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POLICY: Unrealistic, unfair mercatilism in health care.

I like Don Johnson’s blog Businessword but sadly when you really push him, as I’ve done in his comments over the last couple of years, he either won’t answer or his answers reveal a political philosophy that is downright mean. So in his criticism of Krugman’s analysis on his blog and in comments at THCB here, Don essentially says that if you’re poor or sick in America, well that’s just tough titties. And, as a by product, it’s OK for the insurance market to screw over those who really need individual insurance because, well, because it’s a "market". Same way it’s OK for Enron to defraud the California rate payer, or same way it’s OK for Healthsouth to defraud its shareholders. After all they’re operating in "markets" too.  But Don misses the wider point. Because of the way the US system is set up  — because we’re a richer country than any in Europe, and because the majority of people can afford to pay way too much for our health care —  we systematically overpay for things that no rational market would value. That does not help our economy, it hurts it as most health care spending is non-productive to the overall economy.

The other point that pro-unrestrained booty capitalists in health care, or those Krugman was criticizing, go on about is the huge waiting lists in Canada and the UK.  Well as I mentioned in the UK the wealthy can trade up with their own money while the less well-off get a decent standard of care. Meanwhile single payer advocate Don McCanne found this just excellent chart from Stats  Canada which shows that median waiting times for non-emergency surgeries in Canada  are just over 4 weeks! I’m more than prepared to wait 4 weeks for non-emergency surgery if it means that poor people wont be crushed by their medical bills and can get access to basic health care. (For far more details on this see my "Oh Canada" piece).  And anyone who doesn’t think that’s a fair equation is just mean in my viewpoint. Not to mention that such a system would cost me as a tax payer and a premium payer less money! Money I could spend on other, more productive things, like Frappuchinos.

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JCDonald E. L. JohnsonSueJohngadfly Recent comment authors
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gadfly
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gadfly

//No one seems to demonize the neuroligst with 3 vacation homes?// You’re right – there needs to be a better way to talk about outrageous pay other than the cheap soundbyte “executive pay” or “CEO pay”. When critics talk about bureaucratic money-sinks, people envision the cost of supplies and red tape. The stereotype of the bureaucrat is middle class, if not egregiously underpaid. However, at Kaiser the Shareholder physicians make out like bandits, and a substantial mass of physicians feel underpaid (I would argue that this feeling is only relative to the income of the Shareholders. I don’t regard $200-$500k… Read more »

JC
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JC

I agree with you gadfly, that a HUGE amount of health care dollars (not just premiums) are wasted on bureaucracy and poor technology. But your point about fat cats executives, or shareholders being the cause for high health care premiums is exaggerated. The argument about overpaid executives has been going on for decades in almost every industry. The correlation does not exist. In the very late 90’s and early 00’s HMOs (and Insurers) were hurting or losing money. It had nothing to do with executive pay, but more to do with poor projections on health care trends (and increased regulation).… Read more »

gadfly
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gadfly

//Where do you think those premiums are going to?//
I think they are going into a lot of bureaucratic fat, overpaid executives, and poor technology investment decisions. In the case of HMOs, the money goes into profit for the Shareholders (even in non-profits, the physicians who are shareholders are compensated like partners in a lawfirm.). Deregulation will just add a dash of Anything Goes to an already unsavory mix.

JC
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JC

If you believe that the problem with our health care system is that insurance premiums are too high, you don’t understand the dynamics of the system. Where do you think those premiums are going to? Some slush fund? HCA is posting its best year decades (look at D. Johnson’s website). Hospital profits are on the rise. I am not saying insurers are not making money, at least in FL, it less than some Hospital systems. The problem with the insurance market for healthcare is that it is TOO regulated. Car insurance companies do not have the level of mandated benefits… Read more »

Sue
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Sue

I want to refer everyone back to an earlier post on this blog: http://matthewholt.typepad.com/the_health_care_blog/2003/12/health_planspol_1.html. Under the entry relating to Georgia health care plans, it discusses the concept of churning. This is a health insurance policy designed to “milk” a consumer with a combination of high deductibles and high premiums until they cancel the policy without taking benefits. I’m in one of those policies right now. I pay $6500 a year with a $5000 deductible and it goes up $1000 a year. It was the only group plan I could get and I’m relatively healthy–just middle-aged. Our health care model was… Read more »

Donald E. L. Johnson
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I guess it’s “mean” to advocate regulated free markets that: 1. Help us have the lowest unemployment levels and lowest income taxes. 2. Give people who take the time to become educated, find rewarding jobs and seek out health care providers they like the freedom to spend their money on health care, if they think that’s important. 3. Try to minimize the role of centralized governmental planners who’ve never successfully created a health care system that cares for everyone in the country and makes everyone happy. 4. Give everyone incentives to earn the money needed to buy the best health… Read more »

gadfly
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gadfly

/ We manage to make the car and home insurance market work / I think it’s misleading to compare health insurance to car and home insurance. My income has always been spotty (grad student for 7 years, and rocky work history since then). As a result, I don’t own a home: hence no home insurance. I don’t even purchase renters insurance: I’ve lost everything in a burglary before, but I don’t purchase renter’s insurance because it’s cheaper to just replace everything. So – the experience of loss doesn’t necessarily lead to a rush for insurance: it leads to calculation of… Read more »

Sue
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Sue

I think the best way to put into perspective what is happening in the insurance market is to compare it to the S&L crisis in the 80s. S&Ls ran were run loosely and started making a lot of very risky loans. You could argue that the end result of S&L failures was simply a market correction, except that the government ended up making good on the money lost by depositors. In short, we taxpayers ended up bailing out bad business practices. Insurance pricing and the failure of businesses related to health care to appropriately manage internal costs is causing the… Read more »

gadfly
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gadfly

//problem is spending IT dollars on irrational things// That’s true. I confess to having no knowledge of how health care IT spending stacks up to other industries, and I’m also unable to make industry comparisons in terms of prudent money management. As for my personal experience, I can only draw from working in similar areas in the banking industry. I do know that at Kaiser the IT fish was rotting from the head. The business side of IT project management was tremendously wasteful and made no sense at all. I think a lot of the blame can be laid at… Read more »

matt
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matt

“I can vouch for the colossal waste in the IT area – but the place to look for the cause is on the business management side rather than the technical workers.” While healthcare organization IT management might well be generally inept, healthcare has traditionally spent much less on IT than other industries. The problem is spending IT dollars on irrational things (from a system perspective) vs. those that provide the greatest (system) benefit per cost. IT spending has been focused on the things that make money for a healthcare organization and its physicians (at the expense / detriment of the… Read more »

John
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John

Oooh, he said “titties” :0 (I couldn’t resist) I don’t believe Don Johnson (aka Sonny Crocket) was too extreme in his comments. He may have been a little blunt, but that’s for him to explain. I think there is value in learning from other countries, but whatever is learned must be applied to the unique cultural context of America. In America (the land of freedom), we don’t like being told what we can and can not have. A socialized healthcare system like Canada (which denies any private endeavors) with its restrictions and rationing would last about as long as the… Read more »

gadfly
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gadfly

Ouch – do I get extra points for the double post?

gadfly
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gadfly

I can vouch for the colossal waste in the IT area – but the place to look for the cause is on the business management side rather than the technical workers. Managing IT projects pays like technology, while access to these jobs is largely social. In fact technical knowledge is actively discouraged on the basis that people with too much technical knowledge won’t “side” with business interests. Access to the jobs is largely social, and the candidates are drawn from people who have had the right opportunities. I was stunned by the serious deficiency of technical knowledge in Kaiser’s N.… Read more »

gadfly
Guest
gadfly

I can vouch for the colossal waste in the IT area – but the place to look for the cause is on the business management side rather than the technical workers. Managing IT projects pays like technology, while access to these jobs is largely social. In fact technical knowledge is actively discouraged on the basis that people with too much technical knowledge won’t “side” with business interests. Access to the jobs is largely social, and the candidates are drawn from people who have had the right opportunities. I was stunned by the serious deficiency of technical knowledge in Kaiser’s N.… Read more »

Matt
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Matt

Don Johnson has really been busy since Miami Vice and that show with Cheech ended… Sorry couldn’t help myself. As for ” . . .we systematically overpay for things that no rational market would value,” I would assume that Matthew is referring to the fact that there is no systematic mechanism (as there are in other health systems) for “rational rationing.” That’s why we – collectively – spend billions a year, for example, for allergy drugs for people who don’t actually have allergies. Or for new technology that costs a lot more with marginally better (or unmeasured) outcomes: stents anyone?