Health care poll

[A18]

I have two problems with the above.  The first is that most health care procedures and treatments cannot be afforded by individual consumers, particularly in the kind of downturn we are experiencing now.

What you're overlooking is that the extraordinarily high prices of medical services are a direct consequence of third-party payment. Consumers have no incentive to do a meaningful cost-benefit analysis, as the cost to them is negligible. And of course, we all know what inelastic demand does to producers.

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Well, naturally risk is going to factor into insurance premiums—in health care, as with all other forms of insurance. But why should this be objectionable? Do you only object in the case of health care, or would you extend your "equal access" principle to (say) car insurance as well?

[anvi]

I have two problems with the above.  The first is that most health care procedures and treatments cannot be afforded by individual consumers, particularly in the kind of downturn we are experiencing now.

What you're overlooking is that the extraordinarily high prices of medical services are a direct consequence of third-party payment. Consumers have no incentive to do a meaningful cost-benefit analysis, as the cost to them is negligible. And of course, we all know what inelastic demand does to producers.

I don't overlook this.  The CATO Institute frequently uses this argument about insurance providers. 

There are a number of empirical studies that address the causes of increased health care spending in the U.S.  Changes in third party payment contribute, according to these studies, about 10-13% of the rise of the nation's health care expenditures.  But there are other factors that account for more of a share of the increase in expenditures, such as increases in administrative costs (13%), increases in personal income (11-18%) and increasing prices in the health care sector (11-22%).  But the most significant reason by far for increases in health care expenditures in the U.S. in recent decades is the residual cost of new technologies developed for health-care procedures, which according to three separate studies in the last two decades ranges between 39-65% of increases in costs.  While it's true that increased demand may have indirectly contributed to the development of such new technologies, they are also  the result of many other factors.  (See the table on page 6 of the CBO report delivered to the Congress by Peter Orzog in January, 2008 at http://www.cbo.gov/ftpdocs/89xx/doc8948/01-31-HealthTestimony.pdf 

I do think that much more information should be disseminated to health care consumers about what sorts of treatment are effective and for what costs in order to change incentives.  But, given the fact that many other factors play into the increase of health care expenditures in the U.S. and at markedly higher percentages of cost, drastically reducing third-party cost-sharing mechanisms is not going to make quality health care much more affordable for people, especially as new technologies will effect the an ever-increasing share of treatments of disease in the future.

[Fmr. Pres. Duke]

I'm firmly in the deregulation camp. Allow insurance companies to be able to compete across state lines for customers. It is unfair that one company has a monopoly on one market in one state while another has a grasp on another. If an individual can buy the cheaper plan in a different state, they should be allowed to do so. A person is not worth more if they live in Massachusetts as opposed to a person in Oklahoma. That way it brings down costs for everyone because insurance companies cannot price gauge as much.

Also, we need heavy tort reform because these lawsuits are a big reason why insurance is so high. Most doctors have to purchase a huge amount of protection against patients suing them.

My second choice would be to leave it up the states to figure out, but after seeing Massachusetts problems, I am sort of wary of that.

Out of the choices listed, I'd go with option 1. I have healthcare. All my friends have healthcare. I don't see a crisis, nor do I see a reason for us to overhaul the entire system and give the government control of it just because 40 million people, half of whom choose to be, are uninsured. The funniest part is that liberals believe that this current proposal will solve all our problems and cut costs and the deficit! When has the government ever run anything efficiently?

[Ronnie]

It's incredibly sad that the last option has the most votes.

[A18]

The faith that some (very intelligent) people have in "empirical studies" never ceases to amaze and frustrate me. Truth be told, I've yet to come across a single economic-policy study—by any institution or group, reaching any conclusion whatsoever—whose methodology inspired confidence. And while no attempt is made to explain why I should put any stock in the percentages you cite, the answer certainly isn't self-evident.

In any case, those percentages are inadequate even on their own terms. They address, in the first place, the growth in real per-capita expenditures on health care, rather than how much lower prices would be if third-party payment were not the norm. The relationship between these two things is obvious, but it's also indirect and attenuated. (New technology, for example, may well drive up the amount spent, but in general it should not drive up the prices of pre-existing treatments. By way of analogy, the introduction of plasma TVs may have persuaded consumers to part with more of their dollars, but the "price of a TV" had risen only in a trivial sense.) Worse still, the data speaks to "changes in third-party payment" (the meaning of which is ambiguous), rather than to third-party payment itself.

Perhaps the best way of approaching this is with a small thought experiment. Suppose we had "shoe insurance," which covered the cost of buying a new pair of shoes. Wouldn't it be naive not to expect prices to rise; and not merely a little, but a great deal? How about "food insurance," "clothing insurance," or "coffeehouse insurance"? What separates health care from these markets?

[anvi]

In any case, those percentages are inadequate even on their own terms. They address, in the first place, the growth in real per-capita expenditures on health care, rather than how much lower prices would be if third-party payment were not the norm. The relationship between these two things is obvious, but it's also indirect and attenuated. (New technology, for example, may well drive up the amount spent, but in general it should not drive up the prices of pre-existing treatments....

Perhaps the best way of approaching this is with a small thought experiment. Suppose we had "shoe insurance," which covered the cost of buying a new pair of shoes. Wouldn't it be naive not to expect prices to rise; and not merely a little, but a great deal? How about "food insurance," "clothing insurance," or "coffeehouse insurance"? What separates health care from these markets?

On the first point, new medical technology not only drives up the total expenditures, but it drives up the cost of individual procedures.  Brain scans, heart operations, and cancer screening along with many other medical procedures cost between two and four times more in the U.S than they do in other countries, and the cost differential is not merely accounted for by the differences in economies of scale, but also because the equipment used for these procedures in the U.S. costs more.  If the product costs more to make, the seller is going to charge more for it.  Costs of individual procedures are often the very criteria that determine whether an insurance company will cover a given treatment or not. Now, I do agree that prices for procedures would fall if there were no third-party payment, as demand and utilization for many procedures would decline.  But, given all the other costs that go into  offering medical services in the U.S. (or anywhere else, for that matter), I don't think we are warranted in assuming that they would fall enough to be affordable to most people and their families, particularly since you can't pick which disease you are going to get at what time, nor can you choose in most cases what the treatment will cost, especially with a chronic illness, in the same way that one can pick a price range for a house purchase and budget for it.

Now, as to the "thought experiment," I don't think it provides a close enough analogy to be of any use in an argument about health care.  As I just pointed out, someone who bought clothing insurance or food insurance or coffeehouse insurance would presumably be someone who planned, of their own accord, to buy these products, thus creating the demand that would be the most significant factor under such circumstances in the rise of prices for clothes, food and coffee.  While certain lifestyle choices may indeed raise the risk that a person may get diseases of certain kinds (and preventive care needs much more attention in this country), one does not presumably plan to have a stroke, kidney failure or cervical cancer, one does not even know what illness might come over oneself or one's children, and so one does not raise the demand for the treatment of such ailments intentionally.  Furthermore, the demand for medical procedures is often not the choice of the patient, but of the patient's doctor.  Now, again, I don't deny that there is over-utilization caused by the costly fashion in which third-party payers make certain procedures available to consumers, but such demand is not really analogous to the way people create demand for other products, and so the role in which medical insurance plays in rising medical costs would not, in a very large number of if not most cases, parallel how buying the above hypothetical products would cause their prices to go up.

Anyway, despite our disagreement about the needed remedy, it seems to me that we agree about something fundamental, namely that there is not enough choice available to the consumer of health care services in the environment of the current insurance framework.  We might articulate the most important reasons for that lack of choice in different terms, but that there is a woeful lack of informed consumer choice for health care now sounds to me like something we agree on.

[JSojourner]

Single payer.  I do, however, support some (though not all) tort reform legislation.

[Torie]

I favor a mix of options 2 and 3, plus making securing heath insurance mandatory, with appropriate means tested subsidies. Having no options for health care except using a government run system filled with uncaring and hostile bureaucrats who think even more than the pathetic current crew that my time is worthless, and are annoyed by my series of penetrating questions and commentary, as well as  their competence on occasion, would absolute terrify me.

[Stampever]

Public option seems like the only realistic possibility...

I fear your reality.

[Marokai Backbeat]

Public option seems like the only realistic possibility...

I fear your reality.

Fear? Seriously? You fear an optional public health insurance program?

[Stampever]

Public option seems like the only realistic possibility...

I fear your reality.

Fear? Seriously? You fear an optional public health insurance program?

Do you take everything so litterally?