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The Right Prescription
Bending the Cost Curve — With a Crowbar
Do we really want to rein in medical costs?
Having failed to excite the majority of American about covering 30 million of their fellow citizens at the expense of jeopardizing their own medical care, the Obama Administration has settled on an even more implausible reform argument — extending these benefits will lower medical costs.
The amen chorus in the press has seconded this claim. “Dramatic figures in the [recently released Center for Medicare and Medicaid Services] report show that health care accounted for 17.3% of the U.S. economy in 2009,” writes Kate Pickert in Time. “The increase in health spending, from $2.34 trillion in 2008 to $2.47 trillion in 2009, was the largest one-year jump since 1960. CMS predicts total U.S. health spending in 2019 will be $4.5 trillion. This will bolster the Democratic argument that dramatic health reform is an urgent need that must happen quickly.”
The New York Times paints a similar picture of a system spiraling out of control:
If nothing is done, the number of uninsured people — 46 million in 2008 — is sure to spike upward as rising medical costs and soaring premiums make policies less affordable and employers continue to drop coverage to save money.
The Congressional Budget Office projects 54 million uninsured people in 2019; the actuary for the federal government’s Centers for Medicare and Medicaid Services projects 57 million.
All this raises an embarrassing question. If more and more people are losing coverage, why do costs keep going up? The Times’ answer is that by postponing treatment, uninsured people end up requiring more expensive care. Or alternately, if they are treated anyway, hospitals will slip the bill to other patients. But none of this adds up. There is widespread agreement that preventive treatment is just as expensive if not more so as emergency treatment. After all, isn’t it all that preventive medicine to guard against lawsuits that is driving up costs? It is indeed unfortunate when people don’t get proper medical care, but you can’t argue that they aren’t getting proper care and not providing that care is more expensive.
Likewise, even if hospitals are shifting costs, isn’t that what the Democrats are trying to do as well? You can argue that cost-shifting should be done in a more above-board manner, but you can hardly argue that this will bring down the costs of medicine.
So maybe we should start with a more basic question. “What’s so bad about Americans spending more and more money on healthcare?” Wouldn’t it be just as easy to argue the opposite? Americans are spending more on healthcare — therefore they are living longer and healthier lives. It seems quite true. Given the choice, isn’t it possible that Americans prefer spending money on medical treatment than on vacations, third cars, home entertainment systems or some other big-ticket item? What is more valuable than a person’s health? And if so, won’t “bending the cost curve down” simply mean taking away medical care that people would otherwise want?
The topography of the healthcare “crisis” is all too familiar. It is one of those periodic fervors that seem to occur during every Democratic administration. Recall the “Energy Crisis” of the Carter Administration, when Congress managed to parlay a one-time Arab Oil Embargo (which lasted only three months) into a decade-long oil shortage. Then the greedy oil companies were the problem and government intervention the solution. Instead of allowing oil companies to produce oil, we had Department of Energy bureaucrats drawing up Five Year Plans to wean the nation from fossil fuels. It was not until President Reagan threw out price controls his first week in office that the “oil shortage” solved itself.
Today it is the “greedy insurance companies” that must be slain by heroic politicians. Only yesterday Senator Dianne Feinstein told the New York Times, “We are the only industrialized nation that relies heavily on a for-profit medical insurance industry to provide basic health care. I believe, fundamentally, that all medical insurance should be not-for-profit.”
Yet only 6 percent of Americans buy health insurance directly from those insurance companies. Some smaller businesses also buy policies for their employees but together this constitutes less than 15 percent of the market. The largest bloc of Americans — about 40 percent — have health benefits, not insurance. This means their employer self-ensures under the federal ERISA program, which allows employers to offer their employees health coverage free of state and federal taxes and cumbersome state mandates. The insurance industry’s profits rank 88th out of the 100 largest industries. Insurance companies are not the problem. They are only the scapegoats.
So what is the problem? Well, it can be summed up very simply. Too many people in the system are spending other people’s money. What makes healthcare different is that the industry is already dominated by so many federal programs plus large corporations operating under exemptions provided by federal regulation that no one has any incentive to save money. Everything is covered by third parties. As long as everyone is spending other people’s money, the system will continue to spiral out of control.
You can see this everywhere. Union members with “Cadillac” ERISA plans offering first-dollar, no-deductible coverage are notorious for using the system up to the maximum. Why shouldn’t they, since it is all “free”? As anyone with health insurance knows, as long as a procedure is “covered,” there is little reason to worry about costs.
What is less often observed is that doctors, hospitals and other providers are playing the same game. Particularly with Medicaid and Medicare, they routinely pad bills with all kinds of unnecessary provisions. An elderly relative of mine recently looked at her hospital bill and found $2000 in services she had never received. When she complained to the hospital, she was told to keep quiet, Medicare would cover everything. When my elderly father lay dying in the hospital four years ago, he spent the last day of his life being visited by a bevy of specialists who arrived completely unbidden, offering physical therapy, rehabilitative treatment, and other services he obviously wasn’t going to need, all to pad the Medicare bill (which came to $12,000 for three days). When I visited my own doctor recently for one condition and then mentioned a second complaint, he told me to make a second appointment so he could bill the insurance company for both treatments.
The medical economy is replete with this kind of gamesmanship, all at the expense of third parties. In fact, the whole problem is this: Healthcare is already a “welfare-state-within-a-welfare-state,” with almost all direct exchange between doctors and patients completely eliminated. The problem with such systems, as Margaret Thatcher put it memorably, is that eventually you run out of other people’s money.
Will Obamacare solve any of this? Not a chance. The only practical solution is to restore some personal responsibility to the system. Health Savings Accounts (HSAs) are one obvious answer. Governor Mitch Daniels of Indiana recently recounted in the Wall Street Journal how his state has reduced medical benefits $8 million annually by giving state employees $2,750 each year to pay their own medical expenses and then covering the rest through catastrophic insurance. Seventy percent of state employees have chosen the system.
What makes healthcare a “problem” is that it already suffers from too much cost-shifting through government intervention. Obamacare will only make things worse. Any incentive to control spending will disappear completely, to be replaced by ham-handed government efforts to “bend down the cost curve.” There’s a simple word for this — government-run health care.
Letter to the Editor View all comments (111) | Leave a comment
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SC Mike| 3.10.10 @ 6:49AM
Wow, you’ve nailed the problem: “Too many people in the system are spending other people's money.”
And the solution: The only practical solution is to restore some personal responsibility to the system. Health Savings Accounts (HSAs) are one obvious answer.
Folks have to pay more of that first dollar of coverage, and a $10 co-pay on a $60 visit ain’t enough. Why not pay it all?
Employers can provide variations, as Safeway’s CEO Scott E. Harrington and Whole Foods’ CEO John Mackey have in place variations that give folks incentives to spend wisely.
What the Obami and the state legislators who create the mandated coverage lists don’t appreciate is that folks’ medical needs change over their lives. We don’t need one size fits all, we need to be able to tailor or self-finance our coverage so that we can make cost-effective choices. In our 20s and 30 a coupe needs obstetric and pediatric coverage, but don’t in our 50s and 60s. And we need to be able to save in our youth for the complications that come with old age.
Evan at that, sometime we don’t want or need a $60 physician’s visit charge along with a $25 strep test, just the strep test, and a Doc-In-The-Box or LPN at Wal-Mart or Target mini-office will do just fine.
Some folks want acupuncture, massage therapy, and chiropractic treatment. Fine, they should pay for it out of their own pockets. The HAS or hybrid provides that freedom.
Bravo, Mr. Tucker.
Alan Brooks| 3.10.10 @ 9:03AM
AND you have to tell your wealthy grandparents to spend their own funds to pay their own medical bills, too. They don't need Medicare. In fact, if they are well-off enough they can use the interest in their accounts to pay the bills.
melatr7| 3.10.10 @ 10:30AM
Great comments.
I would add that in more than one way we do not need a one size fits all system. The cost of living in various states is another huge factor. The best that can be accomplished with this massive bill is for the government to not subsidize the most costly state- but then it will require subsidies for all of the rest. Just what we don't need.
As you said, people need to stay involved in the billing process and one of the ways could be to allow no policies that pay more than 75% of the costs. People would think twice about going to a dermatologist for a pimple on their butt to begin with and they would also seek lower priced care when thet really needed it. That would drive abuse AND prices down.
basur | 10.27.10 @ 6:44AM
It is the height of naiveté to believe the federal government can manage the market better than the free, individual decisions of millions of people.
Deborah D | 3.10.10 @ 8:27AM
If only left-wing politicians like Obama, Pelosi and Reid wanted to bend the cost curve down. They don't. They don't like HSA's because they can't control you, me or the guy down the street if those become law of the land. They don't give a rat's patootie whether they bankrupt the country, the state or your neighbor. They want control over 1/6 of the American economy and your life...bingo, lefties in power forever. Let's hope Rich Lowry is correct in thinking Republicans can repeal the health care monstrosity once they return to power. He mentions that here: http://article.nationalreview......wry?page=1
Alan Brooks| 3.10.10 @ 2:47PM
It might be that Copyleft doesn't realize that many would like to help others, if only there weren't so many frightfilly pigheaded shits working for govt. Last month an overweight bureaucrat stabbed his chest saying, "I was the first one in my family to graduate college and [will do what I want with the power I now have, etc...]"; he didn't get how many detest that sort of hubris, his ilk are as bad as anyone in the private sector. It comes down to Copyleft is being hard enough on the private sector, but too easy on govt. Govt are people, Copyleft! Geez Louise, you make Bob seem like Mises & Friedman.
After what bad stewards Carter, Nixon, and that monstrous egomaniac LBJ were, it is surprising solid conservatives (f*ck libertarians) aren't more suspicious about govt. Now I know where the tea partiers come from. There are some people in govt who almost want you to hate them, dare you to.
At any rate, though social conservatism is dead, technoscience (at least pure science, anyway) and economic "progress"(economic activity) are still valid.
Two out of three aint bad.
But no matter what we say, Copyleft wont listen. It's as if he just wants to shovel effete talking points at us. Can't he write anything new here?
Copyleft| 3.10.10 @ 8:36AM
So, let me get this straight...
We're paying too much for a system that excludes a large chunk of Americans, is massively wasteful and inefficient, and is part of a for-profit system that can prosper only by overcharging the healthy and denying needed care to the sick...
And this joker is not only FINE with that, he thinks we should be paying MORE?
Whatever happened to market conservatism--where efficiency is supposed to keep costs low and customers happy?
The current plan is deeply flawed, yes--but only in that it attempts to PRESERVE the most broken parts of the profit-driven system and keep the insurnce industry afloat, rather than replacing it with a sensible national health plan.
America WANTS healthcare reform; the fringe right is talking to itself and pretending it speaks for America.
Alan Brooks| 3.10.10 @ 9:12AM
"Whatever happened to market conservatism--where efficiency is supposed to keep costs low and customers happy?"
Because social progress is over; it was pushed to the limit. Unending assymetrical wars; unending healthcare debates; budget wrangles that never end. Overcrowded inner city schools that can't be reformed; a Southern border that no one (save for perhaps Tancredo) has any intention of doing anything about.
There is no longer any genuine forward motion. Just sinecures, busywork, hiring and firing, shuffling offices around.
John Navratil| 3.10.10 @ 10:31AM
This problem began long ago with the $5 co-pay. Remember when everyone was going to be healthy because you could go to the doctor for $5 and take care of little problems before they became big?
That was in the 70's when fee-for-service was the norm, a doctor's visit was $20 and insurance was for serious injury or unexpected treatment.
Since then the insurance industry has insinuated itself into all aspects of the health-care expense. Even regulated, they are guaranteed a profit and the more health-care demanded, the greater the profit. There is no incentive to be frugal.
Until routine care is paid for out of pocket, there will be no retreat on costs. Until individuals make their own purchasing decisions for insurance there will be no market. Until the tax code which makes employer-provided insurance available in pre-tax dollars, employees will not get that choice; it will be left up to the employer to provide, or not.
The great bulk of this problem can be attributed to regulation, not the lack of it.
Ryan| 3.10.10 @ 10:53AM
You're missing the point.
It's about spending more of our OWN money on our own care, not for someone else's.
It's about getting a TRUE free-market health care system, not the corporatist/government debacle we currently have.
Alan Brooks| 3.10.10 @ 2:14PM
But someone can be hardworking and still want their widowed grannie's bills paid by Sam. Who wants to cut out Gran?
That's what I literally HATE about libertarians; some want govt to help THEIR's, if not them. For some (and not a few) libertopians to want govt to help their people is like an anti-child porn crusader raping a child in front of a camera. Enraging they would be so.
Tom Degan | 3.10.10 @ 9:01AM
Who wants to make a little wager that those moronic Democrats to mess this up? They have this positive genius for taking a plate of finely prepared caviar and turning it into Donkey dung.
The Republicans are sounding the alarm: If the Dems pass health care reform, they will be slaughtered at the polls in November! It's a political ploy - passing major health care legislation is a no-braner and a sure winner - and yet a lot members of "the party of Franklin Delano Roosevelt" are falling for it hook, line and stinker.
It's funny. Every time I forget why I left that worthless, joke-of-a-party twelve years ago, they always cheerfully remind me - and I appreciate that. I really do!
Teddy Kennedy is dead and he's not coming back.
http://www.tomdegan.blogspot.com
Tom Degan
Goshen, NY
Owen Carneal| 3.10.10 @ 9:05AM
Let's do the math:
$2.47T - $2.34T = $130 billion.
$130B / $2.34T = 5.56% increase year over year.
Taking into account a 2.2% overall population growth (from 2010 Almanac), the increase in healthcare expeditures is peanuts compared to the increases in food, petroleum products, natural gas, and political gas.
The "sky is falling" crowd needs to find something else to focus their energies on -- for instance, there's an issue called the deficit.....
William Tucker| 3.10.10 @ 9:39AM
Owen: Excellent. I should have done the math myself.
Bob| 3.10.10 @ 9:43AM
Actually, Tucker, you missed the entire point. The reason we must significantly lower health care costs in this country is that we can't be competitive and create jobs when health care costs 17% of our GDP. Without that, we'll never be able to pay off our debts. You Obama haters seem to conveniently forget that fact. There is also no question that the cheapest option is to ration health care through expanding Medicare to all. You can't give everything to everyone and reduce costs.
By the way, the main reason health insurance costs are rising by about 40% (yes, 40%) this year is that younger, healthier people are not buying insurance because they don't have jobs and therefore the median costs are rising dramatically.
I wish the bloggers here would learn a little bit about economics and basic math....
Ryan| 3.10.10 @ 10:56AM
The problem with expanding medicare is reduction of services to those who can afford more through a private system, and reducing services in a system where, if some profit were manageable, services would be better.
Someone would have to pay for it. Who?
We need a true free-market system. Tort reform. HSA expansion. State solutions, not national.
Bob| 3.10.10 @ 12:16PM
That's why I continue to support a tiered system where the government provides emergency and basic care and then you can buy the level of coverage you desire. The big problem, Ryan, is that supposed fiscal conservatives want the government/insurance to pay for Grandma no matter what the cost. In other words, they want everything and want to pay nothing. Until conservatives learn what being fiscally sound is all about, we will continue on our path of becoming a third world country.
A few days ago, SoCon argued for care for Grandma no matter what the cost. That's why Medicare is in trouble. That's NOT fiscal conservatism and liberty. If you can't pay for it, you don't get it. Yet we mandate that doctors and hospitals care for everyone that comes through the doors and we don't pay for it. That's not fiscal conservatism either.
The people here at AmSpec just don't understand numbers and analysis. When it comes to spending dollars, you do need an income statement and a balance sheet.
Ryan| 3.10.10 @ 2:04PM
You won't find much debate on the matter from me - the requirement of the elderly to use medicare baffles me.
Curtis| 3.10.10 @ 9:46AM
Its' the US commercial health care system that pays for, and innovates for, the socialist health care that other countries enjoy.
We're the ones who pay the extra for the name brand drugs so the drug companies can research their next breakthrough. We're the ones who pay extra so that the medical companies can build a new wing on the hospital, without having to fight the police and the firefighters and the school for the funding. We pay patients to try new drugs and procedures, in order to prove that our procedures and technologies work as promised.
When the patients in America want something, the doctors and companies innovate to provide it. No having to justify the R@D costs to the politicians or the taxpayers. No doctor or researcher, to the best of my knowledge, has ever had to stand up in congress and justify his research. He may have to justify why he gets congressional funding, but if congress won't pay, he can find a drug company who will, if they think people want the treatment.
Imagine if the drug companies had to justify ED research to the government? No viagra for gramps. Or had to justify birth control research during the fifties? Tax payers and beuracrats wouldn't stand for the funding of 'frivolous' plastic surgery research, regardless of how many mutated babies or first degree burn victims it could wind up helping down the road. Women with mastectomies would be permanently wobbly. "Pay for a fake boob with my taxpayer money? Are you nuts! People are dying in hospitals and you want to spend a couple grand for a fake boob! stuff your bra like you did in highschool. What next, estrogen shots so she can feel sexy at night?"
There are occasional medical breakthroughs that occur in socialist countries, when large chunks of money can be thrown at a high profile case that has good fund raising potential. (Cancer, aids, childhood diseases, etc) But the vast majority of common research is done on the American dime.
Why make a pill to give gramps an erection? Because Gramps wants a boner, and he's willing to pay for it. If we're lucky, it'll make a good blood thinner for heart patients.
In socialist countries, you are only a patient worth spending money on if other people think you're worth spending on. otherwise, suck it up, or die quietly.
Bob| 3.10.10 @ 10:29AM
So let me get this straight. Taxpayers shouldn't pay for fake boobs and giving grandpa a woody. I agree. But the same is true under universal health care. If people wanted fake boobs, they'd still pay for it out of their own pocket. How is that any different? Boob jobs will still occur with universal health care and Viagra will still be sold. And pharmaceutical companies will still do research to make money.
John Navratil| 3.10.10 @ 10:57AM
"And pharmaceutical companies will still do research to make money."
That assumes they can make money. At $1 billion to bring a drug to market, $800 million to fail, and a government regulating that market, the profit is in question.
Everyone's bogeyman is "Big Pharma". No tears, please, just facts. The U.S. is the only country still doing serious drug development; European research centers are still open, but folded in by mergers to the big companies. The largest research facilities are all in the U.S. with its, as yet, free market. Kill that market and expect an unhappy, unintended consequence.
Bob| 3.10.10 @ 12:19PM
So, John, what makes you think this will go away??? If there's a profit to be made, they will make the investment. And by the way, I don't hear any conservative politicians taking the side of Toyota with their accelerator problem. They want to legislate more. We are not willing, as a nation, to let anyone die even if we go bankrupt. Right???
BA Cyclone| 3.10.10 @ 2:02PM
Bob, I think you need to read more carefully before you reply. John's post was right on point.
What "makes it go away" (effectively) is the government's proposal to regulate the market into oblivion. Progressive legislators openly admit to their belief that medical care should be NOT FOR PROFIT. That makes private investment go away.
The only way universal health coverage works "everywhere else in the world" is because we still have some shred of private liberty remaining in our system. The U.S. system is the "escape hatch" of investment and cutting-edge treatments that allows everyone else to fund and treat to the least common denominator.
When we adopt their system, where does all that go?
The mindset of "that can't happen here" is the most dangerous of all.
Alan Brooks| 3.10.10 @ 2:31PM
"So, John, what makes you think this will go away??? If there's a profit to be made, they will make the investment. And by the way, I don't hear any conservative politicians taking the side of Toyota with their accelerator problem. They want to legislate more. We are not willing, as a nation, to let anyone die even if we go bankrupt. Right??? "
You're a real bright guy, Bob, but you are like my family-- blinded by outmoded crypto-progressive ("conservative") thinking. You can't see the forset for the trees. And Toyota is an irrelevant digression. Just today a guy says, "what about TARP, Al? Well, what so what about TARP? what does TARP have to with healthcare in '10-- except as a talking point? Copyleft is the one who is naive, not Bob. Even if healthcare is voted in, it wont be comprehensive, as the tax base isn't large enough. And Obamacare will be whittled down anyway. He's doing it, understandably, to please his base; so he can say "I tried", as Clinton did 1993- '94.
To go all out for healthcare, IMO genetic engineering is the way. but the dislocation might be too much. We see now from what happened the last decade that people can't be trusted to make the right decisions.
Even libertarians are frightfully deluded.
owyheewine| 3.10.10 @ 10:02AM
Excellent analogy to the 70s oil shock. As a veteran of that war, and a participant in the current health care mess, I totally concur with the need to restore personal responsibility for health care spending.
One has only to look at the massive hospital building that has taken place over the last couple of decades. Much of it is in response to demand for often imaginary demand from those that aren't concerned with the cost.
The blame that insurance companies deserve is from their fostering the utilization of unnecessary services, thus increasing their total "sales". More sales at constant margin gives more profits. From a business standpoint they are doing the best thing for their own interests.
Blovating politicians have made the situation worse by finding any case that they can scrounge up to push for a bigger government role., when the real answer is less government intrusion.
SC Mike| 3.10.10 @ 10:47AM
See this from kidney donor / breast cancer survivor Virginia Postrel. Her website is here.
Local Observer| 3.10.10 @ 11:36AM
When people have no "skin in the game" there is no need or desire to ask, "How much does this cost?" Our current system also obscurs costs because fees quoted are frequently inflated to enable merely adequate reimbursement from 3rd party payers. We don't shop for any other good or service this way. By returning responsibility AND the reward for due diligence, the cost of healthcare will come down. More individuals will make decisions appropriate to their situation and decide how to best utilize their own resources.
A good article on cost transparency is:
http://curiouscapitalist.blogs.....alth-care/
Bob| 3.10.10 @ 12:24PM
While making health care more transparent sounds good, as long as the money doesn't come from their bank account, it won't make a difference. When I was an executive in group insurance, I know how much we negotiated rates with employers. There is no way individual consumers would have that bargaining power. The only way to significantly lower costs is to ration care and let people who have the money pay for the care not covered. You can't give everything to everybody and still remain fiscally solvent.
Loacl Observer| 3.10.10 @ 12:58PM
Revamping HSA's and even subsidizing some according to means would help move costs in the down direction. Yes, there would be rationing, but it would be choices made by individuals like we do in many other situations. "I can live with ground beef rather than filet mignon." "This generic drug is an appropriate alternative to the expensive brand-name drug for the same purpose." "Can I get by with a CT scan rather than the MRI with contrast?" Certain situations, just like special occassions justify premium choices, but let the patient decide for or against, not some bureaucrat in a windowless cubicle somewhere.
Bob| 3.10.10 @ 1:05PM
Do you really think the patient is capable of making those types of decisions? Most of them will just do what their doctor requests. In fact, if they do something different, they will be required to sign a legal waiver so the doctor and hospital won't be sued. Do you really think that will happen?
You are assuming they will get valid "advice" from their doctors. That will not happen because many doctors get additional income by having their own CT/MRI facilities. They will send those patients to those facilities.
I certainly wish you were right, but it is just naive to think that consumers can make these decisions by themselves. Certainly, some of us could do it, but not the vast majority of citizens -- half of which are no longer graduating from high school.
BA Cyclone| 3.10.10 @ 2:09PM
"it is just naive to think that consumers can make these decisions by themselves."
If you put people's own money on the line, rather than the unseen power of a policy, people learn quick.
Somehow these multitudes of dolts you implicate can thoroughly research car purchases, big-screen TV purchases, and home purchases...there is no reason to believe they cannot also be their own best advocates for medical care, on average.
At the fringe, people can get free catastrophic coverage, and seek out free clinics (or the multitude of other programs) for everyday medical care.
Pingback| 3.10.10 @ 11:57AM
Today’s OpEds: Congressional Dealmaking, Cutting ‘Honchos Pay,’ Controlling Costs links to this page. Here’s an excerpt:
Local Observer| 3.10.10 @ 1:03PM
By having price transparency for goods and services, customers can comparison shop and make choices with their feet. As competitors in the marketplace face loss of marketshare, costs will inevitably come down. Look at Lasik and other cash-only procedures. When people have choices and ask questions to achieve best value for their dollars, costs come down.
Bob| 3.10.10 @ 1:06PM
Read my comment above. For legal and educational reasons, it is naive to think this will work.
BA Cyclone| 3.10.10 @ 2:14PM
It is the height of naiveté to believe the federal government can manage the market better than the free, individual decisions of millions of people.
There is a critical difference between managing costs, and managing price. Governmental types often mean just one, only being able to control one, and expect you to not know the difference until after the fact.
Bob| 3.10.10 @ 3:32PM
You're right, it was all of that regulation of derivatives and swaps that caused the collapse of Wall Street. Right? I'm certainly a market guy if the market is truly free. But our markets are not "free" as they are manipulated by large entities. It is naive to think that health care could ever be a truly free market. That's the trick -- you need just enough regulation to make the market fair so that people can make good decisions for themselves. For example, what happens if an individual sees an ad for a cheap heart bypass and it happens that the doctor lied about his/her experience? The free market will do things like that. That's why we have so much insurance regulation because insurance was a mess without it and people were ripped off. Boy, the market did a good job with Madoff, right????
I truly wish you were right about market oriented health care solutions, but I was in the business, saw all of the fraud, and don't believe the consumer would ever get good information to make good decisions. You can buy a lousy TV and live, but you can't buy a lousy heart bypass and live.
BA Cycloane| 3.11.10 @ 4:48PM
Market oriented health care solutions are already working. Ask Mitch Daniels, Governor, Indiana.
http://tinyurl.com/ycnhr5o
George S| 3.10.10 @ 1:23PM
I agree with Bob on our wasteful health care spending. Prior to the mid 1970's, for example, people were spending nothing on life saving MRI's and CAT scans. Then all of a sudden there was an explosion of spending on these procedures.
If we can only figure out why CAT scans were free prior to the mid 1970's. Hmmm... any thoughts?
Bob| 3.10.10 @ 1:42PM
George, we have a wonderful tradition of private enterprise, capitalism, and making money. Because of the structure of our health care system, however, this increases costs. Equipment manufacturers long ago noted that giving incentives to doctors for using their newest, and most expensive equipment increased their profits. Doctors then formed groups and bought many of these machines themselves. Our per capita use of those machines is far less efficient than other countries because they have universal health care. In order to pay for that inefficiency, the per capita cost of those machines is much higher. Insurance companies are willing to pay because employers are still using health care as a way to pay workers less money. We are tremendously inefficient with our system and that's why it costs so much. In addition, with computerization, a number of companies sprouted up that maximize the amount of medical billing possible both with private insurance companies and Medicare. Since we pay on procedures, not results, there is no incentive for anyone to improve efficiency.
In the end, we will ration our care because we can no longer afford to exist without it. That will happen when China no longer buys our debt.
BA Cyclone| 3.10.10 @ 2:17PM
The only proper way to ration medical care is for people to do it themselves, with their own resources, just the way they do it for every other service or good.
Any other method of ration is doomed to failure: often a combination of increasing cost and decreasing quality.
You confuse the medical care system we have today with a capitalist system: it is not.
George S| 3.10.10 @ 2:31PM
Actually, my point is that these machines didn't exist prior to the mid-70's, which is the reason why we weren't spending "too much" on them. But now that they do exist, why is it a problem for people to pay for their benefits? Our money, our problem.
However, the system is inefficient because we do not care since we are not paying for it. If a restaurant had to give you meals for free (by government edict) would you care if the owner used the most efficient supplier of vegetables? No, you would order what you could get away with since others are paying for it. That's why restaurant prices are reasonable -- because the menu prices reflect the owner's efficiency of capital outlays.
The only way to bring down the costs of health care is the politically incorrect way of having everyone fend for themselves. Meaning, if you can't afford it, get a second job or wait for the market to catch up to your demand for lower price services. That's exactly -- exactly! - the reason Lasik eye surgery went from a couple of thousand an eye to around $500 an eye. Because the market saw the huge demand among those who could not afford the procedure but knew the flood gates would burst if they could figure out a cheaper (i.e., more efficient) way of delivering the service.
Bob| 3.10.10 @ 3:06PM
The problem, George, is that people don't save in this country. Therefore, when they have a medical problem, they would most likely die under your scenario.
George S| 3.10.10 @ 4:54PM
But that problem can easily be solved when push comes to shove -- without the federal boot on our throats. Right now, those who get medical benefits at work can apply their capital to things like a bigger apartment. But if you have to pay for health care, you would face a choice you don't have to face today (hence the political popularity of it).
The bottom line is if people had to provide for their own medical care by being involved in the equation of paying for services, the market comprised of medical providers are not going to hold out for exorbitant prices and get no business. They will find a way of getting you that chemotherapy on a bus driver's salary, as long as government does not get in between.
Right now, they have no incentive to provide cheaper services because they get paid one way or the other. And they have no problems charging $50 for an aspirin to balance their books because of the major reason for the cost of health care: government short changing the medical field for services they are compelled to provide by law. That's why doctors are cutting back on medicare patients and that's the benchmark insurers base their claims payments. What we pay in our premiums is the difference incurred by government intervention. You cannot shortcut around the basic laws of economics: medical care is a skill, and hence a scarcity. Not everyone can participate in enjoying the scarce labor of others. In a free market, prices weed out the participants; in government, politics determines who gets and who goes without. Those are our ONLY choices.
Even still, people will still die. Under any scenario. I say trust the free market... every time.
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Kiltmaker| 3.10.10 @ 4:21PM
Costs won't be brought down by this health care reform!
From the article:
"we had Department of Energy bureaucrats drawing up Five Year Plans to wean the nation from fossil fuels. It was not until President Reagan threw out price controls his first week in office that the "oil shortage" solved itself."
Five Year plans - think the old Soviet system - good luck with supply in that model.
And cost controls usually lead to shortages. If businesses can't control their pricing for a product, they will find a product that isn't cost controlled and produce that. That leads to shortages.
American businesses and people aren't dumb, they will find a way around it and the "Law of Unintended Consequences" will come into play.
I also forgot one of my pet peeves that began around this time with cost controls - rebates on car prices. Its a shell game invented by car dealers and car makers to keep you paying more, while you think your getting a deal.
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G Judd| 3.10.10 @ 5:29PM
Beware the simple summation, Mr. Tucker.
"if only all of us nasty, slovenly, lazy, spendthrift people were just responsible for spending our OWN money on our OWN care, our health care system would be fine" isn't even believed by conservative clinicians, who know that there are plenty of problems with health care delivery in the US that individual financial prudence will not solve.
60 percent of clinicians flunk Handwashing 101 prior to engaging in surgery. Galling shares of our investment in health care are pure waste, whether the accounting is done globally or by individual account. The system, as constructed and operating today, produces such medical wonders as "The Great Prostate Mistake".
The list of systemic shortcomings goes on & on (see Dr. Nortin Hadler's Worried Sick, and other books, for lots more), and other . and merely saying "pay for it yourself", now, will not fix them. These are problems that involve everyone, that touch everyone, and that reasoning people understand are not simply a function of respect for the value of a dollar.
The current legislative proposals for reform may be way off base. But by urging, in essence, "let's just all leave the whole thing MORE alone", Mr. Tucker has elucidated no pragmatic solution to the health care challenges we face, either.
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barb| 3.10.10 @ 6:30PM
"Having failed to excite the majority of American about covering 30 million of their fellow citizens at the expense of jeopardizing their own medical care, the Obama Administration has settled on an even more implausible reform argument -- extending these benefits will lower medical costs. "
One of the problems is...according to many reports...that of that 30 million figure quoted in the article, 10 million are NOT our fellow citizens...they are illegal aliens.
JimE| 3.10.10 @ 7:03PM
It's about buying votes for the entitlement class, why do you think the teleprompter is now moving on to amnesty,10 million votes camming free health care.
dougfoot | 3.10.10 @ 8:17PM
Having an HSA, I can say that I save money and know where my health care dollars go - I pay the bills out of pocket for everything under my "deductable". Once I reach that "deductable" limit, then I'm covered 80-100% (that's what catastrophic insurance is all about - cover the big things while you pay for the little things - your car insurance doesn't pay for oil changes, why should "health insurance" pay for an office visit?)
This whole debate isn't about healthcare, it's about controlling the American people - we went to war on lesser things
Deborah D | 3.11.10 @ 6:36AM
Amen, sir. They don't care about you, your health, or whether you have health care insurance. Power. That is all.
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Phil Atwood| 3.11.10 @ 9:31AM
Why should my kids have to pay for your grandparents insurance when there already paying for thier social sercurity.Thats your economics. Get real
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