The Virtue of Markets in Healthcare

I want to commend an interesting conversation between Megan McArdle econ prof Bart Wilson on the problems with using fiat pricing in healthcare. It’s an interesting discussion and makes a pretty good backgrounder for some of the fundamental economic issues in healthcare.

My questions are somewhat different. For one thing how can a really free market in healthcare persist in the presence of a supply bottleneck? The supply bottleneck in healthcare is maintained through licensing, limitations on accreditation of med schools, restrictions on med school class sizes, intellectual property law, and certificates of need, just to name a few of the devices. I think that in such an environment you’ll have cartel pricing rather than market pricing.

Secondly, much of the “demand” in healthcare is supplier-created. As long as that’s the case doesn’t it place nearly all of the influence in determining the market-clearing price in the hands of the suppliers?

61 comments… add one
  • cfpete

    “Secondly, much of the “demand” in healthcare is supplier-induced.”
    Yeah,
    When did a significant proportion of the male population develop testosterone deficiency?
    I can not watch anything on TV without seeing ads for testosterone supplements, and I don’t watch that much TV.

    Were men insufficiently manly 50 years ago without their Androgel?

  • The amount of healthcare spending that accounts for is negligible, cfpete.

    Medicare, Medicaid, and other federal, state, and local government programs and spending account for between 60% and 70% of all healthcare spending. Much of that is end-of-life care.

  • steve

    Just so you know, not many people really want to create and run med schools. It is expensive to train students and residents and a pain in the butt. I enjoy (mostly) the teaching I do, but am glad I dont have to do it every day. I get paid nothing for doing it, at least not directly. People not in the profession talk casually about using mid levels to do the same work as docs. It can be done in some situations, we are doing it (we are one of the leaders in our state doing this) but it is difficult. It is a big front investment and does not save as much money as you might think. Even then, it only saves money of that is your goal. Many docs are using mid levels to actually generate more income.

    Which leads to your two statements. Since you are a lot brighter than I am, I am sure you realize the inherent tension between these two. Since providers can induce demand, increasing the supply will likely increase total spending. At some point it probably reduces the wages of the individual provider, but at the cost of increased overall spending. I have agreed many times that doc salaries are too high and need to come down some as part of the effort to control costs. That said, how you do this matters a lot. If all you do is increase supply, I think costs go way higher. If you increase supply (which I think is necessary BTW) AND do something(s) else to hold down utilization or costs, then you have a plan.

    Steve

  • michael reynolds

    Don’t diss Androgel, my friend, Androgel is amazing. I was on anti-depressants before Androgel. Listless, unable to focus, getting physically weaker, cranky. It wasn’t depression. I started on Androgel and it was like I’d been watching the world through a dirty window and suddenly I’m standing outside under a bright sun with the breeze in my face.

    I’m in the best shape of my life, happy, working more efficiently than ever before. I can guarantee you Androgel is worth at least 100k a year in work I couldn’t have done earlier. It’s expensive as hell ($300 a month) and totally worth it.

  • Drew

    “I was on anti-depressants before Androgel. Listless, unable to focus, getting physically weaker, cranky.”

    So why have you stopped taking it? Sorry, man, but you know me, I couldn’t resist. Seriously, glad it works for you. Hormone problems and aging appear to be factually provable.

    “People not in the profession talk casually about using mid levels to do the same work as docs….etc”

    I’m glad you made this point, steve. And I think it goes even further. Having had several close relatives in the medical profession they have anecdotes of catching issues that “lower levels” or nurses probably would have not. We may want to accept that risk, as a society, but I don’t think its being voiced. I just had a “spots and dots” exam. In fact it was done by a nurse. Probably fine. But as a specific example, my father told me he once saw an unusual growth on a person’s hand. It was the one and only time he ever saw it in his career. He connected some dots (no pun intended) and referred and it turned out to be an extremely rare form of malignancy. They removed it early. After progression, the standard of care at the time was removal of the arm at the shoulder joint. Anyone want a nurse making that call? As a follow up, several post ago you cited various surgical procedures as dwarfing routine “sniffle care.” I think you missed the point I was trying to make. By definition, a “belly surgery” is going to cost more than a bunch of “sniffle visits.” I’m not advocating eliminating necessary care. I’m advocating introducing price to the consumer to retard non-vital care. We often hear that small reductions in spending support will force the elderly to eat dog food or forego prescriptions. But 5 stupid visits to the doctor at $120 per copy can pay for a lot of blood pressure pills. We can’t have it both ways.

    “Secondly, much of the “demand” in healthcare is supplier-created.”

    John K Galbraith couldn’t have said it better. People buy cars based upon advertising. Balderdash. They buy a type of car, but not a car. Nothing could make my point better. If its your money advertising will do you no good. If you think its “free,” ……..by God I need some of that……

  • michael reynolds

    Drew:

    I knew when I threw that softball…

  • Drew

    “I knew when I threw that softball…”

    I’ve been known to throw myself in front of a train just for debating/commenting sport………heh, perhaps 75% of the time. What’s the fun in safety?; its far overrated.

    I actually have a serious query. I find OTB just a mess these days. (A shame, BTW) You seem to comment in earnest there, still. Why? Its practically become a parody of seriousness.

  • michael reynolds

    Drew:

    There are a half dozen very smart people there, in addition to the headliners. Unfortunately, the competition is weak. Basically, the people holding up the conservative end of the game are morons like superdestroyer. They need a better class of conservative — but then that’s true for the whole country.

  • For one thing how can a really free market in healthcare persist in the presence of a supply bottleneck?

    Then you really don’t have a free market do you?

    That is rhetorical, BTW. The idea of a free market is that you have relatively easy entry. Barriers to entry can occur naturally (e.g. high sunk costs, high fixed costs, etc.), but just as frequently or even more frequently barriers to entry are a construct of government. Licensing, permits, etc. restrict entry. Barriers to entry are strongly correlated (in a positive sense) with profits. This is why you see licensing for things like hair stylists, interior decorators and funeral homes. It is a form of rent seeking.

    The supply bottleneck in healthcare is maintained through licensing, limitations on accreditation of med schools, restrictions on med school class sizes, intellectual property law, and certificates of need, just to name a few of the devices.

    And there you go. You answered your own question.

    I think that in such an environment you’ll have cartel pricing rather than market pricing.

    When you have a cartel you don’t have a free market. Q.E.D.

    Secondly, much of the “demand” in healthcare is supplier-created. As long as that’s the case doesn’t it place nearly all of the influence in determining the market-clearing price in the hands of the suppliers?

    Sure, but…that is where competition comes in. If you have many doctors and many health care firms, then competition will keep prices from rising. Only if you have a cartel or a monopolist will prices rise. Part of the “free market” is that there is competition. No competition, no free market.

    Medicare, Medicaid, and other federal, state, and local government programs and spending account for between 60% and 70% of all healthcare spending. Much of that is end-of-life care.

    Another reason why we don’t have a free market–i.e. a market with competition and prices set by supply and demand.

    So when somebody says that the U.S. example shows a free market in health care doesn’t work they are either ignorant or mendacious….or both.

  • Drew

    Michael

    Have you ever considered that conservatives simply look at comments from people like C Clavin, Herb or faux “independants” like Personna and conclude “whats the use?”

    In all honesty, we don’t agree on things, but I have a lot of time for you, I have none for those clowns.

  • PD Shaw

    Drew, I stopped commenting at OTB back in October and only resumed sporadically sometime earlier this month whenever Joyner linked to an excellent piece by Reynolds on not glamorizing suicide. I find it best to avoid purely political pieces, not that its an easy line to draw. Politics is the lowest common denominator on which there is usually little to be said or to be learned.

  • PD Shaw

    What I took from the McArdle piece is that while its true that certain emergency, life-and-death medical care does not avail itself of the traditional ability to shop for price or alternative services, the components of medical care can be priced in normal exchanges, but only if you preserve the private market. That seems like an argument for the government to (a) make catastrophic insurance coverage available, and (b) make sure that catastrophic care is not provided at prices higher than they would as ordinary care.

  • PD Shaw

    If that’s not clear . . .

    If the problem is that someone on their death bed will agree to pay $10 million for a shot of morphine, which would sell for $10 ordinarily, then the market needs to be required to sell emergency care at the ordinary rates, either by medical ethics, regulation or the tort system.

  • TastyBits

    @PD Shaw

    … I find it best to avoid purely political pieces, not that its an easy line to draw. …

    At OTB, it is impossible. Any statement that does not fit the orthodoxy is deemed to be from a “right winger”.

    My engagements always ended the same: “What you said sounded like a right-winger”.

    @Drew

    From my engagements with the OTB regulars, they are a bunch of “snot nosed kids”. I have seem little critical thinking, and it is devoid of original thought. They know how to quote others, and they can link to Wikipedia “faster than a speeding bullet”.

  • Drew

    Tasty

    You may be correct, but I’m not sure they are kids.

  • michael reynolds

    Drew:

    I don’t think it’s “why bother?” I think there’s a widespread intellectual breakdown on the right. They outsourced their thinking to Rush Limbaugh and Fox News and what you have is a downward spiral, a race to the bottom intellectually.

    Look, I know you guys all focus on economic issues, but what you miss is that social issues have made it essentially impossible for smart people to identify with the right. Intelligent, thoughtful people simply cannot join themselves to a movement that is anti-gay, anti-minority, that denies evolution for Christ’s sake. An intelligent, decent human being is not going to stand up alongside those people and defend genuine conservatism. Nor are they going to be able to propose new ideas because the GOP is a hostile environment where anything remotely new or interesting is concerned. The new is instantly attacked.

    The GOP today is a wimpier version of Stalinist Russia: You deviate from orthodoxy, you get primaried. You challenge the Foxbots, you get primaried. You reach across the aisle, you get primaried. It’s not blindfolds and rifles at dawn, but it is deadly to careers. This is a thuggish, intimidating, stultifying world they’ve built for themselves.

    That’s why the only people at OTB who defend the right are racist goons and idiots. Joyner doesn’t even defend them because he’s embarrassed to still be in the GOP. The right as currently constituted is indefensible.

    Now, interestingly, as I’ve said on more than one occasion, the left is also out of ideas. We’ve liberated everyone who needs liberating. We’re down to legalizing weed, propping up tottering social programs and giving handjobs to unions. We got not much. It’s just that your side has so much less. My side is at a dead-end, your side is in full reverse. But your side is our only competition and we need competent competition in order to rethink some of our own bullshit. Right now you’re letting us walk all over you because you people cannot get over the Civil Rights movement or hippies or commie paranoia. You’re throwing the game and making us a worse team in the process.

    So, here is my plan for the GOP: Lose the social cons. Just tear off the band-aid. I know it means losing the WH for a few more cycles, but you’re going to do that anyway. Drop the North-South thing: it’s a loser. Drop the white-nonwhite thing: it’s a loser. Drop the maker-taker thing: it’s a loser.

    The winning move is to recast this as future vs. past. The GOP should be jumping up and down yelling that old folks and their worn-out old programs are going to rape the young. That’s not a winning move in 2016, or in 2020, but 2024? Maybe. Bet on the future, bet on the 21st century and for God’s sake let go of the 19th century. Why on earth are you making millennials sick to their stomachs so you can hold onto octogenarian hillbillies? How is that a winning move? Seriously, as a businessman, how is it smart to bet on rural, uneducated and old?

  • michael reynolds

    By the way, if you want a clear picture of just how fucked the GOP is, consider that we have this old white lady with thick ankles and an off-putting laugh who may just run in 2016, and so long as she stays healthy there is not a single Republican anywhere, not even in your fantasies, who can beat her.

  • So, here is my plan for the GOP: Lose the social cons. Just tear off the band-aid. I know it means losing the WH for a few more cycles, but you’re going to do that anyway. Drop the North-South thing: it’s a loser. Drop the white-nonwhite thing: it’s a loser. Drop the maker-taker thing: it’s a loser.

    The reason that’s a non-starter is organizational, structural. The Republican Party is composed of two major components: social conservatives and small government libertarians. As I’ve been pointing out for a long time, as a general principle anti-statists don’t have the stomach to work within the state. That means that inevitably the social conservatives dominated the party apparatus.

  • TastyBits

    Few people can imagine how an actual market in healthcare would work, and therefore, it is deemed impossible. Most of the arguments made about healthcare could be made about cars. With the number people who die in vehicle accidents, people should pay any price for the safest vehicle, and it should be cheaper for insurance companies to pay for a brake job than an accident.

    In a free market, choices would have consequences. Grandma’s hip replacement would mean forgoing the Disney World vacation, and putting grandma in the old folk’s home would mean forgoing buying a new house. Grandma would be living with the kids, and she would be using a walker.

    As I understand, 10 – 15% of the people are the problem, and there can be no limit to how much care they receive. The demand will never be able to be met, and it will never decrease. Increased supply will be met with increased demand. The vehicle analogy would be a highway without speed limits and totally safe. Increasing the safety of the highway would cause a demand for a faster safety limit.

    A government run healthcare system with “death panels” is the logical conclusion. The free market will supply what the government will not. Obamacare is an attempt to “eat one’s cake and have it too.” It ain’t never gonna work.

  • Few people can imagine how an actual market in healthcare would work

    You don’t need to imagine. We had one until about 1910.

    People were dissatisfied with it. Too much charlatanism, substandard and fraudulent care. The AMA assumed control of the system of medical education and the Pure Food and Drug Act gave the remaining docs the keys to the kingdom. The result is what we’ve got today.

    The problem is not in imagining how an actual market in healthcare would work. The problem is in figuring out how to get from where we are to an actual market. I’ve thought about it for about forty years. I don’t think it can be done. and it’s a lot harder to do now than it was 40 years ago when the main problem we had could have been solved by subsidies to the elder poor.

  • Icepick

    Look, I know you guys all focus on economic issues, but what you miss is that social issues have made it essentially impossible for smart people to identify with the right.

    Shorter: Believe what Michael believes or you’re evil and stupid.

    Incidentally, his advice to the Republican party is to become the Democratic party and piss off the only group of people who will reliably vote for them. He probably also wants the Republicans to grant immediate citizenship to every Mexican in the country. That’ll help.

  • Icepick

    I don’t think it can be done.

    It certainly can’t be done as a political matter.

  • TastyBits

    @Drew

    In my experience with the OTB crowd, the thinking is very one-dimensional. They seem to think like college students, and their arguments are derived from classroom lectures. They know the pro and con sides they have been taught, and they cannot comprehend anything that varies from what they have been taught. Few college students have actually read the original sources they use for their arguments. They will cite commentary, but they have little knowledge of the source material (see climate change).

    The OTB crowd seems to have a lot of theory and little actual experience.

  • Icepick

    I’ll also note that Michael’s own prescription for conservative “success” guarantee them another 11 years out of power. By which point the country will be much browner thanks to immigration. And we all know how naturally conservative those Mexicans are….

    Yeah, he’s got the best interests of conservatives at heart, which ois why he wants them to piss off 60% of their base and important tens of millions of others into the country who will never EVER vote against more socialism. He’s a pure humanitarian.

  • michael reynolds

    Dave:

    Oh, I know. I don’t expect the GOP will be able to repair itself.

    Ice:

    We’re talking political marketing. Whether I think they’re evil or not I beside the point. The market thinks they’re evil.

    As for the GOP remaining out of power for the next decade, what’s your plan for them? Forced insemination of Southern whites and lowering the voting age to six months?

    You worry the country will be browner? Yeah, it will, duh, which is why I’m not sure that doubling down on white rustics is a really clever move.

    But hey, I’m not much of a businessman, I’m sure Dave and Drew can cite many cases of clients coming to them and looking for ways to base future growth on people who will be dead in five years. Huge potential there in the pre-dead demo.

  • Icepick

    Reynolds, the country is going to get browner because people like you want a compliant population and will do what it takes to get it. And people like Drew want cheaper labor, and will do what it takes to get it.

    Tell, me, are the blacks in Compton being helped by all the vibrancy they’re getting from Mexico? Is importing a bunch of Third World peasants going to help create the kind of high-tech jobs that we’re supposed to want in this country? Is importing more cheap labor going to help the people at the bottom get higher wages? Or any wages?

    Allowing a flood of illegal low-skill, low-wage, low-social-capital immigrants and then giving them citizenship doesn’t seem like a good way to help the country prosper in a high-tech, high-skill world.

  • Icepick

    You worry the country will be browner?

    I’ll doubt you’re moving into any minority neighborhoods anytime soon. Typical rich Democrat, wanting everyone else to have to live up to an ideal while living the opposite yourself. Try moving to Compton next time, or Liberty City. Come enjoy the vibrancy.

  • Icepick

    I’ll also note that the people that want the most immigration of Third World peasants (while keeping out engineers and doctors and such) are those that stand to benefit from cheap votes or cheap labor. I’ve had friends with impressive degrees (honors in ME, for example) tossed out of the country, while the Administration (take your pick, every President that I can remember has been for it) welcomes every Mexican farm worker into the country with arms as open as the electorate will allow.

  • Andy

    On health care, the model I (currently) prefer is what PD explained.

    On OTB I disagree with Michael. While I think many of the commenters are smart, most are not interested in any kind of actual debate – they’re interested in scoring points. So it’s no surprise that the only ones who “debate” them are the “conservatives” who also are only interested in scoring points. I’ve tried to debate the dominant liberal faction there and the immediate response is to try to maneuver or cast me in with the “other” side. I frankly got tired of playing that game.

    Also, unfortunately, the quality of the main posts there aren’t as good IMO. My perception is that the site shifted it’s focus to pageviews which impacted quality. There is still some good writing and analysis there (which is why I still read, or at least skim most posts), but IMO the site is going downhill. I’ve certainly noticed that our host Dave rarely posts anything on OTB anymore…

    My last complaint about OTB, which I’ve raised a number of times, is the site itself. It takes forever to load given all the crap that’s on the page, and it’s terrible on mobile devices.

    As far as the GoP and Democrats go, I’ll just quote something that I think sums it all up. This was in part of a comment about education, but I think it works from a broader perspective:

    The second set concerns specific American problems which are closely tied with changes in American society and especially imo with the collapse of both Liberalism/Progressivism and Conservativism as political ideologies. From the “Left”, a lot of the good intentions of mass education or more broadly, the Square, New and Fair “Deals” as well as the “Great Society” coupled with modern notions of “progress” have eroded traditional authority – be it parents, churches, teachers and communities, and replaced it with . . . well nothing really. The state as in bureaucratic control, be it education or social services or whatever, has been unable to fill the void.

    The less said about what has become of Conservativism in America the better. Any practical view of politics or of state responsibility has been sunk in a morass of corruption, self-interest, racism and blind ideology which sees the state as simply the steel fist of the elite to enforce their version of “order” or as a milk cow for their narrow interests.

    I am less charitable regarding liberalism/progressivism, which has its own corruption, “steel fist” and milk cows.

  • TastyBits

    @Dave Schuler

    I am not for an unregulated market, but an unregulated market has limiting factors. Like a pathogen, killing the host too quickly limits the ability to spread. Alternative medicine is mostly unregulated, but it is mostly privately funded. There is some quackery, but it is limited. If insurance were to pay for it, the amount of quackery would increase.

    The prices are driven up by the factors you cite, but the increased prices should limit demand. They do not. Most people will not accept any limits on healthcare demands. If everybody is entitled to a unlimited number of heart-lung transplants, the demand is limited by the supply of heart-lungs available, and if mechanical replacements are developed, the number of operations will increase.

    With no limits on what the 20% can demand, the 80% of costs cannot be lowered by decreasing prices. If MRI imaging facilities were to increase 100 times, there would be 100 times more MRI’s performed. To lower costs, the number of MRI facilities need to be reduced. The individual price will rise, but the lower volume will lower overall MRI costs.

    The market actually works, but nobody likes the result.

  • steve

    “You don’t need to imagine. We had one until about 1910.”

    Medicine then was very limited in what it could offer. Not sure it is a valid comparison, but it was a free for all with a lot of quackery.

    Steve

  • steve

    ” That seems like an argument for the government to (a) make catastrophic insurance coverage available, and (b) make sure that catastrophic care is not provided at prices higher than they would as ordinary care.”

    Then at what level do you set it for “catastrophic”? On this particular topic Megan is not well informed. Most of our spending is on chronic illness and big ticket items. Since you are going to go over any reasonable limits in a catastrophic plan, it wont make much difference.
    I could be wrong and would support trying it in a large trial, but it would need to go on for a few years. We also know that people dont always choose wisely on what care to forfeit.

    Steve

  • To lower costs, the number of MRI facilities need to be reduced.

    That’s not necessarily the case. In Japan there are more MRI machines per 100,000 population than there are here and more MRIs are performed. They cost much, much less there. Japan spends much less per capita on healthcare than we do overall. It’s the prices.

  • TastyBits

    @Dave Schuler

    It is difficult to compare different countries. I think Americans and Japanese are vastly different, and while Japan is becoming more westernized, they do not have an entitlement mentality.

  • michael reynolds

    Tasty:

    I don’t think it’s an entitlement thing, I think it’s a cultural thing. I don’t think that as a society we deal very well with risk. I think we’ve somehow come to believe that life should be risk free, that we must hunt down and exterminate everything that might pose even the most attenuated risk.

    But this goes to our larger immaturity about death. I would note that all of the societies which we compare ourselves with in matters of medical use are more secular than ours. The Japanese don’t believe in an afterlife, neither do the French to any great degree or the Swedes, etc… I think this paradoxically makes us less able to cope with death and to see it as a natural and inevitable part of our lives.

    The fact that we will spend hundreds of thousands of dollars to get a very sick person from age 88 to age 88.5 — despite pain and degradation as well as cost — tells you something. The good spin would be that we hold all life sacred. But I think we’re just immature. We spend our lives pretending to believe in fairy castles in the sky so we never get realistic about death. Then when the time comes when we are face to face with the big D we realize we are unprepared. The fairy tales lose their luster. And there it is: actual, real, final death.

    Having refused to face death realistically all our lives we panic and throw resources at the problem. We bankrupt future generations so that we can cling to another six months of misery. It’s perverted. And expensive.

  • jan

    Sometimes I just weave around, kind of lost, as to the fate of either the GOP or the dems. People currently have little faith in either party. IMO, the main reason dems are pulling out wins, is that they have greater social appeal and a bigger goodie bag for people to reach into and grab something for themselves. As for principles or honesty, the dems are at the bottom of the barrel. People like Reid and Pelosi are abysmal in their leadership. McConnell and Boehner, unfortunately are not much better. I have this uncomfortable feeling, though, that the country will have to suffer some horrific loss or downfall, before the populace gets serious about it’s governing bodies, and selects representatives for the greater good rather than just what is good for themselves.

  • sam

    See Steven Brill’s much discussed article in Time, Bitter Pill: Why Medical Bills Are Killing Us and Atul Gawande’s New Yorker piece, The Cost Conundrum

  • sam

    Dave, could you spring my comment from moderation? Thanks.

  • PD Shaw

    Here is an article from Oren Cass critiquing the Steven Brill piece:
    Link

    It does touch on the issue that has always been unclear to me. Why should I care if medical services are priced at different levels for different consumers? Isn’t this just like couponing? What would be fixed if the law required one price for everyone? Medicare would be more expensive and small insurance would be cheaper.

  • Michael,

    I agree with alot with what you wrote at 4:47 pm yesterday. I don’t get the anti-gay, anti-evolution things related to the Republicans. I just don’t. And the whole religious part…again, just don’t get it. Maybe because I’m not religious.

    Just tear off the band-aid.

    It is more like chopping off an arm though. These groups have money and a fair number of people.

    And what do you call a Republican that doesn’t go along with the social conservatism portion of the party? A libertarian (or damn close to it) and that just doesn’t seem to do much in regards to elections. Many people agree in theory, but when you get down to the actual nuts and bolts of that view (redoing Social Security, Medicare, and other aspects of the “safety net”) many who initially like the overall gist of the Republican/libertarian economic view balk. Those issues are way, way to easy to demagogue.

    Lets take health care for example. I take it as indisputable that we are on an unstable spending trajectory. One that if left unchecked will likely result in a serious decline in economic activity. We can’t keep allocating larger and larger portions of our economic output to health care without it eventually reducing economic output. Keeping Grandma (86 years old, say) alive for another 18 months is not going to do much for economic output. Grandma is done with economic output. To put it bluntly and coldly…Grandma is a sink. She consumes, at this point, way more than she produces.

    Dave has put this evidence forward a few times already. Get rid of the 65+ demographic with a wish and boom, our health care problems are largely solved, at least for a good while.

    Now, any attempt to put that into some sort of national political platform is political suicide. Both sides know it.

    This is why the problem will simply be allowed to fester. Eventually, it will “fix itself” and that wont be pretty at all.

    I hate both the Democratic and the Republican party for this reason. I see both as quite willing to let the problem fest. I see both parties and intellectually and morally bankrupt.

  • Pure Food and Drug Act gave the remaining docs the keys to the kingdom. The result is what we’ve got today.

    Progressivism at its finest.

  • TastyBits

    @michael reynolds

    It was not a good choice, but I was moving fast. I am not an expert on Japanese culture, but it seems to me they are willing to accept deprivation. If there were a limited number of MRI’s per year, anybody who came after the limit was reached would accept it as a normal not getting the MRI.

    Your 88 to 88.5 example is where I believe an actual market would force people to make rational choices. The choice may be to keep grandma alive another 6 months, but that choice would incur financial consequences. With unlimited healthcare, there is no reason to not keep grandma alive another 6 months.

  • jan

    Stanley Druckenmiller’s recent Bloomberg interview, reproduced in Zero Hedge, expresses unease in the future when he says “I see a storm coming….:

    “maybe bigger than the storm we had in 2008, 2010.” His fear is that the ballooning costs of Social Security, Medicare and Medicaid (which with unfunded liabilities are as high as $211 trillion) will bankrupt the nation’s youth an pose a much greater danger than the debt currently being debated in Congress. He said, “While everybody is focusing on the here and now, there’s a much, much bigger storm that’s about to hit… I am not against seniors. What I am against is current seniors stealing from future seniors.”

    Although Druckenmiller is considered a “hedge fund icon,” his leeriness is felt by many people, at all economic levels. Bad, myopic policy-making, acquiring huge debt, encouraging more and more government dependence does not create a healthy society that thrives or is sustainable. As Druckenmiller stated, this hyped sequestration doesn’t even include the entitlement triad of medicare, medicaid, or SS being on the table, which is ridiculous, as they are the major source of our fiscal problems! Instead, we continue to burden our medical conveyor belt of services by confusing, flawed ACA policies, and a 100-city road trip by the WH in their attempts to rope in more welfare recipients.

    It’s crazy!

  • steve

    We could start by at least making the country pay for what it is receiving. Medicare and Social Security usually poll as our two most popular programs, even among Republicans. Pay for them. Increase revenue so that we can pay for what we spend. If that is painful enough, people will vote to both cut taxes and cut spending.

    “I think it’s a cultural thing.”

    Certainly true from what I see. However, if brought up, people will talk about it. We know from the Wisconsin experience that if people talk about end of life issues ahead of time, at the prompting of someone else, health care spending decreases and both patients and families are happier with their end of life care.

    Steve

  • steve

    Going back to health care writ large, one of our problems is fixation on ideology and not on pragmatism. Indiana is asking to have a waiver so they can run their own program instead of Medicaid. It will cost 44% more. They are committed to HSA plans because they know they will save costs, even if they don’t.

    http://www.ibj.com/healthy-indiana-plan-expansion-opposed-by-some/PARAMS/article/26056

    Steve

  • We could start by at least making the country pay for what it is receiving.

    I think that’s wishful thinking, steve. When people have a hard time finding a job, they don’t say “My gosh, there isn’t enough economic activity! We need a more active private sector and that won’t happen by increasing taxes.” They’re more likely to say “those greedy corporations are sending jobs overseas”. They’re even more likely to say “How am I going to pay my bills?”

  • PD Shaw

    steve, “On this particular topic Megan is not well informed. Most of our spending is on chronic illness and big ticket items.”

    I’m extrapolating from the discussion of the market problems with a captive consumer, who can’t negotiate on price or comparison shop. The example given is the price of the last glass of water in a desert approaches infinity. However, the fact that the glass of water is expensive in unique circumstances, doesn’t mean that price of a glass of water cannot be determined under normal circumstances.

    The other point being made in the link is that price is normally set on the margin, not by the largest consumer.

  • jan

    The Healthy Indiana Plan (HIP), described in the article posted by Steve, seems to have mixed reviews, saying positively that it has reduced trips to the ER and increased people’s use of preventative services. The fiscal glitch seems to be derived from extra services, such as vision, dental and maternity benefits, mandated under Medicaid expansion, compromising costs and creating some of that estimated 44% increase over the traditional medicaid costs.

    Nonetheless, HIP has been cited as “an innovative state solution for the uninsured.”, that does not however work as a sound vehicle for Medicaid expansion. Being that such a plan is still in it’s infancy, it hasn’t even had a fair chance to reconfigure itself into a better plan before the ACA came along, effectively preempting it. Basically, it’s difficult to blend in an individual state’s solution with the rigid structure of a mandated government HC program. as satisfying the rules and regulations of two different plans kills the ability of the one plan to suitably work at all.

    Yea, the government wins again!

  • michael reynolds

    Steve V:

    I hate both the Democratic and the Republican party for this reason. I see both as quite willing to let the problem fest. I see both parties and intellectually and morally bankrupt.

    I lay very few claims to wisdom, but one thing I have learned is that all my tools will be imperfect. A political party is a tool, I expect them to be imperfect. The problem with the GOP “tool” is that they’ve smeared themselves with scat and made themselves so objectionable that they simply cannot be used at all. This leaves me with only one imperfect tool, and I hate being boxed in like that. And obviously it’s not just me, it’s women, minorities and the young.

    So that limb you’re talking about them chopping off is gangrenous. I feel no pity for them, a blind man could have seen this coming. But the smart move when you have a limb that will kill you is to amputate, be a bit. . . smaller. . . for a while. Better than dying.

    The problem with Libertarians is the same issue I had when I stopped belonging. They take things to extremes. They aren’t ready for practical politics. They aren’t ready to actually govern.

    You can’t capture the young with a mean-spirited, “Are there no workhouses?” approach. A more successful libertarianism would have to be more moderate. Treat principals as guiding lights, not as Sharia law. Modernize, mellow, focus on the future. They won’t throw the old farts under the bus, but they will demand more accountability, and perhaps apply more rigor.

    Don’t get me wrong, I’ll still probably vote D, but a rational libertarian conservatism is at least a useful counterweight to liberalism. We’ll get better outcomes and a better country if the fight takes place on some axis other than, “Good Christian white folk with guns vs.Baby murdering, fag-loving, brown-skinned commies.”

    I just think it makes more sense for a party to fight for new and future voters rather than doubling down on the soon-to-be-dead demographic. For a party devoted to business the GOP sure doesn’t get marketing.

  • PD Shaw

    “Good Christian white folk with guns vs.Baby murdering, fag-loving, brown-skinned commies.”

    Wow, excellent names for two garage bands in one post.

  • michael reynolds

    Re Medical costs: http://dish.andrewsullivan.com/2013/03/01/the-number-one-app/

    And, no, the app does not require you to pee on your smartphone. It does, however, require you to pee into a cup with a chemical strip attached to it. The app, Wired explains, then analyzes those strips “by first taking photos with your phone at predetermined times and comparing the results that appear on the pee-soaked strip to a color-coded map.” The app then offers a breakdown of the elements present in the user’s urine, comparing levels of things like glucose, ketones, leukocytes, nitrites, and proteins — much like a urine test conducted at a medical lab would do, only without the trip to the lab. The app then presents the results to the user, offering visual breakdowns that indicate normal versus abnormal levels of each compound.

    I can’t find the conversation, but I told you so. Just the first of many medical tests that will be moved out of doctor’s offices, off their prescription pad, out of the lab, and out to the great unwashed for a fraction of the cost.

    Imagine what a good home diagnostic app could do to cut emergency room visits. We already have automated sphygmomanometers in many homes. Why not an EKG machine read by an app?

  • Wow, excellent names for two garage bands in one post.

    I presume that Michael already has those trademarks registered.

  • Drew

    “Good Christian white folk with guns vs.Baby murdering, fag-loving, brown-skinned commies.”

    You were saying something about libertarian extremes? C’mon, Michael. When you do this stuff you make yourself a caricature.

  • The problem with Libertarians is the same issue I had when I stopped belonging. They take things to extremes. They aren’t ready for practical politics. They aren’t ready to actually govern.

    I’m a libertarian. My personal policy preferences are…yes, extreme. However, I have offered practical politics…at places like OTB and the retard squad there respond by flinging shit. Those are your Democrats. So please, this is just nonsense you are spewing.

    You can’t capture the young with a mean-spirited, “Are there no workhouses?” approach.

    No libertarian would support work house. So, WTF are you talking about? Scrooge was not a libertarian BTW, he was just a mean old asshole. Well okay, he could be a libertarian, but the enlightened Scrooge at the end could have also been a libertarian. Being a mean old asshole is not a requirement for being a libertarian.

    If, and that is a huge if, you were a libertarian you’d know this.

    So please, stop talking out of your ass.

    I can’t find the conversation, but I told you so. Just the first of many medical tests that will be moved out of doctor’s offices, off their prescription pad, out of the lab, and out to the great unwashed for a fraction of the cost.

    I too believe in unicorns.

    Seriously, Michael I know you think your iPhone can crap gold, but it isn’t going to be the solution for the health care crisis. Why? because no fucking iPhone app is going to deal with the 65+ crowd.

  • sam

    “Why? because no fucking iPhone app is going to deal with the 65+ crowd.”

    Certainly not with this member.

  • This subject is probably worth a post of its own. Tests like the one Michael cites and quotes probably won’t do much to bring down the cost of healthcare. There are several reasons for this. I’ll give an example.

    Glucose test meterrs that had the potential to take blood tests for diabetics out of the doctor’s office were first introduced in the 1960s. The first models that were reliable enough and easy enough to use for patient use were introduced in the 1970s. Have you noticed healthcare costs going down rapidly since, say, 1975? Me, neither.

  • Certainly not with this member.

    Sorry sam, not trying to be a cold hearted bastard. But a big part of our health care problem is demographics. The other part is prices/supply bottle-necks. You combine rising demand with limited ability to expand supply and you have rising prices. Thus, costs growing at a rate several times that or our economic growth rate. Which is why it is unsustainable. We can’t App our way out of this unless Michael can come up with a gizmo like McCoy had on Star Trek that tells you what is wrong then gives you one of those magic shots that dealt with just about any medical emergency. Needless to say, I’m not pinning my hopes on this.

  • sam

    Ah, that’s OK, Steve, I was just registering my aversion to smart phones. I don’t think I have the intelligence, or maybe just the patience, to use one of the damn things. They seem so complicated to me. On top of that, I’m feeling sorry for myself today. I’m 72 and until three weeks ago I’d never had an allergy in my life. Three weeks ago that all changed. Sneezing, etc, etc. I went sleep-deprived for about two weeks until I found an OTC medication that worked (Alavert D, if anyone’s interested.) That’s a problem. But that’s not The Problem. Whatever I’m allergic to has doubled-down and engendered a secondary allergy to alcohol in me. I can’t take a sip of wine, bourbon, or beer without having a 5-10 minute sneezing fit, my eyes water and run, my head fills up, — the whole nine yards. Now, that’s a problem. Jesus, if I found out there was an App for this damn thing, I might even buy a smart-phone.

  • Whatever I’m allergic to has doubled-down and engendered a secondary allergy to alcohol in me. I can’t take a sip of wine, bourbon, or beer without having a 5-10 minute sneezing fit, my eyes water and run, my head fills up, — the whole nine yards. Now, that’s a problem. Jesus, if I found out there was an App for this damn thing, I might even buy a smart-phone.

    My sympathies…I love a nice dram or two of scotch in the evening after work. Not being able to enjoy that is not a pleasant thought.

    Best of luck sam.

  • steve

    @Steve- If you can test for it, you can treat it. It can increase costs. That said, I can se a time when the current digital native population, ie the youngsters, will communicate a lot of their results through a home or mobile device, it will initially be screened by a computer, then kicked up to a med person. Computers already do EKG interp., but not perfectly, though they are miles better now than when they started.

    Steve

  • @Steve- If you can test for it, you can treat it. It can increase costs. That said, I can se a time when the current digital native population, ie the youngsters, will communicate a lot of their results through a home or mobile device, it will initially be screened by a computer, then kicked up to a med person. Computers already do EKG interp., but not perfectly, though they are miles better now than when they started.

    Testing…okay maybe some apps. Maybe some (very) minor cost reductions. But a couple of points:

    The current 65+ crowd is:

    1. The problem, they are going to push costs up very high, and not just with tests, but with treatments.
    2. The current 65+ crowd are going to be, by and large, techno-phobes for the most part. Trying to get them to use a smart phone is like trying to teach a monkey to copy a work of Shakespeare.

    And even further down the road where the 65+ isn’t so adverse to smart phones the use of such devices in medical testing could drive costs up, not down. More tests might lead to more procedures that are orders of magnitude more costly than the test itself. So you save $200 with the iPhone app, but then end up doing a $50,000 procedure that without the iPhone you would not have done.

    It is kind of like the smoking issue (but in reverese). Everyone thought, “Hey, if we get people to smoke less it will save us money!” Then they looked at the numbers and realized that (former) smokers would live longer, consume more Social Security and use more Medicare and in the end cost more money.

    It is things like this that make me discount Michael’s pie-in-the-sky view.

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