Wall Street Opinion Journal Stephen Moore December 5, 2006
Solving the health-care “crisis” means not more government involvement but less.
About 10 years ago, I broke my leg playing basketball. After I came out of surgery, with a cast stretching from my ankle to the top of my leg, an orderly asked me whether I had ever used crutches before. I hadn’t, so he showed me what to do, swinging through them from one end of the room to the other. The whole lesson lasted about 90 seconds. When I got my hospital bill, I saw that I had been charged $150 for “gait training on crutches.” I did what all insured Americans do: I forwarded the bill to my insurance company. Why should I care? I wasn’t paying for it.
One of the problems with American health care, as David Gratzer notes in “The Cure,” is precisely a payment system that takes the patient out of the equation. In the early 1960s, the average American paid out of pocket one of every two dollars that he spent on health care; today the figure is one dollar in seven. The inevitable effect is hugely wasteful spending (and inflated hospital bills like mine). In fact, per-patient costs have gone up almost exactly in inverse proportion to the share of spending borne by the consumer.
Dr. Gratzer cites a remarkable Rand Corp. study that tracked health-care spending by 2,000 families over eight years. The families who got free health care spent 40% more than the families with cost-sharing arrangements. And yet the health outcomes for the two groups were the same. The lesson: Market-based health insurance systems, such as health savings accounts, cut out inefficiencies and lower costs without compromising quality.
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In essence, consumers are being asked to assume the prudent payer responsibility that private insurance is now abdicating. Insurance companies, and especially managed care organizations have long claimed that the value they bring to the health care market is their ability to realize efficency and savings where individual consumers could not. Now they are saying that this responsibility belongs to the consumer, which begs the question of what remaining value they provide that justifies their admistrative costs.
Insurance companies and HMOs were able to negotiate discounted rates on behalf of their members. They employed Medical Directors whose job it is to be informed on the latest therapies and treatments and identify wasteful or medically unnecessary services that the plans should not pay for. They employed utilization nurses to make sure providers were not billing for excessive services or hospitals were discharging their members in a timely fashion.
Indeed variations involving overuse, underuse and misuse of medical resources is well documented. The Dartmouth Atlas, a project undertaken by the Dartmouth Medical School has studied this for years. In some parts of the country or even some hospitals, patients are much more likely to get an Angioplasty or a Back surgery for example, than in others. One study found that different California Hospitals spent widely varying amounts of money to treat the same conditions with no discernable difference in outcome. The study found that eliminating “Medicare overcare” by improving hospital efficiency could have saved Medicare $1.7 billion over five years in Los Angeles alone.
Sometimes differences in potential profit influence a providers decision of which treatment to offer. The New York Times reports:
Profit and Questions on Prostate Cancer Therapy
A large insurance company has the resources to investigate the most cost-efficent and medically prudent therapies, the ability to direct its members to the correct course of treatment, and the financial leverage to obtain cooperation and price concessions from providers. The logic that somehow an individual working alone is somehow going to be able to do better escapes me.
Articles like this reflect an ignorance, laziness and dependency on false stereotypes that should appall readers looking for serious solutions.
According to US Agency for Healthcare Research and Quality (AHRQ):
The High Concentration of U.S. Health Care Expenditures
As the AHRQ report makes clear half the health care population uses very little services at all.
How advanced do your math skills need to be to understand that more restictive market-based policies directed at the 50% of the population that is responsible for only 3% of overall spending are not going to have much of an impact on health care spending overall? Clearly if we want to better control health care spending we have to better manage the care of the five percent of the population that accounts for almost 50% of overall spending.
No where in Mr. Moore’s article however, does he address the cost distribution of the US health care population, or suggest that we need to better manage the care of our most sick and expensive patients – the people who are driving most of the costs.
Instead he implies that the remedy is treat all health care consumers, the well and the sick, the young and the old, the insured and the uninsured, as if they were extravagant, free-spending, wastrels who need to made to feel financial pain every time they seek medical care. It is truly insulting. I never fail to be impressed by the mean-spirited misanthropy underlying most conservative ideological assumptions.
Note 2. Dean writes:
Dean, please. The last time you wrote words like this you were contradicted by rulings of the Canadian Supreme Court. Look, reciting the problems of the present system is not the same thing as making a case for nationalized health care, particularly when the available evidence shows that nationalizing care has lead to a decrease in quality care across the board. More creative thinking is needed beyond the Progressive panacea that placing systems like health care under government control and throwing more money at them will resolve the problems. If we follow the Progressive approach we will end up with an institutionalized health underclass just as we ended with an institutionalized poverty class — except that the class will be larger and broader — just like Canada as their Supreme Court pointed out in its ruling.
You really need to read “Our Culture, What’s Left of It.” The author is not bound to political correctness or moral platitudes which makes for great reading.
From the Journal of the American Medical Association:
In 2003, there were 48.8 million individuals (19.2%) living in families spending more than 10% of family income on health care, an increase of 11.7 million persons since 1996. Of these individuals, about 18.7 million (7.3%) were spending more than 20% of family income. In 2003, individuals with higher-than-average risk of incurring high total burdens included poor and low-income persons and those with nongroup coverage, aged 55 to 64 years, living in a non–metropolitan statistical area, in fair or poor health, having any type of limitation, or having a chronic medical condition. Applying our definition of underinsured to the insured population, an estimated 17.1 million persons younger than 65 years were underinsured in 2003, including 9.3 million persons with private employment-related insurance, 1.3 million persons with private nongroup policies, and 6.6 million persons with public coverage.
Changes in Financial Burdens for Health Care
National Estimates for the Population Younger Than 65 Years, 1996 to 2003
I’m sorry I don’t see how forcing elderly people with chronic illness living on fixed incomes, and already devoting 10-20% of their meager family income on health care, to pay even more is in anyway consistent with Christian ethics.
More and more we are confronted with evidence of how Christianity is tarnished and discredited by attempts by some to link it with a right-wing free-market fundamentalism that has more in common with Social Darwinism than Jesus Christ.
Reviewing Critical Condition: How Health Care in America Became Big Business–and Bad Medicine, for The New England Journal of Medicine, Alan K. Maynard writes:
I’m embarrased as a Christian to read comments like this, which are unfortunately, true. The need to free our Christian faith from the clutches of right-wing fundamentalists has never seemed more urgent.
I wrote an earlier response but it seems to have gotten lost.
Look, no one is arguing that the present system needs work. What conservatives don’t believe however, is that an indictment of the present system is a vindication for Progressive ideals. Progressives tend to launch attacks filled with moral invective and think that the louder their complaint, the more their ideals will appear self-evidently true to the great unwashed. The problem is that the European and Canadian models they tout as superior to the American system are saddled with even greater problems, not to mention the Progressive failures with welfare, education, and other social engineering schemes they have undertaken in the past.
It’s not that conservatives don’t care for the poor, it’s that they don’t really believe that Progressives do, no matter how high pitched their rhetoric. Progressives have failed at welfare and are failing at education, so why give them health care? Do we really want to copy Canada or England?
In fact, conservatives give more than liberals do. The left talks a good game, but they are tight fisted when it comes to helping others. From The Chronicle of Philanthropy: Charity’s Political Divide: Republicans give a bigger share of their incomes to charity, says a prominent economist.
The coming new debate:
Since the Democrats were elected, in part to do-away with old, to govern the House and to square off in the Senate things will be-a-changing to argue about.
Sen. D Oregon Mr. Ron Wyden is going to present a new and ‘total coverage’ health plan. He has been working on it for about six years. The Levin Group post that it will cost the federal government less than the current plans in use. Levin Group link is http://www.StandTallForAmerica.com
There seems to be several union leaders and CEOs to tout the plan along with the Chamber of Commerce.
It would seem that what has gone before is now going to be dated, so start the discussions over.
Sincerely,
J R Dittbrenner
Broken Leg Addendem:
In the early seventies I broke my leg playing Soccer in Colorado. I was casted given crutches and I went on my way. I was insured by Pharmacia-Sweden- and there was no charge for crutch training. I broke my leg while living in Germany and had a plate installed-brake was in the same place-and a National Service inductee-he didn’t want military service-gave me three periods of training with elbow crutches. In Germany you go through a government regulated public health insurance company; there was no charge for the training.
There is a difference between patient centered care and profit motive care.
Sincerely,
J R Dittbrenner
“There seems to be several union leaders and CEOs to tout the plan along with the Chamber of Commerce.”
Good point about the Chamber. The Big Business interests want to get this expense off of their books and onto their workers in the form of taxes because as Mr. Dittbrenner says:
“I was insured by Pharmacia-Sweden- and there was no charge for crutch training.”
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“n Germany you go through a government regulated public health insurance company; there was no charge for the training.”
Like so many others (a majority I believe) Mr. Dittbrenner confuses the issues. Because “there was no charge” in these two cases, it apparently was “free”, in the sense that those who trained him, and the equipment they used, was “free”. Of course, this is not right in that the cost was just put somewhere else (perhaps higher taxes, perhaps in higher premiums – it is unclear if these were government ran programs). Simply shifting costs from one person to another does not make for a better system by any other measures, it just means you are shifting costs. What the liberals propose is shifting the cost to (relatively) efficient private sector to (relatively) inefficient public sector is a good, because…well, they usually talk (with much moral indignation) of those without health insurance, etc. What we all know is that government will be worse, not better, because it will raise the cost of health care, not limit it, in the form of higher taxes.
Big Business does not care either way, because it is a middle income/lower income problem (the majority of their workers), and not a higher income problem (most of the management, some of the stock holders). Now, if we can just get all the middle income stock owners to realize that it is not in their interest to socialize medicine we might get somewhere…
J. R. Dittbrenner writes: “It would seem that what has gone before is now going to be dated, so start the discussions over.”
Yes, Wyden’s plan is the only real option on the table at this point. It addresses cost reduction, begins separating health insurance from employment while still retaining private choice, increases competition between health plans, promotes continuity of care by allowing people to keep the same health plan across different employers, allows Medicaid to function within the same model rather than as a separate program, etc., etc. It goes way beyond the usual debate over liberal socialized medicine, and conservative rearrangement of deck chairs on the Titanic. I’m sure it is not a perfect plan, but if people are smart, they’ll try to find a way to make this work.
The most realistic proposals from Republicans have come from state Governors. Mitt Romney passed legislation in Massachusetts calling for mandatory employer health coverage with a mandatory employee contribution. (The mandatory employee contribution addresses the conservative emphasis on personal responsibility) Those employers who chose not to provide health insurance would be required to pay into a a state insurance fund. At least two other GOP Governors, Mitch Daniels in Indiana, and Schwarzenegger in California, are likely to introduce similar legislation.
Daniels and Schwarzenegger are being proactive. As more Democrats, like Wyden, introduce universal health care legislation Republicans will be forced to counter with their own proposals. This is a hopeful development and indication that a serious debate is getting started and we are finally starting to deal with a looming national problem.
PS: To Christopher, Nu. 8
Brokenlegs: The Colorado incident was covered by Pharmcia Upjohn employee coverage; PU is a private company. I did receive the accounting bill.
German incident: We pay out insurance preimiums for coverage and receive accounting bills. The hospital help was doing his national service-Germans have a draft-as conscientious objecter to the military so he was in service work and military paid.
J R Dittbrenner
Instead of costing more money, the Wyden Plan will save $4.8 billion in the first year and $1.48 trillion over the next decade. That is the conclusion of The Lewin Group, a health care actuarial consulting firm.
Lewin’s actuaries crunched the numbers and found:
http://www.thehealthcareblog.com/the_health_care_blog/2006/12/policy_wydens_h.html
Assuming the assumptions in the analysis are correct, we can dispense with the notion that universal health care coverage automatically means massive new taxes. the proposal builds on the existing private sector system but contains a lot of incentives to make insurance companies and providers more price competitive
Even Conservatives get the health care blues. John Derbyshire of the National Review:
http://corner.nationalreview.com/post/?q=ZTI4ODE1NGIwNmNkMmI4OWJkNDhkOTM5NDhkNWRhNjg=
Health Care Financing [John Derbyshire]
http://corner.nationalreview.com/post/?q=ZGI1NWFmZmEyMTk0ZDBjMWM1M2Q1YWFlOWNmMWU3Yjk=