Actually, It Is the Projected Growth of Private Sector Health Care Costs That Is Unsustainable,

[dkf]

Not Medicare

That is what a real newspaper would have told readers when it quoted House Budget Committee Chairman Paul Ryan saying:

"There is nobody saying that Medicare can stay in its current path."

However the Rupert Murdoch owned Wall Street Journal did not provide this information. The Center for Medicare and Medicaid Services projects that health care costs will rise rapidly in coming decades. While health care is overwhelmingly provided by the private sector, the rise in costs is projected to lead to large budget deficits because more than half of health care is paid for through public sector programs like Medicare and Medicaid.

If these projections prove accurate then it will have a devastating impact on the economy regardless of what happens to the public sector health care programs. On the other hand, if per person health care costs were brought in line with costs in other wealthy country, the government would be facing large surpluses, not deficits.

http://www.cepr.net/index.php/blogs/beat-the-press/actually-it-is-the-projected-growth-of-private-sector-health-care-costs-that-is-unsustainable-not-medicare

[BzaDem]

1. K & R. This is exactly right. Medicare costs are only high because private costs are so high, and

Medicare can't charge too much less than others or providers will simply dropping Medicare. ALL costs have to be brought down to solve the problem.

[murphyj87]

2. The costs in a single payer system....

The costs in a single payer system are 10% of those for insurance run health care when the single payer system is the only system, while insurance run health care denies proper health care to 38% of Americans, and a single payer system provides health care to everyone, as we in Canada can attest. The poorest Canadian has the same access, quality, and medical outcomes as the Premier of his Province and his Member of Parliament. In the United States, not only the poorest, but most of the middle class have no proper health care at all.

If the Canadian system provided health care half as bad as American insurance run health care provides, there would be civil war in Canada and either a government inquiry or a judicial inquiry, televised across Canada would be convened within two days.

[dkf]

4. I still don't understand why our costs are so out of line.

Someone explained to me that it is because of the duplication in very expensive equipment that would be shared in a single payer system.

I wish someone would do a serious analysis of the equipment we have, the use of drugs, surgeries and cost of insurance. Has anyone seen these comparisons anywhere?

[BzaDem]

5. That is not the primary reason. The primary reason is that providers can charge basically whatever

they want.

In a normal market, there are two factors that mitigate this desire. One is competition, and the other is the ability for the customer to walk out the door if the price is too high.

In medicine, there is often little competition. When you are being flown to the emergency room, they don't ask you to pick the emergency room you would like to go to, or give you a menu of prices and doctors you can compare. And even if they did, you wouldn't have enough information to figure it out anyway. Medical knowledge is quite specialized, and most do not know how to evaluate doctors or prices.

Furthermore, the ability to "walk out the door" is almost non-existent, given that most people would prefer to stay alive.

Some other markets differ in one or the other way, but often not both. For example, food is something we all need (so we can't "walk out the door"). But there is plenty of competition, and the information is not specialized, so customers can use the information to make informed choices about what food to buy and at what price. This drives the price down significantly.

Similarly, there are other markets where there is little competition, but do not involve essential goods. So the ability to "walk out the door" keeps the price in check.

Medicine, however, fails both tests, which means there is very little ability for anyone to resist whatever providers want to charge.

How does every other modern industrialized nation deal with this problem? The set price controls on providers. This is done in single payer countries, in mandate-subsidize-regulate countries (like Switzerland and the Netherlands), and even health savings accounts/catastrophic insurance countries (like Singapore). It is done everywhere. Except here. And then we wonder why our medical costs are unsustainably high.

[dkf]

6. So you think the problem is the providers, ie Doctors and hospitals?

Our doctors make too much money? I thought it wasn't such a big piece of the puzzle. What percent of our costs are doctors?

[BzaDem]

7. Yes, absolutely. Providers providers providers. Our doctors make too much money for medicine to

be sustainable (along with other providers such as hospitals/medical device manufacturers/drug companies/etc), and that is basically the entire puzzle. This is not to say that ALL doctors make too much money -- just that doctors and other providers in the aggregate make too much. (Of course, insurance companies are part of the problem, but even if we got rid of all of their profit tomorrow we would still have the vast majority of the problem left over.)

Here is one good graphic that explains it. It lists the myths, and then the truths. In summary (at least by their metric) about 20% of the problem is insurance profits/administrative costs, and most of the rest is providers. Both need to be fixed.

http://www.washingtonpost.com/blogs/ezra-klein/post/why-american-health-care-costs-so-much-in-one-very-long-graphic/2011/05/09/AFjSRVbG_blog.html

[murphyj87]

Sorry, duplicate - server error I think

[murphyj87]

8. Most Canadian GPs make...

Most Canadian physicians make $150,000 to $250,000 a year, in other words, about 30% of what an American physician would, however, Canadian physicians would rather provide health care to everyone for less in Canada than making 2.5 to 3 times more in the US but having an American insurance company bureaucrat telling them which patients they can see and what treatment their patients are allowed to have.

Canadian physicians are very happy making less, because they know that every resident of Canada can see a physician, and whatever they say their patients need, they get with no out of pocket cost.

The Hypocratic Oath means something to physicians in Canada, it means nothing to most physicians in the United States.

http://www.youtube.com/watch?v=3LzQFMvoUug

[BzaDem]

9. Indeed. Another factor in the US for why doctor pay is so high, is that the AMA artificially

constrains the number of accredited Med Schools (and therefore the number of potential doctors). Constraining supply in any market increases the price (in this case doctors' pay), and the price of Medical school.

[murphyj87]

11. The AMA was so scared of single payer....

The AMA was so scared of single payer that when Tommy Douglas introduced single payer in Saskatchewan in 1962, the AMA CROSSED THE BORDER and agitated and financially sponsored a physicians' strike in Saskatchewan. In a short time, the will of the people prevailed and the AMA withdrew from Saskatchewan and single payer became the law of the province. Tommy Douglas became first leader of the New Democratic Party in 1963 (when the old CCF became the NDP) and in 1966, single payer became national in Canada without a word of protest.

[customerserviceguy]

14. Don't Canadian physician

also have a lot less fear of being sued just because "shit happens"? The whole malpractice industry, including insurers, the court system, the tort attorneys, and the professional witnesses (and what it takes to prevent them from showing up with a subpoena on your doorstep) is surely not as prevalent in Canada as it is in the US.

[murphyj87]

22. When there are no out of pocket costs....

In Canada, there is no reason to sue for money you paid out of pocket, since in Canada you pay nothing out of pocket for health care. The main reason for lawsuits in the US is to recover money paid out of pocket, and those costs are huge in the United States and zero in Canada.

[customerserviceguy]

27. Nope, it's for a lot more than you pay the doctor for

There's that whole pain and suffering thing, for starters. And, hey, your lawyer's gotta get some money. Add in emotional distress, etc., and US lawsuits against doctors are about a whole lot more than what it's going to take to get you the proper care you need.

[Carolina]

17. Physician incomes SEEM

large but if you factor in the cost and years of a medical education (i.e. physician indebtedness) and malpractice insurance, you get some perspective.

Medical education --tuition alone for 4 years-- costs anywhere from a low of ~80,000 to high of >$200,000. This does not include books, housing, equipment, etc nor does it take into account any indebtedness from college! So in the end, most doctors complete their education with loan debt equivalent to the mortgage debt for a McMansion!

Then there is malpractice insurance which can easily run into $100,000+ and which is what drives defensive medicine. No doctor will ever make millions of dollars from one case while lawyers do everyday (and they bill for phone calls, emails, whatever -- billable hours)!

Specialists train for years (neurosurgeons 6 years after med school, cardiothoracic surgeons 6 years, general surgeons 5 years after med school, OB-GYNs 4 years after med school, etc.). No doctor controls all the factors encountered in cases/situations but in the legal world, a doctor is held accountable for the outcome and does not get a jury of his/her peers. Moreover, doctors frequently have to juggle diagnostic verbiage so that you can get the care you need (including specialist referrals) covered by insurance and they can get some reimbursement. To see what I'm talking about take a look at those confounded "explanation of benefits" statements you get after office visits, procedures, etc.

The doctors are not the ones profiting from this system nor are they the ones driving it. Insurance companies call the shots.

I will concede that there are greedy bastards everywhere, including medicine, but I work in an acdemic setting and I am awed by:
- the expertise and ethics of many of my colleagues who do good and well but don't bilk the system
- the idealistic medical students who study hard, for long hours, for years and who walk the talk of service in medical school and beyond

Carolina MD

Edited to add: I hate the AMA and never joined. It opposed Medicare and Medicaid, it supported Phil Gramm for POTUS in 1996 :puke: and it's reactive (rather than proactive for good), reactionary and frequently behind the times & on the wrong side!

[BzaDem]

21. Correct, but the solution there isn't to make physician pay unsustainable like it is now. The

solution is to lower medical school costs. If the AMA didn't artificially constrain the supply of medical schools (and therefore doctors), med school would be cheaper and the supply of doctors would be larger (resulting in lower pay for them). In reality, pay will still need to be further controlled by the government even after such a reform (as it is in every other modern industrialized nation), and medical school will need to be subsidized, but such a reform is a necessary first step.

I'm not claiming doctors are "greedy," anymore than anyone in any other profession is greedy. The truth is that in the aggregate, prices are set to optimize profit. Even if you or others voluntarily set your prices lower than you can to optimize profit (as some undoubtedly do), this does not happen in the aggregate, which is why doctors (and drug companies/medical device manufacturers/hospitals/etc) are paid in this country far more than in any other country.

Most markets have competition and non-necessity to counteract unchecked increasing prices, but medicine by and large doesn't have either. It is a different type of market than other markets and it needs to be treated as such (as it is in other nations). This is not the fault of doctors -- this is simply due to the lack of mechanisms in the medicine market to counteract unchecked price increases (described in post 5). It's microeconomics more than anything else. Any market with the properties of the market for medicine would have this problem.

The result of what I'm talking about would not result in doctors getting paid less than other countries -- in fact they would likely continue to be paid higher than other countries (just not the level they are right now). The alternative is quite simply national bankruptcy -- medical costs simply cannot keep increasing at three times the rate of inflation. That is mathematically impossible -- something has to give.

[murphyj87]

23. Do you realize?

Do you realize that all Canadian universities, including medical schools, have government subsidized tuition. In Canada, government subsidizes tuition by 75% (Students pay 25% of tuition costs)? The costs for medical school in Canada are only 25% of what they are in the US. Did you also realize that Canadian physicians are generally better trained than American physicians and that an American physician who wants to practice in Canada generally has to study for an extra year or more to upgrade himself in order to get a Canadian medical license?

[Carolina]

25. It doesn't surprise me

that Canadian medical education is subsidized. As for better training, perhaps. But we're better at treating gunshot wounds... we have so much practice. When I was a mediacl examiner, Canadian MDs came to the facility where I worked specifically to get more first hand experience in GSWs.

Speaks volumes doesn't it!

[murphyj87]

26. That sounds quite possible.....

That sounds quite possible. Unless they work at St. Michael's or Sunnybrook, which are the two major trauma centers in Toronto, or somewhere like that, they may not have that much experience with GSWs. The idea that Canadian physicians are better trained is not my opinion. It is documented in medical literature, Canadian medical literature, but medical literature nonetheless, and it is true that an American physician has to study in Canada for at least a year, maybe more, to qualify for a Canadian medical license..

http://player.vimeo.com/video/13707544

[murphyj87]

10. This is fairly old (1987), but I think the proportions might be close

Dollars per capita population per year

note: Canadian totals provide health care to all residents of Canada
The US numbers are based on 100% of the population while failing to adequately cover 38% of Americans (17% with no insurance, 21% with inadequate insurance)

Hospital Fees and Construction
Canada______659_______U.S.___802

Physicians’ Services
Canada______241_______U.S.___369

Health care system/Insurance Overhead
Canada______18________U.S.____95

Other Professionals
Canada______20________U.S._____84

Dentists’ Services
Canada______82_________U.S.___108

Research
Canada______13_________U.S.____36 (Note: Canada has more medical inventions and discoveries per capita than the U.S. for less per capita)

Other Health care
Canada______42_________U.S._____49

Other Institutions
Canada______156________U.S.____158

Public Health
Canada_______67________U.S._____58

Drugs and Medical Appliances
Canada______209_________U.S.____196

Total
Canada______1,507_______U.S.___1,955


In a recent survey on health care satisfaction, Americans WITH INSURANCE were found to be one third less likely than Canadians to have a regular medical doctor, 25% more Americans WITH INSURANCE were more likely to have unmet health care needs than Canadians, and Americans WITH INSURANCE were more than twice as likely to go without required medication than Canadians. These numbers increase substantially for the uninsured. According to the study, 13.2% more U.S. respondents WITH INSURANCE had unmet health care needs while 10.7% of Canadians had unmet medical needs. 7% of U.S. residents, and less than 1% of Canadians had unmet needs because of finances. whereas 3.5% of Canadians had unmet needs because of relatively long waiting times for purely elective surgery. U.S. respondents WITH INSURANCE cited wait times as less than 1% for reasons behind unmet needs. Americans without insurance, however, had no chance of treatment for years and had TO WAIT FOR DECADES until they qualified for Medicare, if they survived that long.

In 1990 Canadian hospitals provided more services at less cost than did acute care facilities in the United States. Canadians spent $2,720 less per discharge for 48 percent longer stays. If U.S. acute care facilities had achieved an average discharge cost comparable to that in Canada, the annual savings among hospitals in the United States would have totaled $84.3 billion. In a comparative study of volumes and costs in medium-size and teaching hospitals, it was found that U.S. hospitals had significantly greater costs for delivering services than Canadian acute care facilities did in almost every department.

[dkf]

16. Those are great stats.

Where did they come from? I will definitely bookmark.

[OHdem10]

3. with the downward spiral of wages, who does the private sector

can afford to buy their plans. As Hospidal supplies, treatment,
medications continue to increase, this increases insurance
premiums.

Health Care costs must be adjusted or they will fail.

[Hannah Bell]

12. actually, it's the growth of the unbridled power of the ruling class, as well as their wealth.

[murphyj87]

13. Estimates of U.S. Health Care Administrative Savings from Transition to Canadian Style Single Payer

Study

Sheils JF, Young GJ, Rubin RJ, “O Canada: Do We Expect Too Much from Its Health System?” Health Affairs, Vol. 11, No. 1, Spring 1992, pp. 8–20.

Administrative Cost Savings

89.1 billion

---------------------------------------------------------------

Study

GAO, Canadian Health Insurance: Estimating the Costs and Savings for the United States, Washington, D.C., GAO/HRD–92–93, April 1992.


Administrative Cost Savings

$127.1 billion

---------------------------------------------------------------

Woolhandler S, Himmelstein DU, "The Deteriorating Administrative Efficiency of the US Health Care System," New England Journal of Medicine, Vol. 324, No. 18, May 2, 1991, pp. 1253–1258.

Administrative Cost Savings

$209.3–$253.3 billion

-----------------------------------------------------------------

Study

Aaron HJ, "The Costs of Health Care Administration in the United States and Canada—Questionable Answers to a Questionable Question," New England Journal of Medicine, Vol. 349, No. 8, August 21, 2003, pp. 801–803.

Administrative Cost Savings

$213.3 billion

----------------------------------------------------------------

Study

Woolhander S, Campbell T, Himmelstein DU, "Costs of Health Care Administration in the United States and Canada," New England Journal of Medicine, Vol. 349, No. 8, August 21, 2003, pp. 768–775.


Administrative Cost Savings

$280.4 billion

[SoCalDem]

15. Every Boomer who "graduates" into Medicare is a LOST "customer"

That's what has insurance companies shitting themselves, and why they are desperately trying to FORCE us all to stay with them, by privatizing Medicare.

We have been their Golden Goose for DECADES.....they have been stealing all our eggs...... and they are now about to resort to eating the goose.

[Carolina]

19. Touche!

[Uncle Joe]

18. Kicked and recommended.

Thanks for the thread, dkf.

[defendandprotect]

20. MEDICARE FOR ALL --- Not back room deals with Big Pharma and private h/c industry!!

[mmonk]

24. Exactly.