Most of these costs are hidden and yes, it would be politically difficult to move from a system in which these costs are hidden to a system in which these costs are manifest. Both conservatives and liberals of good faith might well agree that transparency in costs would be a good start to cost containment. But we won’t move in that direction because we don’t have the kind of partisan cooperation around rationalizing health care that would make a difficult transition like that politically possible.

But I know if you gave me 17.6% of GDP I could wring out a huge amount of waste, cover everyone and provide better healthcare overall than the system we have now by moving to a single payer system.

And yes, Neil I recognize increasing HSAs as a good idea in support of cost containment.

My favorite ideas are almost certainly too radically libertarian to be politically feasible, but there are some things that I suspect would be very popular with the public (not necessarily with the political class) and do a great deal of good.

MOM’s suggestions that I quoted are pretty close. The simplest thing would be to expand the Health Savings Account program to allow greater yearly tax-advantaged individual contributions to the HSA account. (Right now there’s no way to cover the yearly deductible with your contributions.) On top of that, convert Medicare and Medicaid into HSA high-deductible plans, but provide a subsidized quarterly contribution to the HSA accounts from the federal general revenues. Medicaid can probably be expanded somewhat, and converted into a simple subsidy paid into individual HSA accounts. Eliminate the Medicare payroll tax (which is a drag on employment) and fund it out of the income tax, which will have to be raised on the middle class.

The key with the HSA is that the individual must be in comelete control of spending decisions up to the deductible of their insurance policy (which might be $5K to $10K per individual).

In one fell swoop, this provides the individual incentives to improve lifestyle. It provides individuals the incentive to control chronic health care spending. It provides individuals the power and responsibility to live as they choose, while retaining a safety net. Most importantly, that safety net does NOT interfere with their personal power and responsibility.

The right gets increased freedom and responsibility, the left gets an increased safety net and higher taxes. Everybody gets improved health care outcomes. Sounds like a winner.

I didn’t mean to be confusing, I will try to clarify that statement.

Copithorne conflated two statistics–health care spending per capita and overall health outcomes, then compared the U.S. to some European countries with more centrally managed health care systems. As Maxed Out Mama and Naomi have highlighted, the difference between the way we in the U.S. pay for our health care is probably the LEAST of the differences between the U.S., UK, Germany, and Canada, not to mention France.

In studies that control for lifestyle differences, the U.S. ranks equal to or better than most European countries.

In studies of survival rates in cases of critical care (the “really get sick” situation) such as some types of cancer, U.S. outcomes are head and shoulders above other countries with more communal health care systems. Unfortunately, these are the sorts of capital-intensive interventions that are likely to be limited by any health care spending bureaucracy.

In other words, it is not self-evident that a European-style health care system would actually change anything for the better when applied to the U.S.. I’ve seen no evidence that putting a bureaucracy in charge of some portion of our health-care decisions will improve the lifestyle choices that affect health, and there’s good reason to believe that the technological resources which make our critical-care outcomes so impressive will suffer.

As far as I can tell, from a pragmatic point of view the health care reform currently on offer will not improve the things we do badly, and will degrade the things we do well. And it will bankrupt the country in the process. How is this an improvement?

AJA

The last point you just made encourages me to remind you that “If you take out accidental deaths due to car accidents, and you take out gun deaths — because we like our guns in the United States and there are a lot more gun deaths in the United States — you take out those two things, you adjust those, and we actually better in terms of survival rates.” ENSIGN – September 29, 2009 Senate Finance Committee markup of health care legislation….

However, may I humbly beg an answer to my question as to whether you would be wiling to accept a Medicare payroll tax of between 17.5% to 20% for the sake of establishing a true single payer system? I realize there would be caveats in your mind either way – you’d want to know more about the proposal before signing on, as would I.

But I would really like to know whether that is acceptable at all to you. So far my surveys on this point have not provided any support for the idea that the US population is willing to accept a public health care system. I asked on DU a number of times, and most people rejected it.

No, I am not writing out of prejudice. The most significant waves of recent immigration to the US have come from countries that vastly underspend on medical care (compared to the US). That means that the cohorts coming to the US have much higher rates of preventable disease and infectious disease than individuals born in the US. For example, one recent survey of a food processing plant in the SE turned up test results showing that over 70% of the workers had evidence of TB infection.

We have imported and or allowed waves of immigrants with preventable and treatable diseases, many of whom are working in very low-wage jobs without any medical benefits. The emergency room stopgap does help them if they need emergency treatment, but it does not deliver anything in the form of what they really need, which is to be “caught up” with immunizations and treatments for parasites and other chronic diseases. Many of those are infectious.

The public health system in the US developed during the last wave of such immigration, and it needs to be shored up.

If one looked at the problem purely from the aspect of bringing these people up to speed healthwise, the obvious answer would be Medicare/Medicaid for all funded by a payroll tax. This would both reduce some immigration (casual which would become non-economic) and allocate expenses better to the employers, but it would also provide for far more efficient and effective treatment for these people.

Third world diseases like dengue and TB are making a comeback in the US in areas with high rates of immigration from poor countries. The fact that many of these people don’t even have legal status makes the situation far worse.

I am surely not going to criticize either Jay or SW for not discussing the public health component of our overall health care system, but Congress should be dealing with this issue. Saying that we won’t cover illegals is ridiculous. If you want efficient health care managed for lowest costs, you have to deal with infectious disease FIRST. And if the largest vector of that disease in your population comes immigrants with a high proportion of illegality, you must design your health care system to address their needs.

The reason why the proportion of immigrants from poor countries to a developed society matters is that health care spending isn’t a zero sum game. People born in this country have very low rates of parasites and many other preventable diseases because of all the investments we have made in the past in our health care system. It’s not an accident, and it is an outcome of spending money efficiently in the past. To let our current overall health status decline is going to cost us a great deal more money in the future.

See, for example the CDC on TB:
http://www.cdc.gov/Features/dsworldtbday/
and the real contribution from immigration:
http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5711a2.htm

Because we have gaps in primary care, we spend more in public health. This is indeed a hidden cost – we have ramped up spending in the last few decades, but we are not making much progress or are sliding backwards in states with high immigration. In the process we have created prison epidemics and epidemics among poorer people.

TB rates started to rise in the US coincident from the latest surge in immigration in the 1980s, and we have ramped up spending very significantly since, but not nearly enough. There is probably no feasible way to control such epidemics except to have a good solid primary care system in place for immigrants.

My mouth dropped open when I read the stuff about illegals not being eligible. You can’t have a health care system that discriminates among the population like that if it results in a surge of infectious disease. Infections in populations do not discriminate, therefore treatment had better not!!

The extraordinarily disparate impact of H1N1 in populations with high rates of TB has just been highlighted. Even mild/non-infectious cases can abruptly shift to fulminating when a carrier comes down with a hefty case of flu. Not only does this make the flu far more dangerous and expensive to treat, it creates a public health danger. No one wants to sit on a subway or a bus next to someone coughing and sneezing from the flu, but when that sufferer is also expelling mycobacteria, your future is considerably more hazardous.

TB is just one example, (consider as another example hepatitis):
http://www.springerlink.com/content/r41708534450439n/
but it does serve to highlight several issues of this debate in society in general. First, health care spending is not zero sum. There are certain levels of spending which will cut overall medical costs. This is not debatable. Nor is it debatable that the US has segments with highly treatable conditions who are underserved.

I agree with Jay that the distinction between methods of allocating money for care versus providing levels of care is important. This entire debate is dysfunctional because it is treating risks and outcomes as unitary (per person) whereas in epidemiology, population risks are anything but unitary.

To control population risks, access to primary care and concentration on points of risk is essential. Therefore an Obamacare plan is doomed to fail. Without shifting more resources into primary care, and without ensuring that payment rates for primary care are robust enough to ensure that people can really see a doctor and get adequate screenings for their risks, the whole thing becomes an exercise in futility which may well raise health care costs in total.

The MA plan has sharply reduced primary care access, and worst yet, it has reduced it the most for the population most at risk. Not a good strategy for the US.

Copithorne, I do not think you understand the impressive achievements of the US system, regardless of all that needs to be fixed. Germany has a much lower rate of non-German borne residents than the US, and a much much lower number of recent immigrants. Yet the German TB rate is higher than the US rate. France has a very good health care system, yet it has a much, much higher TB rate than the US. It also has a high immigrant population proportion, although not as high as the US.

The US actually ranks very high in health statistics in the developed world, especially when you take into account over 12% of our population having been born outside the US.
http://www.carp.ca/community/index-chapters.cfm?documentid=3108&type=full&cityid=183

Trying to compare health systems between countries without integrating immigration data and the source of that data is ridiculous. It also leads to misallocation of health care spending.

However, I’m perplexed by Neil’s comment in response to Copithorne: ” You cite as ‘fact’ that the U.S. has poorer health outcomes than other countries, but there is no evidence that socialized medicine has anything to do with it. On most measures, if you really get sick it’s best to do so in the U.S. Overall outcomes are much more influenced by culture than by technology.”

First, “really get sick” and “overall outcomes” are not defined here, so their apparent contrast and juxtaposition is unclear in effect. Generally speaking, overall outcomes should be the summum bonum of healthcare, and the bottom line in evaluation, even if, specifically, the best bypass surgery might be available somewhere else. I don’t know what long-term studies have been done specifically focusing on variant aspects of care between the U.S. and universal systems demonstrating a clinically supportable cause and effect relationship between those variant aspects and outcomes, but the U.S. has a long cultural, political, business, and philosophical tradition of pragmatism: nose around at length among the Organization for Economic Co-Operation and Development statistical reports (Health Consumer Powerhouse is a good site for only EU comparisons) where varied comparisons are made among the members, and note the glaring deficiencies of the U.S. in life expectancy, infant mortality, obesity (cultural, indeed – an aspect of a health system). The U.S. not only ranks low, but often below the mean, above, sometimes only nations like Russia and China or former Eastern Bloc countries such as the Czech Republic or former Third World countries such as Brazil.

Recent immigrants, on average, have greater health problems than natural-born U.S. citizens because of a materially-poor childhood. It’s also possible that there is some interaction between the culture they bring with them and American culture that leads to poorer-than-average health. Universal healthcare will not change these facts. To say so is not immigrant-bashing, nor is it complaining, it’s just pointing out that you’re trying to use a flyswatter to screw in a lightbulb–the two issues don’t have much to do with each other.

You cite as “fact” that the U.S. has poorer health outcomes than other countries, but there is no evidence that socialized medicine has anything to do with it. On most measures, if you really get sick it’s best to do so in the U.S. Overall outcomes are much more influenced by culture than by technology.

The “skull-numbing complexity” of U.S. health insurance is entirely a result of the tax advantages and government regulations that accrue to health insurance. We aren’t in charge of our own health care because we aren’t allowed to take the tax write-off unless it first goes through employer-based insurance. That, and Medicare reimbursement rates that are too low, are the roots of the problems in our health care system.

You probably are not aware of this, but Maxed Out Mama has, in fact, proposed some solutions that would probably improve health care delivery in the U.S. a great deal. She did so, actually, in the comments to SW’s initial healthcare post:

http://shrinkwrapped.blogs.com/blog/2009/10/the-open-mind-ii-the-dangers-of-obamacare.html#comments

“If you really want to know, the most economically efficient system that would produce both the best medical delivery system and the lowest medical costs a decade from now is to raise Medicare payroll tax, increase copayments and premiums, especially for non-life-threatening conditions, sharply increase Medicare and Medicaid reimbursement schedules and peg them to private insurance payments in a region, institute real market reforms for private insurance, including a huge expansion of the HSA system, and split the price negotiating feature from private insurance coverage.

That is the only reform that would produce reform and control costs without producing a depression.”

She’s not just complaining.

http://economix.blogs.nytimes.com/2009/07/08/us-health-spending-breaks-from-the-pack/

I don’t understand why having a lot of “recent immigrants” (as if they were the only poor) could have any bearing on that. Perhaps if you are comforted by having your costs hidden then there is some benefit there for you.

There is going to be a good chunk of people, such as Shrinkwrapped, who perceive the current system as working. They do not see the need to change it, do not know how to change it and have no constructive ideas for how to change it. The only contribution they have will be to complain about the negative consequences of any effort to change.

The organization of health care in America is profoundly irrational and wasteful. The skull numbing complexity of competitive private insurance creates staggering non productive administrative costs. There is no country on earth which would choose the American health care system. The current course cannot be sustained.

There are those who will want to take their best shot at fixing these problems and those who are more comfortable in the role of complaining. It is not easy to move someone from an orientation of complaining to an orientation of problem solving but there is still time if anyone is inspired to move themselves.

First, most insurance is not gambling. It is a means of saving which allows individuals to save less by spreading risks across a group than those individuals would have to save if they had to save enough to deal with just their own likely risks. As such, it is economically efficient. When insurance programs become a method of providing access to care that most of the insured can pay for without insurance, insurance becomes economically inefficient and wasteful. Because insurance is not at all a gamble but an actuarially determined savings program, it serves a function. Currently we do not save (provide adequate resources) for any of our federal public programs.

You state that insurance can be used as a method of managing risk for those who are wealthy in poor societies. Actually, that is not true. When you are wealthy in a poor society without any mechanism of funding medical care for the poorer majority, the impact of the price-demand function is such that YOU WILL HAVE ACCESS TO WHATEVER MEDICAL CARE EXISTS REGARDLESS. The problem often is that you could pay for care which does not exist, which is why the Saudis keep showing up at hospitals in Europe and the Americas. There is never medical insurance in societies with a small middle class. The wealthy do not need it, the poor cannot afford it. The only group that benefits from health insurance (without welfare) is a middle class which can save for medical care but cannot save enough for all the medical care they might need individually without spreading the risk across a group.

Widespread insurance programs and/or subsidization of high-end medical care for the poor do work for the wealthy, but only because they increase the amount and variety of services available. But widespread insurance or even an ethic requiring provision of services will always increase medical costs for persons with significantly higher incomes, because no matter the method of paying for the care, a significant amount of the cost is shifted to those who are able to pay – whether it is taxation, private insurance combined with welfare, a private/public mix or an ethic requiring the provision of free care by professionals and institutions.

Further, because it is such a high burden, the majority of the cost is shifted to the middle class. The more uniform the standard of care, the more burden is shifted to the middle class, and the higher the overall spending level per capita. You appear not to grasp this, but in fact the standard of care provided to poorer people in the US is on average much higher than in countries with “universal” care. The young, the injured and the relatively healthy receive generally excellent services under these systems, but the old, disabled and the chronically ill are extremely shortchanged in comparison to the US.

That is because there is no such thing as universal care. The wealthy can always exit. The middle class can often exit, and usually do if their circumstances become pressing enough. The poorer people live with whatever is generally available. The standard of “universal” care in each society evolves to match the resources devoted, and there is a breaking point at which the middle class simply cannot afford to pay for care for everyone.

There are a number of other awful economic errors in your post, but just the two above show that insurance and medical care systems are not a zero-sum game. There is some X range of funding which will generate more medical resources and cheaper overall access because the cost per service is related to the number of accesses/fixed cost. There is another X level of funding which will generate superb medical resources but a growing pressure on the middle class. That is where we now are, and the reason is the massive cost-shifting onto the private sector from Medicare/Medicaid.

German insurance rates are currently set at 15.75% of payroll (cut as a stimulus measure on a temporary basis to 14.75% of payroll), which is not very different from what we would require to institute Medicare across the board. However, to do that, individuals now on Medicare would have to accept a lesser standard of care, and so would people on Medicaid, and so would people now on private insurance.. Because of the disproportionate payments coming from the 50% of society covered by private insurance, our standard of care has evolved to meet their high demands as well as the high demands of those getting a free ride (Medicare and Medicaid). When you have 40% of the population paying 80% of the costs for the entire population, a very high incentive exists for the rest of the population to demand good medical care.

But German medical standards include not treating a number of conditions we treat, especially terminal or severe chronic disease. Just as public plans in say, Oregon, have totally different standards of care (and much lower) than those pertaining to most privately insured persons, or NHS standards of care.

You also seem to have completely missed the point of SW’s writings on this topic. The US has created a bizarre mixture in which the bulk of medical care provided is paid for by others, PRECISELY BECAUSE OUR GOVERNMENT MEDICAL INSURANCE PROGRAMS DO NOT INCLUDE ADEQUATE FUNDING.

So if we switch to a public single-payer option (which is not used by the majority of western countries which have universal care – most use insurance funds) under our current system, we won’t have access to care at all. That is his concern. If we jack up taxation rates to fund it, the general level of care will absolutely have to drop. The way this will be accomplished will be by cutting care provided to the most vulnerable, which is not exactly a progressive option.

Your point about the taxation of high-end plans is good and economically sound. Both employers and employees already have a strong incentive to cut costs, and the steady shifting in the private sector towards higher deductibles, etc, is proof of it. There is nothing such a tax can effect except injustice upon smaller groups with disproportionate risks and thus higher premiums.

As to why Obamacare is all about insurance and avoids the issue of public insurance like the plague, it’s because the average college professor would pay very much more for his medical insurance under such a system than he or she does now. The upper middle class now votes disproportionately Dem, and it is a demographic group the Dem leadership does not want to lose. Under such a plan, a person earning 100K would be paying from 17.5K to 20K a year for his or her coverage, whereas that Walmart worker would be paying at most 4K.

So since you favor single payer, are you willing to pay 17.5% to 20% of your salary for it? If your answer is no, you are not really in favor of single payer. The rich cannot pay for it, the companies cannot pay for it. The only group that has the money to pay for it is the upper middle class. Mind you, on top of that payroll tax you would also be covering 20% copays.

The reason it would cost more than in Germany or France is that we have such a high percentage of recent immigrants working low-pay jobs.

1) Affordable

2) High Quality

3) Universal

That formulation is the whole zero sum pie right there.”

I must respectfully disagree. Your retort is clever, but certainly we can agree that it would be possible to have a health care market that is affordable and high-quality, with ever-increasing technology leading to coninually-decreasing cost, if we give up on equal-access “Universal” health care?

Let’s leave aside for the moment the question of whether equality is an overriding good in its own right. Can we at least agree that a (relatively) free market for health care would lead to increasing availability for the poorest, much as a (relatively) free market in food production has led to the first society in history where the poor are obese?

When you argue for universality rather than letting market forces increase the supply, you are implicitly saying that it is better that we all make do with less, rather than let anyone have more. People will die from this. Almost certainly more people than will be saved by universality.

Wouldn’t it be better to help the hindmost, rather than tear down the foremost?

It becomes clear (to me) with your riposte here what one of these differences is: You believe that every individual is absolutely entitled to full health care – that should something degrade the health of a citizen, every feasible option must be pursued to restore it.

ShrinkWrapped, near as I can tell, would not argue that everyone should be allowed health care – but he stops short at making others pay. His argument seems to be that while everyone should be able to exhaust every option available to them to restore their health, it is a step too far to demand that others pay to make these options available to them.

This is but an example for the current topic: My larger point is that the two of you have differences of belief far more fundamental than what is being discussed here. Until and unless you not only identify, but resolve these differences, you will make no progress in discussing these more specific topics. All you are doing is putting ice packs on a feverish forehead, without attacking the infection.

First, why “Obamacare?” Well, everything’s gotta have a name, otherwise conversations about it take way too long as we specify “that bill proposed by Senator Baucus, with this set of amendments and without that set of amendments, in the version it had on such and such a date…” Major ideas typically get attached to them the name of one of their most famous proponents, even if that person was not the most important in their inception. (Think of the Monroe Doctrine– surely President Monroe was not the first nor the most enthusiastic supporter of the idea that Europe should leave off meddling in the Western Hemisphere, but his name got attached to it anyway since he was president at the time and it was his administration that pushed it.) It would properly be “Obamacare” if President Obama had written it and presented it to Congress for debate; but surely it’s not out of the realm of imagination that his name would get attached to a bill that he promoted even before it was written, much less one that has not been fully and transparently available to the American public so that it can be given the name of those actually proposing it.

Second, I really do feel for the plight of the uninsured, having spent some time in that category myself. But I think you are off-base when you present health care options as a choice between the using the emergency room as a free clinic and dying of a hematoma. Even the uninsured can see a doctor for preventative care anytime they want, and you cannot be turned away from an emergency room. Paying for it, that’s another story, but the care itself is not unavailable. The ER will let you go without paying, you know. If you can’t pay, there are payment plans, charity care, and you can even collect donations from your family and friends. If you have none of those, there is Medicaid. The application process isn’t that bad (I’ve done it), and once you’re in, you can find a doctor and get the care you need.

Since we already have these things in place, here’s what I think would make a better health care plan: making the options available to poorer people cheaper. Cash prices for doctors are sky-high because doctors have to compensate for low reimbursements by Medicaid, Medicare, and insurance. Reducing these payments further, which is one way the current plans are supposed to reduce costs, only makes the problem worse for those who can’t afford health insurance, and only increases costs for those who can afford it (or for the government who’s paying for it). Health insurance costs can be reduced further by going over to health savings accounts (possibly combined with catastrophic health care plans which are more like actual insurance).

As you describe, insurance is indeed like gambling, and as in gambling the house always wins over the long term. However, the goal of insurance is the same as the goal of gambling: to bring more players to the table. People will participate more in their health care when they feel that the costs are controllable. Hopefully we can all agree that bringing more players to the health care table is a good thing.