My latest essay is on health care policy. My views have not changed since my book was published fifteen years ago. But my understanding of why my views are not going to be accepted has increased over time.
While many other governments limit the availability of the expensive tests and treatments that are routine here, I would prefer instead to see individuals face more of the costs of these procedures and make their own choices to forego them. But this idea runs afoul of the moral dyad that most people use when thinking about health care.
I guess this is where I am most sympathetic to the libertarian argument. I agree in large part, but maybe my ideal would look a little different idk.
I have had very high deductible insurance for 6 years now. It’s essentially a catastrophic plan. Basically every choice is made looking at cost. Some things are very cheap. 3 foot x-rays taken at an in network clinic read by a MD in India and passed on to my PCP cost $100. I think most care in sub-senior people is in this category. Even my colonoscopy (family history) was less than $1000. At every 5 years, that’s like $200 a year.
Yet my premiums are very high! $15,000 a year for 2 of us. That means we pay over $25,000 a year before the first dollar is covered! Where does that $15k go? My eye surgeon said he would get about $500 for my cataract removal but the cost was over 7,000. He said the difference was “hospital charges.” Insane.
I would pay my own wellness exam ($600 covers it all) and the cost of my statins ($2) in exchange for lower premiums. But I will say at least I can buy insurance now. Before the ACA I could only get employer plans because of pre-existing conditions from 30 years ago. This is the issue that needs to be addressed. This and allowing competition with MDs etc.
Even if cost was an issue, it is very difficult to convince someone not to do something when a doctor is telling them to do it. You can state from experience and logic that the procedure will cause more damage than possible good. You can point out the self interest and other issues with the doctors recommendation. It’s often all for naught.
This is especially difficult with older people who are going through mental decline, which is where most of our healthcare spending happens.
Small quibble: “For example, instead of health insurance coverage kicking in for every medical procedure, we might have means-tested catastrophic coverage. People who can afford to pay for their own medical treatment needs would be required to do so.”
Someone pays for all this, so you need to make it clear that we need more point of service payments directly by those receiving the service, not recycled through third part insurance companies or taxes.
We need far far more medical schools. More doctors – lots more. More governors should be proudly building new Med schools connected to their Universities; and existing Med schools should be expanding their class sizes.
Slovakia, and many EU countries, have Medical Universities that include Med school plus college in 6 years. Last year my eldest son graduated, as a doctor, plus getting a good college education. The USA should start some of that.
Trump’s push to get hospitals to publish prices for operations seemed like it was a good, but tiny, first step. The government should be publishing prices of operations in govt Veterans Admin hospitals. That would be starting baseline for comparisons between hospitals.
How much “admin” costs are covered by each operation could be a problem, but the first step is noting how much that overhead is. Health care costs will only come down with measurement – which is necessary, but might not be sufficient.
More doctors will certainly help.
My son the recently graduated Slovak doctor writes a long note on this:
I mostly agree with the diagnosis, but the therapy is all wrong! First, a few points that I considered interesting:
1. “People who can afford to pay for their own medical treatment needs would be required to do so.”
– How do you test this? Sounds like a lot of possibility for fraud and opens up necessity for an inflated governmental regulatory body, checking individuals.
2. “Government interventions in markets almost always involve subsidizing demand and restricting supply.”
– This is just false. A huge amount of government intervention is subsidizing supply – from stimulating local agriculture, through funding of solar panels (making the research cheaper and thus the consumer doesn’t have to pay so much), through public housing projects, through public schools. Even government jobs could be considered a job supply subsidy – competing with the private sector and making sure they don’t have the monopoly on determining job conditions (you don’t like working as a cook at Apple? you can go work as a cook at a state funded school).
Subsidizing demand is tax breaks for installing solar, using public transport, healthcare – also happens a lot.
Restricting demand – public education about harms of smoking, restricting smoking in public spaces, tax smoking
Restricting supply – tax smoking, regulate yhe industry.
3. “We are not mere helpless feelers. Instead, most of the time when we get medical services we are capable of thinking, planning, deciding and acting. I do not have to go for an MRI when I hurt my back lifting furniture. I can decide whether to get a colonoscopy to screen for colon cancer. I can choose to try using exercise and diet rather than seek medical services to treat the symptoms that come from poor lifestyle choices.”
– We had an entire subject devoted to public health and healthcare administration, one of many was on market failings within healthcare.
Among those were information imbalance – no, most people don’t know if they need an MRI or colonoscopy; allowing them to choose is wasteful for the unnecessary cases and a health threat for the necessary cases not checked. In fact, economic studies prove the efficiency of many subsidized interventions – an X ray/colonoscopy+early cancer treatment costs significantly less compared to the treatment of breast/colon cancer discovered late.
Another is the power imbalance – if my patient refuses treatment, I lose money (I can live with that risk) and he potentially loses his life – few are willing to take that risk. This puts more power in my hands, improves my negotiation position and thus allows me to overcharge.
Part of the way our government reduces hospital and insurance companies’ power is by negotiating prices on behalf of the patients – reducing the power imbalance. A surprising effect of this government intervention is less bureaucracy – the conditions are the same for everyone, so less resources need to be spent hustling. https://www.healthaffairs.org/do/10.1377/hblog20200218.375060/full/ US spends higher percentage of healthcare costs on administration than OECD average.
My biggest point of contention is that people can make smart choices for themselves – this is repeatedly disproven in psychological research, has a solid evolutionary explanation, and I can easily provide you with examples that are a lot clearer than “should i get that colonoscopy?”:
a) most people don’t save up for retirement, or save up in form of hard cash
b) many people rent homes they will live in for a long time – buying would be fiscally smarter.
c) 20% of people smoke
d) 30% of people are obese
e) 10-20% of people have drinking problems
f) 50% of people refuse to get vaccinated for COVID, 5% of those are willing, but only using the unapproved Sputnik V.
The list goes on, both in fiscal and healthcare decisions, as well as an array of other areas. If 30% of Americans are obese despite obesity being obviously terrible for health, than either:
1. Some Americans are not educated enough to make smart healthcare decisions for themselves
2. Some Americans are not rich enough to make the smart healthcare decisions
3. Some Americans don’t have the willpower to make the smart decisions (thus, don’t actually have the power to choose).
And obesity is a much more clearcut thing than colonoscopies – it costs very little to get in shape (it could even make you money by saving on food), and it will make you look and feel better. A colonoscopy will cost between 20 and 10,000 USD, is excruciatingly painful and usually the result is nothing. Even subsidizing colonoscopies, we don’t prevent colorectal carcinoma because people are scared of them – however, we have reduced the costs of the disease treatment anyway.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7490076/
I do agree with some of the articles’ points: deregulate the profession, and allow substandard doctors and nurses to flood the newly built public hospitals for government-insured people. I think this will be necessary for the transition between lucrative care for the rich and no care for the rest.
Reduce education requirements for nurses and other personnel. Allow 2nd rate universities to train these people to increase their supply – to get the super well paid jobs, they will still have to become great doctors and nurses. But you can’t focus on quality before you’ve covered your quantity.
Deregulate the pharmaceutical market by reducing patents, to allow earlier adoption of generic options.
I just think it’s paradoxical that healthcare is an area that’s proven to be more efficiently run by government than the private sector, yet people still use the same old “government=inefficient” arguments – the bloated costs argument being the most glaringly wrong one.
~ Mike
And obesity is a much more clearcut thing than colonoscopies – it costs very little to get in shape (it could even make you money by saving on food), and it will make you look and feel better.
You have a very limited conception of cost.
If someone is obese, getting in shape (which I assume means losing lots of weight and getting physically fit) is extremely costly. Exercise for an obese person is unpleasant and doing enough to take off significant amounts or weight is time-consuming.
Cutting down on food enough to lose substantial weight is also difficult, though many people do seem to find crash diets to quickly lose a lot of weight fairly easy. They then say how much they look and feel better. But in nine cases out of ten, they gain the weight back. There is something in that “feel better” that actually feels worse, enough worse to make them undo all the work they had done. That is, in a word, costly.
Costly enough to get them to “buy back” the obesity that they know is ugly and unhealthy. (And ten years later to say how awful “fat shaming” is.)
Check “forego” in quote. Think you mean “forgo.”
–“While many other governments limit the availability of the expensive tests and treatments that are routine here, I would prefer instead to see individuals face more of the costs of these procedures and make their own choices to forego them. But this idea runs afoul of the moral dyad that most people use when thinking about health care.”–
The tough part is that the typical method for achieving this is high deductibles / out of pocket maximums.
Say you have two people, Tom and Cindy, both 28, both in white collar jobs earning $60,000/yr, and both have insurance which covers everything after the first $10,000.
Tom is perfectly healthy, whereas Cindy was diagnosed with Type 1 Diabetes as a teenager and has several other health needs, requiring an expensive prescription such as restasis.
Due to her health care needs, Cindy is always blowing through large portions of her deductible, whereas Tom typically spends only a few hundred dollars per year, and has watched his HSA savings swell in size.
So not only does Cindy have worse health through no fault of her own, but she also pays a large financial penalty for it.
I think the appeal of low deductibles and higher premiums, aside from the fact that people think of health care as a cost and hate paying for it, is that it helps offset the health status inequality. Tom enjoys better health than Cindy, but it’s partly offset by the fact that Tom is effectively covering some of Cindy’s care through the premiums.
I think the answer is a two tier health care system.
The first tier is public.
Emergency care is government funded for everyone, much in the same way that Police and Fire services are. It’s hard to have market forces operate in emergency situations. Those who use the ER for non-emergency care are provided mandatory long wait times (e.g. 2-3 hours minimum) as a disincentive. This should be easy to fund as ER care is a small slice of the overall budget. Privately provided ER services would not be prohibited.
Secondly there would be a government funded system of hospitals as well as clinics providing primary care. The system has a modest means test (anyone can use it, but above a certain level of financial assets a moderate premium is required). Total per capita outlays are capped at the level of a moderate spending country (e.g. UK). The system is laser focused on cost efficiency and negotiates hard on all prices. Prescription drugs that are too expensive are simply not purchased. I would also have the system make use of some of Singapore’s tricks, providing necessary services for free but charging extra for luxuries such as private rooms.
Lastly, long term care for the elderly. The government pays the full amount for home health care and long term care at the 40th percentile of price, and amounts over or under that are paid by or returned to the patient. The government would also in lieu of this pay a family member $2,000/mo to care for an elderly family member, provided that the patient lives with their related caretaker and this caretaker cannot have any other employment. This would probably be better for many elderly patients and would save money.
The second tier would be private.
The private system would be lightly regulated. Insurance companies could experience rate, insurance could be sold across state lines, etc. If you wanted access to treatments with high cost / low expected benefits, you would have to find them in the private sector. Hopefully many options, such as concierge care, health share systems, etc, would flourish. There would be no tax deduction for private insurance or health savings accounts.
In my example above, Cindy could decide to opt into the public hospital system, as effective treatment of type 1 diabetes is something that the public system would find to meet its cost benefit objectives, whereas Tom could have extremely catastrophic coverage for himself, or he too could opt into the moderate premium public system for a small premium, knowing that if he does wind up with something like stage 4 pancreatic cancer he’ll only get palliative care.
**Obvious objection to this system is that people won’t accept a cost focused public system or lightly regulated private sector and we’ll end up with our current system and public hospitals which cover everything at great expense.
The problem is that health status is a mixture of chosen and not chosen. I didn’t choose to have Type 1 Diabetes. However, most people who have Diabetes have Type 2, and they did choose to eat themselves into it.
You could get all hard nosed about the deserving and un-deserving sick…but that has all the same problems as all arguments about deserving and undeserving. Who decides and by what criteria. And who butters their bread.
Some nits to pick.
The USA is similar to Canada and likely many other countries in the amount of expensive, low value care being sold: https://qualitysafety.bmj.com/content/27/5/333.abstract
As many have mentioned above, unless you are on a Cadillac government plan or at some rich non-profit, you are already on a high deductible plan and you need savings to cover your deductibles and copayments.
The real issue is Medicare and the Cadillac plans for government, military, and veterans where the big numbers get racked up, a relatively small share of the population accounts for a disproportionate share of spending. https://fas.org/sgp/crs/misc/IF10830.pdf
I read the book way back when but don’t recall what you wrote about Medicare. Unless you want to put forth a Medicare reform plan, you are just blowing smoke.
The administrative costs associated with the cost-shifting that is the hallmark of the USA system is arguably a bigger waste of money than the expensive process of developing and refining new and improved medical procedures that are deemed low value until they are fully developed.
Medicare-for-All would be less costly than hiring the vast new army of nudgers and second guessers that you propose to deny access to care and promote medical tourism. Medical tourism is already doing quite well and doesn’t need your subsidies.
Better than Medicare for all would be Tricare for All and just open all the under-utilized government hospitals to the public. Instead of forcing private hospitals to provide charity care, emergency care for the uninsured should be provided directly by the government. The government can provide a basic floor package and people can buy private insurance for better, more inclusive care. This would violate the widely held notion that nobody should be able to buy better care than anyone else, but that is already happening and providing a uniform universal base package ( not so different than what you are proposing) and letting the rich act as the “first adopters” to pay for the development of the expensive new procedures would seem to be a reasonable compromise.