Megan McArdle Avik S. A. Roy points out the absurd character of the healthcare debate in the United States:
In 2009, according to these statistics, which come mostly from the OECD, U.S. government entities spent $3,795 per person on health care, compared to $3,100 per person in France. Note that these stats are for government expenditures; they exclude private-sector health spending.
If anything, the U.S. figures understate government health spending, because they exclude the $300 billion a year we “spend” through the tax code by making the purchase of employer-sponsored health insurance tax-exempt.
So: if we measure the relative freedom of health-care systems by the dollar amount of government involvement in health spending, the French system is actually meaningfully freer than America’s.
in response to which James Joyner suggests that private businesses will provide the impetus for some more-nationalized form of healthcare in the U. S.:
I’ve argued for years that the combination of unsustainability high growth in health care costs and the enormous competitive disadvantage that puts on American business means that our current system of quasi-private, insurance-based medicine will collapse of its own weight. Like it or not–and I mostly don’t–Americans will wind up with some sort of government-centric model, likely one that provides basic coverage at a fixed price with some option for private supplemental coverage for those who can afford it.
Note that the large graphic illustrating per capita public healthcare spending by OECD countries in which the public healthcare spending in the U. S. outstrips any other country in the world other than Norway and is 20% higher than the country that is otherwise most similar to the U. S., Canada, does not include at least 30% of total U. S. per capita healthcare spending. We spend enormously more than any other country for healthcare.
Over the period of the last 35 years I’ve supported a single-payer system for the United States. More recently I’ve begun to despair that would be enough.
The assumption seems to be that, for example, Germany has lower costs because Germany has a single-payer system. Is that in fact the case? I don’t think that’s the only explanation. It could be that for lifestyle reasons Germans are healthier than we are. It could be that Germans ask a lot less of their healthcare system than we do and, consequently, their costs are lower. It could be that wages in Germany’s healthcare sector are closer to wages, generally, than wages in the U. S.’s healthcare sector are to wages, generally, here. There are all sorts of possibilities.
What I think is clear is that we can’t go on paying as much more for healthcare relative to other OECD countries as we are. I’ve expressed my opinion before: I think the entire system needs to change. Not merely who writes the checks. Neither will reducing administrative costs be enough. It isn’t merely administrative costs that are increasing at too great a rate. I think the incentives need to change. I have no idea how that can happen.
The bold part, nonsense. See Doug Elmendorf. (The link I had no longer works, but I quote him here).
Quite right. For most places, while their problems are not as big as ours, they are heading in the same direction…they just have a longer horizon.
This is a great point that the dopes who favor Medicare for all just don’t seem to appreciate. Our growth rate in health care costs cannot be explained by a massive growth rate in administrative costs. After all the dopes are correct that Medicare does have lower administrative costs…but that implies if it is just administrative costs then the private sector growth rate would have to be astronomical…and it isn’t.
To be honest I think the causality goes the other way around: I think that our administrative costs are increasing at too rapid a rate because healthcare costs, generally, are rising at too rapid a rate.
A small matter: all systems are unsustainable depending on the time frame. The sun will blow up in however many billions of years. So when we’re debating the sustainability of any system shouldn’t we define a time frame? 10 years? 50 years? 100 years? Otherwise the answer is always going to be: unsustainable.
I guess that depends on how tolerable high unemployment and slow wage growth are. I think we’ve already reached the point at which our healthcare system is impeding growth.
The healthcare sector accounts for, what, about 15% of GDP now and if it grows at the expected rate that’ll be around 25% within 10 years. Since the healthcare sector produces fewer jobs per dollar spent I think that’s a serious problem.
“It could be that for lifestyle reasons Germans are healthier than we are. ”
When you adjust for lifestyle factors, including weight, they add a very small amount to our costs compared with the rest of the world. It probably adds about $100 billion to our costs compared with the rest of the OECD.
Administrative costs are part of the problem, but not the major one.
http://theincidentaleconomist.com/wordpress/breakdown-of-insurer-administrative-cost/
http://theincidentaleconomist.com/wordpress/why-the-us-spends-more-on-health-care/
Private sector and public sector costs have been rising at about the same rate. My view is that private costs are driving public costs. We have to keep raising public reimbursement to keep up with private so that publicly funded patients can be seen. Could single payer solve this? I dont think the answer lies so much in single payer as it does in getting us all into the same kind of system. It could be single payer, a French or Swiss or Singapore type system. What matters is that we get out of our fractured system.
Steve
I don’t think that a unitary system is sufficient either, Steve. What’s needed is either a) a mechanism for pushing costs down or b) a change in incentives that reduces cost per procedure and/or the number of procedures so that costs go down. Neither a single-payer nor any other unitary system does that per se.
The incentive for patients is to want more; the incentive for physicians is to perform more procedures; the incentive for politicians is to appropriate more. We can do something to change one or more of those incentives but without that nothing will slow the increases in costs.
So, Steve, would you say that “boutique” medicine is driving costs? I recently read that Anjin over at OTB was billed $14,000 for a routine colonoscopy.
That’s up from 12 grand a couple of years ago.
Small correction, but McArdle is on a leave of absence and that was written by a guest blogger.
Andy:
Thanks, fixed.
Janis:
I like the term “artisanal medicine”.
My wife just came back from the pharmacy having paid $150 for an asthma med. (Very slight asthma.) Her doctor prescribed it despite it being new and expensive and despite the fact that there are about a hundred equally effective meds available in generic.
The same doctor has on several occasions pushed me stay within their extended practice for procedures.
Meanwhile over at my dentist they have thus far suggested a crown on a tooth that’s not even in contact with anything, implants (unneeded) and possible gum surgery, likewise unneeded. How do I know this is unnecessary — I just switched to this practice after relocating and I’m almost OCD when it comes to dental care.
These people up-sell like waiters trying to raise check totals. With all due respect to steve and the good doctors out there, a lot of the time my medical interactions smack of used car buying.
Potentializing the existing customer base.
That’s about the last time I want to hear that. Used cars are fine, with good provenance. I won’t buy a new one again.
Janis:
Not a knock on used cars, just the dealers. There was a time in my life when I used to buy $300 Valiants or Darts, invest a few bucks in Bondo and fiberglass and drive them until they died. Actually blew a jagged two inch hole out of the side of a slant six on a highway in Vermont. Hitchhiked away from the scene of the crime. (Sorry about that, Vermont. I owe you a towing fee.)
My grandfather owned used car lots. In SoCal no less, home office of sleazy used car dealers. He also owned what we used to call slums in Long Beach. So a used car dealer and a slumlord.
Based on my pet theory that’s it is all about the artificially reduced supply of medical doctors I looked for and found this:
I imagine there are not a lot of doctors starting their residencies with 400,000 in debt there.
I think that’s part of the story, Sam, but only part. Our balance between GPs and specialists is out of whack, too.
Yenchh, small time, Michael. My ancestors were slave-traders, if they weren’t Choctaws.
17% I believe.
And yeah, we aren’t talking 100 years like the global warming stuff. We are talking 10 years, maybe 20 tops.
My guess is that there is a positive feedback effect as well. Also, publicly funded health care is often for some of the most intensive users (the elderly). As such we are subsidizing the highest users which means they consume more than they otherwise would and that also drives up prices across the board. In short, the underlying mechanism driving costs is probably more complicated than “its A or B”. More likely is is a host of issues that are all inter-related.
Still it is undoubtedly a system in need of reform. I don’t disagree there and have already indicated that looking at other systems like the French, Swiss or the Singaporean systems would probably be good ideas. Neither of those systems might work as they are currently structured in their respective countries, but I bet moving to a system more like one of them would probably help.
My GP did my last pap smear, too. A nurse practitioner or even a nurse could do that.
I don’t think that a unitary system is sufficient either, Steve. What’s needed is either a) a mechanism for pushing costs down or b) a change in incentives that reduces cost per procedure and/or the number of procedures so that costs go down. Neither a single-payer nor any other unitary system does that per se.
The incentive for patients is to want more; the incentive for physicians is to perform more procedures; the incentive for politicians is to appropriate more. We can do something to change one or more of those incentives but without that nothing will slow the increases in costs.
I know this will probably simply get dismissed, but since vignettes are being thrown around. I have had 4 herniated/degenerative cervical discs. I currently have a symptomatic c-7 t1. Conservative (PT) treatment is of course currently indicated. I have two choices. My neuro will write scrip for PT which I can use at a local and reputable PT firm. Insurance will cover it. My deductible is small. It’s practically “free.”
Or I can go outside this firm to a PT who also will deal with some golf related postural issues that may alleviate this issue. Insurance does not cover it, because of the golf aspect. So it’s not “free.”
Who do you think charges more? Because of my means i will choose the latter, at multiples of cost. The vast majority of the citizenry would do the former. after all, it’s “free.”.
Price works. All Rube Goldberg proposals in the world will only result in a continuation of the problem, or ultimately restrictions to access.
And I would say, “what’s a young , vibrant boy like you” doing with four herniated discs? Y’all been moving furniture?
My mom and two of my siblings (the ones I resemble most closely) all had the same disks operated on at roughly the same age. We speculate that I’ve escaped the same thing because of the substantial mass of muscle I have supporting my abdomen and back, fruit of my many years of martial arts training.
I’m doing some yoga. The most strenuous (and least spectacular) poses build the core.
Dave- A unitary system is just the first step. It means everyone has an interest in holding down costs. I am mostly agnostic as to whether it is single payer or more akin to the European systems.
Janis- The reasons for our system costing more are multiple. There is no single reason. I think this also means that there is no magic bullet answer.
Steve