Explaining Runaway Costs: The Lobster or the Salad?

LOBSTER_GRAM_300Have you found yourself ‘splaining to friends and family why the healthcare system is so damn expensive? I’ve been teaching health policy for a couple of decades, and I’m surprised that my two favorite stories haven’t yet surfaced in all the discourse. Here they are, in the hopes that they help you, or someone you love, understand why medical care is bankrupting our country.

Let’s start with the Expensive Lunch Club, a story I first heard from Alain Enthoven, the legendary Stanford health economist. It goes like this:

You’ve just moved to a new town and stroll into a restaurant on the main drag for lunch. None of the large tables are empty, so you sit down at a table nearly filled with other customers. The menu is nice and varied. The waiter approaches you and asks for your order. You’re not that hungry, so you ask for a Caesar salad. You catch the waiter looking at you sideways, but you don’t think too much of it. He moves on to take the order of the person sitting to your right.

“And what can I get for you today, sir?”

“Oh, the lobster sounds great. I’ll have that.”

You’re taken aback, since the restaurant doesn’t seem very fancy, and your tablemate is dressed rather shabbily. The waiter proceeds to the next customer.

“And you, ma’am?”

“The lobster sounds good,” she says. “And I’ll take a small filet mignon on the side.”

Now you’re completely befuddled. You tap your neighbor on the shoulder and ask him what’s going on.

“Oh, I guess nobody told you,” he whispers. “This is a lunch club. We add up the bill at the end of the meal, and divide it by the number of people at the table. That’s how your portion is determined.”

You frantically call back the waiter and change your order to the lobster.

“If the waiter makes a 15% tip on the total bill and you ask him to recommend a dish,” Enthoven asked our health econ class, a glint in his eye, “do you think he’ll recommend the salad or the lobster?”

“And if most of the lunch business in town is in the form of these lunch clubs, do you think you’ll find more restaurants specializing in lobster or in salad?”

I have always found this story to be the best way of explaining how the fee-for-service incentive system drives health inflation – and how it isn’t just the hospitals, or the providers, or the patients who are the problem. It’s everyone.

The second story involves one of the great innovations in the annals of surgery: laparoscopic cholecystectomy, or “lap choley” for short. As you may recall, the old procedure for removing a gall bladder involved an “open cholecystectomy,” a traditional “up to the elbows” surgical procedure. It was a nasty operation: patients stayed in the hospital for a week, recuperated for a month, and ended up with a scar that began in their mid-abdomen and didn’t end till it reached Fresno. The surgery was exquisitely painful, and had a high complication rate and a non-trivial mortality rate. And it was hecka expensive.

In the late ‘80s, along came lap choley, in which the surgeon makes a few inch-long slits in the abdomen, then inserts narrow mechanical arms that can cut and sew while allowing him to monitor the patient’s innards through a tiny camera. With this revolutionary “keyhole” procedure, patients had shorter hospital stays (1-2 days instead of a week), a much shorter convalescence, and a far lower complication rate (and negligible mortality). And costs were reduced by about 25 percent.

This was innovation – the new procedure was safer, less painful, and far less expensive. So what do you think happened to national expenditures for surgical management of gallstone disease after the advent of lap choley?

You know the answer. During my training in the 1980s, we were taught that you only removed a gall bladder containing gallstones when it was infected (“cholecystitis”), unless the patient was diabetic (the much higher complication rate of cholecystitis in diabetics justified prophylactic cholecystectomy). We told all the other patients with known gallstones to avoid fatty foods and to come to the ER promptly if they had severe belly pain, developed a fever, or were mistaken for a pumpkin. Most of these patients ultimately died with their gallbladders still in their abdomens, not the pathology lab.

But lap choley led to “indication creep” – the surgery now seemed benign enough that we began to recommend cholecystectomy for anybody with “symptomatic gallstone disease.” Since everybody ends up with an ultrasound or CT at some point in their life, we find lots of gallstones. Symptomatic? How many people do you know who never have belly pain? Do you? (Perhaps you need your gall bladder out.)

So, whereas technological innovation usually lowers costs in other industries (Exhibit A: Moore’s Law), in healthcare it often raises them as the indications for expensive procedures change faster than the unit price.

Is there a way out of the lap choley conundrum? Perhaps comparative effectiveness research will help – it might tell us precisely which patients will, and won’t, benefit from lap choley. All the usual issues must be navigated.

The expensive lunch club and the story of lap choley are two reasons why our healthcare system consumes 16% of our GDP. Sure, there is waste, greed, and fraud in healthcare, but I find the stories helpful because they illustrate how the actions of perfectly reasonable doctors, patients, and administrators will lead to inexorable inflation if the system isn’t changed in fundamental ways.

That increasingly seems like an awfully big “if”.

Robert Wachter is widely regarded as a leading figure in the modern patient safety movement. Together with Dr. Lee Goldman, he coined the term “hospitalist” in an influential 1996 essay in The New England Journal of Medicine. His most recent book, Understanding Patient Safety, (McGraw-Hill, 2008) examines the factors that have contributed to what is often described as “an epidemic” facing American hospitals. His posts appear semi-regularly on THCB and on his own blog “Wachter’s World,” where this post first appeared.

52 replies »

  1. I’m a Brazilian citizen, born in Brazil and have been living here since then, so the health reform won’t affect me in any way.
    Even so there is something I’d like to share with you.
    We here have a large experience on government “taking care” of us and that’s exactly why I can tell: YOU DON’T WANT IT!
    Bureaucrats aren’t competent enough to deal with health issues and to be fair they shouldn’t be. If you are under attack you’ll want a soldier or a lawyer to take care of the problem? Some people are trained to act, others to postpone and bureaucrats are PhD on the latter.

  2. Let me clarify for a general audience what I mean regarding the influences of femininity and masculinity being in balance as a means of achieving health, personally and socially. I am not referring to gender. Femininity is associated with receptivity. Masculinity is associated with creativity. If people are overly receptive, they do not protect themselves, their children and almost anyone or everyone else. They let almost anything in, not keeping danger out. If people are overly, actively receptive (in a creative way), do they want to take? If people are overly creative, they push things onto other people, without being receptive to whether those people want it or not. They overpower others.
    So, when people are in balance, they protect themselves and others, while offering beneficial things to others as they are able. They are open to people making their own choices. They offer as much free and informed opportunities as they can. It feels safest to be around such people. Their own momentary needs are pretty much met, in their state of balance. They don’t feel a pull to take or push too much, or just let anything happen, too passively. When other people are around this balanced state, those other people come into balance. Neurons mirror off of each other; human electromagnetic fields are dynamically in interaction. When people are around an unbalanced state, it throws them off balance too. At least, it makes it much more difficult to maintain balance.
    I have seen both homosexuals and heterosexuals who tend to maintain themselves at or near a state of balance, with respect to receptivity complemented by creativity. I have also met others from both groups who try to take too much or push too much, or let too much happen carelessly. Both doctors and patients are best protected as these influences are brought into balance, so people can coordinate treatments with full respect for each other, maximizing each other’s choices. How can this best happen between doctors and patients, with or without a federal health board? Right now, many patients do not feel they have enough free and informed choice for the treatments they find effective, which many other people find effective too. They do not feel the medical industry has always been receptive to their perspective, and so they don’t feel the industry has been in a balanced state that is respectful toward the influences of femininity or receptivity. How can this issue be best addressed, with or without a federal health board?

  3. Irene,
    Are you OK?
    You are mixing chinese medicine, federal blogging, beer summits, two angel protectors that Doreen sees in each person, and music by The Police in the longest and most bizarre narration (if you could name it this) in my entire life!
    I promise never, ever to read again comments that are longer than the post!
    What the heck?!!!
    No thanks,
    The EHR Guy

  4. Here’s another note about the doctor I mentioned above, as an example of effective coordination between doctor and patient. A patient came in. He said he wanted to be strong. He asked what kind of ginseng* is more powerful, American or Chinese? She said, “Chinese.”
    Our medical industry uses opposition against the body to counter its focus: disease. Other methods nurture health naturally to support their focus: life. When the forces (or influences) of masculinity and femininity are well balanced in a culture, they are balanced in the people of the culture. The people, together, are the culture.
    Collective Soul is playing in town soon. I’ve been hearing about it on the air.
    Hot and cold can also be balanced. Does tension in interpersonal relationships, at individual and social levels, create heat in bodies, in people’s electromagnetic fields, the most powerful of which is the heart? According to physics, these fields go on infinitely, interconnecting us. Many people are concerned that our planet is heating up. How do people cool down? What are compatible relationships? Could a federal health board help coordinate treatments among doctors and patients?
    How are babies received into this world, male or female babies? What does the medical industry direct at their bodies? If babies are traumatized, male or female babies, what happens as they grow up? How do they treat people then? Trauma is energy to defend oneself that gets trapped because the person is unable to use it. Consciousness gets cut off from the traumatized area. People lose sense of their integrity, their direction in life. How do people find their soul mates? How are they conscious of who they go well together with? How are babies naturally surrounded by lots of love and cooperation?
    Trauma re-enacts itself until it is healed. When people are traumatized, who did it? Who sets the rules about how the medical industry treats babies? What situations are people in when they follow them? Are those rules based on cultural history? What culture or cultures?
    How deep does the rabbit hole go? Red pill or blue pill?
    Who’s the patient? Does change come from within?
    These are the lyrics playing on the airwaves: “I can’t take no more / Her tears like diamonds on the floor… No more! No more!… her diamonds falling down” by Rob Thomas. Child Protective Services has let people know that people who speak up about trauma are not to be shamed. That would re-traumatize them instead of protecting them.
    On blogs, patients and doctors can share information about what treatments are working for them and how issues are overcome. How about if the federal health board provides such a blog? As patients and doctors read it, in their more freely chosen time and space, they could access as much information as they’d like to enable truly free and informed consent. Respect for patients’ and doctors’ choices is what a federal board could enable or coordinate. What would such a blog be directing at patients and doctors? Or would it be more like giving them something, being receptive, or enabling effective connections? Many cultures see receptivity as an aspect of femininity. We like and accept femininity as much as masculinity, right? We love balances of power, yes? That’s why we want to maximize free and informed consent.
    As people recommend comments on a federal blog, comments and treatments with many recommendations could “bubble up.” Full and free discussion between doctors and patients could be the basis for the treatments the federal board helps coordinate. People could see which treatments are working well for large groups of people, even if the people are different. Various people are more receptive to different treatments. It’s about matching each individual with a compatible treatment. That is different than one size fits all.
    Such a federal blog would provide a way for the medical industry to be receptive to treatments that many people find effective, even if they have not been a part of the conventional “American” tradition. Since many cultures collect in America, this ensures all traditions have an opportunity to be well received. It ensures all patients and doctors may have a seat at the table, if they choose to receive it. Patients could pose questions, and the collective group of doctors, patients, and health board officials (each of whom individually participates of their own will) could respond. We would connect, bridging distance, enabling cooperation between all parties, so together we are safe and protected.
    Beer summits. Yes and well, alcohol is hot.
    Doreen Virtue says on her morning and evening meditation CD, “Mistakes simply require correction, not punishment.” Police are in the Department of Corrections. They are to protect all people, together. Doreen Virtue says everyone she has seen has two guardian angels. People have two parents who are consciously connected to each child. Chinese culture involves consciousness of ancestors.
    Now playing on the airwaves is “The answer, my friend, is blowin in the wind” by Bob Dylan. By the way, the herb I showed the doctor was eucalyptus. I personally don’t like it for me in significant quantity, and so I wouldn’t recommend it. It has powerful drying power, so it’s good for clearing up swamps. Moisture and dryness are also properties to balance.
    Nature. Human nature. That’s what we care for, yes? Connection. Balance. Together. All. One. Did spiritual teachers present themselves as ways to the whole or all? Now the radio show is “Acoustic Cafe.” I’m about to go into this restaurant and then go out again.
    I told a woman who looked Chinese that I liked Chinese medicine. She smiled and said, “Oh, we don’t get sick.” There was a photo behind her of herself at home with her husband. It’s there as she gets through the workday. Now playing on the radio is “California, rest in peace” by Red Hot Chili Peppers. There has been fires there every summer. The ocean is cooler, though.
    My Dad sometimes said very pointedly, “Do you mind?” with lots of focus on the word “mind.”
    When the doctor asked “Who’s the patient?” as a tired parent come in, overburdened with a child, could the doctor have been referring to someone who was not present? What leads to the situation of a parent and a child? Now playing on the radio is “My True Companion” by Marc Cohn.
    How do we bring balance to all these issues in this world full of people? The radio just played, “Right as Rain” by Adele. (I have added comments about the music playing as I’ve edited this, bringing different areas into focus). Now playing is, “Right here, right now… watching the world wake up from history.” Now playing are the lyrics, “Hold me down, sweet love, little girl… and I’ll carry you home.” It’s from the Cities 97 channel in Minneapolis.
    Both my parents were in the medical industry. I like nature. It gets pretty cool here. Now playing is “Every little thing she does is magic,” by the Police. Now playing is, “I just want you to know who I am” by the Goo Goo Dolls.
    *I’m working from memory. I hope I’m getting it all down correctly.

  5. “You are perfectly happy to advocate for a rationing board because you are neither sick nor providing care. That is not the way life works in Medicine.”
    MD as HELL – First, I’ve had more than my share of medical episodes over the past 15 years including a CABG, a DES, a TURP, seven colonoscopies, and a lap chloey plus a number of other invasive procedures. The plain fact is that resources are finite but demand for medical services is potentially near infinite. While I recognize that doctors see their primary mission as healing without much if any consideration given to cost, we have to set limits somehow. The challenge is to do it as fairly as possible. Insurance, including Medicare doesn’t cover everything today. If you or any of the other doctors on the blog have better ideas on how to bend the cost curve down toward a level that the society can afford and sustain, I’m all ears. By the way, as I think you know, I’m with you on tort reform, especially for failure to diagnose cases.
    “I am having issues with the tiered approach that Barry is proposing, though. I’m not sure how you rate providers for cost effectiveness.”
    Margalit – The Dartmouth Atlas of Healthcare has 30 years worth of data documenting huge regional differences in practice patterns by both doctors and hospitals with no difference in risk adjusted outcomes. Indeed, often more care provides worse outcomes. The insurers all say they can easily identify who the high utilizers are in a given area. Some doctors practice more defensive medicine than others. According to McKinsey, doctors who own their own imaging equipment order 3-8 times more imaging studies than doctors who don’t own their equipment. Some doctors and hospitals are simply much more expensive than others on a per procedure basis. It would not be that hard to group doctors and hospitals into tiers based on utilization and quality as long as the scoring approach is transparent and providers have ample opportunity to rebut or challenge the insurers’ information and conclusions.

  6. All of you who argue for a national healthboard are why we will never do better.
    You do not want to be responsible for your own choices. You want someone else to be responsible. You want someone disinterested to choose appropriate care. Well, folks. If the Board is disinterested politically, then it is also disinterested in you.
    You are perfectly happy to advocate for a rationing board because you are neither sick nor providing care. That is not the way life works in Medicine.

  7. Peter, Senator Daschle has provisions in his proposal for regional entities that report to the Federal Health Board.
    Also, the FHB would have the power to affect payer regulations.
    I am having issues with the tiered approach that Barry is proposing, though. I’m not sure how you rate providers for cost effectiveness. First, even if it was possible, it would have to be based on long term studies of outcomes. Second, there will be significant temptation for payers to rate on cost only.

  8. Peter – I’m thinking in terms of a Federal Health Board modeled after the Federal Reserve that Senator Daschle talked about. Obviously, it would have to have power and it would have to be as insulated from the political process as possible.
    I have no problem with insurance coverage decisions based on both comparative effectiveness and cost-effectiveness evidence and research. For example, if PSA tests are shown not to be cost-effective, then insurance shouldn’t cover them. People who want one anyway can self-pay. If the latest cancer drug that may get you an extra month of life at a cost of $100K is deemed too expensive, then insurance won’t cover it. We can’t just cover any specialty drug that happens to win FDA approval no matter how much the drug company decides to charge for it. Suppose they want $2 million for a course of treatment that gets you an extra month. Should we pay for that? How about $10 million?
    Doctors and hospitals will have at least two incentives to follow evidence based guidelines under the reforms that I would like to see. First, they would have robust safe harbor protection from lawsuits based on a failure to diagnose a disease or condition. Second, they would earn a position in the preferred tier of providers that would minimize patient co-pays. Tiering works pretty well for drugs as it significantly increased the percentage of prescriptions accounted for by generics. I think it could work for doctors and hospitals as well. As I’ve said before, the difference in co-pays doesn’t have to be huge. It just has to be enough to get the patient’s attention.

  9. Barry, do you really want a Federal Health Board making local decisions in Washington? Do you really think that will work? And just how is this board going to get doctors to follow any comparitive/cost effectiveness when it will not have any power?

  10. With people and systems, change comes slowly from within, like a groundswell. The best health care creates self-caring people who are healthy on their own. Below, I show how a doctor gently gives patients self-sustaining health. The change we are waiting for is the consciousness between us that enables patients to bloom into health around doctors.
    First, a few ideas:
    Lobster and salad.
    Red pill and blue pill.
    The depth of Wonderland’s rabbit-hole and ignorance.
    I’ve never really gotten sick since I realized the medical industry kills people. Telling people that truth is the best incentive to reduce health care budgets to grocery bills. I walk in nature and dance to the radio. I listen to Doreen Virtue’s Morning and Evening Meditations from her Chakra Clearing CD. I just warded off the flu before it bloomed, especially with rest, garlic-onion-seaweed-egg broth and elderberries, whose structure naturally disables the flu virus. All this is basically free because I’m coordinating with nature.
    I rarely eat restaurant lobster. I like relaxing at home. My internal condition tends toward the warmer. The energy property of lobster is warm too. If bodies overheat, puffy redness can occur, such as skin eruptions. I naturally tend to heat up, so I eat more cool things (like watermelon, lettuce, tomato, cucumbers…) to balance out the warm energy of carrots or yam and the hot energy of most spices. This way I stay clearer and lighter all around, as reflected in my skin.
    I refer to the energy properties of foods, in terms of their effect on bodies. When I started looking up properties of foods, I brought a doctor an herb. It was not from her tradition, but she smelled it and said, “Smells hot, like ginger.” I began to think in her terms because I wanted to gain her loving, wise consciousness. Upon reflection, I could also relate her comment about hotness to my internal state. If she tells me what to realize by metaphor, and I figure it out, it’s my responsibility. She mentioned ginger appreciatively; it has many wonderful properties when combined wisely with other foods and conditions.
    She modeled wise awareness of the interconnections among nature and people for me. Once a bedraggled, exhausted mother came in with a small boy who exuberantly scampered about. Picking up on the boy’s joyful abundance of life energy, the doctor merrily declared, “Who’s the patient!?” Hearing this, I realized the interaction between the mother and son exacerbated the differences between their internal conditions. Since their dynamics conflicted, the mom probably needed some rest; maybe a relative with extra energy could spend more time running in nature with the child. That would be a more self-sustaining situation. I gained this wisdom about harmonizing family dynamics from my doctor, in three words spoken in loving appreciation of the interconnectedness of life.
    She gave me this gift that keeps on giving for $40 per session (well, $50 later), which was naturally perfect because downtrodden people who need care don’t have spare cash. She worked alone in an adequate hole-in-the-wall, alive with her clarity. If people wanted to use insurance, she said from her firm yet gentle rooting, “Maybe first time you pay. If they pay, then I pay you back.” I always paid her personally, to respect her time and reduce her insurance paperwork. That’s how much I loved what she did! What she gave me was worth the world, so I knew it would naturally pay me back by enabling better life choices. She had no assistants, just a file cabinet, two table-beds and an herb market next door. A few days a week, she worked at another office with her husband.
    One patient was taking pills he was trying to reduce. She said, “My other patient takes this pill. With acupuncture, he was able to take less.” When I arrived a few minutes late, she modeled the consciousness that gets people to places on time. With loving awareness of my desire to do well in life, she said appreciatively, “Long drive.” The next time, she said, “It takes two hours.” So, I started thinking in terms of the duration of my activities and planning ahead better in general.
    Her awareness was the doorway to embracing and understanding all of life for me. I need to get to my soup now. I’d love everyone to eat what they’d like too. Restaurants are just one aspect of the sparkling true wonderland of all real life beyond their confines. Physics has shown all people are connected energetically, so I’ll be happiest if everyone else is happiest too.
    P.S. Dr. Pandey, I am very glad to see your comment. I feel people are gaining wisdom.

  11. Mr. pel, you know, I was afraid that using personal illustration instead of some kind of parable would bring this digression. Here goes:
    My policy with a $5,000 deductible, the most affordable that I could find a few years ago, through AARP, was about $5,500 per year. (60 years old, surgery in ’06 and another issue). That’s about a quarter of my gross income as a self-employed caregiver. I was handling that, but the deductible on the tests that I perhaps foolishly had without first knowing the cost were too much too handle. I know I should have not let the coverage lapse. I’m still making payments on last year’s tests.
    As to physicians taking cash for visits, maybe true if you can get past the office’s initial screening. Without insurance or an employer, and perhaps some other factors detected by the receptionists, that was a revealing experience for me. If you were nearby I would invite you to sit in on the call (or visit). Disclosure here: my daughters are RN’s, so I expect I have fall-back options not available to my peers.
    And as to clinics, the recommended link seemed more directed to estimated costs than to specific clinics, however it is useful. I’ll check it out further. When I get a chance, I’ll also report on my recent experience at a free clinic. That’s more involved, but an experience worth retelling. I’ll put it on http://eldercarenotebook.blogspot.com/.
    All this so far, unfortunately, is detracting from the real discussion. My original point was that there is an additional layer of costs, besides the two that were illustrated.
    Also, more specifically:
    1) my care recipient, and those like her, is over-paying unnecessarily, because of some obstructions that are not being addressed,
    2) there is a population of care providers still aspiring to minimum wage and to health coverage,
    3) there are some simple cost-benefit disclosure discussions that are not happening that could help prevent personal financial crises that have ripple effects, and even if that’s not the case, should happen anyway,
    4) (the reason for the post here) the readers here are, one would hope, smarter, more influential, and better equipped to help the care providers and care recipients who can’t adequately speak for themselves.
    I’m guilty of self-interest in these discussions, of course. Barry Carol’s outline makes perfect sense to me, though I am still trying to think through it’s application as it relates to the issues in front of me.

  12. I also like the Federal Health Board concept for developing insurance coverage decisions based on comparative effectiveness and cost-effectiveness. We need to recognize that resources are finite and we can’t afford to give everything to everyone. At the same time, if people choose to spend their own money on treatments deemed not cost-effective, that should be their prerogative. The challenge will be to insulate the FHB as much as possible from political influence.
    That all said, I don’t feel at all comfortable with rationing by age. At the same time, I would like to see the default protocol in end of life situations changed from “do everything” if there is no living will or advance directive to apply common sense depending on circumstances without having to worry about being sued if everything technically possible isn’t done.
    Finally, I never liked the idea of dictated or administered payment rates for services, tests and procedures. I think they should be negotiated instead. If providers can’t reach a satisfactory agreement with the (government) payer, they should be excluded from the network. At the same time, the payer should be able to refuse to do business with providers who cannot meet the payer’s quality standards. As I’ve said numerous times before, I would prefer a tiering approach similar to what we use for drug formularies today. A reasonable payment mechanism would also need to be worked out for care delivered under emergency conditions such as hospital inpatient care for patients who were admitted through the ER.

  13. There was a study a few years ago about patient satisfaction and the number of tests ordered. I’m too lazy to look it up, but the bottom line was more tests equaled more satisfaction. I used to be kind of self-righteous about not ordering unnecessary tests, but now I measure cost against reassurance. In some ways I think its fraud; many people interpret a normal “metabolic panel” as assurance that “I don’t have any cancers”, but if I don’t order an x-ray or a blood test or provide a prescription they will often leave my office feeling that they didn’t get anything for their copay. That’s especially true, if they don’t know me because our practice is the doc-of-the-week for their current insurance.
    Patient satisfaction, patient reassurance, distrust of my own diagnostic skills, and defensive medicine are all reasons that I order questionable tests and referrals.

  14. > First, I challenge any uninsured person like me to try to get an appointment with a primary care physician, or a specialist for that matter, with cash in their hand to pay, but no insurance policy.
    Come on, that’s a little far fetched. I’m in Texas and there are plenty of reputable doctors and clinics in the area who take cash.
    Specialists might be more of a battle, but with enough cash and fees negotiated up front, I can’t imagine their “business” office giving an outright refusal. The health care blue book might be a good starting point for you to negotiate prices: http://healthcarebluebook.com/
    By the way, I just quickly priced out an HSA plan with $5,000 deductible from Blue Cross for a 45-year old woman who smokes, with 100% coverage after the deductible is met. Annual premium: $1,836.

  15. Here is a third category of cost multiplier. The example is my own situation.
    I am a state licensed CNA now working as a home health care worker. I enjoy this work, and I work on a self-employed, 1099 basis. I make two-thirds of minimum wage for 24-hour days. The rationalization for that is that I must be sleeping eight hours, although I do need to sleep where I can hear my client if there’s a problem. Under my category of work, I am not entitled to overtime. I report my income, pay self employment social security, and carry a professional liability policy that I pay for myself. I used to have health insurance, but could not keep up with the payments an am currently uninsured.
    Why do I accept this level of pay? My client has a long term care insurance policy that pays for me. The reimbursement rate is about double what I am getting, however the ‘nurse registry’ that placed me gets the payment and forwards me my portion. They did make the connection, and I don’t begrudge them a fair fee.
    But if I’m so smart, why don’t I simply arrange my work without a nurse registry in the middle? Two reasons.
    First, almost anyone reading this has probably has seen some consumer advice article this past year or two warning against the dangers of ‘hiring direct’. (We don’t report our income? Despite our state licensing requirements on this, our background might be suspect? Perhaps most importantly, there is a direct-hire liability exposure that somehow can’t be resolved easily with insurance? Agencies take care of this by taking on the responsibilities of an employer?).
    Second, as an individual, I have not figured out how to be a Medicare-eligible provider, which is the basis some LTC policies use, because although I can meet the functional requirements (RN affiliation, liability insurance, qualifications) I can’t meet the commercial ones (staffed commercially zoned office, 10 client minimum requirement).
    So, I take the deal I’m offered.
    Why don’t I provide my care in a nursing home, rather than a home care setting? Nationally, the average pay is $10 per hour (not bad, right?), but the coverage would have to be at a minimum 10, more typically 15, and frequently over 20 patients. I can’t do that. Depending on their conditions, I know I can only provide my level of care to about five. I won’t compromise on that. (Besides, I think that these are a failed model for care, and that we are going to see a continued decline in nursing homes despite demographics. But they do have a better lobby than home health aides, so who knows). 16% of CNA’s at nursing homes are uninsured, by the way, and only about half are insured through their employer.
    Anyway, despite working for lower than minimum wage, I do believe the overall cost of my services as a care provider can be further reduced. Not too much, in my case, but perhaps a little.
    Now, as to my having no health insurance:
    First, I challenge any uninsured person like me to try to get an appointment with a primary care physician, or a specialist for that matter, with cash in their hand to pay, but no insurance policy. So guess what? (Those few of us too proud to use the emergency room for routine care can go to a handful of ‘free’ clinics in poorer neighborhoods, which I’ve found to be exploitative in other ways).
    Second, I am still paying off bills for when I last had an insurance policy, which had a high deductible, which was what I could afford at the time. I realized later that the physician who referred the bone density and other tests, which were perhaps a stretch, probably didn’t realize that I would be paying for those myself. I sure he didn’t realize that I would still be struggling with them more than a year later. Should we have had a cost-benefit discussion? Perhaps, at least in this case.
    So is there a solution? From my example, I can see some things that could be fixed but are not being addressed, and others that might be addressed but are much more difficult.
    If someone can solve my problems though, it might be a good start for addressing the larger ones.
    (I originally posted this reply on Dr. Wachter’s site, also)

  16. Deron S., you have it exactly right and said it very succinctly. Thank you.
    We know that the cost drivers are fees and utilization. There are many possible solutions to managing these costs, some more realistic than others. The fees side can be handled by some national mechanism to negotiate fair and reasonable fees with medical providers. I suggest national because we don’t want to give economic advantage to one region over another. You mention a health board, I call for single payer but regardless, in a rational system there has to be some mechanism.
    The control of utilization is a more difficult matter since the reasons are more complicated as we see in this thread. Defensive medicine, patient expectations, greed, lack of concern may all enter into it. How then can we get providers to pay attention to this problem and change their behavior? In my own view, we need a system that both rewards appropriate care and potentially punishes inappropriate care. In turn, this implies a controlling mechanism. What we need are some pilot programs to test various solutions.

  17. it is neither the lobster nor the salad. It is the government sandwich with insurance vinaigrette.

  18. Margalit and Barry – The last posts by each of you were very refreshing for me. There is a lot of frustration and ideology clouding the reform picture, but you have put that aside to take a pragmatic look at this. That’s the conversation that needs to be had. What are the cost drivers, how are we going to address each one head on, and who’s going to ensure that we can successfully carry out the solutions we develop? While the solutions might not be simple, the framework we need to put in place to make it happen is pretty basic. I’m all for some type of Health Board if it can be completely isolated from the politics that causes solutions to be watered down.

  19. Very nicely put, Barry. The inability to quantify any of those things means that we currently cannot measure their effects, which makes it very difficult to improve any of them.
    Political realities aside, I don’t see how anybody can expect congress to come up with a coherent plan, and its financing, when we cannot even measure the effects of our presumed drivers on overall costs.
    I’m starting to think that Senator Daschle’s Federal Health Board is not a bad idea after all. Someone needs to accurately define the problem (numbers, please) before we attempt to solve it.
    So maybe covering as many uninsured as possible and regulating discrimination and hazard out of health insurance and pay for it all right now, is a good first step. It should be accompanied by commissioned research and mandates to act on recommendations.

  20. Margalit,
    Unfortunately, too many of the factors driving healthcare costs inexorably higher are virtually impossible to quantify. For example, if a doctor orders a test that may be unnecessary, even he or she can’t tell you precisely how much of the motivation was defensive medicine, how much was money driven, especially when the doctor also owns the imaging equipment, and how much was responding to patient demands or expectations. Fraud, which could include everything from billing for services never provided to ordering clearly unnecessary tests just to make money to deliberate and unjustified upcoding is also impossible to quantify precisely. End of life care, as the video illustrated, is subject to regional differences in culture around the acceptance of hospice or palliative care and differences in the percentages of the elderly population that have executed living wills or advance directives.
    At the same time, insurance company profits and administrative costs can be quantified to the dollar. All you have to do is look at the public company annual reports and the non-profits’ regulatory filings. The same is true for the compensation of the CEO and the next four most highly paid officers. Ditto for drug company profits and advertising costs.
    Finally, patients and referring doctors generally can’t easily find out what anything costs, at contract rates, even if they want to and make an effort to. That makes it virtually impossible to identify the most cost-effective providers which is why we need robust price and quality transparency tools. Add in every stakeholder group fighting like hell to protect its turf and its piece of the pie, and it’s no wonder that sensible healthcare and health insurance reform is so hard.

  21. Why is a blog about lobster and salad so popular on a healthcare blog?
    Oh, I see! The consumption of lobster can cause tinnitus and gout.
    If you go to an emergency room in Maine with a ring in your ear it will cost you $800,00 dollars so that a doctor in a less than a 20 minute encounter can tell you that the dry cold weather or eating too much lobster can cause that.
    What about the salad?
    The EHR Guy

  22. Deron, most patients do not have the knowledge to question the physician, many of us do not have the mental/educational tools to acquire that knowledge, or even have the notion that we should. Many people still “trust” that the “doctor knows best”.
    That is not to say, that some folks are not very savvy patients, but I think these are a very small minority.
    I do agree that some people demand the latest high priced junk that they saw on TV last night. I just want to know what percentage of the health care cost increase is driven by those patients, as compared to all other factors.

  23. Barry, that was a very nice video and, yes, at one point, the doctor said that folks are demanding unreasonable tests, and physicians order them defensively.
    However, during the entire video all the “usual suspects” of health care costs were mentioned (low primary care reimbursement, too much supply, end of life, malpractice, uninsured in the ED, etc.)
    I’m sure all these contribute to rising costs, but I am equally sure that some contribute much more than others.
    I wish somebody would take the trouble to quantify the contribution of all factors, one by one, and then systematically tackle them. Some things will be more difficult than others because of the ethical implications, as the doctor in the video acknowledged (that slippery slope of end of life decisions, for one).
    To go back to the lobster fest that started this discussion, if the waiter was paid more for counseling the patrons on healthy and appropriate lunch choices, instead of paying him exclusively for volume and entree price, maybe there will be more fruit and veggies served.
    Most people at the table have no clue what to ask for when they walk in. They just know that they are hungry. Maybe some are gluttons and greedy, but the effect of that, I think, is negligible compared to a waiter running around and shoving lobsters in everybody’s plate, particularly if said waiter owns a couple of lobster fishing boats.
    Maybe, as a first step, we just remove the temptation and reward the desired actions.

  24. Margalit – What do you think is the main reason behind patients not having the “ability” to dispute physician orders?

  25. Margarit> Barry, lots of people here are arguing that costs are driven up by consumers demanding expensive and dubious treatments. But are there any studies or any research, even anecdotal ones like the McAllen story, showing that this is indeed the case?
    I ran across a study which showed average per-person health care costs in 1970 were around $2,000 in inflation-adjusted 2009 dollars.
    2007 costs (in 2009 dollars)? $7,600. ish.
    That is quite a remarkable jump. $2,000 to $7,600.
    However, in 1970, there were a great many procedures which were not widely available. Most of the involved orthopedic stuff, for instance, nor coronary bypasses.
    Private hospital rooms for most were still rare, ambulances weren’t yet universally huge triage-rooms-on-wheels, and I suspect there were still a large contingent of nurses without four year degrees and expensive, advanced medical training.
    To say nothing of the new meds, expansive use of chemotherapy, high tech equipment, and use-once-then-discard approach: all things that have rapidly grown since then.
    While I suspect not all of that can account for the $7,600 figure, I do think that if we went back to 70’s level of health care, costs would drop significantly.
    I’m not advocating that, but I’m just putting it out there for perspective.

  26. Some comments…
    Lobster lunch story. Bill isn’t divied up. Each at the table pay a part of their bill ~20%… some unseen dudes that you have paid at the beginning of the year are picking up the tab. The top 1% at your table are really paying the most. The one paying the least… its that lady next to you who kept asking for refills… then she’d leave… and come back… and leave… and come back. Governement is paying for her. She’s on Medicaid, doesn’t have a job, and going to the ER gives her something to do.
    Problem with health care expense is that the patient ain’t paying the cost of the service. You go to a dry cleaner… and they dry clean and press your suit … and you pay them. Two of you in the conversation. Problem with health care is that you and your provider aren’t in the conversation that determines what you will pay and what the provider will be reimbursed… and in the future … what he’s allowed to do on your behalf.

  27. The link doesn’t seem to work. Instead, Google “Religion and Ethics Newsweekly +healthcare +Miami, and it should bring up the July 24th segment.

  28. Margalit,
    I think it’s the primary care doctors in particular who make these claims over and over. Since they’re the people on the firing line, I’m inclined to believe them.
    Last Saturday evening, there was, I thought, a very good segment on Religion and Ethics Newsweekly that focused on healthcare for the Medicare population in the Miami, FL area. You can view it or read the transcript at <a href=”<a href="http://www.pbs.org/wnet/religionandethics/episodes/july-24-2009/health-care-costs-and-the-elderly/3695/“.”>http://www.pbs.org/wnet/religionandethics/episodes/july-24-2009/health-care-costs-and-the-elderly/3695/“. It covers the issue of demanding patients as well as several other important issues.

  29. Irene,
    Lots of great points. I really like and have been telling people to not-become presription happy. There is a time when one needs medicine but we take too many and that hurts more than help.
    We have realized in Afganistan and Pakistan that you can not win against terrorists using military power. But we do seem to think that we can do the same with our bodies. It does not work.
    Disease, like terrorists, are part of nature. While we do not want them, but solely killing has not solved the problem.
    Over the decades, with trillions of money, we have seen growth of in both personal and socail disease.

  30. Bob,
    I think the Lobster story says little about fee-for-service medicine. Yes, the waiter wanted customers to buy the more expensive lobster. But the bigger lesson is that when people do not have financial incentives to buy cost-effective, high-deductible, community rated, catastrophic health insurance, they’ll take a no deductible, gold plated policy required by ObamaCare and paid for by rich taxpayers anytime.
    What Enthoven missed in his story is that the financial incentives have to get consumers to buy the right insurance policies. By the time they need medical care, financial incentives seldom work except for the uninsured free riders.

  31. “Besides, this “free” care model seems to be working elsewhere rather well.”
    You mean “working rather well” in the same sense that Medicare is “working rather well”? Health systems in other countries are seeing the same rate of cost inflation as the US and are experiencing the same issues in financing that cost as their populations grow older and more expensive.

  32. The Medical Industry Kills Faster than Natural Life
    Employees should have the right to choose whether they want non-emergency health care coverage or simply a few more weeks off every year to heal from minor illnesses like colds. That way, they can avoid being slowly killed by over-reactive medical treatments. We should not mandate health insurance aside from covering emergency trauma care for all. That actually makes people better. Applying our medical industry to less severe problems ends up killing people faster in the long run.(1)
    Our natural body is designed to heal itself with rest, nutrition and all other forms of social support or love. It views medications as foreign invasions that interrupt the dynamic equilibrium among all of its bodily systems. The body reacts to counteract their influence.(2) This triggers overcompensations that gradually accumulate into more disease. These long-term effects are subtle, while the observable problem looks and feels better right away! So, the doctor avoids a lawsuit because the new, long-term problem his treatment induced is too subtle to trace. People fear disobeying standards, so lawyers run the medical industry. It is fueled by opposition, which is the opposite of the compassion that heals people.(3) Any ethical doctor should disentangle himself (or herself) from the industry and work on his or her own.
    Doctors need to become the parents of the medical industry. The parents who fed them, the industry that trained them, has grown rigid with age. These parents have become corrupted by socializing only with wealthy, self-defensive friends such as insurance, drug and device companies. New insights run counter to their habituated rules, which have always brought them the power they needed to keep their loved ones secure in life. Their overgeneralized standards run roughshod over the unique differences between each person’s organic body, with all its interrelationships with one’s personal environment. It’s easy to slip into parents’ old ways, but unless doctors save their parents, their parents are going to fade away.
    Our medical industry is a pyrrhic victory of technology over nature. This is called pollution. It’s a shocking breach of trust to realize doctors are shoving pills that kill us down our throats by not granting us fully informed consent. People are clinging to the idea of good intentions rather than opening up to realize the horrendous long-term effects. People don’t want to face that they are killing their families by encouraging treatments, which they could be sued for avoiding. It’s too much conflicted heartache to face; what’s a parent to do?
    We’re paying billions to force psychiatric treatments onto victims of trauma, including non-violent women and children, though we’ve known for decades that medication makes patients violent and sicker, compared to none.(4) It also kills people much faster and is considered torture by the United Nations.(5)
    Did you know that Ted Kaczynski and Jeffrey Dahmer both behaved like loving children connected to their families until they were traumatized by medical treatment? At 9 months old, “Teddy” developed a rash and was “strapped down to a pediatric examination table,” poked, prodded and immobilized as he “screamed in terror” before being “placed in isolation for seven days.”(6) When his mother returned to take him home, he did not recognize her and never again connected with any family member. Forced treatment “was an important, possibly critical, component in the shaping of Theodore Kaczynski, the convicted ‘Unabomber.'”(7) Not a single one of us warded off the effects of the forced treatment he suffered during all the interleaving years by showing him what love really feels like to the natural body. If love hurts, it’s not coming from the all-encompassing consciousness of real Love. If someone wants personal liberty, Love understands this with wisdom.
    Lacking the perspective of what was to happen decades later, doctors attacked those children’s bodies first, clinging to ideas of what must be “good” for everyone. Learning about this, many people realize our medical system might have bred terrorists with its lack of compassion. Instead of loving the nature of people and life, doctors narrowly battle molecules. At first abstract molecules seem like a simpler target; they don’t sue until they join together as people. Doctors can avoid lawsuits by avoiding lawyers. This ensures people must find empathic ways to resolve issues, which is much better in the long run for everyone. Plus, compassion actually heals situations.
    I vote Democratic and have pretty much never minded paying taxes, but why force me to “help” so people can be killed in the name of love? That’s worse than killing people in the name of war. There’s no reasonable justification for it.
    People mean well, but they don’t embrace the big picture of all of life. If they really care about children, why don’t they prevent medical trauma? When will people understand the physics of energy, which runs through all of us? Our medical system applies force against disease, seeing it as an enemy. “For every force, there is a counterforce.”(8) Respecting nature means acting wisely in consciousness with it, not against it. Nature is a feminine power. If you don’t respect it, you will bring your own self down because it loves you as you love it; opposing nature is like opposing yourself. We are the change we have been waiting for, and long-term proof shows that we’re naturally much better than we fear.
    (1) Death rates decrease when doctors stop working: http://www.goodsamiam.com/modern_medicines_secret.htm
    (2) The natural body counteracts medications, p. 28: http://psychrights.org/articles/EHPPPsychDrugEpidemic(Whitaker).pdf
    (3) “Placebo effect” is really compassion: http://www.goodsamiam.com/harnessing_compassion.htm
    (4) Psychiatric meds makes people violent, sicker and dead: http://www.mindfreedom.org/truth/
    (5) U.N. declares involuntary psychiatric treatment to be torture: http://www2.ohchr.org/english/issues/disability/torture.htm
    (6, 7) Trauma Through a Child’s Eyes, by Peter Levine, (c) 2007, p. 184, 197: http://www.amazon.com/Trauma-Through-Childs-Eyes-Awakening/dp/1556436300/ref=sr_1_1?ie=UTF8&s=books&qid=1248803037&sr=1-1
    (8) Lao Tzu on the wisdom of acting with nature and ourselves: http://academic.brooklyn.cuny.edu/core9/phalsall/texts/taote-v3.html

  33. Barry, lots of people here are arguing that costs are driven up by consumers demanding expensive and dubious treatments. But are there any studies or any research, even anecdotal ones like the McAllen story, showing that this is indeed the case?

  34. I have to stick in my $.02. Every time I’ve been to a doctor, for whatever reason, I got ripped off and felt lousier for months than I did when I started. Then I had an insurance-based health record that follows me around the rest of my life.
    With all due respect to the author, the restaurant analogy needs some tuning. For we ordinary people who don’t have thousands in the bank for little things like,oh, say, a broken leg, this is the equivalent of going to a restaurant, being told to wait for a table, stopping in the rest room, being insulted and robbed, then leaving with toilet paper stuck on your shoe. Regardless of how you put this, SOMEONE is making money in HealthCare, but patient care gets less and less human and humane and all we are told is “work harder so you make more money so you can afford to be sick.”
    I don’t eat out, you see. That’s an extravagance. I work for a hospital for about 2/3 what I could make in any other market and industry. Every time we try to advance any kind of IT initiative, there’s no money, even when it is clear there’s an obvious ROI supported by a clear patient care requirement. Yet I go to my own emergency room and am charged $200 for a bandaid and wound cleaning. I’m certainly not getting the money. Who is? Tell me that. WHO OWNS THE RESTAURANT AND WHY AM I NOT GETTING SERVED? Please do not condescend and tell me it’s because I’m asking for too much. That’s poppycock.

  35. “Patients don’t “order” anything. Physicians do.”
    This isn’t quite accurate. While patients may not “order” anything, they quite frequently “insist upon” things such as the drug they saw advertised on TV or the MRI for their headache. Drugs, tests and procedures that are (relatively) painless and/or non-invasive are frequently requested by people who think more care is better care or who equate more tests with “thoroughness.” With third party payment, the patient is insulated from most or all of the cost. Physicians, for their part, face no adverse financial consequences for going along with the patient’s request(s) as long as it is unlikely to cause harm. Until patients face more financial exposure to treatment costs and doctors and hospitals are subject to tiering, similar to drug formularies, based, in part, on the utilization that they drive, nothing will change.

  36. Patients don’t “order” anything. Physicians do.
    In a lunch situation, the patron is the ultimate authority and the waiter is merely a servant, that may or may not make a recommendation. This is not an accurate description of the relationship between patient and physician.
    Most often than not, there is no “menu” for the patient to see. Physicians tell their patients what they need and what will be done next. Few people have the ability to dispute “doctor’s orders”.
    Besides, this “free” care model seems to be working elsewhere rather well. So unless we are contending that gluttony for unnecessary procedures is uniquely American, that patients in this country have full control of their treatment, and US physicians are all working for the 15% tip and don’t really care about their patients, then the analogy is flawed.

  37. tcoyote
    Please read the posts at http://www.leanmedicalcare.org for coverage of a possible single payer model. Single payer doesn’t imply single insurer nor does it need to involk rationing regardless of what European models may suggest. Our single payer system need not slavishly follow the Euro models. We are perfectly able to build a unique single payer model using existing elements in our own health care economy. The potential benefits of the single payer heavily outweigh the multiple payer model we have now.

  38. Dr. Wachter,
    If the dinner club were in California, the richest 1% of the members would pay half the bill no matter what they ordered or ate. Of course, if it were a dinner club, the rich guys would soon stop eating at the club and everyone else would wonder what happened.
    Regarding the lap chloeys, I would be interested in your estimate of the percentage of procedures currently being done that are unnecessary. I ask this because I had one in 2000 after several severe attacks and visits to the ER, one of which resulted in my admission to the hospital. That was about a year after my quintuple CABG. Now, almost nine years later, I haven’t had a problem since. So, in my own case, I’m glad I had it done and consider it well worth what it cost. How easy is it to tell at the individual patient level when more conservative management of the disease is appropriate, at least for awhile?

  39. I agree with Nate, that the Lunch Club leaves out the sign on the menu that states “If you are over 65 then 80% of your bill will be taken care of at no ‘obvious’ direct cost to you, and by the way if you can’t pay at all, we will still feed you”. It is easy to order lobster when there is little personal financial cost attached to it.
    With regard to the Lap Chole example, as a surgeon (ie proceduralist), I would agree that while overall ‘indication creep’ may certainly exist, our decisions tend to be largely based on risk:benefit ratio. The introduction of new technology frequently involves improved procedures which may significantly decrease risk, and the increase in new procedural (or drug for that matter) volume may likely be explained by this reduced risk (which is, thus tipping the scale toward benefit and thus more implementation. No doubt C.E.R. should address this, and should be vehemently supported by all physicians but it will require true equipoise.

  40. Peter, the problem is that many medical conditions get better without intervention, and many are WORSENED by intervention, necessitating more intervention. Some irreversible chronic conditions get worse regardless of what we do. The more we do, the more miserable the patient. Bob sees such patients every day on his rounds.
    Rounding with him might be educational . . .
    Since we are primed to assume that doing something about a condition that, while not fatal, annoys us, is better than doing nothing, we feed the machine. It is part of what makes America great. And also why we spend more than twice what any other country does per capita on healthcare. We are willing participants in the moral hazard problem Bob outlined.
    I agree w/ Deron. We need to have some economic stake in health costs. Single payor merely rations provider incomes, and creates queues. It is a stupid solution, particularly in a political system that cannot separate strong from weak claims, and that cannot reduce ANYONE’s income, even if they are stealing. As John Kennedy would say, were he here, “We can do bettah . . . ”

  41. I thought the cause of the current economy woes lied in one of the following:
    1. The nationwide housing market speculation,
    2. Corrupt mortgage and banking practices,
    3. Credit abuse,
    4. The country is producing near to squat.
    Now I am happy to know that it is caused by faulty gall bladders.
    The EHR Guy

  42. “money not spent on healthcare will be spent on other things.”
    Like gas and toys from china. Once that money is spent it is out of our economy and no longer grows GDP. That decrease our GDP by a factor of 7 to 20 depending on what they are buying. Besides healthcare and housing what other expenditures keep more money in the US? This is not to say we shouldn’t control our HC spending but drastically cutting it will have sever consequences most pro-reform advocates don’t grasp.
    Is a Chinese made big screen really a better purchase then lap choley? That is where our discretionary spending is being spent, people are choosing to purchase excessive healthcare. If we eliminate that then they will purchase excessive electronics or eating out or other non essential items. Our HC spending is not resulting in people starving in the streets.
    I disagree the lunch club explains FFS. It is not the FFS model that leads people to order surf and turf, it is the welfare state involvement in paying for FFS. FFS functions great when the person deciding what to order also has to pay the bill.
    Doesn’t that describe insurance?
    No not at all. Insurance doesn’t work when people choose what they are going to order. No one in their right mind would pay 120% the cost of lobster for lobster dinner insurance to insure they get lobster. They would just pay the normal cost of the lobster.
    “People don’t get pleasure from being sick.”
    No but they do get pleasure from taking pills they think will help them but don’t or having a test done to make them feel something is being done. Treatment is all about pleasure. See lap choley, most people don’t need it but the treatment makes them feel better.
    “The single payer controls both the supply of patients and the prices paid.”
    Mr. Nesbitt your confused about reality. If what you say is true why has no single payor plan in the history on healthcare anywhere in the world controlled cost and utilization? Medicare being a prime example. If you prefer to look over the Ocean every single payor plan is unsustainable. Singer Payor has been an epic failure in everything in what supposed to control.

  43. To mimic medical care, the waiter has to say, “Try the lobster sir, and since it’s small, I suggest the $12 tuna appetizer, the $9 caesar, and $11 tira misu. Will you also be having the gazpacho? It’s excellent.” Now that’s health care in the U.S.
    Deron, you are very confused about the reasons for a single payer and the power it can wield. The single payer controls both the supply of patients and the prices paid.

  44. we are selling to the patients, pressuring our indentured servants, the doctors, to keep the operating rooms full and mri scanners working 24/7. we churn beds and have a consult club to enrch the hospital in order for me to get a 3.2 million dollar compensation package.

  45. “We add up the bill at the end of the meal, and divide it by the number of people at the table.”
    Doesn’t that describe insurance?
    “If you have one big pool of someone else’s money, people are going to crap in it.”
    Deron, for patients, comparing sickness to lobster does not make sense. People don’t get pleasure from being sick. It does make sense though if it’s the docs using FFS to pad their incomes.

  46. The lunch club story illustrates why CDHPs need to exist and why single payer will not work in America. If you have one big pool of someone else’s money, people are going to crap in it. The crap will flow from the supply AND demand sides.

  47. I love the way told the whole healcare paradigm in your article.For a common person it will all make sense.For an Internist like me who are on both sides of heathcare spectrum: consumer and provider,I find that it is ore complicated than the story. IN Socal where 90% pts are HMO pts., there is culture of IPA and all pts are enrolled into IPA and gets distributed thru them. There is usaid culture of denial of care and downgrading of services provied in name of cost cutting and doctors are alll part of it and that is how their annual incentives are determined. HMO taks 20% from the top ,IPA takes 15% from top,MSO takes another 10% from the top and rest 55% is left for doctors,hospitals,DME,Home health etc.

  48. MD as HELL misses the point: money not spent on healthcare will be spent on other things. The economy might even grow faster that it would otherwise if there’s a few billion dollars that businesses and individuals can spend on OTHER things. Let the reasoning of the calculus apply: what happens to the economy as health care costs approach 100% of the GDP? Right. It collapses long before, due the fact that other things are actually necessary or beneficial. And what happens as health care costs approach 0% of GDP? Productivity increases as we no longer have sick people like me and you slowing down the workforce – but the economy would suffer from loss of key younger minds to disease 🙂
    Another factor in healthcare inflation is cost inflation: worker salaries and supplies costs in particular. The cost of quality is often high. A similar situation exists in aviation, where every part of an airplane must be FAA-certified, comparable to FDA certification. A GPS for an airplane costs 5-20 times what a similar unit costs for your car or hiking. Drugs, equipment, and so on suffer the same production cost pressures.
    The safety bit is important, but the whole process could be reconfigured to make it much less costly.
    Then let’s talk about the effect of tightly restricting supply while letting ‘market forces’ operate on the demand and price side. This is why some specialists command million-dollar salaries – they’re scarce.

  49. When Doctor A told Doctor B that he was dropping out of the country club, he also asked, Doctor B, how can you afford this extravagance?
    Doctor B said, well you see, I got one of those newfangled cut and paste computer thingies for patient notes. It was paid for by stimulating me, courtesy of the government. What is even better, Doctor B said, that computer is so smart, it even knows how much boiler plate jargon it has to put in so the Medicare hound dogs won’t come and take money back from me when I upcode.
    Doctor A responded, I am gonna get one of those. It will pay for my Callaway driver in less than one day and with that cut and paste, I will save mucho time. I will also give the patients a question list and have my secretary enter the answers. I heard that machine will print out a nice patient story with those answers.

  50. Healthcare does not consume 16% of GDP. Healthcare IS 16% of GDP. Sqeeze that out of the economy over 3-10 years and you have a 3-10 year long recession/depression with stagflation.