Here is my response to Steve Turner’s post over at Progressive Pulse. Steve’s text is in itals:
Max is from the “consumer-directed” school of health care reform who believe that Americans consume too much health care because insurers pay the bills. In Max’s world, costs skyrocket because Americans over-consume healthcare so that our “sniffles and sore throats” can be treated, our Viagra prescriptions filled, and astronomically priced new treatments are demanded “whether or not they are necessary.”
So far Turner hasn’t really made an argument. But it’s not "Max’s world" it’s the real world. Can Turner seriously deny that colds, flus, and hay fever are being treated by MDs daily when the patient could simply hit the CVS? What about those back-cracking quacks the chiropractors whom I have to pay for in NC? What about Viagra grandpas? What about paranoiacs demanding MRIs? What about obese people with no incentive to change their lifestyles (like higher premiums)? This is the perverse effect of third-party insurance (and then deny that this is somehow low cost?). When someone else is paying the tab you can get Nexium over Prilosec. You can get Prozac over Fluoxitine generic. A CAT-scan ‘just to be sure’. Steve is being disengenious if he denies that there is rampant overconsumption in our system.
So why is Max wrong? Simple. He works for the Civitas Institute.
[This is a cheap shot, Steve. Naked fallacies? I expect better from someone as smart as you.]
But more than that, it is the “80 –20” rule. This rule applies to patients with chronic illnesses, not sore throats or erectile dysfunction. In health spending, 20% of the population (the chronically ill) account for 80% of expenses.
Not only is there considerable overconsumption in your 20 percent, as well, but overconsumption is only one in a spectrum of causes that effect our healthcare market. In fact, Turner didn’t address any of the other causes I mentioned in the piece he references — like: intra-state monopolies caused by the regulatory system and employer-based insurance (though, to be fair, he did refer readers to the piece). Ultimately, competition creates higher quality at lower prices. Price is determined by supply and demand – regardless of the good or service. When the government has such an undeniably heavy hand in distorting both supply and demand in the healthcare field – the inevitable result will be higher prices.
Add to this that Steve passes over the fact that in his 80/20 figure (which doesn’t prove much of anything), that 25 percent of all healthcare costs go towards so-called "heroic measures." That means doctors are very often trying to save people who are less functioning than Terry Schaivo; or have virtually no chance of survival. Again: To save someone at all costs is an easier decision if it comes at no costs. End of life ethics takes us too far afield, however, and I gather Turner and I would agree more than we disagree (as I part ways with my conservative friends on many of these issues).
Half of us have virtually no medical expenses at all in a given year. [Red herring: that’s why insurance pools work.] In 2003, 1% of the population accounted for 22% of expenses, 5% accounted for 50% of expenses. [So?]
To be sure, health expenses are rising at an alarming rate. However, this is mostly due to the development and increasing use of new medical technology
In part, but not in total. Besides, new technologies in other fields are going down, down, down in price. The reason they’re not in medicine is due to market distortions we’ve described. So Turner is actually proving my point here. There are loads of treatments people can choose, but when the pool is paying, they will almost always opt for the state of the art, or won’t question the price. But it’s not just overconsumption that’s the problem. Turner seems to think monolithically (single cause), not holistically (multiple causes). But the healthcare issue has myriad factors, not just one.
And this is not necessarily a bad thing, either. It’s called medical progress. We have expanded our medical choices, something the John Locke boys should appreciate. [they do, but it’s not choice if I have to pay for everyone else’s choices — including unhealthy lifestyles] We spend more because we can do more [in part]. And here is the take home message: unlike the usual market forces in business, technological advances in health care have generally raised costs rather than lowered them [And why do you think this is? Hint: the expense account effect].
MRI’s, drug-coated stents, PET scans, titanium joints, dialysis machines, robotic surgeries, implantable defibrillators (yes, I mean you Mr. Vice-President), bone-marrow transplants, respirators, and neo-natal nurseries…these are all things that increase medical spending.Anybody out there willing to forfeit these therapies for themselves or their families?
It’s not that they will forfeit these, it’s that they might shop around more if they had to bear more of the costs of the care. competition. Price goes down. I guarantee you under a consumer-driven model, many of these things would go down (just like with Lasik and other elective surguries not covered by third parties). You’d do better not to try to explain everything away with technology (an economist refutes you here), but to look at Baumol’s cost disease.
People with sniffles are not racking up medical expenses other than their $50 visit, $25 of which is an out-of-pocket expense for them. [Oh, I beg to differ. Reducing these costs could make a considerable difference in the cost of premiums and access to care by the uninsured.] On the other hand, chronically ill patients are not over-consuming. (“Doc, this one’s on Uncle Sam…can you indulge me in some excessive chemotherapy, unnecessary dialysis, and a needless colonoscopy?”) I don’t think so.
You may not think so, but thinking don’t make it so. There are thousands of people who accept chemotherapy based on less than a 2 percent risk that a cancer will reoccur after surgury. Seriously, Steve, I thought you were a doctor? Haven’t you known any greedy bastard colleague who knew good and well that a procedure would have little effect, and yet saw dollar signs? And by the way, doctors are OVERPAID in this country precisely because they don’t have to negotiate with consumers. The third party payer system is an indirect subsidy to them and hospitals.
Having diagnosed the patient incorrectly, Max prescribes the wrong treatment: high deductible health plans and HSA’s (health savings accounts), presumably to discourage excessive consumption of small-expense items.
Funny you should say it’s the "wrong treatment." It’s precisely this prescription that my family and I have chosen. Are you so elitist as to tell me my prescription is wrong? Indeed, millions of other Americans are choosing my prescription as an alternative to yours since the plan was created in 2003 — and those numbers are growing.
In fact, as more people adopt them, doctors are going to have to become more price competitive. People paying out of pocket are conscious consumers. I know that our behavior has changed as a family since we started with the HSA. We not only think more long-term about check ups, etc., but we eliminate unnecessary treatments. We never did that before.
While being excellent tax saving vehicles for the healthy and wealthy [Uh, actually Steve, we’re healthy, but not wealthy — in fact we would qualify for 300-percent-of-poverty SCHIP expansion; and that’s just perverse], these plans will do little to curb the appropriate consumption of medical services by chronically ill patients.
True in part, but that’s precisely why there is a catastrophic portion of the plan. Turner should probably go back and do his homework on HSAs and HDHPs. But more importantly, he should pause before he presumes to choose his healthplan for me and others. I know my family and I don’t want government-run care. I won’t be able to go to Canada to get my child’s broken leg mended when we’re put on the waiting list.
That’s not to say that there is not massive waste and inefficiency in the US health care market. [my point exactly!] The most obvious one being the 15-20% administration fees in private insurance (as opposed to 2-3% in Medicare) [Thank you! for proving my point again! Consumer driven care cuts admistration costs drastically], closely followed by pharmaceutical profits [We want drugs to be created don’t we?].
Let me add that while Medicaid my have lower administration costs – though 3 percent sounds dubious – Medicaid is frighteningly expensive in other departments. Admin costs for dealing with multiple insurance companies will logically be higher than dealing with one bureaucracy — particularly when that bureaucracy has very few, if any, actuarial incentives. Medicaid is a train-wreck, and there is no comparison — even if you consider that most private care are in-state monopolies propped up by government regulation.
-Max Borders
Max…here is how I responded at the Progressive Pulse:
Max has spoken…
Read it and decide for yourself. Mostly he goes on and on about the miracles of free-markets. No surprise there.
At the end of the day, Max and Brian are faced with an inconvenient fact. Even though it is not as “free” as they would like it to be, America has the MOST “FREE” HEALTH CARE MARKET IN THE WORLD.
Yet, we are by far the most expensive health system and nowhere near the top in health outcomes.
If free-markets were so powerful in healthcare, shouldn’t even the mongrel version we have here in the US of A be kicking the ass of the French and their “socialized medicine?” Shouldn’t we at least be seeing some favorable trend lines? No, the sad fact is that we are twice as inefficient as anyone else…and getting worse.
And we still have 47 million uninsured Americans.
One more thing. Max and Brian are always talking about innovation, big ideas, entrepreneurship, etc. Max’s policies are just a warmed over version of what the Heritage Foundation advocated in February 2001, the first month of George W. Bush’s presidency. Go here to read Heritage’s “Top Ten Ways to Fix America’s Health Insurance Market and Expand Coverage.”
http://www.heritage.org/Research/HealthCare/BG1410.cfm
With 6 years of a Republican President and a Republican controlled Congress, you guys couldn’t even get your own party to adopt your ideas. What makes you think your ideas are workable now, with a Democratically controlled Congress and a better than even likelihood of a Democratic President?
You had your chance. In the healthcare marketplace of ideas…you lost.
“
Some of the innovations made it, some didn’t. (HSAs were created in 2003 and just need to be expanded) I’m not making any apologies for any party — particularly since I’m a libertarian.
And just because some of these ideas weren’t adopted doesn’t mean they weren’t good ideas. The Bush proposal of 2006 would have given American families 15,000 tax deductions (and could’ve included tax credits with some negotiation) and changed the tax code.
In short: why not treat the ideas Steve? Even Brookings liked the SOTU proposal to change the tax code. Can’t you evaluate the ideas on their own merits instead of making this partisan?
And besides, entrepreneurship doesn’t come from government planners. It comes from millions of individuals exchanging values. The conceit that wealth redistribution and expanded welfare is somehow entrepreneurial is just, well, not all that deep.
(And another thing: the US is the “free-est system” in the world… and the senses in which it it is free it is the best. However, one could argue that there are free-er countries than the US — like Singapore, which subsidizes its healthcare with vouchers, but let’s people get insurance where they like. I would support that for the US.)
Max…
The reason I’m not that interested in your ideas is that they really do not address our most pressing need…to insure health care for all Americans. If you and your family like your HSA that’s fine with me.
But it’s not a national health plan.
In fact, alot of your arguments are for the freedom to have less healthcare. That’s a different debate, but also one that will not alleviate the immediate problem of the uninsured.
Nowhere in the literature on consumer driven health reform are their reasonable estimates that a significant number of the uninsured would be covered anytime soon. Your ideas do not appear to be politically feasible either, so it is a moot point for me.
You see, we really have very different priorities. You want to see market theory applied, I presume because you really believe in it. I also hope that you would like to see the uninsured have access to health care, but it is not a priority for you. The ideology is what drives you.
For me, the priority is universal access to health care. I don’t care how we get there, just get there. I have looked at the evidence, I’ve worked in healthcare for 22 years, and I do not believe your policy ideas will get us there. There are, however, 3 credible plans on the table that are politically feasible that may achieve universal access to healthcare…so I plan to fight for them.
We just want different things, and each of us realizes that the other is an impediment to achieving our goals. It’s not personal…it’s just business.
Steve,
“to insure health care for all Americans”
I think you mean ensure. Of course, the debate is such that we are looking at ways to insure people in order to ensure health care, so the slip is one I am sure you will not be the last to make.
Personally, I could care less about universal health care as a concept. As a reality, access does need to be improved, but so many people seem to be more interested in creating a universal access plan as the end. Let us not forget what universal access is supposed to be for.
In my opinion, if we get health care costs under control, access will improve. Improving access without addressing the costs is putting the cart before the horse. In essence, all that does is strengthen a broken system. Why would we want to do that?
Steve said:
“Nowhere in the literature on consumer driven health reform are their reasonable estimates that a significant number of the uninsured would be covered anytime soon. Your ideas do not appear to be politically feasible either, so it is a moot point for me.”
&
“For me, the priority is universal access to health care. I don’t care how we get there, just get there.”
The fact that some (not all – I know the chlildren…) of the uninsured do so by choice does not play into Steve’s calculations. His “I don’t care…” argument is a prescription for unlimited spending on ill-defined goals.
Rich…universal access means everybody has the means to see a doctor when they are sick. What’s so hard about that?
Francis…”unlimited spending on ill-defined goals.” Francis, go read the specifics on any of the Democratic candidates health proposals. They estimate both the cost of their plans and a mechanism for payment (roll back tax cuts on the wealthy). And of course the goal is perfectly well defined…universal health insurance. You may not agree with it, but you can’t say you weren’t warned.
I just read Max Borders’ editorial in the News & Observer today, which prompted me to delve deeper and see what other wrong assumptions he has made about health care in the United States. Where should I begin? I think I’ll start with the fundamental flaw of consumer driven health care.
First of all, most people aren’t physicians and don’t work in health care, so not everyone has equal opportunity to understand what they’re “shopping” for in a consumer driven model. You might say that it’s the same case with purchasing a new vehicle or looking for a home, but the stakes aren’t the same. If you make a bad decision, or just a decision that isn’t optimal, when purchasing property, a commercial good, or other services, it probably won’t have a direct impact upon your health. Of course there are exceptions, like if that purchase involves a pack of cigarettes, but in that case there are regulations preventing the purchase of tobacco by minors and warning labels prompting individuals to consider the risks to their health. Forcing individuals to consider the immediate financial disincentives associated with seeking medical attention, then you’re right Max, they will go to the doctor less often. However, in doing so they may miss catching a detectable cancer before it becomes untreatable; they may miss treating atherosclerosis that is currently causing chest pain before it causes a major heart attack; and they may miss an opportunity to address any number of health problems or risk factors before they lead to more severe consequences. Patients do need to be involved in medical decision making and physicians should respect patient autonomy, but patients should be making those decisions based upon their own values, information about their condition, and education regarding available options, NOT on how much money they can afford or want to spend. Another consideration is that individuals have very different degrees of resources available to them in order to “educate” themselves as consumers, including access to the internet and time, as well as varying amounts of education and life experience. The best way to prevent costly diseases, both in terms of direct expenditures on health care and lost productivity, are to encourage patients to develop good relationships with their doctors and for physicians to counsel their patients to lead healthy lifestyles, and I think the best way to do this is to provide these services to Americans with as few hurdles to jump as possible. Can you say “universal health care?”
“However, in doing so they may miss catching a detectable cancer before it becomes untreatable”
Would that be like a certain well known person of considerable wealth who went a number of years without a routine check-up and unfortunately ended up with cancer. Unless we are going to do as John Edwards said and FORCE people to get regular check ups – the above statement will still be factual with or without “affordable” health care.
Dustin…
We agree. I have been a primary care physician for almost 20 years. The two most important factors for patients in making decisions about their healthcare are a) fear, and b) urgency. And when they have to factor in the cost of their treatment, it only exacerbates the fear factor.
Healthcare choices are often visceral rather than rational. This is where the doctor comes in. A successful model for cost containment will not be consumer driven, because physicians are driving most of the decision making process. Nobody is choosing their physician on how cost efficient their MD is practicing, because cost efficient physicians tend to be minimalists. I spend much of my day talking to my patients about why it is OK to take a “watch and wait” approach, rather than ordering tests and consultations randomly. Another problem is that there are perverse financial incentives in health care for physicians to provide more care, not necessarily better care.
So if you really want to contain costs in healthcare, we need to emphasize to physicians to practice cost efficiently based on the evidence. The government should also aggressively fund research to determine the evidence for “best practices.” And then we should guarantee that all of our citizens have access to the best evidence based healthcare available.
Token conservative…I agree that preventative health exams should not be mandatory. However, where evidence based research supports the value of preventative care (and that doesn’t mean that every healthy 21 year old male needs an annual physical) every American should have access to that option under a universal healthcare system.
Steve said:
“universal access means everybody has the means to see a doctor when they are sick. What’s so hard about that?”
You are kidding, right? What is so hard about that? Find one place in the world that happens. Please. It isn’t in Britain or Canada because I know people from both places that came to the US for treatment since they couldn’t get it in a timely fashion with their “universal access” systems.
Being made to wait 6 months after diagnosis to see an oncologist is a death sentence, but fits under what some label universal access. Universal access is no good when you, like my Aunt, are dead.
We need to improve access and that needs to come from improvements in affordability, not from dogma driven zealots looking to score political points. Universal health care in the way it is practiced elsewhere is a solution that creates as many problems as it eliminates. Is that what you are advocating? New problems? At least be honest that this isn’t a solution, but a trade off.
Rich…
America’s current system of rationing healthcare is more ruthless than any waiting lines in Canada, France, or the UK. I’ve got lots of scary stories, too, from patients who live and work in our community.
By the way, if I’m a “dogma driven zealot looking to score political points” what dogma do I ascribe to? I am on record at the Progressive Pulse for saying that “by whatever means possible, which I see as a collaboration between the public and private interests, we need to get 47 million people access to healthcare.” I’m completely open to any solutions that are politically feasible to accomplish that goal. As I said before, though, the affordability ideas you advocate have been languishing for years under Republican rule. You had your chance and didn’t get it done. Don’t blame me, blame George Bush and the Republican controlled congress who couldn’t really be bothered with healthcare legislation. You either lead or get out of the way.
Speaking of getting out of the way, I’m not sure why you and Max and Brian are so upset. Nobody is saying that you can’t keep yourselves and your families on a high deductible plan or an HSA like I assume you currently have. Under Hillary Clinton’s plan you would be allowed to do so. And if you are right and HSA’s are such a great deal, then people will flock to them and you can say I told you so. In the meantime, in the HRC scenario, 47 million people get coverage so I’m happy either way.
Maybe you’re just afraid that, given the choice under a Clinton or Edwards type plan, the majority of Americans will choose government sponsored health insurance over private insurance options or HSA’s. That’s the real threat for folks like you…you’re afraid the government might outperform the private sector and that would upset your free-market fantasies.
Steve said:
“That’s the real threat for folks like you”
Well done. I make two comments and you call me a fool. Thank for proving so quickly that you are incapable of maintain proper discourse on this important subject.
You’re right Steve. We have two different ends. And for you, the ends justify the means. Your means are government santioned theft. I don’t acknowledge the government’s right or your right to steal from me based on your ends. I’m glad you made the difference between us so stark.
Max said, “Your means are government sanctioned theft.”
Max…
That is an intellectually weak argument that, truly, you should be ashamed to make even if you are playing to your base on your home field. Unless you are making an argument that ALL taxes are somehow “government sanctioned theft…”
Is that your argument Max?
If not, if “Congress Shall Have the Power to Lay and Collect Taxes,” then it is a matter of legislation as to HOW MUCH to tax, and HOW it is spent. We have a disagreement on how much and how it is to be spent. That’s why we have elections.
Where’s the theft?
…and Rich. Re-read my comment.
“That’s the real threat for folks like you.”
Nowhere in the entire comment do I call you or anyone else a fool. I have voiced an opinion that consumer driven healthcare reform is unrealistic and unwise. If you don’t like my opinion then refute it. But don’t imagine personal accusations that don’t exist.