From a post by Arnold Kling:
When I wrote my book, the United States was spending a larger share of our GDP on Medicare than other countries spent on health care for the entire populations. So anyone who thinks that making more people eligible for Medicare would solve our over-spending problem is delusional.
The over-spenders are us. We go for too many expensive tests that rarely make a difference to our lives. We get surgeries and take drugs for ailments that people used to just live with.
and the most upvoted comment there:
I am a physician. Been one since 1979. The system rewards procedures and is financed by healthcare being delivered in “units” rather than outcomes.
which you will note echoes observations I have made here.
There’s only one little, tiny problem with Arnold’s take. In the United States “we” (meaning patients) are not prescribing our own tests and procedures. That is done by physicians. That’s who creates the demand for healthcare services.
“That is done by physicians. That’s who creates the demand for healthcare services.”
Or by defensive practices to avoid being sued for negligence….
Or by CMS:
https://areaocho.com/it-isnt-a-system-its-market-manipulation/
Kling’s numbers arent making sense. Medicare accounts for about 20% of all US health care spending. In 2023 US spend on HC was about 16.5% of GDP. 20% of 16.5 is 3.3. No OECD country spends that little. You have to go to places like India to find it that low. (Yes, I know Kiling claims this was true when he wrote his book but the number is so weird I doubt it’s true and even if it is it’s not relevant now.)
There are lots of studies that Kling could cite, but he doesnt. Our overall utilization of health care is close to the same as other OECD countries. However, our utilization of expensive procedures like total joints is higher and we spend more for our brand name drugs. In general everything in the US costs more; hospital care, physician fees, nurse pay, other hospital staff, drugs, devices, tests, etc. However, we are especially bad at using the expensive stuff and less on primary care which is cheaper. (As an aside while we spend more on drugs than other countries even that is complicated. The cost of generic in the US is lower than in other fist world countries. It is the cost of new drugs, the ones still under patent, that drive the difference.)
For sure, docs get a lot of blame for this, but in general docs dont go grab people and drag them in for tests and procedures. Also, many of the advances giving better results really do cost more.
https://www.statista.com/statistics/268826/health-expenditure-as-gdp-percentage-in-oecd-countries/#:~:text=Among%20OECD%20member%20countries%2C%20the,U.S.%20with%20distinctly%20smaller%20percentages.
Steve
In one of my first posts I showed pretty conclusively that there was little relationship between revenue and research spending in pharmaceutical companies but there was a relationship between revenue and what was spent on marketing and lobbying. For pharmaceutical companies research is like the phone bill. It’s an overhead expense. Their real businesses are sales and lobbying.
The situation has actually gotten worse in the intervening 20 years. Too many pharmaceutical patents are bogus—not original but derivate which should not be patentable. Not a fan of pharmaceutical patents.
The comment about defensive medicine should be addressed. It does happen but when looked at estimates are that it adds a small amount to health care costs with other factors being more important. Those factors are too long to list so let me mention just two. One is provider induced demand ie providers promote care that makes them the most money. Another is practice style, much more common than people outside the trade would realize. You develop a lot fo that in training.
As examples my wife went to a med school where she had worked as a researcher. They were cost conscious and also aware of work loads of their residents. If a test was unlikely to give an answer they didnt do it fo the most part, or not until everything else was tried first.. I did med school and internship at an Ivy where the priority was to never miss anything. You ordered every test that could possibly be relevant even at 1 in many millions chance of it helping. It was at least partially a contest to show who could think up the most possible relevant diagnoses.
As an example, while i was an intern a senior resident made me get Brucella cultures on an inner city drug addict with a fever. Only about 100 people a year get infected with Brucella and at the time I had that pt it was mostly from drinking raw milk which at the time you mostly got from the Amish 50-100 miles west of the city. I thought it was stupid since the odds that an inner city drug addict would have any interest in visiting the Amish to drink raw milk was about zero. Anyway, my takeaway was that it was stupid but I was a minority and most people thought it was cool that our senior resident thought of something no one else had.
Steve
“In the United States “we” (meaning patients) are not prescribing our own tests and procedures. That is done by physicians. That’s who creates the demand for healthcare services.”
I’m not sure its that simple. I give steve a hard time, but its mostly for sport. I think the physicians have a tough situation. They know that patients will shop physicians to get what they want. After all, patients think pills and procedures are “free.” What do they care? The physicians have to ride the line between sound medical practice, obviously, and “customer’ retainage. My father lost an awful lot of patients because he was an absolutist: good medical practice first, $ second. Don’t like it? Go away. Today the world has changed. Personally, I would lay more of the blame on the patients than perhaps you do. Health by pill guzzling. Any wonder pharma spends so much on marketing?
In any event. I think you hit the nail on the head in your very first post on this subject. There is not one party in this equation who has proper incentives. Add to that the baby boom bulge and no wonder we are where we are.
Drew, I don’t think you realize it but you’re saying that physicians are unethical. The behavior you’re describing (doing things outside the standard of care to lure patients from other physicians) is unethical behavior as is not disciplining physicians who engage in such behavior.
In my own case I have only specifically sought care, i.e. other than regular checkups, three times in my life. One is when I had a life-threatening automobile accident. Another is when I had a persistent pain in my abdomen. I still have it. After many, many tests my PCP determined it was not treatable or worth treating and I just tolerate it. The third time was when I had severe joint and muscle pains. After many tests and medications that left me practically unconscious all of the time (and unpleasant they tell me), I thanked my PCP and other physicians and determined to tough it out. Better to live life in pain but conscious. That was more than 25 years ago. I have been told by physicians that I am “toughing out” pain that would leave most people bedridden. This blog is part of the treatment plan I devised for myself. Other components are meditation and walking five miles a day.
“Drew, I don’t think you realize it but you’re saying that physicians are unethical.”
I don’t think so, Dave. And if my writing was clumsy that’s on me. I’m not advocating for what would clearly be erring on the wrong side of a bright line distinction between proper standards of care and actual practice. But just like in our field (business) there is so much grey. After all, the so called “businessman’s rule” simply relies on a reasonable man standard. But does not defend against fraud or gross negligence. Perhaps a couple examples:
A patient presents with chronic anxiety. My father would have said suck it up. That patient went shopping. Today, doctors listen to the story and perhaps prescribe Klonopin or Xanax. Or not. Is that unethical? That’s above my pay grade.
How about weight loss drugs?
I’ve told this story before. In my father’s day, if you got the legs kicked out from under you playing soccer and landed on your head (me. it explains a lot) he observed carefully for 24 hours. Today? Straight to imaging. $1500. Unethical? Defensive medicine?
I defer to steve at this point; I’m sure he could wax eloquently.
My point is that there are grey areas. Its not just “its unethical/its practical.” Medicine is part science, but also part learned art.
Back to the main point. If you set up a system where the consumer thinks everything is “free” then you have set up a system that demands services. Is it really the burden of the providers to educate on the grey area? To not commit malpractice, yes. The grey area, I’m not so sure.