Princeton economist Uwe Reinhardt is well known as one of the bluntest—and wittiest—critics of U.S. Healthcare. Last week, we both spoke at a conference organized by Princeton’s Policy Research Institute on “Access to Universal Health Care: New Jersey, the Nation and the Globe. As usual, I learned something from Professor Reinhardt.
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Earlier this year, New Jersey Governor Jon Corzine received a somewhat startling letter from Princeton economist Uwe Reinhardt. The missive was appended to a report from the “New Jersey Commission on Rationalizing Health Care Resources,” a Commission that Corzine had asked Reinhardt to chair.
In the letter, Reinhardt expresses “some personal observations on the inconsistent expectations Americans have of their health system,” describing “these inconsistencies” as “a form of cognitive dissonance.” Reinhardt goes on to explain that, in his view, these inconsistencies reflect “certain deeply ingrained traits in American culture that stand in the way of a rational health care system.”
He concludes: “In short, Governor Corzine, in my professional view, the extraordinarily expensive, often excellent just as often dysfunctional, confused and confusing American health system is a faithful reflection of the minds and souls making up America’s body politic.”
After reading the letter, Governor Corzine had one question: “You’re not going to publish this in the report, are you?”
In fact, the letter did appear at the front of the report. And last week, at a conference on “Access to Universal Health Care: New Jersey, the Nation and the Globe” sponsored by Princeton’s Policy Research Institute, Reinhardt circulated said letter. It served as a good companion to Reinhardt’s speech, which compared what we euphemistically call our health care “system” to systems in other parts of the world.
Reinhardt began his talk by considering the fact that, in the U.S. insurance is often tied to one’s job.
“No one –in his wildest dreams—Drunk!!—would design a health care system based on employment,” Reinhardt declared, barely containing his outrage at such a truly bone-headed idea. After all, the unintended–but inevitable– consequence of an employer-based system is this: if you lose your job, you also lose your health insurance—at exactly the worst possible time.
In his letter to Corzine, the Princeton economist elaborates: “the
reluctance of Americans to countenance government financing of health
care outright…has led them instead to prefer inherently temporary
private health insurance tied to a particular job with a particular
company (and then to look helplessly for rescue by federal or state
governments, when, in their 50s and early 60s, they may find themselves
structured out of their jobs and the health insurance that came with it
and unable to afford coverage in the private insurance market for
individuals). When,” he asks, “will it dawn on the American voter that,
in an age of fierce global competition and ever novel disruptive
technology, any individual American corporation is a fragile
institution and, at best, a highly unreliable source of health
insurance…?” This is especially true for those forced into early
retirement.
Reinhardt is right. A great many Americans do not want “Big Government”
interfering with their health care. Unless they lose their insurance
and then they expect “their government” to bail them out.
In theory, our government will come to your rescue if you’re
poor enough, offering Medicaid and SCHIP to millions of families and
children who simply do not have the money to purchase their own health
insurance. We take care of our poor—or at least that is what we like
to tell ourselves.
In fact, Reinhardt points out, a 2008 brief by the National Institute for Health Care Management Foundation reveals that 12 million Americans who are uninsured are eligible for public programs—but are not enrolled. Of these, more than half are children.
Why aren’t they enrolled? In many cases, the application process is
filled with roadblocks which can include 14-page application forms.
“And this is deliberate,” Reinhardt added, quoting a Harvard
economist who has suggested that “the way to manage entitlement
programs is to harass people.”
The problem, Reinhardt explains in his letter to Corzine, is that we
are of two minds about providing care for the poor. While “many
Americans do believe that health care is a social good that should be
available to all socio-economic classes on roughly equal terms…just as
many other Americans believe that health care is essentially a private
consumer good—like clothes, food and shelter—whose procurement and
financing is primarily the individual’s responsibility, and they
routinely (and quite incorrectly) deride the former school of thought
as ‘socialists.’”
The way we pay health care providers who take Medicaid patients
illustrates just how conflicted we are. Doctors who treat these
patients are paid much less then they would be if they were treading
Medicare patients. In other words “Americans tell providers that the
value of their work is lower when applied to uninsured patients or to
patients insured by Medicaid.” Reinhardt observes. As a result,
Medicaid patients often have difficulty finding a provider. A 2007 study
published by the Commonwealth Fund reports that when Community Health
Centers (CHCs) try to refer Medicaid patients to a specialist for “high
tech services,” 16 percent of those patients “never” or “rarely” are
able to obtain access. When it comes to Medicaid patients referred by
CHCs for hospital admission, nearly 12 percent find the door blocked.
This is the legacy of racism. As Henry J. Aaron and Jeanne M. Lambrew point out in Reforming Medicare: Options, Tradeoffs and Opportunities,
Southern Congressmen refused to vote for the 1965 legislation that
created both Medicare and Medicaid if physicians and hospitals were
going to be paid as much to treat the poor as they were paid when
treating the elderly. These Congressmen wanted to preserve medical
apartheid. (Most Southerners over the age of 65 were white: a
combination of poverty and a lack of healthcare ensured that few
African-Americans lived that long.) Ultimately President Johnson had
no choice but to cave to the legislators’ demands. What is both
shameful and startling is that forty-three years later, this wrong
still has not been righted.
But, as Reinhardt notes in his letter, our feelings are confused on
this issue. Thus, even while signally to providers that we don’t value
their work as highly when they are treating the poor, we don’t want to
make the distinction explicit.
“A ‘rational’ health system responsive to this powerful economic signal
[of lower pay for Medicaid providers] would be openly two-tiered,”
Reinhardt writes in his letter to Corzine, “with bare-boned facilities
devoted strictly to Medicaid patients and the uninsured…and much more
luxurious, better equipped and better staffed facilities for
commercially insured patients whose insurers are willing to pay higher
fees.”
But in the U.S. a “citizenry which signals its preference for a
class-based health system through the payment mechanism, soothes its
conscience by holding physicians and hospitals to strictly egalitarian
standards when it comes to the treatment of patients of all
socio-economic classes.”
Since this is an unfunded mandate, many doctors reject all Medicaid
patients; others take only a few. Hospitals, too, have found ways to
avoid charity cases, “stabilizing the patient” who stumbles into the
ER, as the law demands, but refusing to admit him as an outpatient so
that he can receive the services the ER doctor recommends.
In other countries, where there is widespread agreement that equal
healthcare for all is a right, our sharply tiered system is viewed as
unacceptable. “If you want to kill a health care proposal, whether in
Taiwan or Germany” Reinhardt told his audience last week, “all you need
to say is, ‘if you do this, you’ll wind up with the U.S. system.’ It’s
amazing,” he mused, “how they manage to avoid adopting ‘the best health
care system in the world.’”
Why don’t we just raise fees for Medicaid providers? “We would have to
pay higher taxes,” says Reinhardt. “We can’t have the Chinese
temporarily pay for it” (the way China and other countries fund so much
of our deficit spending by buying our bonds.)
When we try to think about health care markets and regulation, we also
experience “cognitive dissonance.” For many Americans, Reinhardt
notes, “it is an article of faith that private commercial markets are
inherently more efficient than government will ever be. At the same
time…the same Americans seem troubled and unwilling to accept for
health care—and now even for mortgages—the harsh verdicts of the ‘free
markets’ among which are:
(1) That a market allocates resources not to individual most in need of
them, but to those who have the most money to bid high prices for them.
(2) That individuals or institutions, including hospitals, unable to
fend for themselves in the competitive market’s free-for-all—among
them hospitals in low-income neighborhoods—should be allowed to wither
away; and
(3) That in the free-for-all of the marketplace, not only the
quick-witted and better-informed, but also the morally more flexible
participants often will take advantage of less quick-witted and less
well-informed market participants who are naive enough to trust the
morally flexible.”
Free market enthusiasts often speak as if “the market” is a benign
intelligence, hovering over the marketplace to ensure that gains and
losses are fairly distributed. In fact, the market is not fair—nor is
it unfair. It is amoral, totally indifferent to whether individuals are
getting their just desserts. The most virtuous man may lose the roll of
the dice by investing too early, or too late. Often he is duped by
those Reinhardt describes as “morally flexible,” truly believing that
his mortgage broker has his best interests at heart. When it comes to
healthcare, a seven-year-old who needs a $100,000 cancer drug may not
get it; if an 89-year-old has the cash, the drug is his.
Because most Americans are unwilling to accept what Reinhardt rightly
describes as “the harsh verdicts of the market,” they believe that the
government should protect the weak. On the other hand, they don’t want
the government to disrupt free markets which, they insist, are
“efficient.” The result, says Reinhardt, is “a bewildering system of
half-hearted competition and half-hearted regulation” of health care.
When it comes to health insurance, Reinhardt writes, once again
“confusion reigns.” On the one hand, “many Americans decry as outright
un-American the idea of mandating the individual to procure adequate
health insurance coverage for at least catastrophically expensive
care.” Those same youthful libertarians, however, would “bristle at the
idea that…a hospital should have the right to withhold from them for
want of ability to pay, costly life-saving medical interventions,
should [they] be seriously injured or become critically ill…These
unfunded mandates on hospitals effectively ask hospitals to provide
uninsured individuals with the catastrophic health insurance they are
free not to procure, at the expense of insured patients…”
“Just as inconsistently,” Reinhardt notes, many Americans believe that
insurers have no right to refuse to sell insurance to individuals
suffering from “pre-existing conditions.” Everyone has a right to buy
insurance, they say. But many of these Americans also believe that the
government has no right to insist that everyone purchase insurance. We
should be able to wait until we are sick, and then buy insurance when
we need it.
Of course if everyone followed this rule, only the sick would purchase
insurance and it would become exorbitantly expensive. This is precisely
what happened in New Jersey when, as part of the “New Jersey
Individual Health Coverage Program,” the state passed legislation
requiring that insurers sell policies to everyone in a given community
at the same price. After the law was passed in 1993, more and more
healthy individuals decided to forego insurance. They would buy it when
they became ill, secure in the knowledge that insurers would have to
sell it to them. As a result, Reinhardt observes, enrollment in
New Jersey’s Individual Health Coverage Program plummeted. In 1995
186,130 New Jersey citizens had been enrolled in the program; nine
years later 84,968 were covered—and since so many were sick, premiums
had spiraled two to three-fold.
New Jersey’s experience illustrates why we cannot insist that insurers
sell policies to everyone, young or old, sick or healthy at a
reasonable price—unless we also insist that everyone must join the pool
by purchasing a policy. Only then will insurance be affordable.
In other words, markets need rules. But before we can draw up
regulations, we have to agree on our goals. If we, as a nation,
believe that health care is not a right, but a consumer good, then a
multi-tier system makes sense. But we should be honest about this and
say the poor deserve only so much care—and no more.
Alternatively, if we agree with the Supreme Court of Taiwan, which has
ruled that healthcare is a “right”—a pure social good, to be available
to all on equal term—then we all must contribute, based on our ability
to pay, to a insurance pool that provide equal protection for all
citizens.
Until we do this, true health care reform will remain a figment of our collective but deeply divided American imagination.
Maggie:
You wrote the morally more flexible participants often will take advantage of those naive enough to trust the morally flexible.
There is much wisdom in that statement.
The morally less flexible don’t recognize their counterparts for, they expect others to behave as they do.
One can call it naive, but it also goes with one’s personality.
We are more apt to perceive in others similar qualities that we have.
Thus, to more easily recognize a thief, one needs to be a thief himself.
Don Levit
Maggie
GREAT- I call this, at the very least, the need for core values identification if not core values congruence.
Without this emphasis on fleshing out our core values as a US society on health care we are indeed just “flailing” and failing!
Be Well,
Dr. Rick Lippin
Southampton,Pa
ralippin@aol.com
Maggie:
I think you rightly emphasize the key notion of the risk pool and how health insurance underwriting skims those who largely don’t need expensive health care. I wish more health journalists would trumpet the importance of this notion and make it mainstream, because it is not esoteric at all. The only way we can make the healthcare fair is to make that risk pool as large as possible–it must include everyone.
Dr. Lippin:
If we accept the premise that the market is amoral, what relevance is there for assessing core values?
Don Levit
Nice posting. This analysis is fundamentally correct; it is also fundamentally a lie since it is only one side of a two sided coin. Socializing healthcare is no more ‘truthful’ than the lie it tries to supplant.
For the cognitive dissonance inherent in the classic socialist healthcare view: “from each according to their ability, to each according to their need” centers around the basic fact that
it is those WITH ABILITY who provide for those WITH NEED. And guilt is not always a successful method of bridging this divide.
One of the nuttiest things about liberals is their belief that evolution happened but has no consequences for their own belief system– something which seems every bit as nutty as the Christian fundamentalist who think that evolution never happened in the first place.
And interestingly, it is comforting to know that your readers do worry about scales of social injustice over their own personal agendas.
For it is quite clear that Americans are far more selflessly concerned with (say) the plight of the people of Darfur than their own healthcare system.
This may fool many readers (it is completely true after all). But don’t think it fools everyone.
If you are going to try to tell the truth with big words like ‘cognitive dissonance’, you may as well tell both truths.
Don, Rick, Chris–
Thanks very much for your comments.
Don–I absolutely agree. People who are always worried that the cabdriver will cheat them, that the girl in the grocery store didn’t give them the right change, that the restaurant bill won’t add up and that their stockbroker may be selling them down the river . . .
are often right about their stockbroker, but not the others.
And their paranoia tells you that you don’t want to buy a car, a house, or much of anything else from them.
I would add that I think being honest is less a matter of personality than of character. People of character have a conscience that pricks them if they even consider doing something dishonest.
As for the market being amoral, while the people of this nation need to get clear on core values. . .
Just because the market is amoral doesn’t mean that we have to be.
In fact, I think it is very difficult for human beings to be totally amoral or indifferent to what is going on around us.
Some people are primarily concerned with how they personally may gain–and this tends to lead to immoral behavior. I think it was Balzac who said that “Behind every great fortune lies a great crime.”
If you go back enough generations, this often is true.
Then there are people who
are empathetic and concerned about what is happening to others. This gives them a conscience.
In my experience, these people often grew up with animals. (I’m only half-kidding. I do think that if kids grow up in a household where animals are loved and treated well, they learn to see beyond their own needs at a very early age. It’s just so much easier to love cocker spaniels than it is to love people. So it’s good way to begin learning empathy.)
.
Rick– Thank you. I do think that this is a time that we need to talk about real values. Not conventions– “family values” “middle-class values” etc., but core, “Do Unto Others” golden rule values.
Chris–
Yes. It’s interesting that most people accept the fact that we all contribute to Medicare based on our ability to pay–young or old, sick or healthy–but
cannot understand why the same principle should apply universal health care.
But the only way we can afford universal coverage is if everyone chips in. And even if you don’t benefit today, eventually you will. Most of us will be very ill at some point in our lives–if we live long enough, we’ll be very ill more than once.
More importantly, “pooling the risk” is the only fair way for us to collectively face the whims of fate.
Red Baron wrote:
“For the cognitive dissonance inherent in the classic socialist healthcare view: “from each according to their ability, to each according to their need” centers around the basic fact that
it is those WITH ABILITY who provide for those WITH NEED.”
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In healthcare, many WITH NEED if properly treated can later become one of those WITH ABILITY, but only if they survive. Even if they don’t survive, treating them properly and fairly is just a moral thing to do, as anyone could find (and likely will someday)themselves WITH NEED for proper and compassionate healthcare someday!
Red Baron and NG–
Red Baron, I think NG answers your comment better than I could.
Both as a practical matter, and from an ethical point of view, the only thing to do is to try to help those who have greater needs.
Maggie: “Both as a practical matter, and from an ethical point of view, the only thing to do is to try to help those who have greater needs”
NG: “In healthcare, many WITH NEED if properly treated can later become one of those WITH ABILITY, but only if they survive. Even if they don’t survive, treating them properly and fairly is just a moral thing to do”.
Neither of these responses answers the fundamental cognitive dissonance issue you initially mention in your posting. Are you really that intellectually disingenuous? I honestly had more respect for you than that.
There are really two issues hidden here:
1.“Many WITH NEED if properly treated can later become one of those WITH ABILITY, but only if they survive”.
and
2.“Treating them properly and fairly is just a moral thing to do”.
The first is the easiest to debunk.
My response- “yes”, but ONLY if there is a ‘realistic’ possibility that they will one day becomes someone of ability. Someone who has already retired MAY contribute further to society (the idea of contribution is itself clearly a whole can of worms), but never the less from a pure economic standpoint, the odds of such contributions fall greatly the further someone moves away from the working world. At a certain point the math is quite clear that it is no longer worth the cost economically. Run the following model yourself and you will see I am correct: An imaginary society has 4 people in it (A, B, C and D), is a total size of 10, grows by 1 a year, and has a production distribution as follows: A produces 6, B produces 3, C produces 1 and D produces 0 (you can shuffle these ANY way you want, as long as they are all not equal). You can argue with the compassion of spending resources on D all you want, but in the end if you spend more than 1, the economy will shrink every year. It is basic math and therefore D’s subsidy from the collective is always at risk.
If this stuff is hard for you, I suggest you read Sarah Blaffer Hrdy’s book Mother Nature http://www.amazon.com/Mother-Nature-Maternal-Instincts-Species/dp/0345408934 (she was a professor at UC Davis and a member of the national academy of sciences and is truly one of the greatest minds to ever walk this planet (and a feminist I might add).
The second point is obviously much harder as it represents the classic moral dilemma we all face as a social collective: “how much does the collective owe the individual? When is the collective able to say ‘enough is enough’ no matter what”?
My response: “yes”- to a point. And people who make this statement usually do so because they are spending someone else’s money.
For one thing which is clear that Maggie is being dishonest about when she makes her ‘cross boarder’ comparisons between the US and other countries is she fails to look at things like ‘rationing’ on specific groups within a society. For again, healthcare spending follows non-linear ‘fractal’ patterns (i.e. 1% of patients spend 25% of the dollars and 5% spend 50%, etc…)
Saving money on designer drug pharmaceuticals and single payer systems is nice (I am all for these improvements), but still these issues are SMALL compared to the effect of saving money by not spending it on the 1%. Some social collectives in the world simply say “enough is enough”.
Maggie (and NG) remain dishonest when she (they) do not address their own cognitive dissonance.
They are similarly dishonest when they do not address the fundamentals of this fact between nations.
Red Baron,
I understand you are trying to have an overall system policy discussion, and I can respect that. However when I read your post two items come quickly to mind. I am sure more will be pointed out to you by others!
–Take a look at how our system treats poor children, especially children on Medicaid. Take a very close look at dental care for Medicaid children over the last 40 years. As Maggie has said, we have made a conscious decision in this country to discriminate against poor families, but many families include children, who may well be good social contributors if they can be given proper care growing up. It is not just the old who may have their productive capacity (no matter what it is) cut short by lack of proper access to healthcare.
–If enough in society are discriminated against, even the ones at that moment capable of doing good works may find themselves pre-occupied fighting civil unrest or too busy picking up the pieces of a failed society to continue being really productive.
These 2 agruments overlook any moral and religious obligations which by themselves may well be enough to justify a nation implementing a certain level of predictable universal healthcare!
It’s nice that Reinhardt mentioned young libertarians, this just serves as a reminder that people’s viewpoints don’t just pop into their heads, but are the result of information that they receive from the public sphere.
This is the true evil of the “vast right wing conspiracy” headed by the super wealthy libertarian plutocrats like Scaife and the Koch brothers. The millions they have spent each year for the past several decades funding propaganda has done its job and the idea that society is a communal effort has been demolished and replaced by the mythological frontiersman ideal.
It’s interesting to see how quickly this class demands government support when their areas of the economy get “sick”.
I might be willing to tolerate principled libertarianism, but it is the hypocrisy and corporate syndicalism that they really support that is so outrageous.
Perhaps the financial meltdown will open up the public space to a new discussion of the true role of government.
Red Baron and NG–
Other countries (like the UK) do not say that “enough is enough” because the individual is not going to make a contribution to the economy equal to the investment in his care. The UK says “enough is enough” because the treatment provides too little benefit for the cost.
For example the cancer drug costs $100,000 but gives the patients only an additional two months of life (and not high quality life.)
By contrast, our FDA has approved a very expensive cancer therapy that gives the average patient 11 days.
Your theory–that we should cut off spending if the individual is not going to make a significant economic contribution (because retired) even if the treatment helps him suggests –if taken to its logical extreme– that we shouldn’t operate on Downs Syndrome children to extend their lives because they are never going to make a signficant eocnomic contribution.
This policy has been tried–in a place called Nazi Germany.
As for intellectual dishonesty — At this point I know quite a bit about how health care is “rationed” in other countries (based on how effective it is and how large the benefit is For the Patient, when compared to the cost–and how heatlhcare is rationed here.
In the U.S. there is quite a bit of bedside rationing. The hospital asks: “Will his insurance cover it? If it won’t, they don’t do it, because the hopsital can’t afford to eat the cost.
A number of doctors have told me that they don’t even tell patients about treatments that their insurance won’t cover and that the patient can’t afford out of pocket–it’s too upsetting to the patient to learn that he could be helped, if only he had more money.
In the U.S. we ration according to ability to pay. If you have the cash, or expensive, comprehensive insurance, you can have the treatment. If not, you probably don’t get it–even if there is evidence that it is very effective.
Maybe you’re comfortable living in a country that rations care that way. Many (most?) of us are
not.
NG– a good point about poor children, but ultimately I agree with you that “moral or religious obligations alone are enough to justify” society giving every individual an equal shot at better health –no matter how much that individual can or can’t “pay back” to society.
This is called the golden rule. Or, as Rawls put it, we should strive to create a society where each of us would be happy to be born into
any class in that society–rich, middle-class or poor. (I’m paraphrasing) This is a fair society.
The Downs’ Syndrome child provides a good example. Often these children need operations to ensure a long life. And they can lead very happy lives.
Thus I would argue that they have a right to what we guarantee everyone: the right to “life, liberty and the pursuit of happiness”–whether or not they contribute to economic productiviy,.
As the economist Rashie Fein points out: “We live in a society, not just in an economy.”
Red Baron and NG–
Other countries (like the UK) do not say that “enough is enough” because the individual is not going to make a contribution to the economy equal to the investment in his care. The UK says “enough is enough” because the treatment provides too little benefit for the cost.
For example the cancer drug costs $100,000 but gives the patients only an additional two months of life (and not high quality life.)
By contrast, our FDA has approved a very expensive cancer therapy that gives the average patient 11 days.
Your theory–that we should cut off spending if the individual is not going to make a significant economic contribution (because retired) even if the treatment helps him suggests –if taken to its logical extreme– that we shouldn’t operate on Downs Syndrome children to extend their lives because they are never going to make a signficant eocnomic contribution.
This policy has been tried–in a place called Nazi Germany.
As for intellectual dishonesty — At this point I know quite a bit about how health care is “rationed” in other countries (based on how effective it is and how large the benefit is For the Patient, when compared to the cost–and how heatlhcare is rationed here.
In the U.S. there is quite a bit of bedside rationing. The hospital asks: “Will his insurance cover it? If it won’t, they don’t do it, because the hopsital can’t afford to eat the cost.
A number of doctors have told me that they don’t even tell patients about treatments that their insurance won’t cover and that the patient can’t afford out of pocket–it’s too upsetting to the patient to learn that he could be helped, if only he had more money.
In the U.S. we ration according to ability to pay. If you have the cash, or expensive, comprehensive insurance, you can have the treatment. If not, you probably don’t get it–even if there is evidence that it is very effective.
Maybe you’re comfortable living in a country that rations care that way. Many (most?) of us are
not.
NG– a good point about poor children, but ultimately I agree with you that “moral or religious obligations alone are enough to justify” society giving every individual an equal shot at better health –no matter how much that individual can or can’t “pay back” to society.
This is called the golden rule. Or, as Rawls put it, we should strive to create a society where each of us would be happy to be born into
any class in that society–rich, middle-class or poor. (I’m paraphrasing) This is a fair society.
The Downs’ Syndrome child provides a good example. Often these children need operations to ensure a long life. And they can lead very happy lives.
Thus I would argue that they have a right to what we guarantee everyone: the right to “life, liberty and the pursuit of happiness”–whether or not they contribute to economic productiviy,.
As the economist Rashie Fein points out: “We live in a society, not just in an economy.”
There is one common thread here – whether it is ‘forced’ payment in to a private insurer scheme or via taxes in to a government one, there needs to be large enough pool in order for any system to be sustainable. In other contexts, this pool would be called ‘community’ or ‘society’ right?
But why pay the middlemen (insurers) at all? Let there be universal care, let the community pay for that (up to a certain amount to provide for basic care), make it mandatory with a state license that physicians and providers of care participate but also allow them to set their prices; then there can be those that will accept government payment as payment in full and those that advertise ‘extra’ services for an additional premium. Want a private hospital room? Pay extra. But at least let us, as a civilized society, supply the room and services!
An alternative approach to look at is the Irish system. By no means a great one, it at least provides care or all (on waiting lists for non-critical issues) and those that want to purchase ‘insurance’ can do so independently or through their employer(though the coverage does not end with employment as it does here). That insurance gives you access to faster, more luxurious service and care. A tiered system but one that at least allows for everyone to be within a system. Lose your house and life savings to cover care or your illness? Unheard-of anywhere but here in the US.
A report released by Ingenix recently states that there is more than $210 billion going to waste in the administration of commercial insurance health care claims processes alone. Hmmm . . . bet that money would go a long way toward care for all in this country, in a way where no-one is treated as a Medicaid patient, and the well heeled can have their own luxury clinics if they want them, on their own dime.
Susanne:
You have some interesting ideas.
Cutting out the middleman sounds very intriguing.
But, don’t you think if the government is the insurer, it is still acting as a middleman?
And, if the government doesn’t actually “lock up” the contributions, and their growth, it isn’t even functioning as an insurer, while it is, indeed, still, a middleman.
It is not the concept of an insurer that bothers me.
It is, rather, the idea of an insurer whose primary concern is with stockholders, and not the policyholders.
What we need to consider, imo, is an insurer which IS the policyholders.
An insurer in which a good portion of the reserves are owned collectively by the participants.
Don Levit
@Don said “It is not the concept of an insurer that bothers me. It is, rather, the idea of an insurer whose primary concern is with stockholders and not the policyholders”
Amen. Only I would suggest the same cognitive dissonance statement that started this discussion still applies to even this statement.
For imagine a country where there are no private insurance companies, and where there is only a a single insurer– the government. The basic fact remains, who is the government’s primary concern? The patients who are ill within the system (the policyholders so to speak)? Or ALL the citizens of the country (the stockholders if you will)?
While initial examination might suggest the two groups should be identical, closer inspection would reveal that in fact they are not identical exactly. For while some citizen stockholders are healthy, they would get far less from the system than they put in. On the other hand other citizen policyholders are ill, and draw out more from the system than they will ever contribute. There is a never ending tension between these two groups. And while policyholders can correctly point out that ALL stockholders will one day become policyholders, still the numbers may not work according to either the stockholders personal economic favor or even the stockholders personal moral values.
Try as policyholders will to use guilt, or accusations of Nazism, to get more resources, the stockholder citizens might still say they would rather pay (say) 10% of their life’s earnings into a health system instead of (say) 15%, and use the other 5% for things like smaller class sizes for their children, or better transportation, or a cleaner environment, or a donation to their favorite charity or even a bigger home in Aspen (in fact the possibilities on how they might want to spend their money is nearly infinite).
Some in the stockholder group might say “we moved past the point of optimal healthcare spending vs. all other ways we can use money long ago”
http://assets.opencrs.com/rpts/RL34175_20070917.pdf (look at page 55 or CRS-50)
@Maggie: You might think statements like “too little benefit for the cost” are somehow different than “enough is enough”, but others (like me) see them as basically ‘the same thing’. If this helps you rectify your own cognitive dissonance, that’s really your issue, not mine.
Historical note: Nazism was an ideology where a centralized entity decided to actually expend energy to destroy those groups it felt a threat to its collective. There is a VERY big difference between saying “I am just not going to subsidize you anymore” and “I am going to destroy you”. You are being intellectually dishonest again.
When you say “In the U.S. there is quite a bit of bedside rationing. The hospital asks: “Will his insurance cover it? If it won’t, they don’t do it, because the hopsital can’t afford to eat the cost. A number of doctors have told me that they don’t even tell patients about treatments that their insurance won’t cover and that the patient can’t afford out of pocket–it’s too upsetting to the patient to learn that he could be helped, if only he had more money”
My response: True, I have seen this myself. But I HAVE NEVER seen this occur in something that would have made a major difference. Since I recognize my own experience is not necessarily the norm, before I comment any further, I would ask if you have a link showing how this makes a major difference on outcomes? (I clearly see how it makes a major difference in trust).
I will say this, from the link I gave above http://assets.opencrs.com/rpts/RL34175_20070917.pdf
44.7% of healthcare is financed by the US government. This publically financed portion is more money per capita than the UK spends in its entire system per capita.
Last time I checked, public spending IS NOT private spending. And while I totally agree with you that there is a BIG difference between Medicare and Medicaid and that issues of racism plays a major role in how the American psyche regardes these programs, this does not change the fundamental fact that there is still plenty of public money to do what is done in the UK if we want. We could easily ration to achieve UK outcomes with the public money which is spent. And it certainly does not change my fundamental point regarding your own cognitive dissonance in this discussion.
FYI- You may convince yourself that the UK does things for ‘more benevolent’ reasons than we do in the US, but the fact that you are fooled by them does not mean the rest of us are fooled.
Have you considered that MAYBE rationing care on the people who cost the most because “there are better ways we can use the money” also happens to ration care on the people who contribute the least economically (except for a few kids who by and large don’t represent all that large a cost to the system). Have you further considered there might really be an illusion of compassion you are confusing with economic viability?
I have worked for the NHS in the UK. The Brits are wonderful people, they are not MORE compassionate than Americans whatever your illusions tell you
http://news.bbc.co.uk/1/hi/health/407362.stm
And of course realists like me are always fighting the ideologs who seem endlessly hell bent on creating something that doesn’t work except in their own twisted logic
http://www.timesonline.co.uk/tol/life_and_style/health/article3646250.ece
And Maggie, next time you check into cross cultural rationing- look into whether the Japanese really let their elderly know when they have been diagnosed with cancer or not? Or whether there is a culture ‘compassion’ to prevent disturbing the ‘frail’ elderly in their last few mnths of life (of course a cynic might call it a culture of withholding information?). If you find this culture, ask yourself if such a behavior might also just work economically.
I am the first to admit that compassion CAN be a surrogate marker of economic viability, but it is still just a surrogate marker.
@NG: I couldn’t agree more.
Health reform and cognitive dissonance
Excellent summary of a recent talk given by Princeton’s Uwe Reinhardt. One interesting point the post brings up is health care for the poor, and how this is a legacy of racism:
The way we pay health care providers who take Medicaid patients illustrates j
Red Baron:
That is a unique way of expressing the tension between policyholders(those wih sizable claims), and stockholders (those with little or no claims).
What we need to accomplish, imo, is designing a system in which that tension is manageable.
In particular, a system in which the low claimants are encouraged to stay in the pool.
One way this could work is to assign 2 separate pools, say, claims of $50,000 and below, and $50,000 and above.
All the participants would pay premiums for the $50,000 and above coverage, which should be relatively inexpensive.
The $50,000 and below would be insured through a combination of insurance and investments.
Those with lower claims would be able to self-insure to a great extent, over time, so their total premiums for pure protection would lessen every year they have low or no claims.
Don Levit
Red Baron, your last post that begins,
“Don said “All the participants would pay premiums for the $50,000”
was indeed well written and shows some good insight and truthfulness about the problem. However, what has been discussed here most often is that the decision making incentives in our current system favor the provider-producer side, and they are milking the system while providing very little to mixed value to the relatively clueless patients! Because of this, many citizens have to do without, but it is true that they do without both the low value and the high value procedures.
I believe what most progressives want is to find a way of assigning objectively determined and truthful value on procedures, and then getting rid of the dangerous and useless. After doing that and making the price reflect systgem realities, then most citizens can afford to be given a basic healthcare package of just these higher value processes!
Your comment?
Red Baron wrote, “High deductible policies do not address the issue of how we ration on the above $50,000 claimants, yet all healthcare data shows it is precisely the above $50,000 claimants who are spending the overwhelming majority of the system’s money.”
That is why I suggested dividing the pools into 2 distinct groups, $50,000 and below claimants, and $50,000 and above claimants.
If everyone must purchase the $50,000 and above coverage, the price would be about $70 per month per family.
You then brought up the good idea of rationing for the $50,000 and above claimants.
IMO, people would purchase a multiple of their net worth.
For example, if a family has a net worth of $200,000, and the maximum multiple available is 4, they could purchase an additional $800,000 of protection (or could select $200,000, $400,000 or $600,000).
While the value of a life is priceless, we still need to also view insurance primarily as asset protection.
Protecting one’s assets up to 5 times is pretty significant protection.
Don Levit
Susanne, Robert, Don, NG, Red Baron–
Thanks for your comments.
Susanne–
First, let me say, I’m not in favor of most private insurers. I don’t think most add that much value to the system.
That said, let me add this: not all administrative spending is “waste.” Some of it is very valuable.
Some administrative spending by both private insurers and Medicare is spent investigating and trying to prevent fraud.
Unfortunately, some doctors and hopsitals bill for services that they have never provided–or inflate their bills. In other cases, they provide services people didin’t need (For example: Hundreds of unnecessary heart surgeries at a hospital in Redding California that was rated as one of the nation’s best. Many people were crippled as a result.) Drug-makers and device-makers pay kick-backs to make sure providers use their most expensive products.
Research shows that Medicare does not spend nearly enough investigating and preventing fraud–it could save hundreds of millions if it spent more, but Congress doesn’t give it the funds because lobbyists are protecting some of the hospitals, drug-makers, doctors and device-makers involved in fraudulent schemes.
Second, “administrative costs{” include money insurers spens investigating the quality and effectiveness of treatments. Back in the 1990s, when insurers were trying to “manage care,” the best private insurers actually spent quite a bit of money on this, and it helped improve quality. (Kaiser Permanente still does.)
So good insurers/middlemen actually can serve some
purpose if they research quality and fight fraud.
In addition, administrative costs are much higher in the U.S. than in countries with a single-payer system not simple because we have multiple payers, but because we have so many providers working as solo-practioners or in 4 or 5 doctor practices–and because we have thousands of employers involved in the system.
Insurers have to market to those thousands of insurers, who have to hire human resource people to help them pick policies. Insurers then have to reimubrse all of those small practices and small hospitals in suburbs etc.
In other countries where most doctors and hospitals work for the government, in very large groups, all of this paperwork is avoided. The doctors receive a salary; the hospitals receive a yearly allotment– they are not reimubrsed for piece-work (fee-for-service). This streamlines everything.
What makes administrative cost so high in the U.S. is not just that we have multiple payers, but that our system is so fragmented in so many ways–with so many small providers, and employers as an additional layer of middlemen . . .
That said, we definitely could save some administrative costs by having a single payer system–though not nearly as much as many people assume.
I’m not against single-payer. It can work well–it works quite well in the U.K. (patient satisfaction is much higher than it is here.)And if they could afford to spend, say 15 percent more on healthcare, it would work very well. (They spend about half what we do , per capita.)
But in this country, people are very afraid of “big government”–so we’re probably not ready for single-payer yet.
That’s why Obama and Clinton both setting up a public sector system (something like Medicare for all) to compete with private insurers. They proposed regulating private insurers and forcing them to play on a level playing field competing with the goverment system (Medicare For All). Over time, people might find they preferred Medicare For All and we might well transition toward single-payer.
Regarding Ireland-yes it is possible to give everyone comprehensive insurance, and then let them pay extra if they want “luxuries.” But we have to make sure that the luxuries really are “frills” and not things that people might need, medically, to improve their health, or improve their chances of getting better.
The comprehensive insurance that everyone gets needs to be good enough that you and I would be happy with it for our families. (That’s the way it is in Germany, when even doctors are often prefectly happy with the state coverage that everyone gets, and don’t buy the private coverage.)
Robert– Yes, Conservatives have spent millions on propaganda claiming that we don’t need govt regulation–which feeds into the Libertarian line–until a Libertanian finds that he needs govt’s help.
Reserach shows that the vast majority of Libertarians are under 45–maybe under 35, I can’t remember. When you’re young, healthy, don’t have a mortgage, children or other obligations, life can seem pretty simple–something you can handle yourself. But as you get older, you, or your family is more likely to run into one of the accidents that Fate hands out– a child is born who is very sick; your area is flooded and your insurance doesn’t cover the cost of replacing your home; you or your spouse is out of work for 7 months, and during that time, you have a bad car accident (bad luck tends to cluster, partially because we’re stressed.)
When these things happen, you realize that you’re very grateful to have: unemployment insurance, govt’ disaster relief, etc.
So, as people grow older they realize they’re not quite as self-sufficient as they think they are . .
This is why we need to think collectively.
And yes, I think this financial meltdown will make it very clear to people that markets need regulation–including health care markets.
Basically, markets are “games” in which we trade things, and games need rules–and someone to enforce the rules Otherwise, there will always be people who cheat.
Don- An insurer that is a collective owned by the participants, is an interesting idea . . .
Another idea–which we know can work very well– is an insurer who is also the provider. In other words, the insurer also owns hopsitals, and doctors work for the insurer. Thus, the insurer and the doctors are not adversaries.
This can work very well BUT ONLY IF the insurer takes the long view and understands that in the long run, it will save money if doctors and hospitals provide lots of preventive care, chronic disease mangement, use electronic medical records, don’t cut corners, spend time listening to and talking to their patients. . . .In the short run, this costs teh company money; in the long run, both patients and the company are better off.
Kaiser Permanente does his very well in Norther California,and there are other examples. (Kaiser, for example, runs smoking cessation clinics that are either free or very cheap for the patient and very successful. In the long run, this saves Kaiser money–many fewer customers develop lung cancer, etc. This works for Kaiser because its doctors and hopsitals adn insurance is good enough that, in North California, patients stay with Kaiser–often for generations. Even if the change jobs. Employers in Northern California have told me : “You have to offer Kaiser, or people won’t come to work for you.”
Don–
We really don’t want people self-insuring for claims under $50,000.
A large body of resreach shows that when people have to spend their own money–including money investing in an HSA for healthcare– they skip necessary preventive care (mammograms etc.) They then wind up sicker, and cost all of us more as they begin getting reimubrsement from the over $50,000 pool.
In countries in Europe where people are much healthier than us–and have better outcomes for most diseaes–there is “first dollar coverage”–no co-pays, no deductibles, no out of pocket spending.
Everyone goes for preventive care becuase it’s free. No money changes hands. (We find, in the U.S. that even a $25 co-pay becomes a barrier. Middle-aged women don’t go for mammograms.) And everyoen gets the Pap smears etc. (Nordic countries have basically eliminated cervical cancer.)
NG writes: :”I believe what most progressives want is to find a way of assigning objectively determined and truthful value on procedures, and then getting rid of the dangerous and useless. After doing that and making the price reflect systgem realities, then most citizens can afford to be given a basic healthcare package of just these higher value processes.”
Yes, exactly. And those who cannot afford that package can be subsidized.
If we squeeze out the waste, and refuse to let the healthcare industry overcharge, we can easily afford to subsidize those who cannot afford good, comprehensive insurance.
Red Baron– Uwe Reinhardt, who is German, travels extensively, lecturing on and researching healthcare around the world. His wife, who is Chinese, also
researches health care and int’l reforms.
Reinhardt (and others) have written extensively on a key difference between the U.S. and other developed countries: a lack of social solidarity.
Let me put it this way: The French have an excellent health care system because the French believe that nothing is too good for another Frenchmen.
Unfortunately, we do not feel that way about each other.
We have much more of a “every man for himself” attitude. (McCain’s health reform plan sums up that attitude.)
Because of the social solidarity in other countries, they are willing to pay much, much higher taxes than we do (income, VAT and inheritance) to finance a “social safety net” for everyone.
We don’t do that. As a result, we have homeless families; a much higher rate of poverty among our children than in any other developed country; much poorer health (even if you only compare white Americans to people in other countries); inner city public schools that are shameful; a foster-care system for abused children that often only leads to more abuse (not enough social workers to really monitor what’s going on); public hospitals for elderly patients suffering from dementia that are a disgrace . . ..
I could go on and on.
When it comes to healthcare, as Dr. Steven Schroeder pointed out in the Shattuck lecutre last year, we pour money into trying to improve healthcare for the upper-middle class, (roughly people earnign over $80,000, joint), while ignoring the other 75 percent of the nation.
(To find Schroeder’s speech, “search” his name on this blog.)
Susanne, Robert, Don, NG, Red Baron–
Thanks for your comments.
Susanne–
First, let me say, I’m not in favor of most private insurers. I don’t think most add that much value to the system.
That said, let me add this: not all administrative spending is “waste.” Some of it is very valuable.
Some administrative spending by both private insurers and Medicare is spent investigating and trying to prevent fraud.
Unfortunately, some doctors and hopsitals bill for services that they have never provided–or inflate their bills. In other cases, they provide services people didin’t need (For example: Hundreds of unnecessary heart surgeries at a hospital in Redding California that was rated as one of the nation’s best. Many people were crippled as a result.) Drug-makers and device-makers pay kick-backs to make sure providers use their most expensive products.
Research shows that Medicare does not spend nearly enough investigating and preventing fraud–it could save hundreds of millions if it spent more, but Congress doesn’t give it the funds because lobbyists are protecting some of the hospitals, drug-makers, doctors and device-makers involved in fraudulent schemes.
Second, “administrative costs{” include money insurers spens investigating the quality and effectiveness of treatments. Back in the 1990s, when insurers were trying to “manage care,” the best private insurers actually spent quite a bit of money on this, and it helped improve quality. (Kaiser Permanente still does.)
So good insurers/middlemen actually can serve some
purpose if they research quality and fight fraud.
In addition, administrative costs are much higher in the U.S. than in countries with a single-payer system not simple because we have multiple payers, but because we have so many providers working as solo-practioners or in 4 or 5 doctor practices–and because we have thousands of employers involved in the system.
Insurers have to market to those thousands of insurers, who have to hire human resource people to help them pick policies. Insurers then have to reimubrse all of those small practices and small hospitals in suburbs etc.
In other countries where most doctors and hospitals work for the government, in very large groups, all of this paperwork is avoided. The doctors receive a salary; the hospitals receive a yearly allotment– they are not reimubrsed for piece-work (fee-for-service). This streamlines everything.
What makes administrative cost so high in the U.S. is not just that we have multiple payers, but that our system is so fragmented in so many ways–with so many small providers, and employers as an additional layer of middlemen . . .
That said, we definitely could save some administrative costs by having a single payer system–though not nearly as much as many people assume.
I’m not against single-payer. It can work well–it works quite well in the U.K. (patient satisfaction is much higher than it is here.)And if they could afford to spend, say 15 percent more on healthcare, it would work very well. (They spend about half what we do , per capita.)
But in this country, people are very afraid of “big government”–so we’re probably not ready for single-payer yet.
That’s why Obama and Clinton both setting up a public sector system (something like Medicare for all) to compete with private insurers. They proposed regulating private insurers and forcing them to play on a level playing field competing with the goverment system (Medicare For All). Over time, people might find they preferred Medicare For All and we might well transition toward single-payer.
Regarding Ireland-yes it is possible to give everyone comprehensive insurance, and then let them pay extra if they want “luxuries.” But we have to make sure that the luxuries really are “frills” and not things that people might need, medically, to improve their health, or improve their chances of getting better.
The comprehensive insurance that everyone gets needs to be good enough that you and I would be happy with it for our families. (That’s the way it is in Germany, when even doctors are often prefectly happy with the state coverage that everyone gets, and don’t buy the private coverage.)
Robert– Yes, Conservatives have spent millions on propaganda claiming that we don’t need govt regulation–which feeds into the Libertarian line–until a Libertanian finds that he needs govt’s help.
Reserach shows that the vast majority of Libertarians are under 45–maybe under 35, I can’t remember. When you’re young, healthy, don’t have a mortgage, children or other obligations, life can seem pretty simple–something you can handle yourself. But as you get older, you, or your family is more likely to run into one of the accidents that Fate hands out– a child is born who is very sick; your area is flooded and your insurance doesn’t cover the cost of replacing your home; you or your spouse is out of work for 7 months, and during that time, you have a bad car accident (bad luck tends to cluster, partially because we’re stressed.)
When these things happen, you realize that you’re very grateful to have: unemployment insurance, govt’ disaster relief, etc.
So, as people grow older they realize they’re not quite as self-sufficient as they think they are . .
This is why we need to think collectively.
And yes, I think this financial meltdown will make it very clear to people that markets need regulation–including health care markets.
Basically, markets are “games” in which we trade things, and games need rules–and someone to enforce the rules Otherwise, there will always be people who cheat.
Don- An insurer that is a collective owned by the participants, is an interesting idea . . .
Another idea–which we know can work very well– is an insurer who is also the provider. In other words, the insurer also owns hopsitals, and doctors work for the insurer. Thus, the insurer and the doctors are not adversaries.
This can work very well BUT ONLY IF the insurer takes the long view and understands that in the long run, it will save money if doctors and hospitals provide lots of preventive care, chronic disease mangement, use electronic medical records, don’t cut corners, spend time listening to and talking to their patients. . . .In the short run, this costs teh company money; in the long run, both patients and the company are better off.
Kaiser Permanente does his very well in Norther California,and there are other examples. (Kaiser, for example, runs smoking cessation clinics that are either free or very cheap for the patient and very successful. In the long run, this saves Kaiser money–many fewer customers develop lung cancer, etc. This works for Kaiser because its doctors and hopsitals adn insurance is good enough that, in North California, patients stay with Kaiser–often for generations. Even if the change jobs. Employers in Northern California have told me : “You have to offer Kaiser, or people won’t come to work for you.”
Don–
We really don’t want people self-insuring for claims under $50,000.
A large body of resreach shows that when people have to spend their own money–including money investing in an HSA for healthcare– they skip necessary preventive care (mammograms etc.) They then wind up sicker, and cost all of us more as they begin getting reimubrsement from the over $50,000 pool.
In countries in Europe where people are much healthier than us–and have better outcomes for most diseaes–there is “first dollar coverage”–no co-pays, no deductibles, no out of pocket spending.
Everyone goes for preventive care becuase it’s free. No money changes hands. (We find, in the U.S. that even a $25 co-pay becomes a barrier. Middle-aged women don’t go for mammograms.) And everyoen gets the Pap smears etc. (Nordic countries have basically eliminated cervical cancer.)
NG writes: :”I believe what most progressives want is to find a way of assigning objectively determined and truthful value on procedures, and then getting rid of the dangerous and useless. After doing that and making the price reflect systgem realities, then most citizens can afford to be given a basic healthcare package of just these higher value processes.”
Yes, exactly. And those who cannot afford that package can be subsidized.
If we squeeze out the waste, and refuse to let the healthcare industry overcharge, we can easily afford to subsidize those who cannot afford good, comprehensive insurance.
Red Baron– Uwe Reinhardt, who is German, travels extensively, lecturing on and researching healthcare around the world. His wife, who is Chinese, also
researches health care and int’l reforms.
Reinhardt (and others) have written extensively on a key difference between the U.S. and other developed countries: a lack of social solidarity.
Let me put it this way: The French have an excellent health care system because the French believe that nothing is too good for another Frenchmen.
Unfortunately, we do not feel that way about each other.
We have much more of a “every man for himself” attitude. (McCain’s health reform plan sums up that attitude.)
Because of the social solidarity in other countries, they are willing to pay much, much higher taxes than we do (income, VAT and inheritance) to finance a “social safety net” for everyone.
We don’t do that. As a result, we have homeless families; a much higher rate of poverty among our children than in any other developed country; much poorer health (even if you only compare white Americans to people in other countries); inner city public schools that are shameful; a foster-care system for abused children that often only leads to more abuse (not enough social workers to really monitor what’s going on); public hospitals for elderly patients suffering from dementia that are a disgrace . . ..
I could go on and on.
When it comes to healthcare, as Dr. Steven Schroeder pointed out in the Shattuck lecutre last year, we pour money into trying to improve healthcare for the upper-middle class, (roughly people earnign over $80,000, joint), while ignoring the other 75 percent of the nation.
(To find Schroeder’s speech, “search” his name on this blog.)
I think the healthcare crisis is an indication of how our myths about ourselves are unraveling. The notion of American exceptionalism is an old and pernicious one. It makes us unwilling to study and learn from how other nations are dealing with this issue. It encourages us to think of ourselves as hardy individualists who don’t need anyone else. Or, if we do, that represents some sort of failure on our part. I think basic medical care is a public health matter, like clean air and clean water. We can and should argue over what that basic care entails, but eventually, like most of the rest of the developed world, we will come to regard it as a right of citizenship. I think only when that happens will we get it done.
I doubt that the cultural differences between the U.S. and elsewhere with respect to the concept of “solidarity” and the willingness to pay very high taxes are likely to change anytime soon. On the other hand, I wonder how much lower healthcare costs in the U.S. might be if our individual attitudes were closer to Europeans and Canadians with respect to when and under what circumstances it is reasonable and appropriate to bring a malpractice suit and how should we define good, sound medical practice regarding end of life care? American expectations around both of these issues, I suspect, probably drive far more of our “excess costs” than administrative expenses attributable to our more fragmented healthcare and health insurance system. If Americans had a better understanding of how their attitudes toward malpractice and end of life care contribute to our high costs, we might be able to gradually change them.
At the same time, much more widespread use of electronic records and more robust efforts to reduce fraud, especially in Medicare and Medicaid, could save significant money. Finally, if coverage and payment decisions were based on sound comparative effectiveness and cost-effectiveness research, there would be less waste and greater value (defined as health outcomes per dollar spent) throughout the system.
I’ve heard it said in the past that we can have our healthcare good, fast or cheap. Pick any two. I think it’s clear that if we are ever going to bend the medical cost growth curve, CMS is going to have to learn how to say NO, and the public needs to learn to accept the fact that we can’t have (and expect someone else to pay for) every medical intervention that might possibly benefit ourselves or our loved ones. We need to get through our collective thick heads the notion that resources are finite, and there are lots of other worthwhile public and private priorities that need to be paid for.
Barry and Chris–
Thanks for your comments.
Barry– If the current financial crisis unfolds
as many predict (something akin to the Great Depression, in its impact, though different in many respects), we might see
greater solidarity sooner than you think.
Disaster can begin to eliminate those gaps between classes. The super-wealthy (those making 30 million a year) will remain super-wealthy. But the upper-middle class and upper-class may find themselves unemployed; living in a home (or homes) worth 30% to 40% less than they were worth a year ago; with 40% of their 401-ks and other savings wiped out (unless they liquidated and moved into cash or perhaps a combination of cash and gold fairly early this year.)
This is going to get much, much worse before it gets better.
I agree with virtually everything you say in your second paragraph.
Chris– Yes, I agree. We’re going to have to come to a consensus that “basic” health care is a right–and by basic I mean something like what the Germans have–which is pretty much what you and I would want for our families.
Red Baron wrote:
“@NG- I know of no system on earth where the underlying integrity of the people does not ultimately determine the system’s success. Is there a particular incentive that most scares you? Probably the #1 thing I have seen kill people over the years is simple laziness. Changing provider’s incentives can dramatically change their willingness to work.”
I think patients are mostly in the dark and scared when it comes to health, death, and what is truly good healthcare. The reason medical care is a profession in the first place is that this clueless and scared attitude had to be counteracted someway in the beginning, and making a moral pack or oath was the way they set out to do it. HOWEVER, fee for service incentives are just too perverse in an area with such unknowns and information asymmetry. So to answer your question, I would start with supply side incentives that promote what we know to be effective for sure as the only things to be offered to patients and that discourage marginal and unnecessary processes.
You seem smart, so how would you bring this about?
Red Baron,
Thanks for this effort! You have obviously been thinking about this area for a while. It will take some time to digest all that you have written, at least for me. I hope others here chime in and comment on some of what you have written because there is an awful lot there to think about.
The main comment that comes to my mind initially after reading your post deals with why we have to worry about how much we spend on any one individual if the NICE process works correctly. The collective system should pay for whatever is considered good care, and limits should be indirect via the NICE process standards, if you know what I mean!
The other item that comes to mind is your insistence that my neighbors “are robbing you every bit as much as the doctors, even if you do not see or understand it completely.” I think my neighbors are as much in the dark about good care as most Americans so how can they be responsible for such robbing?? It is more of a systemic brainwashing if you ask me! If the amount of objectively proven and approved high value and needed care has to be rationed, then this idea may have merit. However, until we get rid of the perverse incentives that allow so much low value and even dangerous care to be routinely given, I believe it is too speculative to say my neighbors are selfishly stealing from others!
Red Baron,
I stand behind the two points made by me in my last post. I think you are nitpicking into the general solutions that I have suggested without first acknowledging and maybe understanding that a new social level effort is needed to deal with my points.
The medical and research and religious professions have brainwashed people to believe in miracles over many years and that accounts for much of you last post. It remains to be seen how people would react if only real clinically objective info was disseminated including real effectiveness and suffering components! As for rationing even when my above info dissemination suggestions are in place, well we first will have to see how much is necessary. However, in life and death decisions, society should not base these exclusively on the individual ability to pay factor because that is a recipe for social disintegration and revolution. Societies still have to maintain some semblance of fairness and order to success, and what good are we if chaos reins supreme because we can’t get along?
Comments?
Red baron asks:
“But what do you actually mean when you say “Societies still have to maintain some semblance of fairness and order to success?” What do YOU propose?”
Many other societies have already made healthcare a government provided social good with a fix global budget. We can do the same, but not necessarily using the same EXTREMELY corrupted and inefficient delivery system we have now. I believe you just assume everything with the delivery system is fine and will remain the same, but to me, it has to be totally modified for efficiency and social fairness, not just kept as an enrichment tool for those currently involved.
As for fairness and order, we have many social areas that people pay into without getting that exact amount out. Legal systems, policing systems, military systems, social security systems. Healthcare should become similar to these. If outright rationing becomes necessary someday because what can be truly and objectively done just costs too much, then I vote anyway that the rationing should not be based on individual ability to pay. I just don’t see us surviving as a civilized society if we do that!
NG wrote, “If outright rationing becomes necessary someday because what can be truly and objectively done just costs too much, then I vote anyway that the rationing should not be based on individual ability to pay. I just don’t see us surviving as a civilized society if we do that!
I agree whole heartedly with you, when it comes to necessities such as health care.
In regards to entertainment, travel, the luxuries, it doesn’t really matter to me what they cost.
When a necessity is priced as a luxury, however, we are looking at a very dangerous situation.
To use money as an objective criteria for rationing in that situation is a recipe for chaos.
Even the wealthy will feel terribly insecure in such an environment.
Don Levit
Don & NG —
Thanks for your comments.
Don wrote: “When a necessity is priced as a luxury, however, we are looking at a very dangerous situation.
To use money as an objective criteria for rationing in that situation is a recipe for chaos.
Even the wealthy will feel terribly insecure in such an environment.”
Yes, very well-put.
NG wrote:
“Many other societies have already made healthcare a government provided social good with a fix global budget. We can do the same, but not necessarily using the same EXTREMELY corrupted and inefficient delivery system we have now. . . it has to be totally modified for efficiency and social fairness . . .
As for fairness and order, we have many social areas that people pay into without getting that exact amount out. Legal systems, policing systems, military systems . . .”
Yes. Another example is social security. If I live to 90 I’ll very likely take out more than I put in. If I die at 66, I won’t.
By pooling the risk (of living to 90) we make sure that those who do live to an old old age have at least a small, continuous, inflation-adjusted income to live on.
And by imposing a global budget on healthcare, other countries signal to manufacturers that there is no point to developing treatments that cost $1 million–the global budget just won’t allow for such high prices. So manufacturers have to think in terms of developing treamtents that are affordable.
When developing drugs and devices for the U.S. they think “the sky’s the limit.” But in fact, we can’t let prices go to the sky. No one can.
With our economy falling behind, the war on terror, pork barreling legislation, corruption, and criminal activity on the rise, payday loans should be the last thing on politicians’ minds. Yet, for some reason, high profile politicians like Obama are focusing on this issue. Some states have banned them, such as Georgia and North Carolina, and more are in the process. Instead of fixing the important issues, they are trying to take out the payday loan industry for personal and political gain. Payday loans are simply for short term financial assistance for the all-American family to cover some cost that wasn’t budgeted or an emergency that they couldn’t pay for at that moment. They provide help to citizens during these financially troubling times with loans that the government otherwise couldn’t provide themselves. Stop the potential loss of thousands of jobs and the loss of a viable financial option by voicing your opinion to the legislature, before a nationwide ban becomes in effect.
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With our economy falling behind, the war on terror, pork barreling legislation, corruption, and criminal activity on the rise, payday loans should be the last thing on politicians’ minds. Yet, for some reason, high profile politicians like Obama are focusing on this issue. Some states have banned them, such as Georgia and North Carolina, and more are in the process. Instead of fixing the important issues, they are trying to take out the payday loan industry for personal and political gain. Payday loans are simply for short term financial assistance for the all-American family to cover some cost that wasn’t budgeted or an emergency that they couldn’t pay for at that moment. They provide help to citizens during these financially troubling times with loans that the government otherwise couldn’t provide themselves. Stop the potential loss of thousands of jobs and the loss of a viable financial option by voicing your opinion to the legislature, before a nationwide ban becomes in effect.
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When you built a course of action on a deceived foundation, you can certainly create a rocky aftermath. Some politicians are looking to wipe out the payday loan industry and sadly, some have succeeded in many areas. This action reflects the groundless idea or assumption that payday lenders fall under the same category as illegal loan sharks. This ongoing challenge to pass this legislature attempts to restrict or take away your ability to get a payday loan for unforeseen emergency cash needs. Please do not be misinformed and educate yourself, friends and family on the right of financial independence.
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Barack Obama and other high profile politicians are attempting to limit the right to use on-demand, short-term financial assistance. A number of cities and towns are also attempting bans on the industry, with several more attempting to follow suit. American citizens from all across the nation are fighting the legislation hoping to have their voices heard to prevent the abolishment of the payday loan industry. Regardless of the hundreds of thousands of potential jobs lost, these politicians are encouraging the elimination of this matter generally for personal political gain.
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One of the biggest targets for politicians, as far as economics are concerned, is becoming the payday loan industry. Governors across the country are trying to rid their states of the industry altogether, and so far, Georgia, North Carolina, and Oregon have succeeded. The result was that bankruptcies, foreclosures, and also the number of overdraft fees due to bouncing checks went through the roof, which doesn’t do anything for the citizens afflicted in these turbulent times, and only is really good for the banking industry. Despite these negative effects, other states are looking to follow the example and do the same. Even at the national level, presidential candidate Barack Obama, is weighing in his own agenda on the issue, and advancing his own intentions on getting rid of the industry in the United States completely. If these measures, both on state levels and nationally, are successful, the results are going to be increased unemployment, more debt, more foreclosures, and an even worse economy.
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Elite politicians, including presidential candidate Barack Obama, are trying to limit access to on-demand, short term financial assistance in America. Some cities and towns are even placing restrictions on where these legitimate payday loan companies can establish their businesses. Even worse, several states including Georgia and North Carolina have successfully imposed complete bans on the payday loan industry, and several more states are following in their footsteps. Nationwide, American citizens are struggling to have their voices heard. They want to fight legislation that would wipe out the payday loan industry in the United State. Obama, and many other misled political officials, are advocating for an all-out ban of the payday loan industry for the sake of personal political gain. Their desire to eliminate the payday loan industry holds no regard for the people who need financial help in this depressed economy.
The same old argument repeated time after time. How much is a life worth? If it is not your life then you are able to enter into an educational conversation. However if it is you live you then enter into an emotional conversation. So how much is a life worth really depends on rather it is your life we are talking about or somebody else’s.
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