I Hate the Healthcare Debate

June 30, 2009

I’ve been working on some videos concerning the healthcare reform issue over the last couple weeks and I’ve come to the conclusion that I hate this topic.

The reason I hate it is because it is so hard to find solid data on almost anything. Identifying the problem is nice and easy:

The US spends more per capita on healthcare than almost any other country, but we don’t necessarily get better results.

That statement is easy to prove with numbers.

Actually, I take that back, the first part is easy to prove with numbers. The second part of that is extremely difficult because judging the efficacy of health care is not an easy thing to do. Some metrics are easy to make judgements on. Wait times for CT Scans and MRIs are not dependent on whether or not the patient is skinny or fat, sick or healthy. How many people you can shove through a machine is far more dependent of scheduling efficiency, the availablility of personel and equipment, etc. In other words, there are few outside variables that are going to screw with your results.

But other metrics like life expectancy are heavily dependent on variables outside the health care system. Life expecancy for latinos, blacks, asians, whites, jews, arabs… near as I can tell they are different for all these groups even when other variables are controlled for. This makes it a very messy metric to use when trying to determine the efficacy of only one of those variables like health care.

As for controlling the cost of healthcare, there is one surefire way to do it: stop paying so much money. But this will result in less care and almost certainly lead some level of health care rationing.

The other ideas that have been thrown out there are not surefire ones, they are either educated guesses or “if I believe in it enough it will happen” wishes. Some of these ideas may work… but we’re not entirely sure which ones.

Which brings me to my preferred solution, which isn’t really a solution so much as it is a suggestion for identifying good policies a little more accurately: I think we should take the ideas that the Obama administration has and separate them out into a) ideas that can be applied to Medicare and Medicaid immediately and b) ideas that require a larger scale implementation.

Medicare and Medicaid are enormous programs with more than 70 million beneficiaries. It is absurd to say that they aren’t big enough to introduce some cost reduction programs without adding another 39 million people to government insurance programs (which is essentially what the Obama administration is saying).

Second, I think the government should set up some kind of public health care metrics program to gather the data that is currently so difficult to gather. Imagine if you could go online and look at hospitals around your city to see which ones deliver better outcomes and how much different procedures cost at different hospitals. This would go a long way toward inspiring competitive pricing in health care.

Third, I think we need to do away with the tax exemption for employer provided health insurance. Not a popular position, but it seems obvious to me that this policy has led to a large part of our health care overconsumption.

So… that’s all I’ve got for now.

I’m still working on some concepts that can be boiled down into something that is both accurate and striking. But the fact of the matter is that in healthcare we can trust very few of the numbers being tossed around right now. They are educated guesses at best and the Obama administration has a pretty bad track record at being able to predict the future.

18 Responses to “I Hate the Healthcare Debate”

  1. PH Says:

    I just discovered your blog. It rocks. Keep up the great work. We need teachers like we need air. You are a great teacher. I’m forwarding your link to all my friends. Thanks.


  2. One thing that you can measure is the wait time, though. I’m concerned about costs, but I’m also concerned with the idea that patients would need to wait months and months for an MRI to get a definitive diagnosis on cancer. In the UK, rationing is already happening, and both there and in Canada there are wait times for procedures that we wouldn’t consider to be extraordinary. (Yes, I know that an MRI or CT-scan are not ordinary, but we don’t have a three month wait for them, either.)

    Some things definitely can’t be quantified, it is true, but I’d be interested to see a comparison – visually – of how long we wait for procedures vs. how long someone in the UK or Canada (or other single-payer state) waits for the same procedure. Mortality rates are climbing for cancer patients in the afore-mentioned countries, which makes me wonder if we truly aren’t getting better results from our healthcare system.

    I’ll be interested in seeing what you do come up with.

  3. Spork Says:

    First off… love the blog.

    …but I’m not entirely sure I’ll agree with the “need to do away with the tax exemption for employer provided health insurance.” I do understand what you mean… but I’m not sure the government taking money by force is the answer.

    The issue is that people have no skin in the game — and that there is a disconnect between cost, price and expectations of health insurance. But this could easily be solved in the private sector by corporations offering multiple plans where the deductible varies from “lots” to “not much.” Employees would be expected to chip in a portion of the premium, which would vary wildly as well. (Personally, I’d love it if employers started sponsoring HDHP’s combined with HSA’s.)

    • politicalmath Says:

      I’m speaking here from a strictly economic point of view… Because the tax rates are what they are, practically nothing saves money like hiding income from the government, be it in IRAs or mortgage interest or employer provided health care premiums, when you get an instant savings of 20-30%, you’re going to see over consumption.

      I am also a fan of the HSA concept since it reduces premiums and provides the tax exemption for something that can double as either savings or medical expenses.

      • J. Ewing Says:

        Removing the tax exemption from employer health care benefits is a tax increase, pure and simple. IF, however, you do as John McCain proposed and simply transfer that tax exemption to the employee, you have created an incentive for the employee to select and manage their own health care. If government would allow it, they could buy an HSA with it, for example, and have it be portable from job to job.

        The liberals want no part of individual freedom and responsibility. EVERY decision must be concentrated in Washington DC, one size fits all, or it’s no good.


    • Peter Schiff wrote about this recently here: http://www.campaignforliberty.com/blog.php?view=20774

      If you got rid of the tax-exemption for employers and replaced it with an identical exemption for private citizens, the result would likely be a move towards less employer-provided insurance and more insurance paid for directly by citizens. That at least moves us one step closer to a system where the end-user is actually a part of the process, and it would eventually eliminate the problem of insurance being tied to a job – which just leaves people stranded when they get laid off or compels people to stay at jobs they are unhappy with because they don’t want to lose their coverage.

      That is a big problem.

      I’m currently also working on a bunch of Health Care related pieces, a few things you may want to look into:

      Wait times in the Canadian system:
      http://www.waittimealliance.ca/June2009/Report-card-June2009_e.pdf
      Health Affairs study of Physicians’ views on the most significant medical innovations:
      http://healthaff.highwire.org/cgi/content/full/20/5/30 (8 out of the top 10 are all US or shared US credit – I’m researching the rest currently)
      Something to perhaps fact-check:
      http://www.ncpa.org/pub/ba649

      and… Frankly, before you recommend *any* government solution, a must-read… “Health Care in the 20th-Century: A history of government interference and protection” – http://findarticles.com/p/articles/mi_m1094/is_n2_v28/ai_13834930/

      ALSO… while I’m on the topic, you may note the correlation between increased government involvement as primary payer – and the decline in supply, e.g. 26 flu vaccine suppliers in 1960s down to only 2 or 3 today, whereas government went from a non-existent payer to around 2/3rds of all medical spending.

      Anyway, it’s a complex topic to be sure – a lot of metrics are horrendous, especially the ones that seem to get thrown about all the time (infant mortality rates in the US & abroad for example).

      Good luck.

  4. J. Ewing Says:

    I think you gloss too quickly over the problems of Medicare. I think it has everything to do with the prospect of having government MORE involved in health care that government has already proven itself completely incompetent at what it ALREADY controls. To begin with, the Medicare program is broke, financially. Considering that Medicare pays only about 1/3 of the costs of health care, this is outrageous. It also leads to the completely rational decision of health care providers to either not see Medicare patients at all, or to deliver substandard or ineffective care, just to cover their costs. Add to that the cost of administration of the Medicare program– you know, typical government red tape– and you have a program guaranteed, just like any government-run health system, to fail on all three measures– cost, quality, and availability– that matter. It is inevitable.

    If the only problem is cost, there are a few very simple steps that can be taken to reduce costs by 50% while maintaining quality and (because of lower cost) actually covering more people with insurance AND care. (They are NOT the same thing.)

  5. torontoinsurance Says:

    You are right, to measure quality if health care in exact numbers is practically impossible and demagogic…

  6. Steve Says:

    I am glad someone finally stated the reason for our “less efficient” health care system, even if you may not realize it. Our system comes down to this one thing, ethnic diversity. The US is the most ethnically diverse nation IN THE WORLD. Caucasian, Latino, Black, Asian, Indian, Arab, etc etc. Each ethnicity has is own predisposed ailments due to genetic differences. Our health care system must provide for ALL of these problems, not just specific ones. Finland, Japan, Sweden, Italy, and Ireland are known to be very efficient per GPD systems. These countries also have a very homogenous ethnic background. This lets a health care system focus on specific ailments that effect these genetic types.

  7. Carolynp Says:

    I agree that you should start slow with something dealing with capacity. You could compare waiting in line at a store. Like, in the US a typical wait for a (an?) MRI is so long because you have X number of people in front of you. In Canada, there are only three cashiers, so you’d have Xmillion people in front of you in line. So, adopting socialized medicine is a bit like being sent to the back of the line.

  8. Geran Says:

    There are some problems with health care in this country, but the anecdotal evidence from other countries indicate socialized health care will be worse. It would make more sense to just fix some of the existing problems than chance to a government operated system with costs and problems we can’t even imagine!

    Looking forward to any factual display you can assemble.

  9. Geran Says:

    *change (it’s early morning here!)

  10. J. Ewing Says:

    We don’t need anecdotal evidence to know that any government-controlled health care is bound to be better than the free market alternative, for the simple reason that the free market forces competition to deliver what consumers want in quantity, quality, and price. Government supplies what they want, if they want, and at a price the taxpayers pay, like it or not. It is simply NOT POSSIBLE for government to operate a “system” better than private enterprise could do it. The moment the government sets up a payment schedule, or a list of “preferred therapies,” or a list of what doctor you can see, all “choice” goes out the window, all innovation goes out the window, and the therapy or drug or doctor that could save your life is not available to you.

    Obama says “there are countries where socialized medicine works very well.” I’m sure that, compared to no medicine at all that’s true. Tell Congress they shouldn’t do a d*** thing with health care until they fix Medicare. It’s broke, provides poor quality care or no care at all, and pays so little to providers that company health plans are going broke trying to cover the “gap” between Medicare and the true cost of care. Don’t you think, if government knew how to provide more care, of better quality, at lower total cost, they would have done so? They can’t. While they’re puzzling over that little impossibility, the rest of us are safe.

  11. Russ Goldstein Says:

    Modern health care “coverage” in the US is comprised of two components – 1) insurance against catastrophic or other ailments that are not routine and 2)a third-party that pays for everything health-care related (covered) on your behalf.

    #2 is the problem. Why is it MORE efficient for me to do what we do now? – I pay an administrator at my company/job (usually in HR) to pay a clearinghouse or other third party, who then pays another clearing house or electronic claims company, who the pays the administrator at my physician’s office, who then pays the doctor.

    Can’t anybody with an IQ above a rodent’s see that we have just created a quagmire of paperwork and make-work jobs – not to mention much higher costs?

    This is especially galling to me when you look at routine care like your annual check ups. What are the odds that I need an annual check up? 100%. You cannot insure against that risk.

    What are the odds that I will fall and break my neck? THAT is something to insure against and pool the risks.

    If we separated the two and made it imperative that individuals own their policies and knew the costs (by actually paying the bills themselves before coverage kicked in) then individuals would make personal choices as to their spending priorities.

    i.e. Do I buy a plasma TV and risk not having cash to pay if I get really sick?
    Do I risk losing my home or going bankrupt because I spent my money foolishly?

    If you don’t see a cost directly it becomes easy to think that the services or products are FREE. They are not.

    Could a drug manufacturer get away with ludicrous pricing if EVERYBODY had to pay the bill? Of course not. Some other company would come up with an alternative solution that might be as good or almost as good for a fraction of the cost.

    THAT is the power of the free market and why command style economies rarely work in the long run.

    The SOLUTION is simple:
    1. Make it illogical for any company to provide “free” benefits by not allowing them to deduct them from taxes as a business expense. For the employees, they should be taxed as income. That would put everybody on equal footing w.r.t. “coverage”

    2. Provide everybody a tax credit per individual, family, and/or per kid that would be available to place into an IRA type of account to be used for health related items and services and savings for future years.

    3. An associated medical debit card would allow us all to pay for doctor visits and for prescriptions along with whatever deductibles we have chosen under our individually purchased plans.

    Payments would be immediate which should lower costs for medical practitioners. The costs would be transparent to the customers (you and me) because we pay the bills. Prices would fall because WE would make the choices in treatment if they are beyond what our personal priorities say.

    Freedom, better care (in the eyes of each individual) and less government debt.

    Unfortunately, it leaves out the power-hungry politicians and the companies that have a vested interest in keeping the status quo.

  12. Carolynp Says:

    I thought of another idea (man, if you think this is annoying, how irritating must it be for accomplished novelists…). You could do something that explains to people (Presidential spokesfolk, etc…) why this will certainly put private insurance out of business? They are trying to paint a picture of a government run health insurance that is on an even playing field with private companies. So, something that explains why someone might purchase something of lesser quality because it’s, you know, free…

  13. John Says:

    In line with your surefire way to lower costs, I’m of the opinion that we need LESS insurance – not more. The fewer insured people there are, the more patient exposure to cost there is.

    We NEED healthcare rationing – the question isn’t whether there should be rationing or not, but who should do it.

    Today’s HMO’s PPO’s etc are the ones that do it now – handing that responsibility over to the government hardly improves anything.

    If we moved more towards a system where patients pay rather than 3rd parties, individuals themselves would do the rationing on their own.

  14. Jeff Says:

    Love how you present the data – keep up the great work! Related to the comments about population diversity, something else I don’t see too many people discuss in the health care debate is the relative poor health of the existing American population – we promote fast food diets and a sedentary lifestyle which contributes to us having nearly a third of our population considered obese. Most of the other countries with “desirable universal healthcare” have a much smaller portion of their population identified as obese. The American population can’t be a good baseline of future patients for universal healthcare. No matter how universal (or expensive) the health care system is, we will never see better results until we start taking care of ourselves with better diet, exercise and reducing self-abusive habits (smoking/drinking in excess, heavy drug use, etc.). Of course, we won’t dramatically change our lifestyle and will dump billions of dollars into a government-managed system with no real improvement – just like our education system.

  15. J. Ewing Says:

    Jeff is correct that the US incurs higher costs because of our collective lifestyle choices. We should all take better care of ourselves. But that is exactly why government-run health care, in any form, is so dangerous. We are constantly told to “follow the money,” but in most government “solutions” one need only follow the incentives to know that it’s a bad idea. In this case, imagine that a standard garden-variety American couch potato gets “free” medical care from the government. What is the incentive to get off the couch, up until that first heart attack? None that was not there before, and even less than what he would have if HE had to pay his own medical bills. What is the incentive for the government to come around and MANDATE, by law, for that couch potato to undergo 1 hour of “forced labor” every day, to lose weight? Plenty, only they will call it “controlling cost.” Government control of health care is government control of YOUR LIFE!


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