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On Collectivized Medical Progress
When it comes to fixing our healthcare system, there are several fundamental disconnects between progressivism and conservatism. One of these, perhaps the main one, relates to the advisability of collectivizing healthcare expenditures via taxpayer subsidization and debt accumulation. Conservatives tend to view the collectivization of healthcare financing as the root of the problem; whereas progressives tend to view it as the answer to the problem. (Obviously, for this to be true, among other things conservatives and progressives must be defining “the problem” differently.)
As a conservative I hold to the view that any real fix of our healthcare mess is going to require individuals to take on much more of the financial responsibility for their own health, and that doing so is both morally desirable and fiscally mandatory. I also believe it is going to be extraordinarily difficult to get a substantial proportion of the American public to accept personal responsibility for something that, they have been convinced, is and ought to be a right. I think most of us here understand how difficult that will be. But as we formulate our arguments in this regard, we are obligated to take a sober look at another major issue we face as we fight to individualize healthcare expenditures. It is an issue which, I fear, judging from the content of the debate, has not yet occurred to many of us.
While we conservatives (and especially libertarians) might like to think otherwise, when you look at the big picture it becomes apparent that collectivizing the bills has not been the unmitigated disaster we like to claim. There have been substantial benefits, and chief among these is the incredible progress we’ve made in medical learning and medical technology over the past half century or more. In fact, the taxpayer subsidization of healthcare has been the catalyst for an incredible golden age of medicine.
It turns out that, the moment everything that is deemed “healthcare” is “covered” by taxpayer-supplied or taxpayer-subsidized health insurance, and therefore payment is guaranteed for virtually any medical product by the full faith and credit of the United States government, a huge amount of investment money suddenly appears to fund research and development in every aspect of medicine you can imagine. And the next thing you know, you’ve got medical progress.
Medical entrepreneurs figured out in about a minute and a half that to be successful, all they had to do was to come up with a product that offered a measurable benefit to some group of people with some illness — no matter how marginal that benefit might be, or how expensive their product — and they were certain to have a ready market for their product, not to mention a customer who would pay the going rate without complaint (well, for at least the first several decades). The more products you could develop, the greater your profits. And so, especially beginning in the 1960s, R&D budgets went through the roof.
An utter explosion in medical progress, virtually all of it arising in the United States, began at that time. With a bit of sputtering, it continues until this day. Except for the Manhattan Project and the moon shot, the kind of concentrated scientific effort that was applied to advance the science of medicine during these few years is unsurpassed in human history. And like the Manhattan Project and the moon shot, it was ultimately funded by the taxpayer.
I am of course not arguing that everything that was developed and sold to the healthcare marketplace during this time has been non-crap. There has been plenty of crap to please anybody.
However, the medical technology that has been developed since the 1950s has done immeasurable good. Uncountable heart attacks and strokes have been prevented or aborted; cancers have been cured or beaten back; people who formerly would have been crippled can conduct normal daily activities without assistance; and some scourges of mankind (such as smallpox and polio) have been nearly vanquished altogether.
With all this good stuff, however, has come a big problem. We are spending ourselves into oblivion. For, as a side effect of this explosion in medical progress has come an explosion in medical spending, spending to such a degree that, unless we bring it under control, we are headed for societal chaos.
The point I am trying to make is that the rate and magnitude of medical progress we have enjoyed in our lifetimes has been financed by a collectivized, no-limits, ultimately disastrous payment system, and not by “natural” market forces.
It is certainly possible, in theory at least, to devise a more fiscally responsible payment system, based to a much greater extent on personal responsibility, while still allowing incentives to exist for medical progress to proceed. In fact, medical progress is poised for a major leap forward given today’s technological advances. But under a new, less collectivized system, the type of progress we see, its pace, and the way it becomes distributed across the population, will look a lot different than it does today — a lot different than we have all come to expect. We had better understand these changes, and manage expectations accordingly. If we are not prepared to do so, we will be vulnerable to withering attacks, for yet another reason, by the fairness mavens of the left.
Published in Healthcare
An example on my point about market based economics: At a local Business & Economics breakfast I met a woman who ran a clinic that used (expensive) specialized equipment to treat cancer. She said that my city had a surplus of these clinics/machines which was driving up the cost. How could that be, I asked (given that this seemed to defy standard economic logic – oversupply leads to downward pressure on prices)? Apparently, with a surplus of machines, they had too few patients per machine, so all the city’s clinics raised the price of treatment support the cost of the equipment . And insurance was paying the increased cost, because in my city, the higher cost had become the ‘standard and customary’ cost!
From an economic standpoint, this is madness. In a market-based economy, an oversupply would drive down prices until some suppliers left the market and supply was driven down to an equilibrium level. Economics 101.
Shocking waste of resources that might have otherwise been used to help additional sick people.
in case you’re interested, here is more information about the VA Hospital with the $1B cost overrun:
Cost overruns of more than $1 billion at the Veterans Affairs hospital under construction in Aurora were the fault of agency officials who ignored repeated warnings about its price and went ahead with plans to build a medical campus that one consultant compared to a shopping mall, according to an investigation made public Wednesday.
By the way, this story is only unique in its size. I know for a fact that this type of thing has happened over and over with VA clinics. The size of the cost overruns is what caused this one to make the news.
Any “right” that mandates other people to work for free (aka slavery) is not a right. Therefore, if healthcare is a right, then as a nurse, I should work for free or for whatever money the government feels that I should have (because my service to other people is guaranteed).
Any time that this occurs, it makes healthcare less attractive to those who provide it. Why would I choose to make myself a slave?
Because you have a tender heart toward those that are suffering.
We know that and ruthlessly take advantage of it.
The reason it is so astonishingly affordable is that insurance and Medicare refused to cover it, so it is not part of the “real” healthcare system. It is instead part of a more normal marketplace. People want it, but at an affordable price, and price competition occurred.
So do I. See comment # 16, paragraph 2.
Also, “private” insurance, being tax deductible, has been part of our collectivized payment system since the 1940s.
The main point you are making in your comments, while not directly addressing my OP, is correct. The waste is truly shocking. But this magnitude of waste is to be expected when nobody involved in the enterprise really feels the responsibility of paying for it.
That’s how I got my most recent old lady [CoC]-kicking. I’m a sucker for punishment.
Also, as a medical procedure it can be done outpatient with minimal complication. There is very little blood involved (if any) and does not require anesthesia. This is a large part of the savings. An OR, monitoring, the staff to do the monitoring, and anesthesia are generally pretty expensive.
This brings up a thought – a question, perhaps – that I have had for some time but not sure I can well articulate: While measures that can comfortably prolong my own life are certainly worthwhile regardless of the cost and you should help cover my costs, is society as a whole really better off than it would be if there were no state involvement whatsoever, if there were no health “insurance” system, if medical welfare was purely a private affair? Granted, average life expectancy might be way down and aging for some individuals would be more painful, but for society as a whole I’m just not at all convinced the benefits outweigh the costs.
I think the idea is the same as it is for all of our social programs: they are intended to be short term fixes for those capable of providing. They are only intended as long term programs for those who are disabled or elderly, without family and without any social groups that might be able to help bear the brunt of care. As social networks (churches, neighborhoods, families) grew smaller and then non-existent, people began to rely upon the government as the surrogate parent.
We believe, as a nation, that you cannot have people go hungry or homeless or without medical care. We have done what we can to ensure that people live in a dignified way because we feel that there is a moral duty to those who cannot and have not.
I think this is vastly different from those who can but simply don’t wanna.
They don’t. The costs, unless checked, will be fatal for society, and it’s hard to imagine benefits that would balance out such a thing.
We need to control healthcare inflation, and doing so will take some very painful decisions. This cannot happen, of course, if healthcare is a “right,” because there can be no justification for withholding a right.
If healthcare is a right, then cost containment can only be done by deception, misdirection, lying and coercion. Right now doctors are being forced to become the tip of this spear, which explains much of the intense dissatisfaction of the medical profession today.
DrRich (ironically named) has it backwards. Collectivized systems have led to lack of access to life changing approaches to disease, as well as vast over utilization of unnecessary healthcare services and the medicalization of just about everything, inappropriately. In a city in which I previously practiced, a general internist built his own 50 bed hospital after Medicare (partA) was enacted, and filled it with medicare beneficiaries who had no need to be in the hospital, and did every test known to man, and fired the bills off to Medicare. Medicare had no controls at all in place and simply paid any bill received. The doctor got filthy rich doing things that were entirely unnecessary. The patients thought they were being treated like kings and queens. Yes, medical facilities sprang up everywhere across the country after Medicare was in place, and medical inflation went from 10% a year to 30% a year, e.g., it tripled, with the deep pockets of the federal government paying any bill submitted with no questions asked. Before the Century was out, a program that was predicted to cost $10 billion a year cost 10 times as much, thanks to the greed of physicians, hospitals, and all providers of medical services and products. Medicare now threatens the solvency of our nation. So controls were belatedly though ineffectively applied. Fraud is rampant. Overuse of services is rampant. And ALL medical services and prices now are dictated by Medicare. That which is not permitted is forbidden. Donut hole.
Ok.
No, deductibility doesn’t pay for it, just doesn’t tax it. Not at all the same thing, even if it is an incentive. Corporations with limited resources will still limit the benefit they’re willing to pay.
Is there any kind of activity out there to determine the real costs of medical care? We patients are told to “shop around” when there is little real data about what the costs ARE for any certain procedure or test or service. I would think that if you wanted to get medical costs under more control, you would have to know what they are first. This seems like a task for “big data”. I know that most insurance companies consider their cost structure to be confidential, since they “negotiate” terms with most providers. True “price transparency” would be a first step to market-based medical care. And most people, including the government, still get “cost” confused with “price”. The cost of a treatment is the sum of all the inputs into that treatment (which should be possible to determine). The price is what the payer pays, and they are different.
I disagree completely. Having known young people in Europe (okay, mostly the UK), they are just as tight with spending on young citizens. A knee surgery will take 6-9 months regardless.
I don’t want to fight because: a) you seem really angry, and b) I agree with you about our collectivized system, as my OP and subsequent comments spell out.
Agreed. Tax deductibility does not pay for it — but it does mean taxpayers subsidize it directly, and other Americans subsidize it indirectly at least in terms of opportunity cost, and debt for future generations.
Nobody I ever encountered knows how to figure this out. Hospital administrators, for instance, have no idea what the unit cost of an aspirin really is. The pill itself is pennies, but the administrative and regulatory overhead is incalculable. The charges that show up on your bill have mostly to do with some kind of arbitrary “administrative fee” per unit activity. It’s the same reason defense department toilet seats “cost” $750 each.
How does the main thesis square with what we are told, i.e.
1. Much of health care spending is on end of life treatment, as has been noted in several responses to this post
2. Much of health care spending is for emergency room treatment of routine illness because people don’t have health insurance
3. Much of health care spending could be avoided if we have “free” mammograms, immunizations, pre natal care, post natal care, annual physicals
4. Drugs are TOO expensive
I’m not good at math but it seems like if you add up all the muches, you are at about 150% of health care spending.
What I do to reduce (a bit) the collectivization of medical care:
I buy ALL my own medications. I am 67, have a chronic disease, and all of my medications are generic. Because I can, I pay for my own meds and do not use the insurance coverage I have. One reason for that is my doctors write in multiples of 100, making it easier for the pharmacy to count. My arthritis medicine is dispensed 200 at a time, which the insurance company would not allow. See, it’s between me and my doctors, and the insurance company has no say. The pharmacy likes it, since it’s a much simpler transaction, and no approvals of any kind are needed. Also, I can see if the price of my medicine has gone up, which most patients never see or know if they only pay a small copay. And I use the pharmacy at my local Costco, so I know I am paying the lowest possible price.
Short summary: if government guarantees to buy a billion of the better mouse trap then many dollars will be poured into developing it. That’s how the collectivization has spurred innovation. Government doesn’t directly fund the innovation; rather, it guarantees a strong market for it after development. Have I wrapped my head around the idea you’re trying to convey? If so, it makes perfect sense to me. If you’re guaranteed a vast sea of customers and payments for something then you’ll get pretty hot on the task of creating it, which has happened in medical care and innovation.
By George! You’ve got it.
Steve, My main thesis is not relevant to any of these four postulates, but in fact all four are grossly exaggerated, and number 3 is simply false. Here’s a post I wrote a while back explaining why number 3 is a fiction of convenience: http://ricochet.com/archives/preventing-preventive-medicine/
Makes sense to me. As I am precisely in your demographic (save for gender) I will take this under advisement.
One more thing. I am still working full-time, and do not intend to retire. I prefer to be a productive member of society for as long as I can, so I can afford to buy my own medicines.
Health care is going the way (well on the way) of education: heavy government involvement by regulation and money. If you can read, thank a teacher has turned into campaigns to celebrate nurses in a similar fashion. Both of these type of campaigns make it hard to be critical of the systems, especially the costs. The nurses aids that make $10 an hour clean up the poop and puke and do a lot of the physical nasty work.
Third party pay is a problem. As Milt Friedman said you get the best value (not always the cheapest) when you use your money to buy yourself something.
Real reform is not possible in large systems that are already operating poorly and that can rely on infinite support both political and economical. Private insurance subsidized Medicare and Medicaid, not the other way around and still does. Henry Ford in Detroit has a list of imaging services for the uninsured based on Medicare reimbursement rates
https://www.henryford.com/visitors/billing/pricing/imaging None are over $707 and they include the physician.
I personally think the height of US medical care was about 30 or 40 years ago. A higher standard of living has contributed greatly to better physical lives. We have clean food, water and live in conditioned spaces.
I agree wholeheartedly with this.
A last comment.
I think what has everybody worked up about health care in the US is that nobody thinks that we are getting good value for our health care dollars. The $300-400k spent in end of life care, the over use of emergency care, having plans with both high premiums and high deductibles, the pages of paper work that is generated for even simple office visits.
The only people that are getting good value in our health care system are the really sick and they are the least appreciative, because they are sick and have bigger problems.