oldfart
Older than dirt
First I take great pleasure in having intelligent discussions like this one. We may not always agree, but we can always try to find common ground and common values to solve problems. Thanks for that opportunity.
Health care is one of a strange class of products or services; things people buy not because they want them but because they perceive a need for them. I don't think people choose more expensive treatments unless they believe the the more expensive treatment will be more beneficial. This is what I was trying to get at with my triple bypass comment. I agree with you about pricing and markets. Again, the health care market is a peculiar market. A few years ago I had an angiogram and anticipated angioplasty. When I woke up in recovery, I was told that the angioplasty was not feasible given the locations of the blockages, so I had a triple bypass the next day. Needless to say, the decision had to be made by a cardiologist with no input from me.
If we want cost control at the patient level, I think that we have to do two things. First, as I mentioned earlier we need copays and deductibles that are scalable to income. People with sufficient wealth will always be able to get whatever care they want regardless of price. Perhaps the rest of us could choose insurance plans with premiums and copays based on broad income bands. A visit to a primary care provider for a throat swab for a kid with an obvious respiratory infection to rule out Rheumatic fever might involve a $5.00 copay for the lowest income group and scale up to 50% of full cost for participants making over $100,000 or so. This example is a good one because it occurs literally millions of times a year and involves a number of the more devilish issues. Such tests are cheap, reliable, and avoid overuse of antibiotics on one hand and untreated strep which can lead to some very expensive to treat outcomes like rheumatic heart disease. As preventative care, it is money well spent. But at the same time, new parents (and some experienced ones!) are notorious for running the kid in with a sore throat, little or no temperature, and no other signs of infection. It's called sinus drainage. Anyway, the devil is in the details, but no one said crafting a system to provide proper incentives would be easy.
The second suggestion I have is that everyone needs a primary care provider (often a PA or NP) and that person should act as a patient advocate. Explaining the cost options would be a part of this function. Combine this with standardized reimbursement rates (which we have now but no one except medical coders can decypher) and it should be possible for patients to make much better and cost effective choices. Increasing patient responsibility for costs is not a substitute for lack of information. It takes both to control costs.
The classic economist response to market failure is to look for regulations or structures that create or emulate markets. We could continue to try to control pollution through direct regulation, but most economists would favor a cap-and-trade system which provides market incentives for all firms to reduce pollution. The same applies to health care. Bad structures with perverse incentives need to be replaced with good structures with virtuous incentives.
Some of this may be philosophical differences. Back in the early 70's I taught economics at two schools one an expensive liberal arts college and the other a traditionally black liberal arts college. In confronting this issue I would ask my classes whether or not they would be willing to give up the right to ever own a yacht of over 100' length in exchange for $20 today. The white students were about evenly divided, with one group arguing that in reality they did not expect to ever be able to afford such a boat anyway and he, $20 back then would buy a good steak and beer for the weekend. The black students also split about evenly, but they turned it immediately into a debate about pragmatism and ideology of equality in the black community. The purpose of the exercise was to bring out the very real differences in rights perceived based on the anticipated opportunity of exercising them. No one, black or white, was willing to consider giving up rights like the right to play church league basketball for $20. The only interest was from white girls who didn't play sports anyway, but they wanted a lot more money!
Anyway this is a long explanation to set up a simple answer. Rich people will always value choice because they can afford it. If the premium on a Rolls Royce plan is $5,000 per month, they pay it because that is what they want. This group is never going to be on board with cost containment. Any effort to drive their costs to punitive levels will fail as they will always be able to obtain the health care they seek in a private boutique market or overseas. Swiss clinic anyone?
People who are uninsured now or have inadequate insurance and expensive medical conditions will take whatever they can get and try to scrounge more money for needed medical expenses. This is not a good scenario either because it shorts preventative care (which is seen as being capable of being deferred) and increases health costs in the long run. The best way of containing costs with this group is to provide more subsidized care for preventative and early treatment scenarios.
That leaves what everyone thinks of as the middle class. They generally believe that they are entitled (and I do use that word very deliberately) to adequate health care at reasonable cost and I think they will respond well to improved incentives. I know of a company that provided free massages twice a week to employees who used their exercise facility and didn't smoke. They still had a right to get a massage twice a week if they didn't exercise and smoked, it just cost them $100 per week to do so. Many of them did not think that they made enough money to comfortably afford the massage, and giving up the right to not exercise and to smoke was worth it. One end of the salami is rights, the other end is incentives and choices. Sometimes its hard to know which end you are cutting from.
Health care is one of a strange class of products or services; things people buy not because they want them but because they perceive a need for them. I don't think people choose more expensive treatments unless they believe the the more expensive treatment will be more beneficial. This is what I was trying to get at with my triple bypass comment. I agree with you about pricing and markets. Again, the health care market is a peculiar market. A few years ago I had an angiogram and anticipated angioplasty. When I woke up in recovery, I was told that the angioplasty was not feasible given the locations of the blockages, so I had a triple bypass the next day. Needless to say, the decision had to be made by a cardiologist with no input from me.
If we want cost control at the patient level, I think that we have to do two things. First, as I mentioned earlier we need copays and deductibles that are scalable to income. People with sufficient wealth will always be able to get whatever care they want regardless of price. Perhaps the rest of us could choose insurance plans with premiums and copays based on broad income bands. A visit to a primary care provider for a throat swab for a kid with an obvious respiratory infection to rule out Rheumatic fever might involve a $5.00 copay for the lowest income group and scale up to 50% of full cost for participants making over $100,000 or so. This example is a good one because it occurs literally millions of times a year and involves a number of the more devilish issues. Such tests are cheap, reliable, and avoid overuse of antibiotics on one hand and untreated strep which can lead to some very expensive to treat outcomes like rheumatic heart disease. As preventative care, it is money well spent. But at the same time, new parents (and some experienced ones!) are notorious for running the kid in with a sore throat, little or no temperature, and no other signs of infection. It's called sinus drainage. Anyway, the devil is in the details, but no one said crafting a system to provide proper incentives would be easy.
The second suggestion I have is that everyone needs a primary care provider (often a PA or NP) and that person should act as a patient advocate. Explaining the cost options would be a part of this function. Combine this with standardized reimbursement rates (which we have now but no one except medical coders can decypher) and it should be possible for patients to make much better and cost effective choices. Increasing patient responsibility for costs is not a substitute for lack of information. It takes both to control costs.
The classic economist response to market failure is to look for regulations or structures that create or emulate markets. We could continue to try to control pollution through direct regulation, but most economists would favor a cap-and-trade system which provides market incentives for all firms to reduce pollution. The same applies to health care. Bad structures with perverse incentives need to be replaced with good structures with virtuous incentives.
Some of this may be philosophical differences. Back in the early 70's I taught economics at two schools one an expensive liberal arts college and the other a traditionally black liberal arts college. In confronting this issue I would ask my classes whether or not they would be willing to give up the right to ever own a yacht of over 100' length in exchange for $20 today. The white students were about evenly divided, with one group arguing that in reality they did not expect to ever be able to afford such a boat anyway and he, $20 back then would buy a good steak and beer for the weekend. The black students also split about evenly, but they turned it immediately into a debate about pragmatism and ideology of equality in the black community. The purpose of the exercise was to bring out the very real differences in rights perceived based on the anticipated opportunity of exercising them. No one, black or white, was willing to consider giving up rights like the right to play church league basketball for $20. The only interest was from white girls who didn't play sports anyway, but they wanted a lot more money!
Anyway this is a long explanation to set up a simple answer. Rich people will always value choice because they can afford it. If the premium on a Rolls Royce plan is $5,000 per month, they pay it because that is what they want. This group is never going to be on board with cost containment. Any effort to drive their costs to punitive levels will fail as they will always be able to obtain the health care they seek in a private boutique market or overseas. Swiss clinic anyone?
People who are uninsured now or have inadequate insurance and expensive medical conditions will take whatever they can get and try to scrounge more money for needed medical expenses. This is not a good scenario either because it shorts preventative care (which is seen as being capable of being deferred) and increases health costs in the long run. The best way of containing costs with this group is to provide more subsidized care for preventative and early treatment scenarios.
That leaves what everyone thinks of as the middle class. They generally believe that they are entitled (and I do use that word very deliberately) to adequate health care at reasonable cost and I think they will respond well to improved incentives. I know of a company that provided free massages twice a week to employees who used their exercise facility and didn't smoke. They still had a right to get a massage twice a week if they didn't exercise and smoked, it just cost them $100 per week to do so. Many of them did not think that they made enough money to comfortably afford the massage, and giving up the right to not exercise and to smoke was worth it. One end of the salami is rights, the other end is incentives and choices. Sometimes its hard to know which end you are cutting from.
