Health Care Spending
On Sat, Jul 18, 2009 at 10:56 AM, Dan Mdsummersmi...@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
Re: WeChooseTheMoon
On Sat, Jul 18, 2009 at 3:25 PM, Nick Arnettnick.arn...@gmail.com wrote: Don't you know that government interference in markets is bad, but corporate interference in markets is good? Corporations do not have the power to compel people at gunpoint to do as they say. Government lawmakers do. That is a huge difference. ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: Why not discuss the topic?
On Sat, Jul 18, 2009 at 7:32 AM, Nick Arnettnick.arn...@gmail.com wrote: The fundamental truth behind that writing is conveniently ignored by champions of liberty who insist that freedom frees them from a community's obligation to organize itself to care for those in need. It is a strange sort of liberation that frees us from our deepest bonds, best fought with its true name, greed. http://www.weforum.org/pdf/whitepaper.pdf A child born in Niger today is 40 times more likely to die before her fifth birthday than a child born in the United Kingdom. A 15-year-old boy in Swaziland has only an 18% chance of celebrating his 60th birthday; if he had been fortunate enough to have been born in Switzerland, he would have a 91% chance. A young woman in Uganda is 300 times more likely to die in childbirth than her sister in the United States. The impact of poor health on economic growth and political stability in Sub-Saharan Africa has been devastating; two African heads of state have predicted that their countries will cease to exist if HIV/AIDS is not brought under control. More than 300 million people—nearly half the population—live on less than US$1 a day. Compare the need of these people to that of a wealthy 87-year-old American who can have his life extended a few months (in constant pain) for $100K. I think of how many more people, younger people with many years of life ahead of them, could be helped by that $100K. And I resent the government forcing me to spend much of my surplus income on people like the 87-year-old so that I have much less to help people like the child born in Niger. ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: Why not discuss the topic?
On Sat, Jul 18, 2009 at 11:35 AM, Dan Mdsummersmi...@comcast.net wrote: Agreed. But, where he and I agree and where a John would disagree is that a free market can be shaped by the laws within which it resides. For example, if you required insurance companies to accept pre-existing conditions, you would get rid of one of the major problems with the present system. The problem is that the laws always have unforseen consequences, and usually cause far more problems than they solve. The system is simply too complicated for a few politicians and technocrats to centrally control. Some states have guaranteed issue mandates that do just as you say above: http://www.ncpa.org/pub/ba558 | A 25-year old male in good health could purchase a policy for $960 a | year in Kentucky. That policy would cost about $5,880 in New Jersey. | A policy priced at $1,692 in Iowa and $2,664 in Washington State would | cost $4,032 in Massachusetts. | Firms in each state are protected from interstate competition by the | federal McCarran-Ferguson Act (1945), which grants states the right to | regulate health plans within their borders. | There are approximately 1,843 state mandates, according to the Council | for Affordable Health Insurance, an industry trade group. Some estimates | suggest these mandates have priced as many as one-quarter of the | uninsured out of the market. | Guaranteed issue means that any insurance company offering policies | must sell coverage to all applicants who qualify, regardless of medical | condition. While this sounds like it protects consumers, it actually | harms them by driving up prices. When insurance companies are forced to | accept all applicants, they raise premiums to guard against losses. As a | result, insurance is a poor value for everyone except those with serious | health conditions, and people often wait until they become sick to buy | it. Subsequently, business dwindles, insurers leave the market and rates | go up as competition diminishes. This has happened in all states that | require guaranteed issue. | Community rating means that an insurer cannot adjust its premiums to | reflect the individual health risk of consumers. While this regulation | achieves a level premium for everyone, in reality, healthy people | are charged more than they otherwise would be and sick people are | charged less. Therefore, the majority who are healthy see their premiums | rise. As Figure I shows, a plan for a healthy 25-year old male costs | six times more in New Jersey than in Kentucky, largely due to community | rating. Because of the higher cost, younger (or low-income) individuals | with few health problems tend to drop insurance, leaving an increasingly | unhealthy risk pool. This drives premiums ever higher - and fewer and | fewer people can afford coverage. ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: Why not discuss the topic?
On Sun, Jul 19, 2009 at 2:49 AM, John Williams jwilliams4...@gmail.comwrote: And I resent the government forcing me to spend much of my surplus income on people like the 87-year-old so that I have much less to help people like the child born in Niger. I believe history has clearly show the foolhardiness of trusting the wealthy and powerful to care for the poorest. It is the exception, not the rule, for such altruism. More to the point, it is a giant step backwards to reject the mechanisms of democratic self-regulation that brought the world out of feudal systems with noblesse oblige and so forth. I would have a hard time endorsing the self-regulation of markets and simultaneously rejecting the self-regulation of democracy. I would be embracing freedom only when it happens to be in my self-interest. Nick ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: Why not discuss the topic?
On Sat, Jul 18, 2009 at 11:11 AM, Dan Mdsummersmi...@comcast.net wrote: If someone pays for full ticket family health insurance with COBRA, the price is about $12k/hear. If someone wants to buy insurance, there are a number of possibilities. First, they can be a young person or a young family with no history of significant illnesses, and can buy insurance for slightly less than COBRA. Then, they can have had one of many instances. For example, a member of the family might have had cancer, be diabetic, or show any one of a number of risk factors. Then they look at the high risk pool. I had an insurance broker who talked to me about this, and am in contact with someone who has high risk insurance because his wife is a diabetic. In those cases, you are talking about 40k/year, with a high deductable for any coverage. The median family cannot afford this, since the median family income is about 50k/year. It was clear that, with even modest risk factors, COBRA was the far better option for me. I am happy that we were able to get on my wife's insurance a few months later, and that we can still participate in a group plan. But, if my wife doesn't get a call before COBRA runs out, one of us must get a job with a company that has group health. http://www.ncpa.org/pub/ba653 | COBRA (the Consolidated Omnibus Budget Reconciliation Act) is a | federal law that gives former employees the right to stay in an | employer's health insurance plan for up to 18 months. But the cost is | high: You have to pay 100 percent of the employer's premiums plus 2 | percent for administrative costs. | There may be cheaper alternatives to COBRA, especially if you have | no severe health problems. For example, a Dallas family of four with | both parents in their 20s could buy a preferred provider organization | (PPO) plan with a $2,000 deductible for a $4,680 annual premium. That | same family's annual COBRA premium would be closer to $13,000, on | average. If the family chose a $5,000 deductible, the annual premium | would be less than $3,500. Some of these plans also qualify for an | HSA, allowing the policy holder to set money aside tax-free to pay | medical expenses. You can contact independent insurance agencies to | compare policies or shop online at sites that compare prices, such as | http://www.ehealthinsurance.com. Some insurers even offer short term | medical gap coverage for people between jobs, retiring prior to | Medicare eligibility, or not yet eligible for company benefits and for | students about to graduate. With health care costs going up, companies are dropping coverage. If we do nothing, we'll go to a real individual free market. More market discipline in health care would be a good thing. Here is an example of how far we are from a real health care market where consumers evaluate costs and make decisions based on those costs: Kathy Gurchiek, Consumers Savvier about Cost of a New Car than a Hospital Stay, Human Resource News , August 2, 2005. | A Harris Poll found that consumers can guess the price of a new Honda | Accord within $300. But when asked to estimate the cost of a four-day | hospital stay, those same consumers were off by $8,100! Further, 63 | percent of those who had received medical care during the last two years | did not know the cost of the treatment until the bill arrived. Ten | percent said they never learned the cost. There are precious few examples of market driven health care in the US, but here are two: “2005 Average Surgeon/Physician Fees: Cosmetic Procedures,” American Society of Plastic Surgeons, 2006; “1992 Average Surgeon Fees,” American Society of Plastic Surgeons, 1993. | transparent package prices covering all services are the norm. Even | though technological progress is frequently assumed to increase health | care costs, the real price of cosmetic surgery has declined over the | 1992 to 2005 period, despite substantial technological progress and a | six-fold increase in demand. From 1992 to 2005, a price index of common | cosmetic surgery procedures rose only 22 percent while the average | increase for medical services was 77 percent; overall, prices for all | goods increased 39 percent. H.T. Tu and J.H May, “Self-Pay Markets in Health Care: Consumer: Nirvana or Caveat Emptor?” Health Affairs 26, no. 2 (2007) | In corrective vision surgery, out-of-pocket payments and package | prices are the norm, and the real price has declined by 30% over the | past decade. When consumers make decisions based on out-of-pocket expenses, real health care costs can actually decrease. Dan M wrote: In those cases, what we'll have a continued expansion of the extremely inefficient way we provide health care to those without the money to pay for it. As compared to the extremely inefficient system of mandated health care plans we currently have imposed on us by various governments: http://www.ncpa.org/pub/ba523 | Mandates cover services ranging from
Re: Why not discuss the topic?
From past behavior, it does not seem wise to expect politicians to be unselfish and to make altruistic decisions to help people. Indeed, the dramatic failure of large centrally planned economies has demonstrated that it is not wise to even expect politicians to know how to keep mundane things in a large system running smoothly. It seems odd to conclude that the way to get other people to behave as one thinks they should behave is to coerce them at gunpoint unless they spend their money as the intellectual elite tell them to. That does not sound much like a respectful community to me. In fact, America was founded by people who resented just that sort of treatment, and felt that they had a right to life, liberty, and the pursuit of happiness. These people were deeply distrustful of any strong central government, and wrote the Constitution to limit government power. ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: Why not discuss the topic?
On Sun, Jul 19, 2009 at 1:29 PM, John Williams jwilliams4...@gmail.comwrote: It seems odd to conclude that the way to get other people to behave as one thinks they should behave is to coerce them at gunpoint There are people with guns showing up to demand that you pay your taxes? That suggests to me that you've been a bad, bad boy. unless they spend their money as the intellectual elite tell them to. I did not realize this discrimination was taking place. Let me personally apologize for it. I pledge that next election, I will do my best to make sure that people like you are no longer turned away from the polls. That does not sound much like a respectful community to me. In fact, America was founded by people who resented just that sort of treatment, and felt that they had a right to life, liberty, and the pursuit of happiness. These people were deeply distrustful of any strong central government, and wrote the Constitution to limit government power. Indeed. Regime change begins at home. I long with you for the day when I can tell my grandchildren that they live in a nation so free that nobody can force them obey a law they don't agree with. I may not get there with them, but I can see the Promised Land in their future, every time their parents tell them to do their part around the house. Some day, John, some day, we will all live in a nation where Who's gonna make me? and You and what army? are true for all people, elite or ordinary, intellectual or lowbrow. In my dream, I can hear the people of American joined in one voice, chanting the great slogans of true democracy - Gimme it NOW, it's MINE! and I had it FIRST! Nick Waaah Maru ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: WeChooseTheMoon
On Jul 19, 2009, at 2:40 AM, John Williams wrote: On Sat, Jul 18, 2009 at 3:25 PM, Nick Arnettnick.arn...@gmail.com wrote: Don't you know that government interference in markets is bad, but corporate interference in markets is good? Corporations do not have the power to compel people at gunpoint to do as they say. Government lawmakers do. That is a huge difference. Right. I'm always getting a gun pointed at my head when I go to the damn doctor. I am SO tired of those bastards and their guns when I go in for a check-up, aren't you? Oh, wait… That never, ever happens. It's a straw man. Another one. The Republicans run those ads for millions and millions of dollars asking do you want a government bureaucrat deciding your health care for a reason: because they don't want people thinking yes, I do, because the alternative is a CORPORATE bureaucrat that I cannot under any circumstances remove from office. We live in an imperfect representative democracy, but at least it /is/ a representative democracy, where change -- however glacial -- is possible. Do you really think that you have a snowball's chance in hell of getting the care you need from some corporate bean counter who is REQUIRED by LAW to maximize profits, and not required to take care of your health? Dave ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: WeChooseTheMoon
On Sun, Jul 19, 2009 at 8:51 PM, Dave Landdml...@gmail.com wrote: Right. I'm always getting a gun pointed at my head when I go to the damn doctor. I have posted articles that list a number of state mandates for health care plans. If a provider were to dare to sell a policy to a willing buyer, and that policy did not, for example, cover acupuncture in certain states, the provider would be breaking the law. If the provider refused to cease selling policies without acupuncture, they would eventually send the police to arrest them, with guns if the person attempted to defend themselves. In Maryland, it is illegal to practice physical therapy unless you have a doctorate. Better not set up a practice trying to rehabilitate injured people in Maryland if you just have an M.A., or you could end up arrested at gunpoint. Another example is that it is illegal for a doctor licensed in one state to treat someone in another state. A doctor from Texas could end up arrested at gunpoint for trying to help people in New Orleans after a hurricane. Do you really think that you have a snowball's chance in hell of getting the care you need from some corporate bean counter who is REQUIRED by LAW to maximize profits, and not required to take care of your health? Absolutely. I choose to buy services from those who have a good reputation for serving their customers. And quite a few people who run businesses are aware that the best way to maximize profits is to build a reputation upon good customer service. ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: Why not discuss the topic?
Limiting myself to the US, and just listing a few incidents that come to mind: Indian Removal Act Legal slavery Jim Crow laws Coverture Japanese American internment Joseph McCarthy Richard Nixon I think that any system of ethics that equates legality with doing what is right, that holds that the majority opinion is by definition good, or that suggests that elected politicians rule justly, has a lot of explaining to do about the incidents in this list (not to mention numerous others not in the list). I tend to consider ethical points on their own merits. Of course, this requires more thought than to simply assume law and majority opinion is always right. ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: Why not discuss the topic?
If we're going to throw out all the flawed human institutions, nothing will be left, including your ideas. I don't have to look beyond my immediate family to see the injustices that our system has allowed, but good isn't the same as perfect. Argue better, please. On 7/19/09, John Williams jwilliams4...@gmail.com wrote: Limiting myself to the US, and just listing a few incidents that come to mind: Indian Removal Act Legal slavery Jim Crow laws Coverture Japanese American internment Joseph McCarthy Richard Nixon I think that any system of ethics that equates legality with doing what is right, that holds that the majority opinion is by definition good, or that suggests that elected politicians rule justly, has a lot of explaining to do about the incidents in this list (not to mention numerous others not in the list). I tend to consider ethical points on their own merits. Of course, this requires more thought than to simply assume law and majority opinion is always right. ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
path-dependence
JDG posted this article on Facebook, very apropos to our discussion. http://www.newyorker.com/reporting/2009/01/26/090126fa_fact_gawande?currentPage=all http://www.newyorker.com/reporting/2009/01/26/090126fa_fact_gawande?currentPage=all Doug ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: Why not discuss the topic?
On Sun, Jul 19, 2009 at 10:10 PM, Nick Arnettnick.arn...@gmail.com wrote: If we're going to throw out all the flawed human institutions, nothing will be left, including your ideas. Then don't throw them all out. I never suggested such a thing. I merely stated my preference for discussing ethical questions on their own merits rather than assuming that majority opinion is the ultimate word on every subject. ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: Why not discuss the topic?
On Sat, Jul 18, 2009 at 1:09 AM, John Williams jwilliams4...@gmail.comwrote: On Sat, Jul 18, 2009 at 12:44 AM, Doug Pensingerbrig...@zo.com wrote: If regulations and restrictions have such a detrimental effect then why do other, more restrictive nations have much more efficient and effective health care systems? That is a complicated subject, and I do not believe I claimed that there is a large detrimental effect on costs, but in the spirit of your one sentence question, I will give a once sentence reply: Many apologies for being able to make my point without being long winded. Many countries ration health care more than the US, thus restricting their people to less health care than people in the US, and by not allowing people to choose low- effectiveness care paid for by other people, they reduce overall spending without significantly reducing certain metrics of effectiveness (NOT including customer satisfaction, though) Ha, you sound like a politician John. But how much less health care can there be in these universal systems considering some 16% of our country isn't covered at all? And are you saying that customer satisfaction is better in the U.S. because I'd have to call you on that one too. Doug ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
Re: Why not discuss the topic?
John wrote: Limiting myself to the US, and just listing a few incidents that come to mind: Indian Removal Act Legal slavery Jim Crow laws Coverture Japanese American internment Joseph McCarthy Richard Nixon Are we waiting for historical perspective to add Bush/Cheney to that list? Doug ___ http://mccmedia.com/mailman/listinfo/brin-l_mccmedia.com
