By Doug Gentry, on January 13th, 2012
In honor of the first week in our Healthcare Economics class, and the beginning of a 6 week session on healthcare via OLLI, here is an interesting report from The New York Times.
National health spending rose a slight 3.9 percent in 2010, as Americans delayed hospital care, doctor’s visits and prescription drug purchases for the second year in a row, the Obama administration reported Monday.
The recession, which lasted from December 2007 to June 2009, reined in the growth of health spending as many people lost jobs, income and health insurance, the government said in a report, published in the journal Health Affairs.
 from The New York Times There are a couple of takeaways from this news.
First, the reduction in spending on healthcare could mean a welcome, albeit temporary relief to those governments and organizations that pay for healthcare….BUT…no real relief for state and local agencies which provide/finance healthcare for poor people. Recessions, of course, result in greater numbers of people qualifying for government-supported care.
The other point is a reminder that some portion of healthcare services are discretionary. When healthcare spending was growing by 10 percent or more each year in the 1980s, that growth probably wasn’t driven by an increase in the need for services. Likewise the slower growth over the last several years is probably not due to the population getting healthier and needing fewer services. Instead, people moderated their demand for healthcare. They put off diagnostic tests, or did not follow through on treatments or prescriptions. Going in the other direction, hospitals routinely see increases in elective surgeries near the end of a calendar year, as people have already met insurance deductibles, and decide to seek care before those deductibles are reset in the new year.
Is this good news? Not necessarily. To the extent the people put off truly necessary tests and treatments, those delays may cost us more in the long run. To some extent, though, tough economic times force us to be more cautious about discretionary spending, and there may be very little impact on long run health status. There is the old saying that if you get a cold, it will take 7 days to go away, but if you see a doctor you’ll be cured in a week! One important element of effective healthcare reform is to introduce that sense of caution in our population. It is a delicate balance – not wanting to interfere with early testing and early, cost-effective treatment, but also discouraging care that has less impact on long term health.
Prices for medical care services and supplies also stayed roughly on par with general inflation during this last year, which is a change from the decades of the 1980s and 1990s where the medical care component of the consumer price index routinely outstripped regular price increases.
I wouldn’t have to polish my crystal ball very much to predict that spending increases for healthcare will pick up speed as the economy recovers. This remains the single most important issue in our nation’s federal deficit struggles.
By Simon Grey, on June 7th, 2011
The United Kingdom, where, on average, people live longer than in the U.S., spends only about 9 percent of gross domestic product on medicine, compared with our 18 percent. The British control costs in part by having the will to empower a hard-nosed agency, the National Institute for Health and Clinical Excellence, to study treatments and declare some ineffective. Some hope the United States will create a similar agency, but I fear it would be hopelessly politicized and declawed.
My solution: admit we are cost-control wimps, and outsource our treatment evaluation to the U.K. Pass a simple law saying Medicare (and Medicaid) won’t cover treatments considered but not positively appraised by the Britain’s national health institute.
Even better, use clinical evidence evaluations of the British Medical Journal. They’ve classified more than 3,000 treatments as either unknown effectiveness (51 percent), beneficial (11 percent), likely to be beneficial (23 percent), trade-off between benefits and harms (7 percent), unlikely to be beneficial (5 percent) and likely to be ineffective or harmful (3 percent). Let’s at least stop paying for these last two categories of treatments! And to put pressure on doctors to collect evidence, let’s stop paying for “unknown effectiveness” treatments after 10 years of use.
As I’ve said before, and will continue to say until everyone in this world understands, universal health care plans will never work. Resources are limited, and no amount of political posturing will change that fact. As Robin Hanson notes, there will come a point where the government must cut back on providing health care, and that’s because there are simply not enough resources available to make sure that everyone is always in perfect health. Anyone who says otherwise is stupid, ignorant, or lying.
By TamzinRosenwasser, on June 6th, 2011
Suppose you went into a grocery store, and found no prices on anything. You ask a clerk how much five pounds of potatoes would be, and he asks you whether you are 65 or older. Youre taken aback, but you tell him you are 64, and he asks whether your income is less than $40,000.00 a year. Startled, you say it is more than that, and then he asks whether you have food insurance. Why would the
price of potatoes depend on the buyers age, income, and insurance status, rather than on the cost of growing, transporting, and stocking the potatoes? That would be absurd.
Yet thats how it is with medical care. I would be unable to find out, for example, the cost of an echocardiogram from the hospital where I did my residency. The price is different for different people. The government instituted this ridiculous situation, in 1965, with Medicare and Medicaid. There is a lot of mythology about these programs, but few people understand them like the physicians who are on the front lines actually seeing the patients. For some of them, it has been a gravy train. They game the system. For others, it has been a disaster to go through medical school and residency, and come out a de facto servant to government programs, but of
course, without benefits or retirement. If you are scrupulously honest, these programs will bankrupt youeven while turning you into Public Enemy #1.
Senators Ron Wyden and Charles Grassley have put forth the Medicare Data Access for Transparency and Accountability Act (the DATA Act) to open a database so that everyone can see how much money Medicare has sent to any physician enrolled in it. Regardless of the cost to provide medical services, the price the taxpayers are forced by the government to pay for other peoples medical care has gone down and down per procedure, per diagnosis, per office visit.
The public wont see that, but it will hear about some isolated cases; for example, an Oregon neurosurgeon who allegedly performed multiple spine surgeries on the same patient, or a Florida physician accused of $3 million dollars in Medicare fraud.
Gaming the system is fraud. But the biggest fraud is the one perpetrated on the working people of this nation who are forced to pay for other peoples medical problems. When Medicare was first instituted, Americans were reassured that it would never cost the taxpayers more than $9 billion a year. It is more like $500 billion a year now.
Patients learn to game the system too. Workers must pay through their taxes for even the most trivial complaint when someone on Medicare makes an appointment for it; say for a cosmetic skin lesion that has been present for 30 years without causing any problem. Working people are also forced to pay for the consequences of other peoples smoking, excess drinking, or risky lifestyle choices. Thats fraud, perpetrated by the government on taxpayers. Its hidden behind political smoke and mirrors.
Amazingly, we managed somehow for 189 years after 1776 without Medicare and Medicaid, and things were getting better and better until Lyndon Johnson came up with a good fraudulent vote-buying scheme, and then a lot of people decided there was money to be made off medical problems with the taxpayers the losers.
So, Wyden and Grassley, open your database. But include a list of all the procedures and diagnoses, and what Medicare and Medicaid actually send the physicians as reimbursement so people can see that physicians who spent years of their life in training while incurring tremendous debtare paid about the same as auto mechanics. And also account for where the rest (about 80%) of the
$500 billion goes.
That would be a good start for medical price transparency. And a good precedent for another database, one detailing just how much value politicians give taxpayers who pay their salaries.
About the Author:
Dr. Tamzin Rosenwasser earned her MD from Washington University in St Louis. She is board-certified in Internal Medicine and Dermatology and has practiced Emergency Medicine and Dermatology. Dr. Rosenwasser served as President of the Association of American Physicians and Surgeons (AAPS) in 2007-2008 and is currently on the Board of Directors. She also serves as the chair of the Research Advisory Committee of the Newfoundland Club of America. As a life-long dog lover and trainer, she realizes that her dogs have better access to medical care and more medical privacy than she has, and her veterinarians are paid more than physicians in the United States for exactly the same types of surgery.
By B.P.T., on February 8th, 2011
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