In a rare bit of good news for the Obama administration and budget policymakers,  health care costs increased last year at their slowest pace since the advent of Medicare and Medicaid in the mid 1960s.

The new analysis, released on July 25 by officials at the Centers for Medicare and Medicaid Services, the agency that administers the two programs, showed health care spending grew last year at a “historic” low  3.9 percent rate, which is slightly below 2009’s record-setting low of 4.0 percent. Health care spending as a share of the economy remained stuck at 17.6 percent, a welcome change from most years when it increases its share of total economic activity.

At a time when the White House and congressional leaders are worried about rampant long term growth of the government’s major health care  insurance programs for seniors and the poor, the new data will allow government actuaries to project growth in  Medicare and Medicaid over the next decade will be less than previously feared. This could potentially ease the task of the Obama administration and congressional leaders somewhat when they finally negotiate an agreement for slowing the growth of entitlement programs to help reduce the deficit.

Moreover, CMS actuaries are now saying the cost of insuring 30 million previously uninsured Americans under the president’s signature health care reform bill will add only a sliver to overall spending, and that increase is about half the projected growth rate of a year ago.

Looking ahead through 2020, CMS says health care spending will grow by 5.8 percent a year on average, which is about 1.1 percent faster than the rest of the economy. But only 0.1 percentage points of that growth will be due to the health care reform law. A year ago, CMS was projecting reform would raise health care spending an additional 0.2 percent a year.

Since nothing of substance has changed in the reform legislation, its lower projected cost is largely a byproduct of the overall reduction in health care spending, which health care economists said is being driven by a number of factors, including changes in consumers’ practices and more aggressive government oversight. “It’s too early to say that the Affordable Care Act will have a small effect on costs overall despite the coverage gains, but this is an optimistic sign,” said Alan Garber, an economist and physician at Stanford University.

Garber cited a number of factors beyond the recession that is lowering the average American’s propensity to consume fewer health care services. About one in seven privately insured Americans now belong to high co-pay, high-deductible plans, which force them to think twice about non-emergency care. “It makes people more aware,” Garber said. “It’s not play money. It’s your money. That may be having an effect.”

There have also been highly publicized crackdowns on Medicare fraud in areas of the country like Florida where costs and utilization rates are high. CMS is now projecting health spending on the elderly will only grow to $636 billion in 2014 from $525 billion in 2010.

That’s $35 billion less than what had been projected for 2014 a year ago. Moreover, CMS’s projection for Medicare spending in 2020 is $922 billion, whereas a year ago the actuaries were anticipating spending of $978 billion in 2019.

The actuaries cast cold water on the idea that delivery system reforms included in the new health care insurance legislation were driving the changes. “There is hope that research into innovative ways of delivering care will lead to slower growth,” said Richard Foster, CMS’s chief actuary, “but until those kinds of innovations have been designed and tested, we won’t have a sense of how large those savings will be.”

CMS’s projections for Medicare – last year or this year – do not include the so-called “doc fix.” Every year, Congress appropriates enough money to avoid a scheduled cut in pay for physicians who treat the elderly.

“If, as is far more likely, the 29.4 percent cut is avoided and the out-year cuts are eased, then spending levels and growth rates will increase significantly,” said Joseph Antos, a senior fellow at the American Enterprise Institute. “Under these more realistic assumptions, NHE [national health expenditures] will easily exceed 20 percent of GDP in 2020, and perhaps even earlier.” CMS currently projects health care spending will reach 19.8 percent of  the Gross Domestic Product by 2020.

Antos also pointed out that there will be a one-time spike in health care spending in 2014 as the 30 million newly insured Americans purchase drugs and physician services that they previously did without, and those costs will become embedded in overall costs.

But Garber, who has chaired a Medicare advisory committee that makes coverage recommendations, said that could actually lower costs. “There’s new research that says Medicare Part D (the prescription drug benefit) by making drugs more affordable is lowering costs elsewhere in the system,” he said. Lowering blood pressure with affordable generic drugs is a lot cheaper than paying for treating heart attacks.

A growth rate that falls to just 1.1 percent faster than the rest of the economy grows has its own implications for the health care  reform legislation, which created an Independent Payments Advisory Board to make recommendations for Medicare cuts whenever its growth exceeds GDP plus 1 percent. If the projections pan out, IPAB’s task will be much easier, and its recommendations to future Congresses and the elderly easier to swallow.

Republicans have charged the IPAB will lead to government rationing of health care, and have attacked the idea of the board, which hasn’t been appointed as of yet–a central talking point it their efforts to repeal reform.

In a rare bit of good news for the Obama administration and budget policymakers,  health care costs increased last year at their slowest pace since the advent of Medicare and Medicaid in the mid 1960s.

The new analysis, released early Thursday by officials at the Centers for Medicare and Medicaid Services, the agency that administers the two programs, showed health care spending grew last year at a “historic” low  3.9 percent rate, which is slightly below 2009’s record-setting low of 4.0 percent. Health care spending as a share of the economy remained stuck at 17.6 percent, a welcome change from most years when it increases its share of total economic activity.

At a time when the White House and congressional leaders are worried about rampant long term growth of the government’s major health care  insurance programs for seniors and the poor, the new data will allow government actuaries to project growth in  Medicare and Medicaid over the next decade will be less than previously feared. This could potentially ease the task of the Obama administration and congressional leaders somewhat when they finally negotiate an agreement for slowing the growth of entitlement programs to help reduce the deficit.

Moreover, CMS actuaries are now saying the cost of insuring 30 million previously uninsured Americans under the president’s signature health care reform bill will add only a sliver to overall spending, and that increase is about half the projected growth rate of a year ago.

Looking ahead through 2020, CMS says health care spending will grow by 5.8 percent a year on average, which is about 1.1 percent faster than the rest of the economy. But only 0.1 percentage points of that growth will be due to the health care reform law. A year ago, CMS was projecting reform would raise health care spending an additional 0.2 percent a year.

Since nothing of substance has changed in the reform legislation, its lower projected cost is largely a byproduct of the overall reduction in health care spending, which health care economists said is being driven by a number of factors, including changes in consumers’ practices and more aggressive government oversight. “It’s too early to say that the Affordable Care Act will have a small effect on costs overall despite the coverage gains, but this is an optimistic sign,” said Alan Garber, an economist and physician at Stanford University.

Garber cited a number of factors beyond the recession that is lowering the average American’s propensity to consume fewer health care services. About one in seven privately insured Americans now belong to high co-pay, high-deductible plans, which force them to think twice about non-emergency care. “It makes people more aware,” Garber said. “It’s not play money. It’s your money. That may be having an effect.”

There have also been highly publicized crackdowns on Medicare fraud in areas of the country like Florida where costs and utilization rates are high. CMS is now projecting health spending on the elderly will only grow to $636 billion in 2014 from $525 billion in 2010.

That’s $35 billion less than what had been projected for 2014 a year ago. Moreover, CMS’s projection for Medicare spending in 2020 is $922 billion, whereas a year ago the actuaries were anticipating spending of $978 billion in 2019.

The actuaries cast cold water on the idea that delivery system reforms included in the new health care insurance legislation were driving the changes. “There is hope that research into innovative ways of delivering care will lead to slower growth,” said Richard Foster, CMS’s chief actuary, “but until those kinds of innovations have been designed and tested, we won’t have a sense of how large those savings will be.”

CMS’s projections for Medicare – last year or this year – do not include the so-called “doc fix.” Every year, Congress appropriates enough money to avoid a scheduled cut in pay for physicians who treat the elderly.

“If, as is far more likely, the 29.4 percent cut is avoided and the out-year cuts are eased, then spending levels and growth rates will increase significantly,” said Joseph Antos, a senior fellow at the American Enterprise Institute. “Under these more realistic assumptions, NHE [national health expenditures] will easily exceed 20 percent of GDP in 2020, and perhaps even earlier.” CMS currently projects health care spending will reach 19.8 percent of  the Gross Domestic Product by 2020.

Antos also pointed out that there will be a one-time spike in health care spending in 2014 as the 30 million newly insured Americans purchase drugs and physician services that they previously did without, and those costs will become embedded in overall costs.

But Garber, who has chaired a Medicare advisory committee that makes coverage recommendations, said that could actually lower costs. “There’s new research that says Medicare Part D (the prescription drug benefit) by making drugs more affordable is lowering costs elsewhere in the system,” he said. Lowering blood pressure with affordable generic drugs is a lot cheaper than paying for treating heart attacks.

A growth rate that falls to just 1.1 percent faster than the rest of the economy grows has its own implications for the health care  reform legislation, which created an Independent Payments Advisory Board to make recommendations for Medicare cuts whenever its growth exceeds GDP plus 1 percent. If the projections pan out, IPAB’s task will be much easier, and its recommendations to future Congresses and the elderly easier to swallow.

Republicans have charged the IPAB will lead to government rationing of health care, and have attacked the idea of the board, which hasn’t been appointed as of yet–a central talking point it their efforts to repeal reform.

Merrill Goozner has been writing about economics and health care for many years. The former chief economics correspondent for the Chicago Tribune, Merrill has written for a long list of publications including the New York Times, The American Prospect, The Washington Post and Financial Times. You can read more pieces by him at GoozNews, where this post first appeared.

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66 Responses for “Healthcare Spend at Historic Low”

  1. Nate Ogden says:

    “But Garber, who has chaired a Medicare advisory committee that makes coverage recommendations, said that could actually lower costs. “There’s new research that says Medicare Part D (the prescription drug benefit) by making drugs more affordable is lowering costs elsewhere in the system,” he said. Lowering blood pressure with affordable generic drugs is a lot cheaper than paying for treating heart attacks.”

    This would explain why Medicare projections are always so far under reality, the people making them really have no idea how things work.

    A lifetime of controled blood pressure means a lifetime of Rx cost then at some point cancer, dementia, or some other equally expensive illness that does kill them. 30% of people that have a heartattack die within a year. Probably a higher percent of the poor. Its a good thing to prevent death but don’t be an idiot and claim its going to save us money. Another 20 years of SS and medical care is obvilsly without doubt and question going to cost more then treating a heartattack.

    • Doc Brown says:

      I think you are looking at this the wrong way.

      Consider patient A and patient B. Both get hypertension at age 35.

      Patient A gets diagnosed with hypertension and is put on medications that prevent him from getting a heart attack at age 40. He gets other diseases and survives till the age of 80.

      Patient B doesn’t get diagnosed and has a heart attack at age 35. He has an expensive surgery to unclog his arteries, then is put on medications (more than those of patient A because of the heart attack) and he gets other diseases and survives to the age of 80.

      So the only differences in cost is the 5 years of medications that patient A takes before he would have have had at age 35, compared to the cost of heart attack surgery for patient B minus the lack of medication use the five years previous plus the additional lifetime cost of the additional medications because of being post-heart attack.

      So as you can see the costs for patient B who goes without care and gets the heart attack will be much greater than for patient A who prevents the heart attack due to medication therapy.

      The only way you have cost savings is if patient B dies from the heart attack, since there will be no downstream costs.

      So if you are saying that it cost less to not treat patients and let them die from a heart attack, you are absolutely correct. But I doubt that is what we want as a hearlth care reform to save costs.

      • nate ogden says:

        “somewhere around 30% of all people die from their first heart attack. That alone destroys your projections.

        Once you have a heart attack subsiquent ones are more likely.

        Additionally majority of heart attacks are lifestyle, that means the conditions that caused the heart attack to start with means its very unlikely the person would live to 80 like the healthy person.

        While its possible A person could cost less long term if treated early with Rx at a reduced price, its impossible;

        “Lowering blood pressure with affordable generic drugs is a lot cheaper than paying for treating heart attacks.”

        “So if you are saying that it cost less to not treat patients and let them die from a heart attack, you are absolutely correct. But I doubt that is what we want as a hearlth care reform to save costs.”

        Then what do we want to do to save cost? Should we continue to sacrafice kids and young adults so Medicare beneficiaries can live 1-2 extra years? Ideally we could extend every life to the last possible moment, thats not reality. When people make false claims to support one treatment over another they are taking one life to save another.

        • Doc Brown says:

          So if I understand you correctly, your health care reform plan is to let old people die so when can spend more money on kids and young adults. Wow!

          Does that also mean we let all newborns with health problems die as well, so we can free up even more money? Since we spend more on the first year of life and the last year of life, than anywhere else?

          Instead of just letting millions of newborns and elderly die, so we can save money, why don’t we just focus on decreasing the cost of health overall by going to a single payor system. If nothing else, this would get rid of a ton of administrative cost that is wasted. Plus, since all of the health insurance and drug companies would have to compete more for business, this would encourage them to find ways to decrease cost while keeping quality high.

          • Nate Ogden says:

            no you don’t understand, it’s not my plan nor am I the one suggesting any changes. I am merly pointing out the dishonesty of someone claiming we will save money by keeping people alive longer.

            I see you subscribe to this dishonest ideology and a healthy case of projection.

            If someone proposes changes to a system already unsustainable that are going to drastically increase cost they should be called out on it if they are claiming those changes will actually save money when any bit of common sense shows they won’t.

            “why don’t we just focus on decreasing the cost of health overall by going to a single payor system.”

            Why don’t we just save our tooth fairly money and plant more money trees while we are at it? If we all rode unicorms that would save billions to.

            Medicare is single payor and its the most inefficient health plan in the world. How does increasing inefficency save money doc?

            You want to save $1 of administrative cost and replace it with $10 of fraud and waste and claim we will save money, your not better then Garber. I would be more impressed if you promised to pay for it with magic beans.

        • Doc Brown says:

          Nate Ogden says:
          August 15, 2011 at 4:49 am
          “no you don’t understand, it’s not my plan nor am I the one suggesting any changes. I am merly pointing out the dishonesty of someone claiming we will save money by keeping people alive longer.
          I see you subscribe to this dishonest ideology and a healthy case of projection.
          If someone proposes changes to a system already unsustainable that are going to drastically increase cost they should be called out on it if they are claiming those changes will actually save money when any bit of common sense shows they won’t.”

          I see that you are attempting to use “common sense” to formulate your opinion on this subject, rather than actually knowledge. The issue of health care cost is far more complex than you make it out to be. I don’t have the time or space to give you an entire lecture on Health Care Economincs, but let me address a few things that you are not considering.

          The first is that a better health care system would keep people healthier, would be focused on keeping people healthy rather than waiting for them to get sick so we can charge them an arm and a leg to be treated, and this would result in such a dramatic decrease in cost due to decreased Emergency Department visits, hospitalizations, and surgeries, that we could keep everyone living to be 100 or more and we would still be saving more than what we are spending now. For example, let’s say that right now, the average health care cost per person was $1000/yr and the average person lived to the age of 80. That means they had $80,000 in cost over the lifetime. So we would only need to decrease the average cost per year to $800 to break-even if we kept people alive till the age of 100. However, a healthier population where the number of ER visits, hospitalizations, and surgeries (which are the most expensive part of health care) were reduced dramatically, you could easily reduce the average health care cost by half or more. And that is without decreasing the irrationally high prices that we pay for medicines, hospitalizations, surgeries, etc.

          “Why don’t we just save our tooth fairly money and plant more money trees while we are at it? If we all rode unicorms that would save billions to.”

          Even though your question is a rhetorical one, the answer is because tooth fairies, money trees and unicorns don’t exist. However, changes to the health care system that improve health and decrease costs do exist. The fact that those changes would be difficult to make, does not mean they are impossible as your comment implies. Why should America be scared of putting in the hard work to help people stay healthy? We are the greatest nation in the world after all.

          “Medicare is single payor and its the most inefficient health plan in the world. How does increasing inefficency save money doc?
          You want to save $1 of administrative cost and replace it with $10 of fraud and waste and claim we will save money, your not better then Garber. I would be more impressed if you promised to pay for it with magic beans.”

          Please show me the statistics that prove Medicare is the most inefficient plan in the world, or even one that proves it is less efficient than the for profit plans in the US. Find me another health plan in the US that covers 40 million people and has as low of an administrative cost than Medicare. You can’t And obviously, you don’t know that the majority of Medicare fraud and abuse is perpetrated by the providers of care (doctors, hospitals, etc) not by the patients who are receiving care. And while fraud, waste, and abuse are problems that need to be addressed, they only account for a fraction of the total costs to Medicare.

          It’s my view that America is a great country comprised of great minds. I think we are up to the task of creating a health care system that prolongs life while spending less. Obviously, just spending a lot of money has not done us any good. We spend far more on Health Care than other countries and yet have worse results. America has put people on the moon, sent rovers to Mars, created technology that has revolutionized the world, but yet we can’t fix health care? I don’t buy it.

          My vision is not a dream of unicorns and magic beans, it is one where take this challenge head on as another opportunity to establish the greatness of our country.

          It seems that you are a person that believes in the greatness of our country, yet you have deemed health care reform to be beyond our capabilities. That just doesn’t seem to be consistent.

          • nate ogden says:

            I hope your a doctor of medicine and your hard work learning the healing arts is why your so clueless about economics. I hjave forgotten more about healthcare economics then you will ever know. My argument that keeping people alive is more expensive then when they die is passed on 20+ years paying the claims and manageing the plans. I know how much a dead person and how much a live person cost from experience thank you.

            ” So we would only need to decrease the average cost per year to $800 to break-even if we kept people alive till the age of 100.”

            If you were a simpleton that didn’t know anything about economics then you would be correct. That is why people like you come up with such stupid ideas that always fail.

            Your first failure of inteligence is assuming that an average healthcare spend of $1000 is spread eveninly over all people. Those in the 70-80 bracket actually spend 5-10 times more then those in the 18-28 bracket. If you keep people alive from 80 up to 100 you can expect their cost to pull up the average cost of everyone to the degree that you increased cost substantially offsetting your meaningless $200 savings.

            If the average cost for everyone was $1000 then the average cost for your new super goldens would be close to or over $2000 depending on your population mix. Saving $200 to pick up $2000 that’s usually how people like you come up with plans.

            “However, changes to the health care system that improve health and decrease costs do exist.”

            Changes that allow everyone to consume as much healthcare as they want, live as long as possibly, and not consume 200% of our GDP do not exist. No one said is or saying we shouldn’t improve healthcare where it saves money and even when it does not save money. We shouldn’t make changes we know will increase cost though and claim it will reduce cost. Thats how we got in this mess in the first place.

            ” Why should America be scared of putting in the hard work to help people stay healthy?”

            We shouldn’t be, we should be scared of politicians and academics promising us savings from things we know will increase cost though.

            “Please show me the statistics that prove Medicare is the most inefficient plan in the world,”

            Its common knowledge Medicare has a 10%+ fraud rate. At $7000+ in expenditures per person thats $700+ per member per year just in fraud and waste. No plan comes close to that. Medicaid does as a % but their expenditures per member are so much lower. With enrollment fraud its actually much higher then Medicare since few people get fake IDs claiming to be 65 when they aren’t.

            “as low of an administrative cost than Medicare.”

            AGain your showing you know nothing about healthcare administration. A low administrative cost is a false measure of efficency, back to common sense, or so we would hope. I could use EDI and auto adjudication with EFT back to the provider and my cost per claim would be $.50, blowing Medicare away. I would also be the laughing stock of the payor community and out of business in a matter of weeks. Doctors and crooks claiming to be doctors would use me like a free ATM. Anyone that has the slightest idea what they are talking about knows paying claims cheaply is not something to brag about. You need to look at total cost, including claims expense to determine true efficency.

            If Medicare spent $6 PMPM on case management for their highest 5% population they could easily see an ROI of 10 to 1. The $6 would blow up their low admin ratio but their total cost would drop, which one is more efficient?

            ” And while fraud, waste, and abuse are problems that need to be addressed, they only account for a fraction of the total costs to Medicare.”

            Fraud and waste 10%+ unnecessary care 30%. All numbers are a fraction of the total, claims are only a fraction of the total cost, about 95/100s should we be cutting need care and provider reimbursement before the 10 and 30%?

            “and yet have worse results.”

            BS, post your worse results and I’ll take you to school there to.

            “America has put people on the moon, sent rovers to Mars, created technology that has revolutionized the world, but yet we can’t fix health care? I don’t buy it.”

            Not everyone demanded a free trip to the moon or mars. Problem with healthcare is everyone demands world class care, thanks cleveland clinic, and wants the bill sent to their grandkids.

            “yet you have deemed health care reform to be beyond our capabilities.”

            I have given plenty of ideas on how to reform healthcare in other post, they aren’t popular on this blog because I acknowledge everyone isn’t going to get everything they want and it aint going to be free. People will die earlier then they had to becuase not everyone can live as long as possible.

        • Doc Brown says:

          Nate,

          For the record, I have a Doctor of Pharmacy Degree, as well as a PhD in Economics and Health Policy.

          I am an academician, but not one that just throws nonsense out there. If you are not capable of putting your emotion aside so that you can actually listen to what I am saying, then there is no need to continue this discussion.

          As to your points:
          “My argument that keeping people alive is more expensive then when they die is passed on 20+ years paying the claims and manageing the plans. I know how much a dead person and how much a live person cost from experience thank you.”

          This is a ridiculous point which seeks to confuse the issue. Of course, with all things being equal, a live person cost you more than a dead person. But that simplistic view has never been the point of the discussion. The point was that it is possible to change the health care system such that it wouldn’t cost you more than we are paying now to keep someone alive till the age of 80, to keep the population alive to the age of 100.


          “Your first failure of inteligence is assuming that an average healthcare spend of $1000 is spread eveninly over all people. Those in the 70-80 bracket actually spend 5-10 times more then those in the 18-28 bracket. If you keep people alive from 80 up to 100 you can expect their cost to pull up the average cost of everyone to the degree that you increased cost substantially offsetting your meaningless $200 savings.
          If the average cost for everyone was $1000 then the average cost for your new super goldens would be close to or over $2000 depending on your population mix. Saving $200 to pick up $2000 that’s usually how people like you come up with plans.”

          Okay, it seems you have a problem understanding basic math. If a person has $80,000 in health care cost over their lifetime, that means they have an average yearly cost of $1,000. Being that it is the average cost, that means the difference in yearly costs, based on age, has already been taken into consideration. That’s why it is called an average. Plus, even given the increase in cost of the elderly, there is no reason to believe that the actual yearly costs of a person between the age of 80 to 100, would be any higher than the current actual yearly costs of a person between 70 and 80 years old.

          Changes that allow everyone to consume as much healthcare as they want, live as long as possibly, and not consume 200% of our GDP do not exist. No one said is or saying we shouldn’t improve healthcare where it saves money and even when it does not save money. We shouldn’t make changes we know will increase cost though and claim it will reduce cost. Thats how we got in this mess in the first place.”

          At no point did you ever hear me make the argument that we should continue to have unbridled consumption. That doesn’t mean rationing of care, but rather allowing patients the ability to make evidence-based decisions regarding their care.

          “We shouldn’t be, we should be scared of politicians and academics promising us savings from things we know will increase cost though.”

          I agree that you should always question politicians and academicians, but don’t forget that there is a difference between not wanting to or not being able to understand the logic behind a statement and the statement actually being a false one. The fact that you “can’t believe” something is true is different from it actually not being true. And please don’t talk to me about “common sense”, that’s one of the most misused phrases in the English language. At one point in our history, common sense said the earth was flat, that man couldn’t fly, that you couldn’t fit a computer into something as small as a cell phone. Common sense changes over time when people make the impossible possible.

          Its common knowledge Medicare has a 10%+ fraud rate. At $7000+ in expenditures per person thats $700+ per member per year just in fraud and waste. No plan comes close to that. Medicaid does as a % but their expenditures per member are so much lower. With enrollment fraud its actually much higher then Medicare since few people get fake IDs claiming to be 65 when they aren’t.”

          You still did not address the fact that Medicare fraud is done largely by health care providers, not the patients. Do I think that more should be done to cut down on All Medicare fraud? Absolutely. I just don’t want people to come away with the opinion that patients are the reason for rampant Medicare fraud.

          “AZGain your showing you know nothing about healthcare administration. A low administrative cost is a false measure of efficency, back to common sense, or so we would hope. I could use EDI and auto adjudication with EFT back to the provider and my cost per claim would be $.50, blowing Medicare away. I would also be the laughing stock of the payor community and out of business in a matter of weeks. Doctors and crooks claiming to be doctors would use me like a free ATM. Anyone that has the slightest idea what they are talking about knows paying claims cheaply is not something to brag about. You need to look at total cost, including claims expense to determine true efficency.
          If Medicare spent $6 PMPM on case management for their highest 5% population they could easily see an ROI of 10 to 1. The $6 would blow up their low admin ratio but their total cost would drop, which one is more efficient?”

          Anyone who knows what they are talking about would know that administrative costs are not just made up of claims expense, personnel and infrastructure costs are also included and make up a large part of administrative costs.

          Fraud and waste 10%+ unnecessary care 30%. All numbers are a fraction of the total, claims are only a fraction of the total cost, about 95/100s should we be cutting need care and provider reimbursement before the 10 and 30%?
          “and yet have worse results.”
          BS, post your worse results and I’ll take you to school there to.

          BS. Really. Show me one report that doesn’t demonstrate the fact that the US pays more and gets less. I’m not talking about the individual results of the surgery or care, but rather overall measures like infant mortality, life expectancy, preventable drug related morbidity and mortality, preventable hospital readmissions, etc.

          “Not everyone demanded a free trip to the moon or mars. Problem with healthcare is everyone demands world class care, thanks cleveland clinic, and wants the bill sent to their grandkids.”

          Your over generalizations negate your point. Do we have a culture of wanting something for nothing? Sure. But that’s not everyone, and it’s not the way America has always been. If we can change for the worse, we can change for the better.

          “I have given plenty of ideas on how to reform healthcare in other post, they aren’t popular on this blog because I acknowledge everyone isn’t going to get everything they want and it aint going to be free. People will Hdie earlier then they had to becuase not everyone can live as long as possible.”

          Your premise is based on lazy thinking. Just because you aren’t capable of divsing a way to have people live longer while still paying less than we do today, doesnt mean the answer isn’t out there.

          And if your goal is only to save money, all you have to do is outlaw all health insurance. If you can’t pay out of pocket for care, then you don’t get care. Do away with Medicare and Medicaid as well. We would save trillions of dollars. Of course, we would also soon regress to a third world country. Not only would our life expectancy soon drop to less than 50′ but most companies would go out of business since you wouldn’t have a sufficient number of healthy Americans to keep the businesses running.

          As David Mirvis and Cyril Change have concluded, The health of the population is the economic engine that keeps our country going.

          As you said, dead people don’t cost you anything. But also, dead people can’t make widgets, work in the service industry, or healthcare, or academia, or K thru 12.

          • nate ogden says:

            “The point was that it is possible to change the health care system such that it wouldn’t cost you more than we are paying now to keep someone alive till the age of 80, to keep the population alive to the age of 100.”

            Myself, 20 years of claims experience, and every actuarial projection around disagrees with you. If you treat every condition X with anything and that keeps those people out of the ER or hospital for condition X but they die 20 years later from anything else you will have spent considerably more money. The increased cost per unit of life between 80 and 100 makes this impossible. Further the debilitative illnesses one is likely to incur between 80 and 100 are far more expensive then those conditions treated between 65 and 80. Once people start getting dementia or anything that puts them in a nursing home any savings is gone 10 times over.

            You would need a revolutionary treatment or change in cost structure to achieve what your talking about. When you get into nursing homes and such your talking labor, how are you going to cut labor cost 30% without robots?

            “Plus, even given the increase in cost of the elderly, there is no reason to believe that the actual yearly costs of a person between the age of 80 to 100, would be any higher than the current actual yearly costs of a person between 70 and 80 years old.”

            How do you contain emotion when supposedly college educated people make statements like this, how many letters do you have behind your name again? So Inflation doesn’t exist? And all the actuarial tables showing cost increase with age are imaginary?

            http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/

            “Per capita lifetime expenditure is $316,600, a third higher for females ($361,200) than males ($268,700). Two-fifths of this difference owes to women’s longer life expectancy. Nearly one-third of lifetime expenditures is incurred during middle age, and nearly half during the senior years. For survivors to age 85, more than one-third of their lifetime expenditures will accrue in their remaining years.”

            Let me repeat that
            For survivors to age 85, more than one-third of their lifetime expenditures will accrue in their remaining years.

            And your arguing keeping people alive from 80 to 100, passing that 85 marker won’t increase cost?

            “The oldest group (85+) consumes three times as much health care per person as those 65–74, and twice as much as those 75–84”

            Again how many letters do you have after your name?

        • Doc Brown says:

          When you’re right, you’re right Nate. If we continue with the same health care system and do nothing differently, keeping people alive longer costs us more money.

          But I’ve agreed with that from the beginning.

          My point is that by revolutionizing the health care system, even the cost of keeping people alive for 20 extra years can still be outweighed by the cost savings.

          And yes, I have a bunch of letters behind my name. And during the long process of getting those letters, I was fortunate enough to be trained how to examine a problem from multiple perspectives, and think critically for the purpose of finding solutions to problems rather than just whining about them.

          As an actuarial, even you would have to agree that your tables are based on historical trends, and those historical trends are based on a society that has suffered under the current health care system. But if you change that system, from cradle to grave, to one that decreases morbidity and disease prevalence, your current actuarial numbers would be of no use. You would have to throw them all out and start again.

          Are you really telling me that if we could decrease the prevalence of prevtable chronic disease conditions by 50%, we wouldn’t save far more money than we would spend extending the life expectancy by 20 years?

          Come on. As an actuarial with so many years of experience, even you can crunch those numbers.

          And as for emotion. Yeah I can see how you would get mad when you hear people say that keeping people alive longer will save us money, if you are looking it from the perspective of business as usual. But that’s not what I’m saying.

          I’m talking about making substantial improvements to the health care system; utilizing health care providers to the maximum of their abilities; changing the way we do business in health care.

          And yes I know that is scares a lot of people, because we are talking about doing things differrent than before. But mostly it scares the health care companies and workers who profit so much by having patients get sick and diseased, than by keeping them healthy.

          The sicker a patient is, the more money hospitals, doctors, and pharmacies (just to name a few) make.

          We have a broken system. And we need to fix it. I hope that we can agree on that.

          It’s been enjoyable debating with you.

          • nate ogden says:

            if you have two PhD do you write it
            Brown PhD PhD or
            Brown PhDs?

            This would be much easier if we had a public white board to draw on.

            Lets work with heart attacks, they can strike early, fairly deadly, and preventable. Lets eliminate all heart attacks and assume they live to 100, what kills them at 100? You don’t normally get into gun fights or drug over doses at 100. While we are very capable of keeping the body going we have not perfected the same longevity for the brain. Old age comes with considerable assistance cost.

            Further lets say we do keep the mind in working order what about the joints? They just aren’t made to last 100 years.

            Even if you solve all that what about 20 years of colds, accidents, and routine care?

            I don’t recall the exact figure but healthcare for the most part is a service industry, most of the money goes to labor. Its one thing to say we can develope cheaper imagining or lab test but thats not going to save enough money. Lets say we developed every drug and they went generic tomorrow even that would only reduce total spending 10-12%.

            You ask if we decreased morbitity by 50% could we pay for an extra 20 years of life. We can actually solve that problem with current data. What morbitities aer you eliminating, and this is the important part, what are you replacing them with? Thats the tricky part, the number of deaths stay the same you just want to change the cause and date of occurance.

            I will give you, if you want to suspend reality, if we lose all cancer and parkenson, etc and replace it with drowning, then we could achieve your goal. We aren’t all eskemo though so I don’t think we can send our centurians out into the ocean on their 100th birthday.

            I don’t see a reasonable trade off, There is nothing so prevalant and expensive that can be replaced with a cheap death to make the numbers work. The fact that deaths later in life tend to be more expensive makes it even harder. 20 years of wage and inflation in general makes it even worse.

            Another overlooked problem is we are talking medicare expenses, if you increase life 20 years you also just added 20 years to Social Security which really blows the budget out of the water.

            How do you feel about war? If we had an all senior citizen army, those between 90-100 and invaded some third world country ever other year that would work.

            I’ll agree we do have a broken system and it needs to improve, we also need to know our limits, know what those limits are upfront, and be honest about what happens when we reach them. The worst thing about the intrusion of politics into healthcare and so many other parts of our lives is politicians love to overpromise. Its one thing if you grow up knowing you won’t get something, its a huge problem when your told all along you will then you don’t.

            We can’t be promising people healthcare we can’t afford to deliver.

            This has been a very enjoyable and challenging debate, any time you and all your letters want to mix it up just let me know.

        • Doc Brown says:

          Nate, the correct title for a Doctor of Pharmacy is PharmD,, not PhD. The title of PhD stands for Doctor of Philosophy degree.

          But it’s become obvious that you lack the imagination or will to be a part of the solution to our health care problem. In fact, you are so entrenched in your belief that it could never work, you woulld never believe otherwise. You’re so proud of how you are, in your mind, so much smarter than the politicians and academicians, but in reality you are just sad. How pathetic to spend your life using what intellect you have To be nothing more than close minded.

          We have had several posting exchanges, and in each one you have talked down to me, called me names, etc. I have refrained from making similar comments, because that’s not how I engage in discussion. But since are discussion has ended, I can speak my peace.

          I knew from the beginning that you were a person who couldn’t be convince. My main reasoning for the interchange was to help show those reasonable folks that a more inficcient and less costly health care system is possible.

          You keep retorting with one specific change to the health care system, and why that could never give you the cost savings you need. Such an argument, of course, is just meant to sound like a logical retort to my points, when it is nothing of the sort.

          A major change to the health care system, would mean increased efficiencies and decreased cost through multiple means and at all levels, not just keeping a person from getting a heart attack, or whatever singular example you come up with.

          So Nate, while you continue to spend your life telling everyone who will listen that it’s not possible, me and others will spend our lives making it a reality. We’re not afraid of a little hard work. And we’ll even do all we can to extend your life expectancy.

          • nate ogden says:

            “to help show those reasonable folks that a more inficcient and less costly health care system is possible.”

            Your suffering from a sever case of liberalism, writing more efficcient and less costly healthcare system on an impossible plan is not achieving anything. Just becuase Obama called it the affordable care act doesn’t mean anything got cheaper.

            I have given specific obstacles that need to be overcome to aqchieve what your talking about. All you have in return is your going to waive your magic wand and revolutionize or modernise, or reform healthcare and cost will drop 50% and we will all live 20 years longer. Granted most liberals would jump all over the chance to vote for that but reasonable people would call BS.

            You have jumped from false statement to false statement, you never did mention again that 80-100 years olds don’t spend more then 70-80 year olds, and you offer nothing solid ofg how your going to achieve anything.

            Your attacking my specifics with generalities and calling me uncreative. Your the Obama of THCB, put something on the table then attack others for being closed minded.

  2. Nate Ogden says:

    “Republicans have charged the IPAB will lead to government rationing of health care, and have attacked the idea of the board, which hasn’t been appointed as of yet–a central talking point it their efforts to repeal reform.”

    Actually Republicans and Democrats aree opposed to IPAB, why did that get left out?

    http://thinkprogress.org/health/2011/06/08/239660/what-is-driving-dems-to-oppose-the-ipab/

    “Antos also pointed out that there will be a one-time spike in health care spending in 2014 as the 30 million newly insured Americans purchase drugs and physician services that they previously did without, and those costs will become embedded in overall costs.”

    Will this be a one time bump like most people think of one time…meaning like one time, or a Medicare one time bump that will last 45 years and blow through all projections of cost? Assuming the government misses the cost of covering 30 million like they missed the cost of covering the initial Medicare population what will happen? Can we afford that sort of mistake?

  3. So we have a sure way to lower health care expenditures: shifting costs to people already impoverished by a recession, while everybody from Kaiser to hospitals to insurers are posting record profits.

    This also works well for CMS since both seniors and Medicaid beneficiaries are now having trouble coming up with copays which they could barely afford before the recession struck.

    Judging by financial forecasts and the “need” to keep unemployment high and markets low until after the 2012 election, things will only get better for health care costs. As long as we can keep the economy in the gutter, we should be OK.

    • Nate Ogden says:

      then shortly after that in 2014 Obamacare kicks in which will really bankrupt the system and drive unemployement up. The provision outlawing carriers from selling high deductibles alone should cost a few million people their coverage and increase deductibles and co-pays for a few million more

      • I don’t think “Obamacare” will either bankrupt the system (what system?) or drive unemployment up. However, I will take your word for the coverage losses prediction, since more than likely insurers will be raising premiums, whether they need to or not.
        This is exactly why we need at the very least another option, but that’s water under the bridge now.

        • Nate Ogden says:

          so ignore the stated reason coverage will be lost;

          “The provision outlawing carriers from selling high deductibles”

          and blame it on carrier greed. Almost as useful as BobbyG there Margalit.

          Why do we need another option when self funding basically allows for infinit options now until Obama started placing all the restricitons. If you want options stop passing so many mandates dictating coverage and how its delivered.

          • I would be fine with no restrictions whatsoever. None at all. As long as there was a nice and safe public option for people to buy into. Insurers can have as much rope as the want. Hopefully they will put it to quick and painless use….. or play along.

          • Nate Ogden says:

            This nice and safe public option, safe to whom?

            Would your public option have to be self sustainable, getting by on just premium collection or would it be heavily subsidized by tax payors?

            Would this safe public option have to reimburse providers a fair amount sufficent to cover cost and some profit or could it under pay and drive up cost on everyone else?

            Would this public option have to operate under the same rules as the carriers it competed with or could they continue to dictate business pratices to their benefit? Secondary payor, CMS reporting, take backs with no time limit, etc etc.

            You mention giving insurers as much rope as they want so they will hang themselves, will your public option also be subject to this or would it just be medicare for all, run as far over budget as it likes, screw up the entire system, and live like a parasite on the private insurers?

            Private insurers have survived inspite of government and public plan failure, Medicare and Medicaid wouldn’t be here without private insurance.

  4. BobbyG says:

    Nate can take it from here, y’all.

  5. Barry Carol says:

    “I would be fine with no restrictions whatsoever. None at all. As long as there was a nice and safe public option for people to buy into.”

    Margalit –

    Switzerland doesn’t have a public option even for the elderly. Within Medicare, MA plans continue to gain market share even as government payment rates are squeezed and PFFS products are phased out. Humana, one of the two largest insurers in the Medicare Advantage market, is doing very well insuring that population. Each year, it resets its bids to target a 5% pretax margin which means profits above that level are reinvested into a combination of greater benefits and/or lower beneficiary premiums which are exactly what we should expect from a rational competitor.

  6. Barry Carol says:

    As Nate outlined very well, the opposition to a public option was based on a lack of trust that it would be forced to operate as a level playing field competitor with private insurers including covering its expenses solely from premium revenue and paying fair fees to doctors and hospitals. Opponents also feared that even if it started out as a level playing field competitor, it wouldn’t stay that way if it started to falter.

    The large Medicare Advantage insurers are highly confident in their ability to compete with standard Medicare. In Medicaid, the states are accelerating their effort to move beneficiaries into managed care because it saves money vs. unmanaged Medicaid.

    Too many liberals think that health insurers are inherently evil and mean while government is good and fair and can provide health insurance for less because it doesn’t need to make a profit. While there are a relatively small number of people, perhaps 4-5 million, for whom the private underwritten insurance market doesn’t work, high risk pools could address their needs without subjecting everyone else to a monolithic one size fits all unresponsive government run monopoly which is what the single payer crowd wants.

  7. Nate Ogden says:

    we wouldn’t have the healthcare crisis we do today if Democrats had passed the catostrophic plan for seniors they said they were. If they had helped the 13% that needed it instead of creating this disaster that effected everyone we wouldn’t be here discussing any of this.

  8. Barry,
    The Swiss insurers are regulated much more than ours, so there is no public option per se. We came up with a lightly regulated (by comparison) private market, plus a big safety net. Obviously, this arrangement is not working well.
    Nate’s solution to the problem, if I understand it correctly, is to relax the regulations on the private market and minimize the safety net, in the belief that the safety net is too big and the free market will solve the problem.
    I believe the solution is exactly in the opposite direction, but in lieu of increased regulation, I would settle for a free market plus one highly available and highly regulated option, which may or may not compete fairly with the market based alternatives. As long as tax payers agree to fund it, it shouldn’t matter because the goal is not fair competition. It is fair health care.
    As to managed care, this is a different debate, but all in all, I believe managed care may work very well if the goal is solely to benefit the patient, i.e. truly patient centered the way Dr. Berwick defines the term. Otherwise is just another money hungry HMO deja vu.

  9. Nate Ogden says:

    By what measure are they much more regulated and US lightly regulated? Fairly subjective argument and impossible to agree or disagree with when you don’t even say how you derive at this conclusion.

    ” Obviously, this arrangement is not working well.”

    What arrangement, the part that is not working is Medicare and Medicaid, the public options, so your argument is due to the failure of our public plans we need to institute public plans?

    And in order to fix these failing public plans we need to destroy the functioning private plans?

    ” As long as tax payers agree to fund it, it shouldn’t matter because the goal is not fair competition. It is fair health care.”

    Can you define fair healthcare?

    And when you say tax payers agree to fund it, do you mean they agree to actually pay it or they agree to incur debt so future generations can pay for it? The left is great at selling bumper stickers, how about an actual working plan for a change? Medicare is the perfect solution to your request. As long as you’re not a future generation forced to pay for it. A sustainable plan that doesn’t collapse in financial catastrophe would be preferred.

    Was it fair thousands of people lost coverage so a few could get IVF treatment?

    Was it fair millions will lose coverage so a few can spend an unlimited amount?

    I’ll be very interested to see how you square fair healthcare and agreement to pay taxes.

    • Fair health care means that everybody gets needed and beneficial care according to their personal preferences, and everybody is able to purchase whatever other care they want according to their financial abilities.

      Millions will not loose coverage just because there are no life time caps. People are not going to get sicker just because you added a paragraph to your regulations document, certainly not catastrophically sicker to the tune of many millions of dollars. Your risk calculations should not change, unless you were dumping folks out when they exceeded a rather small and realistic cap.

      Plans with unlimited life time caps today don’t seem to cost more than the ones with a couple of millions cap. The main difference in plan costs lies in the size of the deductible and coinsurance.

      Here is a question for you, Nate. What is the percent spent by insurers on people exceeding, say, 2 million dollars in cumulative charges?
      Keep in mind that at 65 they are all out and that most people don’t stay with one given plan for their entire pre-65 life.

  10. Nate Ogden says:

    “Fair health care means that everybody gets needed and beneficial care according to their personal preferences”

    So your fair plan will cover my daily massage and you don’t see how this will be unsustainable? We can’t deliver needed and beneficial care now for those that are insured and your complaining about cost. How do you want to deliver this same level of care to an additional 50 million people and spend less? Your still talking bumper stickers, wishing everyone had a unicorm so we could reduce global warming is not a solution, its an hallucination.

    “everybody gets needed and beneficial care according to their personal preferences” is an hallucination, you can’t even begin to lay out a plan that would make this possible. Apparently you have no problem spending trillions of your grandkids money to find the obvious out though.

    “Millions will not loose coverage just because there are no life time caps.”

    Really and you know this how? Lets apply a little logic to this question. Why does PPACA offer waivers of this rule? They knew that people would lose their coverage if this law was applied to everyone. Ok so how many people are covered by waivers?

    “GAO says in the report that about 3 million people were covered in approved plans and about 153,000 people were covered in denied plans.”

    What? 3 million, but Margalit said millions of people wouldn’t lose their coverage if the limits where forced on everyone?

    OK Margalit why did Obama grant waivers covering 3 million people then? I’m guessing you won’t have an answer for this becuase once again your running off making statements you know nothing about. Can’t wait to see you try and spin this though.

    “Your risk calculations should not change,”

    Then why do they? 3-13% increase to eliminate the annual cap depending on the carrier. What do you know that none of the professionals who job it is to calculate these numebrs knows? They aren’t paid to increase premium they are paid to get the numebrs right, this isn’t the CBO but real actuaries.

    “What is the percent spent by insurers on people exceeding, say, 2 million dollars in cumulative charges?”

    Doesn’t matter, rates are based on what is going to happen not what did happen. Last year a hospital couldn’t spend 5 million, now they can, how do you factor this in? When the max was 1 million people hardly ever hit it. When it was raised to 2 million they hardly ever hit that. 5 million hardly anyone ever got there. Now no limit what do you suspect will happen, who do you think is going to pay for all those new hospitals?

    “Keep in mind that at 65 they are all out ”

    No margalit they are not always out at 65, I cover many 65+ and they are usually the large claimaints year in and out. Again if you don’t understand the basic facts how can you hold such strong opinions?

  11. Starting from the bottom up:

    I’m afraid you are assigning causality where one may not exist. Just because costs of care increased in parallel with increased caps on life time expenses, does not mean that one is a result of the other. Do you have any research showing that plans that have unlimited caps have larger expenses?

    “rates are based on what is going to happen not what did happen”
    Rates are not based on experience? They are based on best guess?

    Risk calculation should change if and only if your previous caps created underisurance to the degree that significant numbers of sick people reached their limits and were terminated. Have numbers for how many were placed in that situation?

    I suspect waivers were granted as part of the overall cave in policy approach.

    Finally, “needed and beneficial” does not include massage. I could go into an explanation here, but I know that the Liverpool thing will by definition come up in your response, because if the government denies you a massage, it is necessarily a death panel, but if you as a payer want to not cover the same massage, that is free market glory.

  12. Nate Ogden says:

    “Do you have any research showing that plans that have unlimited caps have larger expenses?”

    I don’t have research but I do have cashed checks made out to hospitals showing they are getting paid much larger amounts then they did before. I also have 10+ years of claims data at my finger tips and another 10 years of memories of hospital contracts and what different per deims were and how much conditions would usually cost.

    I do know a back surgery use to run 90K and if you shop around you can still get them for 90K but for some reason certain hospitals are comming in at 300K+ now.

    If a hospital isn’t going to be paid they are less likely to perform the service, i.e. they wont try to slip[ in 120K of hardware where they use to us 40K on a back surgery.

    Unlimited caps are less then 12 months old by the way, what sort of research study do you expect?

    “Rates are not based on experience? They are based on best guess?”

    Predictive modeling, if someone has condition X its priced at y dollars. This was another of your liberal throw away statements, use a little common sense. Are you really saying auto, homeowners, life, and all insurance is best guesses? Why do you soil conversation with these?

    “Risk calculation should change if and only if your previous caps created underisurance to the degree that significant numbers of sick people reached their limits and were terminated.”

    If you don’t collect the premium beforehand to pay the claims how do you write the check?You can’t pay the claims then hope to collect enough to cover them after the fact.

    ““needed and beneficial” does not include massage.”

    My doctor says I need massage to relieve stress and relax tight muscles that are causing back pain. It is both medically necessary and beneficial. Why won’t you cover it?

    I bet you cover IVF without a second thought, which is not treatment of a medical condition but a solution to a medical problem.

  13. “Unlimited caps are less then 12 months old by the way, what sort of research study do you expect?”

    Nope. I have never had insurance with caps and I’m pretty sure I’ve been around for more than 12 months. There should be numbers out there, if anybody cares to compile them.

    Also I am pretty sure that hospitals gauging prices has been around for more than 12 months and I have no indication that they are checking the plan caps before they charge out. Besides you are not paying them what they charge anyway.

    “My doctor says I need massage to relieve stress and relax tight muscles that are causing back pain.”

    Great. Go get one, or see if you can use your natural charms to get a free one. If the doctor recommended a hot bath, you wouldn’t bill me for the bubbles, would you?

    • Nate Ogden says:

      “If the doctor recommended a hot bath, you wouldn’t bill me for the bubbles, would you?”

      If it was your public option or Medicare sure, and I am positive they would pay for it

  14. Barry Carol says:

    Margalit –

    Two differences between Swiss regulation and U.S. regulation of health insurers are (1) the Swiss insurers cannot make profits on the sale of policies covering the basic benefits but they can from supplemental benefits and (2) Swiss insurers negotiate with providers as a group so all insurers pay the same price for a given service, test, procedure or drug in a given canton. I note that the average blended after tax profit margin of U.S. for profit and not for profit insurers is probably 3% at best which suggest minimal price differences based on whether insurers are for profit or not for profit.

    Also, your comment that it’s OK if a public plan competes unfairly with private plans including the availability of significant subsidies to supplement premium revenue would likely drive insurers out of business and result in a single payer system of healthcare payment. The lack of choice alone coupled with a probable slowdown in medical innovation and the general unresponsiveness of a monopoly government payer would result in most Americans paying higher taxes for less coverage even net of the insurance premiums they used to pay assuming employers raised (taxable) pay by the amount that they previously paid for health insurance. It would not be an American solution consistent with American values and culture. We can do a lot better.

  15. BobbyG says:

    “an American solution consistent with American values and culture.”
    ___

    Yeah, they’re on such stellar display these days.

  16. Barry Carol says:

    For many years, my self-funded employer’s health insurance plan had a $1 million lifetime benefit cap. A few years ago, it raised the cap to $5 million. The only reason that there is a cap at all is cost. This is a generous employer that operates in a highly competitive and very cyclical industry with plenty of years that are not profitable. We don’t have unlimited resources and must factor that fact into the cost of benefits we can provide. It would be enormously helpful if government were more sensitive to that reality as well.

    • Barry,
      What is the realistic effect of these caps on cost? How many people ever reach these caps? Does the number of severely ill people change because the caps are, or are not, there? And what happens when they do reach the cap? Who pays for subsequent care? The government? Or do they just go home and die?

  17. Nate Ogden says:

    Margalit your looking at it all wrong. Health Insurance has nothing to do with health. At least it shouldn’t.

    No an unlimited cap is not going to change the number of ill people, no one ever argues that. What it does effect it hospital and provider charges and billing. If hospitals can get paid more they will charge more. If Pharma can get someone to pay $90,000 for a drug they will sell a $90,000 drug. Now I would imagine they would start selling individually targeted treatments based on ones DNA at some price we never imagined possible before.

    “Or do they just go home and die?”

    Everyone dies in the end. The question is do you die today or do you die next week after spending an additional $300,000. The question to you and those that think like you is how much of your kids and grandkids future do you want to blow for that extra week? Is that extra week in a hospital bed worth your grandkids suffering under a 50% tax burden instead of 35%?

    • I don’t want to spend anything for an extra week in a hospital bed. Actually I am willing to pay for avoiding an extra week in a hospital bed, or month, or year…..

      The problem here Nate is that when PPACA suggested that we at the very least ask patients if they want that extra week, and most probably don’t even if it’s “free”, a whole bunch of people started screaming about death panels.
      If consulting with patients on this subject is death panels, then how do you classify caps on what insurance will pay? Death without panels?

      • Nate Ogden says:

        “PPACA suggested that we at the very least ask patients if they want that extra week, and most probably don’t even if it’s “free”, a whole bunch of people started screaming about death panels.”

        We might have a problem if what you said was even remotely true.

        PPACA didn’t just ask patients if they want an extra week. Did you forget about the government panels making coverage decisions. Somehow when people complained about government panels possibly turning into death panels you missed that entire argument. But when someone talks about pallative care consultations you take the unrelated panel concern and just apply it there. Are you being dishonest or forgetful Margalit?

        Actually there is a third option, you were betrayed by your liberal news providers and have no idea what your talking about. For a good explanation of Death Panels and why informed individuals are concerned read this

        http://www.nationalreview.com/agenda/244934/non-demagogic-disquisition-death-panels-avik-roy#

        after you have been enlightened to the whole argument come back and let me know what you think.

        • OK, I read Avik Roy’s post, and some of his replies to comments.

          I think the crux of the matter is that there is an implied assumption in the conservative argument, that if government finances health care through taxes, then government will assume the right to prevent people from buying additional services. While this may be true in the NHS, it is not true in other “universal care” systems.

          I don’t know why conservatives feel compelled to compare universal health care with, of all things, the NHS. The NHS is an integrated delivery system, where the government owns the delivery system as well as being the payer (like Kaiser). I’m sure that some liberals here advocate for such a system in the US. I most certainly do not.

          For a non-NHS system, the rationing issue is a bogus one. Every payer in this country, private ones included, has a list of “benefits” that are to be paid to members. Medicare, our public system, which has been around for almost half a century, has the most comprehensive list of such benefits, but neither Medicare, nor you, are willing to pay for everything a member could desire. This is not rationing. It’s product definition.

          Since you have no problem with private insurance not handing me a blank check in return for my premium (quite the opposite, I believe), why are you having an issue with the government doing the same thing? Either way, I can go and buy more if I have the money and the inclination.

          We don’t need to go looking at the NHS, we have a pretty solid public precedent right here, a bit younger than the NHS, but 50 years is good enough for experience based conclusions.

          One more thing, in one of his replies to comments Avik Roy concludes “This is how it works in Switzerland, and it works well.”
          I take it that he would support a tax financed health care system similar to the Swiss one. I would too. Would you, Nate?

          • Nate Ogden says:

            ” if government finances health care through taxes, then government will assume the right to prevent people from buying additional services. While this may be true in the NHS, it is not true in other “universal care” systems.”

            Medicare already does it as does the VA and Medicaid. NHS also has one of the older systems, give these other systems another 5-10 years and they will be to.

            “I’m sure that some liberals here advocate for such a system in the US.”

            Some? The polls I read say most, the lack of a single payor option was their biggest complaint of liberals in regard to PPACA.

            “The NHS is an integrated delivery system, where the government owns the delivery system as well as being the payer (like Kaiser).”

            Government already owns 20% of US hospitals. And does ownership matter if your the only payor? If you control the purse strings and make the laws who cares who paid for it.

            “Medicare, our public system, which has been around for almost half a century, has the most comprehensive list of such benefits,”

            LOL, Margalit, please think about what you just said. Are you serious? Medicare that just started covering Rx? Medicare that doesn’t include any dental or vision? You really have no clue what your talking about. No matter your views are so screwed up.

            “Either way, I can go and buy more if I have the money and the inclination.”

            If I am rich can I drop Medicare with no consiquence? Exactly. And what guarantee do we have Medicare won’t follow the NHS if they got rid of everyone else. Remember for the 100th time, Medicare by law paid providers billed charges till it was not convienant so they changed the law. Why do you ignore history?

            Nope, nothing in the constitution allows the federal government to sponsor healthcare and they have failed miserably at it so far

  18. Barry Carol says:

    “Everyone dies in the end. The question is do you die today or do you die next week after spending an additional $300,000. The question to you and those that think like you is how much of your kids and grandkids future do you want to blow for that extra week? Is that extra week in a hospital bed worth your grandkids suffering under a 50% tax burden instead of 35%?”

    This is really the key point. I know I sound like a broken record when I keep saying that resources are finite and we can’t afford to give everything to everyone. What galls me is that people who wouldn’t dream of spending their own money on futile end of life care even if they could afford to think nothing of spending someone else’s. Indeed, they feel entitled to do so. Self-payers with means who are so inclined can, of course, spend as much of their own money on futile care as they like

    People in other developed countries are more accepting of death when their time comes. They don’t spend nearly as much on futile or marginally useful care as we do. In fact, I wouldn’t be surprised if doctors didn’t even offer such care as an available option in many cases. They are probably more likely to say there’s nothing more that we can do other than keep you comfortable.

  19. Barry Carol says:

    I think the British made a societal decision a long time ago to spend less as a percentage of GDP on healthcare than other countries are willing to. I also think it’s outrageous to deny people the right to spend their own money for services that the NHS won’t pay for without losing access to the coverage it will pay for.

    That said, I think the QALY is a logical way to make judgments about what will and won’t be paid for. No society can afford to pay for everything and anything that a doctor thinks might be at least marginally beneficial for a patient no matter how expensive. Personally, I think it would simplify matters to offer the following approach to health insurance. There could be several different schedules of benefits with various combinations of deductibles, co-pays and OOP’s within each. Policy A might cover all services, tests, procedures and drugs up to $125K per QALY for premium amount X. Policy B would cover everything up to $250K per QALY for premium amount Y and Policy C might cover anything you are willing to tolerate having done to or for you for premium amount Z. There could be exclusions for lifestyle treatments like massages, ED drugs and maybe IVF. Long term custodial care in a nursing home would also have to be dealt with separately and probably means tested as it is now.

    In the end, if explicit rationing ultimately becomes necessary, I think it’s more reasonable to ration care to the elderly who have already lived a normal lifespan as opposed to children, young adults or middle age people. People who object to that approach, I think, have an obligation to offer a viable alternative or explicitly agree to shoulder a significantly higher tax burden than we currently pay.

  20. Barry Carol says:

    “I take it that he would support a tax financed health care system similar to the Swiss one. I would too. Would you, Nate?”

    Margalit –

    It’s not tax financed the way Medicare is. All of Medicare Part A is taxpayer financed as are 75% of Parts B and D. The Swiss who can afford to are expected to purchase a health insurance policy on their own and deductibles can range up to 2,300 CHF or about $3,175 at the recent exchange rate. About 30%-40% of the population qualifies for a taxpayer financed subsidy to help lower income people purchase a policy. General revenues also cover some of the cost of operating the hospitals. The Swiss population pays for about 30% of healthcare costs out of pocket, about 35% is covered by health insurance premiums paid by individuals themselves and the rest is covered by insurance paid for by the taxpayer financed subsidies plus the taxpayer contribution to hospital operating costs. As I mentioned in previous comments, there is no public option even for the elderly.

  21. Barry,

    I would oppose a QALY based system. I would oppose rationing by circumstances and by ability to pay. I am perfectly willing to shoulder a higher tax burden to prevent these inequities because of the same reasons Nate is opposing government financed health care – unintended consequences.

    I think I understand the Swiss system and I am fine with it. So my question to Nate, one more time, would you support universal care Swiss style Nate?

    • Nate Ogden says:

      My answer to Margaliut one more time;

      “Nope, nothing in the constitution allows the federal government to sponsor healthcare and they have failed miserably at it so far”

      ” I am perfectly willing to shoulder a higher tax burden to prevent these inequities”

      And your liberal short comming raise their head once again. No matter how many times history hands it back to you why do liberals never learn? Just because you pass a bill called the Affordable Care Act doesn’t mean care will be affordable. You say your willing to shoulder higher taxes for an inequality free system. Are you willing to shoulder higher taxes for an inewuality free system that doesn’t do anything to prevent inequality and actually codifies them?

      in 1965 millions of clueless liberals were willing to shoulder higher taxes so grandma wouldn’t lose the shirt off her back. They got their higher taxes all right, instead of 13% of grandmas losing their shirt 19% do.

      Your mind thinks in liberals ways, you will just never understand consiquences apparently. No matter how many times history repeats itself.

  22. Barry Carol says:

    “I think I understand the Swiss system and I am fine with it.”

    Since virtually everything else in Switzerland is much more expensive that it is in the U.S., especially since the currency is up almost 35% vs. the dollar over the last year, there are several aspects of the system that I would like to understand better including the following since healthcare is cheaper at least as a percentage of GDP:

    1. How does the government define what will be in the basic benefit package and later, as new drugs, devices and techniques or developed, determine whether or not to cover and pay for them?

    2. To what extent, if any, does medical practice differ from here in the U.S., especially as it relates to end of life care and defensive medicine?

    3. What differences, if any, are there in patient expectations from imaging for a headache to end of life care?

    While we may disagree on whether or not QALY metrics are the best way to determine whether or not to pay for a new drug, device or technique, at the very least, Congress needs to specifically authorize CMS to take cost into account in making that determination. Right now, it’s not allowed to.

    • Barry,
      I would assume that government defines the basic benefit in a way similar to how CMS defines the Medicare benefits. I do agree that CMS needs to take cost into account, but not based on individual circumstances.
      For example, CMS can decide if they will pay, or not pay, for a drug that has been shown to extend life by two weeks. CMS should not decide that for patient A, the drug will be paid for, but for patient B it will not. This type of judgement looks very slippery to me.

      I also don’t know what people in Switzerland expect in the way of imaging, but I am having trouble with the notion that all of us, or most of us, are abusing the system and demanding MRIs for headaches, because it doesn’t square with the numbers that show that 80% of people use less than 20% of resources. Maybe there are some MRI junkies in that 20%, but most Americans don’t behave like that, and there isn’t much to be squeezed out from the overwhelming majority.

      • Nate Ogden says:

        just becuase 80% only use 20% doesn’t mean that 20% isn’t still a very big number that could be smaller. Using really rough numbers

        60 million people average $26,666.67
        240 million people average $1,666

        Even if we assumed the 240 million used healthcare optimally that leaves 60 million people making terrible decisions and getting their MRI fix weekly

  23. Nate Ogden says:

    Margalit read this again, then go through history;

    From the conservative point of view, liberals often tend to see an injustice or inequity in the world, pass a law to fix the inequity, and move on to the next problem. Conservatives think of themselves as approaching the same policy problems with pessimism and skepticism, because they are trying to look two moves ahead: what incentives will the new law distort? What new injustices or inequities will be triggered by these reforms?

    This is not to say that liberals don’t try to think about the long-term consequences of their proposed reforms. They do. But it is to say that conservatives worry much more about this problem—the problem of what laws will be written in the future to address the unanticipated problems of laws written in the present. Liberals tend to be much less concerned about unintended consequences, and are more confident in their abilities to promulgate effective government action.

    Let me try to explain another way: there is a policy problem A. Activists seek to pass a law, B, to solve injustice / policy problem A. But law B doesn’t completely solve problem A, and creates unanticipated new problems of its own. So a new law is passed, law C, to solve the problems outstanding from problem A, and the new problems caused by B. Unfortunately, law C only partially fixes the outstanding problems of A, and the new problems caused by B, and creates new problems of its own. So, now, there are calls for a new law, D, that will finally solve all the outstanding problems.

    The above scenario is almost always what happens with complex new legislation, especially when that legislation substantially expands the role of government, in an unprecedented fashion, in what was previously private economic activity. In the case of Medicare, for example, official projections about the long-term costs of the program were off by a factor of 10, and various attempts to solve that problem (e.g. price controls) have created new ones (fraud).

    WHy are we here, not in the grand big bang sense but healthcare.

    Democrats passed Medicare to solve problem Law A

    Medicare cost criminally underestimated so we pass Law B

    Law B starts the cost shifting and market manipulation but doesn’t do anything to get cost on sustainable path so we pass Law C

    I need to hit the road but will finish this later. I just don’t get how anyone can be so naive with our recent history to support more government reform. How clearer of a history do you need to see it never works like they tell us it will and always cost 10 times as much

    • Craig "Quack" Vickstrom, M.D. says:

      Nate,

      I think your critique of liberalism is mostly spot on. Liberals do tend to see a government solution to everything. They also don’t look ahead to the law of unintended consequences. We really fall down on this one.

      That said, conservatives tend not to see problems. Period. Slavery. Child labor. Corruption. Segregation. Environmental degradation. Work place injuries and safety. Gender inequality. Minority persecution. You get the point. These things were OK back in the day, because we’ve always done it that way.

      Conservatism by its very nature sees the status quo as acceptable. Liberalism does not and attempts, through mostly governmental means, to solve the problem. This is ultimately why liberalism was and still is, more appealing to me.

      Now neo-liberaism, a la Clinton and Obama, attempts to use private enterprise to achieve solutions to some problems. Being a classic liberal, I strongly disagree.

      Now, to my civil libertarian mind, this is a big mistake, as we want the Big Three Oppressors (government, religion, and private enterprise) fighting each other so they are too weak to trample on we the people. But, your mileage may vary.

      • Nate Ogden says:

        That said, conservatives tend not to see problems. Period. Slavery.

        Who ended slavery?

        I think your also confusing republicans, a very small set at that, with conservatives. There is no bigger protectors of the enviroment then conservatives. Hunters, fishers, and such do 10 times more then liberals sitting in their ivory towers to actually help the enviroment.

        I think your also giving the liberals far more credit for doing something when something was actually harmful. Sometimes doing nothing is more humane then doing something for the sake of doing something.

        Would you argue the poor are better off after housing projects?

        How about welfare?

        Just two examples of poorly done solutions causing 10 times the harm of doing nothing.

        Medicare has spent trillions and more seniors need assistance now then before.

        Where do you live that you assigned corruption as a conservative issue, I assume you were joking with that one or thought I wouldn’t notice. Liberals own that hands down.

        Gender inequality, do you want to discuss how liberals treated Palin? Malkin? The left embraces the cause but never the issue. Conservatives are far more respectiful of women and women rights then Liberals. Liberals just rally around the cuase to deflect critism of their actions.

        Talk to some Tea Party believers and you will find people that actually believe and pratice what the liberals claim but fail to.

        • The Republican party in President Lincoln’s times has nothing in common with the Republican party today and same is true for what was referred to as Democrats back then.

          Welfare? Do you mean feeding stray animals, as Andre Bauer (R) put it very succinctly?

          Democrats treated Palin the way they did not because of her gender.

          More seniors need assistance today not because of Medicare, but because medical care today is much more expensive than it was in 1965 and because big business prevented most people from improving their financial situation during the last few decades.

          Without Medicare and Medicaid to mitigate these issues you would have had people literally dying in the streets, both from disease and from violence. That may still be coming, because in spite of Tea Party’s own Paul Broun’s advice, people have no country club memberships to cancel. And there is no plentiful cake out there either.

          I don’t have an issue with people holding different social-financial-political views. I do have a problem with people being overtly discriminatory and I have a problem with people subscribing to the notion that a democratically elected President will not be allowed to govern as a Democrat, and I have a problem with people being perfectly willing to throw the country overboard along with the tea bags to that end. And I have a problem with stupidity and suicide bomber mentality in general.

          • Nate Ogden says:

            no i mean paying people to have more babies, a system that incentivies people not to marry and live together. A system that gives people just enough so they can get by but never enough to get out.

            “Democrats treated Palin the way they did not because of her gender.”

            Yet any time you critique Obama its racist? Or speak of welfar its racist, or disagree with NOW your sexist. The left is famous for this double standard.

            “because medical care today is much more expensive than it was in 1965″

            Why is Medical care much more expensive? Becuase of Medicare. Any time the government starts to subsidize something the price increases. Education… housing…. food

            “Without Medicare and Medicaid to mitigate these issues you would have had people literally dying in the streets,”

            Readers need to keep in mind when a liberal says dieing in the streets it doesn’t mean dieing in the streets like the rest of us think. If we pass welfare reform people will die in the streets is another example. When a liberal claims someone will die in the streets if you pass this or don’t pass that they really mean their dogma and creditablity will die.

            “and from violence”

            Violence like that found in public housing projects?

            “I do have a problem with people being overtly discriminatory”

            Like our media? Like our education system? Like hollywood? like the mobs that have been attacking people all summer? Like the NAACP? Like Now?

            ” I have a problem with people subscribing to the notion that a democratically elected President will not be allowed to govern as a Democrat,”

            But blocking Bush was Patriotic? May 2001

            WASHINGTON— The incoming Senate majority leader made it clear Sunday that Democrats planned to use their new control of that chamber to block some key Bush policy initiatives, from early deployment of a missile-defense system to oil-drilling in the Alaska wilderness and increased use of nuclear power.

            As Democrats prepared to take control of the Senate after a Republican senator from Vermont, James Jeffords, said he was leaving his party, the comments of Senator Tom Daschle were the clearest indication yet that parts of the Bush legislative agenda were in serious trouble.

            At least you were honest and upfront about it;

            “not be allowed to govern as a Democrat”

            As long as they govern as a Dem you have different rules.

          • “… a democratically elected President will not be allowed to govern as a Democrat”

            Oh no, I cannot take credit for that idea. It comes straight from your conservative boy wonder Grover Norquist.
            It seems that the Neo-Republican philosophy is to talk as many people as possible out of voting, and if that doesn’t work, just threaten to blow up the country (and mean it) unless the Democrats do what they’re told.
            Democracy is overrated anyway…. It’s all about capitalism and the rights of propertied gents. The more property, the more rights. The rabble should be content with canned beans and if they work hard an old truck and a good rifle and maybe even a couple of gold coins sewn in their hunting jacket.

          • Nate Ogden says:

            “The rabble should be content with canned beans and if they work hard an old truck and a good rifle and maybe even a couple of gold coins sewn in their hunting jacket.”

            which is far more then you have done for inner city poor, or as you like to see them votes, makes it easier to use them if you dehumanize them.

            Don’t worry we know the kind hearted liberals would never allow them to have guns, or gold coins, or a job to work, they might get the wrong idea

  24. Barry Carol says:

    Margalit –

    It’s not just the worried well demanding an MRI for a headache that’s driving our healthcare costs skyward. There is plenty of overtreatment being given to the 20% of patients who drive 80% of costs as well. Part of this is due to the litigation environment. I’ll offer the following three examples that are somewhat different from the traditional notions of defensive medicine:

    1. A patient calls his PCP with a problem and seeks an appointment but the PCP can’t see him until the next day. There is a very small chance that it could be something serious. Just to be safe, the PCP encourages the patient to go to the nearest ER.

    2. A nursing home patient falls but is not injured as far as the staff can tell. Just to be safe, the patient is sent, most likely by ambulance, to the local hospital to be checked out.

    3. A patient facing an end of life situation is unable to communicate, has no living will and no family member, relative or friend authorized to act as his healthcare proxy. The default protocol is to “do everything” because providers are afraid they may be sued if they don’t.

    While I certainly don’t know for sure, I suspect practice patterns in Switzerland and other developed countries would be more conservative (less aggressive and intense) in all three of these circumstances. This is another reason why I think that our litigation environment and culture drive a lot more of our healthcare costs than liberals believe.

    • Barry,

      The interesting thing is that at least for #1 and #2 there could be “an American solution consistent with American values and culture.”
      We have 24 hour gas stations, banks, grocery stores and pharmacies. Why can’t we have 24 hours urgent primary care clinics? The endless minute clinics and urgent cares opening everywhere, all close late afternoon. An urgent primary care office (across the street from the ER) would go a long way to reduce ER utilization. Where are the entrepreneurs?

      As to #3, honestly, and I think this may sound odd, but it is very American, why not ask about advanced directives at the same time we ask for organ donation, at the DMV? Just a simple 5 questions or so form should do.

  25. Barry Carol says:

    Margalit –

    I think many ER’s are already establishing urgent care clinics either on the hospital campus or very close by so triage nurses can divert non-emergency cases to those facilities and free up ER physician time for more urgent cases.

    There is a lot more we could do to encourage people to execute living wills and advance directives. It could be part of the standard procedure upon admission to a nursing home. It should be addressed very early on for patients diagnosed with cancer, Alzheimer’s, dementia, CHF and ESRD among other conditions. As a failsafe, my personal preference would be to change the default protocol from do everything to apply common sense depending on circumstances without having to worry about being sued for not doing everything. Even when patients have executed these documents, they need to be readily available to doctors and hospitals when needed which they often are not. That’s why the information should be stored on a registry.

    For hospital inpatients, I believe 69% of all hospitals with 200 or more beds now have palliative care programs vs. roughly half as many ten years ago. That’s also a step in the right direction.

  26. Barry Carol says:

    Doc Brown –

    I hear what you’re trying to say. Some suggest that more and better primary care, coupled with universal coverage, could keep people healthier for a longer time period. However, there are a number of things I wonder about.

    First, there is plenty of illness that strikes even people that lead healthy and disciplined lives. Cancer is the biggest killer of the under 65 population in the U.S., for example, though heart disease is the biggest killer overall. We lose a sizeable number of people in car accidents and other accidents. Firearms kill 25,000-30,000 people per year. Diseases of old age like Alzheimer’s and dementia can last for years as patients die slowly and need lots of care, including nursing home care in the interim.

    My bigger concern about your thesis, though, is differences between the U.S. and other countries around lifestyle choices (high obesity rates in the U.S.), unreasonable patient expectations and a litigation environment that, when coupled with patient expectations, can drive lots of overtreatment due to a combination of defensive medicine, attempts to satisfy patients, and the fact that the evolution of practice patterns incorporate these realities which don’t exist, at least to anywhere near the same degree, in other developed countries. Our approach to end of life care also tends to be more aggressive than elsewhere due to a combination of patient expectations and the litigation environment but that seems to be changing slowly as more people choose hospice and/or palliative care when the end is near. Regarding the lifestyle choices, people don’t need a PCP to tell them that smoking is bad for their health or that they need to lose weight if they have a BMI of much above 25. People know this but it’s easier said than done.

    Changes in payment approaches, including bundled payments for surgical procedures and capitation for primary care instead of fee for service could make a difference and so could price and quality transparency tools that would make it easier for referring doctors to steer patients toward the more cost-effective providers. My bottom line conclusion though is that given the totality of circumstances that doctors face in the U.S., especially patient expectations and the litigation environment resulting in more aggressive practice patterns, the idea that preventive care can save meaningful amounts of money is way oversold and probably wrong. While Nate can speak for himself, I think this is basically where he is coming from on this issue and I agree with him.

  27. Hayle says:

    You’ve really caturped all the essentials in this subject area, haven’t you?

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