Ricochet is the best place on the internet to discuss the issues of the day, either through commenting on posts or writing your own for our active and dynamic community in a fully moderated environment. In addition, the Ricochet Audio Network offers over 50 original podcasts with new episodes released every day.
Can Modern Healthcare Ever Be “Affordable?”
So Obamacare was expensive and will be dismantled. But it’s a good bet that healthcare costs will continue to rise. Have we ever seen them fall? No, we’ve only seen increases slow down temporarily. What’s going on?
Back in the day doctors were just one of a number of tradesmen that hawked their wares like haberdashers, plumbers, dentists, barbers, lawyers, palm readers, etc. They all got paid in a fee-for-service fashion. The haberdasher sold you a shirt, the plumber cleaned out a clog, the dentist yanked a molar, the barber gave you a cut and a shave, the lawyer filed a deed, the palm reader said you were a loser, and the doctor stitched up your head after you stumbled out of a bar on a festive Saturday night.
Then they handed you a bill and you paid up, or if they knew you they took the money first. It was a simple transaction. If you couldn’t afford their services you either did it yourself or did without. Life was a lot less complicated, and a lot shorter by the way.
I knew a guy whose seven-year-old brother died of an earache in the early 1930’s. Before 1923, diabetes was a death sentence. Before 1943, kidney failure was a death sentence. Prior to WWII it was not uncommon for scarlet fever or pneumonia to be fatal. Many things we don’t have the slightest worry about today were killers before modern antibiotics. You could survive the fractured leg but could you survive the infection?
The story of surgery is a pretty bleak one before the age of anesthesia, sterile technique, and antibiotics. During the Civil War a field surgeon’s skill was heavily rated on how fast he could lop off a mangled limb — the faster you were the better surgeon you were thought to be. (Dominique Jean Larrey, often considered the first modern military surgeon and the inventor of the concept of “triage,” during the Battle of Aspern-Essling in May of 1809, amputated one of Marshall Jean Lennes’ legs in two minutes.)
Within the last century, hospitals have become less a place you went as a last desperate measure and often died to a place where undreamed of treatments can bring back the dead to continue full lives of irritating their in-laws. Within my own adult life heart surgery is now performed routinely on persons who only 20 years ago would not have been touched with a 10-foot scalpel.
Because we wish to be a fair and compassionate nation we have made it illegal to deny treatment to anyone in a life-threatening situation. If your arm, leg, etc., is broken you will receive treatment regardless of your financial situation. If you go to the ER with “an elephant sitting on your chest” you will get heart surgery whether or not you have insurance or can pay. All of this intervention costs a lot of money.
A “routine” coronary bypass operation in the US can cost $70,000. If “complications” set in the cost can easily triple. But first you must have a heart catheterization to ID where the blockages are. This costs another $7,000. And afterwards there will be short-term physical therapy costs ($2,000) and long-term pharmaceutical costs ($100/mo.). These costs also assume uncomplicated courses of treatment and also can easily triple.
The popular idea that having a “stent” placed in a coronary artery instead of having open heart surgery really “saves a lot of money” is patently false. Unless your next heart attack offs you before the paramedics can get to you this treatment only delays the inevitable bypass operation. And now that the person is a few years older and even sicker, the surgery, recovery, and drug treatment will likely be more “complicated” and cost more. And to top it all off, it is not surprising today for somebody to end up on the OR table for their third bypass operation.
So how is this all paid for? There are only three ways.
- Pay cash.
- Buy expensive health insurance and pay deductibles and co-pays (private, voluntary socialization of costs).
- Levy a health care tax on all citizens (public, involuntary socialization of costs — e.g., Medicare, Medicaid).
In the US a combination of these three is in place today.
So how do we get health care to cost less? Again, there are only three ways.
- The Free Market. Competition helps keep a lid on prices by the presence of multiple providers competing for your business. One doctor advertises a procedure for X dollars and another for Y dollars. All other things equal you will choose the cheaper of the options.
- Nationalized Health Care. Form a taxpayer-funded national health care service. Hire public employee providers and pay them a fixed salary. Ration treatments to the level of tax revenue.
- Voluntary Reduction of Personal Medical Services. Quit going to the doctor so much or taking so many pills (i.e., put down the chili cheese dog and go for a walk).
Once more, in the US a combination of these three is in place currently.
One reality that is ignored in all this “health care is too expensive/costs have to be reduced” hand-wringing is that things cost what they cost. And very complex, high-technology, labor-intensive things are just downright expensive to provide. So what if free market forces work to cut costs by 50 percent? How many of us can afford the new cheaper $35,000 (and three times that if major complications occur) coronary bypass? Even a “one percenter” would look twice before whipping out the debit card. The same goes for health insurance premiums. So what if the cost for a family policy goes down from $1,600/mo. to $800/mo. (keeping in mind that deductibles and co-pays will still apply as well)? Who’s got that?
In reality the only way to manage costs is to say “no” either non-subtly (“If you want that treatment, pay for it yourself”) or subtly (“Here’s a cane and some aspirin. Get in line and if you’re alive when we get to you, fine, if not, well…).
And in all my reading I’ve yet to see any serious effort to address the real issue in the cost of healthcare. That is the unrealistic expectations of average consumers and the wacky way we expect to be able to do whatever we want and then just expect the healthcare system to muster all its resources to fix us (and then sue somebody if the outcome is not to our liking). This is the “third rail” of the healthcare discussion.
If I eat my coronary arteries full of fatty plaque in full knowledge of the dangers of doing so, am I entitled to a bypass operation?
If I smoke my lungs full with the knowledge of the dangers of doing so, am I entitled to radiation, chemotherapy, and surgery?
If I have lung cancer and during the preoperative workup am found to have significant heart disease, am I entitled to a coronary artery bypass operation also? Even if I’m an obese, hypertensive, 72-year-old lifetime smoker?
If I gain 80 lbs. becoming hypertensive and diabetic, am I entitled to all of the treatments that will inevitably go with all of the complications of this?
Am I entitled to new bilateral hips and knees and spine fusion surgery for degenerative disc disease due to carrying 80 lbs. of extra weight for 30 years?
If I drink my liver away, am I entitled to a new liver?
If I say to my friend, “Hold my beer, I wanna try somethin'” and then face a future of being nicknamed “Lefty,” am I entitled to have my limb reattached?
If I beat my spouse to within an inch of death and she somehow gets the gun and shoots me causing internal bleeding, am I entitled to be operated on first (if at all) because my injury is more life-threatening?
Etc., etc., etc.
Crisis care intervention is very expensive and always will be. In a free society, there is always a level of cost below which people will simply not provide a service. And it is always more expensive to drain the swamp when you’re up to your bottom lip in alligators.
I am of the opinion that for children up to the age of 18, the full resources of the health care system should be available in all cases and if necessary I would be willing to bear a tax burden for that. But for adults when do we say no? When do I as an adult healthcare consumer stop expecting other people to pay for my bad choices? As a retired person, how long should I expect other people to pay for the 43 different medications I take to keep me alive? These are very knotty problems. Because the fact is that the only way to actually “reduce” healthcare cost is to use the healthcare system less and this will require a huge rearrangement of adult behavior and expectations.
Published in Healthcare
This is an interesting post. I admit I know very little about the healthcare industry. While I tend to assume by default that the Democrats have it wrong, and Obamacare seems to have made a lot of people unhappy, I have no idea what a good healthcare system “should” look like. And you haven’t exactly cleared it up for me. ;) But you’ve confirmed my suspicion that there are no easy answers here.
“So how do we get health care to cost less? Again, there are only three ways.”
Fourth way: a public body acts as single payer insurer (a country is a pretty big pool) while services are provided by a mix of public and private institutions. Think of it like a voucher system.
This constrains costs while really harnessing free market efficiency.
See:
https://en.wikipedia.org/wiki/Health_care_in_Australia
So, you’re advocating socialized medicine with death panels?
As long as you’re deciding who deserves health care, should ability to pay factor into it?
I am pretty sure we don’t have death panels.
What you forget is that one can always buy additional insurance for stuff that isn’t covered. Such as…??
Oh wait, the insurance companies say that this isn’t workable with the vast majority of needs being met by a non-profit insurer working with for profit providers?
Dave: what do you know about the costs and research on minimally invasive procedures as well as preventative medicine? I know a little something. I can tell you that many minimally invasive “heart cath” procedures reduce chances of having a full bypass surgery. I can tell you that surgeries now are safer than ever with better long term outcomes that improve length of life as well as quality of life.
What do you do when life decisions do not have an impact on people? Should I pay less because even at 50lbs overweight, my cholesterol is still awesome and my blood pressure kicks arse? Should other people pay more because their BMI is within a proper range but they have problems converting their fatty acids into useful HDL cholesterol and instead have super high triglyceride levels and LDL levels? Should other people pay more because they are more likely to have cancer because it’s a family tendency?
Hell, let’s take it a step further. Should we really allow these broken people to have children that are inevitably just going to be a drain on the system? Should we only allow children that are properly conceived and modified for optimal health?
C’mon. People need to take care of themselves because ultimately they hurt themselves most of all.
One principle to consider is that health care for an individual, especially one who does not have familial obligations, will spend unlimited amounts of money on health care as preservation of one’s own life is more worth while than anything else that money can buy. Thus, the price of health is very inelastic. That is, a person will spend whatever it takes to get a life saving treatment and so the price can be increased to be extremely expensive and the demanded quantity will only decrease according to the number of people who can afford it. Add in the ability for health providers to provide discounts to those who “can’t afford” the treatment, it allows them to charge the maximum amount that someone can afford, rather than a market rate.
I think the one law I might consider is this. No medical provider shall offer different prices depending on (insurance status, financial status, or other factors except those relating to health risks and liability) for the same treatment. That would prevent the insurance discounts from jacking up rates for those without coverage of the right type.
I think that is part of what you were getting at and what you mentioned are very good points.
I am dumbfounded by the cost of pregnancy and giving birth. The process is natural and in almost every case, quite simple. Yet, care during a pregnancy will likely cost more than $10,000 in America, if there are no complications. This obscene cost makes me think that single-payer would be much preferable for covering at least some procedures, such as birth. After all, so many countries do it so much cheaper with no worse infant mortality rate.
Someone needs to step in and cut down on all the unnecessary stuff that’g going on. That’s not happening under the ACA and it wasn’t happening under the previous insurance system. The answer in the case of birth and many other procedures seems to be less healthcare. So don’t we need panels to decide what will and will not be covered under any system, whether single payer or another insurance regime?
Excellent analysis and the questions you posed are tough ones that no one really wants to think about. I agree with your assessment that many individuals have a perspective that they can do what they wish with their lives and fully expect the health care system to cover any consequences.
Sure it can. If you take an Austrian economics approach to it and get rid of all the artificial interventions into making it “cheaper” the price will come down. Now that’s the philosophical answer. You want the real answer? The price of healthcare is going to be determined by how the American People decide to provide it. If they continue to search for third parties to pay the bulk of the cost when they individually use it, then no, it won’t come down much. If they decide that what they need to do is take better care of themselves, not use hospitals for minor health problems, and plan ahead for the possibility of the catastrophic, then yes, if can come down. The biggest problem with the price of healthcare in this country is the notion that it should be “free” because all that means is that somebody else pays for your services as your costs get distributed among those who can pay.
$250 for a circumcision in Northern Virginia. Something I could have done at home with some Scotch and a razor blade. (I’m kidding folks, I’m kidding!! No need to call CPS.)
I’ve said for 40 years that healthcare is a black hole down which any amount of money can be poured. Our inordinate fear of death will destroy us.
Works for me. Can we also add that they must have the ability to support themselves and any children they bring into the world?
That would be tort reform. Childbirth is natural, sure, and it also used to kill women and children pretty frequently. When it does go wrong, the consequences are dire. Malpractice insurance for OB/GYNs and Peds are the damn near highest in the medical profession because it is so expensive to defend these incidents.
I just wanted to point out that the natural part is actually quite painful. Most of us would like an epidural and it turns out, those are quite complicated, dangerous, and require an anesthesiologist to perform.
I read the summary of Price’s legislation on reforming Obamacare.
In answer to your question, heck, YES.
Healthcare is no different than food. People need both. When the market is able to work, people pick their own, and seek value for money. Prices go down, especially when transaction costs are reduced, tort reform is introduced, and freedom is maximized.
We have concrete examples … Australia gets good results at a much lower cost. India is probably near the top for what you can get for your dollar. But we have many more admins per doctor than those systems do…. that is a huge cost component. So are the legal and insurance liabilities. Both are fixable, and Price’s legislation looks awesome to me.
Probably not. I think things can be improved, but there are significant obstacles. Given all I’ve read, I’m not even sure the obstacles have been properly identified. The demand will rise to infinity, but I don’t know if there is a corresponding market response.
It is a mess and all the brilliant position papers in the world gore too many oxes. I for one don’t want any government telling me, “you’ve had enough medical care”. On the other hand, nobody would accept fellow humans dying in the streets in the richest nation in the world. Not a very Christian society. And we’ve probably gone way past the philosophy of private provision of charity on the necessary scale.
Tis a puzzlement.
I know a rabbi that does circumcisions for free, but he does it for the tips.
I have been saying for decades. As long as we demand the best healthcare money can buy, regardless of the cost, that is what we will get. Until consumers start worrying about costs, healthcare will always be expensive. The only way to make consumers cost conscience is if they pay for what they consume. I’m not holding my breath for this to happen for healthcare.
As you pointed out, things don’t generally go wrong in pregnancy. But when they do, it’s sudden and catastrophic. And if something goes wrong in pregnancy, a young, beautiful mother and/or a precious young child are tragically harmed or killed. Absolute nightmare of a malpractice case. What heartless juror will not award that family SOMETHING? So the OB’s must demonstrate, at every step along the way, that they are doing everything possible for the well-being of the mother and child.
Everything possible is not cheap.
I started to read the comments and noted directly that as usual, health insurance and health care are conflated. We don’t need a new system to replace Obamacare, just let the insurers sell whatever they want, subject to each State’s regulations, and get out of the way! Let doctors and hospitals alone!
Medicaid can be a safety net, funded and administered by each state, not the Feds. Get HHS, IRS, and whoever else in DC is involved out of the way. Decouple from the tax system in a neutral manner. The Feds don’t add value, but rather just deduct a tithing for their unnecessary services as middlemen.
Edit: I almost forgot. Tort reform to get the blood sucking lawyers out of the way and reduce malpractice insurance. Then the cost of having a baby might get reasonable again, TheRightNurse.
Can modern healthcare ever be affordable?
NO!
Where are the “secure” jobs these days? In the healthcare industry. Why? Because the industry is growing, and the pay is (according to Megan McArdle) twice as much in the US as it is in Europe. The industry is inventing procedures and drugs that become “must have” items, and our society is just too darn nice to refuse them to anybody.
But we could stop importing health care consumers that cannot possibly pay for their consumption. I read that the first Zika baby born in the US was in New Jersey to a woman from Guatemala who flew to New Jersey just to give birth. Where do you think that baby is now, how much healthcare did the baby and mom consume, and who do you think paid for it?
Bingo.
These unrealistic expectations are why even Republican voters can’t bear the thought of coverage for pre-existing conditions being eliminated along with the ACA. That guarantee by itself is a bottomless money pit.
Like others have said, we can improve conditions by deregulating (legislators only want to tweak existing systems), loser-pays tort reform (won’t happen because lawyers dominate both political parties), local competition, and direct payments (don’t involve insurers for most procedures). But none of that matters as much as a common willingness to endure pains and disabilities, and that a long life is neither promised nor necessary.
This is one fantasy shared by both the Left and Right: the entitlement to a long healthy life.
Eh, it’s not just an entitlement mentality, and framing it as just an entitlement thing leaves folks sounding more selfish than they really are:
People are justifiably terrified of imposing burdens on their loved ones because of poor health or untimely death. You needn’t feel entitled to a long and healthy life to consider the following bind a fate, well… worse than death:
Your continued living just seems a burden to others that you’re morally obligated to ease for them if at all possible. On the other hand, the permanent way to ease that burden – your suicide – is something you’re also morally obligated to avoid… that is cowardice, “the easy way out”, your suicide might leave your loved ones with an even bigger burden!!!, etc, etc…
To make things even worse, sometimes you’re not even allowed to passively die. If you’re too sick or injured to coherently refuse medical treatment, odds are good you will be treated, even if you believe it would have been better for all concerned if you were just left to die.
As told from a Philippine Island fella years ago, circumcision was part of a rite to manhood in his neck of the woods. So each were given a palm leaf and went in turn to the village Shaman on the beach, placed their member on a block of wood, a sharp knife made the cut and each ran member in hand wrapped in the leaf and stood in the surf until summoned out.
So much for customs, billing and fainting CPS workers.
Having lived there as a non-citizen legal immigrant and therefore not allowed to participate in Medicare (yet still taxed for it until I found out — no one tells you! — that I could get that refunded) and informed by the NSW Health Ombudsman that I shouldn’t have been allowed to purchase private insurance, either — my claims having been denied and my premiums were not refunded — I beg to differ.
Especially after watching the so-called “medical” treatment my citizen wife received during and after the birth of our first son at the Royal North Shore Hospital, where she was left to bleed because there were no actual obstetricians on duty on a Friday morning, just midwifes.
And certainly after watching my mother in law wait years for her knee replacements.
Try reconciling your beliefs with the fact that the NSW government is having to pay immigrant doctors, many of whom have barely any understanding of English, hundreds of thousands of dollars in “signing bonuses” to take up posts in country towns because doctors in Australia are severely limited in how much money they are allowed to earn so many country towns are going without doctors.
Agreed. But that’s an aspect of human existence always and everywhere. It’s a fallen world and nothing will change that.
We have extended life to such a point that the majority of it is lived in biological decay for a large portion of society. So now people talk as if someone who dies of a heart attack at 50 “died young”. Now many people treat every head or muscle ache with pills.
I might have overstated the case. But the fundamental issue is that there is no system or lack thereof by which everyone’s pains, disabilities, and threats are ameliorated without impoverishing all or many financially. The expectations represented in politics are unreal.
Not all societies have considered suicide immoral under any circumstance. But our claim to value life and hence to disapprove of suicide whatever the circumstances creates the social obligation to avoid suicide. I am not surprised that, when there’s both a moral obligation to avoid suicide and a moral obligation to avoid being a burden, folks might be left feeling like something’s gotta give.
In a recent survey, 70% of hospitalized patients said that living with incontinence would be as bad as death or even worse. That one very common indignity was considered as bad as being on a breathing machine or bedridden, and even worse than needing a feeding tube. Why? Maybe because being able to “do your duty” (as they say of dogs) is, um… doing your duty. No longer doing it means no longer accomplishing one of the basic responsibilities that even small children are expected to master.
Our culture of life means expecting people to be OK with living even when they can’t take care of themselves. Well, when people are expected to be OK with living even when they can’t take care of themselves, we can’t fault them for adjusting and becoming OK with living even when they can’t take care of themselves – and for many, what they’ll need to be OK with living like is evidently some dough spent on mitigating a quality of life they would otherwise regard as worse than death.
Sounds like you had an awful experience.
Do you mind my asking when this was? Currently all legal immigrants are basically permanent residents, and as such have access to Medicare. (I had access from day one when I immigrated.) Spouses who are waiting for permanent residence on a bridging visa are also able to access it.
Did you mean to say that you were a legal non-migrant? (Hadn’t applied for a migrant visa.)
That would have an impact on the kind of private insurance you could buy.
I’m up on this right now because I had to buy insurance for my mother who is not a permanent resident and who is visiting me. It’s actually one of her visa requirements that she have insurance.
@midge It is interesting that you cite incontinence. Unless it is a severe medical case it is a condition that can be cured or severely ameriolated by teaching individuals gender specific proper pelvic floor exercises. I’m not just referring to the usual keggel exercises. There are bioresponse exercise kits and weights that allow individuals to target and strengthen the pelvic muscles. It is so dumb founding that doctors don’t address pelvic strength with women after childbirth and provide good resources. Knowledge would prevent a sizable number of incontinence issues.
That truly is shocking. Was she in Royal North Shore Public or Royal North Shore Private?
We do have to wait for non-critical surgery if we choose to have it in the public system.
But there is also a private system, where people who do not want to wait can have these surgeries basically on demand.
In Australia single payer doesn’t mean that there are no other options for people who are willing and able to pay – it is not like Canada.
There is no legal limit to how much doctors can charge, only on how much they can claim as a rebate from Medicare.
If they aren’t charging more it’s because the market won’t support it.
The problem for a lot of country towns is poverty – doctors charging more wouldn’t functionally increase access, linking medical visas to residence requirements (+bonus) does.