weak assumption). In 50 years time 40% of the GDP will go only to providing health care. In 100 years, 105% of GDP will go towards providing health care.

I find it funny that so many people are upset about something like global warming when by comparison the costs will be trivial. Clearly there will be a major crisis with regards to health care expenditures in well before we get to 105% of GDP. Also, this is why health care plans that actually are geared towards expanding access to health care, i.e. increasing demand, and with nothing to address the supply side of the issue are not only lacking in seriousness, but fool hardy as well.

However, the problem with the millions of uninsured is part of the problem in rising health care costs. When people who don’t have insurance and go to get care, even routine care, they typically go to the emergency room for such care. This is quite expensive. And even people with health benefits are frequently told to go to the emergency room with non-emergency health problems that they feel can’t wait for a day or so. So the idea that getting these people access to health care via some plan while helpful wont do all that much to reduce expenditures. Moving these people into Medicare isn’t a solution either since Medicare is already facing a massive shortfall.

So here we see a situation where fixing the problem with people lacking access to health care could actually exacerbate the underlying problem of health care expenditures. This is one of the major reasons why I don’t like Senator Clinton’s plan (or any candidate’s plan for that matter). There is damn little in her plan that addresses the issue of expenditures. Everybody wants to focus simply on the demand side. Make health care access universal, get uninsured kids insured (SCHIP), make minimal health care benefits mandatory (Sen. Clinton). At best we get lip service in addressing the supply side and even there it is of a dubious nature such as using the coercive power of the state to get a better deal on prescription drugs. Sounds good, but the long term effect is similar to price controls and will only reduce supply, not increase it. And when you reduce supply, increase demand, then prices go up even more.

Of course, doing something like breaking the barriers to entry to the medical profession that are advocated by the AMA and enforced by the government…why that is just crazy talk. There is a shortage of nurses in this country, so much so now companies are bringing nurses from overseas (link). With regards to doctors, the U.S. is producing about 1 doctor for every doctor that retires, and this has been the case since about 1985 (link). And in the not too distant future lots of doctors are going to be retiring with the baby boomers…a time when we’ll need even more doctors. And keep in mind that the number of doctors is a political decision, not one made by the market place. The supply side of the problem is a major part of the problem that needs to be addressed and which is all too routinely ignored.

FILED UNDER: Campaign 2008, Economics and Business, Health, US Politics, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Michael says:

    I find it funny that so many people are upset about something like global warming when by comparison the costs will be trivial.

    I think you either over-estimate the cost of increased health spending, or under-estimate the cost of global warming. Over spending on health won’t ever render the earth uninhabitable by humans. It’s also a self-correcting problem, at some point health care becomes unavailable. Global warming is not self-correcting on human timescales, and certainly not with a human-friendly corrected state. The damage done in 50 years of 6% grown of health spending may take another 50 years to correct, but 50 years of increased CO2 emissions will take hundreds to thousands of years to correct on its own.

    Also, this is why health care plans that actually are geared towards expanding access to health care, i.e. increasing demand, and with nothing to address the supply side of the issue are not only lacking in seriousness, but fool hardy as well.

    Ok, so what are our options for increasing on the supply side? I’ve already made my recommendations, lets not require an MD for basic and routine medical care. Lets lower the bar for treating non-emergency situations, and provide some base level medical education to the public. I learned CPR in high school, why not teach how to treat infections? How about letting me get antibiotics for my kids when they get an ear infection? Why can’t the pharmacist check if he has strep or just a sore throat? Why isn’t there a home test for that?

  2. Patrick T. McGuire says:

    The problem with the cost of health care all boils down to three causes:

    1> People will go to a doctor for any small infliction, real or imagined, expecting immediate cures, usually in the form of a pill.

    2> These people then expect their insurance to pay for everything and so will claim a $50 doctor bill against their insurance, increasing the cost of insurance.

    3> And if these people don’t get the results they expect from the doctor, they sue, making multi-millionares out of the likes of John Edwards, driving up the cost of malpractice insurance which drives up the cost of medical care.

    Until people get out of the frame of mind that they need to go to the doctor every time they get a sniffle and then expect someone else to pay for it, medical costs will continue to go up.

  3. Michael says:

    2> These people then expect their insurance to pay for everything and so will claim a $50 doctor bill against their insurance, increasing the cost of insurance.

    That’s nothing. My son was getting Physical Therapy for a while, and to pay out-of-pocket would have cost us $70/session. But our insurance paid for 20 visits, so we used them. Later we found out that the clinic was billing our insurance at $210/session.

    I think that medical care should have a set and advertised price, no matter who is paying. How many people know in advance how much a doctor’s visit, X-ray, or vaccine is going to cost (including what your insurance is going to pay, not just your co-pay)? I never see a listed price, I just get it done and hope insurance pays enough that I can afford the remainder. I certainly don’t know which doctor in my area has the best rates, do you? How can free market forces keep prices in check without price-based competition?

  4. anjin-san says:

    I find it funny that so many people are upset about something like global warming when by comparison the costs will be trivial.

    Yea, who gives a crap about a bunch of polar bears? Does not affect our lifestyle…

  5. Hal says:

    I find it funny that so many people are upset about something like global warming when by comparison the costs will be trivial.

    Aside from the obvious reply that you’re probably way off base on your estimates, the thing about health care is that we know the solution and we already have multiple examples running over many decades of successful resolutions of the “problem”.

    The problem is that we simply don’t like the solution.

  6. Steve Verdon says:

    Michael, Hal and Anjin-san,

    I have yet to see such dire predictions…well aside from the ravings of Al Gore. I have yet to see a prediction that the planet will be uninhabitable by humans.

    Ok, so what are our options for increasing on the supply side?

    Are you serious Michael, I believe I’ve already covered one aspect of the solution.

    Global warming is not self-correcting on human timescales, and certainly not with a human-friendly corrected state. The damage done in 50 years of 6% grown of health spending may take another 50 years to correct, but 50 years of increased CO2 emissions will take hundreds to thousands of years to correct on its own.

    First, I’ve never seen any reasonable study indicating that warming over the next 50 years is going to render the entire globe uninhabitable by humans. Second, you seem to be stuck in the non-economist view here. We have limited resources. Resources are finite. You can’t grow the world’s food supply in a flower pot, and you can’t expand health care to millions of people (especially on a global scale) and introduce a stringent policy for global warming. Just. Not. Going. To. Happen. You can’t devote and increasing share of your output to one activity while systematically engaging in a policy that curtails output.

    Aside from the obvious reply that you’re probably way off base on your estimates, the thing about health care is that we know the solution and we already have multiple examples running over many decades of successful resolutions of the “problem”.

    Really Hal? What successful example is that? Every government run program that I know of around the world is running into the same problem we are, costs rising at a rate higher than economic output. And remember it has to be “successful”. Simply letting the system run until it collapses doesn’t quite qualify in my book. Restricting supply based on the whims of the political solution doesn’t appear to work either. Exactly what solution do you have in mind?

  7. Steve Verdon says:

    And Patrick, you are still looking at only the demand side. While I think we need to address that side of the problem as well, we can’t ignore the supply side.

  8. Anderson says:

    I think that medical care should have a set and advertised price, no matter who is paying.

    Agreed. What’s going on would look an awful lot like fraud, in any other line of work.

    Also agreed w/ Steve that we need to break the quota system on doctors.

    Anecdote: my boss’s daughter, a smart girl and straight-A student in high school, went to college planning to become a doctor. She changed her mind after encountering the chemistry survey course, which of course was taught by a chemistry prof with the needs of actual chem majors put first.

    How often does that kind of thing happen? How many practitioners really need more than a rough grasp of chemistry? How many other hoops of fire are in place to artificially limit the number of physicians?

  9. Michael says:

    Are you serious Michael, I believe I’ve already covered one aspect of the solution.

    There’s no need to be combative, it was a genuine question. You support reducing the barrier to entry, but didn’t specify what form that barrier took, and how to reduce it. And again, would more doctors and nurses drive down the cost of health care, and how?

    First, I’ve never seen any reasonable study indicating that warming over the next 50 years is going to render the entire globe uninhabitable by humans.

    No, the warming over the next 50 years wouldn’t do that, obviously, but the emissions over the next 50 years, of kept to current pace, would continue causing warming over the next several hundred years, and the rate of warming will be exponential to the rate of emission due to the positive feedback loops caused by the greenhouse effect.

    You can’t devote and increasing share of your output to one activity while systematically engaging in a policy that curtails output.

    Which is exactly why I don’t want to see us in a situation where we have to devote a share of our output to reversing global warming, preventative medicine is cheaper that reactive medicine after all. Reducing emissions now will reduce total output because of reduced efficiency, yes, but we are going to have to fix this at some point, and it will only get more expensive the more CO2 we dig up.

    But let’s stick to the health care issues for this thread, because that is an area where I haven’t seen enough options discussed.

  10. Dave Schuler says:

    You’re playing my song, Steve!

    Scattershot, here are a few observations.

    I think we’ve already reached a crisis point in healthcare spending we just don’t realize it yet. We’ve picked the lowhanging fruit in new pharmaceuticals and treatments. An increasing amount of investment is going into relatively unproductive lines of research. This would be all well and good except that other areas of the economy aren’t getting enough investment due to the distortions produced by our bizarre healthcare system.

    Approaches for reducing costs:

    – standardize and automate claims reporting
    – revise medical education (we’re educating physicians and researchers through the same tracks)
    – more medical schools
    – more nursing schools
    – more paths to the MD—apprenticeships, reading medicine, etc.
    – more automation
    – revise the prescription drugs laws
    – revise IP laws
    – revise laws, regulations, rules on telemedicine
    – remove non-competitive regulations on hospitals
    – mandatory published fee schedules
    – company paid insurance should be declared as income

    We shouldn’t be thinking in terms of a 20% increase in supply or a 30%. We should be thinking in terms of a 100% or 200% increase in supply.

  11. Dave Schuler says:

    Add to the above

    – revisions in the funding an procedures on drug and treatment approval by the FDA

  12. jeff b says:

    Some studies lead me to believe that health care spending is supply driven, with a bit of a cartel thrown in. In areas with numerous specialists, visits to specialists are higher, even controlling for age and illness. This is true in, for example, Miami, where it seems that every third person is a physician.

    The problem as I see it is that insurance is currently warping the market. Ancient, decrepit people get as many expensive special treatments as can be found to extend their life by one more week. Meanwhile other people cannot afford very basic care because physicians are drawn by economics into specialties rather than generalities.

    I believe that we should have a national health care insurance program which reimburses health care costs starting with the very basics like infection and injury, and pays the entire cost up to some bright line. Any treatment or care above the line will simply be paid by the patient at the market rate. It seems to me that this will solve the supply-driven problem we currently have while reaping the benefit of a healthier population.

  13. Hal says:

    Really Hal? What successful example is that? Every government run program that I know of around the world is running into the same problem we are, costs rising at a rate higher than economic output. And remember it has to be “successful”. Simply letting the system run until it collapses doesn’t quite qualify in my book. Restricting supply based on the whims of the political solution doesn’t appear to work either. Exactly what solution do you have in mind?

    Ah yes, “successful”. So, if they don’t have > 10% of their population completely uncovered, is that “successful”? The problem, Steve, is that you haven’t – as I recall – ever defined “successful”. No metrics.

    So, when you come up with some metrics for this determination of “successful”, it’d be nice to continue the conversation. It’s a bit hard to argue in a metric-less conversation where metrics are demanded.

  14. Tlaloc says:

    Second, you seem to be stuck in the non-economist view here.

    Steve given what a genuinely bad field of knowledge economics currently is (in the sense that it is absolutely terrible at making accurate predictions, which is the only real measure of a field of human knowledge) you might not want to brag about “thinking like an economist.”

    Especially when your economics thinking just lead you to such an idiotic conclusion that economic problems are more fundamental than ecological ones. Hint- we have total and absolute control over the economic systems we use, we could, if we wanted, change literally everything about our economy tomorrow, and by fiat.

    We have an incredibly limited capacity to control the environment because it is based on a system with huge amount of momentum and that runs according to physical laws and not merely economic perceptions.

    That you;d seriously write that a trivial and self correcting problem like health care costs not only compares but overshadows an issue of extinction like environmental collapse (you do realize that pretty much every time in the past that there’s been a big change in temperature the earth has lost between 30-80% species, right?) means you’ve got that peculiar economists myopia where you not only believe the BS economic theories but you see them as superior to far more advanced fields of knowledge.

    Seriously, put the econ book down, you have a lot of unlearning to do.

  15. just me says:

    I think Dave’s list makes a lot of sense.

    I think one problem with insurance is that it hides the cost of medical care.

    When we aren’t footing much more than $15 co-pays per visit or test, we don’t pay much attention to the real costs.

    It also bothers me that insurance companies are able to negotiate lower then supposed market value rates, while the uninsured actually pay a higher amount.

  16. Michael says:

    It also bothers me that insurance companies are able to negotiate lower then supposed market value rates, while the uninsured actually pay a higher amount.

    I’m not sure that is exactly the case. Insurance companies negotiate a rate that they agree to pay a covered provider for a service, but the provider can charge whatever rate they see fit to charge, usually billing the patient for the remaining balance and/or writing off the remaining balance as a tax deductible financial loss.

  17. Michael says:

    Which goes back to my earlier objection, for any given procedure I don’t know what rate my doctor is going to charge, let alone how that rate compares to other local doctors. I don’t know how much my insurance company has agree to pay my doctor for that procedure, let alone how much they have agreed to pay other local doctors for the same procedure. I don’t know how much of the remainder the doctor is going to write off, and how much he is going to send to a collections agency to get me to pay.

    When my insurance said they pay 100% after my deductible, I assumed it meant I don’t have to pay anything else (0%), when what it actually meant was that they will pay 100% of what they agreed to pay my doctor, not 100% of what my doctor is going to charge. That is how I got 10k in medical bills from a single child birth, even with 100% medical coverage from my insurance (deductible had already been met).

  18. Michael says:

    Oh, and one last complaint (why not, I’m on a roll), my insurance listed both my wife’s OB/GYN and our local hospital where the delivery took place as “in network”, which is why we chose them. It turned out that the anesthesiologist working at the hospital that night was “out of network”, yet we were never told, never given the choice of anesthesiologist, didn’t even know his name until he was already doing his thing. Again, we assumed that the hospital being “in network” meant that the people working there were “in network”, but the anesthesiologist didn’t technically “work there”, he was contracted to work “at” the hospital, but not “for” the hospital, and billed separately from his own office.

  19. Steve Verdon says:

    Michael,

    There’s no need to be combative, it was a genuine question. You support reducing the barrier to entry, but didn’t specify what form that barrier took, and how to reduce it. And again, would more doctors and nurses drive down the cost of health care, and how?

    I don’t think I need to recapitulate previous posts every single time I write on health care. Further, the links in the article gave some background on why there are barriers to entry. The number of doctors is set by political fiat.

    No, the warming over the next 50 years wouldn’t do that, obviously, but the emissions over the next 50 years, of kept to current pace, would continue causing warming over the next several hundred years, and the rate of warming will be exponential to the rate of emission due to the positive feedback loops caused by the greenhouse effect.

    I have seen nothing that supports this claim and all the studies looking at the costs, even the ones that are wildly on the high side (e.g. the Stern Report) do not put the numbers anywhere near a level indicating uninhabitable by humans.

    Which is exactly why I don’t want to see us in a situation where we have to devote a share of our output to reversing global warming, preventative medicine is cheaper that reactive medicine after all.

    All global warming policies save business as usual would devote some portion of economic output towards reducing GHGs. Even if it is merely via reduced output.

    As for preventive medicine that is the scoundrels refuge when it comes to health care discussions. No amount of preventive medicine will address the demographic shifts that will lead to increased demand, reduced supply of doctors, nurses, hospitals, as well expanding by millions the number of people who will get better access to health care resources.

    Reducing emissions now will reduce total output because of reduced efficiency, yes, but we are going to have to fix this at some point, and it will only get more expensive the more CO2 we dig up.

    And the very same argument holds for health care and is far, far less nebulous when it comes to costs. What are the costs of global warming? Most of it is a fair amount of guess work. But we have very solid evidence indicating that health care growth rates have been unsustainable for decades, and will likely remain so.

    Anderson,

    How often does that kind of thing happen? How many practitioners really need more than a rough grasp of chemistry? How many other hoops of fire are in place to artificially limit the number of physicians?

    In a perfect world, I’d like them all to be experts. However I realize we don’t live in that world by a long shot. This is what pharmacists exist for and who go through much more rigorous coursework on chemistry, drugs and their interaction effects than doctors.

    Dave,

    In general I agree with just about everything you’ve suggested. There might be some details were we’d disagree, but that is not a bad list of things to start on. Of course, such a list would mean any candidate putting it forward would have a tough time getting elected.

    Hal,

    Ah yes, “successful”. So, if they don’t have > 10% of their population completely uncovered, is that “successful”? The problem, Steve, is that you haven’t – as I recall – ever defined “successful”. No metrics.

    I’d say a minimum measure of success is a system that isn’t going to bankrupt the society implementing said system. Even the French officials are starting to talk of more market oriented reforms.

    And I’ll also note your shifting the burden of proof here. YOU were the one who brought up the “multiple examples running over many decades of successful resolutions of the ‘problem’.” I see you still haven’t posted a single one of these multiple examples.

    Tlaloc,

    Steve given what a genuinely bad field of knowledge economics currently is (in the sense that it is absolutely terrible at making accurate predictions, which is the only real measure of a field of human knowledge) you might not want to brag about “thinking like an economist.”

    Sorry Tlaloc, given that most people can’t grasp the concept of opportunity cost I think I’ll pass on your suggestion.

    Especially when your economics thinking just lead you to such an idiotic conclusion that economic problems are more fundamental than ecological ones.

    Wrong conclusion, for such a supposedly smart person. The point is that you can’t fix the ecological problem when your economy is facing a serious financial crisis like the looming health care crisis. We can’t stay on this course for too much longer without risking serious economic problems. Answer this one, Mr. Genius, which countries tend to have the better environmental records? The ones with advanced, wealthy economies like the U.S., Canada, and Western Europe, or the poor one’s like the Third World, or Eastern Europe and the Former Soviet Union? if the economy goes south in a major way, people aren’t going to give two shits about global warming.

    We have an incredibly limited capacity to control the environment because it is based on a system with huge amount of momentum and that runs according to physical laws and not merely economic perceptions.

    We have an incredibly limited capacity to control the economy too, in case it has escaped your notice. And the economy is a large system that is interconnected that also can generate large amounts of inertia. Why do you think nothing has been done about health care? By the way, I’ll note that if indeed your worst fears are true about global warming, it will be the economy that brings them about.

    That you;d seriously write that a trivial and self correcting problem like health care costs not only compares but overshadows an issue of extinction like environmental collapse (you do realize that pretty much every time in the past that there’s been a big change in temperature the earth has lost between 30-80% species, right?) means you’ve got that peculiar economists myopia where you not only believe the BS economic theories but you see them as superior to far more advanced fields of knowledge.

    Clearly, you are an idiot. You don’t understand the concepts of opportunity costs or relative costs/prices.

    Michael again,

    The problems you are pointing to are that health care is not consumer driven. Try looking at the work of Regina Herzlinger.

    Further, while I see how such a problem can be very difficult, at the same time making your health care costs everybody else’s problem as well (i.e. via some sort of subsidized government program or something) wont solve the problem of health care expenditures rising faster than GDP. I think increasing the supply of doctors, the number of hospitals, and so forth would help keep those costs down. Admittedly it wouldn’t help you right now, but then again not much can short of winning the lottery or some other improbable event.

  20. Dave Schuler says:

    such a list would mean any candidate putting it forward would have a tough time getting elected.

    On this we agree, too. As I see it the problem now is that bad solutions will be adopted in a panic because, caught between the poles of those for whom any socialization (including the socialization we already have) is anathema and those for whom no less than BNH will do, it’s politically less costly to avoid real solutions.

  21. Michael says:

    The problems you are pointing to are that health care is not consumer driven. Try looking at the work of Regina Herzlinger.

    I can’t quite justify $50 to buy the book, but from the reviews on Amazon it seems that she and I share some of the same ideas (or at least desires) about “consumer-driven healthcare”. I’m not sure I agree with some of her ideas like specialized hospitals, and she seems to focus more on consumer-driven health insurance options, rather than direct out-of-pocket health care. I’m also not sure about her timelines, she thought that a consumer-driven health care market was “imminent” in 1999, and in 2004 thought the time was right for it to occur. Now, in 2007, we seem to be further from that goal than ever before.

    I think increasing the supply of doctors, the number of hospitals, and so forth would help keep those costs down.

    I don’t even see why we need doctors to perform all of our health care needs. You don’t take you car to a mechanic for everything that goes wrong with it do you? I change my own oil, my own brakes, my own spark plugs, and I know next to nothing about cars. I think a little more general health care knowledge among the population at large, and the ability to provide some measure of health care for themselves, would reduce the demand for doctors, accomplishing the same result while costing consumers significantly less. Doubling the number of car mechanics in your town may make changing your breaks a little bit cheaper due to competition, but knowing how to do it yourself makes it much much cheaper.

  22. Hal says:

    Okay Steve, I’ll retract my claim and take a different line of argument.

    Let’s say that we froze all health care spending in the US at the current levels and just adjusted for inflation and population growth. Would that bankrupt our system? Well, only if inflation went out of control or population growth did likewise, or some combination of both. Am I good so far?

    What’s the effect of this freeze? Well, it means all research is basically frozen at the current levels, so medical advances don’t come that fast. This means that we’re probably not going to save as many people as we could have, and we probably will have to put up with things that aren’t fatal or debilitating but still drag on us. But the important point here is that we’re clearly no worse off for performing this freeze – i.e. what’s “lost” is the potential moving forward.

    So, unlike global warming, the health insurance “problem” is solvable. You may not like this particular solution, but it’s pretty simple.

    Now, before we continue into the uncharted seas, do you agree with the above analysis, or do you have to school me on some economics that I’m missing in my simplistic solution above?

  23. Michael says:

    I believe that what Hal is getting to is that the time gap between cause and effect is relatively immediate in the economy, but not so with the ecology. Economists speak in terms of years or at most decades, Ecologists speak in terms of decades to centuries, sometimes millenniums. Even if we stopped all Green House emissions tomorrow, global warming would continue for tens, even hundreds of years before reaching a new equilibrium. Even worse, one more year of emissions doesn’t cause one more year of warming, but tens of years of warming.

  24. Hal says:

    That’s mostly what I was getting at. But it’s also that Steve somehow thinks there’s something *intrinsic* about health care costs that are making it spiral out of control. It’s only going up because people are paying for it. At some point we’ll stop paying for it and while we now won’t all become cyborg bloggers like Glenn Reynolds, we won’t be worse off than we are now. The massive costs Steve is predicting will simply vanish.

    Contrast this with global warming, which – as you point out, Michael – is a very complex, non-linear system that will continue to screw us over well after we cut emissions down to the point where we stop contributing to the problem.

    Steve somehow has to posit the equivalent regarding health care – maybe cyborg doctors will continue to drive up costs well after we stop paying for them through some as yet undiscovered economic principle.

  25. Steve Verdon says:

    Michael,

    $50? The one I was looking at was half that price. Also, some of her articles should be available in the local university library and copying is cheap(er). Granted it is more leg work for you, but…well as I’ve been trying to point out in many of my posts here on OTB, nothing is free.

    I don’t even see why we need doctors to perform all of our health care needs.

    On this one we are in agreement. Nurses (nurse practitioners) have been picking up some of the slack, and hopefully it will be a continuing trend. This could help solve some of the problem.

    I change my own oil, my own brakes, my own spark plugs, and I know next to nothing about cars. I think a little more general health care knowledge among the population at large, and the ability to provide some measure of health care for themselves, would reduce the demand for doctors, accomplishing the same result while costing consumers significantly less.

    I agree to some extent here as well. Self-medication isn’t always a bad thing. I was on a camping trip with my son (Cub Scouts) and I got hit with food poisoning. I didn’t go to the camp medic, I didn’t leave the camp, I merely suffered in my tent knowing with a fairly high probability it would pass (no pun intended). Sure enough it did, and I enjoyed the rest of the trip. My wife and I also medicate our son. When he has a fever, we give him childrens advil. When he has congestion we give him a decongestant, etc. Having some place to call into and ask questions and get advice is also not bad either. Heck it could even possibly be outsourced to Pakistan.

    Hal,

    Let’s say that we froze all health care spending in the US at the current levels and just adjusted for inflation and population growth. Would that bankrupt our system?

    Probably not, in that case we’d probably see health care expenditures growing at or less than the rate of growth for GDP.

    What’s the effect of this freeze? Well, it means all research is basically frozen at the current levels, so medical advances don’t come that fast.

    A reasonable conclusion.

    This means that we’re probably not going to save as many people as we could have, and we probably will have to put up with things that aren’t fatal or debilitating but still drag on us.

    Yes, also reasonable.

    But the important point here is that we’re clearly no worse off for performing this freeze – i.e. what’s “lost” is the potential moving forward.

    So, unlike global warming, the health insurance “problem” is solvable. You may not like this particular solution, but it’s pretty simple.

    Yes and no. Global warming is also “solvable” in the sense that we could limit the output of GHGs, or at least slow the rate of growth, much like you are suggesting with health care expenditures. Of course, from what I’ve read even reducing GHG output wouldn’t have much impact on future temperatures. But that really is another topic, IMO.

    Michael again,

    I believe that what Hal is getting to is that the time gap between cause and effect is relatively immediate in the economy, but not so with the ecology.

    In theory, sure, but then again in theory we also have perfect competition. In reality, interest groups are going to fight tooth and nail to prevent such changes. The Baby Boomers will hate the idea of having health care expenditures frozen at a growth rate to account for inflation and population change. In the end, they’d get less care than they were counting on. Similarly, current Medicare beneficiaries are going to be very leary of such a plan. As such there is going to be tremendous pressure to kill such a plan or, water it down considerably via “grandfathering”, etc.

    Economists speak in terms of years or at most decades, Ecologists speak in terms of decades to centuries, sometimes millenniums.

    I would like to point out that so far the GW issue has been framed in terms of 100 years into the future. Further, that health care expenditures are going to be a serious problem within the next 50 years. When it comes between struggling in an economy that is dealing with a very serious financial crisis and saving the environment most people are going to say, “F*ck the polar bears.”

    You can’t ignore either the long run or the short run. In focusing only on global warming and not taking a long and serious look at health care expenditures you are putting both at risk in sense that you wont have the resources to deal with either.

    Hal again,

    That’s mostly what I was getting at. But it’s also that Steve somehow thinks there’s something *intrinsic* about health care costs that are making it spiral out of control. It’s only going up because people are paying for it.

    No this is not correct, and rather ironic in that I’ve been the one arguing that health care is like most other goods. The problems aren’t due to something intrinsic to health care, but due to really bad incentives as well as rent seeking behavior. I see both largely as the result of government and at the very least a major reform of government’s role in the health care industry is necessary.

    At some point we’ll stop paying for it and while we now won’t all become cyborg bloggers like Glenn Reynolds, we won’t be worse off than we are now. The massive costs Steve is predicting will simply vanish.

    What your not coming out and saying is that the “natural” course if nothing is done that will induce us to stop paying for it is for there to be a serious economic crisis. Even if the government takes control of the industry you’ll still have problems just like every other health care system is experiencing (Canada, France, England, etc.).

    Contrast this with global warming, which – as you point out, Michael – is a very complex, non-linear system that will continue to screw us over well after we cut emissions down to the point where we stop contributing to the problem.

    This is a naive and inaccurate depiction of what I’ve written.

    Steve somehow has to posit the equivalent regarding health care – maybe cyborg doctors will continue to drive up costs well after we stop paying for them through some as yet undiscovered economic principle.

    Right now we are a path with regards to health care that is more immediate and more unsustainable than the path we are on regarding global warming. Your strawman argument above is simply false.

  26. Hal says:

    What your not coming out and saying is that the “natural” course if nothing is done that will induce us to stop paying for it is for there to be a serious economic crisis. Even if the government takes control of the industry you’ll still have problems just like every other health care system is experiencing (Canada, France, England, etc.).

    I’m wondering when you stopped believing in the market. Again, my argument is that market forces will stop the growth. Even now you can see corporations cutting medical benefits. What used to be common place (choosing your own doc, etc) is now a perk reserved for only those at the upper pay tiers.

    Will there be a revolt? Who knows. Will we finally be able to negotiate prices with the drug companies? Probably not as long as your mentality holds, but even that will eventually fold under market pressure.

    Or have you completely abandoned the market?

    Right now we are a path with regards to health care that is more immediate and more unsustainable than the path we are on regarding global warming.

    You have yet to postulate a mechanism in health care costs which are unresponsive to the market. For example, you could say that people will rise up in revolt and storm the government demanding that we pay 110% of our GDP for health care. I don’t think it’s likely given our past history, but I guess it could happen.

    But just because health care costs are rising doesn’t mean they’ll continue to rise after we stop paying money for them. In fact, it’s almost impossible for me to believe that if we stop paying money for health care, the costs will continue to rise. Sure, we’ll see degradation in our received health care, but that’s what happens in a free market.

    You seem to be postulating that there is some force which will drive us to keep paying for ever increasing amounts of health care, or that the health care quality we’re currently receiving will rise in price (for the same health care) faster than inflation, or that the people paying for it – i.e. corporations – won’t simply stop paying for it.

    I’m not sure which.

    WRT straw men, you’re the one who brought up Global Warming – not me. Calling something a straw man doesn’t make it so. Where was the straw in my argument?

    To reiterate:

    If we freeze spending on health care, it will NO LONGER RISE. You either have to tell me why that is not the case (i.e. armed angry voters storming the gates demanding it, or cyborg doctors siphoning off cash somehow). We may have to accept a lower quality of health care to get the costs under control – that’s DOABLE TODAY. And if we do it, the costs will stop rising.

    This is UNLIKE global warming where even if we stop everything we’re doing today and cut it to zero, the system will continue to spiral out of control and make us miserable and cost us a pile.

    Again, where’s the straw?

  27. Steve Verdon says:

    I’m wondering when you stopped believing in the market.

    We don’t have a free market in health care so you non-sequitur is noted and dismissed as irrelevant.

    You have yet to postulate a mechanism in health care costs which are unresponsive to the market.

    See the above answer. You seem to think a system where a large percentage of our health care expenditures are from the government or are influenced by government policies is a free market.

    But just because health care costs are rising doesn’t mean they’ll continue to rise after we stop paying money for them.

    Of course the wont keep rising, this is a truism. The point is that given the current set of perverse incentives things could end up getting really ugly. Maybe the situation will resolve itself nicely, but I think it is foolish to count on such a low probability event.

    You seem to be postulating that there is some force which will drive us to keep paying for ever increasing amounts of health care, or that the health care quality we’re currently receiving will rise in price (for the same health care) faster than inflation, or that the people paying for it – i.e. corporations – won’t simply stop paying for it.

    It is alot like a bubble, when you get right down to it. Ill thought out policies–e.g. Medicare–means we are locked into this spending path with out action being taken. Taking such action is politically very risky and politicians are loathe to do so.

    WRT straw men, you’re the one who brought up Global Warming – not me. Calling something a straw man doesn’t make it so. Where was the straw in my argument?

    Well for starters you keep asserting that I don’t believe in markets when in fact I do. I just happen to realize that the U.S. health care system cannot, by any stretch of the term, be characterized as a “free market”.

    If we freeze spending on health care, it will NO LONGER RISE. You either have to tell me why that is not the case (i.e. armed angry voters storming the gates demanding it, or cyborg doctors siphoning off cash somehow).

    Why don’t you just promise everyone a free pony too? Because you can’t, just like you can’t simply freeze current spending an allow it to rise at the rate of inflation + population. Sure sounds great in a blog comments section, but as an actual policy proposal you’ll be eaten alive by the interest groups. Hillary knows, that as do all the other candidates.

    Or in your terms, it is NOT doable today save as a theoretical construct.

    This is UNLIKE global warming where even if we stop everything we’re doing today and cut it to zero, the system will continue to spiral out of control and make us miserable and cost us a pile.

    As I’ve already noted you can’t stop everything we have today, not without serious consequences both politically, economically, and health wise. What are you going to do when the Baby Boomers start retiring en-masse? There will be a tremendous increase in demand, but supply will be relatively inelastic.

    As for GW, cutting emissions to zero wouldn’t make us all misearble due to warming. It would make us miserable for the same reason’s freezing health care spending would make us miserable.

  28. Grewgills says:

    We are facing more than one problem and even more than one problem with health care. We can, should, and have dealt with multiple problems in the past and can should and will deal with multiple problems now and in the future. Health care availability, delivery, and costs are all problems that we must deal with as is AGW.

    There are at least two broad approaches to solving our problems with health care. We can try to implement one grand scheme to solve all the problems or we can try to compartmentalize the problems and solve them individually or in groups. It seems to me the wiser approach (at least given current political realities) is to compartmentalize. This seems to be the approach of most who are making any real suggestions about health care in the US.

    Re: costs
    Supply is certainly an issue that needs to be addressed that involves making decisions that, unfortunately, would likely tank any political campaign. To expect anyone to put forward these solutions in a presidential campaign is not realistic.
    Health care costs in the US are projected to rise at near 7% over the next 9 years. I haven’t found similar projections for other countries, but did find comparisons of previous growth between countries.
    Over the period of 1990-2003 US health care costs grew faster than those in Canada, Denmark, Finland, France, Italy, Japan, Netherlands, Sweden, and Switzerland but slower than Australia, Austria, Belgium, Ireland, Luxembourg, Norway, and the UK. Over the period from 1980-2003 growth in US health care costs outpaced growth in all of these countries other than Luxembourg.
    In all of these countries per capita health care spending is 2/3s or less than that of the US at this point and in most the growth in costs is less (or nearly all depending on time frame).
    Claims are frequently made based on economic theory, but little or no real world evidence, that health care costs will increase and increase at a faster rate under a universal care system. This, while far from definitive proof, is certainly real world evidence that this assertion is wrong.
    (The countries whose health care costs are growing at a faster rate than ours have not been suggested as a model for our own health care system by anyone I am aware of.)
    Re: availability and delivery
    Most of the Democratic plans deal with this. I am not aware of a Republican plan that deals with this issue.

  29. Hal says:

    Well for starters you keep asserting that I don’t believe in markets when in fact I do

    Um, now you’re using things I said after the fact to prove something I said previously. While a stunning example of a classic debate tactic, it’s not really relevant to the issue I was questioning.

    A strawman would be an argument that I’m arguing against which you’re not making. You *are* making the case that health care is a more immediate and dangerous crisis than GW, which is precisely the argument I was debating. Therefore, no straw man. Granted, you may think my argument is for crap and that’s fine, but that doesn’t make it a straw man argument.

    WRT the market for health care and the freedom thereof, I don’t remember using the word “free”, so perhaps you’re creating the straw man? I’m also under the impression that the government is a large sector of the financial “market” and is heavily involved in regulating it. I was under the impression that the financial market in the US was considered “free” in the understood meaning of the term “free market”. Certainly the government is a big spender in the health care market and of course it is involved in regulating it. But I don’t see how that makes it any less “free” than the financial markets.

    Finally, it’s pretty clear that regardless of how the end goal is accomplished, a reduction in health benefits for the upper crusters of this economy (such as myself) are destined to be lowered. Whether this happens due to corporations refusing to pay for it anymore (as is already well underway, in case you hadn’t noticed) or whether it comes about through some Canadian style socialized health program is immaterial in the end.

    The only “crisis” will be the realization that because our economy has been gutted and due to the structural changes involved in globalization, we’re all going to have to readjust our expectations. What we get for our health care dollar spent and how many of those we spend will be one of those painful adjustments.

    Oh well. Such is the beauty of 21st century capitalism.

    But “crisis”? People will grumble, and politicians will lose their cushy jobs, but I doubt it’s going to be a “crisis” in anything but the sense that CNN uses the term to regularly describe everything from recalled cereal to Britney Spear’s child raising issues.

    Depending on how the results work out, the “crisis” could be nothing more than the right wing freaking out over “socialized” anything, but I’m more of the opinion that we’re pretty safe in that respect and the reductions will come from the abandonment of benefits from the private sector and the complete sapping of the ability of the government to spend anything due to spending on our most excellent series of eternal war and the tax give aways which are doing Grover Norquist’s work of getting the government to the size where y’all can drown it in the bath tub.

    Crisis? A crisis is when the water starts rising and we lose the coastal cities where a majority of the population lives and millions are displaced and the economy is ransacked due to the upheaval. A crisis is when the fresh water supply dwindles and our food supply is dwindling.

    But hey, “crisis” to anarcho capitalists like yourself is when the work “socialized” is used in the same sentence as “health care” without irony.