On Sat, Jul 18, 2009 at 10:56 AM, Dan M<dsummersmi...@comcast.net> wrote:
> How did you get > 1.2 trillion for Medicare and Medicaid? I meant to write that Medicare and Medicaid _and other government-related health care spending_ make up more than half. The biggest additional component is the tax subsidy the government provides to employer-provided health plan premiums. But the governments have their hands so deeply and pervasively into health care spending that it is hard to keep track of all the sources. Here are some others: - SCHIP - health care plans for state and federal govt employees - other govt subsidized (not 100% govt paid) health care plans - state govt mandated services that many consumers would have not purchased I haven't added up the figure myself, but here is the reference that first alerted me to the situation: http://www.ncpa.org/pub/ba586 > "Government health programs (principally Medicare and Medicaid) and tax > subsidies accounted for more than half ($1.3 trillion) of total health > expenditures in 2006." But rather than debating which items to allocate where, I think it is more interesting and relevant to look at out-of-pocket health care expenses paid by consumers, since this is the figure that is most relevant when determining determining marginal consumer behavior. Centers for Medicare and Medicaid Services, "National Health Expenditures by Type of Service and Source of Funds: Calendar Years 2005-1960," Department of Health and Human Services, 2006. http://www.cms.hhs.gov/NationalHealthExpendData/downloads/nhe2005.zip. > In 1960, consumers paid about 47 percent of overall health care costs > out of pocket. > > The proportion had fallen by almost half to 23 percent by 1980. > > In 2004, consumers paid only 13 cents out of their own pockets every > time they spent a dollar on health care. C.L. Peterson and R. Burton, “U.S. Health Care Spending: Comparison with Other OECD Countries,” (Washington DC: Congressional Research Service, 2007). > While 13 cents of every dollar is paid out-of-pocket by US patients, the > OECD average is 20 cents. So only 13% of medical expenditures are out-of-pocket in the US. Lower even than the average country in the OECD survey. This is far from a market system following the usual laws of supply and demand. It is also interesting that the out of pocket percentage has fallen from 47% in 1960 to 13% today, while health care spending has exploded over the same period. Arnold Kling calls the low out-of-pocket expense "insulation": http://www.cato-unbound.org/2007/01/08/arnold-kling/insulation-vs-insurance/ > The health coverage most Americans have is what I call “insulation,” > not insurance. Rather than insuring them against risk, most families’ > health plans insulate them from paying for most health care bills, large > and small. > Real insurance, such as fire insurance, provides protection against > rare, severe risk. Real insurance is characterized by: > – low premiums > – infrequent claims > – large claims > American health insurance—including employer-provided insurance and > Medicare—is the opposite. Families typically are paid claims several > times per year, often for small amounts. Premiums are high—the cost of > providing insulation often exceeds $10,000 per year per family. However, > most families pay these premiums only indirectly, through taxes and > reduced take-home pay from employers. > Real insurance would pay for treatments that are unavoidable, > prohibitively expensive, or for illnesses that occur relatively > rarely. Instead, insulation reimburses even relatively low-cost > services, such as a test for strep throat or a new pair of > eyeglasses. Insulation pays for treatment even if it is commonplace or > discretionary. > What is Wrong with Insulation? > For health care providers, insulation is a bonanza. Because consumers > are not spending their own money, they accept doctors’ recommendations > for services without questioning them and without concern for > cost. Faced with an insured patient, a health care provider is like > a restaurant catering to convention-goers with unlimited expense > accounts. The customer will gladly take the most high-end recommendation > and not worry about the price. > Consumers are happy as well. Insulation relieves the patient of the > stress of making decisions about treatment. The patient also does not > have to worry about shopping around for the best price. > The problem with insulation is that it is not a sustainable form of > health care finance. Individuals, employers, and government are all > under stress. > Families that are in the individual insurance market face sticker shock > when they confront health insurance premiums. Many choose to remain > uninsured. _______________________________________________ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
