Can a free market economy deliver affordable healthcare to all? Don’t bet on it
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Over the past few days, I’ve been engaged in a truly interesting discussion with a gentleman named David Theroux, the CEO of the highly regarded Libertarian think-tank, The Independent Institute. While I do not yet know David well, I can say that he is an extremely intelligent man who very clearly knows what he’s talking about – and then some.
David makes a compelling case for how the injection of government into our economy and culture has moved us away from the liberal underpinnings of our society – a society where the role of central government was limited to the protection of our God given natural rights from government’s interfering with the same – and moved on to become an invasive and harmful presence in the mold of the failed German experiment in the socialization of health and welfare that took hold in the 19th century.
I don’t disagree with Mr. Theroux – to a point. While I believe that the libertarian philosophy has much to offer, I have never been particularly comfortable with the notion that any philosophy is absolutely right or absolutely wrong.
However, in view of Theroux’s strong and well documented argument that the socialization of health care historically leads to corporatism rather than inspiring free and unfettered markets to innovate in the effort to create affordable and accessible health care to the benefit of all in our society, I’ve taken some time to re-examine my own beliefs on the subject.
Having done so – and with no disrespect to David Theroux intended – I find that the libertarian, strict free-market approach to health care comes up short.
To my way of thinking, health care simply does not lend itself to the free market approach any more than do other elements of societal infrastructure.
In a 2009 op-ed piece, healthcare futurist, Joe Flower, does an excellent job explaining this:
To the extent to which health care capacity is infrastructure, like police, fire, ports, highways, and public education, the costs are properly assigned to the society as a whole; they are the type of costs that we normally assign to government, and pay for through taxes, rather than per transaction. In every developed country, including the United States, health care gets large subsidies from government, because it is seen as an infrastructure capacity.
Via The Healthcare Blog
Is Flower correct in including healthcare as a component of the nation’s infrastructure? I would argue he is. Not unlike police, fire departments and highways, everyone benefits from the healthcare infrastructure – whether you realize it or not.
While you may not use that new highway that was built at great taxpayer cost, that does not mean you don’t benefit from it by way of reduced traffic on the roads you do take, allowing you to be more productive in your day. Further, your employees, customers, co-workers, suppliers, etc. may use that highway, allowing them to better contribute to your efforts to advance your own objectives.
Healthcare is no different. It may seem that advances in cancer treatment may not directly impact on your life. You might not feel that you should be obligated to pay, through your tax dollars, for medical advancements in diabetes and heart disease because you take care good of yourself, thus greatly reducing the likelihood that you will have need of these advancements you are paying for. But, just as in the case of the highway, you do benefit from these advances through employees, co-workers, customers, suppliers, etc. who may be spared as a result of those medicines, thereby permitting you to better accomplish your own free market goals.
But the importance of healthcare as an element of infrastructure is but one argument that suggests that free-market principles might not apply. We must also recognize that healthcare is simply not like other goods and services that we rely upon free enterprise to innovate for our benefit.
Again, as Mr. Flowers does such a superb job of making the point, I will take advantage of his explanation-
Some people get cancer, others don’t. Some keel over from a heart attack, get shot, or fall off a cliff, others are in and out of hospitals for years before they die. Aggregate risk varies by socioeconomic class and age – the older you are, the more likely you are to need medical attention; poor and uneducated people are more likely to get diabetes. Individual risk varies somewhat by lifestyle – people who eat better and exercise have lower risk of some diseases; people who sky dive, ski, or hang out in certain bars have higher risk of trauma. But crucially, risk has no relation to ability to pay. A poor person does not suddenly discover an absolute need to buy a new Jaguar, but may well suddenly discover an absolute need for the services of a neurosurgeon, an oncologist, a cancer center, and everything that goes with it. And the need is truly absolute. The demand is literally, “You obtain this or you die.”
Via The Healthcare Blog
And therein rests the crucial difference. How many goods and services can you identify where if you fail to obtain it, you die? Doesn’t this factor, in and of itself, define what separates health care from the usual free-market influences?
Still, Mr. Theroux argues that the free-market practitioners would do a better job in bringing health care to all members of the public were they freed of the regulations and interferences of government.
He may well have a point here. But to better understand why health care is a different animal, consider this comparison.
The problems in health care are not about product and service innovation. Certainly, the free-market has innovated extraordinary advances in technology, drugs, etc., all capable of extending and vastly improving the quality of our lives.
The problem comes in paying for the innovations.
In the case of free market innovations in consumer goods – say a new 3D television – prices tend to drop over time, thus allowing more and more consumers to take advantage of the innovations. If you can’t afford that 3D television today, there’s a much better chance that you will in two or three years. You’ll wait. And in the meantime, you’ll suffer through with that 40” LCD hanging on your wall.
It’s a bit different with healthcare. Were we to take a pure, free-market approach, it is reasonable to expect that accessibility to the CT scanner that can discover your cancer will cost less a few years after introduction into the market. But, unlike the new TV, somebody who has cancer now can’t wait those couple of years to gain access. By the time they can afford the test, they could well be dead or have a disease so advanced they soon will be.
If the government were to take their nose out of it, could the free-market system come up with products, drugs and technology more readily available to everyone? Maybe.
It’s just that they haven’t.
Until 1912, the nation’s healthcare was never much of a discussion in government circles. Then, Teddy Roosevelt, running for a third term as President, called for universal health care for all Americans. He lost – a sign of things to come.
While Libertarians will likely tell you that Teddy Roosevelt did more to harm the fundamental economic principles of our nation than most, there was a reason Roosevelt saw this need. At that time, health insurance was virtually non-existent, and paid sick days and maternity leave was not something that had even been contemplated. People were getting sick and dying because they lacked access to health care if they lacked the money to pay for it. And yet, the free market had failed to find an incentive to care for these people. There just wasn’t any profit in it.
In 1929, we saw the first efforts of the private sector to innovate when a group of teachers in Dallas contracted with Baylor Hospital to pay a monthly fee to the hospital in exchange for Baylor’s promise to provide medical services, room and board should the teachers get sick in the future. This innovation was the beginning of private health care insurance – the only free-market move we’ve really seen in expanding healthcare accessibility and one that served a valuable role – until it began to break down as it is today. Note that the early days of private health insurance were based on a non-for-profit model. Many would say that when the health insurance industry innovated its way into the for profit model, that was the beginning of the end.
In 1943, the Wagner-Murray-Dingell (father of the current Rep. Dingell of Michigan) Act was introduced in Congress and called for a compulsory national health insurance plan to be implemented within Social Security. Why? Because while the medical profession was advancing in terms of their skills and abilities to save lives, those segments of society who could not afford the services and products which could save and improve their lives were still denied access. It too failed.
Yet there was still no effort by the free-market system to solve the problem by innovating health care for the more disadvantaged elements of society.
While there was some small, government intervention between the failure of the Wagner-Murray-Dingell Act and the arrival of Lyndon B. Johnson, the first major step wherein the government stuck its large head into the nation’s health care system arrived with the passage of Medicare and Medicaid. Why did government do this? Was it about increasing the role of central government for the sake of power and politics? Or was there a critical need that was not being filled by private industry?
In all the years between Teddy Roosevelt’s initial effort and LBJ becoming president, the free market had yet to innovate its way into a business model that allowed the poorest elements of society to access quality health care. Indeed, prior to Medicare, “about one-half of America’s seniors did not have hospital insurance,” more than 25 percent “were estimated to go without medical care due to cost concerns,” and one in three were living in poverty.
Clearly, the situation for seniors in America today is dramatically better.
So, the question must be asked- how has the free-market system performed in innovating solutions that would bring access and affordability in order to create healthcare for all?
I would argue that the system has failed miserably.
And if a decent society is predicated on the notion of caring for the wellbeing of one another, rather than every man and woman for himself or herself, is there not some obligation of someone’s part to deal with the issue?
I would argue that there is. And if the free-market can’t succeed in doing it, then who is left to perform so critical a function?
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“Having done so – and with no disrespect to David Theroux intended – I find that the libertarian, strict free-market approach to health care comes up short.:
Thank goodness you came to your senses, we have thousand of years of history to know that in terms of providing health care to all libertarianism (frankly I prefer the term “social Darwinism”) just doesn’t work. If the free market did work we wouldn’t as a society at the cross roads we are at. 40 million Americans without health care coverage and medical bills being the highest cause of personal bankruptcy prove the free market is not up to the task. The basic truth of the matter is that the GOP-Libertarian set don’t feel health care should be a right, the Liberal-Democratic set does.
I’m not sure it is a fair characterization to say I came to my senses. If someone makes solid arguments and puts forth verifiable theories, I am always going to listen and take what they say seriously. Nothing is ever as simple as it appears and there is always more to learn. When you come across someone who is a knowledgeable advocate for another point of view, it is a foolish and closed person who doesn’t listen.
In response to another comment. See in context »geez, lighten up!
In response to another comment. See in context »Long morning writing this one. sorry.
In response to another comment. See in context »Medical bills do not cause all of these bankruptcies. Often times poor prioritization of expenses where people choose to be uninsured or underinsured so they can spend their money on other things is the root of their financial troubles. When their tenuous financial situation meets medical bills they often go into bankruptcy. Let’s not use medical bills as a scapegoat for crappy financial planning.
In response to another comment. See in context »Obviously you have no idea of just how much money it costs to be sick.
In response to another comment. See in context »Actually, I do. I have a physically disabled child, and I provide care to others. I also know it always costs a lot more to be sick than good insurance. So does buying a new car after an accident if you choose not to have car insurance.
I am certain that not all of the folks who applied for bankruptcy protection after receiving medical bills were on completely solid financial footing prior to becoming sick. Most Americans are not. No one saves, most have significant credit card debt, etc……..
There are not a lot of other unexpected expenses that can come along to tip one over the financial edge, however. This does not make medical bills THE reason for their bankruptcy. It is just another reason to make it a priority.
So the person gets sick, goes to the doctor, gets better, gets the bill, can’t pay, applies for bankruptcy, gets bankruptcy protection an doesn’t have to pay. Depending on the rules she gets to keep her house, etc. The provider then simply raises prices to pass on the loss to the next patient. Just like any other business. Problem is way too many people can’t/don’t pay for health care.
We need good catastrophic insurance options for people to address this problem.
In response to another comment. See in context »I don’t think anyone suggested that medical bills are THE reason for bankruptcies. However, you might want to read the following -
“Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance. Using identical definitions in 2001 and 2007, the share of bankruptcies attrib- utable to medical problems rose by 49.6%. In logistic regression analysis controlling for demographic factors, the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001.
CONCLUSIONS: Illness and medical bills contribute to a large and increasing share of US bankruptcies. © 2009 Elsevier Inc. All rights reserved. • The American Journal of Medicine (2009) ”
These figures are the latests available as of 2007. As I think you might understand, it has only gone up. And, fyi bankruptcy laws have significantly tightened in the last ten years.
In response to another comment. See in context »gitchie
In response to another comment. See in context »Previously, you’ve had some modicum of credibility with me. With this comment, it’s completely gone. I’m not quite sure how someone could possibly be so out of touch. You actually think that an average America, who earns about $40k a year, can withstand an expensive illness without insurance? Even the millions who are underinsured can’t handle it.
I’ve had some bizarro comments but, I have to tell you, this is jumping right up to the head of the class.
The AJM statement leaves a lot to be desired. There is no mention of how these people managed their money prior to their “medical bankruptcy”. We know that many Americans have, or had, mortgages for homes that they couldn’t afford. This makes no mention of how the bankrupt people prioritized health insurance over other expenses.
Three quarters had “middle-class occupations”. What does that mean? Middle class occupation making low income? How do they define the middle class?
If you have medical insurance (three-quarters) and you go into medical bankruptcy, you are underinsured.
If a debt that equals 10% of your annual income puts you into bankruptcy, you have planned poorly.
People who lose their income because of medical illness and go bankrupt lack another essential financial planning tool. Disability insurance.
I realize there are people out there who fall on very hard times. And I think they should be helped.
I also am trying to state that taking care of priorities has gone by the wayside in America for many.
In response to another comment. See in context »Percentages are nice, but how many actual cases are there AND how many people managed to have similar circumstances and avoid bankruptcy?
Of course, total number of bankruptcies went up considering the state of the economy as a whole.
“You actually think that an average America, who earns about $40k a year, can withstand an expensive illness without insurance?”-Rick
Nowhere above did I state that they could. It is an oversimplification to state that bankruptcies are “medical” without significant additional information. The report you cite falls far short of that.
In response to another comment. See in context »Not to knock the whole “individual responsibility” concept – I consider myself a highly responsible person – but there’s a point where you can’t lean on that crutch anymore, and the astronomical price of some of these health bills is one such case. How anyone can prepare for that “rainy day” with their health and put aside thousands upon thousands they need to pony up in case they get cancer or what have you is beyond me. How does someone prepare for having to take up to dozens of chemotherapy sessions at thousands of dollars per session, even with insurance? At some point there’s a limit to all this “people just spend too frivolously” claptrap and there needs to be an admission that sometimes people just need some help.
In response to another comment. See in context »Another pathetic “poor people are lazy” or is it stupid? “Poor prioritization of expenses” my @ss.
“Bankruptcies due to medical bills increased by nearly 50 percent in a six-year period, from 46 percent in 2001 to 62 percent in 2007, and most of those who filed for bankruptcy were middle-class, well-educated homeowners, according to a report that will be published in the August issue of The American Journal of Medicine.”
Of that 62%, three quarters had health insurance.
Are you really that clueless, poorly informed, or just that hateful? Maybe if you lose your job and your company insurance, find out how much it will cost you just for basic health insurance, which will not save you from a catastrophic illness or injury, you may begin to understand – but I’m sure for you thn it will be different, as you are not “like them”. I’ve never understood people like you – those that are suffering hardship are always in some way “guilty” of causing their problems – defective, lazy. ignorant. I’m guessing you are an Ayn Rand worshiper. See if your medical insurance can provide with a heart.
In response to another comment. See in context »Your angry mis-characterization is baseless. I did not call anyone poor, pathetic, defective, ignorant or lazy in my post. Since you brought it up, I am prepared if I lose my company insurance.
Unfortunately, there are a lot of Americans out there who have developed an alarming sense of entitlement. As a result, many of them expect to be cared for for free. I care for people with this attitude frequently. Some are even flagrantly gaming the system. The problem with this mentality is that the care is not “free”.
In response to another comment. See in context »Again, gummi you demonstrate a wooden ear to reality. What is this adversarial thing you have with patients? Please take a time out and reconsider your perspective. People in this country are paying a large percentage of their income to medical expenses. Larger every year. The fact that they need a roof over their head and food, as well as medical care should not be seen in the same light as free spending hedonists, who can’t decide whether to spend a month or two months in Europe this year. Those who suffer most from this burden are middle class families who make too much money to qualify for aid, but see enormous financial pressure from all sides.
In response to another comment. See in context »[...] Original post by Rick Ungar [...]
The simple problem with the argument is that our current system is NOT a failed free market system because the market is not free.
Government pay (? 40% of all care) does not meet the provider’s cost in many instances. The balance gets passed on to the private side. This is a large part of the reason for the dramatically increasing prices on the private side.
Fixing Medicare and the others by adequately funding them so they can function like a normal “customer” would be a huge step in the right direction.
If the government forced Ford to sell them cars at 80% of Ford’s cost to build them, Ford would pass the cost on to the rest of its car buyers. Cars would get more expensive.
Medicare enrollment continues to go up:
http://www.cms.hhs.gov/medicareenrpts/
Why can’t Medicare just negotiate contracts with providers like every other “insurance”? They could. But, our friends in Washington would have to raise the Medicare tax to get it done.
Hmmm…I wonder if the aging of the population has something to do with Medicare enrollment going up?
In response to another comment. See in context »I’m realizing how incredibly out of touch you are. Why can’t Medicare negotiate contracts with providers like other insurance? Because a provider is free to say no to private insurers if they don’t like what they are prepared to pay that provider and make deals with insurance companies who will. If you are a hospital or a cardiologist, it’s pretty hard to be in business without Medicare. Kind of takes away their bargaining position wouldn’t you say?
Medicare can’t negotiate contracts like other insurers because they don’t have enough money to do it! Instead, Medicare has been skating by paying less than care costs.
“Because a provider is free to say no to private insurers if they don’t like what they are prepared to pay that provider and make deals with insurance companies who will.”
EXACTLY my point. And as Medicare will need providers to care for all those seniors they have promised care to, they will have to get the money to pay fair MARKET PRICES for the care. And it’s not that we don’t LIKE what they pay, its that it doesn’t cover our expenses.
You have made the point many times that insurance companies run on thin profit margins. hospitals typically do as well. At least where I practice. Medicare is not helping this situation at all.
In response to another comment. See in context »It is unsustainable for Medicare to continue to shove inadequate payments down the throats of providers.
I have worked in two of the three largest and highest acuity of care hospitals in my state. In both of them the Cardiologists have chosen to become employees of the hospitals. Why? Because as employees they can maintain their incomes. How? The rules that prevent them from receiving “kickbacks” from the hospital are less restrictive when they are hospital employed. Some hospital (facility) revenue can be used to pay the physicians.
Hospitals do somewhat better than doctors when dealing with Medicare because they are better organized to pressure Washington for adequate payment.
Medicare still wants to cut physician payments 21%. You think this will be good for access?
In response to another comment. See in context »“Why can’t Medicare negotiate contracts with providers like other insurance? Because a provider is free to say no to private insurers if they don’t like what they are prepared to pay that provider and make deals with insurance companies who will.”-Rick Ungar
Actually Rick, providers can currently “say no” to Medicare as well. It is called Opting-Out. To read more about this very convoluted option please see the AMA’s recent statement on it with respect to the DRG fiasco.
http://www.ama-assn.org/ama1/pub/upload/mm/399/med-par-options.pdf
If you read this, you will get a very telling insight into why, as a provider, I think “Medicare for all” would fail as fast or faster than Rick predicts the private insurance market will.
Surprisingly, if a physician opts-out (non-Par) of Meidcare she can then still care for Medicare patients. Then she has to hire a large and intelligent staff to figure out how to get the money owed to her by Medicare and the patient.
A brief excerpt for those of you who chose not to follow the link. (The “Limiting Charge” is what Medicare tells the doctor they will can charge for the care)
“Limiting charges for non-PAR physicians are set at 115 percent of the Medicare approved
amount for non-PAR physicians. However, because Medicare approved amounts for non-PAR
physicians are 95 percent of the rates for PAR physicians, the 15 percent limiting charge is
effectively only 9.25 percent above the PAR-approved amounts for the services.”-AMA summary of Medicare rules
Maybe the lawyers wrote these rules to confuse the scientific brains of the doctors? I think it smells like the IRS code. Both created by Congress? I guess they are mostly lawyers too, come to think of it.
If a physician (these rules are specifically for physicians) participates (PAR) in Medicare, she still only gets 80% of What Medicare ALLOWS for a given unit of care. Not necessarily what it costs to provide it or what she gets paid by private insurance. The remaining 20% gets billed to co-insurance (more work for the physician’s office staff) IF the patient has Co-insurance.
Medicare offers Co-insurance called Medigap. Cute, these names they come up with. So called, because Medicare patients pay for it to fill the GAP left by Medicare. Estimated annual cost of Medigap’s “Extended basic Plan” in my area = $5650. (You can go to the Medicare website to get your own personalized quote.)
“The patient or the patient’s secondary insurer is still responsible for the 20%
copayment but the physician cannot bill the patient for amounts in excess of the Medicare
allowance.”-Medicare rules as summarized by AMA.
So, in the case of the un-co-insured (new word?) the physician gets 80% of what Medicare says the care is worth. This amount is significantly different (much less) than what the physician gets from private insurance. She then passes on her “loss” to her insured patients.
And so, private insurance rates go up to supplement the GAP(s) left by Meidcare. How does “Medicare for All” sound now? It’s a catching name, not unlike MediGap. That’s where the appeal ends.
Maybe we should just ADEQUATELY FUND it and SIMPLIFY the rules so the Senior Citizens who are supposed to be sitting comfortably on their newly hatched retirement nest eggs can relax and watch Jeopardy. Instead they are trying to figure why this new “Doughnut Hole” (part D was for Doughnut, I guess) everybody is talking about tastes so bad.
Of course funding Medicare would mean raising the Medicare tax. Very unpopular with everyone who pays Medicare taxes? Hard to get those votes to get back into the Senate with such an unpopular position. Lets just flounder some more shall we?
Sorry if it reads angry, Rick. Unlike you, I am (obviously) not a professional writer.
In response to another comment. See in context »I’m 59 years old. Care to explain to me how government is paying 40% of my medical care?
In response to another comment. See in context »Of those covered nationwide, 40% are Medicare, Medicaid, VA, federal government, etc. Actually, where I work, 65% of patients are government pay of some kind.
These payers do not contract with us. They set the fee schedule.
Again, it is not a free market.
In response to another comment. See in context »“it is reasonable to expect that accessibility to the CT scanner that can discover your cancer will cost less a few years after introduction into the market.”
It is not, because the hospital has bought the newest one out there that detects even smaller tumors, scans faster (so they can do more scans per day), and uses less radiation, etc. It is actually much like the TV only the scanee doesn’t get to decide which scanner is used on them. They can not go to “Budget CT” and get scanned with the old model.
Also, the electricity to run it, the technician, the radiologist, the referring physician, the heat, building etc. all keep getting more expensive (just like costs other businesses have).
There is constant pressure for providers to buy the newest and greatest more advanced equipment. Patients want it, it is often mandated by regulatory bodies, old equipment can often not be supported or maintained, the new stuff is better at finding that small tumor….. you get the point.
Do you think GE would make new scanners, or Medtronic the next generation of pacemaker if they knew they would lose money on them? No, because they get the capital to develop them from investors who expect to make money.
So where will our new technology come from when the single payer system drives prices down for care such that providers can not afford to buy new equipment from free market enterprise?
The US provides much of the medical advancement for the entire world. When we sell it to socialized single payer countries it is often at such a steep discount that the additional cost gets passed on to……American health care consumers.
Canadian drug purchase programs are a good example of this. They tell the drug companies what they will pay take it or leave it. And no, the solution is not to buy drugs back from them. We do it, however. How stupid is that?
I can’t embrace the broken free market concept, because it is not free.
Tell ya what…next time you think you might have cancer, I think you should head to the veternarian who will probably have an older, less sensitive CT scanner.
In response to another comment. See in context »Me? I’m going to continue going to my oncologist for the best equipment that is out there, but maybe that’s because, but for the newest machines, I would not have discovered my cancer as early as I did and would likeliy now be dead.
You are unbelievably out of touch. While I hope you never have a serious illness, I would love to hear your perspective when its you we’re talking about, not just some ‘people’ out there that you clearly cannot relate to.
And you, as well as the rest of us, should have the best care. That’s the standard we have set as a society. But, nobody wants to pay for it.
I too hope I never have a serious illness. If I do, I am covered. How, you say, could I possibly be covered?
Well it all started with my great-grandparents who were immigrant farmers. They worked hard to make a living, no complaining and few entitlements. ALL of their children had higher education to at least a bachelors degree level and held professional jobs. They worked hard to provide this for them. My parents also went to college and had graduate educations. Not because this fell in their laps, because they worked hard for and prioritized getting it.
My grandmother had polio that severely crippled her feet. She worked as a nurse, on her feet, for 40 years. No complaining and no disability. My parents also prioritized hard work and encouraged me to get a good education. I now have a good job, with benefits and have excellent health insurance for which I pay thousands of dollars a year. I spent many years (12) making marginal sums to achieve this success (insured all the time).
In addition, I pay hundreds of thousands of dollars each year in taxes to pay for my and other people’s health care and other social services.
I have a daughter with physical disabilities for whom I spend much money to care. I would live in a trailer house (I grew up in one so I can relate) and eat rice before I declared bankruptcy to pay her medical bills. I have parents who are now on Medicare and continue to work past 65 to keep supplemental coverage. I have a brother with a college education and a modest income who chooses not to have health insurance despite owning several unnecessary luxuries.
I am a health care provider. 65% of my patients are on Government insurance programs. My group recovers 43% of what we bill out for our services. Yes, that’s correct 43 cents on the dollar. This percentage has been steadily decreasing. Despite that we are expected to continually provide the same high quality care for each patient using the best and latest techniques, maintaining our knowledge and skills and risking being sued or causing a bad outcome. And we do. I care for my patients without knowledge of their ability to pay.
I do not lack perspective in this discussion. I am here to learn, just like you. That’s why I have gravitated toward your blog. You asked me to be civil in my text and I have honored that. Why are you insulting me. Please, just counter the argument with some logic.
I didn’t know I needed to have a “modicum of credibility with” you to participate in your blog. It is free and open to the public?
In response to another comment. See in context »I think the main problem is not that “nobody wants to pay for it” is that we’re realizing that we’re paying twice as much of it as anyone in the world for half the care. You’re talking about people being underfunded while most insurers are running administrative costs six times that of the more efficient care services in the world. Why do you think underpaying is happening if that much waste is going on? Our buying power is diminished because not everyone is covered and those who go uncovered, whether it be willingly, sadly, or because their jobs do not provide the service. Well, that’s why there’s mandates in the bill proposal, and moderate tax fines for those who willingly disobey them, and why the best care systems in the world make everyone participate. But,I guarantee if we were able to pay half what we are right now, a luxury most of the industrialized world enjoys, that the “young and immortal” like your brother would even pony up for it. Hell, I take the “catastrophe” option on my HC, opting for the cheapest plan just to ensure I don’t get bent over for a major surgery that may happen, and I still pay about 5.5% of my paycheck for that option. Asinine considering places like Germany cover everyone with quality care (preventative and emergency based) for 6.5% of their incomes.
I know there’s some cheap asses in the world who just won’t learn dragging the system and that’s unfortunate, but for everyone of those there’s someone falling through the cracks of the current, privatized system that are bringing it down as well as their health deteriorates, and that’s honestly pretty pathetic. And despite having decades to prove itself capable of rectifying this, the private market has only shown itself capable of raising rates while diminishing the returns on them.
In response to another comment. See in context »Since you are questioning my perspective, I will add some more detail.
I spent time working at a hospital in Sweden where Income taxes are as high as 55% and they have a VAT of 25%. Doctors make reasonable salaries and work less than half the number of hours typical here. Elective surgeries are not done in any kind of hurry. Access to care is limited. People are significantly healthier than here. Many Swedish doctors are leaving practice for more lucrative ventures. I know this because I am currently consulting for a company and in that role I have hired a Swedish consultant and we have been communicating a lot lately. Foreign (central European) physicians are replacing them. They are having problems with patient-doctor communication as a result.
I also have lived on the Canadian border, have many Canadian friends, and work/have worked with several former Canadian physicians who now work in the US. Their government run plan would not work well for Americans. Mostly because it is not possible to get the immediate care we expect. No CT scan on demand there. They also have significantly higher income tax and have GST/VAT taxes to pay for it all.
In response to another comment. See in context »1. You continuously refer to your being a provider of health care. Don’t you think it’s time you told us all what that means? Are you a physician? You say you pay hundreds of thousands of dollars a year in taxes- which might explain why you may not be in touch with some of the realities people face out there.
2. It is extremely hard to respond to your arguments logically because you really are all over the place with your arguments. To be totally honest, I have no idea what you are trying to say beyond that you seem to believe that people go broke because they don’t manage their money correctly.
3. I’ve also noticed that, on numerous occasions, you suggest people get sick, go to the doctor, get better, don’t pay their bills. Sorry,but you would appear to have no sense of the fact that, in many instances, it isn’t that simple. That people face treatments that are dramatically far more expensive than a visit to the physician.
4. You have this idea about bidding for Medicare services but you have yet to clearly explain what in the world this means. You suggest that it is untenable for Medicare to continue to shove substandard payment down providers throats – yet, there are no laws that say that anyone has to accept this payment and take medicare patients. When enough providers stop taking Medicare patients, I imagine government will begin paying them more. In the meantime, how does this bidding idea resolve this issue?
5. I question your credibility because making the statements you make here about the realities people face when faced with overwhelming medical expenses simply betrays a remarkable lack of understanding of the situation. We aren’t talking about people who can’t the doc the $600 for their office visit, blood tests, etc. We’re talking about people who run up huge bills that they can’t possibly hope to pay on their salaries, no matter how prudent they are with their money. Can you understand why your failure to understand that might cast some doubt on your credibility on the subject?
In response to another comment. See in context »1) I am a physician. It is not relevant what kind of provider I am. All of the providers I work with, nurse practitioners, physician assistants, therapists, nurses, have similar perspective being on the inside of medical care. This is why I stick with the term. I come from a middle class family. Like many other successful people I worked very hard for many years to get where I am. I resent the implication that someone who has substantial income is therefore “out of touch”. I care for and sympathize with people who are having many extreme hardships every day when I go to work. I do so without bias in the care I provide or the level of respect I show.
How much money would one have to earn before you consider them “out of touch”?
What is medical care worth to you? While we’re at it, how well do you think physicians should be compensated? You want the best and most expensive new CT scanner, and so do I. Do you want a budget provider to read your scan?
2) With regard to the data you presented on “medical bankruptcy” my point is simple. It is an oversimplification, with the limited information included, to attribute these bankruptcies to medical illness or lack of medical care. To summarize:
BrianNYC stated: …”medical bills being the highest CAUSE of personal bankruptcy…”
I stated:
“Medical bills do not CAUSE all of these bankruptcies.”
You countered with:
I don’t think anyone suggested that medical bills are THE reason for bankruptcies.
Actually, that IS what Brian stated. …”medical bills being the highest CAUSE of personal bankruptcy…”
The conclusion of your citation states:
“Illness and medical bills CONTRIBUTE to a large and increasing share of US bankruptcies.”
Are you still confused?
3) This intentional oversimplification was to make a larger point. Obviously, I am well aware that there are complex cases requiring many expensive treatments. Regardless of the complexity of the care there are people who do not pay. When they do not, the cost gets passed on to those who do. This makes private insurance more expensive. I believe this is a SIGNIFICANT reason why insurance is so expensive.
4) I wrote a lengthy response to your request for details on my idea in the post where you requested it. Clearly I am not going to come up with bulletproof solution right her on your Policy Page. I am just taking a stab at it. Medicare needs to start paying market rates.
5) I realize there are hard working well meaning and financially responsible individuals out there who incur “overwhelming medical expenses”. I was simply trying to correct what I consider to be an inaccurate statement about the CAUSE of bankruptcies. Blindly accepting that these bankruptcies are CAUSED by medical illness or bills inaccurately colors the argument. Do you dispute that very many Americans make poor financial decisions or that these very likely contributed to some of these bankruptcies? I believe they are very much multi-factorial.
I would like to understand the situation better and have dialogue about a solution. This is best achieved with accurate information, opinions and perspective from many angles of the issue.
In response to another comment. See in context »It is a free and open blog. But I would hope you might appreciate that I too have a ‘day job’ and while I try to engage with readers, there is only so much time in the day. I tend to spend my time with comments where i think there is something that can be gained by readers through the dialogue. Accordingly, I always have my radar up for those who are expressing bias based on things that may not be relevant to the discussion. As long as commenters are civil, they are welcomed to comment and I certainly would not suggest that you are not civil. However, when a commenter suggests that many medical bankruptcies are the result of people being imprudent with their money, that suggests a lack of understanding that causes me to question.
In response to another comment. See in context »I contend that many of the bankruptcies are very likely multifactorial. To suggest that medical bills or illness CAUSE them is inaccurate.
In response to another comment. See in context »gitchigummi is a product of the current system. He or she exhibits the classic us vs them mentality that I have found repeatedly in my long experience with healthcare providers. Many doctors and their staff develop this attitude after being inundated by reimbursement procedures that vary from patient to patient, by patients who refuse to take any responsibility for their own health, and by cynicism fostered by the harsh realities of move ‘em in, move ‘em out time constraints. Believe me, I have witnessed this behaviour on many occasions. I feel sympathy for the patients who encounter these jaded providers.
In response to another comment. See in context »You do understand you are going around in circles, don’t you?
In response to another comment. See in context »“I can’t embrace the broken free market concept…”
Uh…that’s what I’ve been saying in article after article after article. So what in the world is your point?
I’m sure you are an excellent doctor, although I can’t help but be curious as to why you don’t wish to reveal what kind of doctor you are as it doesn’t seem like something that would require so mysterious an approach…but, seriously, if you were to graph our your comments in total, I promise you that you would be as lost as the rest of us.
Sorry, I can see how the sentence you quoted could be read in a way that was misleading.
but……
You paraphrased me out of context.
“I can’t embrace the (Rick Ungars (added for clarity)) broken free market concept, because it is not free.”
I can’t embrace your writings here that the Free Market is hopelessly broken and doomed to fail.
Why?
It is not now, nor has it been in the last 40+ years, a “Free Market”.
Why?
Approximately 40% of the payers in the market (Govt. pay) pay what they see fit rather than market rates. Another approximately 7% (personal statistic) pay nothing but consume services.
Therefore,
Those who can and do pay (the insured) get stuck with an unequal portion of the bill.
This defies the basic principles of a free market.
I propose that we allow the entire health care market to actually function freely before we scrap it all and start over. This could be achieved, in large part, by funding Medicare in a way that would enable the program to pay fair market rates. Other proposals aside, this could be achieved if Medicare simply negotiated contracts with providers like other payers do. This would help decompress the hidden costs passed on to the privately insured.
A fair market correction would also require reasonable insurance for individuals who are out of group policies. This too would be easier to achieve with fewer hidden costs passed on to the privately insured by government pay programs.
It would also help to insure the totally uninsured who have no chance of buying insurance but still get sick and have (unpaid) bills.
Here in MN we have a few extra layers of coverage than (I think) most other states. MN Care is funded by a 2% tax on Physicians and Health Plans. (No, we do not pass the tax on to our patients and no it is not income tax deductible.) MN Care covers those folks with too much income to qualify for Medicaid and not enough to afford something else.
I think my sub-specialty is completely irrelevant to the discussion. I suspect that you, and many of your readers, have misconceptions about various sub-specialties of medicine. I base this on your (collective) quick conclusions that I am a poverty hating “jaded provider” for simply stating that bankruptcies are more complicated than you suggested.
In response to another comment. See in context »I think this article and all the citing you do in it goes well with what you’ve been saying a lot lately, and pretty how I feel on the subject, that this is a broken business model. Every year we see rates increase, bonuses doled out, and when the grumbling comes about bitching about the system, the insurers hide behind their “our margins are only 4%!” Maybe if your administrative costs weren’t also 30%, we could almost feel your pain. But the fact of the matter is, insurers continue to pay out big bonuses, they continue to make billions while denying care, and they continue to spend as much time and money denying claims as they do making good on them. It’s better to spend $20K weaseling out of someone’s brain surgery than to pay the $60K post-deductible. And even after that, their margins are, admittedly, pretty small, despite yielding billions in profits.
At some point, something will have to give. Maybe insurers will have to go “catastrophes only” while people pay every cent of their visits and MRIs, but even preventative stuff like that is costly, especially to larger families. Most likely though, we’re going to have to do something that puts the people before profits. I’m sorry, I’m a business major and have no problems with the free market, but not when it’s causing as many issues as it is helping. Free Market is great when you’re buying a new Car or TV and weighing competitors and their products and so on, not when it’s your life and well being on the line and your choice is “who will screw me over less”.
And, the worst part of all this debacle, is that people act like there aren’t socialized medicine plans out there that don’t get the Private sector involved. I have no problems with going Single Payer, but I’ve long been a fan of something like the German system, where the government collects the money but uses private companies as intermediaries to get people to where they need to be for care. They compete with how well their services actually work, not on the premise of “Eh, we’re going to screw you, but not as bad as you’d screw yourself by going it alone”. What should it matter that you’re not making insane profits, as long as you’re making a livable wage while helping those in need? I’ve always thought rewarding work was the best kind of work.
Nicely put.
In response to another comment. See in context »It is so sad we are going to lose another opportunity to make health care a right for all people by using some sort of universal coverage. We will have universal coverage at some point in the near future when the ER’s are overrun with people who do not have coverage because they cannot afford it or they have a “pre-existing condition” and the insurers will not cover them at any price. The local taxpayers will be funding this universal coveage for the public by steadily increasing taxes to pay for these ER visits until they protest or move to another city. The funding of healthcare will bankrupt individuals, then cities, states and finally the federal government if something is not done to control costs and the current private system cannot do anything about this problem. The Dem’s and GOP are just kicking this can down the road unaware it is explosive.
They are aware that it’s explosive…yet they are still kicking the can down the road.
In response to another comment. See in context »Kudos to you Rick – as usual a thoughtful and informed article. excellent comment by humphreylee as well.
In response to another comment. See in context »Sorry if in my anger I got a bit carried away, but Ayn Randian thinking is so pervasive with the free market, personal freedom/personal responsibility crowd, (which is so lacking in any sense of the “common good”) and it infects far more than the health care problem (pun intended?) It not only increases the cost of health care and prevents it’s solution, it pollutes our water and air, etc. It IS NOT SUSTAINABLE in the case of health care and many other issues. While certainly a tangent from this specific health care topic, Jared Diamond’s “Collapse – How Societies Choose to Fail or Succeed” covers it pretty well. I’ll stop here so as not to drag this off-topic
Medicare has a method of paying hospitals that allows for profits. In the case of Critical Access Hospitals Medicare allows for “Cost Plus 1%” reimbursement. This includes allowing for capital improvement costs.
It seems that this is an admission that their regular payment system (PPS) does not necessarily cover hospital costs.
http://www.cms.hhs.gov/AcuteInpatientPPS/01_overview.asp#TopOfPage
PPS is much more complicated than it should be.
Perhaps we just switch to Cost Plus 1% for all Medicare payments?
Rick,
i appreciate this post. surprisingly I have some sympathy for the libertarian point of view and I also have friends I respect who have chosen to place their faith in the free market. However, I believe in evidence based reasoning, and I’m not aware of a successful free market health care system. Still, true believers will deny the evidence that all advanced countries have universal health care funded by taxation or compulsory contributions. Do they really take Somalia as evidence that the free market works? At least their faith is strong.
[...] Can a free market economy deliver affordable healthcare to all … [...]
Gitchie-
1. Maybe there is a glitch in the system here, but the only comment I can find from Brian to you reads, “Obviously you have no idea of just how much money it costs to be sick.”
In the chain I am reviewing, it is right after that comment that you made your bankruptcy statements. Am I missing something?
2. My suggestion that you might be out of touch as a result of your income does not imply that everyone with higher levels of income would be out of touch. To be frank- and I think most of my readers have a pretty good sense of my background- it is highly unlikely that I would be the one to make such a suggestion. My statement was not intended to apply to all – it was intended to apply to you.
3.Yes, you have put up comments on the bidding thing and I have re-read them a number of times. While I just might not be bright enough to ‘get it’ – I don’t get it. No matter how many times I read the comments, I cannot see what the actual system is that you are proposing.
3. If you wish to split hairs over what you intended in your bankruptcy comment, go for it. While you are free to make the point by focusing all ‘most’ or ‘all’ or whatever you like, I think you’d be better of just clearly stating that you may have overstated your point. I see glimpses of your attempting to do so-it would just be easier and we could move on to substance if you were more direct.
4. I really do understand how Medicare works, how it pays…etc. I don’t know all that much in this world, but I’ve spent an awful long time studying this subject. I absolutely welcome – and love to think about – ideas to improve it. I’m trying to understand what you have in mind.
gitchie
I see what statement of Brian’s you are referring to – it was his comment to my comment.
“40 million Americans without health care coverage and medical bills being the highest cause of personal bankruptcy prove the free market is not up to the task.”
Brian never said the medical bills caused all bankruptcies – he said it was the highest cause. Sorry, but he is absolutely correct according to virtually any study one can find.
“While I just might not be bright enough to ‘get it’ ” — That is so so very unlikely, Rick. A pleasure to read you …
Heath care is complex. Talking about the charactistics of health care problems produce more emotion and than facts. Let me explain. This outline essay is first draft without editing. My favorite doggie is old, very sick and may pass before the moon rises.
Calling health care infrastructure misses the issues because the basic structure or underlying foundation of an organization is critical. It’s well known that without proper structure, a business will not produce a good or service, but rather will produce chaos, dissension and disorder.
One cannot accurately call our current health-care a free market system. Government highly regulates and micromanges our health care causing impeditments and other unintended consequences.
Most of US health care today is structured around employers and government. They pay the medical bill, less a small copayment with most patients not knowing the total cost. There is no rational basis for employers to provide health care. There is no rational basis for medicare, medicaid and other government health care organization to pay less than the market rate costs.
There are three ways our health care is provided. Government, insurance companies and private market. Government provided: think DMV.
Insurance provided requires regulation.
The proper organizational structure depends upon the flow of information. The gas and electric delivery company has a different information flow than a hospital. In health care, the basic transction is between a customer and doctor or other health-care provider.
If a bridge has a weak foundation, it will fail. Our health care has a weak foundation that cause our health care to cost more and service to be uneven.
Cost of health care and coverage are two different issues. In business the cost issues would be addressed before the business was expanded to provide more goods or services.
Unless a problems is fully understood, a good solution can be crafted. Understanding includes, what, how and why.
The government health care discussion is a long way short of understanding health care and weak on changes that will make it better.
Herb-
First and foremost, I’m very sorry to hear about your dog. Losing a pet sucks.
I’m having some trouble getting through what you are intending in the comment, but I’ll try to respond best I can.
1. It feels like you’re saying that it is not an infrastructure matter and that it seems like you acknowledging that it is. Health care is, to my way of thinking, very much an infrastructure. I think the concept is important because people have a tendency to think that if they are healthy, and work hard to stay to that way, they should have no stake in health care. But, like it or not, they do for the reasons I set out in the post. It’s just as they have a stake in a new highway whether they use it or not.
I don’t think this misses the issue because it is but one issue I raise. Certainly, there are many more facts to health care issues.
2. Unfortunately, we do understand the problems. It is the solution that is so very hard to reach. This is why I suggest that, with the private insurance market failing, there will only be two choices and one of those two does not yet exist. It will default to the government to become the payer system for health care or we will develop a third option that we have not spent enough time developing.
3. I don’t disagree that employer provided health care is the best answer. As you probably now, it is the result of the wage freeze during WWII. Since employers could not give employees better wages, they came up with the idea of benefits, including health, as an incentive to gain and keep employees. The system grew from there. It’s a tricky one to dismantle as it accounts for over 60% of the health care coverage in the country, with larger corporations actually acting as the insurer through ERISA.
In response to another comment. See in context »Rick – while I am personally fond of the use of the double negative, I had to read it twice – are you saying you think employer provided health care is the best answer? In which case I do disagree, though it may be difficult to change. Why provide the tax benefits to corporations instead of individuals? Wouldn’t changing this help solve some portability, eligibility and “pre-existing condition” issues? Help improve US companies competitive position? Hasn’t the economic downturn shown a big weakness to this approach? I struggle a bit with conversations blending health care cost & delivery and health insurance. They only have to be linked if you look for a solution that is a variation on what exists now, and that is likely not a long term solution. Insurers are the middlemen, which are for profit enterprises so cannot but add to the cost, while at the same time can and do limit health care options delivered – is the physician covered by your policy for starters; every statement I receive from my insurer has them underpaying the amount requested by the physician/health care provider; the argument seems to be to what degree (between public vs. private) the providers are underpaid. It seems to me we are slipping away from the original point – the discussion seems to be more about tactics than strategy. As you stated, the business model is failing, is not sustainable. If it is allowed to continue along it’s current path (rising premiums, less people can afford, insured pool contains a smaller number of high risk or already ill, repeat cycle, more “healthy” people gamble and lose to unexpected serious illness or injury, end up bankrupt…)or one that is palatable but only slows this process down, it still isn’t sustainable – all of which you and others have laid out quite clearly. Serious fundamental changes need to be made. I think disconnecting health care from employer insurance is one of them. We need to rethink the entire health care delivery process. Part of the difficulty is frame of reference – we know what we know – this will require a paradigm shift to something much less familiar.
In response to another comment. See in context »Bluesman-
In response to another comment. See in context »Sorry about the double negative confusion!
I think the employer model worked well enough once-although the tax benefits were never fair in view of the fact that individual policy holders do not receive the same tax benefits.
I think the model is past its prime. As more and more costs are being passed on to employees, we are reaching a point where employees will be unable to afford their share and the system will cease to work.
“I contend that many of the bankruptcies are very likely multifactorial. To suggest that medical bills or illness CAUSE them is inaccurate.” – gitchigummi
gitchigummi,
I certainly respect where you are coming from, and how you are affected by these bankruptcies as a health care provider, and I also appreciate your insight. However, I can see how you can be perceived as “out of touch” when it comes to the CAUSE for these bankruptcies. You seem to contend in several comments that many Americans ‘make bad financial decisions’, which ultimately lead to the bankruptcies. While this may be true to a certain extent, it almost seems as though you are failing to acknowledge that the REASONS Medical Bills throw many families into bankruptcy is also ‘multifactoral’.
Your family history appears to be similar to most Americans, mine included. However, my grand-parents and parents, who also taught us about hard work, were not college educated and didn’t have the means to get us a better education. My Dad worked very hard as a butcher, sometimes working two jobs at a time, merely to just provide us with the necessities. I consider him to be ‘successful’ for being able to accomplish that.
My point is that MANY Americans do not have the mental or physical means to be more than what they are; they simply do the best they can with what they have to work with. While I agree that there are many who do not spend or save wisely; there are just as many, if not more, middle and lower income families that cannot deal with the financial impact of major medical costs, because their day to day lives consume every penny they make. I agree with you that Americans have access some of the best Health Care in the world, but I do not believe we have the best system for providing that access to everyone.
well stated
In response to another comment. See in context »Rick,
I thank you kindly for your warm thoughts.
Economics does not tell us what good or service to provide. However, it can tell us how to provide, distribute and price the good or service.
Infrastructure is defined as the underlying foundation or basic framework of a system or organization. It’s a generic word such as fruit, is it an orange, apple or pineapple?
I don’t think employer provided health care is a good delivery system and it should be fully taxes, not a tax deduction.
What I said today is that the US health-care has the wrong structure, and that a rational and evidence based choice of structure depends upon the flow of information.
Some things may seem hard to change. Just appearances. It merely takes good leadership. If we wait for an emergency, we may have one option that is forced upon us. Our county has a growing fiscal debt and faces enormous unfunded retirement committments in a few years. It will be difficult to impossible to get citizens today to approve of expending money without careful thought.
It would be a shame to say in the next decade we had smart politicians in 2010 who lacked the gift of foresight.
Our current structured (employer and government) health care covers about 85 or 90 percent of our people. Most of those people are satisfied with their health care.
Herb-
In response to another comment. See in context »I’ve always found the ‘most people are satisfied with their health care argument deeply troublesome.I believe the polls that say that 80% of the public are happy with their health care because 80% have not had to call on their health care to any significant degree. I don’t think it is a coincidence that the number corresponds to the 80% of a health insurance pool who pay for the 20% who are sick.
Asking the question the way it is asked is like asking me if I’m happy with my home fire insurance. Sure I’m happy. I have no reason not to be happy as I’ve never had a fire! Now, once I’ve had a fire, my answer would have considerably more weight wouldn’t it? The question we should be asking is how happy are the 20% who have had to heavily rely on their insurance in a serious illness. That would give us a much better indication of where we are at.
Well said Rick. Needless to say I’ve never been polled on this topic.
In response to another comment. See in context »Rick,
The question of the satisfaction of people who have had to rely on their health insurance for major medical has been asked many times. However many surveys were poorly structured. The critical issue is the legal coverage in the medical insurance. If a certain illness that you have is not covered, who do you blame? The insurance company, the employer or yourself? And what will you say when asked the questions?
There’s enough investigation of health care to show how a rational system could be developed, and there is much research that is unclear and confusing leading to poor decisions.
If you have a large pool that has an 80% satisfaction ratio, one could reasonably say it’s a good program. Some say 54% is proof positive of satisfaction. But the real issue here is choice. Consumers should be able to choose a policy they want.
Policy satisfaction is best served by many health care insurace choices and the ability of the policy holder to keep his policy regardless of where he works or lives.
Two recent reports on health care are showing some good evidence of where we should go.
Massachusetts is already cutting benefits and caping insurance rates in their government mandated health care. Indiana’s state workers HSA is showing saving from fewer medical visits due to consumer choices.
One of the critical issues in covering an additional 20 million uninsured is a shortage of doctors and other health care providers.
This is a reason why cost reduction should be addressed before we expand coverage.
The basic health care transaction is between a consumer and his doctor. Health care insurance should be planned around this model, a bottom up approach. A top down approach hasn’t worked well for the last 50-years.
We know the way to go, but will our politicians have the will to go down the right path? It doesn’t appear they will.
In response to another comment. See in context »“One of the critical issues in covering an additional 20 million uninsured is a shortage of doctors and other health care providers.
This is a reason why cost reduction should be addressed before we expand coverage”
First of all the figure is closer to 40 million than it is to 20 million. Could you please tell me what members of that group are supposed to do while you so eagerly place on them back burner? Crawl off and die?
Could one of people who are so opposed to the health care bill tell me where you sense of national shame is? The richest nation in the history of the planet and we have thousands of people who die on a yearly basis due to lack of health coverage
In response to another comment. See in context »“While I just might not be bright enough to ‘get it’ – I don’t get it. No matter how many times I read the comments, I cannot see what the actual system is that you are proposing.”
Perhaps you are just so focused on what you think the best path is that, despite claiming to be interested in alternative ideas, you are not really giving serious consideration to what dissenters write on your blog. You quite freely state that others ideas are unclear when they are well stated and relatively uncomplicated. See below:
“I’m having some trouble getting through what you are intending in the comment,”-Rick
“No matter how many times I read the comments, I cannot see what the actual system is that you are proposing.”-Rick
“I’m trying to understand what you have in mind.”-Rick
You have failed to respond to multiple comments by myself and others revolving around the statement that the current system of health care finance in the US is not a true free market system.
You claim you “really do understand how Medicare works, how it pays…etc.” but have written very little here to demonstrate that. Your writings lack any significant response to numerous contributors’ comments that the way Medicare functions now defies basic Free Market principles. This piece was about how the “free market” we supposedly have has failed? Perhaps you do not really understand Medicare as well as you say you do?
Your unique perspective; attorney, writer, cancer survivor, recipient of CABG, student of health care finance are all valid to the discussion, in my opinion. I would encourage you to consider placing a value on others perspectives before you dismiss them as “out of touch” when they provide contrary statements. Otherwise, your blog is just a place for those to agree with you to give you a little electronic massage, and little progress is made.
“Kudos to you Rick – as usual a thoughtful and informed article.” “Nicely put.”
If you are genuinely interested in learning about alternative solutions, no matter how different they may be than those you embrace, you might try considering the alternative opinion a little more closely before attacking the writer. Perhaps if you do not understand a reply or comment you should request clarification or offer meaningful retort?
Let’s try again:
The current health care market in the US is NOT a true free market, therefore it can not be considered a failed free market. This is primarily because Government payers, who make up approximately 40% of the market, do not participate in a manner consistent with free market principles.
Perhaps, instead of attacking my lack of perspective you could counter the statement using your self-proclaimed vast knowledge of Medicare and health care finance in general?
My relatively short and simple statement disputing the conclusion that medical bills and illness “cause” bankruptcies has been blown completely out of proportion. Again, the conclusion of the article you site the statement is that medical bills and illness “contribute” to the largest group of bankruptcies. If the difference between cause and contribute is splitting hairs in your opinion, I have nothing else to add. I did not make any statements nearly as absolute as medical bills “cause” bankruptcy. Nor am I under the delusion, as you and others imagine I am, that there is no one out there trying their best to make it who ends up bankrupt because of medical debt.
I am not nearly as far off your line of thinking as you have convinced yourself I am. You know way too little about me and my opinions to make any statement that I am “out of touch”. The statements I made about myself above just scratched the surface of my “perspective” into the situation. Prior to this, I was unaware that one needed to establish perspective before contributing.
You have a bit of a short memory. Whichever blog it was where you first commented on something I said (I think it was Eric’s) I was more than happy to engage with you. What’s more, as you are someone new to this blog, were to you review past entries, you would find I get quite a few commenters who disagree. They are my favorite ones as i enjoy the back and forth and have, from time to time, learned something.
My problem is that I just can’t make heads or tales out of what you are suggesting. I’ve asked you to explain a few times and this appears to frustrate you. That is not my intention. I really would just to better understand what you are getting at.
However, I found your comments regarding people who suffer financial ruin as a result of overwhelming medical expenses offensive. You may not like that but just as you have a right to say what you wish, so do I. Obviously, I wasn’t the only one who saw it this way but even that is not important. I found it cold, insensitive, and having encountered people who have been ruined in this way, I just thought it sucked. And, I’ll say again, I’m entitled to this opinion whether you approve or not.
You are more than welcomed to participate and I couldn’t be happier if you disagree. That’s what makes things interesting. You might keep in mind that my response to comments is not just about what I think. It is a big part of how readers get to engage. I simply would like you to be clear in what it is you are arguing about because, very honestly, I have no idea where you’ve been going.
As I writer, I will make one suggestion which you are completely free to disregard- you are not likely to get the attention of people with open minds by suggesting that what is really behind financial failures of people who suffer huge medical bills is actually the result of their poor planning and wanton spending habits. Yes, we all know that there are many people who are careless with their money. Yes, we know that there are instances where people get too close to the edge and a medical emergency can push them over. We are all aware of the frailties of people. However, it is hard to understand how this is a response to a problem that is well established – which is the average working person in America cannot manage the overwhelming costs of a serious illness. While you may see some value in pointing out these other aspects, I think it doesn’t speak to the problem but appears to indicate a bias that implies that maybe you are not completely open to this problem. That is your right. But I hardly think you should be indignant when others are offended. That’s not to say you are not free to offend away. But I- and anyone else who cares to respond- are equally free to be offended. No disrespect, but you seem pretty comfortable dishing it out but very sensitive when it comes to taking it.
If you’d like to start again, I’ll again ask that you clarify what it is you are suggesting. I’m happy to agree, disagree, debate or whatever. But I can’t do that if I can’t understand it. It seems to me that what you were pursuing was a bidding solution. Great. I just want to understand how it would work and, while it might be perfectly clear to you, I have no clue what you have in mind. I don’t understand how every medical provider would bid and win. Typically, a bidding situation has people competing with one another with the lowest bidder winning the business. If I understand you correctly – and I very well may not – you have something else in mind.
In response to another comment. See in context »My intent was not to offend or come off as angry. Clearly, I did both. I think I clearly stated my issue with the citation. I would not characterize it as splitting hairs.
I sympathize very much with people who have difficulties in any circumstance. It is harder to sympathize when those circumstances arise partially as a result of a lack of personal responsibility.
I also believe that too many Americans lack the fundamental sense of personal responsibility that will be necessary if single payer health care is to be successful and even remotely affordable in America. If one is unable to acknowledge the existence of this trend, then I say he lacks perspective. This is a major difference between the US and the major European countries that are often cited as models for socialized (single payer) care. Of course, this is only one of the many problems we face.
You have cited Medicare fraud (on the part of providers) as a major problem. There are also patients who commit fraud and abuse the system. I contend that the percentage who do is likely significantly higher here than in other socialized medicine countries. It is not fair to the others using the limited available resources to have to compete with patients who defraud the system. If you do not believe that there are folks out there who defraud and abuse the free health care they have, you lack perspective. I see it first hand, and it is significant in prevalence to be a considerable impediment to successful single payer care here.
The limited information presented in the citation (I confess to not reading the whole piece. I will try to obtain it.) leaves many statistical and methodological questions. It may in fact be a good study. I can not tell from what was presented. In medicine, we are trained to scrutinize research and data. There is lots of bad data.
What I can tell is that the conclusion does not state that Medical illness or medical debt CAUSE bankruptcy. I like to see good and accurate data and facts used to frame arguments. Again, I did not ever state that bankruptcies are not related to medical bills.
Can $5000.00 of medical debt bankrupt an individual who earns $50,000 a year and who is otherwise solvent and debt free? The statement seems to imply it can. If it can, is this what bankruptcy protection was intended for?
In response to another comment. See in context »You did it again. You don’t understand, and you didn’t touch the statement about free markets. I am interested in your comments. Is not commenting is your way of stating that is too far out to deserve a comment?
Let’s try again:
The current health care market in the US is NOT a true free market, therefore it can not be considered a failed free market. This is primarily because Government payers, who make up approximately 40% of the market, do not participate in a manner consistent with free market principles.
In response to another comment. See in context »My goodness!
In response to another comment. See in context »Please respond to the just the latest comment. You are chastizing me for for not commenting on a commnent I didn’t even comment on! If you’ll just look at the chain, you’ll see that this makes no sense.
If you responding to my latest comment, I said I was just going to pick a few points so as to keep it manageable.
Since you are so upset by not responding yet to this one – yes, I understand that a percentage of our health care is government supplied (it’s not quite 40% but close enough for rock n’ roll.) If you would read the post that you are responding to with some frequency, you’ll be reminded that I was writing about private health insurance. I was also responding to those who would like government to get out of health care all together.
Now, if you would like to respond to my last comment at the bottom of the chain, I will be pleaed to reply once more. But then its time to move on. No offense intended, by I can’t make a career out of responding to one commenter on one post. It’s not my intention to cut you off or whatever else you might think. I write these just about every day and it gets impossible to keep up the comments on just one. I do hope you’ll understand.
“My goodness!
Please respond to the just the latest comment. You are chastizing me for for not commenting on a commnent I didn’t even comment on! If you’ll just look at the chain, you’ll see that this makes no sense.”- Rick
Truly sorry . This one did not “land” in the “chain” where I attempted to place it.
In response to another comment. See in context »Even being from the computer generation, I find navigating around this blog a little awkward. On your 2/24/10 post, I wrote a lengthy description of how I envision the bidding system. This was in response to your request for a detailed description of it. You seem and seemed interested, but I see no response from you there. When I navigate there I have to click the “all comments” button twice to get my statement on the screen.
Here is the text from there. I apologize if you have already read it and still find it unintelligible.
My proposal from 2/24:
The best case scenario would be to have Medicare function in the same way as private companies in terms of securing contracts with providers to provide care for their insured.
The major problem with this is, of course, that the money to pay fair market rates and maintain the current level of coverage is not in the coffers. Medicare taxes will have to go up.
“Tell me what is going to happen to me, as a patient, if your system were to be employed.”-Rick
Ok, here goes. You get sick. You make an appointment at the doctors office of your choice. Then you take your Medicare card to the doctors office. The doctor sees you, cures all that ails you. Medicare receives record of your care and pays your doctor and clinic.
Ideally, that’s how it would look to you.
Glad I could deliver all you expected.
Now, behind the scenes.
Medicare puts out a request for bids from providers (hospitals, clinics, doctors, therapists, integrated health systems, etc.). The request asks for a cost per UNIT of care for that particular provider. (The current RVU system isn’t perfect for my model and would require some modification). Lets just say that some system defining units of care will be used.
Providers bid (dollars per unit of care) based on what they think they can provide care for and survive financially (yes, profit!). This part might need to be a bit more complicated with multiple bids or some kind of auction. Ultimately, each provider agrees on a price paid to them per unit of care.
This process would likely result in most providers participating and competitive bidding would keep the rates near but just slightly above actual cost.
Providers then care for Medicare patients and receive their negotiated unit rate for that care.
Medicare would have to use the previous years payout as a basis for setting the tax for the next year.
Likely/possible other features:
Beneficiaries (Medicare patients) would likely somehow be preferentially steered toward providers with the lowest unit rate. Perhaps they would be required to make up the difference in rate between the lowest rate provider and the more expensive provider. Or, perhaps each member is allowed some limited upgrade to more expensive providers. This would be similar to Tier systems used by HMO’s.
Providers would be offered some incentive (slight rate increase each year of a three year contract, for example) for outcomes, patient satisfaction, etc. There would also be penalties (rate reductions) for fraud, abuse, poor quality, etc. included.
Yes, I remember this. I think I did respond as you quote me as saying – “Tell me what is going to happen to me, as a patient, if your system were to be employed.”-
You write –
“OK, here goes. You get sick. You make an appointment at the doctors office of your choice. Then you take your Medicare card to the doctors office. The doctor sees you, cures all that ails you. Medicare receives record of your care and pays your doctor and clinic. Ideally, that’s how it would look to you. Glad I could deliver all you expected. Now, behind the scenes. Medicare puts out a request for bids from providers (hospitals, clinics, doctors, therapists, integrated health systems, etc.). The request asks for a cost per UNIT of care for that particular provider. (The current RVU system isn’t perfect for my model and would require some modification). Lets just say that some system defining units of care will be used. Providers bid (dollars per unit of care) based on what they think they can provide care for and survive financially (yes, profit!).
1. While this reads that I go to the doctor and get happily treated and then ,behind the scenes this negotiation takes place – I assume you mean that the Medicare/provider bid happens before I go to the doctor, yes?
2. What this gets confusing is this – you suggest Medicare will put out request for bids on a per unit basis? What if my doctor cannot come to terms with Medicare? This isn’t a bidding situation, this is a negotiation similar to what a private insurer does with a provider, correct?
3. With doctors, including yourself, are already pretty unhappy with what they are getting paid from Medicare, are you suggesting that this system would cause doctors to get paid more because they would refuse the lower prices? What if only the worst doctors, who can’t get patients because of a poor reputation, are the only ones to be able to reach a deal with Medicare? Am I think forced to go to these crappy doctors? Is this fair considering I’ve paid in all my life only to get stuck with lousy medical care by only those who would take the bottom dweller prices? this is why I asked what happens to me. I have a cardiologist I’ve seen for years. If he can’t make a deal with Medicare – but the guy next door does – do I now have to leave my doctor and go next door? Wouldn’t this all be a giant step backwards in Medicare?
These are just a few of the questions I have but let’s stop at this in order to try and keep it understandable.
In response to another comment. See in context »1) yes.
Yes, it is similar to how private insurers negotiate with providers now.
Ask your Cardiologist why she takes Medicare now. Ask her if she makes money on her medicare patients.
2) I think your doctor will come to terms with Medicare because he wants to keep his patients and get new ones. If he ends up high on his bid, he will lose his patients. I think there would be some component of a tiered system to allow patients choice. Bidding would likely go in rounds. After the initial bid, the provider would be told, “at that price, you are Tier 3″ for example. They could then adjust and re-submit their bid if they pleased in an attempt to get into Tier 2, etc.
Remember that providers would likely bid a number that would be at least slightly profitable for them. Providers know their costs and should be able to bid appropriately. Medicare has a duty to make sufficient providers available to their patients. Medicare would pay more than it does now for the care they buy for you.
Not every patient wants or needs the choice you desire. That’s not necessarily good or bad.
Making it totally fair so that you can see any physician you want is a lofty goal that is not well aligned with cost control. VA patients do not necessarily get this, and we all pat ourselves on the back about how great it is that they ave their own hospital system. If you want a perfect model, I will see if I can deliver. But, I think we have to compromise between high cost and choice. I do not think that all bad doctors are necessarily cheaper and good ones more expensive either.
We are headed toward limited choices for Medicare patients now because of inadequate payments. I know many physicians who have or have considered opting out. Believe it or not, some providers stay in because of their duty to treat. Others, like me, are hospital based and can not really opt-out unless the hospital does. Hospitals considering opting out of Medicare has been a genuine topic of discussion too.
Sorry, I was attempting to keep it simple.
Did you catch my comment about Cost plus 1% above. What say you?
In response to another comment. See in context »Yes, I remember this. I think I did respond as you quote me as saying – “Tell me what is going to happen to me, as a patient, if your system were to be employed.”-Rick
The message above from 10:46 PM is cut-and-paste from 10/26/10 on the other post (10/24/10 your original post date). I did respond to “Tell me what is going to happen to me….” , and my response only shows up after two distinct clicks of the see responses button. What am I doing wrong?
In response to another comment. See in context »Since we are talking about having or not having “perspective,” I’ll suggest this discussion is devolving into one just about medicare; while a very serious part of the overall broken health care system, medicare not paying what Dr. Gitchi and others may feel their skill is worth is not the only issue. Maybe we can begin with finding things we can agree on and take them out of the discussion. Can we agree that health care providers should not be forced to provide services at or below cost? Not sustainable. Even the most altruistic, compassionate not profit-driven physician can’t provide care indefinitely under that arrangement. Could we also agree that medical costs due to serious illness or injury should not bankrupt RESPONSIBLE individuals and their families? Any sense of community and the common good acceptable? Let’s talk about the majority of honest decent, hard working people, making the distinction between becoming bankrupt (poor, destitute) because you’ve expended all your resources on treatment and declaring bankruptcy to “game the system” because of irresponsible behavior, shall we?
I don’t get to take “personal responsibility” when corporations (employers) get the tax benefits(to manage/decide my level of care) not I. I can only suffer from it if I change employers, and the insurance companies can then “game the system” by denying me coverage. I can’t even benefit from a health savings account (taking personal responsibility again) if my income is “passive” – not wages paid/earned. I might add that most corporations are “self-insured” with a company that administers, not insures the employees. The administrator keeps that contract by minimizing costs (claims) and the company improves profits by doing the same. Anyone who thinks this is in the best interest of the employees is sadly mistaken, and this also contributes to medical professionals being underpaid for treatment – it “ain’t” just medicare that’s the problem.
That said, certainly medicare is a good point of discussion if you are proposing a move to a “single payer” system, as “the devil is in the details” of who gets paid what for each and every procedure, and it is certainly very very difficult to establish decent standards for a lot of reasons, plus the unintended consequences of ones that aren’t very well thought out will have a negative impact. We would have at least eliminated the middleman in most cases, and dramatically streamlined the entire payment system. Figuring out these “rules” can’t be any worse than the current hodge-podge of payment rules/schedules by insurance companies, and based on that system, there should be a TREMENDOUS amount of data to work from. Once a baseline is established, supplementing the system beyond the “tiers” in a more free-market approach is certainly possible. At the private practice level, there are already “boutique” doctors that for an annual fee (not insurance, direct payment) will provide a high level of personal service to individuals who can afford to pay. (I understand this is not hospitals.) Insurance companies could be more focused on supplemental programs/packages for those that can afford or desire a higher level of care and to prevent the financially catastrophic impact of serious, expensive illness.
So back to medical bankruptcies for a second – the “responsible” ones – it is also not just altruistic but more beneficial long term to our society to prevent those – the destruction to families, educational opportunities of the children and long term earning power are well documented. They will pay less taxes and often require more social services.
My apologies if I fail the verbal eloquence test and tidy, linear content requirement – this is such a broad topic. If you care to give the discussion some framework I’ll do my best to stay within it.
I got what you said and it makes a lot of sense.
A single-payer system in the US similar to Canada’s means:
Reduce or eliminate bankruptcies and also reduce or eliminate the write-offs many providers have to make as a result. This would also reduce the mark-ups required to cover expected losses. Everyone’s covered and every provider gets paid.
Remove the onus on businesses to provide primary health insurance, and thus enable them to compete better globally, while giving them the ability to provide their employees with extras such as supplemental care if they choose. And to increase salaries.
Reduce the provider administrative costs and speed up the payments, allows providers to spend more time on actual delivery of services.
One pool means no out of balance costs versus receipts. Risk is spread.
What I don’t get is, why not do these things? They all seem pro-business and contribute to a free market for the actual services. Unless you’re an insurance company exec, what’s the issue?
In response to another comment. See in context »roger- not clear if you got what Gitchie is saying or what I had said. If you get what Gitchie is saying, fill us in.
In response to another comment. See in context »I don’t think that he is suggesting a single-payer system, but I could be wrong.
I got what bluesman said, and I’m also surprised there’s not much talk about single payer anymore… as for gitchigummi, I was not reading everything he said, but went back and read his last one – much better. If everyone was on medicare (or a single payer plan), those reimbursements would cover costs and provide a profit, when you factor out all the losses from bankruptcies, insurers attempting to deny valid claims in the attempt to boost profits, and the cost of having a couple of accountants dealing with nothing but claims all day.
When I lived in Canada, many doctors were in single practice. It was economically sustainable. Here it seems only a group practice can handle the overhead. I’m not a doctor, but I’ve seen the support staff at some of my doctors’ offices, so that’s a guess…
BTW insurance companies can still be in business – to provide supplemental care. Want a private hospital room, paid wages during an extended absence, etc, those are things that will still be of value but purely optional.
In response to another comment. See in context »Ah. Got it.
In response to another comment. See in context »I still talk quite a bit about single-payer, not out of any ideological persuasion but because I believe it is inevitable as the private insurance market will soon no longer work for the middle-class.
I completely agree, as I believe I noted in this piece, that there will be a business for private insurance either as supplemental coverage were we to go to a medicare for all system, or as an alternative to government provided health care for those who can afford it as is the case in Great Britain.
Thanks Roger looks like you and I are on the same page. Seems all too logical, doesn’t it? There are several psychological reasons for the resistance (as well as the lack of political will, lobbyists, etc.) including the “sunk cost effect”, the tendency to resist change and take the ISEP view when under stress, and even the “closest to the dam” denial mechanism. These may actually be thornier problems blocking solutions than the problems within health care itself, if that makes any sense.
In response to another comment. See in context »Americans aren’t ready for the Canadian system. They will not accept a system where a patient living in a town of 15,000 population has to go 2 hours by car or bus to have a CT scan, if it is approved. And that would be in three weeks time, not today at your choice of local scanners like here. Neither are perfect.
The American health care consumer that I take care of wants his MRI and he wants it now. My Canadian friends have a Molson and wait patiently for their scan comforted by the fact that if they die in the interim, at least they will have died with a Molson in their hand. Rick wants to continue to see his cardiologist, too. I think he should be able to. It’s gonna’ cost, big time, if we want it all under government pay. Canada has significantly higher income and VAT/GST taxes than we do.
No doubt, government pay will mean fewer choices for health care consumers than we have now. Like Canada, those without the ability to pay more for care on demand, will have fewer choices. (Yes Canadians come to the US, cash in hand, for care) I can hear the screams of “unfair” now.
****
This concept that companies will be lifted from the shackles of health insurance leaves out the fact that the money for the care will still have to come from somewhere if we are going to cover everyone. Sorry, but even taxing the richest 1,000,000 Americans 100% will not cover the bill (figures fictional to make a point). Corporations will still have to pay taxes to help pay for health insurance. If government run health care is as poorly run as much of the rest of the government (and congress), they may have to pay more than they do now.
Few will likely sympathize with providers on this point, but bear with me. Providers in the Canadian and other social system countries are paid less than American providers. They also receive more social services as their countries tend to be more “socialized”. Significantly and abruptly reducing what providers are paid will have great short term economic impacts. Removing folks from the 39% tax bracket and causing some to be unable to afford the mortgages they have based on current incomes will not be good for our faltering economy. If pay is to come down, it has to be eased down. Otherwise, the banks will be owning a lot of foreclosed providers houses. Yes, we all paid more than fair market value for our houses, too.
******
Reducing administrative costs and time to payment are great. My friends who have dealt with Canadian payment administrators do not agree that it is substantially better. Why does a single payer have less interest in denying or delaying payment than our multitude of payers do? Everybody wants to keep the money and thinks they deserve it.
In response to another comment. See in context »“The administrator keeps that contract by minimizing costs (claims) and the company improves profits by doing the same. Anyone who thinks this is in the best interest of the employees is sadly mistaken…”
I do not agree that employers use managing health insurance as a way to extract more money for their own profit from employees. Many use it as a way to attract workers (employment benefits). I think many corporations would be relieved simply to be rid of the administrative headache it causes. While less than perfect, abruptly dismantling it is problematic.
Lets take the example of the policy that Congress wanted to tax at 40% and the Labor Unions apparently negotiated (surprise to the congressmen) for their members:
$24,000 per year premiums.
$6,000 deducted from the employees pay pre-tax.
$18,000 “contributed” by the employer.
Likely pretty good comprehensive coverage (Cadillac Plan).
Take it all away.
Where does the $24,000 come from to buy the equivalent policy for the insured now?
The labor unions will want the $18,000 because they made wage concessions. They will want it in their pockets.
All workers will want to keep the $6,000 because hey, if you are not buying me health insurance any more, I want MY money.
If a single payer takes over, the single payer will need the $24,000 to cover that worker as she was. Smells like increased taxes to me. I personally don’t mind, but it is an awfully hot political time to be raising taxes.
In response to another comment. See in context »Thank you for this article. Will link to it. Some of my more conservative friends might actually learn something.
http://www.thehamandlegsshow.com
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