Hypothetical grocery store illustrates health care “marketplace”

In his new book, The Righteous Mind: Why good People are Divided by Politics and Religion, Jonathan Haidt compares the American marketplace for health care to a hypothetical grocery store run the same way:

The next time you go to the supermarket, look closely at a can of peas. Think about all the work that went into it—the farmers, truckers, and supermarket employees, the miners and metalworkers who made the can—and think how miraculous it is that you can buy this can for under a dollar. At every step of the way, competition among suppliers rewarded those whose innovations shaved a penny off the cost of getting that can to you. If God is commonly thought to have created the world and then arranged it for our benefit, then the free market (and its invisible hand) is a pretty good candidate for being a god. You can begin to understand why libertarians sometimes have a quasi-religious faith in free markets. Now let’s do the devil’s work and spread chaos throughout the marketplace. Suppose that one day all prices are removed from all products in the supermarket. All labels too, beyond a simple description of the contents, so you can’t compare products from different companies. You just take whatever you want, as much as you want, and you bring it up to the register. The checkout clerk scans in your food insurance card and helps you fill out your itemized claim. You pay a flat fee of $10 and go home with your groceries. A month later you get a bill informing you that your food insurance company will pay the supermarket for most of the remaining cost, but you’ll have to send in a check for an additional $15. It might sound like a bargain to get a cartload of food for $25, but you’re really paying your grocery bill every month when you fork over $2,000 for your food insurance premium. Under such a system, there is little incentive for anyone to find innovative ways to reduce the cost of food or increase its quality. The supermarkets get paid by the insurers, and the insurers get their premiums from you. The cost of food insurance begins to rise as supermarkets stock only the foods that net them the highest insurance payments, not the foods that deliver value to you. As the cost of food insurance rises, many people can no longer afford it. Liberals (motivated by Care) push for a new government program to buy food insurance for the poor and the elderly. But once the government becomes the major purchaser of food, then success in the supermarket and food insurance industries depends primarily on maximizing yield from government payouts. Before you know it, that can of peas costs the government $30, and all of us are paying 25 percent of our paychecks in taxes just to cover the cost of buying groceries for each other at hugely inflated costs. That, says [David] Goldhill, is what we’ve done to ourselves. As long as consumers are spared from taking price into account—that is, as long as someone else is always paying for your choices—things will get worse. We can’t fix the problem by convening panels of experts to set the maximum allowable price for a can of peas. Only a working market can bring supply, demand, and ingenuity together to provide health care at the lowest possible price.
Haidt then compares the "market" for most health care products for the market for uninsured health care products, such as LASIK surgery, which highly competitive. More food for thought: Think of any other type of insurance that we buy to cover ordinary and expected costs (I admit that most health care policies also cover unexpected high cost occurrences). Health care insurance is thus a rather strange creature compared to most other kinds of insurance. Imagine homeowners insurance that covered the cost of cutting the grass, or the cost of a carpet wearing out. I suspect that health insurance is treated differently because many of us sacralize health. We treat it as sacred, meaning that we refuse to negotiate it as though it were a commodity, even in some instances where we might be better off subjecting some health services to the open market (such as we already do with many over the counter medications and devices).

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Digging deeply into death panels and rationing

At at website called Respectful Insolence, Orac takes on the misconceptions and lies regarding the PPACA ("Obamacare"), focusing on "death panels" and "rationing." It's a fact-filled article sprinkled with excellent links. This brand new article is called "No, Virginia, cancer care in Europe doesn't suck, contrary to what a recent paper implies." Here's an excerpt:

Indeed, most of the resistance to the Patient Protection and Affordable Care Act (PPACA), otherwise known in popular parlance as "Obamacare," has been fueled by two things: (1) resistance to the mandate that everyone has to buy health insurance, and (2) the parts of the law designed to control the rise in health care costs. This later aspect of the PPACA has inspired cries of "Rationing!" and "Death panels!" Whenever science-based recommendations are made that suggest ways to decrease costs by reevaluating screening tests or decreasing various tests and interventions in situations where their use is not supported by scientific and clinical evidence, whether by the government or professional societies, you can count on its not being long before these cries go up, sometimes eve from doctors themselves in the form of Ayn Rand-worshiping libertarian doctors who think that Medicare is unconstitutional, that doctors' autonomy should be virtually unlimited, and that there should be in essence no constraints on them.

My perspective on this issue is that we already "ration" care. It's just that government-controlled single payer plans and hybrid private-public universal health care plans use different criteria to ration care than our current system does. In the case of government-run health care systems, what will and will not be reimbursed is generally chosen based on evidence, politics, and cost, while in a system like the U.S. system what will and will not be reimbursed tends to be decided by insurance companies based on evidence leavened heavily with business considerations that involve appealing to the largest number of employers (who, let's face it, are the primary customers of health insurance companies, not individuals insured by their health insurance plans). So what the debate is really about is, when boiled down to its essence, how to ration care and by how much, not whether care will be rationed. Ideally, how funding allocations are decided would be based on the best scientific and clinical evidence in a transparent fashion.

This article punctures the flawed methodology of another recent study that slams all government health care based on prostrate and breast cancer outcomes without taking into account the "lead-time bias." Here's the issue with LTB: "aggressive screening can lead to more patients having a diagnosis of cancer for a longer period of time even without any real improvement in survival [this leads to] more overdiagnosis, which will inflate the apparent survival time after a cancer diagnosis in the population." The article links to a stunning set of graphs At Incidental Economist showing that the U.S. isn't getting anything for all of that early diagnosis and high tech cancer treatment. And this is the health care system that we tout as the world's best. Another case where evidence is inconvenient. If you really want to get pissed off at the insanity of our lawmakers, check out this article at Incidental Economist("Public health prevention fund: On the chopping block once again"), which points out that fact that our preventative health system is atrophying and the reasons for this horrific development.

Continue ReadingDigging deeply into death panels and rationing

On the outrageous cost of American healthcare

In France, an MRI costs $280, while in the U.S., an MRI costs $1080. At the Washington Post, Ezra Klein discusses this huge discrepancy:

There is a simple reason health care in the United States costs more than it does anywhere else: The prices are higher. That may sound obvious. But it is, in fact, key to understanding one of the most pressing problems facing our economy. In 2009, Americans spent $7,960 per person on health care. Our neighbors in Canada spent $4,808. The Germans spent $4,218. The French, $3,978. If we had the per-person costs of any of those countries, America’s deficits would vanish. Workers would have much more money in their pockets. Our economy would grow more quickly, as our exports would be more competitive. . . . In America, Medicare and Medicaid negotiate prices on behalf of their tens of millions of members and, not coincidentally, purchase care at a substantial markdown from the commercial average. But outside that, it’s a free-for-all. Providers largely charge what they can get away with, often offering different prices to different insurers, and an even higher price to the uninsured.
What about the new health care reform law? Klein offers the bad news: "The 2010 health-reform law does little to directly address prices." This is a stunning conclusion, given that Barack Obama's opening sales pitch for health care reform is that we need to do rein in the high cost of health care.
On October 15, 2008, then-Sen. Barack Obama (D-IL) promised the American people: “The only thing we’re going to try to do is lower costs so that those cost savings are passed onto you. And we estimate we can cut the average family’s premium by about $2,500 per year.

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More on the Catholic bishops and the HHS rule

The Catholic bishops' caterwauling over the proposed HHS rule on employees’ benefits is just more of the same type of anti-Obama shark hunting on the Mississippi that the bishops engaged in even before Obama was sworn as President. The issue then was the Freedom of Choice Act (FOCA) and it was "religious freedom" and "freedom of conscience" then too. All the same far right wing quasi-Catholics, pundits like George Weigel, decried the Obama administration then as now. Too bad there wasn't even any such bill before the Congress at the time. Congress wasn't even in session but, we Catholics heard it from the pulpits and pews and bishops all across the nation about the evils of Obama. Thousands, maybe millions, of anti-FOCA postcards were sent to Washington. I sent one but, modified the text because I thought the bill would unconstitutionally usurp some states’ rights to regulate abortion under Roe v. Wade. Then, I found out there was no bill. Imagine my surprise as an Obama supporter. Now, the Catholic bishops and their piling-on sycophants decry a "mandate" where no such thing exists at all. There is a proposed rule, which isn't even in effect, that says that if an employer offers health insurance as a benefit to its employees, the insurance must cover contraceptive services. Strictly religious institutions are exempt from the proposed rule. No mandate, law, rule or regulation exists now or will exist that absolutely requires any Catholic employer to do anything against its conscience. [More . . . ]

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