Health Care Is a Right, Not a Privilege

[JayB]

I think the system you mention has some merit - it's just that it's inefficient. It's not a single payer system (publicly funded, privately operated) and still includes the high rate of inefficiencies associated with 400+ insurance companies and their Byzantine forms, call in centers, claims denial staffers, marketers, lobbyists, and snake oil sales staff.

 

Whittle it down to two or three providers, set standards for the paperwork, eliminate TV advertising of drugs and move on already. It also should be funded through taxes so all parties are included.

 

Depends on how you measure efficiency, no? A software algorithm that dispensed money per a pre-determined set of rules would cost quite a bit less than all of the above, but it's far from certain that it would be more efficient in any sense that's meaningful. That is, in terms of medical benefits delivered per dollar spent.

 

There's plenty of examples where medical innovation has moved faster than medicare/medicaid's capacity to adjust their payout schedule, and providers simply capture the excess payments. Less overhead? Yes. More efficient? No.

 

There's also the matter of simply gaming the system to derive maximum compensation. There are plenty of cases where medicare won't pay unless providers do X, even if X is unnecessary. What happens? They do X and bill medicare/medicaid. Once again - less costly overhead? Yes. More efficient? No.

 

Anyhow - shouldn't the measure of efficiency be left to individuals to determine on their own behalf? If it turns out that the government can actually deliver higher quality care and better outcomes more rapidly and at a cost that's lower than or equal to those that private insurers can offer, then the "public option" will ultimately prevail under these conditions of competition, no?

 

If anything, it seems like gaining converts via competition would actually be better for anyone interested in seeing the "public option" persist for more than a single election cycle, since people who enroll in a government sponsored health insurance plan because they want to, not because they had to, will ultimately be more faithful allies of such a system.

 

 

 

 

[Jim]

Carrying the competitive model to its extreme, which is the current condition, indicates that that model is a train wreck of both efficiency and cost. AND it does not provide care for 25 million people.

 

The idea that somehow the mystical market will provide for the most efficient and cost effective deliverer of health care is a proven fallicy. Yes, there needs to be government oversight - otherwise it will remain the same race for the extreme profits. When insurance CEOs are getting an average of $14 million, doctors and nurses have to battle with the uncoordinated insurance forms, formulas, and restrictions; and when we have bloated admistrative costs the answer is obvious. Collect taxes so all can have health care. If you want more than the 3 or four designated programs provide, then you are welcome to pay for private insurance.

 

And insurance policies with large deductibles don't help people with day-to-day medical costs of preventive care, checkups, medications, etc. that warrant a program that provides adequate health care for all citizens. We are the only country where you can go backrupt because of medical costs. \

 

Think you are safe because you have medical insurance - ha! One accident or health crisis will bring you up to speed.

[Fairweather]

Polls show a vast majority of Americans in favor of a single payer system.

 

This a bold statement. Can you back it up?

[Fairweather]

There are even more people who need access to health care and can't afford it.

 

What we need is health care, not insurance. Cut out the parasites.

 

Like illegals?

[Fairweather]

I like the insurance I have. Any attempt to take it away and replace it with long lines, government bureaucrats, and rat-infested clinics will make me deadly upset--and I suspect I'm not alone on this.

[Fairweather]

Carrying the competitive model to its extreme, which is the current condition, indicates that that model is a train wreck of both efficiency and cost. AND it does not provide care for 25 million people.

 

 

25,000,000/300,000,000=8.3% uninsured. Not worth overhauling the system. A private policy for a late twenty-something is $160/month. I would rather see the government mail a check than rip apart a system that is only partially flawed. Once the government controls access to health care, they control your life.

[olyclimber]

I like the insurance I have. Any attempt to take it away and replace it with long lines, government bureaucrats, and rat-infested clinics will make me deadly upset--and I suspect I'm not alone on this.

 

the "health insurance" i have sucks. its basically catastrophe insurance that only starts paying out after i have paid out a large deductible that is far more than I average in yearly medical costs.

 

if you are happy with your insurance you're most likely in the minority for Americans. I've worked for two major companies and have seen medical insurance coverage take a huge downward turn, from great coverage to what I have above. And these are from companies that are considered "good to work for". I do feel lucky to have the coverage I do though. Shortly after I had (in one year) both sepsis and a broken leg, my insurance changed. Instead of paying out the huge amount I would now the costs were reasonable.

[richard_noggin]

One rule of thought …why should the rich be entitled to better health care than me …hence social medicine …the other rule of thought …I’m rich so why should I not be able to buy a stolen live from Mexico to replace the one I burnt out with alcohol

[JayB]

Carrying the competitive model to its extreme, which is the current condition, indicates that that model is a train wreck of both efficiency and cost. AND it does not provide care for 25 million people.

 

The idea that somehow the mystical market will provide for the most efficient and cost effective deliverer of health care is a proven fallicy. Yes, there needs to be government oversight - otherwise it will remain the same race for the extreme profits. When insurance CEOs are getting an average of $14 million, doctors and nurses have to battle with the uncoordinated insurance forms, formulas, and restrictions; and when we have bloated admistrative costs the answer is obvious. Collect taxes so all can have health care. If you want more than the 3 or four designated programs provide, then you are welcome to pay for private insurance.

 

And insurance policies with large deductibles don't help people with day-to-day medical costs of preventive care, checkups, medications, etc. that warrant a program that provides adequate health care for all citizens. We are the only country where you can go backrupt because of medical costs. \

 

Think you are safe because you have medical insurance - ha! One accident or health crisis will bring you up to speed.*

 

 

 

This supposes that it's the medical bills alone, rather than the combination of medical bills plus income lost to disability that puts people under. I don't think that the statistics concerning the percentage of people who have coverage *and* go bankrupt bear this conclusion out. Do all other nations in the world include 100% pre-injury income replacement to prevent bankruptcies brought about by post-injury incomes that are no longer sufficient to meet pre-injury obligations?

 

If you want to talk in terms of generalities like "mystical markets," though, I'd be interested in hearing of some other cases where eliminating competition creating a monopoly has decreased costs and improved quality before we assume this will happen if we transfer monopoly control of healthcare over to the government.

 

It's also worth considering the connection between profits and efficiency. If one could increase efficiency (raise the value of total outputs relative to total inputs) simply by eliminating profits, then GM would have been widely admired as one of the more efficient car companies in the world, and Toyota would be widely derided for their woeful performance on this front. "Look at all of the *profits* that Toyota is making on their cars. GM not only isn't profitable, they're losing billions every month. That means that they must be spending more on flawless engineering, high-quality parts, and top-notch assembly than they could possibly hope to recoup in the sale price of one of their vehicles! I'd better buy a GM product to insure that I get a better deal! Ha! Take that ...Toyota!"

 

I'd prefer to constrain the discussion to specifics that pertain to a government monopoly in health care though, such as whether keeping "overhead" low by *not* spending an extra dollar on claims review and fraud prevention actually constitutes greater efficiency if doing so will save, say two dollars. I'll just tack that one onto the examples I gave above if anyone wants to address any of them at some point.

 

Then there's the matter of what would happen to costs when there's no private payers for the government to shift its costs onto. Right now the government pays less than the actual costs of providing medical care, and private payers make up the difference. When there's no longer any private payers around to do so, and the funding necessary to sustain the existing medical infrastructure has to be financed by government expenditures alone, one of two things will happen. Capacity will contract or the government will have to spend more to deliver the same amount of care. There's no escape from this.

 

With regards to high deductible plans, it'd be worth considering the effect of low-premium, high-deductible plans coupled with tax deductible HSAs (or even income indexed subsidies) that build in incentives to spend wisely (like getting to keep a portion of what you don't spend) vs a universal zero-dollar coverage scheme in terms of efficiency and cost containment. The reason that high deductible plans cost consumers less is because they result in lower costs for the insurer. How certain are you that moving the entire population from their existing insurance plans into a universal, first-dollar/zero-deductible plan is actually going to result in lower total spending on medical care?

 

 

*We have private disability coverage. Safe - no. As secure as we can reasonably expect to be here or elsewhere in the world - I think so.

 

 

[mattp]

Typical malarky from you, Jay. You appear to be recycling the talking points I heard on a debate on TV last night.

 

"People only go bankrupt due to lost income, and not actual medical bills?" When was the last time you had to pay for brain surgery and rehab? Or even simple arthritis medication? (Hint: mine costs over $30,000 a year.)

 

“When has monopoly reduced costs?” Say what? I did some research on this last year when we had this same debate on cc.com (I don’t remember if you participated or not) but it seems that virtually all studies show that the healthcare beurocricy created by private health insurance companies is FAR more expensive than the government program costs associated with the ever feared medicare program, and we have far greater per capita costs for worse public health outcomes in the US than in most if not every single other “advanced nation.”

 

“Public healthcare shifts costs onto private payors?” I heard a discussion of this on the radio in the last few days and I don’t’ remember the “rebuttal” but I wonder: how is it that government does this? If a hospital accepts funds under the Hill-Burton act they must provide certain emergency services for patients who cannot pay, I think, but how is it that “government” forces private insurance companies to pay for patients whose care is paid for by public healthcare programs?

 

et cetera et cetera et cetera.

 

The advocates for private health insurance companies seem desperate to argue against any possibility that they would have to compete against a public funded program, when they cherry pick all the healthy people who they can sell cheap plans and reject the sick people who are too expensive, and yet they still seem to argue that "free market" is the answer to our healthcare problems.

 

Garbage in garbage out, I guess.

 

[JayB]

Typical malarky from you, Jay. You appear to be recycling the talking points I heard on a debate on TV last night.

 

"People only go bankrupt due to lost income, and not actual medical bills?" When was the last time you had to pay for brain surgery and rehab? Or even simple arthritis medication? (Hint: mine costs over $30,000 a year.)

 

“When has monopoly reduced costs?” Say what? I did some research on this last year when we had this same debate on cc.com (I don’t remember if you participated or not) but it seems that virtually all studies show that the healthcare beurocricy created by private health insurance companies is FAR more expensive than the government program costs associated with the ever feared medicare program, and we have far greater per capita costs for worse public health outcomes in the US than in most if not every single other “advanced nation.”

 

“Public healthcare shifts costs onto private payors?” I heard a discussion of this on the radio in the last few days and I don’t’ remember the “rebuttal” but I wonder: how is it that government does this? If a hospital accepts funds under the Hill-Burton act they must provide certain emergency services for patients who cannot pay, I think, but how is it that “government” forces private insurance companies to pay for patients whose care is paid for by public healthcare programs?

 

et cetera et cetera et cetera.

 

The advocates for private health insurance companies seem desperate to argue against any possibility that they would have to compete against a public funded program, when they cherry pick all the healthy people who they can sell cheap plans and reject the sick people who are too expensive, and yet they still seem to argue that "free market" is the answer to our healthcare problems.

 

Garbage in garbage out, I guess.

 

1. What specific health outcomes are you talking about here? I'm more than happy to compare apples to apples here.

 

2. Cost shifting. Are you making the "argument from personal incredulity" here on purpose, or do you really not believe that this really happens?

 

The government pays providers less than the cost of providing care. Providers recoup the losses by charging private payers more.

 

There's an hour-long interview with a CEO of a major hospital chain where he's quite frank and explicit about how they go about shifting costs to make ends meet here:

 

http://www.econtalk.org/archives/2008/12/lipstein_on_hos.html

 

"Steven Lipstein, President and CEO of BJC HealthCare--a $3 billion hospital system in St. Louis, Missouri--talks with EconTalk host Russ Roberts about the economics of hospitals. They discuss pricing, the advantages and disadvantages of specialization in modern medical care, and culture and governance of non-profit hospitals vs. for-profit hospitals. At the end they talk about the positives and negatives of a national health board patterned after the Federal Reserve."

 

The alternative to cost shifting is simply turning patients away. We can talk about why hospitals that take a mix of patients with public/private insurance are unlikely to do so, and why small practices are increasingly doing so if you wish.

 

If you still think that I'm making this up, I invite you to consult the literature and evaluate their analysis/conclusions. Here's a representative paper:

 

"Hospital Cost Shifting, Provider Segmentation, and the Game of Medicare Payment Policy.

 

Mayes R, Lee J; AcademyHealth. Meeting (2005 : Boston, Mass.).

Abstr AcademyHealth Meet. 2005; 22: abstract no. 3586.

 

University of Richmond, Political Science, 28 Westhampton Way, Richmond, VA 23173 Tel. 804-287-6404 Fax

 

RESEARCH OBJECTIVE: The goal of our paper is to gain a better understanding of some of the leading factors that influence Congress annual adjustment of Medicare payment policy and how medical providers (primarily hospitals) respond to changes in reimbursement by public health insurance programs....The paper concludes that cost shifting is becoming an increasingly important issue for individuals, because they have assumed a disproportionate share of the dramatic increase in health care costs that have occurred in recent years."

 

http://gateway.nlm.nih.gov/MeetingAbstracts/ma?f=103623049.html

 

3. Costs of bureaucracy. You are conflating "low overhead" with efficiency here. Going light on claims review, fraud prevention, and other functions that are served by admin reduces administrative costs, but does not necessarily do anything to improve the efficiency of overall medical spending.

 

Since you have studied this matter in some depth, you may also be able to tell me if the cost estimates that you cite account for the fact that Medicare/Medicaid get their funding directly from the Treasury. Private insurers have to account for the costs of raising money and staying solvent, which includes maintaining capital reserves sufficient to satisfy their claims in addition to billing for premiums, etc. Do the cost figures that you cite account for the cost of raising the funds necessary to pay for claims via taxation? How about maintaining capital reserves? The future costs of pension/healthcare liabilities for government employees?

 

4. I'll hope that you'll add something more flesh out your more general claim that eliminating competition and creating monopolies reduces costs and improves quality. I don't think that a mixed market with government imposed price controls that transfer costs onto others isn't the best example with which to make this case, but I'd be more than happy to continue this discussion.

 

5. Bankruptcy. Let's look at the data as opposed to swapping anecdotes.

 

Once we've established whether it's the costs of care or the costs of disability that drive more people into bankruptcy, we can talk about the pros and cons of price controls and the real but seldom understood costs that come along with them.

 

Any time you have a conversation about costs, it's worth asking -"Compared to what?" What were the costs associated with the condition/disease/etc before there was an effective treatment? How likely is it that the costly treatment would be available at all under a centrally administered price control regime/monopoly? Would it exist in the first place? Would the government pay for a supply commensurate with demand, and if not - how many people would get it?

 

6. Public/Private competition. Do you really think that this will be a fair competition - e.g. that the government would be willing or able to create a plan that has no competitive advantages that aren't due solely to its power to draft legislation, etc? E.g. advantages that no private company, no matter how lean, efficient, or innovatvie could ever hope to duplicate since the very fact of being a private company precludes them from doing things like...drafting legislation that restructures the rules that govern the entire medical economy?

 

...

 

More malarky for you to enjoy. Have a nice weekend.

 

 

[Jim]

 

The best example of why not to trust everything to the marketplace is the current expensive and wasteful program we have now. The private insurance industry spends about 20 percent of its revenue on administration, marketing, and profits. Further, this industry imposes on physicians and hospitals an administrative burden in billing and insurance-related functions that consumes another 12 percent of insurance premiums. Thus, about one-third of private insurance premiums are absorbed in administrative services that could be drastically reduced if we were to finance health care through a single non-profit or public fund.

 

 

The United States has the most bureaucratic health care system in the world. Over 31% of every health care dollar goes to paperwork, overhead, CEO salaries, profits, etc. Because the U.S. does not have a unified system that serves everyone, and instead has thousands of different insurance plans, each with its own marketing, paperwork, enrollment, premiums, and rules and regulations, our insurance system is both extremely complex and fragmented. The Medicare program operates with just 3% overhead, compared to 15% to 25% overhead at a typical HMO. Provincial single-payer plans in Canada have an overhead of about 1%.

 

When all patients are under one system, the payer wields a lot of clout. The VA gets a 40% discount on drugs because of its buying power. This “monopsony” buying power is the main reason why other countries’ drug prices are lower than ours. This also explains the drug industry’s staunch opposition to single-payer national health insurance.

 

There is a myth that with national health insurance the government will make the medical decisions. But in a publicly financed, universal health care system, medical decisions are left to the patient and doctor, as they should be. This is true even in the countries like the U.K. and Spain (or in U.S. systems like the VA) that have socialized medicine.

 

In a public system, the public has a say in how it’s run. Cost containment measures are publicly managed at the state level by elected and appointed agencies that represent the public. This agency decides on the benefit package and negotiates doctor fees and hospital budgets. It also is responsible for health planning and the distribution of expensive technology. Thus, the total budget for health care is set through a public, democratic process. But clinical decisions remain a private matter between doctor and patient.

 

Much current medical research is publicly financed through the National Institutes of Health. Under a universal health care system this would continue. For example, a great deal of basic drug research, for example, is funded by the government. Drug companies are invited in for the later stages of “product development,” the formulation and marketing of new drugs. AZT for HIV patients is one example. The early, expensive research was conducted with government money. After the drug was found to be effective, marketing rights went to the drug company.

 

Over sixty percent (60.5 percent) of health spending in the U.S. is funded by government. Official figures for 2005 peg government’s share of total health expenditure at 45.4 percent, but this excludes two items:

1. Tax subsidies for private insurance, which cost the federal treasury $188.6 billion in 2004. These predominantly benefit wealthy taxpayers.

 

2. Government purchases of private health insurance for public employees such as police officers and teachers. Government paid private insurers $120.2 billion for such coverage in 2005: 24.7 percent of the total spending by U.S. employers for private insurance.

 

So, government’s true share amounted to 9.7 percent of gross domestic product in 2005, 60.5 percent of total health spending, or $4,048 per capita (out of total expenditure of $6,697).

 

By contrast, government health spending in Canada and the U.K. was 6.9 percent and 7.2 percent of gross domestic product respectively (or $2,337 and $2,371 per capita). Government health spending per capita in the U.S. exceeds total (public plus private) per capita health spending in every country except Norway, Switzerland and Luxembourg. And about 18% of our population has no access to health care.

 

(Source: Himmelstein and Woolhandler, “Competition in a publicly funded healthcare system” BMJ 2007; 335:1126-1129 [1 December] and Woolhandler and Himmelstein, Health Affairs, 2002, 21(4), 88, “Paying for National Health Insurance - And Not Getting It.”)

Competititio

 

Advocates of the “free market” approach to health care claim that competition will streamline the costs of health care and make it more efficient. What is overlooked is that past competitive activities in health care under a free market system have been wasteful and expensive, and are the major cause of rising costs.

 

There are two main areas where competition exists in health care: among the providers and among the payers. When, for example, hospitals compete they often duplicate expensive equipment in order to corner more of the market for lucrative procedure-oriented care. This drives up overall medical costs to pay for the equipment and encourages overtreatment. They also waste money on advertising and marketing. The preferred scenario has hospitals coordinating services and cooperating to meet the needs of their communities.

 

Competition among insurers (the payers) is not effective in containing costs either. Rather, it results in competitive practices such as avoiding the sick, cherry-picking, denial of payment for expensive procedures, etc. An insurance firm that engages in these practices may reduce its own outlays, but at the expense of other payers and patients

 

Illness and medical bills caused half of the 1,458,000 personal bankruptcies in 2001, according to a study published by the journal Health Affairs. The study estimates that medical bankruptcies affect about 2 million Americans annually -- counting debtors and their dependents, including about 700,000 children.

 

Surprisingly, most of those bankrupted by illness had health insurance. More than three-quarters were insured at the start of the bankrupting illness. However, 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy.

 

So folks who get a major illness are screwed. You may be eligible for disability but how are you going to pay medical expenses that are piling up? Sure - the top income earners can afford disability insurance, but if you can't afford insurance you can't afford disability insurance as well. And if you lose your job you lose your insurance - that's just stupid.

 

 

 

 

 

 

 

[Fairweather]

 

When all patients are under one system, the payer wields a lot of clout.

 

Exactly. And you don't seem the least bit concerned.

[KaskadskyjKozak]

 

When all patients are under one system, the payer wields a lot of clout.

 

Exactly. And you don't seem the least bit concerned.

 

I would gladly pay higher taxes to fund surgery correcting Kevbone's cranial-rectal inversion.

[Jim]

 

When all patients are under one system, the payer wields a lot of clout.

 

Exactly. And you don't seem the least bit concerned.

 

 

Certainly a lot less than the current condition where we are raked over the coals by the for-mega-profit insurance companies. And clout to reduce the cost of drugs for instance (like the VA)? Damm straight that would be a vast improvement.

[Fairweather]

 

When all patients are under one system, the payer wields a lot of clout.

 

Exactly. And you don't seem the least bit concerned.

 

 

Certainly a lot less than the current condition where we are raked over the coals by the for-mega-profit insurance companies. And clout to reduce the cost of drugs for instance (like the VA)? Damm straight that would be a vast improvement.

 

I vehemently disagree and believe history is on my side. Will the safety net be there for all under your single-payer scheme? Sure. But what will happen to the financial incentive for the pharmaceutical companies you're so fond of bashing? Do you really think they'll continue to advance their science at its current pace? I use this as an example, but it applies across the health care landscape. The system you envision will be purely political. That your bleeding heart can't bear the current paradigm wherein costs are redistributed matters not. That your pleas for liberty under a Bush government now support what is, potentially, the most intimate and personal government intrusion in to our lives--ever--is only mildly amusing. That lefties like yourself fall victim to the rule of unintended consequences time after time is truly sad given the high levels of worth you all seem so fond of assigning yourselves.

[Bug]

 

When all patients are under one system, the payer wields a lot of clout.

 

Exactly. And you don't seem the least bit concerned.

 

 

Certainly a lot less than the current condition where we are raked over the coals by the for-mega-profit insurance companies. And clout to reduce the cost of drugs for instance (like the VA)? Damm straight that would be a vast improvement.

 

I vehemently disagree and believe history is on my side. Will the safety net be there for all under my single-payer scheme? Sure. But what will happen to the financial incentive for the pharmaceutical companies you're so fond of bashing? You mean the fiducial responsibility Do you really think they'll continue to advance their science at its current pace? I use this as an example, but it applies across the health care landscape. The system you envision will be purely political. That your bleeding heart can't bear the current paradigm wherein costs are redistributed matters not. That your pleas for liberty under a Bush government now support what is, potentially, the most intimate and personal government intrusion in to our lives--ever--is only mildly amusing. That lefties like yourself fall victim to the rule of unintended consequences time after time is truly sad given the high levels of worth you all seem so fond of assigning yourselves.

I vehemently disagree and believe history is on my side. Will the safety net be there for all under your corporate scheme? No. But what will happen to the financial incentive for the pharmaceutical companies you're so fond of holding up as shining examples of capitalism? Fiducial responsibility trumps concern for human welfare every time. Left unchecked they'll continue to advance their marketing schemes at their current pace. I use this as an example, but it applies across the health care landscape. The system you envision will be purely political which in these times is synonymous with commercial. That your cold heart can't bear the new paradigm is mindboggling when costs under the current system are already picked up by the taxpayer and consumer. That your pleas for understanding under a Bush government now support what is, potentially, the most intimate and personal government intrusion in to our lives--ever--is only mildly amusing. That righties like yourself fall victim to the rule of unintended consequences time after time is truly sad given the high levels of worth you all seem so fond of assigning yourselves.

[whirlwind]

well, for one if our medical system wasn't based on profit, maybe the Dr's would treat the problems that cause bad health rather than using proscrition drugs and surgies to cure the pains and deficintcies caused by poor diets and lack of exrercise, and these same drugs also have side effects that cause, often times more problems, than the origal.

[Bug]

An that's what I thought before I drank all that whiskey too.

[Bug]

And I agree.

[JayB]

The best example of why not to trust everything to the marketplace is the current expensive and wasteful program we have now. The private insurance industry spends about 20 percent of its revenue on administration, marketing, and profits. Further, this industry imposes on physicians and hospitals an administrative burden in billing and insurance-related functions that consumes another 12 percent of insurance premiums. Thus, about one-third of private insurance premiums are absorbed in administrative services that could be drastically reduced if we were to finance health care through a single non-profit or public fund.

 

 

The United States has the most bureaucratic health care system in the world. Over 31% of every health care dollar goes to paperwork, overhead, CEO salaries, profits, etc. Because the U.S. does not have a unified system that serves everyone, and instead has thousands of different insurance plans, each with its own marketing, paperwork, enrollment, premiums, and rules and regulations, our insurance system is both extremely complex and fragmented. The Medicare program operates with just 3% overhead, compared to 15% to 25% overhead at a typical HMO. Provincial single-payer plans in Canada have an overhead of about 1%.

 

When all patients are under one system, the payer wields a lot of clout. The VA gets a 40% discount on drugs because of its buying power. This “monopsony” buying power is the main reason why other countries’ drug prices are lower than ours. This also explains the drug industry’s staunch opposition to single-payer national health insurance.

 

There is a myth that with national health insurance the government will make the medical decisions. But in a publicly financed, universal health care system, medical decisions are left to the patient and doctor, as they should be. This is true even in the countries like the U.K. and Spain (or in U.S. systems like the VA) that have socialized medicine.

 

In a public system, the public has a say in how it’s run. Cost containment measures are publicly managed at the state level by elected and appointed agencies that represent the public. This agency decides on the benefit package and negotiates doctor fees and hospital budgets. It also is responsible for health planning and the distribution of expensive technology. Thus, the total budget for health care is set through a public, democratic process. But clinical decisions remain a private matter between doctor and patient.

 

Much current medical research is publicly financed through the National Institutes of Health. Under a universal health care system this would continue. For example, a great deal of basic drug research, for example, is funded by the government. Drug companies are invited in for the later stages of “product development,” the formulation and marketing of new drugs. AZT for HIV patients is one example. The early, expensive research was conducted with government money. After the drug was found to be effective, marketing rights went to the drug company.

 

Over sixty percent (60.5 percent) of health spending in the U.S. is funded by government. Official figures for 2005 peg government’s share of total health expenditure at 45.4 percent, but this excludes two items:

1. Tax subsidies for private insurance, which cost the federal treasury $188.6 billion in 2004. These predominantly benefit wealthy taxpayers.

 

2. Government purchases of private health insurance for public employees such as police officers and teachers. Government paid private insurers $120.2 billion for such coverage in 2005: 24.7 percent of the total spending by U.S. employers for private insurance.

 

So, government’s true share amounted to 9.7 percent of gross domestic product in 2005, 60.5 percent of total health spending, or $4,048 per capita (out of total expenditure of $6,697).

 

By contrast, government health spending in Canada and the U.K. was 6.9 percent and 7.2 percent of gross domestic product respectively (or $2,337 and $2,371 per capita). Government health spending per capita in the U.S. exceeds total (public plus private) per capita health spending in every country except Norway, Switzerland and Luxembourg. And about 18% of our population has no access to health care.

 

(Source: Himmelstein and Woolhandler, “Competition in a publicly funded healthcare system” BMJ 2007; 335:1126-1129 [1 December] and Woolhandler and Himmelstein, Health Affairs, 2002, 21(4), 88, “Paying for National Health Insurance - And Not Getting It.”)

Competititio

 

Advocates of the “free market” approach to health care claim that competition will streamline the costs of health care and make it more efficient. What is overlooked is that past competitive activities in health care under a free market system have been wasteful and expensive, and are the major cause of rising costs.

 

There are two main areas where competition exists in health care: among the providers and among the payers. When, for example, hospitals compete they often duplicate expensive equipment in order to corner more of the market for lucrative procedure-oriented care. This drives up overall medical costs to pay for the equipment and encourages overtreatment. They also waste money on advertising and marketing. The preferred scenario has hospitals coordinating services and cooperating to meet the needs of their communities.

 

Competition among insurers (the payers) is not effective in containing costs either. Rather, it results in competitive practices such as avoiding the sick, cherry-picking, denial of payment for expensive procedures, etc. An insurance firm that engages in these practices may reduce its own outlays, but at the expense of other payers and patients

 

Illness and medical bills caused half of the 1,458,000 personal bankruptcies in 2001, according to a study published by the journal Health Affairs. The study estimates that medical bankruptcies affect about 2 million Americans annually -- counting debtors and their dependents, including about 700,000 children.

 

Surprisingly, most of those bankrupted by illness had health insurance. More than three-quarters were insured at the start of the bankrupting illness. However, 38 percent had lost coverage at least temporarily by the time they filed for bankruptcy.

 

So folks who get a major illness are screwed. You may be eligible for disability but how are you going to pay medical expenses that are piling up? Sure - the top income earners can afford disability insurance, but if you can't afford insurance you can't afford disability insurance as well. And if you lose your job you lose your insurance - that's just stupid.

 

 

 

Jim:

 

1. There are serious problems with dividing the total spending on healthcare in a given country and dividing by the population - at least if you are interested in comparing apples to apples. How much is discretionary, does it make more sense to compare non-discretionary spending between states with significant differences in per-capita income in terms of dollars or percentage of income, etc? Are we interested in apples-to-apples comparisons here, or not?

 

2. I lived right next door to a hospital in NZ, and heard about the disposition of hundreds of cases and the parameters that drove the state's decision making regarding who got what care - since my wife treated those patients herself and dealt directly with the administrators.

 

At least in NZ - you don't get the treatment that you and your doctor agree upon, you get the treatment that the state allows. I'm not out to disparage their system here - just to inform you that the state rationing system in place there, coupled with very little recourse for patients and families in the event of malpractice (which tends to happen as soon as the payouts for lawsuits/settlements start coming directly out of the state's pockets), results in limitations on care that are considerably more severe than those that prevail here.

 

When we're comparing alternatives, let's be honest and admit that we're comparing alternate rationing mechanisms. On one side we have competing sets of algorithmic third-party rationing mechanisms with incentives that are at best poorly aligned with those of their ostensible beneficiaries, and at worst completely at odds with them. If you think that a set of competing private insurers subject to the restraints of competition, government oversight, and monetary liability is going to impose more severe limitations on care than a government monopoly that's subject to none of these - I hope you'll explain how and why that's the case.

 

A high-deductible/HSA model coupled with income indexed credits and subsidies is off the table would likely cost less, do a better job of aligning the incentives of patients and providers, and leave people in control over the rationing of 95% of the medical choices that they'll ever have to make - but since that's largely off the table at this point I'll leave it at a discussion of third-party rationing via a competitive private system or a public monopoly.

 

3. Costs. How do CHAMPUS, Medicaid, SCHIP and other government programs stack up in terms of administrative costs?

 

If you want to stick to medicare - how certain are you that the comparisons of administrative costs are both meaningful and accurate? Here's an argument that they aren't:

 

"Advocates of a public plan assert that Medicare has administrative costs of 3 percent (or 6 to 8 percent if support from other government agencies is included), compared to 14 to 22 percent for private employer-sponsored health insurance (depending on which study is cited), or even more for individually purchased insurance. They attribute the difference to superior efficiency of government,[1] private insurance companies' expenditures on marketing,[2] efforts to deny claims,[3] unrestrained pursuit of profit,[4] and high executive salaries.[5]

 

However, on a per-person basis Medicare's administrative costs are actually higher than those of private insurance--this despite the fact that private insurance companies do incur several categories of costs that do not apply to Medicare. If recent cost history is any guide, switching the more than 200 million Americans with private insurance to a public plan will not save money but will actually increase health care administrative costs by several billion dollars.

 

Fuzzy Math

 

Medicare patients are by definition elderly, disabled, or patients with end-stage renal disease, and as such have higher average patient care costs, so expressing administrative costs as a percentage of total costs gives a misleading picture of relative efficiency. Administrative costs are incurred primarily on a fixed or per-beneficiary basis; this approach spreads Medicare's costs over a larger base of patient care cost.

 

Even if Medicare and private insurance had identical levels of administrative efficiency, Medicare would appear to be more efficient merely because of an artifact of the arithmetic of percentages--Medicare's identical administrative costs per person would be divided by a larger number for patient care costs.

 

Imagine, for a moment, that Fred and Jane each have a credit card from a different bank. Fred charges $5,000 a month, and Jane charges $1,000 a month. Suppose it costs each bank $5 to produce and send a plastic credit card when the account is opened. That $5 "administrative cost" is a much lower percentage of Fred's monthly charges than it is of Jane's, but that does not mean Fred's bank is more efficient. It is purely a mathematical artifact of Fred's charging pattern, and it would be silly to compare the efficiency of bank operations on that basis. Yet that is how many analysts compare Medicare with private insurance.

 

Background

 

Administrative costs are customarily expressed as a percentage of total costs, that total being the sum of administrative costs and health benefit claims paid. In the case of Medicare, the cost to the Centers for Medicare and Medicaid Services (CMS) of operating the Medicare program has ranged in recent years from 2.8 to 3.4 percent; adding in costs incurred by other government agencies in support of Medicare brings the total to a range of 5.7--6.4 percent.[6]

 

In the case of private insurance, administrative costs are measured by the difference between premiums collected and claims paid. The result is that this includes some costs that are not really "administrative."

 

For example, many private insurers provide disease management services for patients with chronic conditions and/or on-call nurses for patients to consult by phone. Because these services are provided directly by the insurance company, they do not result in a claim being paid. In addition, most states impose a "premium tax" on health insurers; this tax is obviously not a health benefit claim. However, because all non-benefit costs are defined as "administrative," these and other similar expenditures are reported as administrative costs. In recent years, these so-called "administrative costs" have accounted for 11.4--13.2 percent of total health insurance premiums.[7]

 

Why Measuring Administrative Costs as a Percentage Is Misleading

 

Administrative costs can be divided broadly into three categories:

 

1. Some costs, such as setting rates and benefit policies, are incurred regardless of the number of beneficiaries or their level of health care utilization and may be regarded as "fixed costs."

2. Other costs, such as enrollment, record-keeping, and premium collection costs, depend on the number of beneficiaries, regardless of their level of medical utilization.

3. Claims processing depends primarily on the number of claims for benefits submitted.

 

Claims processing is the only category that is at all sensitive to the level of health care utilization, and it is more correlated with the number of claims than on the cost or intensity of service provided on each claim. Furthermore, it represents only a very small share of administrative costs. For example, in the case of Medicare, the total claims processing expenditure in FY 2005 was $805.3 million,[8] which represented 4.04 percent of Medicare's administrative costs--which is, in turn, only 0.234 percent (less than 24 cents for every $100) of total Medicare outlays.[9]

 

Clearly, only an extremely small portion of administrative costs are related to the dollar value of health care benefit claims. Expressing these costs as a percentage of benefit claims gives a misleading picture of the relative efficiency of government and private health plans.

 

Medicare beneficiaries are by definition elderly, disabled, or patients with end-stage renal disease. Private insurance beneficiaries may include a small percentage of people in those categories, but they consist primarily of people are who under age 65 and not disabled. Naturally, Medicare beneficiaries need, on average, more health care services than those who are privately insured. Yet the bulk of administrative costs are incurred on a fixed program-level or a per-beneficiary basis. Expressing administrative costs as a percentage of total costs makes Medicare's administrative costs appear lower not because Medicare is necessarily more efficient but merely because its administrative costs are spread over a larger base of actual health care costs.

 

Administrative Costs per Person

 

When administrative costs are compared on a per-person basis, the picture changes. In 2005, Medicare's administrative costs were $509 per primary beneficiary, compared to private-sector administrative costs of $453. In the years from 2000 to 2005, Medicare's administrative costs per beneficiary were consistently higher than that for private insurance, ranging from 5 to 48 percent higher, depending on the year (see Table 1). This is despite the fact that private-sector "administrative" costs include state health insurance premium taxes of up to 4 percent (averaging around 2 percent, depending on the state)--an expense from which Medicare is exempt--as well as the cost of non-claim health care expenses, such as disease management and on-call nurse consultation services."

 

 

[Choada_Boy]

 

When all patients are under one system, the payer wields a lot of clout.

 

Exactly. And you don't seem the least bit concerned.

 

I would gladly pay higher taxes to fund surgery correcting Kevbone's cranial-rectal inversion.

 

A major problem is with misdiagnosis: Kevtard suffers from a closed Rectal-Cephallic Inclusion.

[billcoe]

socialism is great idea until you run out of everyone elses money...

 

 

 

LOL!!!!!!!!!!

[glassgowkiss]

there are lots of people who voluntarily opt not to buy insurance even though they could afford it (at least catastrophic).

First of all what "catastrophic insurance is a complete bullshit. It usually includes at least $5000 deductible and no medications are usually covered by it. So what is it supposed to for? So called "catastrophic" insurance is a complete fraud. If you really need any medical treatment it will not pay for 75-90% of your bill. So if you have even 50 grand in medical bills it won't make any difference in the amount you have to pay off.

Second, 47 million people did not "opt" to have no insurance. It's a choice between housing and food vs insurance.

[glassgowkiss]

I vehemently disagree and believe history is on my side. Will the safety net be there for all under your single-payer scheme? Sure. But what will happen to the financial incentive for the pharmaceutical companies you're so fond of bashing? Do you really think they'll continue to advance their science at its current pace? I use this as an example, but it applies across the health care landscape. The system you envision will be purely political. That your bleeding heart can't bear the current paradigm wherein costs are redistributed matters not. That your pleas for liberty under a Bush government now support what is, potentially, the most intimate and personal government intrusion in to our lives--ever--is only mildly amusing. That lefties like yourself fall victim to the rule of unintended consequences time after time is truly sad given the high levels of worth you all seem so fond of assigning yourselves.

You are an obvious example how limited helps meds really are. Your complete lack of logic shows your two brain cells are beyond any help by anyone. now do us a favor and suck some repubifuck shlong or just plain piss of clownpunch.