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  1. Mike,
    Yes, good point about the ambiguity of the phrase “account for.” Physicians are certainly the centerpiece of healthcare spending when you factor in what they prescribe, treatments they recommend and hospital admits they make.

  2. The Golden Years
    This folk song written by Eric Rech in 2007 reflects the changing of attitudes among the baby boomer generations about the governments ability to care of them as they reach their golden years. Originally titled “Granny Bong Hit” the name was changed to “The Golden Years” to appeal to a wider audience. In the 2008 elections the term “Universal Health Care” will become center stage only dwarfed by the current war in Iraq.
    A link to the song can be found here.
    http://www.subcampus.com/promo/grannybonghit.mp3
    Artist: Nel Harrison
    Album: In The Beginning
    Song Title: The Golden Years
    Release Date: 2007

  3. Private insurance may have only a 5% margin, but they are not the only for-profit in the healthcare system.
    The majority of hospitals are now for profit. All US drug companies are for profit. I don’t know the profit margins for these industrires, but assuning a reasonably low 5% for each, a trip to the hospital for a prescription costs the consumer 15% more in profits to various companies over what they would pay in a government (non-profit) run healthcare system.

  4. Mike,
    Yes, good point about the ambiguity of the phrase “account for.” Physicians are certainly the centerpiece of healthcare spending when you factor in what they prescribe, treatments they recommend and hospital admits they make.

  5. jd, your post above is just excellent, but I think inadvertently you left out a detail at the end when you say:
    “physicians account for only around a third of all health care spending”
    I think you mean that physicians’ own income accounts for only about a third . . . etc.
    Physicians order or prescribe most of the rest. (and, fortunately or not, patients who have little financial reason to question why, too often don’t question why)

  6. Scott,
    Respectfully, you’re just flat-out wrong on the facts. There is not a single health insurer of any size earning even 15% net income. Not one. You say you’ve posted information supporting your claim before. Please post it again. I’d like to know who is peddling this.
    The historical profit margin on health insurance is close to 5%, and almost no one makes more than 10%. You can argue that the system sucks for all sorts of reasons, but if you claim it’s because insurers are carting off 15-50% margins, you’re misinformed.
    I wanted to provide a link, but I get my information from analyst reports that aren’t available online. You can look at margins for the publicly traded companies individually at Yahoo or MSN finance. Just note that these guys have some of the highest margins, while the non-profits (mostly Blues, but also dozens of other regional plans) tend to have lower margins in the 2-3% range.
    No one is saying that the high cost of healthcare is forcing insurers to have higher profit margins. Insurers expand margins on an opportunistic basis, but they’ve been flat for the last few years. As insurers maintain their margins, the ever-increasing cost of health care does lead to ever-increasing profits measured in total dollars. 5% of $110 is more than 5% of $100.
    As for doctors, it’s true that primary care physicians have not seen wages increase in keeping with the growth in GDP ever since managed care hit big around 1994. But the same is not true of specialists. Specialists have seen steady increases in pay that have far outpaced the general rate of inflation. Today specialists earn on average twice as much as primary care physicians, which is a huge problem because we really need to focus on primary care more than specialties.
    The Physicians Practice survey you linked concerns fee schedules (which ignore utilization increases), it only concerns 2006 and looks at only a handful of billable codes out of thousands.
    Even so, a 17% drop in one year for basic office visit payments is indeed remarkable if true. In fact, that is really a newsworthy event. I’m suspicious of it for two reasons: One, I’ve never heard anyone in the insurance industry (or analysts of the industry) mention a drop in 2006, let alone a drop of this magnitude. These people’s livelihoods depend on knowing changes in provider rates, so it would be quite an oversight on everyone’s part for me not to have heard of this by now.
    Second, I happen to have in front of my Modern Healthcare’s 2006 Physician Survey, which is a list of 15 different physician salary surveys. According to these 15 independent surveys, family practice physicians saw their income change by anywhere from +12% to -9%, with the average around 2%. That fits the long-term trend.
    In any case, physicians account for only around a third of all health care spending. Total spending can and does rise even when not every part of the total rises equally.

  7. JD-
    “Insurers will generally give you as much coverage as you can pay for, plus 10-15% admin and 3-5% profit.”
    I disagree. Insurers are posting record profits, anywhere from 15% to 55% and I have posted the numbers here once before. However the school of thought is these insurers are posting record profits because of the high costs of healthcare. So in line with that logic, doctors should be posting record profits or at the very least should be seeing a rise in reimbursement.
    Not so according to nation wide study done by Physicians Practice. According to the study “average physician reimbursement from commercial payers and Medicare collapsed in 2006, with payment levels averaging 17 percent below that of 2002 and a staggering 36 percent below that of 2004.” continuing, “Here’s another 2006 shocker: Nationally, Medicare is now a better payer than commercial payers. Yup, you read it right. Better think twice about cutting back on those Medicare patients. They may be your best bet for decent pay”
    Link to the full study: http://www.physicianspractice.com/index.cfm?fuseaction=articles.details&articleID=933
    JD- “private profiteers skimp on coverage to save money, leaving more and more private profiteers skimp on coverage to save money, leaving more and more people denied care and people denied care”
    HUGE problem. Now a days you are paying for vastly inflated premiums for less coverage, higher deductibles for both in-network and out of network services, more policy restrictions and more carve outs.

  8. I should add that (1) not only does not “feel” like a marginal problem to those left holding the bag on coverage decisions, it isn’t a marginal problem for them. I meant that it was marginal from the point of view of its contribution to our total cost/access mess.
    Being denied coverage that you paid for occurs vastly less often than not being able to get adequate coverage in the first place.

  9. O. Neimon,
    You would do well to listen to the comments of people like Stuart S. and Peter on this board. The overwhelming problem with our system is that it costs too much, not that private insurers are skimping on care in order to reduce premiums. Insurers will generally give you as much coverage as you can pay for, plus 10-15% admin and 3-5% profit.
    The problem is that fewer and fewer can pay for rich benefits anymore. For the same level of coverage, premiums are going up at over twice the general rate of inflation, and have been for most of the last five decades. That’s overwhelmingly because medical costs have been going up at twice the rate of inflation for most of the last five decades.
    There are two basic themes to criticism of private insurance from the left: (1) private profiteers skimp on coverage to save money, leaving more and more people denied care and (2) private insurers on their own can’t control medical costs, so supply-side pressures for spending run wild and the lack of a safety net leaves more and more without adequate access to care.
    (1) is a marginal problem (though it doesn’t feel that way to those on the short end of the stick). (2) is an enormous problem, and really defines the failure of the American system vs. all other systems in the developed world.
    Note also that (1) and (2) are partly in conflict with one another: the more insurers skimp on care, the less is spent; the less insurers control spending on care, the more is spent. (2) exerts by far the greater force.

  10. I’ll support Stuart S. on this one. I too looked at the link Mr. Browning gave and concluded that free market plans, no matter where they are, fail to control costs. It’ll take time, as with America, for the Swiss to see that gov run single pay is the only way to stop the juggernaught of free market pricing.
    From the link:
    “He called on all sides, notably health insurers and the cantonal authorities, to make renewed efforts to reduce spending and aim for more cost efficiency.”
    “There are currently 87 private insurers providing mandatory basic health care coverage for Swiss residents under a 1996 law. But health premiums have soared over the past decade.”
    “More than 100,000 people are no longer covered because they haven’t paid their premiums.”
    “For their part proponents said a single health insurer would boost the efficiency of the system and allow annual savings of at least SFr300 million ($245 million) in administrative costs.”
    “Switzerland has the most expensive health system in Europe, according to an international comparison. It spent 11.6 per cent on health in 2005, ahead of Germany and France but behind the United States.”

  11. Hi Stuart its Stuart. Thanks for posting to the article. It mentioned a few points it mentions, other than the Swiss voters voting against a single payer system. One major one is that Switzerland, with its private insurance market, has the most expensive health system in Europe, with annual spending around 11.6. Additionally it has 100,000 without insurance because of rising premium rates (about 1.5% of the population). Granted the US has 10 times that amount of unisurance and higher health care expenditures. Also, the strongest opposition to this plan came from the regions (German) with the, on average, lower premiums. So count this one as a victory for a Swiss. Perhaps one day they too can become American like in their poor care and flourishing market! Apparently, they’re well on their way.

  12. Funny how? The writer is presenting evidence to support his view. So. If you have conflicting evidence? The snarky “I hate to tell you, but you’re wrong” language can go away, thank you. This kind of attitude does nothing to support your argument, so back to your alter of Rove for instructions with you.
    Meanwhile, it looks to me as though this was about their disability system, but I’m not sure what you meant, since there are several articles on that page.
    And, from my point of view, market-driven healthcare will fail because the market incentive is NOT to provide healthcare, thus saving premiums. Or, rather, it will fail to provide healthcare. It will do very well for the very few who already have enough.
    My $.02

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