Drew Altman, president of the Kaiser Family Foundation, has a great tweet on the key question to ask when thinking about health care costs — WHOSE COSTS?
I have probably participated in 1,000 conference on health care costs and published even more analyses on costs at KFF. One observation: we sometimes talk right past each other on health costs because we are talking about different problems (sometimes with different solutions). pic.twitter.com/qSmxS2UfEt
— Drew Altman (@DrewAltman) June 20, 2021
The answer to that question determines the possible solutions.
The recent surprise billing legislation that passed in December 2020 answered that question as to consumer out of pocket spending is the cost that matters.
The three new public options are mostly answering that question with national/state health care spending and some employer premium perspectives.
Different questions with different answers will determine policy.
it’s the money I pay that is my main concern
And then there are the opportunity costs when the “consumer” has to try to figure out the arcane mess of co-pays, premiums, and no-pays to choose a plan, the consumer and medical fights with the insurance company to get them to adhere to their contract, and the general wearing-down of initiative and motivation by knowing this is all expectable.
You know, I think our language fails us sometimes. When we talk “cost,” the preposition matters, especially with regard to health care in America. There is a subtle difference between “cost to” and “cost of.” You make a good point that politically, what matters is “cost to.” At least to a degree, what will lead to legislative redress is the “cost to” the voters. Both the above mentioned legislation and Obamacare sought to address this.
But what matters economically is “cost of.” This is a much thornier issue and one that is hard if not impossible to address.
This only seems complicated because of our Rube Goldberg contraption of a health-care non-system. Value for money is obviously a desirable goal no matter who is paying. But given the nature of the product — that people have wildly differential need for it, and anyone but Jeff Bezos and the like might find that they need more than they can afford, and any given person’s need varies over time — the cost needs to be spread out somehow, and the fair way to do that is to put everybody into one pool and pay for it with progressive taxation so that nobody has to pay more than they can afford.
That’s called universal, comprehensive, single payer national health care, and it would put an end to this entire discussion. And it would be cheaper overall.
West of the Rockies
What does “national health spending” refer to? The others I understand. Should there be a circle for the cost of being a healthcare provider (office, staff, etc.)? I hope these aren’t wildly stupid questions.
The term “health care” itself is ambiguous. Are we talking the medical aspect? The insurance aspect? The cost? Availability? People may mean any or all of the above, or more.
I just got into a Facebook argument about just this question when a friend posted about how much less is spent on health care in the UK and went on to assert that we’d save tons of money if we adopted a single-payer system. I said that fantasy is a fantasy. I pointed out that those savings would require major hits to the income of doctors, nurses, hospitals, drug companies, and rehab facilities.
Boy, from the responses I got you’d think I was advocating killing puppies.
I don’t like the term health care at all, actually. It’s propaganda. We’re talking about an industry that supplies medical services and associated goods. Only a small portion of it is about keeping people healthy, it mostly responds to disease — which it also defines, and the definition continually expands. And it doesn’t exist to “care,” it exists to make money. If you run into people who care along the way, that’s great, but it doesn’t define the industry. So let’s say medical services, or the medical industry, not health care.
I am interested in your thoughts on the Washington, Nevada and Colorado “public” options and the Haven effort. It seems with Haven, it struggled “with the lack of transparency in health-care costs and data.” https://www.wsj.com/articles/why-the-amazon-jpmorgan-berkshire-venture-collapsed-health-care-was-too-big-a-problem-11610039485 I find in my position, I often have to pause efforts to ask, “What is the problem we are trying to solve?” Articulating the problem is the often overlooked step.
Villago Delenda Est
Take laissez-faire capitalism OUT of health care. Single payer. GS-4s imposing cost discipline. No more freeloading middlemen.
You may say that I’m a dreamer. But I’m not the only one.
Villago Delenda Est
@Richard Guhl: That’s pretty much what the groups you articulated are into.
Well, yes, single payer or even a Swiss style ACA on steroids type system faces major resistance from vested interests. But in fact if you took all the money going to medical services today, and chopped out the insurance company overhead and profit, you could give them all more money and still save on the total cost. Agreed, there would be political incentive to start squeezing down costs after that, and the single payer would have total leverage to do that, but the biggest obstacle is probably the insurance companies. They’d have to be bought out. But doctors around the world have gotten used to it.
Anyway, pipe dream or not, it’s helpful to think about it because what we have now is actually a major departure from the international norm.
My question is “How do we get the total cost of health care to be the lowest possible?”
My second question is “How do we fairly divide that cost among all the people of the country?”
Perhaps a third question is “How do we decide what is a minimum level of care that everyone should have?”
The ACA tried to answer the third question with their mandatory coverage provisions, but at least some people are still fighting which should and should not be covered.
All the necessary costs are essentially borne by everyone. How you divide it up really doesn’t matter. My employer pays an insurance premium, and may pass some part of it on to the employee covered. The insurer pays the doctor, and again may pass some of that cost on to the patient being treated. The government kicks in their share, paid by taxes on employers and employees. If the taxing scheme, or the wage scale or medical prices charged are unfair and unbalanced, then the burden will fall unfairly too.
At some point ethics and morality have to be considered, and that is where the problem lies. When the GOP is chanting “let them die” at rallies, getting them to see that it is a moral imperative to treat save the lives of indigents is not likely. Rabid forced birthers will not see abortion (or contraception) as a necessary medical cost no matter how many people are harmed or die without them. Without agreement on what should be done, getting it paid for is only a small part of the problem.
What Have the Romans Ever Done for Us?
This is just a brief anecdote from my own life about how price gouging is a major problem in pretty much all areas of medical care except probably office visits…about 30 years ago (actually 27 but close enough) I worked at a ski shop for a couple years. We had this gizmo in the shop we could use to make “custom molded footbeds” for customers. We could NOT call them orthotics because orthotics are made by TRAINED MEDICAL PROFESSIONALS and prescribed by a DOCTOR. Anyway, we would pre-warm a neoprene footbed with a plastic underlayment hot enough to soften the plastic and stick it in this box, have the customer stick their foot in the box on top of the footbed and stand on the footbed, and the warmed plastic would mold to the shape of their foot and as it cooled it get rigid and be molded to the shape of the customer’s foot. I think we charged $50 a pair.
Anyway, my point is that a local ski shop circa 1993 could afford a device that essentially made custom orthotics or something approximating them. So fast forward to last week Thursday, when I picked up my custom orthotics prescribed by my podiatrist because plantar fasciitis. I ordered them a couple weeks back. The process was I sit in the chair and they scan my foot with an iPad (or some other tablet) to get a 3D image of it. What happens after that, I surmise, is that image is transmitted to a manufacturer electronically. That manufacturer has a hot box that auto adjusts to the shape of the scanned foot, and then they pour soft plastic into the box to mold the footbed to the scanned foot shape. Then wait for the plastic to harden, slap a neoprene footbed on top, and send it away. I’m guessing the whole process takes 10 minutes tops and the materials cost about $10 tops. But…my out of pocket costs were $400 and they billed my insurance company slightly more than $1,000 per footbed, so over $2,000 total. I’m not convinced these things are in fact any better than a pair of Superfeet or any other retail footbed with rigid arch support that is available off the shelf. But, maybe they are marginally better than the off the shelf ones. They still don’t cost anywhere near even $400 much less $2,000 to produce. I guaran-dan-tee that.
@Cervantes: This only seems complicated because of our Rube Goldberg contraption of a health-care non-system.
Our system spends an inordinate amount in terms of percent of GDP. Now, some of that spending is of course another person’s salary, income, etc. What I think of as inefficiency may be another person’s way of paying their mortgage.
So one must be prepared that in reducing the percent of GDP costs, while (hopefully) maintaining or improving aggregate health outcomes, that some oxes will get gored.
Of course the loudest are shareholders and executives in the for-profit parts of the system. Social pressure to remove profit from insurance and maybe even from provision of care itself will have to increase intensively if we are to drown out the cries of mortal danger from the private sector.