Via Paul Krugman, a quick link and thought as I scramble elsewhere:
The red line is Medicaid spending over the past decade. Everything else is increasingly rapidly, while Medicaid spending stayed flat. And it stayed flat because Medicaid says no.
Second thought from Time Magazine on Las Vegas hotel economic structures as an insight into hospital economic structures:
Time Magazine in August had a good piece on Las Vegas’s hotel and gambling industry that has an interesting nugget of explanation for hospital pricing:
A 5,000-room casino hotel that runs 24/7 has high operating costs, and it’s the gambling action that has covered them. The magic of a casino hotel is that once the costs are covered, profit mounts prodigiously–in accounting jargon, this is a business with very high operating leverage.
Hospitals and most other medical practices are the same way. Just opening the doors is extremely expensive as the fixed costs are very high. However, the marginal cost of treating the next patient for most situations (high end drug treatments excluded) are not that high. Hospitals with high census or heads in beds counts are able to use the high usage of their facilities to cover fixed costs and then operating costs.
joes527
So … slot machines in admitting is the answer?
Zifnab25
@joes527: I thought they were already doing that in some states, with their Medicaid lotteries.
cathyx
@joes527: No, I think he’s saying that good health care is a crapshoot.
Belafon
I read most of the comments (it looks like Krugman was able to get rid of a lot of true trolls). And like joes527, most seem to be missing the point. It’s not to convert everyone to medicaid. It’s that it is actually possible to control spending, but it really takes an entity large enough, like the government, to say no to the suppliers.
NonyNony
@Belafon:
I don’t even think that’s it entirely either. And in fact let me quote Krugman’s last para here to underscore it:
Emphasis added by me. What Krugman is saying here is that there are people who are interested in controlling the spiraling costs of health care, and there are people who are interested in using the spiraling costs as a rhetorical crowbar to dismantle the existing system. If everyone who complains about spiraling costs were actually interested in controlling spiraling costs it could be done because, well, we’ve proven that it can be done even here in the US of A, nevermind what they do in other countries.
But since only a small chunk of the people who talk about the spiraling cost of healthcare are actually interested in fixing the problem, and because MOST of the people who talk about it are only interested in using it as a rhetorical crowbar to dismantle the welfare state, the obvious set of solutions that would fix the problem will never be tried.
The Dangerman
Would a gynecologist have to hit a soft 17?
ericblair
Another industry that has high fixed costs is the airline industry, which should give some insight into pricing. If you’ve got mostly fixed costs, anything that puts a butt in a seat or a bed is good, but you have to find some way to extract the most money out of your customer by segmenting the market somehow because you can’t survive if you sell all your capacity at the bare minimum rates. That’s how you get the sort of otherworldly chaos that is airline ticket pricing, which is using their ability to separate the cost-conscious leisure travelers from the cost-is-no-object business people, plus floors full of analysts to make hour-by-hour decisions based on demand.
Villago Delenda Est
@NonyNony:
This is an important point. The Rethuglicans hate the welfare state…because it creates a situation where all people are treated with respect and dignity and they fucking hate that idea.
Face
No, but a Catholic priest sure would.
piratedan
@Face: I would think that they would be more partial to doubling down than splitting tens….
but TY Nony, that was my take from Krugthulu as well, the “heavy lifting” can be done, it’s just a matter of saying/establishing what the market is… the part that worries me, is what if the supplier states that they can’t provide that product at the government price and shuts down, is it a matter of it not being profitable, or not being profitable “enough” because we do know that there are some folks out there that aren’t satisfied to make a modest profit….
MomSense
@The Dangerman: @Face:
I thought I was a woman of the world but I have no idea what you are talking about however I have a feeling that this is a good thing.
? Martin
Correct, which is why health care best practices that have been pioneered in places like Boston, NYC, Chicago, etc. aren’t always applicable to rural areas. Those kinds of efficiencies often fall apart when you need to Med-evac the patients 300 miles to the big fancy hospital – only one of which the state has the population to justify.
This is one of the arguments against nationalizing health care in this country. Congress is particularly unsuited to recognizing that policies that make sense in one state don’t make sense in another. (Is it appropriate to deny someone living in Alaska access to a rifle, where it truly can be a necessity for survival?) That said, the states are particularly unsuited to solving the problem from the other side – learning from those fancy doctors at Harvard or partnering up with the neighboring state, with a similar constituency, to set policy that would benefit both populations. Instead they put preserving the local economy over the welfare of their residents.
Healthcare is really damn hard.
Belafon
@NonyNony: Yes, yours is a much better reading than mine. I was trying to respond to the “So, you think everyone should be on Medicaid?” – yes, that was in the comments – so while I read the same thing you wrote, I did analyze it properly.
I have been trained a bit by now: I knew someone was going to do the “Krugman wants us on Medicaid” before I got to the comments, and I was correct, so I went looking for the answer to that question.
Belafon
@? Martin: Though your problem sounds a lot like getting electricity/phone to rural areas in the early 1900s. It took government involvement. And what we get as a result is rural people thinking that electricity is being given to them by God, and the government needs to stay out of the market.
Belafon
@Belafon: Change “I did analyze it properly” to “I did not analyze it properly”.
negative 1
I was under the impression that the green line on the chart also more accurately tracks real healthcare cost. Every time medicare says no a doctor ups the rates on private plans, in an attempt to get the two to blend to the number that they want.
My point in bringing this up is that this chart may not necessarily be instructive going forward, as larger group plans in the exchanges may end up having a whole lot more power. The question is then what happens — do the doctors/hospitals stop charging as much (either through rates or through different treatment options) or do they start trying to push back on medicare a little more? Or do the exchanges still not give them as much power to deal with pricing?
Villago Delenda Est
@piratedan:
It’s actually in nearly every case the latter, because Wall Street demands constant growth. This was a key factor in driving the mortgaged backed securities collapse of five years ago…the “sound” market had been tapped, but these outfits had to maintain or increase growth levels, because the street demanded it. So they loosened lending standards and then all those poor black people held guns to their heads and forced them to grant loans that were unlikely to ever be repaid, because, after all, the real money is in the fees, not getting the loan repaid.
Rapacious short term greed is what is driving this situation. Adam Smith foresaw all this and commented it.
Joey Maloney
@piratedan:
I think a propensity for splitting tens is precisely the problem.
Villago Delenda Est
@Belafon:
The disconnect with reality has always been there, and will for some of us (27%?) will always be. It doesn’t help that the lazy shits of the MSM toss the word “miracle” around like a damn vollyball.
Villago Delenda Est
@? Martin:
If you insist on treating it like a loaf of bread or a widescreen TV, you’re making it harder than it needs to be.
Healthcare should NOT be treated like a business. The market model does not work with it. Anyone who insists on a market model should be shut out of the conversation permanently as they have terminal cranial-rectal inversion.
NonyNony
@Villago Delenda Est:
This, oh Grod, a thousand times this.
A ton of our problems would be solved if hospitals were a non-profit only enterprise, with tax-funded grants to help pay for the system and salary caps on the administrators who run them. Treating the healthcare market as if it were a widget market in an MBA case study is a huge chunk of the reason that costs are rising uncontrollably. Because as Richard points out above it’s nothing like the widget market.
Suzanne
@Villago Delenda Est:
This. Absolutely. It is a fundamental conflict of interest to have anyone’s profit motive interrelated to the medical care someone else receives. At times, interests may align. But no needs me to stay alive as much as I do, and for that reason, no healthcare transaction can ever be purely in my best interest.
StringOnAStick
Exactly, the reason why health care is so much cheaper in countries with a single payer (or even the Swiss multi-payer, but everyone has insurance model) is because they are non-profit health care systems. Non-profit is the point, the goal, the thing we need to get to, period.
? Martin
@Belafon: Well, somewhat. But rural electrification didn’t bring clear downsides. Applying urban healthcare norms to rural areas does. The big problem in rural areas is the transportation problem. How far should a person have to travel to get to a GP? Too far, and they won’t go. However, too many GPs makes the cost of rural healthcare more expensive than urban – and they’re the population least able to afford the higher cost, even when pooled. How far should a person have to travel to get to a specialist, keeping in mind that in some of the lower-48 states, that might involve a hotel and overnight trip and loss of wages, none of which would normally be counted as ‘healthcare spending’ except to the person spending that money. It’s a hidden cost paid mainly by rural communities, so is the above measure an accurate one? Urban care consumers would likely reject those costs as frivolous – after all, there isn’t a specialist I can’t get within an hour drive of my house, and that’s true for most of the US population because most people live in cities. Finally, how far should I have to go to get urgent care? People in rural areas have the same sorts of accidents as people in urban (swap gunshot wound for falling into combine as needed) but where I can get to a trauma center by ambulance within minutes, people in rural areas may need an hour airlift. Not only is that expensive, but that hour may well kill you – so survival rates are now being impacted. To what extent do we spend money to address that? We can’t put a trauma center in every other town in Nebraska – it would cost a fortune. But not spending that money amounts to a statistical death panel. How do you balance that?
There were challenges to rural electrification, but they really were primarily fixed costs. Getting the right of ways for power lines and the cost of installation. But once the grid was in, the consumer paid for most of the remaining expenses. In rural healthcare, that’s not true – most of the costs aren’t fixed because doctors and nurses are likely to be idle quite a lot of the time for high quality care. Either you’re going to pool those costs and make healthcare more expensive for everyone, or you’re going to stick the costs locally, or you’re going to eliminate those costs and reduce the comparable quality of care. An MRI machine in each town is a high fixed cost that can be overcome, but on-call operators for those machines that don’t suffer from the same transportation problem as the patient are going to be expensive and recurring.
Richard’s analysis of costs applies really well to urban care, specifically hospitals. There’s always enough demand there, and hospitals always have the flexibility to move patients through the care tiers dynamically – if there are open beds in the hospital, then be slower transferring them to a hospice, etc. That requires a sufficiently large supply of care to get those economies of scale. Rural areas don’t often have that. They usually need to build out a surplus of infrastructure (fixed costs) and then dick around with how to staff it – often with a lot of contract on-demand. Doctors/nurses may get 20 hours per week on-staff at a fixed rate and then on-call at a higher rate – and these rates often exceed what you would find in an urban setting because they won’t get a full 40/wk. And they need to make different decisions regarding treatment. An MRI might involve an expensive (and risky) ambulance trip, whereas in a city there’s almost certainly one in the building, so you might call for that MRI differently in each case.
My point being that Congress isn’t particularly well equipped to understand those distinctions and ensure that they’re in the legislation. Or they will understand that they’re out of their depth and leave it to the individual care providers to do what’s best, opening the system up to fraud and abuse. Either way, it’s hard, and will remain hard.
Belafon
@? Martin: I would say that my analogy is not meant to be perfect, but there is overlap in one area: If a problem occurs, which is what healthcare is really solving. If a line breaks in an urban area, it’s easy to get people to the problem. This is not true in the rural area, for reasons similar to what you mention.
But once again, I picked the example in more of the rhyming sense, than an exact match. Your statements do point out a problem that will have to be dealt with.
? Martin
@Villago Delenda Est:
But you have to, at least in some regard. We have the technical ability to keep nearly everyone alive nearly indefinitely. It would not be difficult to bankrupt this nation by providing the best healthcare we can provide to everyone under a single payer system. You have to say ‘no’ in there in countless places, for reasons that are almost entirely economic. Some form of rationing must take place.
Now, I agree that the current model is a poor way of rationing, but nobody wants to contend with the challenges of a better model. And it’s not like we can conscript people into the medical corps to deliver on these promises either. The only mechanism we have to create medical professionals is an economic one.
The Dangerman
@Villago Delenda Est:
I agree with you, but I’m curious how far that philosophy should go on making “necessities” nonprofit; for example, if Healthcare is a necessity (it clearly is), should we also treat National Defense as a necessity and pull the profit motive out of Defense Contractors (by even suggesting such, I assume Boeing/Raytheon/et al are putting out hits on me)?
NonyNony
@The Dangerman:
But non-profit healthcare used to be the norm, much like non-profit education and non-profit prison systems were historically the norm. It’s only relatively recently that for-profit healthcare became a thing that was ubiquitous (as with for-profit education and for-profit prison systems). What you’re talking about is a situation that has never existed before in the history of the US, while hospitals being primarily non-profit would just be a return to the way that things used to be. Different questions entirely.
Villago Delenda Est
@? Martin:
There is a tremendous difference between efficiently allocating resources to provide adequate care for all and the current model in which care is secondary to lining the pockets of people who are supposed to be efficiently allocating resources…because their incentive is not the well being of the patient, but planning for their next BMW payment.
Chris
@? Martin:
… This is the entire reason why blue (e.g. urban heavy) states have been picking up the tab for what red (e.g. rural) states can’t afford ever since the New Deal. It’s nothing new. We love to rub it in their faces because it puts the lie to their bullshit claims of self-sufficiency and individualism, but it really isn’t their fault – it’s the natural consequence of having so few people that there just aren’t enough customers to pay for a service, therefore the federal government steps in and uses money from places like New York and Chicago, which can afford it, to pay for the more-spread-out-over-fewer-people infrastructure in red states.
Health care = same thing. No, the rural states will not be able to afford to pay for all the health care requirements needed, therefore the feds will pay for what’s left.
And I’m not even remotely worried that the red states will have any trouble collecting that money. It may be true that Congress doesn’t fully understand distinctions between rural and urban heavy states, but ever since long before I’ve been born, the bias in Congress has been towards the rural states, not the urban ones. Our glorious constitution guarantees low population states representation far out of proportion to their population, which is why government subsidies to these parts of the country are barely ever scrutinized, in sad contrast to subsidies for the inner city poor.
ericblair
@The Dangerman:
If Boeing put a hit out on you, they’d have to subcontract that out, and shopping for a good wetwork guy might take a while plus negotiating the rates under the current budget uncertainty might take a while more, so you’ve probably got a good six months or so before your number’s up.
The issues with profit in healthcare and defense aren’t easy to work out, for two main reasons. First of all, there’s often a lot of overlap with the rest of the economy. The gubmint and hospitals spend an awful lot on buildings, office equipment, standard desktop computers, paper, telecom, power, and all that shit. Are you going to demand that all at cost? If they don’t sell it to you, because, in many cases, why should they bother, what then? Build your own paper plant, or force them to sell it to you?
Also, non-profits aren’t magic. They exist in both healthcare and federal government (google FFRDCs). They’re not cheap. And you’ve got to decide whether your main concern is getting the best value for the money or ensuring that there’s no budget line called “profit” involved, because they’re not the same thing. In defense acquisitions, you can waste an enormous amount of money without anybody involved having to call any of it profit. Shit is all fucked up and we all know that, but it’s way more complicated than a financial statement.
Botsplainer
@NonyNony:
Not to mention that BC/BS was a non-profit mutual.
Back in the days of yore, before creating a new facility, the operators had to obtain a Certificate of Need, which involved public hearings and an administrative action. It helped make a more even distribution of facilities. Now? We shot straight through the 1993 mark of health care representing 1/7th of the economy, and are now flirting with it being 1/5th. There’s a ton of ads for every med under the sun, and in desirable cities, clusters of hospitals grouped up.
The Dangerman
@NonyNony:
Well, let’s use education as a comparison, i.e. would there be private for profit healthcare along with the public nonprofit? Using education as the example, would we end up with the “for profits” attacking the “publics” for quality and we end up arguing about vouchers for health care services? Don’t get me wrong, I’m all for socialized medicine just as much as socialized education, but I’m wondering about unintended consequences…
? Martin
@Belafon: There’s a difference in urgency between the two as well. The transportation problem in electrification is one of convenience. If you live in the weeds, it might be days before your power is back on, and so you may need to have a generator if that would present a life/death issue. In the case of medical care, the transportation problem IS a problem of life/death. Time is life in trauma cases, and the ability to get to a trauma center in 15 minutes vs an hour is it’s own form of a death panel. It’s an unavoidable one, but it’s one nevertheless and its a very real problem.
An anecdote from last week: My stepfather lives in Iowa. He was out flying model planes with a friend of his when his friend accidentally severely cut his finger to the point of nearly amputating it. They drove to the ER, but there was no surgeon on call who could fix it – it would be 3 days before the surgeon was available, at which point he’d probably lose that part of his finger. If he was lucky, he wouldn’t lose it, but he’d almost definitely lose feeling/functionality in it. So, does he drive the 3-4 hours to a hospital with a specialist, and will it be too late by then? But there was another calculation taking place. The guy is 80. How much microsurgery do you want to give an 80 year old who doesn’t need the finger for his employment? This is the rationing problem. I’m pretty sure we’re not at a point to by policy deny this treatment (that is, if a surgeon was available, we’d say ‘no, don’t fix it, he’s not worth it’), but by not having a surgeon on staff there, we’ve rationed care implicitly and differentially from an urban hospital. I know for a fact that if I go to my local ER, that there is either a microsurgeon on duty or on call, or are no more than a 10 minute ambulance ride from one. That’s not a rationing call that would happen to me, but it did happen to my stepfather’s friend – in this case not because of age but because of population density. And because the guy is on Medicare, it’s a problem that exists even within a single-payer system (probably moreso, unfortunately).
Roger Moore
Even for high-end drug treatments, the marginal cost overall isn’t that high. Drugs are another thing that have a huge up-front cost- getting one drug approved means doing lab testing on a huge number and various stages of clinical trials on a fair number, and initial marketing it can double or more the development costs- but relatively modest marginal costs. Of course, the drug company winds up charging the hospital an arm and a leg to try to recover their development and marketing costs, so the hospital has to pass on those very high costs to the patients.
Yatsuno
@The Dangerman: FWIW Boeing still makes a nice tidy sum off commercial aircraft, so even if weapons contracting was to cover just costs, they’d do just fine. Plus there are loads of ways to cover “just costs” and still manage to come out ahead. That’s half the fun of military procurement.
Belafon
@The Dangerman: Actually, we treat national defense as a necessity and treat it as a non-profit: The military, state department, and intelligence agencies are run by the government. What we don’t treat as a non-profit are the suppliers to the military. There are a whole lot of rules set up to manage the relationship between the contractors and the government.
Villago Delenda Est
@Yatsuno:
They wouldn’t go broke, but they wouldn’t be “profitable enough” to satisfy Wall Street, where endless avarice is the only god they know.
“Doing fine” is old style non Gordon Gecko/Michael Milken thinking. Elizabeth Warren is right. Banking needs to be boring again. We as a society cannot afford the excitement that Jamie Dimon types insist on.
piratedan
@Villago Delenda Est: agreed, if the likes of Dimon and other Gecko advocates want excitement, get a fucking hobby, quit screwing with people’s life savings.
Villago Delenda Est
@Belafon:
One problem is more and more logistical and even tactical support has been “privatized” in order to, as Rachel Maddow points out in Drift is to get both the Executive and Legislative branches off the hook for military adventurism. This introduces a new dynamic into the situation, as we saw in Afganistan and Iraq, where there are parties profiting, literally, off of death, and are totally unapologetic about it because hey, they’re just doing what Mammon demands.
? Martin
@Villago Delenda Est:
I agree completely. But we have no other mechanism besides economics around which to craft a better model – even single payer. It will always be treated like a business. A better, more compassionate business, but a business nevertheless. Some day maybe we’ll hit Star Trek and do everything for the betterment of ourselves and society, but that’s seriously a long way off.
Villago Delenda Est
@piratedan:
My ideal situation for those types who want excitement is skydiving with faulty parachutes.
weaselone
@? Martin:
I’m trying to understand your point. It seems natural that there are and will continue to be a difference in ease of access to medical services based on population density. This exists with other services currently provided by the government such as police and fire. To some extent the gap and services is lessened by subsidizing rural areas, but it doesn’t place a fully stocked fire station or swat team within 2 minutes of every person in this country. I’m not certain why you seem to believe that it would be any different for medical coverage in a socialized system.
ericblair
@Villago Delenda Est:
Logistics is one thing: there’s no reason that the military can’t use FedEx or leasing trucks if it meets operational requirements and makes financial sense. But the mercenaries have to go away, and we have to think pretty hard about more typical private security as well. The term is “inherently governmental function”, and its meaning is being revisited for security clearance investigations as well.
Villago Delenda Est
@? Martin:
There may be no other method besides economics, but the problem is, economics does not drive a lot of businesses. Pure, unvarnished greed does.
THAT needs to be removed from the system. There was a time in this country where a sustainable long term outlook for any business enterprise was the norm. That time was ended by the MBA quarterly profit obsession that views the people who actually do work as an annoyance in the way of management swimming in pools of benjamins.
Ruckus
@Villago Delenda Est:
Would we call that russian squashete?
Villago Delenda Est
@ericblair:
I disagree. Logistics is the heart of military power. It needs to be totally under the control of the generals. Anyone who is on a battlefield (and the battlefield extends well to the rear of the front lines) needs to be a soldier. Cooks, truck drivers, the works.
Belafon
@Villago Delenda Est: I think Maddow is wrong here. The entire reason for that is so that companies, mainly those that contribute to Republicans, could take money from the government.
Villago Delenda Est
@Ruckus:
Yes, but we rig it so all the chambers are loaded.
Ruckus
@Villago Delenda Est:
QFT
Ruckus
@Villago Delenda Est:
That takes all the fun out of it.
Not saying it’s wrong, just less entertaining.
Villago Delenda Est
OT, Newsmax headline:
Tom DeLay: I Never Lost My Good Name
You can’t lose what you never had, asshole.
Villago Delenda Est
@Belafon:
It’s a floor wax AND a desert topping.
ericblair
@Villago Delenda Est:
Define “battlefield” and maybe we can discuss, but the actual scope of logistics is pretty wide. I don’t think we need E1s driving five-ton military transports to restock Doritos in the base commissary.
Villago Delenda Est
@ericblair:
What we definitely do NOT need are civilian contractors running convoys of ammo trucks in a combat zone.
? Martin
@weaselone:
That’s sort of my point. The feds never tried to solve that problem – they leave it to the states to work out schemes that are appropriate to their area. And even the states don’t try and solve that problem – they usually delegate it to the county and municipality, but also where the solution is in close alignment with the voter authority. People in my city can vote for a volunteer or paid fire department. If the feds impose one model or the other, my city (who are the ones directly impacted) can vote unanimously against the decision and be overruled by people that are not directly impacted.
Healthcare is a different animal, and we arrive at this point mainly because the states have largely failed to address the problem, plus the feds have been involved since Medicare was introduced, so they now have a vested interest. But the argument above is at least part of why the Tea Party is all up in arms about this. There’s some fear of a black president mixed in as well. It’s the ability (or appearance thereof) of voters from California dictating what health care in North Dakota will look like. California would be equally upset if the tables were turned. So how do you balance the federalism of this with the regional challenges? It’s certainly possible. Very hard with states that are uncooperative due to politics – CA will have much more control over our exchanges (there will actually be 3 regional exchanges) than many states because those states opted for the fed exchanges which won’t have those local considerations whereas ours will.
shelly
So, what happened to your stepfather’s friend and his finger. You can’t leave the story unfinished.
? Martin
@ericblair:
Why not? It’d be cheaper than hiring Haliburton to do the same job. Hell, hiring O-8s to do it would be cheaper than hiring Haliburton.
raven
@Villago Delenda Est: :)
ericblair
@Villago Delenda Est:
Yep, agreed. Are you looking to expand or eliminate the merchant marines?
raven
@Villago Delenda Est: Here’s one strak ammo platoon!
? Martin
@shelly:
We don’t know. It just happened on Sat. He decided to not do the drive and had the ER doc stitch it up and wrap it. He’s pretty sure he’s permanently lost feeling/functionality in it. He’ll see the surgeon tomorrow to see what can be done.
ericblair
@? Martin:
How about if we don’t hire Halliburton next time?
Roger Moore
@Chris:
You can also interpret this as a market inefficiency that the government is overcoming. If the market were really perfect, it would set prices on goods from rural areas that were high enough to sustain the higher cost of rural infrastructure, which is, after all, necessary to bring those rural goods to market. But because the market isn’t even close to perfect, it actually winds up under-allocating resources to rural areas so that they’d wind up with standards of living that we as a society are unwilling to accept. Rather than try to fix things through the market, we use the government to subsidize rural areas so they can have an acceptable standard of living.
jl
The graph was interesting, but I do not think the best of Krugman’s columns on healthcare. ‘Saying no’ seems to be always interpreted as denying necessary or useful care to patients, implying a favorite obsession in the U.S.: the supposedly always difficult trade-offs between unsustainable cost growth and pain and suffering for the ‘lesser persons’.
I am suspicious of it, and other ‘Saying No’s’ should also be considered.
How about saying no to all mix of bronze, silver, gold, platnum, premium platinum, and assorted metallic robot’s breakfast of plans, when there is very good theoretical and empirical evidence causes inefficiencies in health care insurance. Instead, a highly regulated uniform basic plan with identical benefits that must be sold to everyone, and supplemental insurance for additional benefits sold on a separate market. This is a very widely used mechanism in other countries, that has been very successful, even in the free market paradise of Switzerland. It reduces adverse selection, increases transparency in cost analysis and evaluation of performance as well.
Now about saying no to physician self dealing. There has been rapid growth in doctor owned specialty private hospitals in affluent areas that can pick and choose their case mix, and empirical evidence that they can game public and private insurance systems to reimburse them at up 30 percent above cost. This has lead to proliferation of underutilized facilities, and fancy machines. Same for other doctor self referrals for lab and high cost examinations.
How about saying no to allowing vast rent-seeking in medicine, and Uwe Reinhardt is a good person to read on that.
How about saying no to a outdated system of provision of care that ignores evidence based medicine, comparative effectiveness analysis, and interprofessional team based practice, and adequate quality control systems. Atul Gawande has a lot to say about that. He has not only written excellent descriptive analysis of unexplained practice and cost variation in the U.S., but has been heading a WHO sponsored international project on improving quality control in surgery.
There are a lot of things you can say ‘no’ to in the U.S. health care system before you have to say no to a member of the lesser classes getting a reasonable minimum standard of care, while retaining options to get more than the minimum in special cases, and not break the bank.
But cruelty to the lesser non gazillionaire class in the U.S. has become more than an obsession, it has become an automatic mental twitch with forms the set of assumptions to answer an public policy question, it seems to me.
raven
@jl: commie
khead
Y’all are being a wee bit too charitable to the rural folks, methinks.
raven
@khead: Yea fuck them ridge runners!
Belafon
@? Martin: Actually, in this case, it wouldn’t necessarily be cheaper. Frito Lay has spent a lot of money figuring out how to ship their Doritos efficiently. This probably would not be more efficient swapping people at the last mile. And we’re not looking for most cost effective in the case of logistics. We’re looking for most reliable, which, in the case of war, it would be more reliable for the people who know where they are planning on bombing to keep delivery trucks out of the area.
MattR
@jl:
I may be dense, but isn’t the bronze plan essentially that highly regulated uniform basic plan you described and then the silver, gold and platinum are essentially supplemental insurance with additional benefits that can be purchased if desired?
jl
@Roger Moore: I think the presence of local market power by providers and insurer, especially in smaller states and rural areas prevents us from knowing the real cost structure.
It is not clear to me how high volume in itself can increase amount or quality of care, except it is true for many types of surgery. But there are advances here in increases quality thrhough better training in the lower, if not the lowest volume markets.
It is clear to me how local market power of suppliers, providers, and insurers can get 10, 20, or even 40 percent discounts on equipment.
If you look at number of doctors, nurses, fancy machines, per population, the U.S. does not have uniformly high rates. Many countries can provide higher rates on the supply side in at least several areas, and they all have lower percentage of GDP going to health care sector. Why? Number of doctors per person is one of them, U.S. has one of the lowest ratios. And other countries with similarly low ratios have more health professionals than the U.S. who can provide at least some services that only doctors can provide in the U.S. So why the almost automatic idea that the U.S. cannot afford the real resources needed to give humane and needed care to it’s people?
I think the best explanation, given by Uwe Reinhardt, is the huge rental income charged by drug, equipment, medical supply, and many health professionals in the U.S. because of lax or outdated regulation, and little regulation of local market power.
Belafon
@jl: As was talked about at the beginning, Krugman’s point is that what is being offered by most “serious” people is that we have to cut out people who receive healthcare, when what Medicaid indicates is that we don’t have to, and part of the reason for that is that Medicaid, because of it’s size, can control the price it is paying.
As for your list, how do you propose we get from where we are now to there?
Yatsuno
@MattR: Basically, though the benefits of the bronze plans are kinda shitty. The standard should be what I’m getting: what the FEHB offers federal employees. No plan should be offering less than 80%, and the fact that they are allowing plans that only pay 60% is really horrid. I think that will be the next tweak, along with finally getting that public option allowed.
ericblair
@jl:
One of the major problems with our health care “system” is that it’s so fucked up and broken you can’t even make any sensible tradeoffs. You need a fix like Obamacare or single-payer or other types of system to even make tradeoffs between level of spending on care and outcomes even possible. In other developed countries you can have political debates on whether to fund more rural hospitals or decrease the use of MRIs to cut costs versus a possible higher risk of poor outcomes, but in the US you historically didn’t have the right levers to do this. You can stop paying for one thing, and some other cost goes through the roof and you’re worse off and paying more to boot.
jl
@MattR: No, because they are all competing against each other on the same market.
I believe the theory behind ACA is that a standard for minimum benefits will solve some of the problems with adverse selection and lack of transparency, particularly provider and insurer performance to contract obligations.
Maybe it will work. But the standard solution around the world is to have one standard contract that must be sold on one highly regulated market. If you want more, you buy supplemental insurance on a separate less regulated market.
So, for example, the exchanges would have to offer one absolutely identical, say, silver plan. For basic care, every person, every provider every insurer operates under an identical contract with identical benefits and identical provisions.
You can buy extra coverage on a separate market if you want it. I think this system increases administrative efficiency, increases market transparency and ability to monitor performance, and market stability. This is approach most other high income countries with good health care systems take.
jl
@MattR: Maybe you are correct on how it works, I have never heard that before. I will check. Thanks for pointing out I may have misunderstood.
My understanding is that people select one plan, from several of different qualities on the same market.
I haven’t heard that people have to buy a bronze, and then can buy a silver add-on.
Edit: but even so, the basic and supplemental plans being on the same market is confusing and will cause problems.
JPL
@raven: How’s the pup..
raven
@JPL: They called @ noon. Good bit of pain in neck and leg so we’re doing xrays. They should be calling in the next hour or so.
thx
ranchandsyrup
The Onion is on point with this characterization.
jl
@Belafon: Krugman did mention both type of ‘no’, so you have a point. I think he should have separated the issues more, and did not emphasize that there is probably more benefit to society in saying no to certain prices than no to care.
So, that irritated me. I was probably too one sided in my presentation of Krugman’s column, though. You have a point.
Villago Delenda Est
@raven:
A fine looking group of young soldiers!
raven
@Villago Delenda Est: I lost my cover!
Villago Delenda Est
@ericblair:
I’m not sure I’d call Doritos vital military materiel. Transporting pogey-bait, however, anywhere where you can reasonably expect enemy activity is best left to actual soldiers, who are trained to deal with ambushes. After all, the enemy doesn’t know if they’re transporting 5.56 rounds or Cheetoes. It’s all the same to them.
Villago Delenda Est
@raven:
Aha! You’re the one out of uniform! Figures!
(for those of you who don’t know, a “cover” is a hat. Look for the hatless dude in the big group photo)
raven
@Villago Delenda Est: Half the time WE didn’t know what we were transporting!
raven
@Villago Delenda Est: See if you can find me in this one!
Villago Delenda Est
@raven:
Joe Cool in the lower right corner?
raven
@Villago Delenda Est: Ding. Raggedy ass.
MattR
@Yatsuno: Agree that the coverage level on the bronze plan is too close to being effectively no coverage.
@jl: I believe that you would buy a single plan with the level of benefits you desire (ie. silver), but that seemed pretty much the same as everyone buying a bronze plan and then an individual buying a silver upgrade. I can see there being some issues with confusion, but I am not sure how much efficiency there really is to gain (at least while I think about this with half my brain while I try and do work with the rest). If anything I could see it being more efficient to worry about buying a single plan from a single source rather than managing the basic plan and your separate add ons (For whatever reason, I have cable TV in my head as a a parallel. While there may be pricing advantages to a la carte programming, I would hate to have to pay the cable company for basic cable and then purchase additional channels from other sources)
? Martin
@Roger Moore:
This. Precisely.
jl
@MattR: IMO, different types of long contracts for long term products and services, which are really contracts of very complex bundles of individual products and services provided an specified contingencies have different problems, and require different solutions.
For very time sensitive and quality of service sensitive thing like basic medical care, I would prefer to deal with one basic uniform and universal contract that, because it is uniform and universal, has provisions that are very clear. That being a good solution assumes that the basic plan has good basic minimum benefits. And it is true that in other countries, there is continuous struggles between insurers to take stuff out of the basic plan and public pressure to put more in.
With a uniform plan the rule of what happens when you have to get good care quick become much clearer.
Supplemental plans usually cover stuff that can be dickered over and pondered that becoomes important after first line cost-efficient (on average) care fails, or options for extra care in addition to compassionate exception rules that most other countries can afford to be more generous with than U.S. providers and insurers.
The cost and benefits of not watching a show on cable are very different, so the cost and benefits of different contract and market design should be different.
Roger Moore
@MattR:
I’m not sure about that. They aren’t what you’d want if you are taking a bunch of medicine for chronic conditions so you know you’ll be making a bunch of deductibles and copayments, but they look a lot better than today’s catastrophic illness plans for people who are young and healthy. They’ll still get preventative care with no deductible or copay, and they still have an annual cap on out of pocket expenses.
Another interesting point is that I’m not sure that they’re even being offered to people who are getting big subsidies. Here in California, at least, people getting up to 250% of the Federal poverty line are eligible for “Enhanced Silver” plans, which start with Silver-level deductibles and copays (for people at 250%) and are actually better than the Platinum plans for people who just miss Medicaid eligibility.
jl
@Roger Moore: If in “I’m not sure that they’re”, the ‘they’ refers to the chronically ill, If so, it that might be good idea. There is evidence going way back showing that high deductibles and co-pays cost lives, and in the long run, money for chronically ill. That evidence goes all the way back to the only randomized controlled experiment comparing health plans (the RAND HIE), using plans which were more flexible and more closely monitored for provider performance than real world plans (so that on average more care was delivered in the experiment than in the real world).
If you have high blood pressure, or cholesterol, or more severe chronic illness, setting cost of getting routine preventive care and monitoring for those conditions at zero saves lives and money over long run.
Sad that such empirical results go against the discipline and punish mantra of standard CW policy advice.
Roger Moore
@jl:
I was talking about the Bronze plans, but some more fiddling around with the system shows me that I was wrong. What happens here is that the Bronze tier remains about the same no matter what your income level, but the closer you get to qualifying for Medicaid, the better they make the Silver tier plan for the same money. Somebody who is just above the Medicaid qualification level gets what is basically a Platinum-level plan for the price of a Silver- and that’s with them still getting the subsidy.
Unfortunately, people who are having trouble making ends meet will still be tempted to go with the Bronze plan and skimp on treatments to save some money. They may take advantage of the free preventative care, but that doesn’t cover treatment of chronic health problems. If they actually plan on getting treatment, they’d be much better off getting the “Enhanced Silver” plans, which drastically cut copays and deductibles, and should reduce overall costs for anyone who actually needs more than preventative care.
jl
@Roger Moore:thanks for info.