The conventional wisdom in health policy is that the United States spends far more than any other country and enjoys mediocre health outcomes. This judgment is repeated so often and so forcefully that you will almost never see it questioned. And yet it may not be true.

Indeed, the reverse may be true. We may be spending less and getting more.

The case for the critics was bolstered last week by a new OECD report that concluded:

The United States spends two-and-a-half times more than the OECD average health expenditure per person … It even spends twice as much as France, for example, a country which is generally accepted as having very good health services. At 17.4% of GDP in 2009, U.S. health spending is half as much again as any other country, and nearly twice the average.

Similar claims were made recently in The New York Times by former White House health advisor, Zeke Emanuel, who added that we are not getting better health care as a result. The same charge was aired at the Health Affairs blog the other day by Obama Social Security Advisory Board appointee Henry Aaron and health economist Paul Ginsburg. It is standard fare at Ezra Klein’s blog, at The Incidental Economist and at the Commonwealth Fund. It is also unquestioned dogma for New York Times columnist, Paul Krugman.

What are all these people missing? On the spending side, they are overlooking one of the most basic concepts in all of economics.

When you and I buy something, the cost to us is the price we pay for it. But that is not necessarily true for society as a whole. The social cost of something may be a whole lot more or a whole lot less than what people actually spend on it; and that is especially true in health care.

In the United States and throughout the developed world, the market for medical care has been so systematically suppressed that no one ever sees a real price for anything. Patients never see the real price of the care they receive; doctors never receive a real price for the care they deliver; employees never see a real premium for their health insurance, etc.

In the United States, for example, a typical doctor is paid one fee by Medicare, a different fee by Medicaid, and a third fee by BlueCross. Moreover, there are different fees for all the other insurers and for all the employer plans. These fees do not count as real market prices, however. Instead, they are artificial payments that often reflect the bargaining power of the various payer bureaucracies. When government accountants sum up all the spending on health care, therefore, they are adding artificial price times quantity, for all the separate transactions, to arrive at a grand spending total.

Here is the kicker: since each separate purchase involves an artificial price, no one knows what the aggregate number really means. To make matters worse, other countries are more aggressive than we are at shifting costs and hiding costs. They use their buying power to suppress the incomes of doctors, nurses and other medical personnel much more than the United States does, for example. In addition, formal accounting ignores the cost of rationing in other countries. In Greece, patients spend nearly as much on bribes and other “informal” payments as they do on “formal” costs such as insurance co-pays. Yet these bribes do not show up in the official statistics. Bottom line: in comparing international spending totals, we are usually comparing apples and oranges.

Let’s take doctor incomes and government health care programs. One way to pay doctors is to pay market prices — whatever fees are necessary in order to induce them to voluntarily provide medical services. Another way is to draft them and pay them little more than a minimum wage — as the government has done in the past in times of war. Obviously, the second method involves a lot lower spending figure. But to economists, the social cost is the same in both cases.

The reason? To economists, the social cost of having one more man or woman become a doctor is the next best use of that person’s talents. Instead of becoming a doctor, the pre-med student might have become an engineer, say, or an architect. So what society as a whole must give up in order to have one more doctor is the loss of the engineering or architectural goods and services the young man or woman would otherwise have produced. This cost, called “opportunity cost,” is independent of how much doctors actually get paid.

The principle also applies to other medical personnel and to buildings and equipment. The opportunity cost of a hospital, for example, is the value of a commercial office building or some other use to which those same resources could be put.

The concept of opportunity cost allows us to see that if we don’t trust spending totals in the international accounts, there is another way to assess the cost of health care. We can count up the real resources being used. Other things equal, a country that has more doctors per capita, more hospital beds, etc., is devoting more of its real income to health care than one that uses fewer resources — regardless of its reported spending.

On this score, the United States looks really good. As the table below (from the latest OECD report) shows, the U.S. has fewer doctors, fewer physician visits, fewer hospital beds, fewer hospital stays and less time in the hospital than the OECD average. We’re not just a little bit lower. We are among the lowest in the developed world. In fact, about the only area where we “spend” more is on technology (MRI and CT scans, for example), as is reflected in the second table.

Almost a decade ago, Mark Pauly estimated the cost of health care across different countries based on the use of labor (doctors, nurses, etc.) alone. The finding: The U.S. spends a lot less than such northern European countries as Iceland, Sweden and Norway and even less than Germany and France!

What about outcomes? Do we get more and better care for the resources we devote? Here the evidence is mixed. As the second table shows, we replace more knees per capita than any other country and it’s hard to believe that any of these are unnecessary procedures. On the other hand, if you think that there are too many tonsillectomies and Caesarean births, our ranking there (2nd and 8th, respectively), may be less admirable. Avik Roy has a nice presentation of cancer survival rates. The U.S. basically leads the world.

What about life expectancy statistics — a favorite of the critics, since Americans don’t score very high? It turns out that when you remove outcomes doctors have almost no impact on — death from fatal injuries (car accidents, violent crime, etc.) — U.S. life expectancy jumps from 19th in the world to number one!

This isn’t to say we don’t have problems. There is a lot of evidence of waste and inefficiency in U.S. health care. Still, it’s not clear that we have any reason to feel inferior to the rest of the world.

John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. His Health Policy Blog is considered among the top conservative health care blogs where health care problems are discussed by top health policy experts from all sides of the political spectrum.

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106 Responses for “Do We Really Spend More and Get Less?”

  1. John Ballard says:

    I’m glad you explained that. I thought health care inflation was real but it’s really something I imagined. I feel all better just knowing.

    • Dr. Mike says:

      Inflation is affecting the cost of healthcare everywhere in the world – not sure what that has to do with an article about the relative costs of healthcare.
      If people weren’t so agenda driven (government control of health care at any cost) they might stop gazing over the pond and instead start focusing on what could be done in a uniquely American way to control costs whilst improving care. Government involvement is necessary, but the unholy union that results from the government purchasing private insurance for its citizens will never, never, result in lower cost nor improved outcomes compared to the other options. These options go undiscussed in public because of our agenda driven political system and the partisans that support it.

  2. John Ballard says:

    Snark on my part, clearly. Sorry… a little bit.

    Help me understand what “government purchasing private insurance for its citizens” means.
    Would that be Medicare? Medicaid? VA clinics? Tri-care? Community clinics? SCHIP?

    I really don’t get this “government control of healthcare” meme. The only government health care I know about is the VA and the various medical support systems of the military services. I was an Army Medical Corpsman many years ago and worked in a totally government owned and operated environment which looked pretty good to me at the time. I even had my wisdom teeth extracted at government expense by a very competent oral surgeon in a field hospital in Korea. Aside from that I don’t know of any other government controlled healthcare.

    The rest of the above list are arrangements by which government tax money is disbursed to the private sector. Is that what is meant by “government control”?

    I’m all in favor of other options, but if dental care and cosmetic surgery (they don’t get a lot of tax money) are illustrative that is nothing but means testing in reverse, disallowing access for those unable to afford it. I can’t think of any medical practices seeking to drum up business by offering more competitive prices like retailers or auto dealers.

    I’m not just looking across a pond. I’m looking at two oceans and a Northern border and know personally of individuals who have gone in all three directions to get medical care that they could not afford in the US. And they weren’t getting any special deals from a family member. They were accessing systems that didn’t have them going into debt for the work they had done. (Thankfully they weren’t life-threatening emergencies.)

    • Dr. Mike says:

      “Help me understand what “government purchasing private insurance for its citizens” means” PPACA, Medicare advantage, Medicare part D

      I was an Air Force physician for 7 years, I thought we provided excellent care overall. (The medical corpsmen and women were exceptional as well – I thank your for your service)

      My strongly held view is that our government, in its present form, is incapable of expanding upon its involvment in health care without bowing to corporate (private sector) pressures. The three entities I mentioned above are all examples of this.
      I have patients who are not getting needed care because of our country’s lack of affordable health care. But the answer is not to purchase insurance on their behalf. That is not what you see when you look “at two oceans and a Northern border”.
      I am very much in favor of a VA-like system for inpatient care (running in parallel with a private system), and a means tested Medicare-like system for outpatient care (again with a parallel private system). Medicaid should cease to exist – it is too expensive. Medicare should be reformed to include finncial incentives and disincentives to PATIENTS, not just providers. One’s benefit from Medicare should again be means based, and those who are able should be allowed to enjoy the advantages of an HSA and/or to purchase private insurance. Medicare should experiment with inovative programs like funding (partially or fully) HSA’s for healthy individuals and giving them more control over what they can choose to spend their health care dollars on.
      All care in every system in every country is rationed. There are no exceptions. We choose to ration by providing essentially unlimited to care to a subset of the population while ignoring millions. To expand this unlimited care to the entire population is simply mathmatically impossible. If we are going to ration care (and we must) I believe that those who choose not to take care of themselves should have to suffer at least some of this rationing in proportion to their unwillingness to look after their own health.

      • Dr. Mike, I don’t understand how the HSA concept would work with Medicare which has no deductibles and does pay for everything already.

        • Nate Ogden says:

          ? Margalit Medicare has deductibles and pays roughly 80% of everything else. Deductible is indexed.

        • Dr. Mike says:

          I was referring to Outpatient only. An HSA is a money bag. Anyone can put money in (i.e you, me, medicare…), but the holder of the bag gets to take it out. The idea is to connect the patient with the cost of care – the HSA concept does this. If the incentive is in place (say 15% of the HSA’s year end balance given as a tax credit) the patient will be more likely to negotiate on price or to ask the doc, “Do I really need that MRI?”

          • Nate Ogden says:

            Its not even necessary they question if they need the MRI all we need them to ask is;

            Doc instead of getting a $2400 MRI outpatient at the hospital can I go across the street to the nice new building and get a $600 MRI from the free standing imagining center?

            The left will instinctivly bash HSAs as only being effective when they deny care but we don’t need to reduce care we just need to consume it smarter. Granted it helps to also reduce but there are billions that can easily be saved with a little commom sense.

  3. steve says:

    There is so much spin here I am dizzy. Yes, we have a lower number of doctors. How does this translate into numbers of procedures, which is a large part of what is really driving costs? John knows, but he chooses to use the less pertinent number. Next, this is bizarre.

    “As the second table shows, we replace more knees per capita than any other country and it’s hard to believe that any of these are unnecessary procedures.”

    Hard to believe? The 90 y/o demented patients getting total knees really need them? The end stage CHF or COPD pt who is not going to walk anyway? Economists need to leave the office and go to a hospital.

    Just to briefly address the first half of the argument, we know that government routinely pays less private insurers. You seem to be implying that markets, if they were the sole determinant, would set fees closer to private rates, ie, medicine would cost more. Unless, and this is a big unless, you are suggesting we only get real market prices when patients negotiate individually for prices. This may work for car purchases, but since we have a lot of docs here, I think we can imagine the practical, time consuming effects of having to negotiate the fee for each procedure. I dont see how you make health care work for most of us w/o an insurance mechanism.

    Steve

  4. rbaer says:

    I need to do a little more thinking about that post, but the obvious conclusion to be drawn from having fewer docs and medical services and paying more in comparison to other countries is that US doctors are greatly overpaid (which I believe is true for a subset).

    The more likely explanation for fewer services per capita and poor collective outcomes are that some insured utilize more services (which often results in wasteful spending/overutilization – this is just a fact for any critical observer and also supported by the medical literature), while there are many patients who have poor access and underutilize.

    And then there is the fact that it is wrong to just count docs, RNs (did they count supportive staff? US hospital care tends to be intensive and there are few RNs and a rather high number of support staff) and hospital beds: for true opportunity costs, you have to count outpatient surgical facilities and clinics, as well as the administrative waterhead of US medicine (billing staff, administrative staff, discharge planner, inside and outside medical facilities). No reasonable individual would deny that an extraordinary amount of resources – money and manhours – is spent on US medical care and its bureaucracy.

    • steve says:

      “The more likely explanation for fewer services per capita”

      John emphasized that we have fewer physicians. If you read the chart, you will see that we are near the top for services per capita.

      Steve

      • rbaer says:

        Goodman wrote: “We’re not just a little bit lower. We are among the lowest in the developed world. In fact, about the only area where we “spend” more is on technology (MRI and CT scans, for example), as is reflected in the second table.” The problem is that these services are just selected snapshots of total healthcare spending and that in the US, services are to a large extent shifted to the outpatient sector (as I indicated and Millenson further below). But that was not Mr Goodman’s emphasis.

        As a side note, the statistical anlysis bringing the US to the top of life expectancy by removing trauma etc. (ohsfeldt + schneider) has been debunked by the OECD itself, as indicated here:
        http://blogs.wsj.com/health/2009/08/25/violence-traffic-accidents-and-us-life-expectancy/

  5. Al Lewis says:

    Very intriguing posting! i would call it the best I’ve seen on this site (including my own, which given the size of my ego is quite a compliment). This doesn’t mean I agree with it all, just that it provokes a great deal of thought and follow up.

    To begin with, I have noticed the same thing in my travels. For instance, post-acute home-based case managment simply doesn’t exist (as of my last trip) in the UK, so that their hospital stays were much longer than ours.

    Here are some questions that one could use to validate (or not) the conclusions:

    (1) It would seem logical that markets with very dominant payors (like Pittsburgh) would then have lowr unit costs. Is this the case?

    (2) Some European countries, like Holland and (I think) Switzerland hae market-based systems. Does that mean they have higher unit costs?

    (3) Drugs are cheaper in Europe than here. Do they use more of them?

    PS One math question: Can you check that #19-to-#1 thing absent non-natural deaths? Our fatal accident and violent crime death rates have been falling for years, with no impact on life expectancy.

  6. Joe Flower says:

    It’s a nifty argument, kind of an end run around the obvious fact that we spend more dollars per person, greater percentage of GDP, not only than other nations do, but than we would be expected to given our greater wealth. I do understand that one can fish around for regression models (and years for your data) that manage to make it look like we don’t spend that much more than expected—and I understand that regression models don’t deal well with extreme outliers. Yet to my eyes it remains clear that we are an extreme outlier on costs.

    I am wary of an “opportunity cost” argument as a way of comparing systems. One gets very deep in the weeds very quickly with assumptions about the relative value of what else one could do with the money but somehow chose not to do. It’s much clearer to simply note that we do spend a lot more.

    And what do we get for it? Fewer doctor visits, hospital discharges, and so forth — but more technology. The picture here is obscured by another obvious fact: All those other systems have more or less universal coverage. A substantial portion of our population is seriously restricting their use of doctor visits and hospitalizations because they can’t afford them. I wonder how those figures would look if they were comparing apples to apples, that is, the use of resources on people who had medical coverage to pay for them.

    • Nate Ogden says:

      ” A substantial portion of our population is seriously restricting their use of doctor visits and hospitalizations because they can’t afford them.”

      This is not even close to true. Most of our uninsured are so becuase they don’t need care, see the 14+ million eligible for Medicaid that don’t bother to sign up, if they needed care they could go to the hospital and be signed up at the same time they are treated.

      We only have a few million people not receiving the care they need.

      • BobbyG says:

        “Most of our uninsured are so because they don’t need care”
        __

        I’m a safe driver. Why should I waste my money on auto insurance?

        • Nate Ogden says:

          you only need to carry liability unless you have a loan in which case your lendor requires you be able to pay. Getting a little lasy with your arguments.

          • BobbyG says:

            I knew you would take the bait, and miss the point.

            And, who is “lasy”?

          • Nate Ogden says:

            no one says nothing as well as you Bobby

          • BobbyG says:

            “you only need to carry liability”
            __

            So, you forego health insurance because you “don’t need it” in your view. Then, having guessed wrong, you have a life-threatening acute medical event (take your pick).

            See 42 USC § 1395dd

            You’re gonna argue to me that society has no “liability”?

            Never let the legal facts interfere with your otherwise superior all-knowing acumen.

  7. BobbyG says:

    “Indeed, the reverse may be true. We may be spending less and getting more.”
    __

    Two economists are standing at the bottom of a deep hole.

    Economist 1: “We’re TRAPPED! Oh, no! How will we ever get out?”

    Economist 2: “Not to worry. First, assume a ladder.”

    Gild on enough unprovable abstract assumptions and you can rather quickly “prove” that we have the best health care system in the world at the lowest possible cost.

  8. Boy, that was fun. Now, aside the roller coaster and go look at a completely different analysis by the McKinsey Global Institute in Dec. 2008. (See: http://www.mckinsey.com/Insights/MGI/Research/Americas/Accounting_for_the_cost_of_US_health_care) I thought it was one of the more innovative analyses I’ve seen.

    In summary: “Of the $2.1 trillion the United States spends on health care, nearly $650 billion is above expected, even when adjusting for the relative wealth of the US economy.

    Outpatient care, which includes same-day hospital visits and is by far the largest and fastest-growing part of the US health system, accounts for $436 billion, or two-thirds of spending above expected. Fueling this growth are a number of supply- and demand-related factors, including (1) provider capacity growth in response to high outpatient margins; (2) the judgment-based nature of physician care; (3) technological innovation that drives prices higher rather than lower; (4) demand growth that appears to be due to greater availability of supply; and (5) relatively price-insensitive patients with limited out-of-pocket costs.”

    Oh: and there are statistics which are non-political. Just because The Washington Post/Fox News reports the temperature is 75 degrees doesn’t mean it’s really snowing and sunscreen is a liberal/conservative plot. Even if you earn a living being ideological. :-)

    • BobbyG says:

      “[T]here are statistics which are non-political. Just because The Washington Post/Fox News reports the temperature is 75 degrees doesn’t mean it’s really snowing and sunscreen is a liberal/conservative plot. Even if you earn a living being ideological.”
      ___

      OK, that’s going on my REC blog “Quotes” column.

  9. In those other OECD countries with socialized health care, patients are equally, if not more so, insensitive to price. Since there are more doctors and more beds, etc., it seems that the greater availability of supply is somehow not driving up demand. In many of those countries, technology is keeping up rather nicely with the US and physician care is also mostly judgement-based. Which leaves us with the margins, and the all around profit incentive unique to the U.S., and profit does exactly what profit is supposed to do – drum up businesses and grow the industry.

  10. I am a chiropractor in St George UT, and I do what I can to keep the costs low. One thing that gets me so irked is hearing stories of how drug reps are buying lunch every day for clinic staff, just to get access to the MD’s. We all end up paying for those lunches in the form of higher medication costs. I know this happens. My wife works for a cardiologist and they have catered lunch at least 4 days a week.

  11. Matthew Holt says:

    Do we really spend more and get less?

    Well that would depend if the incomes of scholars at Dallas based right wing think tanks and Philadelphia based business school are counted as health care expenditures. But please dont ask about spending on San Francisco-based conferences.

    Otherwise the answer is yes.

  12. Jonathan H says:

    John: “One way to pay doctors is to pay market prices — whatever fees are necessary in order to induce them to voluntarily provide medical services”

    That paraphrase is only true in a competitive market. When some players have market power this is no longer true. No one doubts that pharma and large provider systems/groups have market power. So your statement is false. Providers and pharma would continue to supply services if they were paid less relative to GDP.

  13. Joe Flower says:

    > Most of our uninsured are so because they don’t need care, see the 14+ million eligible for Medicaid that don’t bother to sign up, if they needed care they could go to the hospital and be signed up at the same time they are treated.

    How many of those aren’t signed up because they don’t *think* they need care, don’t know about their diabetes or high blood pressure until they are wheeled into the ER on a gurney. How many don’t sign up because they have heard how difficult it is to get proper doctor’s care in their area on Medicaid? How many are undocumented aliens who are afraid to try to sign up? The lack of proper primary care for the uninsured is one of the factors driving our enormous chronic disease cost in this country.

    • Nate Ogden says:

      seeing as how illegal aliens are not suppose to be eligibile for Medicaid why would they be signing up?

      How does adding tens of millions of more people to Medicaid improve the quality of care from Medicaid?

      Primary Care is a very small factor, diet, exercise, lifestyle are the major factors, you don’t need a doctor at $60 a visit to tell you sitting on your ass eating fast food every day is bad for you.

  14. Joe Flower says:

    > seeing as how illegal aliens are not suppose to be eligibile for Medicaid why would they be signing up?

    Not saying they should/could/would. But when I see figures about the millions not signing up for Medicaid, I wonder who exactly those figures are counting.

    > How does adding tens of millions of more people to Medicaid improve the quality of care from Medicaid?

    No one ever said it would. But the fact that the quality of care is so poor and so hard to find at all is one likely reason that there are people who don’t sign up for it – it’s just not worth the incredible hassle for them.

    > Primary Care is a very small factor, diet, exercise, lifestyle are the major factors, you don’t need a doctor at $60 a visit to tell you sitting on your ass eating fast food every day is bad for you.

    You know, you can have all the opinions you want, but we actually know what effect good, smart, engaging primary care has on people of whatever socioeconomic level. We have the data. When a population gets good access not just to primary care, but to a medical home that reaches out to them, calls them up, gets them in for a physical, gives good preventive care, is available for questions, you actually see a marked, measurable improvement in health status, and a drop in costs – less hospital costs, fewer ER visits, everything expensive.

    One big way to cut healthcare costs in this country is to provide better, smarter, earlier, more engaged primary care to everyone, no matter their insurance status or their socioeconomic level. It’s not just more humane, it’s cheaper.

    • BobbyG says:

      Yep.

      “Hot Spotters”

    • Dr. Mike says:

      “One big way to cut healthcare costs in this country is to provide better, smarter, earlier, more engaged primary care to everyone, no matter their insurance status or their socioeconomic level. It’s not just more humane, it’s cheaper.”

      Agree 100%. But we do have to pay for it, unfortunately. But making what you describe more affordable to us as a society fortunately has the added benefit of making it better. If you give BOTH the patient and the provider incentives, financial and otherwise, to use the precious healthcare resources wisely, you are more likely to succeed, especially if you manage to “align their incentives.” I feel that if those who desire what you describe were more willing to accept and even promote free-market type incentives as part of such a reform, that you might have more greater success in convincing a majority to move in this direction.

    • Nate Ogden says:

      The disengenous 50 million uninsured does include illegal aliens, the 14 million eligibile for medicaid that don’t enroll does not

      Remember there are only around 5 million americans that truly can’t get insurance.

      If we assigned a person physician to every single person to follow them around and give them advise on every decision we would have amazing outcomes. Obviously that is not affordable. Neither is outsourcing personal responsibility to a medical home. To solve the problem individuals need to stop being the problem, and not with billions in coaching and bribes.

      Cheaper is relative and does not mean affordable.

  15. Joe Flower says:

    > there are only around 5 million americans that truly can’t get insurance.

    Depends on your definition of “can’t,” along with “for how much” and “for what.”

    > If we assigned a person physician to every single person to follow them around and give them advise on every decision we would have amazing outcomes. Obviously that is not affordable.

    Wrong. We have the data. The Vermont Blueprint’s actual extra costs are $17 per person per year, and result in a 12% overall reduction in healthcare costs for the whole covered population – Medicare, private insured, whatever. Same percentage with the Atlantic City Special Care Center, cited in the “hotspotters” article – a 25% reduction on the costs of the top 5% of users (who typically consume 50% of the costs) – employed, insured people. Alaska Natives Healthcare Service – huge reductions in utilizations, with big rise in health markers and patient satisfaction. Orriant’s clients, with individual companies experiencing a 7% drop in costs over a time when everyone else’s costs went up 44% – and a broad range of health markers went steadily up.

    > Cheaper is relative and does not mean affordable.

    “Affordable?” In these examples, the cost to the payers is less than zero. That sounds more than affordable to me. It sounds compelling. Now that we have the data, for any organization that has to pay the healthcare costs of any population, not providing better, earlier, more engaged, smarter care for that population is coming to look like a manifestly stupid business decision.

  16. John Ballard says:

    Interesting and constructive input (for a change) despite the nutty thesis of the post.

    Dr. Mike’s mention of HSAs is good, especially the idea of a tax credit for any unused end-of-year balance, although I would prefer that as an optional rollover to the next year (subject to some cumulative use formula to prevent a bottomless tax shelter).

    The insurance mandate remains unresolved. Comparisons with auto insurance are empty as long as no one is compelled to buy a car, although states normally mandate liability insurance (collision is optional, of course) and in so-called “no-fault” states each person’s personal policy pays medical bills and the company may or may not go after the other “at fault” driver. (Subrogation?)

    I particularly like “Assume a ladder.” Excellent!

    Mention was made that most uninsured people simply don’t need medical care may be true but not to the extent that the number that do is insignificant. I found out working in a healthcare system that the hospital operated an “indigent care clinic” for a sub-set of people who were uninsured but ineligible for Medicare or Medicaid. ER patients with Medicare or Medicaid went through the system (hello tax dollars) but those without insurance were quickly diverted elsewhere with minimal attention. I am personally familiar with two young people (under forty) who died subsequent to such encounters but the families were not sophisticated or resourceful enough to pursue investigations. I think this happens more than we like to discuss.

    Michael Millenson mentioned the growth in capacity, technological advances and physician judgement as cost drivers, all of which look right to me. Again, in the system where I worked there seemed to be a heavy emphasis on getting patients out of the hospital as rapidly as possible, supposedly for their own benefit and th “save costs.” But no matter how fast rooms became available there always seemed to be a wait, which strikes me as just the opposite.

    It’s hard to know if a big operation like a hospital is churning the system to increase revenue, but I know that as a cafeteria manager for three decades I was sensitive to two important numbers: line speed and check average. We knew that at meal time any time there was a line of people waiting to pick up a tray the only limit to the revenue stream was how rapidly the meals could be served. (A well-organized team of seven servers could serve 75 meals every fifteen minutes without working hard, and speeds in the 90s and over a hundred per quarter hour were not out of the question.) As for check average, the more people put on their trays the more they spent. (This was before the now stylish all-you-can-eat buffets. Customers buying alacarte are more circumspect.)

    Maybe it’s too many years in the food business, but I sense some very strong parallels with health care.
    ==> When someone else picks up most of the tab the tendency is to order more of everything.
    ==> In an all-you-can-eat environment waste is wholesale and the most expensive items vanish much faster than they would otherwise.

    So I come full-circle to the HSA idea. When patients have a serious amount of “skin in the game” they will behave more like “consumers.” Unfortunately that is not an option for most working people, many of whom manage their financial affairs payday to payday, often without any contact with a bank except to cash paychecks. And I’m not talking about just the working poor, either. No one paying attention to the news is unaware of the desperate circumstances of millions of the unemployed.

    Someone mentioned getting rid of Medicaid and having all on Medicare but at the rate things are going we will have the opposite, with the aging population “spending down” in growing numbers to qualify for Medicaid. The expense of long-term care continue to be a ticking financial bomb which thanks to technology, vaccinations, antibiotics and other blessings with unintended consequences is swelling the number of people who live way past any productive years, past their life’s savings and into that of the next generation, and often past the time when they have any ideas about anything at all. (And the next politician who figures out how to get their votes by mail will have another weapon in his or her campaign arsenal.)

    Medicare currently pays up to 100 days of long-term care, calling it “rehabilitation.” But after that time Medicare only pays medical expenses and the patient becomes a “resident” with “custodial” expenses. A handful of people carry (very expensive) long-term care insurance which comes with a term limit. Otherwise the financial burden becomes private pay until the person’s estate spends down to qualify for Medicaid. I don’t know about other states but where I live the amount allowed for the person to keep is quite small. (If annuity, pension or other income is too much they also don’t qualify for Medicaid but there is a big spread between many disqualifying incomes and the expense of long-term care.) And those planning to game the system can forget it since there is now a ten-year look-back to insure that assets are not transferred for the purpose of Medicaid qualification.

    I’m concerned that with all this discussion of costs our already frayed safety nets are about to become even more insubstantial

    • BobbyG says:

      Nice comment. Very nice.

      “Comparisons with auto insurance are empty as long as no one is compelled to buy a car”

      Well, it’s a flawed analogy in some respects. Someone ought to remind the President of that.

      Moreover, I suppose that Nate (to deploy another analogy apropos of the point), having chosen to forego health insurance because he “doesn’t need it” and is now in dire clinical straits, is not by law “compelled” to seek hugely expensive exigent care. He guessed wrong, and will most certainly Man Up and just die in order to not foist any EMTALA social cost on society.

      • Nate Ogden says:

        the flaw in your analogy is I’m not a liberal and would not act in such an illresponsible manner as being without insurance.

        I would support repealing EMTALA if it makes you feel better. Any time you pass a law codifying charity people will abuse that charity. Its entitlement at that point.

        • Do you have any numbers showing that liberals are less likely to purchase insurance?

          EMTALA is not about charity is about basic human rights.

          • Nate Ogden says:

            your measuring the wrong data, who has insurance doesn’t matter, who demands free care does. As an american its your right to have or not have insurance, its not your right that someone else provide you free service if you choose to go without.

            free healthcare is not a human right. Funny how willing you are to trample all over my freedoms, actual expressed rights, in chasing healthcare for others which is not.

            If your willing to toss my freedoms out how can you demand healthcare?

          • Are you implying that people who ask for free care for themselves are all liberal? No conservatives on Medicare or Medicaid?

            The only freedom that EMTALA is trampling on is your freedom to externalize the costs living in a civil society conducive to business growth.

          • Nate Ogden says:

            “conducive to business growth”

            Shouldn’t we be seeing actual business growth then?

            Its pretty easy to chart, first with Europe then the US that as the entitlement sector grows the business sector is deminished then collaspes into government or socialist control. The only way to support your liberal welfare state is to take over the businesses, i.e. Venesula, Cuba,

          • We could be seeing business growth if “some people” were actually willing to pay fair wages for labor
            http://research.stlouisfed.org/fred2/series/PRS85006173?rid=47&soid=22

            Greed doesn’t really work, contrary to theoretical assumptions

      • Nate Ogden says:

        as soon as I saw this I thought of Booby;

        http://www.youtube.com/watch?v=t3e41prVDv4

        problem isn’t having 15 kids you can’t support it is society being cruel and not taking care of them

        • Yes, because all poor people have 15 children.
          And all poor people expect society to bail them out when their irresponsible behavior gets to be a bit excessive. Rich people would never do any such thing.

          • Nate Ogden says:

            hide your strawmen Margalit is on a killing spree. Where did I use the word all even once? The problem is not poor people its poor people that have 15 kids and expect someone else to take responsibility.

          • Right. And the problem is not rich people, it’s rich people that sell funky derivatives and defraud an entire country.
            Which one do you think is more costly to the nation, and you personally?

          • Nate Ogden says:

            “Which one do you think is more costly to the nation, and you personally?”

            Thats tough, Democrat and Liberal John Corzine or the 48% of the popualtion that doesn’t pay income tax, I’ll go with the simple math and say the 48% that don’t pay income tax. Your good ole boy Johny cost us 1.2 billion and our niave faith in a market that serves no purpose. That is a rounding error in the amount of tax credits and entitlement programs we fund annually.

          • Is the one lady with the 15 kids costing us more than, say, one Lehman executive?
            Not to mention that one of those kids may very well be the one to discover a cure for cancer….or write a beautiful song. No such hope from Lehman.

          • Nate Ogden says:

            “Not to mention that one of those kids may very well be the one to discover a cure for cancer….or write a beautiful song. No such hope from Lehman.”

            Really, that kid is going to discover a cure for cancer using pots and pans in his mom’s apartment? Or is he more likely to do it at a state of the art lab funded by someone like Lehman?

            The Lehman Brothers Foundation has pledged $6 million to help support the establishment of the Lehman Brothers Lung Cancer Research Center, a core component of the newly established Lung Cancer Research Institute at Weill Medical College of Cornell University. The Center, led by renowned lung-cancer clinician-scientist Dr. Nasser K. Altorki, is dedicated to the efficient translation of laboratory discoveries into novel and more effective treatment strategies for lung cancer patients.

            Ignorance of liberals knows no end.

          • Nate Ogden says:

            And if they are to be a successful artist…..good chance someone like Lehman will have a hand in that as well;

            http://www.artnet.com/magazineus/news/artnetnews/artnetnews9-17-08.asp

            Indeed, within the art world, Neuberger Berman principal Roy Neuberger (b. 1903), who cofounded the firm in 1939, is known as much for his taste in art as for his investment savvy — the Neuberger Museum of Art in Purchase, N.Y. is named after him, established with the help of Nelson Rockefeller in 1974 to let the financial titan show off his collection. Since 1990, his namesake company has had a fund to purchase “emerging to mid-career artists, with an emphasis on the former,” according to the press release for a show of the firm’s collection that toured U.S venues in 2004 — making Neuberger Berman one of the harbingers of the finance industry’s recent infatuation with emerging art.

            Neuberger Berman was an asset manager owned by Lehman Brothers. Who do you think buys the art that allows emerging and mid-carrer artist to pratice their art instead of spending all day waiting tables?

          • Nate Ogden says:

            Don’t you ever tire of being so wrong?

            MUSEUMS LOSE BIG IN LEHMAN COLLAPSE
            Whatever the fate of Neuberger Berman, however, the collapse of Lehman Brothers is destined to pass like a cold wind through the museum world, which has leaned on the investment firm for untold millions of dollars in arts patronage (charitable giving at Lehman Brothers totaled $39 million in 2007, according to a story by Bloomberg reporter Philip Boroff). In recent years, Lehman has been the lead sponsor for a range of museum initiatives, from the Brice Marden retrospective at the Museum of Modern Art and the Jackson Pollock show “No Limits, Just Edges” at the Guggenheim Museum to the “Young Friends of the Norton” program at the Norton Museum of Art in West Palm Beach, Fla., and a show about the pleasures of collecting contemporary art at the Bruce Museum in Greenwich, Conn.

        • BobbyG says:

          As soon as I saw this, I thought of Nate:

          http://www.bgladd.com/Nate.jpg

    • steve says:

      The thing people forget is that spending is not evenly spread. 3% of medical spending is done by 50% of people. Most spending is done by a small percentage of people. When people need a major cardiac procedure or need cancer therapy, they do not shop for price. If you have not been through it, talk with relatives who have.

      Steve

    • Dr. Mike says:

      “So I come full-circle to the HSA idea. When patients have a serious amount of “skin in the game” they will behave more like “consumers.” Unfortunately that is not an option for most working people”

      The money the patient spends when they swipe their HSA card could have come partially or totally from someone else.

      It is possible to spend someone else’s money – we do it all the time. With proper incentives and disincentives, we might even be coaxed into spending it as wisely as if it were our own, i.e. subject to the beneficial feedback of a free market system.

      Money collected from a socialist system can in turn be spent by an individual in a free market environment.

      Placing incentives and disincentives on patients does not single out the poor for punishment.

      etc.

      • Nate Ogden says:

        http://www.ibj.com/feds-proposed-indiana-medicaid-expansion-premature/PARAMS/article/29883

        Unlike the proposals in Obamacare this has been tried and is successful.

        Which most likely means Obamacare will kill it off before people learn how effective it can be.

        HIP, which Daniels touted as a success in his new book, “Keeping the Republic,” provides about 41,000 enrollees up to $500 in free preventive care such as cancer screenings and a $1,100 medical savings account. When medical costs exceed that limit, benefits of at least $300,000 are provided.

        Enrollees make monthly contributions based on their ability to pay, but many pay nothing because they earn too little. State officials say they are working on expanding the program to another 8,000 people.

  17. @John Ballard
    Lovely, well reasoned, post.
    I do have some doubts though regarding the analogy between food and medical care. Whether someone else picks up the tab, or an it’s an all-you-can-eat buffet, food is something most people enjoy consuming (up to a point).
    I still find it hard to believe that most people are gluttons for medical care, no matter who pays for it. I agree that some excess demand may occur in desperate end-of-life situations, and perhaps for other infrequent luxuries, but all in all, people are not generally looking forward to a free bout of leukemia as would be the case with a lobster dinner.

    I am willing to bet that 100% of people would prefer to be healthy and blow their premiums for nothing, rather than be sick and draw out more than they put in.

    The question becomes, how to keep as many people as possible in a relatively health state, which is perfectly aligned with folks’ personal desires and no other incentives are really needed. If we want to accomplish that, then society needs to make it easier for itself to do what we all know needs to be done.
    It’s not just a matter of personal responsibility to fight the food industry, the tobacco industry, the polluting industry, the pharma industry and yes, the health care industry, and all their enticing overt and covert efforts to make more money regardless of people’s health.

    • Nate Ogden says:

      am willing to bet that 100% of people would prefer to be healthy and blow their premiums for nothing, rather than be sick and draw out more than they put in.

      If this was even remotely true margalit the term non compliant diabetic wouldn’t exist. Do you get more naive around the holiday’s or something?

      Self destructive behavior is not a new discovery I would wager instead of 100% of people prefer to be healthy that 100% of people knowingly engage in unhealthy activity and or lifestyle.

      • John Ballard says:

        So 100% of those who buy life insurance hope to die in time for the policy to pay off?

      • Of course 100% of people engage in unhealthy activities and lifestyle, Tibetan monks excluded, but this is not the correct question. The question is whether people purposefully try to get sick in order to clean up on all those nifty surgeries and chemo things. They do not.

        A lot of the so called healthy lifestyle stuff is very much beyond the average person’s control if he/she is trying to survive in today’s environment. From the endless stress of executives to the fast food of day laborers, we live in a very complex environment, and the implications that this has something to do with morality or character is ridiculous and I would say somewhat self-serving.

        • Nate Ogden says:

          where do you draw the line between purposefully try to get sick and engage in activity that we know will make sure sick. We know smoking will cause cancer is that not purposefully making oneself sick? We know what excessive drinking does to your liver. We know what a poor diet does to a diabetic. People must make great effort to first earn the money then engage in smoking and excessive drinking, to not do either of those activities would be far easier then it is to do them. How is that a reflection on character and morality. When you forgo insurance

        • Nate Ogden says:

          wanted to make sure you see this clearly;

          http://www.tobaccofreekids.org/research/factsheets/pdf/0260.pdf

          Among adults under age 65, 34.9 percent with Medicaid coverage smoke compared to 33.5 percent who are uninsured and 17.3 percent with private insurance coverage.

          Most people could buy a decent insurance policy for the cost of an average smoking habit. Why are the 34.9% of Medicaid smokers given coverge they obviousluy can afford to pay them selves if their health meant more then their smoking habit? Why are the 33.5% of uninsured given free emergency treatment when they also could pay for their service if they had any personal responsibility?

  18. Jemma says:

    Good point. This is why I’m getting upset sometimes and not getting enough for healthcare particularly I have a 5 children. I care about their future and it includes their health insurance and how much they get from it since I am spending much more and work so hard for it. Thanks!

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  20. Peter1 says:

    “Why are the 34.9% of Medicaid smokers given coverge they obviousluy can afford to pay them selves”

    Well Nate if someone even qualifies for Medicaid it means they are the lowest of the low for income/assets. Maybe you could give us the numbers for cost of cigarettes against health insurance premiums. Don’t forget to include co-pays and deductibles, and of course if it’s an HSA, given all the disposable income Medicaid recipients have.

    • Nate Ogden says:

      ” Don’t forget to include co-pays and deductibles, and of course if it’s an HSA, given all the disposable income Medicaid recipients have”

      Peter if your bothered to think even a little before you posted you might actually contribute something. Many Medicaid plans have co-pays and Indiana has HSAs so you have already asked the wrong question.

      The proper way to make the argument is what would a close panel HMO with benefits similar to Medicaid cost. With age and zip it would be all over the place but roughly 80-90 in low cost states like Utah and $150 in your high cost states like MA and NY. Not saying their is causation but it seems the states with higher tabacco taxes tend to have higher health insurance premiums. Its pretty consistent that a pack a day smoking habit would be enough to purchase an insurance policy similar to Medicaid.

  21. Peter1 says:

    “We may be spending less and getting more.”

    Typical John Goodman lead statement from his Alice in Wonderland logic trying to repeat his mantra that the U.S. has the best system in the world, and of course he links to his own opinion piece to close his circle of proof.

    “the cost to us is the price we pay for it. But that is not necessarily true for society as a whole. The social cost of something may be a whole lot more or a whole lot less than what people actually spend on it;”

    Usually it’s, “a whole lot more” as people/business transfer the true costs to someone else’s books. The statement is true but certainly does not justify health costs in the U.S. or does not negate our direction of financial Armageddon unless our actual health costs are slashed. Just try to go to your bank and pay your mortgage with “opportunity cost”.

    • rbaer says:

      Yeah, that’s funny, it’s usually all about money, but when the US system clearly fails like it is the case in health care, “opportunity costs” are pulled out of the hat. And it’s idiotic: no sane person can doubt that huge amounts of effort/talent/work/hours are used realted to HC services.

      • Nate Ogden says:

        clearly if your looking through the crap stained lenses of liberalism. US has the best healthcare in the world and that is why the world comes here for healthcare when they can’t get it at home. Do we offer the cheapest healthcare no, like everything american we do it big and to much. Doesn’t mean we still aren’t better. You pick one meaningless and schewed data point and by that say we fail.

        • Gary O. says:

          “US has the best healthcare in the world….” Prove it. Even the sophist Goodman doesn’t try to go down that hopeless path.

          • Nate Ogden says:

            since their are many measures we’ll need to take them one at a time;

            Access to top quality care, anyone want to argue we have the top hospitals? If you have a rare condition or need aggresive treatment there is no better place in the world to be, people come from all over the world to use our facilities.

            Next would be outcomes. Studies have shown that a person of certain ethnic background is likely to live longer in the US then their native country. At worst they live just as long in the US as they do in their native country. While our health system does not help asians live longer then say being in Japan we do add a number of years of life to the average african american or hispanic life.

            Our survial rates for cancer are better then the rest of the world.

            Except in political measures we perform better then everywhere else.

          • rbaer says:

            That’s all the same old boilerplate, Nate.

            I know what I am talking about because I worked/trained in Germany and spent a few months in France.

            There is no doubt that peak insititutions are preforming very well in the US and I would even admit that there are more peak performing institutions in the US than elsewhere (no wonder given all the resources going into it).

            But there are many University- and private clinics that attract patients from all over the world as well (yes, Mayo may be number one for treating well off people from everywhere because they cover pretty much all subspecialties very well, i.e. they don’t have any true weak spots as far as I know). But these well off are very well served at the many European centers such as:
            http://www.rhoen-klinikum-ag.com/rka/cms/dkd_2/eng/87839.html
            http://www.klinikum.uni-muenchen.de/International-Patient-Office/en/Treatment/index.html
            http://www.charite.de/en/clinical_center/international_patients/

            Does the US health care system deliver excellent service for the entire population, considering its huge cost? All in all, considering overtreatment, waste (services of marginal value) and access/bankruptcy problems, the answer is a resounding “no”, and most people in the US know that. (As a side note, I don’t think medical errors are a larger problem in the US than elsewhere as many here claim – which does not mean there is no need for improvement.)

            BTW, the cancer survival rates are deceptive: if you diagnose more cancers, you will treat more individuals with milder -or even misdiagnosed – cancer, which automatically results in better survival rates, but this will not necessarily imply that you truly benefitted the individual (in particular true for prostate cancer and probably many cases of breast cancer). I actually suspect that US oncologists MAY do, on AVERAGE, a better job than oncologists elsewhere ON AVERAGE, but this remains to be seen and differences are unlikely to be dramatic.

          • Nate Ogden says:

            when your debunking the same old boilerplate lies why would you not use the same boilerplate facts?

            I never said we had a monopoly on centers of excellence just that we have more of the top hospitals then anywhere else.We do provide amazing and the highest quality care in the world, something those bashing our system deny.

            “Does the US health care system deliver excellent service for the entire population, considering its huge cost?”

            Your using a socialist measuring stick to argue our system, which is not socialist, does not measure up. I don’t recall an election where we voted to become socialist. In this country we place personal freeedom and the ability to fail or exceed over that of the social good. Our system was not designed to provide the best results over the whole population, it was designed to deliver the best results to an individual. And that it does better then any other country in the world.

            Their are studies that control for stage of cancer. Isn’t higher diagnosis rate a sign of higher quality, just becuase your diagnosised doesn’t mean we should always treat but its always a good idea to know whats up

        • steve says:

          Very few people come here for care. This has been pretty well debunked. As well, you should remember that a lot of docs comment here. Having trained at some of the top rated programs in the country, we rarely saw anyone from outside the country. Working now at smaller community/academic center, the foreigners we treat are those who have moved here.

          Steve

          • Nate Ogden says:

            could you tell that to the Cleveland Clinic then, they go on and on about their plane that flies people here anjd world class care and how Interntaional they are. Really hurts to find out they have been lying to us this whole time.

            Why would a billionair prince fly all the way to the US to get care at a smaller community/academic center?

            I think your comment debunks its self. Use a little logic, your not going to fly to the US to get your cold treated. For starters there is a very small population annually that has something serious enough to come here. Then further limit that to those that can afford to.

            When someone is spending their own money and has the choice to be treated anywhere in the world and they choose here that is a sign of quality. It doesn’t need to be 1 million a year to be an accurate measure.

            Maybe you should work at better faclities then you will get to meet more foreign visitors?

          • steve says:

            “could you tell that to the Cleveland Clinic then, they go on and on about their plane that flies people here anjd world class care and how Interntaional they are. Really hurts to find out they have been lying to us this whole time.”

            :-) When you live long enough, you get to know lots of people. I just hired a fellow who trained at the Cleveland Clinic. No, they dont really take care of that many people. Having seen the insides of a couple of Saudi hospitals, I dont blame a prince for leaving there. It probably is for quality, though it is also for security. Based upon my limited encounters with Saudi royalty, I would also think it might have something to do with the availability of blonde woman while being far away from home.

            What we have is an inconsistent system that provides good care if you can afford it. It provides very limited care to many of our working poor and to our welfare class.

            (My training was Penn, CHOP and Hopkins. Not that great, but ok.)

            Steve

        • rbaer says:

          It’s hard to argue with you, nate, when you arguments remain a blurry but moving target:
          Nate 1 “US has the best healthcare in the world and that is why the world comes here for healthcare”
          Nate 2 “I never said we had a monopoly on centers of excellence just that we have more of the top hospitals then anywhere else.”
          (Not at all surprising that a 310 Million Nation spending close to a fifth of a huge GDP on HC and a world language as native language has peak performing facilities).

          • Nate Ogden says:

            “It’s hard to argue with you, nate, when you arguments remain a blurry but moving target:”

            How are those two statements in conflict with each other? You don’t have to have all 100 of the top 100 hospitals to still have the best care overall.

            How much more simple do I need to state things for you?

          • rbaer says:

            Everyone who reads these 2 statements will realize that your definition of “best” has become near meaningless and that your argument is therefore of little value, since it relies only on spin/unfounded assumptions.
            “I did not have sexual relations with that woman”

  22. “…what would a close panel HMO with benefits similar to Medicaid cost. ….. roughly 80-90 in low cost states like Utah and $150 in your high cost states”

    Just want to make sure I understand this, Nate. Are you saying that Medicaid costs are on average between $1000 and $1500 per year per beneficiary? Or are you saying that they should be?

    • Nate Ogden says:

      no Medicaid cost on Average 1-5K depending on the state. I’m saying you could buy an individual policy in most states for $100 per month with benefits as good as Medicaid. That does exclude your Medicare dual eligible population. And it wouldn’t allow for people waiting until they were at the hospital and checking out to enroll. But it would eliminate the rampant fraud in Medicaid and it would actually pay the providers better. Some States are spending less then that but making a total mess of the healthcare system in doing so.

      Here is some good data

      http://statehealthfacts.org/comparemaptable.jsp?ind=183&cat=4

      I do think the States should take care of the truly disabeled, I would provide better care then what Medicaid gives them though. We short the deserving in order to help those that don’t need it, i.e. smokers and drinkers.

      We couple triple what we spend on truly disabeled and give them great care, eliminate Medicaid for the rest and still save a fortune.

      • steve says:

        Could you link to these $100/month programs as good as Medicaid?

        Steve

        • Nate Ogden says:

          sure go to any carriers website and run rates for a closed panel HMO with low co-pays

          • steve says:

            Going only to sites where I dont have to give up my name, at my age the lowest quote I get is $300/month for individual coverage, with no pre-existing illnesses.

            Steve

      • What Steve said + looks to me more like $500 per month/per person on average.

        As to your personal distaste for smokers and drinkers, this is precisely why medical care should not be viewed as a charity. When you engage in charity giving, there is a tendency to expect that one can pick the recipients based on their being “worthy” or “deserving”. Today it’s drinking and smoking, tomorrow it’s obesity, later on it’s laziness, or maybe religion or sexual orientation or promiscuity … The sky is the limit.

        • Nate Ogden says:

          so your arguing people should be able to take my money and live off my labor without any obligation to need or deserve it?

          Why don’t you be the first to start margalit, send me your bank account info and we’ll see how long you still believe this makes any sense

  23. Peter1 says:

    ““US has the best healthcare in the world….” Prove it.”

    That was sarcasm, but the line definitely needs a re-write. Mr. Goodman (sophist arguments) flips between saying European systems are inferior to ours to saying a libertarian system here would solve all our problems.

  24. Peter1 says:

    “I’m saying you could buy an individual policy in most states for $100 per month with benefits as good as Medicaid”

    “As good as Medicaid” – which providers then would accept it? $100/mth – age, medical condition, deductibles, co-pays, how about spouse included?

  25. DeterminedMD says:

    You read threads like this and wonder why health care in this country continues to flounder and sputter on life support.

    Boy, does “full of sound and fury, signifying nothing” really fit here. I guess when you have trillions of dollars floating around to be misappropriated and stolen, everyone has a stake in claiming as much as they can. Everybody wants to live forever, see no harm or pain in their loved ones, and thinks that every single treatment opportunity is owed to anyone who pursues it.

    Except one little detail, isn’t expense finite? Like, life as well? And, how much is enough? Tough questions for those who really don’t want to examine, what, reality!?

    I am beginning to think this blog has scared away people who want to be realistic and grounded. Same old banter from the same old suspects!

    Again, happy holidays?

  26. Barry Carol says:

    Margalit and Nate –

    We really need to think of Medicaid beneficiaries as two distinct populations. The first group is the aged, blind and disabled (ABD). They account for roughly 25% of the beneficiaries and 70%-75% of Medicaid costs. The other group is mainly children and women with children. They account for 75% of the beneficiaries and 25%-30% of the cost. Children are cheap to cover averaging $1,500-$2,000 per year of medical spending each. In most states, childless adults are not eligible for the program.

    Interestingly, slightly over 40% of the 4 million births in the U.S. each year are paid for by Medicaid which helps to account for why out infant mortality statistics don’t compare very well to other countries. Poverty is the issue here, not the quality of our healthcare system.

    With respect to the dual eligibles, this population consists of between 9 and 10 million people eligible for both Medicare and Medicaid. Most are over 65 years old but some are younger disabled people who qualify for Medicare as well Medicaid. The medical spending on this comparatively small population exceeds $300 billion per year or roundly one-third of the combined cost of Medicare and Medicaid. Care is often fragmented, uncoordinated and unmanaged. There is a lot of room for savings here just from better care coordination which is starting to gain traction as both the states and the federal governments look to mitigate spending growth for these two programs.

    • I agree, Barry, but I think that herding the “high spenders” into managed care is not quite enough. There is a post above discussing preemptive strategies to both reduce expenditure and provide tangible help to these folks by walking into the community instead of trying to bring the community to designated facilities. It is a simple example of doing well by doing good and I hope that governments at all levels understand that we cannot just discard entire sections of our society.
      It is always mind boggling to me when folks defend our less than stellar mortality rates and education attainment results by arguing that if you only look at white guys in suburbia, we do as well as anybody in the world.
      And these are the same folks that prefer to narrowly interpret the Constitution, in which case I would like to remind them that the term “indivisible” is not given to interpretation.

      • Nate Ogden says:

        Interpretations change, if you have a right that was interpretated then as soon as someone in power interprets it differently those rights disappear. Rights are not something that should come and go with changes in power. We have a very clear and simple process to amend our constitution, there is no reason for anything to ever be interpreted.

        People such as your self love to interpret the constitution as a way to force your political ideology on others that disagree with you. You make up and find rights to bolster your politicial power

        Are you arguing genetics don’t exist? Why don’t you find a new right and pass a law saying everyone deserves to live the same length of time? Its a simple fact of life that some races live longer then others, its dishonest to irnore this fact and say our healthcare system is failing becuse we have a different racial make up then france.

  27. Barry Carol says:

    Margalit –

    I’m not sure I understand what your reference to “herding people into managed care” means. In the context of the dual eligible population, it includes everything from more thorough discharge planning following hospitalizations in order to reduce readmissions to health coaches to having patients report their weight and blood pressure daily or at appropriate intervals to catch deterioration in chronic conditions like CHF sooner rather than later. It also includes the use of electronic records so that multiple doctors treating most of these patients know what each other is doing or recommending. Increasing the use of living wills and advance directives is extremely helpful in order to reduce futile and/or often unwanted aggressive care at the end of life. There is plenty of room for improved oversight of care that takes place within skilled nursing facilities as well. In short, there are lots of opportunities to reduce the cost of caring for this medically expensive population. It’s not about herding them into some bare bones HMO.

    • Nate Ogden says:

      for some people managed care will always be a bad thing. Which is to bad becuase a sizeable portion of the population responds to it very well. From the studies I have read those enrolled in trial programs for dual eligibles respond very well and prefer it over traditional coverage from Medicare and Medicaid. This makes sense as they now have someone advocating for them and answering questions.

      http://www.ahipcoverage.com/wp-content/uploads/2011/09/Dual-Eligible-Study-September-2011.pdf

      see page 3-5 for good summary of the problem and what they are trying to do. Personally I think they could achieve better results if they shopped outside BUCA and the big players but something is better then nothing.

    • I don’t have any objections to managed care if it is managed for the benefit of the patient and respecting his/her wishes whatever those may be.

      • Nate Ogden says:

        so you don’t allow for any management of cost? If he and her aren’t paying for it aren’t you creating an unsustainable expense? Who tells the patient when their wishes are out of line?

        • Shouldn’t be unsustainable at all. Everybody and their grandma is now advertising “patient-centered” care, which is defined as follows:
          “The experience (to the extent the informed, individual patient desires it) of transparency, individualization, recognition, respect, dignity, and choice in all matters, without exception, related to one’s person, circumstances, and relationships in health care”
          Note the “without exception” part.
          We are being told that less care is better care and if patients understood what is being done to them, they would naturally choose less. Go for it….

          • rbaer says:

            “We are being told that less care is better care and if patients understood what is being done to them, they would naturally choose less.”

            I strongly suspect that this is not the full story. Sure, it applies to a reasonable majority, but to me, it seems that there is a small but important subset of patients who overuse the system – I mostly perceive, as the underlying problem, a mixed bag of psychiatric/behavioral factors (mostly anxiety, in combination with physiologic symptoms) plus unrealistic expectations/attitudes (“we need to do something/investigate” – i.e. watchful waiting is never enough, “the newest is always best” etc). In that respect, referring to the reasonable majority may prove futile.

  28. Barry Carol says:

    Thanks Nate. I’ll give Dr. Thorpe’s paper a read tomorrow.

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