If we introduced free-market reforms at this point, such that actual insurance only paid 5% of claims, insureds would probably still prefer insurers that negotiate prices for them. So all healthcare encounters would still probably go through insurance.
We recently learned about a form of "dental insurance." You show your card to the dentist's office, and you get a discount. But I don't know if there would be as much price discrimination if the vast majority of people were paying out of pocket. People might all get the discounted price. If they did not, then you're right.
That is possible but our dental system suggests not. Dentists are interesting in that some take insurance, and the rates that limits them to, while many others do not. Many of these dentists offer no discounts except maybe for cash at time of service. The same applies to orthodontics except I'd bet even less is through insurance. Laser eye surgery is almost never covered by insurance. Many offer discounts as Kling mentions but mostly not rates negotiated by insurance companies.
Conventional wisdom (not always right) is that the smaller insurance role in these services holds down prices. It also seems their overheads are way lower. I'd bet market forces contribute to that.
I’d note that both dentistry and orthodontics are generally a lot cheaper than medicine. It’s really hard to parse cause and effect.
I’d also note that there may be path dependence. People are used to getting their medical care repriced and providers are used to ridiculous list prices that they know will get repriced.
Dentistry and orthodontics might be cheaper, but what about the margins? The cost for a simple dental exam is easily on par with seeing a primary care doctor. What's the margin on a set of braces?
My point is just that it’s hard to say that the experience in dentistry tells us much about medicine. It might or might not. The absolute price level of the related services might mean that it doesn’t.
It's both. It's all of the above. Sometimes the patient has cancer and heart disease too, also diabetes and chlamydia. That's the US health care system diagnosis, "Is it A or B or C or ... Z?" - "Yes."
And so it's prices too. Other developed countries use some services even more - sometimes much more - intensely than the US, e.g., average length of hospital stay for any particular procedure or number of angioplasties per capita. They can afford it because the average cost per day or procedure is less than half what it is in the US, no matter how you try to 'correct' the comparison, with similar outcomes. Only the US prices of fully elective procedures for which most people pay mostly out of pocket suddenly start to converge to the same ballparks of developed country norms. If you use those ratios to normalize, the prices of everything else for comparable procedures, tech, care are in the stratosphere.
Thanks, and I wish I could say I was 'back'. Unfortunately, for reasons it would be unwise for me to reveal but starting last fall, I found myself in a situation which required me to abstain from most online commentary and even ordinary communication with some friends to avoid getting myself and perhaps them too in the kind of trouble I cannot afford to absorb in my present circumstances. Thankfully I was alerted to this risk (a danger I had underestimated and regarding which I confess I had become too cavalier) in time to adjust behavior to protect myself and perhaps others too. My best information is that things will blow over after a year, so hopefully not too much longer. All I can say - and with sadness - is that people should update their priors to be much more cautious and security-conscious about what they say and who they talk to.
That's a very interesting stat about new procedures and physician-administered drugs. I wonder how much is the same drugs coded differently.
The shortage of doctors is highly related to limited spots in med schools and internships. My guess is the number of NPs and PAs is increasing rapidly but still too slow. I haven't looked for data to what the increases are.
Yes, I agree with what you say. Health care is the elephant in the budget deficit room. I would guess that Medicare and Medicaid comprise roughly 40% of the Federal budget, and growing (with fits and starts). As you know, total Federal debt is something like $35 trillion, but that understates the true liability. (Unlike public companies, the U.S. gov't isn't required to use accrual or GAAP accounting). If the gov't used Generally Accepted Accounting Principals (GAAP) which account for unfunded liabities, I believe that number would be about $100 trillion ( my very rough ballpark guess), with probably half that being healthcare related. Ugh!
While most of the overreaction to Covid-19 concerned vaccines, masking, and lockdown procedures, and the latter two were mostly not done to us by the health care system, a large part of the public does not realize that the federal government seriously messed up the health care system in response to it, not least by giving hospitals a subsidy for each person they diagnosed as having Covid and a larger subsidy for each death where Covid was listed as one of the causes. A lot of overdiagnosis resulted.
It's too late to save most of the people affected, but there are important lessons to be learned from the debacle that are not being heeded by the bureaucrats in charge. One is that it is too easy for an executive to invoke emergency powers and too difficult and slow for either legislators or voters to take them away. Second is that the civil right to refuse unwanted treatments is of life-and-death importance. And third is that emergencies are best handled at the local level, so that there is no central authority that can impose mistakes on the whole country.
The later point is the most important. CDC did not give individuals and local policy makers the tools to decide on cost effective NPI's. In addition, it frightened people by emphasizing the "safety" of the vaccines. Airlines do not advertise their "safety."
I think you are at least partly correct in your diagnosis. I’ve always thought that the various disconnects between supply and (artificially inflated/subsidized) demand are in large part to blame. Make a system where patients often pay little or nothing out of pocket, with dramatic reductions in buyer discipline, etc etc, and no surprise prices increase. All things considered, I’m not so sure that this is all that different in principle from the also-dramatic increases in higher education costs we’ve seen over similar time periods.
Approximately 50% of Medicare costs can be attributed to the obesity/diabetes crisis. Address that and costs related to a whole host of other diseases such as coronary vascular disease and other metabolically related illness with dramatically drop. Now, there are new drug out there: Semaglutide and Terzepitide ( works differently than Sema, and better) result in dramatically lower weight, less CVD, stroke and BP issue but they are not cheap. Similarly, PCSK9 inhibitors lower risk of CVD events, but getting them approved for many remains a challenge.
it appears that as far as insurers are concerned , rather than paying for some meds, they will incur the cost of events and must seem to think that those costs< costs of paying for these meds. Add to it that the medical profession and insurers, mostly the latter do not view obesity as a disease .
As to finding an internist, it all depends upon where one lives. In many zip codes better, more established internists have opted for the concierge model, thus lessening the number of doctors who take insurance.
"I would argue that the main causes of poor health outcomes in the United States are obesity, substance abuse*, and mental illness. " -- easy for the system to treat: the sick human must CHOOSE to stop eating too much, or taking too many drugs, or, to stop NOT taking the anti-mental illness drugs which the mentally ill so often stop taking.
Adult freedom to act should go along will the responsibility to pay for the bad consequences of behavior -- and the freedom to choose or not. But once one chooses obesity, it is no longer fair to require the non-obese to pay more for more-often sicker obese folk.
The obese are similar drug addicts in that food is like the drug they're addicted to -- harsh diets result in all-day cravings, and dream/ nightmares about food. But Hanania is correct that each bite (not byte!) eaten by the obese is an exercise in their "free will" -- which is diminished because of their addiction. Unlike bio-sex, "free will" really is more of a spectrum (if it even exists, which I firmly believe but understand cannot be proven).
We really do more of a social discussion, as Arnold & Freddie sort of had (more of a Freddie paper presentation), of how to be compassionate to addicts & mentally ill, while also treating the responsible non-sick folk fairly. At a minimum, some safe and not uncomfortable place to sleep with toilet access, and food, should be available.
Perhaps a voluntary dorm/ cell, with cafeteria food (some daily free menu plus other options that need payment) for the ill. Similarly for special weight loss camps with restricted diets and required exercise. Such folk want the child-freedom FROM responsibility, but also want the freedom to act AS IF they are responsible adults.
Lots of fun actions are, because of the risk of damage, irresponsible. When overeating and drug abuse require others to pay more, it becomes a bit unfair for the gov't to punish the careful to care for those who choose less careful actions. We need more discussion of trade-offs.
You're writing as if it really was a choice for these people. Over 90% of obese people can't lose significant weight for a long period of time. If you think they're all weak willed, I've got a bridge to sell you in Brooklyn. Your fat farms may work temporarily and will fail as soon as you let the inmates out.
We need need need more Med Schools. For 40 years that has been the most obvious step for improved health care. That’s not all, but if some states can’t buy failing current colleges, like Bennington, and convert them into med schools, more difficult choices ain’t gonna happen.
It's expensive if you have to pay for the test yourself. Think of a test that costs $5000 and has a chance of saving your life of 1/200. Not very many people would pay for such a test themselves.
You miss the point. There may be dozens of tests with similar benefit/cost configurations, and each one might have to be repeated every year, or even more often. Unless you are very wealthy, you would have to be selective about which tests to take.
I’ve often wondered if, in a free market, people wouldn’t purchase health and life insurance in the same policy, to help align the insurer’s incentives with keeping the insured alive. And maybe disability insurance, too, to incentivize the insurer to keep the insured at least healthy enough to work. We’ll never know.
Our food system is a gateway drug for the US Healthcare system
Healthcare is for the most part a low productivity solution to extend life. Marginal return is low. Conversely the barriers to nutrient dense quality food are to high. Those barriers are in part price. They are also the friction of shoping, cooking, recipes, life, correlation to long term outcomes etc.
Price discovery in Healthcare would help. Unbundled care would help. But still for the most part Healthcare sands rust and applies bonds.
Why hasn't creative destruction displaced it? Likely lack of good early adopter market to reveal latent price signals.
If this diagnosis is correct, why does it receive so little attention? I suspect that people prefer a diagnosis that blames “our free-market health care system”
Possibly because opponents of equalizing subsidies for health insurance not purchased by employers with subsidized for employer-purchased insurance, refer to it as "socialism," as if employer-purchased insurance is "free market."
No one has the courage to find ways to inject cost befit analysis of drugs, equipment and procedures into the system. [Not that it would be easy, but no one is trying.]
But, really, if you asked people why costs of health care have increased, wouldn't most people say it was because new drugs and machines are more expensive than the old ones?
It seems to me that you can think of a health insurance policy as having several financial drivers, if they were rationally designed, rather than mainly responding to regulation.
1. The premium paid. This has to fund treatments.
2. Patient contribution. This could be coinsurance or copays or whatever. A key point is to assure that patients have some cost when making a decision about whether treatment is worth it.
3. Provider prices. This is mainly about negotiating with oligopolistic regional providers who become maximum
price-setters for everyone else. I think. Ugh. Whatever.
4. Treatment value. The current system does this stupidly. It first asks whether the treatment is medically necessary. “Necessary” for what? That just puts the rabbit in the hat and defers the question to someone else (like supposedly expert panels). A better approach would be for those expert panels to arrive at a value in terms of years of life saved or quality of life preserved. Then each insurance policy could set that as an explicit variable: we’ll cover treatments up to a treatment value of $500k/lifeyear or $20k per quali-year. There could be variations -- we’ll pay up to the cap for that treatment and the rest is on you vs we don’t cover that, for example. Yeah, that’s really hard, but everything else is just hiding that this is what’s actually happening, by way of things like decisions about medical necessity, physician review panels, pre-authorization, step-therapy requirements, and long delays in pre-authorization.
Re: "the main causes of poor health outcomes in the United States are obesity, substance abuse*, and mental illness. These are all notoriously difficult to treat."
Technology shock is the main cause of obesity and substance abuse.
Obesity: cheap, fast calories + technologies that replace physical labor and walking.
Substance abuse: quick delivery of concentrated doses of ever-more powerful mind drugs to the brain (by injection, inhalation, pill). It was one thing for an Andean peasant, by tradition, to chew coca leaves as a mild stimulant in a context of hard labor. It's altogether another for a person today to inject cocktails of cocaine, heroin, fentanyl.
Many people get stuck in self-reinforcing patterns of myopic choices in these contexts of technology shock, as present consumption then makes it harder to delay gratification next time. (Habituation, addiction). Self-regulation breaks down in a bad equilibrium centered on the here and now.
It's hard "to treat" obesity and substance abuse, because they are entrenched in myopic choice patterns.
What about "mental illness" (what Thomas Szasz called "problems of living")?
There is substantial correlation between diagnoses of substance abuse disorder and mental illness. Surely, these problems reinforce each other. And surely the commonplace practice of treating mental illness by prescribing mind drugs indirectly reinforces the idea that drugs are the answer. It turns out that many persons who are diagnosed with mental illness prefer illicit mind drugs to drugs that the psychiatrists prescribe for them.
Here, too, we find that it's hard "to treat" mental illness insofar as problems of living find expression in patterns of decision-making that appear self-defeating to others. And, of course, self-defeating behaviors, willy nilly, often cause social friction. And social friction reinforces alienation insofar as the person, who won't fit in, interprets her situation and the world in ways that subjectively justify her choices.
Technology should not be banned or even taxed just because some people choose to use it in a way that causes obesity. The whole point of being an adult is getting to make your own risk/reward decisions individually.
I’ll repeat a point that I made the other day somewhere in substack. I suspect that obesity would be better treated by a carbohydrate tax than by the medical profession. Thinking of obesity primarily as a medical condition leads us to the wrong kinds of approaches.
(I don’t think that this thought applies to mental illness at all. Perhaps it might apply to substance abuse, if we took an approach of legalize and tax, but it’s not a panacea. People still get hooked on cigarettes despite the massive statistical success of tobacco taxes.)
I'm not sure why you continue to shortcut to carbohydrate tax despite being reminded not all carbs are bad. Some are actually very good. Likewise, while there is good reason to believe tobacco taxes have good incentives, there is no RCT showing their impact is massive and not just mostly correlation.
Stu, because it is easy to abstractly say that we should not think of overeating purely as a matter of healthcare, but giving a concrete policy option that does so is much better at inducing people to actually think about overeating other than as a matter of healthcare.
Also if I were pushing this as my desire policy outcome, I’d think through all the second-order issues like excluding fiber from what gets taxed. But I’m not.
And, while I would prefer to live in a world in which no policy gets implemented but after an RCT, I don’t think that would be a real-world burden of proof for someone actually wanting a carb tax )or any other policy).
I agree RCT probably isn't a reasonable burden of proof for a carb tax. But I didn't suggest it was. I suggested your claim about the effect of tobacco taxes needed a better basis than correlation, RCT or not.
I'm glad to hear you are concerned by second order issues. While I like the idea of a carb tax, I think what you will find is that the second order effects are both too big and too unknown to implement more than a sugary drink tax without a lot of problems.
Teachers and nurses are huge voting blocks and I do not believe they will ever let these sectors shrink. "We do too many procedures" = some nurse has to do the procedure = a solid middle class income.
It is difficult (both naturally and at least politically) to separate "deserving" from "undeserving" health expenditure. I'm a Type 1 diabetic from like my father. This is a genetic condition we have no control over. Naturally our health expenditures are going to be higher than average.
Could I afford to just pay more, probably. But my father was a poor orphan and definitely couldn't.
Most people would consider that kind of health condition "deserving of subsidy".
But 90% of diabetics are Type 2. Now some type 2 diabetics are also natural (my mother had it during pregnancy), but most are just fatasses. Is being so fat you have type 2 diabetes "undeserving of subsidy"? When I suggested this yesterday I got fierce pushback, how dare the government be in the business of judging peoples weight (I guess the fact that type 2 diabetes gives you a large (heh) risk score bonus on Medicare isn't judging).
Then there is the question of preventative medicine. Obviously if you deny a person with Type 2 treatment and medication they need one of two things are going to happen:
A) They shape up and become thin.
B) They end up in the hospital a lot.
Some proportion of people are going to end up in B. Unless the answer is "deny them hospital coverage and let them die" then the preventative medicine may be less expensive then B (I personally favor let them die, but I acknowledge the political infeasibility).
And that assumes the problem is something someone can fix. If you've already got AIDS, you can't fix that. So everyone is going to end up in B.
One of the worst regulations were the medical loss ratios. If admin/profit is a fixed % of revenue then insurers have a huge incentive to increase revenue. This is why insurers favor high risk score members in Medicare.
It also becomes a self fulfilling prophecy. Most of that 15% isn't profit, it really is admin (BTW, bid margin requirements assure this in addition to the MLR). Especially selling expense (everyone has to pay the CMS maximum or the brokers won't sell your policies) and other stuff that you can't really go without. 15% of $200 = $30 and 15% of $100 = $15. If your book geared towards $30, you're basically going to end up with an admin/sales expense of $25 and $5 profit, its just were things are going to trend. But if your cost structure has $25 of admin in it, can you sell the $100 revenue business profitably? No, so you aren't even going to focus on trying to win or create $100 revenue business.
Back in the day medicare used to pay a flat fee and you got to keep whatever you saved compared to that. But people complained that Medicare Advantage was "poaching the healthy people" and created the risk score system. Now Medicare Advantage "poaches the sick people."
Fundamentally whatever system the government comes up with people are going to game. They will overpay for some member profile, and insurers will go after that member profile, and they will use whatever tools they have (upcoding) to create that member profile.
In truth, Medicare Advantage shouldn't exist. It is basically a deal between insurers and members against taxpayers. We (insurers) find clever ways to overcharge the government and you (the member) get some of that value back as cash-equivilant benefits (vision, dental, etc) while we pocket some % of the overpayment. In the flat fee era the deal was (we will help you healthy person escape from subsidizing the sick) and in the risk score era its (we will increase total government expenditure and give you some).
Naturally, this is very popular with members (who are voters). It's the equivalent of getting congress to pass an increase in medicare benefits without having to go through the political process. And Medicare Advantage is so big now that threatening to cut it in any way is as politically toxic as threatening to cut Medicare.
"But 90% of diabetics are Type 2. Now some type 2 diabetics are also natural (my mother had it during pregnancy), but most are just fatasses. Is being so fat you have type 2 diabetes "undeserving of subsidy"? When I suggested this yesterday I got fierce pushback, how dare the government be in the business of judging peoples weight (I guess the fact that type 2 diabetes gives you a large (heh) risk score bonus on Medicare isn't judging)."
It's counterintuitive but Type 2 Diabetes has much more of a genetic component than Type 1 Diabetes.
There’s a decent paternalistic but conservative position that it is OK for the government to help offset bad luck. Since that tends to show up as low income, it is the paternalistic conservative basis for mild welfare programs. They tend to be concerned about policing the line between bad luck and getting the “luck” you deserve because of your actions.
Suppose to simplify the hypothetical that we had a system of vouchers with which people could partially find health insurance purchases. In such circumstances, it would appeal to paternalistic conservatives to add something to the voucher for type 1 diabetics, but not type 2 diabetics.
That's basically something like the Medicare risk adjustment model.
What does that mean?
1) Some government agency like CMS will attempt to gather data from the entire healthcare system.
2) That data will tend to be out of date, oversimplified, and deeply flawed.
3) It will then produce a "model" based on that data. That model will be subject to a political process as interest groups attempt to shape the model.
4) Whatever model they come up with, skilled high IQ people working for private entities (health providers, insurers, etc) will go about thinking of every possible way to exploit the model. Hell nowadays even AI will try to pick it apart.
5) Several years after those entities start exploiting the model, the regulatory agency will notice it and start having some meetings about how the model has to be changed (or more likely special interest think tanks paid for by special interests will provide white papers pushing how they think the model should be changed).
6) Within say a decade there might, or might not, be political initiative to institute some kind of change.
7) Whatever that change is it will probably have its own flaws.
8) Even if it was perfect we go back to #4.
I'll be blunt, the only hope for free market healthcare is "merciless commitment to eugenics."
A system where society productively agrees on what health conditions are and aren't "deserving" would have a better chance of having a less flawed model, but it wouldn't be a free market.
If we introduced free-market reforms at this point, such that actual insurance only paid 5% of claims, insureds would probably still prefer insurers that negotiate prices for them. So all healthcare encounters would still probably go through insurance.
We recently learned about a form of "dental insurance." You show your card to the dentist's office, and you get a discount. But I don't know if there would be as much price discrimination if the vast majority of people were paying out of pocket. People might all get the discounted price. If they did not, then you're right.
There are also discount drug cards for cash payers, which are pretty popular among them.
That is possible but our dental system suggests not. Dentists are interesting in that some take insurance, and the rates that limits them to, while many others do not. Many of these dentists offer no discounts except maybe for cash at time of service. The same applies to orthodontics except I'd bet even less is through insurance. Laser eye surgery is almost never covered by insurance. Many offer discounts as Kling mentions but mostly not rates negotiated by insurance companies.
Conventional wisdom (not always right) is that the smaller insurance role in these services holds down prices. It also seems their overheads are way lower. I'd bet market forces contribute to that.
I’d note that both dentistry and orthodontics are generally a lot cheaper than medicine. It’s really hard to parse cause and effect.
I’d also note that there may be path dependence. People are used to getting their medical care repriced and providers are used to ridiculous list prices that they know will get repriced.
Dentistry and orthodontics might be cheaper, but what about the margins? The cost for a simple dental exam is easily on par with seeing a primary care doctor. What's the margin on a set of braces?
My point is just that it’s hard to say that the experience in dentistry tells us much about medicine. It might or might not. The absolute price level of the related services might mean that it doesn’t.
All true. Not sure what you think that changes.
One reason for the high list prices is to get more credit for charity care.
It's both. It's all of the above. Sometimes the patient has cancer and heart disease too, also diabetes and chlamydia. That's the US health care system diagnosis, "Is it A or B or C or ... Z?" - "Yes."
And so it's prices too. Other developed countries use some services even more - sometimes much more - intensely than the US, e.g., average length of hospital stay for any particular procedure or number of angioplasties per capita. They can afford it because the average cost per day or procedure is less than half what it is in the US, no matter how you try to 'correct' the comparison, with similar outcomes. Only the US prices of fully elective procedures for which most people pay mostly out of pocket suddenly start to converge to the same ballparks of developed country norms. If you use those ratios to normalize, the prices of everything else for comparable procedures, tech, care are in the stratosphere.
I was wondering where you had gone after the migration to Substack. It’s good to have you back!
Thanks, and I wish I could say I was 'back'. Unfortunately, for reasons it would be unwise for me to reveal but starting last fall, I found myself in a situation which required me to abstain from most online commentary and even ordinary communication with some friends to avoid getting myself and perhaps them too in the kind of trouble I cannot afford to absorb in my present circumstances. Thankfully I was alerted to this risk (a danger I had underestimated and regarding which I confess I had become too cavalier) in time to adjust behavior to protect myself and perhaps others too. My best information is that things will blow over after a year, so hopefully not too much longer. All I can say - and with sadness - is that people should update their priors to be much more cautious and security-conscious about what they say and who they talk to.
I hear you. Best of luck under the radar.
That's a very interesting stat about new procedures and physician-administered drugs. I wonder how much is the same drugs coded differently.
The shortage of doctors is highly related to limited spots in med schools and internships. My guess is the number of NPs and PAs is increasing rapidly but still too slow. I haven't looked for data to what the increases are.
Yes, I agree with what you say. Health care is the elephant in the budget deficit room. I would guess that Medicare and Medicaid comprise roughly 40% of the Federal budget, and growing (with fits and starts). As you know, total Federal debt is something like $35 trillion, but that understates the true liability. (Unlike public companies, the U.S. gov't isn't required to use accrual or GAAP accounting). If the gov't used Generally Accepted Accounting Principals (GAAP) which account for unfunded liabities, I believe that number would be about $100 trillion ( my very rough ballpark guess), with probably half that being healthcare related. Ugh!
While most of the overreaction to Covid-19 concerned vaccines, masking, and lockdown procedures, and the latter two were mostly not done to us by the health care system, a large part of the public does not realize that the federal government seriously messed up the health care system in response to it, not least by giving hospitals a subsidy for each person they diagnosed as having Covid and a larger subsidy for each death where Covid was listed as one of the causes. A lot of overdiagnosis resulted.
It's too late to save most of the people affected, but there are important lessons to be learned from the debacle that are not being heeded by the bureaucrats in charge. One is that it is too easy for an executive to invoke emergency powers and too difficult and slow for either legislators or voters to take them away. Second is that the civil right to refuse unwanted treatments is of life-and-death importance. And third is that emergencies are best handled at the local level, so that there is no central authority that can impose mistakes on the whole country.
The later point is the most important. CDC did not give individuals and local policy makers the tools to decide on cost effective NPI's. In addition, it frightened people by emphasizing the "safety" of the vaccines. Airlines do not advertise their "safety."
I think you are at least partly correct in your diagnosis. I’ve always thought that the various disconnects between supply and (artificially inflated/subsidized) demand are in large part to blame. Make a system where patients often pay little or nothing out of pocket, with dramatic reductions in buyer discipline, etc etc, and no surprise prices increase. All things considered, I’m not so sure that this is all that different in principle from the also-dramatic increases in higher education costs we’ve seen over similar time periods.
Approximately 50% of Medicare costs can be attributed to the obesity/diabetes crisis. Address that and costs related to a whole host of other diseases such as coronary vascular disease and other metabolically related illness with dramatically drop. Now, there are new drug out there: Semaglutide and Terzepitide ( works differently than Sema, and better) result in dramatically lower weight, less CVD, stroke and BP issue but they are not cheap. Similarly, PCSK9 inhibitors lower risk of CVD events, but getting them approved for many remains a challenge.
it appears that as far as insurers are concerned , rather than paying for some meds, they will incur the cost of events and must seem to think that those costs< costs of paying for these meds. Add to it that the medical profession and insurers, mostly the latter do not view obesity as a disease .
As to finding an internist, it all depends upon where one lives. In many zip codes better, more established internists have opted for the concierge model, thus lessening the number of doctors who take insurance.
"I would argue that the main causes of poor health outcomes in the United States are obesity, substance abuse*, and mental illness. " -- easy for the system to treat: the sick human must CHOOSE to stop eating too much, or taking too many drugs, or, to stop NOT taking the anti-mental illness drugs which the mentally ill so often stop taking.
Adult freedom to act should go along will the responsibility to pay for the bad consequences of behavior -- and the freedom to choose or not. But once one chooses obesity, it is no longer fair to require the non-obese to pay more for more-often sicker obese folk.
The obese are similar drug addicts in that food is like the drug they're addicted to -- harsh diets result in all-day cravings, and dream/ nightmares about food. But Hanania is correct that each bite (not byte!) eaten by the obese is an exercise in their "free will" -- which is diminished because of their addiction. Unlike bio-sex, "free will" really is more of a spectrum (if it even exists, which I firmly believe but understand cannot be proven).
We really do more of a social discussion, as Arnold & Freddie sort of had (more of a Freddie paper presentation), of how to be compassionate to addicts & mentally ill, while also treating the responsible non-sick folk fairly. At a minimum, some safe and not uncomfortable place to sleep with toilet access, and food, should be available.
Perhaps a voluntary dorm/ cell, with cafeteria food (some daily free menu plus other options that need payment) for the ill. Similarly for special weight loss camps with restricted diets and required exercise. Such folk want the child-freedom FROM responsibility, but also want the freedom to act AS IF they are responsible adults.
Lots of fun actions are, because of the risk of damage, irresponsible. When overeating and drug abuse require others to pay more, it becomes a bit unfair for the gov't to punish the careful to care for those who choose less careful actions. We need more discussion of trade-offs.
You're writing as if it really was a choice for these people. Over 90% of obese people can't lose significant weight for a long period of time. If you think they're all weak willed, I've got a bridge to sell you in Brooklyn. Your fat farms may work temporarily and will fail as soon as you let the inmates out.
We need need need more Med Schools. For 40 years that has been the most obvious step for improved health care. That’s not all, but if some states can’t buy failing current colleges, like Bennington, and convert them into med schools, more difficult choices ain’t gonna happen.
Residencies, not med schools.
Is $1mm per life saved expensive? I'm pretty sure insurers value lives at much more than that.
It's expensive if you have to pay for the test yourself. Think of a test that costs $5000 and has a chance of saving your life of 1/200. Not very many people would pay for such a test themselves.
You're convincing me that we don't spend enough on health care! I'm looking into getting this test right now.
You miss the point. There may be dozens of tests with similar benefit/cost configurations, and each one might have to be repeated every year, or even more often. Unless you are very wealthy, you would have to be selective about which tests to take.
I’ve often wondered if, in a free market, people wouldn’t purchase health and life insurance in the same policy, to help align the insurer’s incentives with keeping the insured alive. And maybe disability insurance, too, to incentivize the insurer to keep the insured at least healthy enough to work. We’ll never know.
Our food system is a gateway drug for the US Healthcare system
Healthcare is for the most part a low productivity solution to extend life. Marginal return is low. Conversely the barriers to nutrient dense quality food are to high. Those barriers are in part price. They are also the friction of shoping, cooking, recipes, life, correlation to long term outcomes etc.
Price discovery in Healthcare would help. Unbundled care would help. But still for the most part Healthcare sands rust and applies bonds.
Why hasn't creative destruction displaced it? Likely lack of good early adopter market to reveal latent price signals.
If this diagnosis is correct, why does it receive so little attention? I suspect that people prefer a diagnosis that blames “our free-market health care system”
Possibly because opponents of equalizing subsidies for health insurance not purchased by employers with subsidized for employer-purchased insurance, refer to it as "socialism," as if employer-purchased insurance is "free market."
No one has the courage to find ways to inject cost befit analysis of drugs, equipment and procedures into the system. [Not that it would be easy, but no one is trying.]
But, really, if you asked people why costs of health care have increased, wouldn't most people say it was because new drugs and machines are more expensive than the old ones?
It is correct to blame the most free-market part of our health care system for generating new treatments!
But not alone for generating treatments that do not pass cost benefit tests.
Nice!
It seems to me that you can think of a health insurance policy as having several financial drivers, if they were rationally designed, rather than mainly responding to regulation.
1. The premium paid. This has to fund treatments.
2. Patient contribution. This could be coinsurance or copays or whatever. A key point is to assure that patients have some cost when making a decision about whether treatment is worth it.
3. Provider prices. This is mainly about negotiating with oligopolistic regional providers who become maximum
price-setters for everyone else. I think. Ugh. Whatever.
4. Treatment value. The current system does this stupidly. It first asks whether the treatment is medically necessary. “Necessary” for what? That just puts the rabbit in the hat and defers the question to someone else (like supposedly expert panels). A better approach would be for those expert panels to arrive at a value in terms of years of life saved or quality of life preserved. Then each insurance policy could set that as an explicit variable: we’ll cover treatments up to a treatment value of $500k/lifeyear or $20k per quali-year. There could be variations -- we’ll pay up to the cap for that treatment and the rest is on you vs we don’t cover that, for example. Yeah, that’s really hard, but everything else is just hiding that this is what’s actually happening, by way of things like decisions about medical necessity, physician review panels, pre-authorization, step-therapy requirements, and long delays in pre-authorization.
Re: "the main causes of poor health outcomes in the United States are obesity, substance abuse*, and mental illness. These are all notoriously difficult to treat."
Technology shock is the main cause of obesity and substance abuse.
Obesity: cheap, fast calories + technologies that replace physical labor and walking.
Substance abuse: quick delivery of concentrated doses of ever-more powerful mind drugs to the brain (by injection, inhalation, pill). It was one thing for an Andean peasant, by tradition, to chew coca leaves as a mild stimulant in a context of hard labor. It's altogether another for a person today to inject cocktails of cocaine, heroin, fentanyl.
Many people get stuck in self-reinforcing patterns of myopic choices in these contexts of technology shock, as present consumption then makes it harder to delay gratification next time. (Habituation, addiction). Self-regulation breaks down in a bad equilibrium centered on the here and now.
It's hard "to treat" obesity and substance abuse, because they are entrenched in myopic choice patterns.
What about "mental illness" (what Thomas Szasz called "problems of living")?
There is substantial correlation between diagnoses of substance abuse disorder and mental illness. Surely, these problems reinforce each other. And surely the commonplace practice of treating mental illness by prescribing mind drugs indirectly reinforces the idea that drugs are the answer. It turns out that many persons who are diagnosed with mental illness prefer illicit mind drugs to drugs that the psychiatrists prescribe for them.
Here, too, we find that it's hard "to treat" mental illness insofar as problems of living find expression in patterns of decision-making that appear self-defeating to others. And, of course, self-defeating behaviors, willy nilly, often cause social friction. And social friction reinforces alienation insofar as the person, who won't fit in, interprets her situation and the world in ways that subjectively justify her choices.
Technology should not be banned or even taxed just because some people choose to use it in a way that causes obesity. The whole point of being an adult is getting to make your own risk/reward decisions individually.
Agreed.
I’ll repeat a point that I made the other day somewhere in substack. I suspect that obesity would be better treated by a carbohydrate tax than by the medical profession. Thinking of obesity primarily as a medical condition leads us to the wrong kinds of approaches.
(I don’t think that this thought applies to mental illness at all. Perhaps it might apply to substance abuse, if we took an approach of legalize and tax, but it’s not a panacea. People still get hooked on cigarettes despite the massive statistical success of tobacco taxes.)
Why would you tax carbohydrates and not fat, fat is twice as energy dense after all.
I'm not sure why you continue to shortcut to carbohydrate tax despite being reminded not all carbs are bad. Some are actually very good. Likewise, while there is good reason to believe tobacco taxes have good incentives, there is no RCT showing their impact is massive and not just mostly correlation.
Stu, because it is easy to abstractly say that we should not think of overeating purely as a matter of healthcare, but giving a concrete policy option that does so is much better at inducing people to actually think about overeating other than as a matter of healthcare.
Also if I were pushing this as my desire policy outcome, I’d think through all the second-order issues like excluding fiber from what gets taxed. But I’m not.
And, while I would prefer to live in a world in which no policy gets implemented but after an RCT, I don’t think that would be a real-world burden of proof for someone actually wanting a carb tax )or any other policy).
I agree RCT probably isn't a reasonable burden of proof for a carb tax. But I didn't suggest it was. I suggested your claim about the effect of tobacco taxes needed a better basis than correlation, RCT or not.
I'm glad to hear you are concerned by second order issues. While I like the idea of a carb tax, I think what you will find is that the second order effects are both too big and too unknown to implement more than a sugary drink tax without a lot of problems.
Teachers and nurses are huge voting blocks and I do not believe they will ever let these sectors shrink. "We do too many procedures" = some nurse has to do the procedure = a solid middle class income.
It is difficult (both naturally and at least politically) to separate "deserving" from "undeserving" health expenditure. I'm a Type 1 diabetic from like my father. This is a genetic condition we have no control over. Naturally our health expenditures are going to be higher than average.
Could I afford to just pay more, probably. But my father was a poor orphan and definitely couldn't.
Most people would consider that kind of health condition "deserving of subsidy".
But 90% of diabetics are Type 2. Now some type 2 diabetics are also natural (my mother had it during pregnancy), but most are just fatasses. Is being so fat you have type 2 diabetes "undeserving of subsidy"? When I suggested this yesterday I got fierce pushback, how dare the government be in the business of judging peoples weight (I guess the fact that type 2 diabetes gives you a large (heh) risk score bonus on Medicare isn't judging).
Then there is the question of preventative medicine. Obviously if you deny a person with Type 2 treatment and medication they need one of two things are going to happen:
A) They shape up and become thin.
B) They end up in the hospital a lot.
Some proportion of people are going to end up in B. Unless the answer is "deny them hospital coverage and let them die" then the preventative medicine may be less expensive then B (I personally favor let them die, but I acknowledge the political infeasibility).
And that assumes the problem is something someone can fix. If you've already got AIDS, you can't fix that. So everyone is going to end up in B.
One of the worst regulations were the medical loss ratios. If admin/profit is a fixed % of revenue then insurers have a huge incentive to increase revenue. This is why insurers favor high risk score members in Medicare.
It also becomes a self fulfilling prophecy. Most of that 15% isn't profit, it really is admin (BTW, bid margin requirements assure this in addition to the MLR). Especially selling expense (everyone has to pay the CMS maximum or the brokers won't sell your policies) and other stuff that you can't really go without. 15% of $200 = $30 and 15% of $100 = $15. If your book geared towards $30, you're basically going to end up with an admin/sales expense of $25 and $5 profit, its just were things are going to trend. But if your cost structure has $25 of admin in it, can you sell the $100 revenue business profitably? No, so you aren't even going to focus on trying to win or create $100 revenue business.
Back in the day medicare used to pay a flat fee and you got to keep whatever you saved compared to that. But people complained that Medicare Advantage was "poaching the healthy people" and created the risk score system. Now Medicare Advantage "poaches the sick people."
Fundamentally whatever system the government comes up with people are going to game. They will overpay for some member profile, and insurers will go after that member profile, and they will use whatever tools they have (upcoding) to create that member profile.
In truth, Medicare Advantage shouldn't exist. It is basically a deal between insurers and members against taxpayers. We (insurers) find clever ways to overcharge the government and you (the member) get some of that value back as cash-equivilant benefits (vision, dental, etc) while we pocket some % of the overpayment. In the flat fee era the deal was (we will help you healthy person escape from subsidizing the sick) and in the risk score era its (we will increase total government expenditure and give you some).
Naturally, this is very popular with members (who are voters). It's the equivalent of getting congress to pass an increase in medicare benefits without having to go through the political process. And Medicare Advantage is so big now that threatening to cut it in any way is as politically toxic as threatening to cut Medicare.
"But 90% of diabetics are Type 2. Now some type 2 diabetics are also natural (my mother had it during pregnancy), but most are just fatasses. Is being so fat you have type 2 diabetes "undeserving of subsidy"? When I suggested this yesterday I got fierce pushback, how dare the government be in the business of judging peoples weight (I guess the fact that type 2 diabetes gives you a large (heh) risk score bonus on Medicare isn't judging)."
It's counterintuitive but Type 2 Diabetes has much more of a genetic component than Type 1 Diabetes.
https://diabetes.org/diabetes/genetics-diabetes
There’s a decent paternalistic but conservative position that it is OK for the government to help offset bad luck. Since that tends to show up as low income, it is the paternalistic conservative basis for mild welfare programs. They tend to be concerned about policing the line between bad luck and getting the “luck” you deserve because of your actions.
Suppose to simplify the hypothetical that we had a system of vouchers with which people could partially find health insurance purchases. In such circumstances, it would appeal to paternalistic conservatives to add something to the voucher for type 1 diabetics, but not type 2 diabetics.
That's basically something like the Medicare risk adjustment model.
What does that mean?
1) Some government agency like CMS will attempt to gather data from the entire healthcare system.
2) That data will tend to be out of date, oversimplified, and deeply flawed.
3) It will then produce a "model" based on that data. That model will be subject to a political process as interest groups attempt to shape the model.
4) Whatever model they come up with, skilled high IQ people working for private entities (health providers, insurers, etc) will go about thinking of every possible way to exploit the model. Hell nowadays even AI will try to pick it apart.
5) Several years after those entities start exploiting the model, the regulatory agency will notice it and start having some meetings about how the model has to be changed (or more likely special interest think tanks paid for by special interests will provide white papers pushing how they think the model should be changed).
6) Within say a decade there might, or might not, be political initiative to institute some kind of change.
7) Whatever that change is it will probably have its own flaws.
8) Even if it was perfect we go back to #4.
I'll be blunt, the only hope for free market healthcare is "merciless commitment to eugenics."
A system where society productively agrees on what health conditions are and aren't "deserving" would have a better chance of having a less flawed model, but it wouldn't be a free market.
All great observations.