Why the markets can't cure healthcare

[Junior]

http://krugman.blogs.nytimes.com/2009/07/25/why-markets-cant-cure-healthcare/?_r=0

 

 

There are two strongly distinctive aspects of health care. One is that you don’t know when or whether you’ll need care — but if you do, the care can be extremely expensive. The big bucks are in triple coronary bypass surgery, not routine visits to the doctor’s office; and very, very few people can afford to pay major medical costs out of pocket.

 

This tells you right away that health care can’t be sold like bread. It must be largely paid for by some kind of insurance. And this in turn means that someone other than the patient ends up making decisions about what to buy. Consumer choice is nonsense when it comes to health care. And you can’t just trust insurance companies either — they’re not in business for their health, or yours.

 

This problem is made worse by the fact that actually paying for your health care is a loss from an insurers’ point of view — they actually refer to it as “medical costs.” This means both that insurers try to deny as many claims as possible, and that they try to avoid covering people who are actually likely to need care. Both of these strategies use a lot of resources, which is why private insurance has much higher administrative costs than single-payer systems. And since there’s a widespread sense that our fellow citizens should get the care we need — not everyone agrees, but most do — this means that private insurance basically spends a lot of money on socially destructive activities.

[Junior]

http://www.theguardian.com/commentisfree/2013/sep/30/single-payer-cure-healthcare-reform

 

It is unconscionable that in one of the most advanced nations in the world, there are nearly 50 million people who lack health insurance and millions more who have burdensome co-payments and deductibles. In fact, some 45,000 Americans die each year because they do not get to a doctor when they should. In terms of life expectancy, infant mortality and other health outcomes, the United States lags behind almost every other advanced country.

 

Despite this unimpressive record, the US spends almost twice as muchper person on healthcare as any other nation. As a result of an incredibly wasteful, bureaucratic, profit-making and complicated system, the US spends 17% of its gross domestic product – approximately $2.7tn annually– on healthcare. While insurance companies, drug companies, private hospitals and medical equipment suppliers make huge profits, Americans spend more and get less for their healthcare dollars.

[HuskerLuke]

It's really not fair to knock our health care system for people's life expectancy. Americans are 2 to 3 times more likely to be obese than citizens of other developed nations. Say what you want about McDonalds, but that's not our healthcare system's fault. Our murder rate is 2-4 times that of other developed countries. Say what you want about our police, gun laws, or urban decay, that's not our healthcare system's fault. Our motorists are 1.5-4 times more likely to be killed in an auto accident than other developed countries. Say what you want about the driving skills of Council Bluffs residents, but that's not the fault of our healthcare system. Additionally, the complaint about infant mortality is largely (although not completely) a statistical glitch, as the United States uses a more liberal definition of what constitutes a "live birth" than most other countries. Basically, let's not overreach in condemning our health care system. There are access issues and there are cost issues. There are not quality issues.

 

The issue I take with Krugman is that he merely assumes and never asks why health care is so expensive. The thing is, the market works with health care. I'm sure you've heard of medical tourism. Foreign hospitals are increasingly able to compete with - and win - against US hospitals on cost while matching quality. Passing a law requiring hospitals to openly publish procedural costs would do wonders to the price inflation that plagues the US health care market. Similarly, health care insurance is prohibitively expensive because insurers largely do not have to compete with each other. BCBS of Nebraska owns an 85% market share in this state, which constitutes a monopoly. Sure, regulation keeps some of the abuses in check, but there's no substitute for a serious competitor. Life or death competition can do wonders for a bloated, inefficient company, which certainly describes many insurers.

[JJ Husker]

I really am starting to come around to the idea that a single payer system is the only way to fix healthcare. As HuskerLuke alluded to, the quality of our care is not the issue. The issues are cost, access, cost, and cost. PPACA made some attempt to help control costs by mandating that a higher percentage of premiums be spent on actual healthcare (reducing overhead and profits for insurers and providers) but, from what I've seen and heard about this so far, the result has been to cut care providers and put more workload on fewer people. And, I think the profit/overhead control percentage has been and likely will be largely overshadowed by the great expense of adding so many poor and health problem infested individuals to the roles of the insured. There is just way may added expense there as compared to the relatively small savings of forcing insurers and providers to be more efficient. One of the possibly overlooked side effects of switching from a system that utilizes insurance companies to one that is single payer would be the loss of jobs in the insurance industry. Sure we're going to need more government employees to operate a single payer system but that moves a whole bunch of people from private industry to the public dole ranks. That can't be viewed as a good thing in an open market free society.

 

The issue I have always had with a single payer, government run system is quality and new inefficiencies. If you think free market insurers and providers are inefficient, just wait until government bureaucrats get deeply entrenched. But, if we as a society want to care for the most vulnerable among us, single payer is likely the only workable solution.

[Junior]

But, if we as a society want to care for the most vulnerable among us....

 

That's the real question, isn't it?

[JJ Husker]

But, if we as a society want to care for the most vulnerable among us....

 

That's the real question, isn't it?

 

I suppose it does come down to that. But, unfortunately there are also some other major issues namely cost and affordability that are tough to simply ignore. I'm getting old enough and have gravitated a bit to the left (although still right of center so don't worry) that I can now say care comes before cost but it isn't quite that easy for people who also want to be fiscally responsible and salvage some form of freedom, liberty, and democracy for our way of life. Single payer would be a huge step toward more government control and socialism and away from the principles this country was founded on. However, it is quite possible the principles and ideals we were founded on were never going to make it for the long run anyway. Our broken system of governing is already hinting at that being the case. Just please don't make the mistake of thinking people who want to maintain capitalism, free markets, and responsible fiscal policies must to be heartless in this matter. I want the most vulnerable taken care of as much as anyone but, I also want us as a country to live within our means. I'm not convinced we can do both at the same time. I think most of the economies around the world serve as witness to this predicament. It appears that there is so much poverty in this world that no amount of cost sharing goodwill can overcome it.

[HuskerLuke]

I really am starting to come around to the idea that a single payer system is the only way to fix healthcare.

 

I could be potentially won over to some sort of state by state single payer system, but never a federal one.

 

Looking at the two major federally funded health care programs we have now --- Medicare and Medicaid (shared) --- neither fulfill the holy trinity of a good healthcare system.

 

Medicare has good healthcare outcomes and decent access, but its so expensive it's the single largest driver of current and future deficits, and it's projected to double as a share of overall US GDP in the next 25 years. Medicaid does a good job controlling costs, but it achieves those low costs by having a doctor/hospital network so small that access is terrible and the health outcomes aren't any better than being uninsured.

[NUance]

Why the markets can't cure healthcare

The isn't, and never will be, anything close to a free market for heath care. There just are too many forces preventing competition. Four factors occur to me:

 

1) regulations and licensing requirements for practitioners: If we lowered the requirements to get a license to practice medicine the market would sort out the individual practitioner's value.

2) regulations on drugs and medical equipment: The huge nonrecurring cost of getting a new drug to market serves as a barrier to cheaper, alternative drugs.

3) prepayment for services with an incentive not to deliver: Once insurance premiums are paid in, insurance companies are incentivized not to pay out the benefits.

4) tort laws that allow patients to sue for malpractice in combination with policies that make it nearly impossible to kick practitioners out once they are licensed.

 

I'm not saying that medical care would be better if we eliminated one or more of these things. But it would be *much* more cost effective.

[sd'sker]

here is a good video explaining the complexities of high health care costs. and i do agree the single-payer system is the only way to go. i believe in capitalism, but few industries i do believe should be nationalized. i would say military, education (not saying there should not be private schools, but the public option should always be offered), banks, and healthcare; for various and differing reasons.

[sd'sker]

I really am starting to come around to the idea that a single payer system is the only way to fix healthcare.

frankly, this is why i was kind of hoping the supreme court would have overturned ACA. because i think that would have led to a legitimate push for a single-payer system. americans understand the system is broken badly and desperately needs fixing. it is broken in a way that has serious ramifications not only for individuals, but for the economy at large. health care costs are such a drag on the economy and there is no bargaining power, among other issues. the fact of the matter is that republicans have no alternative solutions. and we desperately need some solution to this exigent problem.

[JJ Husker]

I really am starting to come around to the idea that a single payer system is the only way to fix healthcare.

frankly, this is why i was kind of hoping the supreme court would have overturned ACA. because i think that would have led to a legitimate push for a single-payer system. americans understand the system is broken badly and desperately needs fixing. it is broken in a way that has serious ramifications not only for individuals, but for the economy at large. health care costs are such a drag on the economy and there is no bargaining power, among other issues. the fact of the matter is that republicans have no alternative solutions. and we desperately need some solution to this exigent problem.

I would agree. The problem with coming up with a solution is that it requires steps that would necessarily run counter to many peoples deeply held beliefs about the role of our government and our way of life. It is a bit convenient for people to simply blame the republicans. IMO, they simply have more aversion to socialistic policies than the dems do. That is not a bad thing, but it sure does make progress on this issue difficult. Once a person accepts that there really is no other solution, it becomes much easier to consider.

[tschu]

Single-Payer system would be ideal

 

Unfortunately, Republicans.

[carlfense]

I really am starting to come around to the idea that a single payer system is the only way to fix healthcare. As HuskerLuke alluded to, the quality of our care is not the issue. The issues are cost, access, cost, and cost. PPACA made some attempt to help control costs by mandating that a higher percentage of premiums be spent on actual healthcare (reducing overhead and profits for insurers and providers) but, from what I've seen and heard about this so far, the result has been to cut care providers and put more workload on fewer people. And, I think the profit/overhead control percentage has been and likely will be largely overshadowed by the great expense of adding so many poor and health problem infested individuals to the roles of the insured. There is just way may added expense there as compared to the relatively small savings of forcing insurers and providers to be more efficient. One of the possibly overlooked side effects of switching from a system that utilizes insurance companies to one that is single payer would be the loss of jobs in the insurance industry. Sure we're going to need more government employees to operate a single payer system but that moves a whole bunch of people from private industry to the public dole ranks. That can't be viewed as a good thing in an open market free society.

 

The issue I have always had with a single payer, government run system is quality and new inefficiencies. If you think free market insurers and providers are inefficient, just wait until government bureaucrats get deeply entrenched. But, if we as a society want to care for the most vulnerable among us, single payer is likely the only workable solution.

Whoa. +1

[tschu]

Insurers aren't inefficient - they just apply their efficiency in the wrong spot as it relates to the healthcare consumer. Insurers are massively efficient at their main goal, which is to make ridiculous amounts of money. Providing their consumers with proper healthcare is not their main concern. They don't bog down the market; they ARE the market.