Tuesday, April 12, 2011

Health Care and the Budget

On the one hand I tip my hat to Republican Paul Ryan for actually submitting a proposal for the federal budget which addresses some of the important issues that are looming.  On the other hand he did a really bad job.  So it's a mixed bag.

The fundamental problem is that he puts fiscal responsibility squarely on the backs of the poor and elderly, mostly by slashing Medicare and Medicaid and lowering taxes on the rich.  Nor does his plan address "defense" spending, which is a subject we've addressed before here.

We pretty much exhausted the health care debate here last year, but it bears mentioning once again that there is a very good argument that a single payer system would do more to solve our entitlement-budget problems than anything else.  A single-payer system would save costs in a few of ways.  First, you would immediately slash most of the administrative overhead that is currently a massive drag on the system.  Second, you remove the perverse profit motive that skews the system and leads to appalling results.  Third, by covering everyone the risks are spread evenly and fairly amongst all Americans and the uninsured can no longer crash the party without paying in.  Fourth, since everyone is covered preventive care is universally available.  Fifth, bankruptcies as a result of medical emergencies no longer exist.

There are other points, and counterpoints, but that gives a pretty good idea of where health care savings might come from in a single payers system.

The United States currently pays more per capita for health care than developed countries which have a single payer system, without the benefits of actually better health.  We should have no problem studying those systems and creating one that works for us.  I understand that there trade-offs for universal health care, but none I'm not willing to pay.

A single payer health care system is a nice, elegant way of both fixing the broken health care system and taking a huge step towards fixing the federal budget.


Pugs said...

While I'm not actually opposed to a single payer system, as long as EVERYONE in the world is not a single payer system. Someone has to shoulder the burden of medical advancement, and lets face reality, if there wasn't a huge profit motive in medical research a lot of it wouldn't get done.

There is a reason why rich people from single payer countries come to our country for certain procedures to be done, because we perfect a lot of the advancements and are unfortunately unable to share that cost burden across the world because of cost fixation and other issues that the foreign countries can impose on our private firms selling the technology.

Now, it is a double edge sword, the profit motive scales out of control very quickly with simple things that SHOULD be cheaper and more accessible, namely medications. A good measure of whether or not there needs to be tweaking done in an industry is how disproportional is the number of Super Bowl ads by a given company. In the Viagra and Cialis heyday, say 5 years ago or so, you wouldn't have a Super Bowl commercial set without one or the other.

All of that being said, those problems really aren't the fat rabbit in what is broken about our healthcare system.

Here is the problem, and while I do know what the problem is I don't necessarily know how to fix it:

If I go to my general practitioner for a checkup with no insurance and pay cash, I believe the bill is somewhere around 145 dollars (at least it was last time I saw the bill). This is the simplest, and most efficient delivery of service, and provides the lowest amount of overhead, I mean it's basically one step above the barter system.

If I go to the same doctor, and receive the exact same care only this time I flash an insurance card, the bill is reduced to 84 dollars and change. This is arguably the highest possible overhead, and least efficient way for the service to be provided, yet costs 43% less.

That is what is fundamentally broken with our health care system, and I honestly don't think that a single payer system will fix it. The single payer system fixes some problems, but not the one where the overhead and inefficiency is replaceable by the more efficient market.

I've been reading about concierge medical groups lately, that's an interesting concept. Effectively having a doctor on retainer like law firms do.

Jacob S. said...

I agree that smaller medical expenses, which make up the majority of our contact with the medical world, could be dealt with differently, maybe without health insurance intervention in some cases. I'm nowhere near smart enough to know how to work that out. I think preventative care, however, needs to be universally available.

As to innovation, it's not clear to me that there is a direct link between a single payer system and stifling of innovation. Under any proposed universal system, wealthier people could still go and pay for the technologies they want that aren't covered by the government. Technologies for senior citizens, for instance, almost universally covered by Medicare, are still top of the line in America. And countries such as Japan and Germany are still on the cutting edge of medical technology.

So I'm not as concerned about this as some are. Here is a link that goes through some of the arguments. It's a liberal point of view but I think it does a pretty good job trying to be objective.

Architect said...

Here are two logical reasons why the elderly should get the biggest cut:
1)The elderly are the most able to bear the burden of any cuts - they have had the most time to make something of their lives.
2)The elderly get the largest piece of the wealth transfer pie.

Here are two reasons why they won't get cut:
1)They vote more consistently than all other groups
2)Congress is full of them.

Federal subsidized medical care deserves to be cut because it does not have an anti-fraud mechanism. The federal government has trouble performing its constitutional obligations, why burden it with health care tax & spend too?

Architect said...

I read this on another blog - The Moral Left

Leaving interest aside, the biggest-ticket items are Medicare (with tens of trillions in unfunded promises) and Medicaid, with Social Security placing third.

Jacob S. said...

Here's the biggest reason why the elderly should continue to be taken care of: because they are the elderly. If you think anyone can just choose to make lots of money and prepare for decades of comfortable retirement, with health care costs in particular rising exponentially fast, you are mistaken. Life isn't so simple for the vast majority of people.

Before Social Security and Medicare there was an epidemic of elderly people who had worked hard their whole lives with nothing to show for it, living is squalor and oppressive poverty. The unfettered free market system did them no favors, and the same would happen again today without those programs.

Jacob S. said...

You are actually forgetting the biggest ticket item, which is "defense" spending. From all the data I've seen, it goes "defense," Social Security, Medicare, Medicaid, in that order.

Pugs said...

Jacob did you not read the links in my military industrial complex post?

Medicare/Medicaid are first with 23%, Social Security second with 20%, and defense with 20% (but a smaller 20%).

At least that was the case in 2010, I for some reason can't find 2011 numbers. So things could have changed since then.

The largest problem I have with addressing the "elderly problem" is pragmatically spending money. A HUGE percentage (I read something like 39% before, but can't find that source anymore) of medical spending is in the last year of life, and frankly, there's a point in life where you lived long enough where we shouldn't be spending 500% more a year on your healthcare than your peers.

If anyone saw recently that there was a $95,000 treatment for (prostate I think) that was deemed "necessary" by the NIH standards board. The results of their tests showed that this treatment extended the life of it's patients by 4.1 months. The result of this being deemed "necessary" by NIH? 2 billion dollars annually for this particular company in medicare/medicaid spending alone.

2 billion dollars a year to extend the lives of old people that are terminally ill by 4 months? Frankly it's money we don't have and we shouldn't be spending.

THAT is the sort of crap that needs to get fixed. I'm all for supporting the elderly because in all honesty that's what a civilized society SHOULD be doing but we need to have REAL talks about what we're actually doing with that money.

Jacob S. said...

I've seen more sources that show "defense" spending slightly higher than the rest, so lets just say they are all about the same.

As far as end-of-life care, that was a big issue during the health care debate last year and where we got stuff like death panels and health care rationing. I agree with you completely, but again I don't know the answer. Finding the right balance between cost savings and extending life has to be about the most difficult thing out there. I wouldn't want someone to tell my wife that she doesn't get four more months with our kids because its too expensive, but I also don't want everyone else doing it.

Where did you get that $2B number? I'd be interested to know how much savings we'd get by tightening up end-of-life care.

Pugs said...

The 2 billion number was directly related to the specific treatment.

I think it will be difficult to have a cost analysis of "end of life" care, because it's totally situational and I highly doubt the granular data is publicly available.

I think the only reasonable way to save money in the end of life care is to ration the care of old people, because obviously that's where we get the lowest ROI.

I don't have any problem spending millions of dollars on experimental or even expensive treatments on young mothers. Those young mothers, and their kids deserve the best possible treatment, even if it costs $25,000 per month to extend the life by four months. I'm all for that type of care.

I do have a problem spending that same 25K for a great grandmother in their 80's.

Architect said...
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