Say Anything Blog

A good article, BB, but “free people making free choices” aren’t to blame.  The real problem in the healthcare market(a very highly “rigged” market) is shortage of supply, which drives up the price.  The genesis of the problem is the AMA control of the supply of doctors, but market forces, if allowed to operate, could still go a long way to solving this problem.  One change could get the ball rolling; allowing everyone to pay for their medical care out of pretax dollars.  In other words, when you do your taxes, the amount you spent on medical care is deducted from your gross income.
None of the plans now proposed will increase the supply of medical care; they all increase the supply of medical care insurance, and so will only make the problem worse.

Hope and change, in a free world, are the private possessions of motivated individuals.

Add onto this, nutritional research is an absolute disaster in this country.

I advise everybody to at least look at a copy of Gary Taubes’ book on the subject.

The introductory chapter could equally apply to some of the problems with the politicization of global warming or a number of other research topics (e.g., stem cell research) that the liberals have adopted as their sacred cows.

My basic view of it is that people should be free to eat unhealthy foods and be fat if that’s what they want.  Or, perhaps more correctly, that’s where their choices lead them since not many people want to be fat.

What we need to do is prevent those decisions from driving up health care costs for the rest of us, and we do that by making the individual responsible for health care.

The path to solving the health care problems lays with things like health savings accounts.  Trying to shift the burden more away from the individuals and onto employers and/or the government isn’t going to solve a thing.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

108, I don’t blame “free people making free choices.” I am simply pointing out that many of the incentives in our current system are perversely extending our dependence on a flawed, high cost system.

To fix it requires we set our minds on a slightly different, less known set of facts that ought to motivate us.

It requires, I think, that we set our minds toward personal responsibility.  We need to, collectively, quit acting like victims and start acting like individuals.

When the people fear their government, there is tyranny; when the government fears the people, there is liberty.

-- Thomas Jefferson

Rob’s recently listened-to songs:

As someone working within the healthcare industry, I have some knowledge of costs. The only way we can “fix” our system is for people to start taking personal responsibility. As Bubba mentioned, many diseases are preventable. We are going to continue to face crises if Americans don’t start taking better care of themselves. Throwing money at the problem after the damage is already done will just eat up more money and the results will be exactly the same.

Fortunately, the healthcare industry and insurance companies are starting to recognize this a bit. Some insurers are requiring that policy holders engage in health promotion plans that include diet, physical activity, and smoking cessation interventions. Those that choose not to engage in these activities must pay higher premiums.

If the government is going to use our tax dollars to “fix” the industry, I’d rather them spend it on health promotion programs rather than national healthcare. It’s a much more efficient and effective use of money.

The path to solving the health care problems lays with things like health savings accounts.  Trying to shift the burden more away from the individuals and onto employers and/or the government isn’t going to solve a thing.

I couldn’t agree more.

None of the plans now proposed will increase the supply of medical care; they all increase the supply of medical care insurance, and so will only make the problem worse.

This is something that’s been troubling me for some time. Everyone goes on and on about increasing healthcare access, but how can you increase access without increased supply?

Everyone goes on and on about increasing healthcare access, but how can you increase access
without increased supply?

Exactly.

Hope and change, in a free world, are the private possessions of motivated individuals.

To fix it requires we set our minds on a slightly different, less known set of facts that ought to motivate us.

Trying to impose some sort of “health morality” on free people won’t work, but increasing the supply, while removing the barrier between consumer and payer will work quite nicely.

Hope and change, in a free world, are the private possessions of motivated individuals.

Well, 108, there certainly is a moral dimension, but what I’m arguing is pretty basic. 

You would agree that any socialistic (or quasi-socialistic) system is bound to collapse under its own weight, no?  Moreover, you would also agree that when government pays half of medical bills (and virtually all for the aged), that is a socialistic system, no?

Well, what are the ramifications of that for a person like myself who must today make the choice to live healthily, or to act in a way as to require more healthcare when I’m older?

If we concede that the current plan is bound to collapse under its own weight (into rationing, etc..), then I would conclude that my best chance to live to see my grandchildren would be had by taking care of this body God’s given me, no?

It’s not a new morality.  It’s just the acknowledgement of a reality that most of us don’t want to think about.

BB: If you assume socialism, you’re right, but it’s still an individual decision, and as you have explained it, it’s for the interest of the deciding individual.  I just don’t accept socialism as an inevitable reality, as you apparently do, mostly because the “health morality” you espouse will inevitably be imposed by the govt.

Hope and change, in a free world, are the private possessions of motivated individuals.

Work on that reading comprehension, 108.  I do not accept the inevitability of socialism, but rather the inevitability of the collapse of socialistic systems.  In a word, I point to the opposite of what you claim occurring over time.

BB: Despite your sinking to insult, I comprehended your statement accurately:

It’s not a new morality.  It’s just the acknowledgement of a reality that most of us don’t want to think about.

“acknowledgement of a reality”?  BTW, I have no problem thinking about it at all.

Hope and change, in a free world, are the private possessions of motivated individuals.

It’s down to 8!

“If a conservative is still a republican after the last 13 years, he is blind to the fact that his party of choice has failed him utterly.” – Realitybasedbob

Yes, 108, you may have no problem thinking about such things, but I guarantee you that those who are voting for Hillary or Obama do.  So do an awful lot of GOP voters.

Which is the point; as long as all of the players in the healthcare “debate” have a vested interest in sustaining the current system, it’s going to be a LOT harder to overcome objections to the common sense way of fixing the problem.

Which is why I’m pointing out the difficulty.  Reality is that incentives matter.  Maybe even Mr.  “it’s down to 8” will take notice.

It’s down to 8!

Trolls. It’s what’s for breakfast!
And then I eat their lunch.

I see all.

“If a conservative is still a republican after the last 13 years, he is blind to the fact that his party of choice has failed him utterly.” – Realitybasedbob

Ha!

You wasted bandwith with –wasteofbandwidthbob

HA!Good one!

“If a conservative is still a republican after the last 13 years, he is blind to the fact that his party of choice has failed him utterly.” – Realitybasedbob

40% of your medical dollar goes to insurance costs,

Self insured groups contracting with ND Blue Cross pay about 8% of the claim amount in administration and other “insurance” costs. I believe that the services they provide are necessary and delivered in a cost effective manner.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Whistler, that’s the portion paid by the insurance company.  Add an equivalent amount or somewhat higher to get the total % that is spent dealing with insurance.

Hopefully your assertion is correct; that Blue Cross of ND spends less on administration than average.  However, I’d have to guess that the actual % spent for even this is 20-30%.  It’s still too high.

To draw a picture, my kids once went to a pediatrician’s office with two doctors and seven people hired to deal with insurance.  Granted, the insurance people weren’t getting as much pay as the pediatricians, but even at half to a third the total compensation, you get to an extremely heavy burden due to insurance.

I would have to think even with no insurance company involvement there still would be a fairly high overhead due to bill processing, collecting and writeoffs.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

There would still be some overhead, but having watched my step-dad struggle late at night processing insurance forms, I dare suggest it would be far less.  Here’s what goes on now:

Bill goes out to insurance company.  It must be in THEIR preferred format or it’s rejected. 

Bill waits 43 days before action is taken.

Bill is either paid at 45 days, or sent back for more information.

If bill is paid, the bill for a copay is sent to you.

As you can see, it’s fairly complex; this is the “easiest” way of getting medical bills paid with “comprehensive” insurance or an HMO.  In contrast, here’s how it works for high deductible major medical:

You go to the doctor. 

The bill is presented to you either then & there, or in the mail. 

You pay the bill.  A copy of the paid bill is sent to your insurer, who applies it to your deductible.

See how this is a wee bit simpler than the comprehensive insurance plans?  Your doctor doesn’t carry the bill for 45 days (a 3% cost right there; he doesn’t get to wait to meet payroll and pay his rent), and typically I’ve found that every bill gets submitted twice with “comprehensive” insurance at least.

A major problem is the mindset of many people that “someone else” is responsible for their healthcare, usually their employer or the govt.  This example will illustrate:  I know an ob/gyn who shares office space with someone who does cosmetic stuff- skin scrubs, lipo-disolve… The ob/gyn says it is not unusual for his patients to loudly complain about a $20 copay, often for tests to check for life-threatening conditions.  Then, these same patients will walk across the hall and spend hundreds of dollars, presumably without complaint.

Also, I take exception to “Doctors love it, too.” I’m not exactly sure what it is you think they love; doctors hate the current insurance and medicare/aid pmt system, and the overwhelming majority of physicians want their patients to be healthy.  In fact, doctors love patients who care enough about their health to take care of themselves with healthy lifestyles.

Sweetness, my point is simply that as long as the AMA refuses to endorse the end of Medicare and Medicaid, they’re still on board for the perverse incentives begotten by these programs--perverse incentives that the AMA warned about back in the 1960s.

You cannot tell me to stop smoking enough to overcome that reality.

Sweetness,

overwhelming majority of physicians want their patients to be healthy.

You would certainly have trouble finding physicians who will disagree with that point.

As someone who has spent a great deal of time working with them, I would have to add...’though for the majority, it is not their number one priority.’

Some unquantifiable portion of their humanity is lost between their pre-med school days and the start of their careers after internship.

R108 said, and I think BB probably agrees, that we have a problem with the supply side. Absolutely.

How can we ever have competition in the market, when the AMA asphyxiates the desires of many competent individuals to enter the field.

“To love is not to stare steadfast at one another...it is to look forward, in the same direction.”
Saint-Exupéry

laydownSally,

Please clarify specifically what market you think the AMA is asphyxiating.  Do you mean that people are less inclined to enter the profession?  I agree, but I would not put the AMA near the top of the list of obstacles.

And as to your claim of lost humanity, I think it does unfortunately happen to many doctors.  However, I strongly disagree with your stated timeframe.  It’s not during residency.  It erodes slowly after frustration after frustration:  patients refusing your advice and repeatedly jeopardizing their health through horrible decisions, defending themselves from frivolous lawsuits, being cursed at by patients who they are trying to help, having feces thrown at you. 

And, from a business standpoint, being forced to work under a system where payment is set by the government (a recipe for failure almost every time.) Merit is not rewarded.  In fact, doing a thorough job and spending extra time with a patient is penalized by having longer workdays, or seeing fewer patients and therefore making less money.

It’s not during residency.  It erodes slowly after frustration after frustration:  patients refusing your advice and repeatedly jeopardizing their health through horrible decisions, defending themselves from frivolous lawsuits, being cursed at by patients who they are trying to help, having feces thrown at you.

Yes, it’s all the fault of those damned patients!  /sarcasm

The AMA controls the regulations that determine the number of doctors that can enter the system.

Hope and change, in a free world, are the private possessions of motivated individuals.

Sweetness,

patients refusing your advice and repeatedly jeopardizing their health through horrible decisions, defending themselves from frivolous lawsuits, being cursed at by patients who they are trying to help, having feces thrown at you. 

If you as a doctor are frustrated by patients who don’t follow your advise, fine. If this is one of the causal agents behind your loss of humanity, you need to explore the possibility of less stressful employment. This division of a doctor/patient relationship has been around since Hippocrates.

Certainly I would agree that the career path of John Edwards and his ilk was to the detriment of the medical establishment and is an issue that should be addressed. Should incompetent physicians, either endogenous or exogenous, be taken to task for their malpractice is without doubt. But a distinction needs to be made between those who made an error and those who are wholly lacking in skill.

R108 spoke to the lack of market forces and he is spot on. I would only add (repeat) that there are so
many qualified applicants who, at the very least would make good GPs. In a forty mile radius from where I live there is not a single doctor, despite the fact that there are a dozen small towns where a practitioner could make a good living treating minor trauma cases.

Lastly,

having feces thrown at you

Other than some inner city ERs and Guantanamo Bay, I suspect this is extremely rare and to use it in your argument is insincere.

“To love is not to stare steadfast at one another...it is to look forward, in the same direction.”
Saint-Exupéry

having feces thrown at you

Other than some inner city ERs and Guantanamo Bay, I suspect this is extremely rare and to use it in your argument is insincere.

Could be a personal problem.  /humor

Hope and change, in a free world, are the private possessions of motivated individuals.

Having worked most of my career inside the medical profession, having lectured at several domestic and foreign medical universities regarding emergency medical, cardiac and respiratory care; I believe I have some small insight into the many problems cited in regards to the medical profession. There are of course many and manifold reasons, defying any easy, single diagnosis. Physicians are not unlike the general population in their myriad faults and failures; but I believe much of what we are experiencing is the result of physicians today being products of wholly liberal educational systems, thus they accept situational ethics and relative morality as the ‘scientific’ model of medical care; then they face a massive government bureaucracy; a no fault, no pain, no responsibility patient culture; and a litigious society, all products of a liberal social mindset having taken hold of America.

Doctors are soon jaded, primarily motivated by financial rewards and have thus fallen from the lofty heights of their first allegiance to the Hippocratic Oath! The “do no harm” part of that oath now being passé, their having being swallowed whole by the current culture of death and a casual disregard for the sanctity of a single human life.

All the foregoing being said, there are still many incredible, self sacrificing doctors, many more self sacrificing nurses and other para-professionals that testify that the health care team is not yet dead as to their goals and purpose.

No matter the age or state of health, for a military man it is always glorious to tilt at windmills, rescue a fair Dulcinea and be a gallant knight in armor in a glorious cause.

Some locales would be willing to pay enough to attract a physician to an area that has no doctors.  However, this is impossible due to government price controls, which I believe is an exponentially more serious free market violation than anything the AMA does.  No matter how many doctors there are, merit is not rewarded.  The more patients physicians can see per day, the more money they make.

And I readily admit that feces-throwing is rare, but please don’t question my sincerity.  I could have used the example of the time my physician wife had a patient call her a f*cking c*nt for the better part of an hour.  Thankfully, this is also rare.  Or the time that a patient of a psychiatrist friend of mine stripped naked in the hospital hallway, fingering herself, screaming for him to come and f*ck her.  Again, rare, but I hope you see my point.

I think the last two paragraphs of Neimen’s post are excellent; I couldn’t agree more.  My wife recently submitted her resignation as director of her hospitalist group after four years of battling administrative obstacles because she refused to compromise her standards of care.  It is difficult for me to put into words just how happy I am that she is finally walking away from a $225k job, because now our children and I will get her back, but it’s a sad day for the hospital.

Actually, although the AMA does work to restrict supply of doctors, I’d say that the motivation of doctors in terms of profit to maintain an unhealthy nation pales before the motivations of patients, big companies, and insurance companies--not to mention government, that loves dependence.

And we’re never going to “resolve” the argument here by stating anecdote a vs. anecdote B.  Let’s draw a picture; I come into the doctors’ office with back, heart, and diabetes problems.

Now the doctor knows that if I drop 50 lbs, all three of these problems will be resolved, most likely.  However, he doesn’t have the “pull” with me to get me to do this.  So he simply prescribes me my insulin pump ($10k), back surgery ($50k), and a host of heart drugs and surgery ($40k).

Now what’s more important here; the fact that the doctor might clear about $10k-$20k from prescribing $100k worth of medicine for me, or the fact that insurance and Medicaid prevent him from telling me that if I don’t get off my sorry rear end and lose some weight, I’m out $100k?

BB,

And we’re never going to “resolve” the argument here by stating anecdote a vs. anecdote B.  Let’s draw a picture; I come into the doctors’ office with back, heart, and diabetes problems. /quote]

We can’t resolve the discussion with anecdotes, so you give us an analogy?  You know it’s not that simple Bike.

Competition cannot exsist under guidelines that limit the number of available doctors. That the goverment and insurers play a part in this is true as the failure of ERISA shows us.

… insurance and Medicaid prevent him from telling me that if I don’t get off my sorry rear end and lose some weight, I’m out $100k?

False. Nothing stops your doctor from saying this except his own negligence. That this behavior by patients is promoted there is no doubt, but the burden of this patients’ lack of responsibility should not fall upon those who exhibit self-control.

By the way, I for one used no anecdotes in my comments. I expressed what I know to be true.

Futhermore, you can see by the tone of Sweetness’ rebuttal that compensation is high on the list of his complaints; additional proof that doctors are in near complete agreement with the AMA and their policy of restriction.

---

“To love is not to stare steadfast at one another...it is to look forward, in the same direction.”
Saint-Exupéry

I don’t know how I pooched that blockquote...Sorry

“To love is not to stare steadfast at one another...it is to look forward, in the same direction.”
Saint-Exupéry

Futhermore, you can see by the tone of Sweetness’ rebuttal that compensation is high on the list of his complaints; additional proof that doctors are in near complete agreement with the AMA and their policy of restriction.

That may be, but that sentiment would be misplaced; as in another profession that has been pretty much taken over by the govt(education), the administrators and the bureaucrats suck up all the money, leaving much less for the actual workers(teachers, doctors).
Socialistic enterprises are always adminstration topheavy, which is just one of the secrets of their failure to generate much, if any, prosperity.  The wrong people get rewarded.

Hope and change, in a free world, are the private possessions of motivated individuals.

In the capitalist system always money is the most important thing. Until drastic increase of health problems because of malnutrition all these unhealthy incentives full of food additives will continue. No doubt about it.

In the capitalist system always money is the most important thing.

Notice: this is coming from a spambot.

Make of that what you will.

Supreme irony?

LayDown, the reason the doctor cannot say “you’ll be out $100k” is that comprehensive insurance & Medicaid prevent you from suffering that loss. 

Yes, it is an analogy or thought experiment; however, it is not an anecdote, but rather a scenario that happens millions of times a year as people get diagnosed with diabetes, heart disease, and back problems.  See the difference?

And the disparity between what the doctor gets for treating these maladies, and what it costs, illustrates why the key issue is not restricted supply of doctors, but rather the perverse incentives of comprehensive insurance and government medical care. 

Not that restricted supply isn’t an issue; I do think it’s a shame that the AMA has a lock on this, apparently.  It’s just that the perverse incentives are of greater magnitude with comprehensive insurance and so on.

laydownSally,

Offering the tone of my quote as “proof” is completely wrong, and also invalidates your comment about writing what you know to be true.  What you actually did is interpret, incorrectly, my comments to support your claim.

I do not agree with or condone the AMA’s restriction on the number of physicians.  Please reread that sentence as many times as necessary until you accept that your “proof” comment is wrong.

Now, it is true that I think the system of physician compensation is horrible.  But not because I think my wife should be making more money.  Two main problems are that the government sets prices, and merit, as I have said before, is punished, not rewarded.

My point to my wife as I have tried to get her to quit her job is:  That she deserves a better life.  Many of the problems she faces are the result of the hospital’s mismanagement of her practice, like the thinly-stretched staff resulting in horrible schedules, but many others are universal to the healthcare system in the US.  She proposed to the hospital that she reduce her compensation and workload, but they were not receptive to the idea.  So she is moving on.

As for the anecdote discussion, sorry for my feces comment; I withdraw it.  But is it not relevant to the discussion, the story of my wife quitting her job because of an unworkable system?

It’s just that the perverse incentives are of greater magnitude with comprehensive insurance and so on.

This is the type of thinking that created the problem in the first place.  After the initial error of removing market forces by restricting supply, the broken system requires ever more layers of govt meddling to “fix” it, when the real solution is to remove the initial cause. The first two steps should be to remove the supply restrictions and to enable everyone(not just big companies) to pay for healthcare with pretax dollars.  These two steps would restore competition to the healthcare system, which would make all those layers about which you complain unnecessary.  We could then select a doctor and negotiate the deal, bypassing “the system” entirely.

Hope and change, in a free world, are the private possessions of motivated individuals.

108, you are aware that every market has both a supply and a demand curve, no?  If we see quickly rising prices, we do ourselves a disservice if we focus only on limited supply without figuring out why demand is skyrocketing as well, don’t we?

Nobody denies that limited supply is an issue here.  However, that does not negate the fact that a demand curve that is insensitive to cost is also a problem.

Supply, demand and price are interdependent.  Demand is the independent variable, supply is the dependent variable, and price is the outcome of the relationship between supply and demand.  Restricting supply from rising to meet the demand raises the price.  Restricting the price, then, as a “cure”, simply creates shortages, since demand is what it is.  I appreciate you want to blame increasing demand on cheeseburgers(figuratively speaking), but it just ain’t so.  The aging population demographic is the real cause, and it won’t be going away anytime soon.  Allowing the increasing demand to create its corresponding supply is the only real answer, and you should know that.

Hope and change, in a free world, are the private possessions of motivated individuals.

...a demand curve that is insensitive to cost…

This is known as price inelasticity, and is a characteristic of the “commodity” and is generally inherent.  Medical care is generally price inelastic, since when you need it, you need it.  There are really no substitutes.

Hope and change, in a free world, are the private possessions of motivated individuals.

108, you’d do well to get back to Econ 101, and most profitably from a different instructor than you had the first time.  Just because common factors influence supply and demand curves does not mean that you’ve only got to take a look at one side of the equation.

I said no such thing; in fact, I described the entire supply/demand/price equation.  I also never said anything about “common factors”, so you just made that one up, too.  I don’t know what you think you are defending here, but you are completely failing to address any of the facts I presented.  I know you can do better than that.  Give it another try.

Hope and change, in a free world, are the private possessions of motivated individuals.

BB: Please explain in economic terms how re-introducing market forces into the rigged healthcare market won’t help.

Hope and change, in a free world, are the private possessions of motivated individuals.

Well, for starters, I’m arguing for market forces on both sides of the transaction.  I never said that introducing market forces to the supply of doctors won’t help.  I’ve said, rather, just the opposite.

Specifically, I’m making the “radical” claim that when a person pays a $15/$100 copay with their comprehensive insurance, HMO, or Medicare/Medicaid, their approach to medical care is going to be a wee bit different than when they pay the actual cost for their medical care out of pocket.

They’re going to go to the doctor for mild colds more often.  They’re going to have less incentive to drop extra weight and get in shape.  Again, hiding the real costs means that they don’t see the wolf at their door as clearly.

And in doing so, they’re going to make the demand curve look inelastic, when an unfettered demand curve would not be.

And in doing so, they’re going to make the demand curve look inelastic, when an unfettered demand curve would not be.

It’s the lack of alternatives that makes the demand for medical services relatively price inelastic, not any sort of “fettering”.  I don’t disagree with the rest of what you wrote, and as a matter of fact, support it, but still maintain that it’s an effect of lack of market forces, not the cause.  In order to fix the problem, the underlying cause must be addressed, which is the present rigged market in healthcare.  Furthermore, this rigged market is the result of trying to “fix” the system by adding ever more layers of rigging to try to fix the problems brought on by the original rigging.
I think if everyone lived their lives the way you want them to, we might experience some reduction in demand for healthcare, but conservation doesn’t really fix the underlying problem, which is the lack of market forces being able to operate.  Even with the best health practices, the demand for healthcare will increase, and the corresponding supply must be able to increase to meet it, or we have the same problems of high prices and shortages.  You can’t cure cancer with a bandaid; you have to dig it out, then maintain vigilance thereafter.

Hope and change, in a free world, are the private possessions of motivated individuals.

Well, the system we’ve got is

A.  Alternative medicine; you pay

B.  Institutional medicine; you don’t get the bill.

What do you expect most people to choose?  Sorry, but you can’t “out-supply” hypothetically infinite demand, and infinite demand is what you get when you pay for everything without sending the bill to the person receiving services.

Well, the system we’ve got is

A. Alternative medicine; you pay

B. Institutional medicine; you don’t get the bill.

What do you expect most people to choose? Sorry, but you can’t “out-supply” hypothetically infinite demand, and infinite demand is what you get when you pay for everything without sending the bill to the person
receiving services.

Since we already know that the system we’ve got is not working, I thought we were talking about how to fix it for real.
You have to build a firm foundation of market forces before you attempt to rebuild the structure that rests on that foundation.  Removing supply restrictions along with making all medical expenses pretax would build such a foundation, as I have already said several times.
Demand is never infinite, btw.  You exaggerated there.  I also never said anything about “out-supplying” anything; that’s just a ridiculous notion.  Once again, basic supply/demand econ: Demand creates supply.  Anything that prevents that causes distortion, like we have now.
BTW, regulations that restrict who can be a “doctor” also restricts supply and makes demand more inelastic by removing substitutes.  Nutritionists and exercise physiologists could have equal standing with medical doctors, but regulations forbid that, thus shrinking the alternatives.  Result: price inelasticity.

Hope and change, in a free world, are the private possessions of motivated individuals.

BB: You don’t seem to understand that “institutional medicine” was created to “fix” the supply problem.

Hope and change, in a free world, are the private possessions of motivated individuals.

No, I understand fully that the “HMO” is a mockery--little effort if any is spent on actually maintaining health, as the operators realize fully that their bread is buttered by increased sickness.  As do administrators at Medicare and Medicaid, for that matter.

And that’s the crux of the problem.  Yes, allowing more people to train and practice would relieve some supply issues, but as long as someone else is paying, the only restraint on demand is effectively time.

“But we’ll double the amount of doctors,” you might say.  Fine, I reply; the obesity rate can double as well, and soak up that advantage.  It’s “only” 35% now, after all.

“But it won’t rise that way!”, might be the reply.  Well, that’s exactly what they thought with HMOs, wasn ‘t it?

And even if it doesn’t under the current regime, you can figure out how to cause spending to rise.  Maybe put a few million more otherwise healthy people on Prozac and Ritalin--and pay for the problems that ensue with that as well.  Keep adding amenities to hospital rooms that were unknown 30 years ago when people paid for their own care. 

Prescribe patent-protected name brand drugs because the rep was cute (she inevitably is), and the patient doesn’t pay the full cost.

You see, you can generate pretty much infinite demand as long as the buyer never sees the bill, even with something like medical care.  It’s just like airports start showing up with marble when they get a cool billion or so in federal cheese.

And thus you’ve GOT to work both sides of the equation, not just one.

BB: BTW, very few cases of Type 2 diabetes require an insulin pump.  It’s caused by resistance to one’s own insulin, not a shortage of same.

Hope and change, in a free world, are the private possessions of motivated individuals.

And thus you’ve GOT to work both sides of the equation, not just one.

Trying to impose some sort of “health morality” on free people won’t work, but increasing the supply, while removing the barrier between consumer and payer will work quite nicely.
robert108 on February 20, 2008 at 03:13 pm

You keep up the same mischaracterization; why is that, BB?  Demand is still never “infinite”, unless you have an infinite population.  I think one of your problems is that you jump back and forth from the micro level to the macro level.  Your behavioral prescription is at the micro level, but you incorrectly assume that it will pay off on the macro level, and that is an incorrect assumption.

Hope and change, in a free world, are the private possessions of motivated individuals.

I have a request.  Would someone (laydownSally or 108 perhaps) who thinks the restricted number of doctors is a significant problem, please explain why?  Please be specific in terms of this issue, and realize that I may not know, understand or agree with factors that you may believe to be true and regard as major premises.  However, I do have a reasonably strong economics background and understanding of how markets work.

I do not agree with or condone the AMA’s restriction on the number of physicians.  Please reread that sentence as many times as necessary until you accept that your “proof” comment is wrong.

Sweetness,

Heh heh...good retort. The comment I made was more general in nature and it was intended indicate that in my experience most (not all) physicians are concerned more about compensation than other things. That your wife is not a unit in this large sub-set, I’ll take your word for it. In my defense, all of your posts in one manner or another spoke of compensation. I apologize if took umbrage to my comment.

R108 and Bike,

It would appear as though we all, Sweetness included, agree that the system is broken. But our discussion has degenerated into arguing about which hole is losing water the fastest, when all need to be plugged.

Is it fair to say that we increase supply and slow demand by putting more of the burden on the consumer?  If so, this has to be done concomitantly.

And should not the HMOs and other providers be subject to the same forces all other insurance institutes comply with?  That is...I should pay less for my insurance than the obese, hard-drinking, chain-smoking, riding-without-a-helmet biker that lives down the lane. Without, I might add, no one restricting his right to engage in those activities.

“To love is not to stare steadfast at one another...it is to look forward, in the same direction.”
Saint-Exupéry

Sweetness,

R108 and BB are better on the economics end than I, but I’ll explain my position.

Anytime in a free market that you restrict competition you degrade the level and you increase the price for that service.

When you introduce choice into the market place you place the encumbrance on the provider to decrease price and increase quality.

“To love is not to stare steadfast at one another...it is to look forward, in the same direction.”
Saint-Exupéry

Sally: Close enough.

Hope and change, in a free world, are the private possessions of motivated individuals.

Sally, thanks for the explanation; I wanted to be sure that I understood your position.  With all due respect, you are missing a major, obvious point in your economic analysis of free-market physician services. 

If I may restate your point:  limiting the number of physicians, and therefore physician services, causes the price for such services to be artificially high, so increasing the number of physicians will mean lower prices. 

This argument assumes that the price level is, or will be, determined by the market, which is not true.

The government, through medicare/medicaid reimbursement rates, has created a price ceiling for physician rates.  That is, prices are artificially low, below what would be a market-determined rate.

So, in order for a truly free market for physician services to exist, these price controls will have to be cancelled, along with the restriction on the number of physicians.  It is impossible to know the exact effect on the price level that these two changes would have, and it would take years to see the full effect.  Even with more physicians, prices could rise without price controls.

Almost every physician in the US works under these price controls.  So, if you want to make the argument that the AMA should allow more doctors so prices will fall, you are free to do so.  Of course, unless you also agree with the cancellation of price controls, you can no longer make that argument under the guise of a free market champion, and without price controls, you are no longer guaranteed of lower prices.  Here are some practical points that you may not have considered if the restrictions on physician numbers were cancelled.

If the number of new doctors was unrestricted, and led to lower prices for physician services, the retirement rate of current physicians would increase.  Undoubtedly, some physicians would retire or move on to other careers instead of tolerating a 10, 20, 30% drop in the prices they can charge.  Also, the pool of people wanting to become physicians would shrink, since their expectations of income have been lowered.  Kind of a bummer to look ahead at 4 years of medical school ($100k tuition plus living expenses) and 3 years of residency with a lower financial payoff; an MBA starts to look a little better.  Ah yes, free market forces at work.

Free market analysis works best with standardized commodities.  On some level, physician services are standardized, but not completely.

Yes, to get a functioning market, we do need to get rid of price controls.  However, you might be surprised where those prices end up.  Some doctors have found that when they stop taking insurance payments and processing them for patients, their overhead drops to the point where they can undercut the “official” insurance rates by about half without seriously cutting their pay.

And I’m not trying to argue which hole needs to be plugged; I’m arguing that BOTH need to be.  As “LayDown” notes, why on earth should healthy nonsmokers pay the same rates as “Mr. Lard” with a nicotine habit?  Life insurance asks whether you smoke and your weight; why not health insurance?

Life insurance asks whether you smoke and your weight; why not health insurance?

Because it was socialized to “fix” the supply problem.

Hope and change, in a free world, are the private possessions of motivated individuals.

BB,

I have read snippets about physician practices that require cash payment and refuse to file insurance claims.  Indeed, it cuts overhead.  Do you have any evidence that backs up your claim that they charge HALF of the allowable amounts??  I cannot let you get away with that claim without a challenge; I’m skeptical, to put it mildly, that the difference is that great.  Somewhat lower prices are probably necessary to entice their patients to file their own insurance claims, but I question the premise that such physicians will be willing to pass that much of their savings on to their patients.

Sorry for sounding so negative.  For the record, I think it is a fine idea, just like any other attempts at increased efficiency and productivity.  I just doubt that the price difference is that great.

On to bigger themes:  I strongly agree that healthcare insurance rates should be a function of risk factors, like the ones you mention.  Unfortunately, no politicians push platforms of increased personal responsibility, in fact, quite the contrary.  Demographically, where are the large or largest percentages of obese, smokers, and those in relatively poor health?  Of course, people in the lowest income levels.  So, I believe we are on an inevitable and sad journey to universal “free” healthcare.

So, in order for a truly free market for physician services to exist, these price controls will have to be cancelled, along with the restriction on the
number of physicians.

Not really, all there has to be is choice for the consumer; the higher-priced socialized plan, on a level playing field(all medical care paid with pretax dollars for everyone) will simply lose market share to the fee for services group.  No need for coercive legislation, just restoration of real choice.
A “free market” means freedom of entry and exit.
So, if everyone has a choice between simply transacting with a doctor and signing up for a complicated and expensive medical plan, which one will win?  Except for catastrophic illness/injury, the simple and less expensive transaction with a doctor will win out, assuming they are on a level playing field.

Hope and change, in a free world, are the private possessions of motivated individuals.

Here you go:

http://www.usatoday.com/news/health/2004-04-04-cash-doctors_x.htm

Google it for yourself, you’ll find a lot more.  There are some doing a great business this way, some struggling, of course. 

And 108, the central idea behind HMOs wasn’t to get better supply.  Sorry, Kennedy wrote the bill, he’s a demand-sider/Keynesian, and how exactly do you help supply by working on the demand side of the equation, as the HMO bill did?

Here’s an interesting thing on the subject:

http://www.capmag.com/article.asp?ID=2819

And 108, the central idea behind HMOs wasn’t to get better supply.

I never said it was, which was why I put quotes around “fix”.  It wasn’t a fix, never will be a fix, and continues to distort the healthcare market because it doesn’t address the supply problem.  What part of that don’t you understand?

Hope and change, in a free world, are the private possessions of motivated individuals.

Then what on earth does this mean, 108?

Because it was socialized to “fix” the supply problem.

I agree that we’ve got largely socialized medicine.  I do not, however, see any credible evidence that Nixon and Kennedy were working to fix the supply issues--leaving out the basic issue of whether their plans would work or not!

Because it was socialized to “fix” the supply problem.

What is your problem, BB? I have said this over and over again to you, at least ten times, and you still don’t get it.
Like all govt “fixes”, it didn’t work!  Instead of fixing what needed to be fixed(supply), they tried to “fix” it with layers of socialism all designed to control demand, which is why it didn’t work!!!!!

Get it now?

Hope and change, in a free world, are the private possessions of motivated individuals.

The genesis of this problem with healthcare is an ongoing supply problem; all the collectivist attempts to “fix” healthcare are on the demand side.  You can only fix a supply problem by allowing the supply to rise to meet the demand.  That is an individualist solution, so collectivist solutions will never work; they only exacerbate the problem, which is exactly why we have the situation we have today.  You may agree or disagree, but please don’t keep trying to mischaracterize what I’m saying.

Hope and change, in a free world, are the private possessions of motivated individuals.