by David Allen, MD
Should health care be controlled or provided by the government?
I believe that years of answering ‘yes’ to this question has been at the root of most of the problems in the American health care system. Let’s explore a few of these ‘yes’ answers:
Health care for the elderly must be provided by the government. By creating Medicare, the US government has massively and deleteriously affected medicine. The immediate effect on the health care system was marked medical inflation. In addition, spending on health care as a percentage of GDP rose dramatically after Medicare was introduced, from 6% to 16%.
As the money poured in and doctors and hospitals found better and better ways to spend the money, times (for doctors, hospitals, and the elderly) were good. Then, as Medicare administrators and politicians realized how much money was being spent, the inevitable regulations followed. It is only natural that those who control the purse strings will eventually want to control how the money is being spent. These regulations (which affect doctors, hospitals, ERs, private and public clinics) are now so numerous that no single individual, unless he is an idiot savant, knows them all.
By controlling the money, Medicare effectively controls the majority of US hospitals. To boot, Medicare has effectively destroyed the private insurance market for the elderly.
Numerous regulations are required to control medicine. This idea is at the root of all sorts of horrible administrators who don’t do things themselves but somehow decide how things can and should be done by others or who are experts but still don’t want to allow individuals (patients and doctors) to make their own decisions. Thus JCAHO and local governments regulate hospitals, states regulate health insurance companies (markedly driving up the costs of insurance by reducing competition and mandating certain types of coverage) and the FDA tells doctors and patients which medicines they should be allowed to use. But this is all, in fact, useless.
It is not regulations that provide good medicine (and medicines) but the profit motive of physicians, drug companies, and hospitals. All of these entities recognized that they tend to do well when their patients/customers do well. (Capitalism naturally creates this win-win scenario by outlawing fraud or theft.) In fact, these regulations and controls really are ‘worse than useless’, since they tend to stifle innovation and hamper the efficient delivery of health care to individuals.
Health care is so expensive for the poor that it must be provided by the government. First of all, as noted above, the reason health care is so expensive is because of government intrusion. The government makes health insurance more expensive, mandates certain types of health insurance coverage, eliminates a huge potential market of private payers (the elderly) and over regulates the market at multiple levels.
This essentially guarantees that a large number of poorer individuals will have a difficult time paying for it, and/or will choose not to pay for it. This problem of choosing not to buy insurance is worsened by each person’s knowledge that he/she will be treated, no matter what, in an actual emergency. In addition, there is Medicaid, which can be obtained AFTER you are hospitalized and can be used to help pay for part of that hospitalization.
Let’s face it, if the government were not so involved people would have a much easier time paying for their insurance and wouldn’t need the further ‘help’ of the government to buy more. Finally, under a better system, those few who were too poor to pay for health insurance would have to rely upon the charity of doctors, hospitals, or actual charities (churches or larger organized charities) to provide for their care.
The bottom line is, years of regarding medicine as too important to leave to the free market has, in fact, undermined the free market’s ability to provide health care. If we want to fix the system, we should be unraveling these root causes. Deregulate medicine at every level, slowly phase out Medicare and Medicaid and end the control of states over health insurance companies.
David Allen is a neurologist.
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{ 44 comments }
“It is not regulations that provide good medicine (and medicines) but the profit motive of physicians, drug companies, and hospitals.”
Profits are maximized when the focus of medicine is to treat…not cure.
The author’s arguments are totally bogus, dangerously so. They boil down to the idea that he does not like to be regulated and in fact would earn more if he were not. If his ideas were implemented, we would have even more rampant unnecessary suffering in this country than we do now.
The facts are clear. Government financing of health care in other developed countries has resulted in better outcomes for less money. It would happen here too.
I wonder about your last claim, does it tend to compartmentalize? Also, how is it that “the facts are [so] clear”, and yet alien to so many of us?
“Deregulate medicine at every level, slowly phase out Medicare and Medicaid and end the control of states over health insurance companies.”
It makes no financial sense for anyone to deal with my health problems. What are you suggesting for people like me? (Before you tell me what a fat, lazy looser I am, I don’t have lifestyle health issues.)
The core of Dr Allen’s argument is that Medicare has driven up health care costs, which he asserts but doesn’t prove other than noting that health care inflation has occurred since the introduction of Medicare. Blaming Medicare exclusively for health care inflation is a bit like claiming that water drinking has 100% mortality: everyone who has taken even a sip of water has eventually ended up dead. Correlation is not causality.
Cost drivers in health care are manifold, and include fee for service, excessive reliance on pills and procedures, and an overemphasis on technology. Medicolegal burdens are also a factor, but their contributions are probably small. These trends may have been influenced Medicare policies, but private insurance has played a very large part in fostering these trends as well. The kernels of these trends were already set in place before Medicare was invented.
I have been waiting for those who tout a “free market” in health care to go the extra step to show they know what that means and prove that such a thing could ever exist.
Dr Allen, please provide us with some examples of what you view as a true working “free market” in medicine.
well-said! i do think “the free market” ideas in a true sense of libertarian thinking would not fit medicine. many aspects of medicine (such as compassion) will not fit the true principles of free market. additionally, also free market requires creating demand for products to stay profitable. now tell me how this is going to reduce the cost of health care – unless you are ok to watch more people fall short of being able to afford care and create health disparities. in paper free market principles work fine under all circumstances until you start operating in the soft markets.
Hmm. I don’t see why compassion would be eliminated from a free market world. Also, I don’t see much evidence of it when the government gets too involved (witness the DMV and the IRS!)
Capitalism, with competition, certainly does reduce prices/costs. It is responsible for the massive increase in the standard of living the world has enjoyed over the last century. This means capitalism benefits nearly everyone.
You are committing the basic fallacy of confusing correlation with evidence of a causative relationship. Just because two things happened in parallel doesn’t mean that one caused the other. This fallacy you fall for is at the heart of both your claims in the article and your claims concerning capitalism, meaning that unfortunately, your “arguments” are devoid of real evidence. It also troubles me that you consistently refer only to US agencies, and only to hand-picked ones. This suggests that you have to cherry-pick the data to make your point.
I think if you read some of the other comments, you will find that I have answered this, to some degree, already. It is certainly true that correlation does not prove causality. But what does prove causality? You need (among other things) some mechanistic explanation, or at least a plausible cause and effect relationship between the two variables. In our case, it is certainly plausible that a new government program that begins paying for lots of things (Medicare) has resulted in more money being spent in the industry and higher costs per product in that industry. Here is a fuller analysis of the situation: http://www.americanthinker.com/2009/09/understanding_the_cause_of_hea.html
And a paper about this issue: http://econ-www.mit.edu/files/788 . Interestingly, this paper concludes that third-party payer systems in general had a large effect on medical inflation:
As to my ‘claims’ regarding capitalism, you are on to a much greater issue about which numerous tomes have been written. It would be impossible to convince you of the veracity of my position in such a short amount of time and space. If you are not already of that position, it would (and should) take exposure to lots of different facts and writings to convince you. We can’t do that here, and I am probably not up to the task in any case.
If you truly are interested in different perspectives on this, then I refer you to The Von Mises Institute (http://mises.org/), to the very accessible book “Free To Choose” by Milton Friedman, or George Reisman’s Blog and works (http://www.georgereisman.com/blog/).
If I understand Dr Allen’s argument correctly, he is essentially outlining part of the classical economic problem of third party payers, in this case the government: the payer (government) controls how the service/product is delivered despite that fact that the payer is not the direct recipient of those services, in addition to having the ability to create rules and regulations that become laws that govern how those services/products are delivered/generated. In addition, the health care market is a market of large players- governement, states, corporations, pharmaceuticals, and insurance corporations, without much a role of individuals, who are after all the direct recipients of health care (i.e. its the patient, stupid). I don’t believe thought that this is an argument against government involvement or deregulation in medicine in general, but rather an argument for defining the appropriate role of governement in health care. The government should defining how the market operates to allow individuals to make both financial choices in their health care and to visit physicians for consultation/procedure to determine the medical options; and it should create the groundwork to make the other players work for the individual. There is a tendency to look to the government for solutions, but that solution does not necessarily mean government run/managed health care (which Medicare is a varient of), but as an entity that regulates how markets are created and governed (which is what it does in other fields). INDIVIDUAL rights and liberties are what government should protect, not that I need to keep a patient in the hospital for three days before I can send them to a nursing home and document their SH/FH to get a payment.
MarylandMD wrote: “Blaming Medicare exclusively for health care inflation is a bit like claiming that water drinking has 100% mortality: everyone who has taken even a sip of water has eventually ended up dead. Correlation is not causality”.
Ah, yea I get that. These articles are short, I can’t talk about everything. Surely you understand why artificially reduced costs to consumers (patients) would increase utilization, but here is something to get you started “http://www.americanthinker.com/2009/09/understanding_the_cause_of_hea.html
He also wrote “Cost drivers in health care are manifold, and include fee for service, excessive reliance on pills and procedures, and an overemphasis on technology.”
In truth, the ‘cost’ of something should be whatever the market can bear. It is not up to you or me (or shouldn’t be) whether costs are ‘too high’ or ‘too low’. But certainly the third-party payer system (insurance for everything, including outpatient services) is, in my opinion, a big driver of costs. In my article, I’m taking on some big players in that arena (Medicare and Medicaid) but I’m not against changes that would also lesser people’s reliance on health insurance for everything. For some good ideas, see Mackey’s article: http://online.wsj.com/article/SB10001424052970204251404574342170072865070.html
And “Dr Allen, please provide us with some examples of what you view as a true working “free market” in medicine.” Lasik eye surgery, most cosmetic surgery, many psychiatrists, Jay Parkinson (http://jayparkinsonmd.com/), Doc Talker (http://www.doctalker.com/), Simple Care (http://simplecare.com/) – etc, etc..
Dr Allen,
Thank you for the additional information. It is a shame you didn’t at least provide some of the links in your original article. While I now understand some of your points a little better, I still feel your arguments do not hold up to scrutiny.
Your “proof” that Medicare is directly responsible for health care inflation seems to trace back to a position paper by Arthur Laffer et. al. I did not find the article persuasive. It appears to be a limited view of the data, and only maps trends back to about 1960. Some of the curves presented seem to indicate costs were increasing well before the introduction of Medicare. It seems to be a very elaborate attempt to make a correlation into causality. Please provide some other data to support your main thesis. Preferably from a nonpartisan source.
Similarly, your “free market” examples are not persuasive or helpful. To point out cosmetic surgery and Lasik (elective procedures for healthy patients with simple, defined results) as examples of a free market that we could expand to encompass the entire healthcare system is a laughable exercise. Your other examples appear to be variations on the “micropractice” and “concierge” models that are being explored by some primary care providers. While these serve a certain niche (generally healthy, well educated and well-off patients with some medical savvy) well, they do not provide examples of a true, comprehensive free market that would encompass care for all patients in the US. Similarly, your example of psychiatrists does not work well for the entire healthcare economy. Perhaps from your vantage point as a neurologist you don’t see any problems with psychiatric care, I can tell you as a family physician providing primary care, I am seeing increasing problems with my patients enduring long waits for psychiatric care as most psychiatrists who don’t take insurance are simply unaffordable. The remaining psychiatrists are almost inaccessible due to being overburdened. If there was infinite capacity to supply psychiatrists, then I guess you could eventually find some sort of balance of supply and demand in psychiatry that could maybe support some sort of “free market” in psychiatry. But that is a fantasy. We need some real world solutions.
As with VIP and “boutique” medical practices, these examples of a “free market” only seem like a parasitic appendages to our current healthcare system which cherry-pick the most desirable patients (educated, healthy, and wealthy) and leave the rest for the remaining providers who are overburdened. If your idea of a “free market” is to further exacerbate the divide between the haves and the have-nots, then I think I will pass.
MarylandMD,
I think you will agree that any economic ‘proof’ is somewhat difficult to come by. Knowing that two things correlate is, of course, just the first step. But realizing there is a reasonable causal explanation for the correlation is something more. When people are given lots of insurance at a relatively low cost to themselves, combined with an insurance which tends not to watch its bottom line (until recently) then you realize why there would be an incentive on the part of patients and doctors to spend. Here is a study dealing with the effects of supplemental insurance on medical spending (showing, in part, that once insurance is bought, spending tended to increase: http://gateway.nlm.nih.gov/MeetingAbstracts/ma?f=102222291.html). Here is another dealing with Medicare Part D on spending habits – again, showing that once you have the insurance, you naturally tend to use it (http://content.nejm.org/cgi/content/short/361/1/52).
You laugh at my examples of the working free market, but you don’t actually examine them. Why can you not imagine these examples applying to a ‘true, comprehensive, free-market’?
Let’s look at psychiatry. The majority of patients can, in fact, see psychiatrists – but they can’t necessarily use their insurance to do so. They can also see psychologists – usually, again, not with insurance. Any physician can prescribe routine antidepressants or antipsychotics – to begin the treatment process. If it is an emergency, then patients can almost always be seen by a psychiatrist in the ER or if/when hospitalized. If you think physicians are in too short a supply (I do) then you might be surprised to know that I don’t believe either in licensing requirements or government control of ‘prescription’ medications. The government has no business telling patients who can treat them and who can provide them with medications. Let psychologists learn about the few medications they prescribe and let them start prescribing them.
I think if you look at Jay Parkinson – you will learn that he takes (as I recall) about $500 per year – even from the uninsured, and does home visits. That’s not exactly VIP ro Boutique care. There is an ER which operates under the ‘pay at the moment of service’ philosophy that posts its prices for various evaluations – and they are hardly boutique!
Keep in mind, that I support health insurance – for true disasters (hospitalizations, cancer, etc.).
There simply ARE many, many free market solutions out there, if you can get away from the government controls and distortions of the market.
“Let’s look at psychiatry.”
I just read a “New Yorker” article about mental health. It’s nice to know that shyness is now a mental health disorder. Nice to see all those experts making a profit.
Many mental health providers have gone cash only. Their fees are more than those paid by insurance companies. Isn’t the theory that prices will drop when doctors accept cash?
My insurance had limited mental health coverage. During a period of severe depression, my benefits ran out. Unable to afford treatment, I stopped treatment and dealt with my feelings of suicide on an internet support group. I also bought a few books. Perhaps in my case, the market worked. I found an affordable treatment.
This year, insurance regulations make mental health benefits on par with physcial illness. I assume, Dr. Allen, that you are against such regulation.
ErnieG wrote “The government should defining how the market operates to allow individuals to make both financial choices in their health care and to visit physicians for consultation/procedure to determine the medical options; and it should create the groundwork to make the other players work for the individual”
Yes, it can do this simply by protecting the individual rights of all the ‘players’. No more is necessary, and no more is desired. Capitalism is a self-organizing system once force and fraud are outlawed by the government.
So, in your free market:
– What costs would be driven out – physician salaries, hospital personnel costs and buildings, fee per service, patent drug costs? Surely you don’t mean insurance company profits and indeed, insurance companies.
– How would those with poor health and pre-existing conditions get care?
– How would poor older people get care?
And the only examples you can come with are the usual tired ones of Lasik and cosmetic, which are not necessary. Let’s see how you would manage an unemployed person with metastatic breast cancer in your ‘free market’.
And finally, there’s ludicrous notion that capitalism is the main driver of healthcare innovation. You obviously have paid no attention to the huge amount of government funded research in the US and round the world, and indeed that Europe is now the the larger contributor to innovation in areas such as clinical cancer research. You also seem to have forgotten that Medicare funds the lion’s share of residents’ training in the US.
Among the biggest problems in US healthcare is its fragmentation and gross inequality – you just want to make it more so. It’s OK to be on the side of the money folk – but just be honest about it.
What costs have skyrocketed in our world of late?: Medicine, Education, Housing (although collapsing now), disaster relief… What do they all have in common?: government (taxpayer) support. I’m sure you can think of more.
Uninsurable – What you clearly desire is deregulation of the health insurance system. Unless you are already critically ill, It would help you immensely. If you could buy catastrophic health insurance only (without all the bells and whistles that current state regulators force health insurers to provide) then you could at least insure yourself against such a catastrophe. I’m not saying it would be cheap, but with a freer market, you would at least stand a chance of getting it. Professional piano players insure their hands, very expensive works of art can be insured – these are examples of what the free market can achieve if unfettered. Witness, though, that the Obama administration is telling insurance companies how much they can charge for their services (in California, this week); so don’t be surprised if, when the price is held down, that they simply say no to certain people. Now, of course, if you didn’t have insurance ahead of time, and had a bad enough condition, certainly in any market this could pose a problem – but you can’t blame the whole system for such rare situations.
Look at some of the websites I listed in responding to another reader. You will find there are plenty of folks (outside the insurance system) who are willing to listen, research, and try to help you figure out solutions to your medical problems.
Your views on the motivations of physicians and drug companies are completely off the mark and smell of conspiracy theories. You wrote “Why would anyone cure type 1 diabetes when you can make a profit selling the treatment? ” Do me a favor. If you have any solid (but unknown) cures for common diseases – just tell me (don’t spread it around). With my resultant millions I will have plenty of time to explain to you the error in your thinking!
While this debate rages, the national healthcare ponzi scheme that is medicare is about to go belly-up. No good deed goes unpunished.
Our parents (or at least their parents) didn’t have these funny buffers between them and their curers. They went in, we’re helped and expected to pay – right there & then. I suspect they didn’t resent their DRs, hospitals, insurance cos (which were for major problems, not oil changes), nor even their neighbors – as being on welfare for care was not as prolific then as it is now.
Medicare, Medicaid, SS… all of this stuff is broke – out of loot; and running out of people to loot. What now, people will really be dying for want of coverage promised by the benevolent politicians wielding other peoples money.
In the end, those directly receiving the welfare are on a death-trap track. Those of us forced to fund it are suffering from diminished ability to carry our own weight (not to mention the injustice of stolen money). Those of you in the cure biz won’t be getting paid by those forcing your labor (see what’s coming in March WRT Medicare/aid). Our own state (MO) has unilaterally chocked off portions of payments to that abstract faceless entity “provider” to cope with the other welfare gluttony that churns on.
In a pretty short few decades of medical welfare (and all of the regs Dr. Allen mentions), what do we have to show for it? A rotten structure ready to crumble over on us at the presence of the 1st breeze of turbulence. For me, I’m trying to keep a good relationship with my dog’s vet – you can never be too prepared.
(2nd try, sorry if this doubles-up)
Our parents (or at least their parents) didn’t have these funny buffers between them and their curers. They went in, we’re helped and expected to pay – right there & then. I suspect they didn’t resent their DRs, hospitals, insurance cos (which were for major problems, not oil changes), nor even their neighbors – as being on welfare for care was not as prolific then as it is now.
Medicare, Medicaid, SS… all of this stuff is broke – out of loot; and running out of people to loot. What now, people will really be dying for want of coverage promised by the benevolent politicians wielding other peoples money.
In the end, those directly receiving the welfare are on a death-trap track. Those of us forced to fund it are suffering from diminished ability to carry our own weight (not to mention the injustice of stolen money). Those of you in the cure biz won’t be getting paid by those forcing your labor (see what’s coming in March WRT Medicare/aid). Our own state (MO) has unilaterally chocked off portions of payments to that abstract faceless entity “provider” to cope with the other welfare gluttony that churns on.
In a pretty short few decades of medical welfare (and all of the regs Dr. Allen mentions), what do we have to show for it? A rotten structure ready to crumble over on us at the presence of the 1st breeze of turbulence. For me, I’m trying to keep a good relationship with my dog’s vet – you can never be too prepared.
Healthcare Observer asks “What costs would be driven out – physician salaries, hospital personnel costs and buildings, fee per service, patent drug costs?”
I don’t know for sure, since one can never tell exactly how the free market will operate (all that innovation, you know) but I suspect all of the above.
And “How would those with poor health and pre-existing conditions get care?”
They would buy it if they could (under my system, almost assuredly, insurance would be cheaper) or depend on the charity of others.
And “And finally, there’s ludicrous notion that capitalism is the main driver of healthcare innovation.”
Yes, there is that ‘ludicrous’ notion. You make some fine (but small) points which do not challenge my main point. If you eliminate the profit motive, all this innovation will go away. The government helps to do a lot of research, but also stands clearly in the way of many products being on the market. Are you under the impression that pharmaceutical companies cannot do research? Do you think medical schools and residency programs cannot take care of themselves?
“It’s OK to be on the side of the money folk – but just be honest about it.”
OK. I’m on the side of ‘the money folk’. Also, those without much money. Oh, and those in between too. I’m on the side of the individual against an oppressive, meddling, foolish government. I’m for the rights of the individual against the statists who don’t believe in such rights. I’m for proven capitalism against the forever longing theories and hopes and ultimate failures of socialists. I’m for productivity and a higher standard of living which comes from the free individual, as against the static, frozen economies and meager existences stemming from the recurring five year plans of command economies.
yes, co’s do research but they will invest in producing the knowledge (using the basic science from public research facilities) that furthers their quest and will not share with other co, which in turn reduces the competition. the basic science knowledge that is produced in public institutions is available to all to innovate with. not sure what stagnation you are talking about but the innovation was livelier when there was more public support in usa. i think you are viewing new product development from the point of being brought to markets. who sponsors the pre-product knowledge development process?
Dr Allen. Thank you for your revealing answers. Now we can see where you are coming from.
So the poor and infirm have to rely “on the charity of others”. Once you have the detritus of society dispensed with, you then present your many false choices: between “an oppressive, meddling, foolish government” and your fantasyland of unfettered capitalism, between pure capitalism and pure socialism, between the “free individual” and “recurring five year plans of command economies”.
As long as you view the world through this lens of fictional black and white choices and as long as you tout solutions that provide for the healthy and well off but leave those less healthy and less well off simply to the “charity of others”, you will not be able to create a persuasive fix for our health care system.
I’m not against people who are unfortunate enough to be in a position that they must rely on the charity of others. Indeed, i supply such charity nearly daily. But, anyone in such a position MUST RELY ON THE CHARITY OF OTHERS. That’s not a cut down, just a different way of looking at the situation. Any supposed ‘right’ to health care necessarily denies the rights of others (who are forced to pay for it or supply it). The ‘right’ to health care is really the supposed right to force others to provide you with and pay for that care.
I don’t have ‘fictional black and white choices’ – but I am thinking using principles and concepts. Anyone who is against ‘black and white’ choices has an antitheses to thinking with such principles. But, it is essential to think using these abstract devices in order to figure out the ‘in principle’ truths. Once you have figured out how the world works, in principle (the right and the wrong of it, the black and the white of it) you then know what you are aiming for. It may be true, that you have little chance of implementing your full views in a particular political climate – but it REALLY HELPS to know where you want to go and why. Then, for any particular proposal, you know why you are supporting it and why.
If you don’t think at such a fundamental level, you may find yourself never thinking of real solutions to real health care problems, because they are not in vogue, or are too ‘black and white’. Indeed, you may find you have boxed your thinking in so much that you cannot even see solutions proffered to you – they just won’t seem ‘persuasive’ to you.
“But, anyone in such a position MUST RELY ON THE CHARITY OF OTHERS.”
I don’t want your charity. Iwant affordable health care. Your solution is for me to beg for help.
And isn’t that what we have now. Those that can pay, pay more so doctors and hospitals can provide charity care.
So perhaps the solution is to reduce doctor’s salaries so they have to rely on charity to live. Doesn’t that make you feel good?
“I don’t want your charity” /=/ “perhaps the solution is to reduce doctor’s salaries”
We all want affordable health care. Ask yourself why it is so expensive. I think a large part of the reason is the government’s distortion of the market – as I’ve outlined. If you want affordable health care, then you should want to get the government out of the market.
Keep in mind a beggar is morally superior to a robber – which is what government health care amounts to. Given the choice, which will you choose?
Uninsurable – I think your view that profits in medicine only come from treatment (but not cure) are not the case. Physicians cure pneumonia, heart attacks, appendicitis, various cancers, etc, etc. They make money doing it and patients tend to appreciate it! Regarding the financial sense of dealing with your particular medical problems, I’m not sure about your exact situation so I cannot comment.
JSmith states “Government financing of health care in other developed countries has resulted in better outcomes for less money. It would happen here too.” I guess you don’t realize that we already have government financing of health care – its called Medicare – and it will soon bankrupt the entire country – to the tune of tens of trillions of dollars by 2015 if ’something’ isn’t done about it.
In terms of ‘better outcomes’, I don’t think that is correct either. There was a WHO report which looked at life expectancy as a measure of the health care system’s functioning; concluding that the US system performed poorly. This study was fraught with problems including the obvious fact that certain things having nothing to do with the health care system (such as the lifestyles of the people, death from violent crimes or automobile accidents) have a huge impact on life expectancy and your conclusions. If you take out these effects, the US system does VERY well. Or, if you look at certain diseases (such as cancer treatments) the US does very well. Finally, you have to realize that the freer nations that allow some capitalism to function, are the ones developing the drugs, devices, and procedures that the rest of the world adopts. Capitalism is the driver of innovation in the health of the world – improving the treatments available to countries which don’t have such innovators, but are perfectly willing to use them once they are magically ‘available’.
” Physicians cure pneumonia, heart attacks, appendicitis, various cancers, etc, etc.”
Once a cancer patient…always a cancer patient-medicine even makes cancer patients. Doctors don’t cure heart attacks, they prevent damage…and the patient forever is recommended to be part of the medical system. If there was a way to forever treat pneumonia…do you think that a drug company would sell the cure? Why would anyone cure type 1 diabetes when you can make a profit selling the treatment?
“Regarding the financial sense of dealing with your particular medical problems, I’m not sure about your exact situation so I cannot comment.”
Insurance companies exist to help spread risk. I or my employer pay premuims and the insurance company hopes I pay more in than I get out. That’s how insurance companies make profits. If a potential customer has a chronic disease or a high risk of using benefits, it’s stupid to insure them. If a customer is low risk and then develops and expensive disease, it would be an advantage to stop doing business with that person.
As for a doctor, isn’t it more profitable with all models of care to treat the person with a “textbook” case instead of the extra time it takes to deal with something difficult? Does the doctor give the patient lifestyle recommendation for little profit or recommend an expensive procedure for large profits? If I have to look everything up at WebMD anyway…
Sorry for jumping in as I am sure Dr. Allen will respond, but I would argue that health insurance companies do not spread risk. That is how car insurance companies work. But, health insurance companies in the current system exist to spread cost amongst the population. Risk implies an unforeseen circumstance. When I pay my car insurance, I pay a company to cover me in the unforeseeable event that I wreck my car and need a new one. This has not yet happened, but I continue to pay my insurance. Meanwhile, I pay for maintenance out of my own pocket. That is the example of spreading risk.
Because health insurance pays for “maintenance”, these costs are not unforeseeable. They are entirely predictable. Many people end up paying a company to process their check, distribute it amongst their employees, help cover the cost of some other people with diseases that have unexpected cost increases over their premiums, and then have some of it returned to the payer through an artificially lowered pricing system. The physicians and hospitals are paid an arbitrary amount, while having to maintain overhead related to receiving that arbitrary fund. That overhead cannot be recouped by increasing the price of the product like any other business because the price is fixed. Thus the option is to recoup the cost through volume.
Not entirely predictable, but individually predictable enough (by looking at pre-existing conditions) that medical “insurance” is really a misnomer, in that it functions mainly as prepaid medical care, rather than as actual insurance which converts the risk of a catastrophic cost or loss into a manageable known cost.
“If a potential customer has a chronic disease or a high risk of using benefits, it’s stupid to insure them.” And you expect that to change (for the better) under government medical boards?
” KENNETH THORPE: We can probably spend about 10 percent less in the Medicare program 10 years from now, but that means we gotta start today.
And by start, he means, get off the couch and yes, diet. Lydia Ogden says Medicare should start paying for tailored weight loss programs for people in their 50s who are overweight, and on the verge of diabetes or heart disease.”
http://marketplace.publicradio.org/display/web/2010/02/18/pm-medicare/
They’re starting to get serious about what they’ll permit you to ingest (and evacuate [CO2]) to/from your body. Where will we draw the line in the sand on how much control they’ll assume?
“Because health insurance pays for “maintenance”, these costs are not unforeseeable. They are entirely predictable.”
I didn’t know cancer was predictable…or a heart attack. Without those unpredicable costs, why buy insurance. It’s a lot like car insurance…accident…cancer.
“They would buy it if they could (under my system, almost assuredly, insurance would be cheaper) or depend on the charity of others.”
A deregulated insurance system wouldn’t pay very long. Are you providing charity care or do you expect churches to pick up the slack?
“Unless you are already critically ill, It would help you immensely.”
Evidently, you don’t understand my name. If not forced to, no insurance company would insure me. Could you please refer me to a charity that would pay $100,000 for cancer treatment.
Yes, I agree that cancer and heart attack would be equivalent to an accident in the analogy with car insurance, and would require health insurance to cover those unexpected and expensive costs.
However, yearly check ups, flu, strep throat, maintenance of an otherwise stable chronic disease, these things are the majority of our health care dollars, and are the equivalent of getting an oil change in an aging car. They aren’t unexpected. They don’t require insurance. It’s just part and parcel of growing old.
“And you expect that to change (for the better) under government medical boards?”
The piece written by David Allen implies that a free market insurance system would work better because profit motives would lead to better medicine. I disagree. I said nothing about government.
So instead of a sensible national insurance system here we have a doctor who prefers to see many (more) millions thrown into health insecurity and begging for charity, forming more lines for tooth extractions and mammograms at RAM field clinics.
No, I certainly would not prefer that millions be thrown into health insecurity – that is what my proposals would cut down on.
Its funny that you should mention lines for tooth extractions, since the British public health system is having such a time of it (read: http://news.bbc.co.uk/2/hi/health/7189448.stm). Notice there aren’t such dramatic stories in this country!
Nice perspective but how do you account for the fact that we spend more per capita on healthcare than any other country and yet do not have outcomes as good?
Other health systems provide for the elderly, the poor and anyone in-between at a lower cost with better outcomes. Other health systems regulate the medicine producers without damaging innovation and output.
The free-market healthcare system does not demonstrate better cost control nor better outcomes. I wish it did, I really do. But the data does not support this view.
Part of my reply was already made in my comments earlier.
There is an assumption built into your question – that we are, in fact, a free market system currently. This is far from the case. Indeed half of all health care dollars spend in the US are spend BY the government. That, and endless regulation, makes us anything but a free market.
Yet, despite that, what remains of the free market has produced significant benefits. Your (and others’) analysis of the situation (again, see my comments above) is not accurate, I believe.
“then submit the claim to the insurer themselves as the customer.”
You have to be kidding. The insurance company has to input all those claims manually. The medical center I go to submits claims electronically and claims are paid the Monday after the visit.
I once went to a cash only doctor for a difficult problem. The initial visit was $300, more than an in-network provider would receive. I filed the claim myself, and it took 9 months to get reimbursed.
“Check out what you can a surgery for in some foreign hospitals that cater to US citizens (medical tourists). ”
Costs are low because the cost of living is low. I could save money by traveling to South Dakota for care. It makes it difficult for follow-up and ongoing care
So how much less I am going to have to pay if we go to a cash only system. 50%? 70%. My last run in with the health care system cost my insurance company $25,000. The new market value cost would be $12,500? $7,500? At what point is the cost catestrophic? When I can’t afford to send my kids to college? When I can’t afford to pay my rent? When I can’t afford to eat?
I looked at the bill the hospital sent me. There were many items I was charged for that I did not give my consent. My hospital ordered test without consulting with me or discussing the cost of such tests. And if I was responsible for the cost, those 2 extra days the doctors kept me there “just in case” would not have happened.
Thank you Dr Allen for an article that succinctly states something I have been trying to communicate to as many as will listen. I agree with every point you make. “Uninsurable”, your plight is well understood by me. As a doctor working part-time in a free clinic, I know your angst. Like it or not, we may ALL be just one disabling illness and a job loss away from being uninsured. That is why I see a true free market as the best way out. Many can’t afford even basic care because the existing system has created a price spiral. Want a good example of free market? Check out what you can a surgery for in some foreign hospitals that cater to US citizens (medical tourists). Costs are low, quality can be high. The hook is: they only take cash. Because cash works. To answer the question of who would lose jobs in a free-market environment posed by “Healthcare Observer”, it will be the scores of billing clerks, coding experts, and claims processors as well as bureaucrats. For conditions such as cancer, we all need true insurance and not pre-paid benefit plans. But even for this, I believe costs would drop if patients bear more of the shared expense and pay the doctor directly, then submit the claim to the insurer themselves as the customer.
“Check out what you can a surgery for in some foreign hospitals that cater to US citizens (medical tourists). Costs are low, quality can be high. The hook is: they only take cash. Because cash works.”
Totally aside from the fact that those costs take into account the standard quality of life in the country, and the salary ranges common there, as well as occupational safety and health standards etc.etc. and as such, aren’t transferable to the US or any other country, this is a classic example of selection bias. Comparing a subpopulation willing and able to pay extra for its health with the general public is bogus and ignores issues of compliance, personal standards of living of the patient etc. etc. ad nauseam.
“But even for this, I believe costs would drop if patients bear more of the shared expense and pay the doctor directly, then submit the claim to the insurer themselves as the customer.”
And if the insurer then tell them “no thanks”, they’ll be just as financially ruined as they are now.
Thank you for mentioning SimpleCare as a solution for many to the current health care state of affairs.
Simple
Common-sense
Great for both doctors and patients.
Cuts the WASTE of 68 cents on the dollar spend on health care, i.e. saves 68% of the current dollars spent on healthcare by cutting out the unnessary administrative burdeon. Again, We appreciate your acknowleggement of the American Association of Patients and Providers and the SimpleCare program. Vern S. Cherewatenko, MD, MEd
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