My weekly TOC from the New England Journal of Medicine (NEJM) contains some interesting articles about cost containment in health care, including some discussion about what Obamacare might or might not do to contain costs, based on lessons from Massachusetts (RomneyCare?). Apparently the Affordable Care Act contains some quite innovative and also potentially punitive measures to force hospitals to reduce rates of readmission after discharge, but has missed some other opportunities in the mix. The NEJM has clearly moved on from debate about whether Obamacare is a good or bad thing, and debate about whether it’s going to be constitutionally viable, to discussion about how it will change the health industry. I wonder if this is going to make the NEJM (the world’s top medical journal) look stupid in about 6 months’ time…?
The first article in the NEJM contains a discussion of the problems facing the health system in Massachusetts, which famously introduced a version of Obamacare a few years ago. This system essentially forces people to take up a health insurance plan, penalizing those who don’t, on the assumption that such a model will improve equity and reduce costs through expanding the risk pool. Unfortunately, it appears that the plan hasn’t led to any serious levels of cost containment – according to the NEJM article, costs have risen significantly since 2006. The basic cost for a “bronze” package is $275 per month, which I’m pretty sure is significantly higher than my “silver” care package in Japan, and is $100 higher than it was just a year or two ago. The article claims that this is because of problems in the payment system in the Massachusetts system: it’s not the insurance plan per se, but the way in which hospitals are paid for providing services. Hospitals have been paid under a fee-for-service plan, and this encourages providers to charge for extra services and make extra money. Massachusetts is solving this problem in two ways: by moving to “global health payments” and by forcing people into “accountable care organizations” (ACOs). The former is a system of payment based on the expected total cost of a person’s illness, rather than the services provided within it, designed to penalize providers (i.e. hospitals) who fail to deliver the required care within the expected cost framework associated with any given disease. The latter are large organizations charged with taking responsibility for the care of a group of patients (similar, I think, to the NHS’s clinical care commissioning), and composed of large numbers of amalgamated insurance purchasers. Essentially, “global payments” are an attempt to exit from the fee-for-service system towards a payment system that discourages over-servicing, and ACOs are an attempt to merge small healthcare providers together to give them more negotiating power (as an example, all public employees are going to be combined in one ACO). These two reforms in tandem look suspiciously like an attempt to force the Massachusetts system towards something that looks like the NHS. There’s a hint here as to a basic fact – on the commissioner (health insurance) side, cost containment is best achieved by consolidating commissioners in order to achieve greater bargaining power with providers, and the maximal example of this is the government-run single-payer system. It appears that Obamacare is likely to have a lot in common with this system.
The next article describes Medicare’s attempts to reduce costs through reducing readmissions, and describes some initiatives in Obamacare to reduce readmissions in order to contain costs. Reducing readmissions is something of a holy grail in healthcare cost containment, because readmissions are a theoretically avoidable source of significant healthcare costs – you got your operation, left hospital but had to come back for some kind of medical complication, so you represent a hospital admission that can be prevented through hospital-focused quality control (rather than lifestyle change). Reducing these leads to reductions in overall costs, and better patient experience (no one wants to go to hospital). The article includes a fascinating discussion of what Obamacare aims to do to reduce readmissions – penalizing the worst offenders – but also discusses why for many hospitals reducing readmissions is not a viable financial goal:
Unless they are at maximum capacity, hospitals face two major economic disincentives to reducing readmissions for the specified diagnoses: the direct costs of the program itself and decreased revenues resulting from successful interventions. Interventions to create and sustain reductions in readmissions typically average $100 to $200 per discharge and often have spillover effects, decreasing hospitalizations for nontargeted diagnoses and reducing readmissions from any cause even outside the 30-day window and across payers. Although these effects are desirable outcomes for patients and payers, they detrimentally affect hospitals’ finances.
This is an interesting and often-overlooked aspect of the private healthcare market: it’s not in the interests of hospitals to reduce rates of illness, since they get paid by insurers to treat sick people. And for hospitals that don’t have outrageously high rates of treatment failure, a little bit of treatment failure is (financially) a good thing[1]. This kind of concept just does not apply in the publicly-run systems of the UK and Australia. The article goes on to introduce the concept of a “warranty” rather than a penalty, under which hospitals have to provide care for a condition at a given price and as part of that care have to offer a warranty – so readmission to hospital gains them no financial benefits, since they have to correct any post-surgical complications without extra payment. This forces hospitals to get it right the first time.
Unfortunately it’s not that simple. A third article in the NEJM challenges the idea that reducing readmissions is a worthy goal. It points out that, although numbers of readmissions may vary substantially, rates may not (and rates are what it’s all about in this business). Furthermore, there is evidence that readmissions, although apparently preventable, are often outside hospital control:
The growing body of evidence suggests that the primary drivers of variability in 30-day readmission rates are the composition of a hospital’s patient population and the resources of the community in which it is located — factors that are difficult for hospitals to change.
There is also evidence that readmission rates may increase when service improves, or that patients may be happier when readmission rates improve, because good quality continuity of care may identify additional health care needs:
whereas some studies have shown that sustained efforts can reduce readmission rates somewhat, others have shown that interventions aimed at improving care coordination and access to follow-up care actually increased the rate of readmissions, presumably because of improved access to needed care, with commensurate improvement in patient satisfaction
The authors of this article also point out that in focussing on readmissions the system privileges cost containment over quality of patient experience (i.e. productivity), which is a kind of cost containment in itself, though perhaps less quantifiable in a fee for service system:
over the past decade, we have seen very little improvement in patient safety, and although mortality rates have declined for a few conditions, they remain high for most others. Many of these deaths are preventable. Yet we are focusing tremendous resources on preventing rehospitalizations for three conditions that account for approximately 10% of all hospital admissions in the Medicare population.
They suggest that we should focus on patient safety, and if we’re going to focus on avoidable readmissions we should focus on very narrow time frames (3 or 7 days), the conclusion being that hospital readmissions are not where we are going to find our savings. I think this is another example of how “efficiency gains” never materialize in health – regardless of the health care system you are experiencing, when you hear politicians talk about “efficiency gains” you should think “oh! a wanker speaketh!” Especially if they talk about sacking back office staff (but a statistician would say that).
The thing I think is most fascinating about these three articles is what they imply about the state of knowledge of health care systems today. Despite 100 or so years of development in health insurance and health systems, modern health care theory is incapable of working out exactly what we want from healthcare. Even worse, modern healthcare markets are constructed without any real understanding of what kind of product we’re buying when we participate in them – we know we want “health” but we don’t know whether being readmitted to hospital is a good or bad thing, and people buying health care (insurance companies) and selling it (hospitals) not only can’t agree on a mechanism for setting prices, but the hospitals are profiting from selling (in some cases) a product no one wants to buy, but are forced to buy the hospitals’ own mistakes (hospital readmissions). What kind of private market works under these conditions? It’s not an information asymmetry, it’s an information fuck up. Also noteworthy is the gradual movement of the Massachusetts system towards a form of NHS-lite, in order to reduce costs. Is that telling us something?
The NEJM is holding a fascinating debate on health system performance and planning, within the (admittedly limited) context of the US system. As this debate plays out it gives the rest of the world a fascinating insight into how weak the theory underlying privatized markets for health care really is. It’s not that market systems are fundamentally right or wrong – it’s more that we haven’t worked out how to price health care, so price signals just don’t work. Can such a thing be done? And if so, would an entirely private market in health care work? All my posts to date claim that an entirely private market is a disaster and an impossibility – but is the problem not the notion of a private market per se, but that we don’t yet have a sophisticated enough understanding of health (and, conversely, of markets) to be able to construct such a thing in the first place?
—
fn1: obviously a lot of treatment failure gets you shut down and your managers charged with negligent homicide, so it’s a bad thing[2]
fn2: no one, however, is suggesting that hospital administration are maintaining such a balancing act. What they *are* doing is prioritizing what they consider to be more important issues, like quality of patient care (see article three).
April 13, 2012 at 1:25 pm
“”Also noteworthy is the gradual movement of the Massachusetts system towards a form of NHS-lite, in order to reduce costs. Is that telling us something?
The thing it tells me is that down this road madness lies. And sub-optimal outcomes. But that’s mostly because it suggests to me the system could become more British (and therefore inherently stuffed up). Maybe they could do the NHS right (though I suspect NHS right consists of “Don’t start from here”).
How does thi differ from an Australian or Japanese/German setup? Why are the US heading down the NHS path rather than other nations? Is Mitt Romney a socialist Muslim?
“it’s more that we haven’t worked out how to price health care, so price signals just don’t work. Can such a thing be done?”
The other question that is worth asking is whether non-price signals can be used to drive service provision. Apparently there used to be a school of economics that argued yes, but it lost lots of credibility when the USSR fell apart and everyone worked out that the USSR was a hellhole where non-price signals were totally failing to drive efficient production or consumption. In a extreme example, the NHS has to use non-price signals such as waiting times which also have minimal agreed standards – Other than “I should be taken care of right now and that other guy can wait for however long minimises the tax cost to me.”
Considering the failures on the alternative option is probably important too, though that doesn’t detract from your point that more conversations are needed to drive agreement on what the price signals should actually communicate.
April 13, 2012 at 6:11 pm
I probably didn’t explain thoroughly what I meant by that first point. I don’t mean that they’re trying to achieve a thoroughly state-managed system like the NHS, and it was silly of me to leave that implication hanging. The two ways in which the Massachusetts changes appear to be similar to a “move towards the NHS” are that a) they are trying to force people into larger and larger risk pools, and b) they are shifting towards bulk contracts and/or medical committees holding funds (possibly like the clinical commissioning model the Tories are proposing for the UK, though possibly not). The latter is being done to prevent over-servicing from a fee-for-service model; the former is being done because the managers of larger risk pools can take a tougher line in negotiating with health insurers. Ideally (from the point of view of negotiating tough price settlements with hospitals) the Massachusetts government would force all residents of Massachusetts into one insurance company, thus giving that company the ability to say to any hospital in Massachusetts “we’ll pay 10 bucks for that, or you can move interstate.” Of course, there is a natural monopoly health insurer in the state of Massachusetts, i.e. the govt. (Actually, as an aside, if one accepts the inevitability of large national risk pools of this kind, is there any reason that they need to be managed by the govt? Couldn’t it just contract out that service as well?)
The other question that is worth asking is whether non-price signals can be used to drive service provision
I was trying to ply a hopeful line for market systems here, not a critical one, though maybe writing a post while trying to play Europa Universalis doesn’t make that so easy to do. Maybe a purely private market will work once we can work out the complex technical problems in pricing health. That we haven’t got there yet might be part of the reason governments have to intervene so much in healthcare when compared to, say, the consumer electronics industry. That’s all I meant – I find it kind of amazing that a great many bright minds thinking about health policy over many years still haven’t been able to figure out how to put a fair price on medical procedures that are now technically pretty much routine.
As an aside, the tone of these NEJM articles suggests very strongly to me that the folks in the health policy field in the US have long, long ago moved beyond the public/private debate and are much more interested in practical nuts and bolts, and they’re treating the ACA as a necessary and long-overdue reform. It makes me think that the political debate is well, well behind the policy reality and if so that’s a really sad indictment of the way the American political system handles big issues.
April 13, 2012 at 8:26 pm
On the grouping into larger risk pools you say larger insurers “can take a tougher line in negotiating with health insurers.” While it’s by no means certain, this can take an ultimate form of:
Insurer: I will pay X amount to say that life
Provider: It costs more than that. Let’s let them die.
And if the choice of insurer is mandated [1] then it could lead to health rationing that is a complaint made against the NHS [2]. While I appreciate the risk pool argument, I can also see a case for allowing insurers to offer different services and then let consumers choose the one they want. This could probably be optimised by setting a basic level of mandated cover that doesn’t promise to spend the earth on you and allow people to purchase additional cover to suit their goals. This basically matches the Australian system.
The problem with this approach is that regardless of the basic level of cover, there’s always going to be political pressure to provide more cover than people are actually paying for – especially when the populace at large can see a better level of service is possible. They’re just not necessarily willing (or able) to pay for it.
To be clearer on my price signal comment, I wasn’t claiming you were being negative. I did see how you were endeavoring to ask the questions that needed to be answered. I just wanted to chime in with the problems that are encountered on the other extreme of the organisational option.
The really interesting point about both options (price and non-price signals) being poorly understood and controlled is it raises the possibility that the points in between the two options are no better. When you ask if current government intervention is better organised its pretty easy to reach a conclusion that its not and that government intervention into the market is also just addressing poorly thought out goals. That’s support criticism that government intervention is a political choice, not an actual solution.
[1] And co-payments are prevented, as in the NHS
[2] Though the NHS also rations through wait times, but that’s a bit of an aside.
April 14, 2012 at 12:29 am
I think your first paragraph is basically just a description of Obamacare …
There is a very real possibility that if we don’t understand how prices should be determined in health care, it doesn’t matter what system we use, we’re going to run into trouble. If you accept that “price” as a concept represents a meaningful understanding of how things are valued (which is a common view in market economics, I think), then not being able to set the price indicates that we don’t understand the fundamentals of the economics of the problem. In that case, even if you accept that non-market economic models are valid (e.g. marxism or whatever), the possibility that you don’t understand how to value health suggests that any system – private, entirely socialist or a mixture of the two – is going to be very far from rational. So perhaps in this situation the best option is to ensure equity of access, chuck in a bit of flexibility, allow for government to interfere when things become too overheated or too inequitable, and accept that it’s going to be far from perfect for a long time to come, while we work out what a health market is and how it can be managed.
I guess that’s what most of the world has recognized, because most of the world has moved beyond ideology in healthcare. Leaving the NHS and the USA to struggle along with their particular illusions…
April 14, 2012 at 6:38 am
“I think your first paragraph is basically just a description of Obamacare”
I hope you mean in the “buy the cover you want” way, not the “let them dies” way.
“the possibility that you don’t understand how to value health suggests that any system – private, entirely socialist or a mixture of the two – is going to be very far from rational.”
Wasn’t that the point of my fourth paragraph? Though your enduring faith that government intervention is going to prevent things becoming “too overheated or too inequitable” is cute. You do realise that we’re talking about intervention by people who have good intentions but minimal understanding operating via a bureaucracy that takes months to achieve the most basic of things? This isn’t to say that government intervention is always bad, but I do stand by a belief that the law of unintended consequences basically lurks outside every government office with a baseball bat waiting for the chance to strike.
April 14, 2012 at 8:11 pm
Judging by population health statistics, government bureaucracies do seem to do better in this area than markets (Cuba, UK, Soviet Union). No surprise there – there are a lot of things that government bureaucracies really do do better than markets – defence, justice, universal education, mass utility supply, roads, railways are just some. There are, of course, other areas where they do badly, and that’s no surprise either.
Sure they stuff up (and they get much more scrutiny, and are usually more open, and have a permanant body of dedicated critics on their case at all times, so we hear much more about their stuff ups). The interesting question is why, after some centuries of experience, we have arrived at a point where we believe that if only we find the right formula, the market fairy will eliminate all problems. Jane Jacobs has some useful words on this delusion.
April 17, 2012 at 8:12 am
”Judging by population health statistics, government bureaucracies do seem to do better in this area than markets (Cuba, UK, Soviet Union).”
US: 78.1 – Public insurance and providers
UK: 80.1 – Private insurance and providers
Japan: 82.9 – Public insurance and private providers
Australia: 81.5 – Mix of public and private insurance and providers
Cuba: 78.8 – Public insurance and providers
Singapore: 81.3 – Health savings accounts and private providers (I hear)
China: 73.1 – Public insurance and providers (I expect, though I know it’s got some private insurance and hospitals for richer people)
Russian Federation: 68.6 – Never got about 70, including the duration of the USSR
Source: http://www.google.com.au/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_dyn_le00_in&idim=country:RUS&dl=en&hl=en&q=russia+life+expectancy#!ctype=l&strail=false&bcs=d&nselm=h&met_y=sp_dyn_le00_in&scale_y=lin&ind_y=false&rdim=region&idim=country:RUS:AUS:CHN:JPN:SGP:GBR:USA:CUB&ifdim=region&hl=en_US&dl=en
The best system seems to be public insurance and private providers (Japan, Australia and in some ways Singapore [1]).
”The interesting question is why, after some centuries of experience, we have arrived at a point where we believe that if only we find the right formula, the market fairy will eliminate all problems.”
A key point to understanding this is realising that it’s always a market. Sometimes you pay in money and denied care, sometimes you pay in votes and waiting lists. In the broader sense, a market is just a way of matching supply and demand. When governments intervene they are also acting as a market, they just lost the pricing indicators that tell other markets where the supply and demand levels are, so instead they react based on focus groups and polls.
How often have you heard of the public demanding better health care while also calling for lower taxes? That’s also market failure. How does the government choose? Some combination of ideology and voodoo.
The point is, sometimes government intervention is optimal and sometimes (lots of the time) it isn’t. But in every case (public or private) we should assume that it’s possible to run the system better and look for a way to improve it.
“are usually more open”
I don’t know about other countries, but the Australian Freedom of Information (FoI)laws appear to be a perpetual joke regardless of the party in power or what the incoming party claims before an election. In many cases information is restricted because of “Commercial in confidence” clauses or cabinet confidentially.
Related to that poor FoI behaviour, I need to point out that government actions aren’t transparent because they lack visible market indicators. When a public hospital is opened in town X instead of town Y then there is no private hospital opened in town Y to prove that place had more demand. We just have to trust the government decision was correct. Which leads to “a permanant body of dedicated critics on their case at all times” because it’s impossible to prove which town would use the hospital more. The typical argument after this sort of decision is the government pointing to the hospital waiting lists and saying they’re short so it’s a good decision and the opposition pointing to public outcry in the other town to say it’s bad.
[1] From my limited understanding of how health savings accounts work there is a safety net that applies, which is effectively a lower limit on your health care cover. I haven’t researched it.
April 17, 2012 at 10:49 am
Paul, I think you got the statements the wrong way around for the US (private insurers and providers) and UK (public providers and insurers).
The examples of Cuba and the UK show that it’s not just the overall type of health system that’s important. Both of these systems are primarily public, but not only has the UK barely beaten Cuba (a country of vastly lower wealth and vastly better weather) on life expectancy, but the UK has huge inequality that masks its overall achievement. Life expectancy (LE) in the poorest 20% of the UK is about 8 years lower than the highest 20% of the UK[1], so probably around about 75-77 years, lower than the average for Cuba – even though the wealth of those 20% is probably much higher than the average for Cuba. This is probably because a lot of the factors driving poor health in Cuba have been eliminated outside of the health system. But Cuba’s a slightly exceptional story, because by all accounts it actually has a very well functioning health system, and (within the commie-sphere) health has been a major export industry for Cuba. Cuba’s revolution was started by a pair of doctors, I think, and they had a lot of experience in their field, and Cuban doctors get a lot of training in developing nations. I think Cuba is something of a success story within communism, and its health system a particular success story. Part of the reason for this is, I suspect, that any system that guarantees access to basic care will achieve quite rapid and significant gains in LE, without necessarily providing advanced end-of-life achievements. This is because LE is increased significantly by reducing infant and maternal mortality, malnutrition and early-adulthood injury, all of which are well contained in Cuba (relative to other developing or middle-income nations, and the communist and ex-communist states). The USA, on the other hand, has quite high maternal and infant mortality amongst the poorer parts of society, which is part of the reason that its LE is so low. It’s much, much better health-wise to be rich in the USA than to be part of mainstream society in Cuba or the UK, but it’s much, much better to be anywhere except the USA if you’re from the rest of society. And it’s very very bad to be poor in the UK or the USA.
As I understand it China doesn’t have universal access to healthcare or anything resembling it, and this is another example of how it is communist in name but not in nature. I think China’s system also varies locally. I don’t know that much about it but I wouldn’t put it in the “public” category (like, say, Cuba).
So if you have a system that guarantees access (every system in Paul’s list except the USA and China) it is as much the internal structure of the system that determines outcomes as it is the precise mix of government vs. private funding and organization. I think this means that if the USA could change its system to guarantee (real, quality) access to its currently uninsured, LE would shoot up rapidly (just improving infant mortality would be a good start). This doesn’t answer the secondary question of cost – the USA gets worse outcomes than Cuba despite significantly higher spending – but, as I said in my follow up post, it may be that the US system could at least work effectively even if it didn’t work cheaply, but has been ganked by 30 years of plutocracy.
As an aside – what would happen if the US govt just made Medicare membership available to anyone willing to pay a certain premium? i.e. opened it up as an insurance provider similar to Japan’s National Insurance? Would that be enough?
—
fn1: I can’t stress enough how crap this is. Australia’s indigenous people – approximately 2% of the population – has a LE approximately 9-10 years lower than the rest of society, and we consider this to be our national shame. It’s been in the public eye for 20 years and significant efforts are being made to change it. The UK started talking about health inequality publicly (i.e. outside a few researchers and thinktanks) in perhaps 2008. If you look at reports on Indigenous health, you see terrible levels of morbidity – e.g. infectious disease incidence at multiples (sometimes double digit multiples!) of the rest of the population, much higher rates of non-communicable diseases and their sequelae, etc. For the UK’s poorest 20% to be experiencing similarly poor LE, I suspect they have to be experiencing similarly higher morbidity (e.g. a recent paper I read suggested 60% of all hospitalizations for flu were amongst this 20% of the population). Yet what is the UK doing about it? They’ve only just started talking about it!
April 17, 2012 at 4:03 pm
”I think you got the statements the wrong way around for the US (private insurers and providers) and UK (public providers and insurers)”
Opps. I can only plead sleep deprivation caused by a baby.
”I think this means that if the USA could change its system to guarantee (real, quality) access to its currently uninsured, LE would shoot up rapidly (just improving infant mortality would be a good start).”
I can see where you’re coming from, but I’d be concerned about whether this could be achieved given US levels of illegal immigration. It looks to me like about 3.5% of the US populace is illegal immigrants (based on http://en.wikipedia.org/wiki/Illegal_immigrant_population_of_the_United_States and a population estimate of 308M) this compares to 1.6% for the UK (based on http://www.dailymail.co.uk/news/article-1160642/Number-illegal-immigrants-Britain-nearing-1million.html [1] and a population estimate of 62M) and a rough estimate I’ll make for Cuba of 0% (based on absolutely no evidence at all – all my Google results talk about Cuban migrations elsewhere). From memory, even in the UK where healthcare is accessible to “everyone” you need to prove you’re a legal resident to get it. That means that 3.5% of the US populace (and it’s likely to be the poorest 3.5%) won’t have health cover in the US regardless of what system you set up. Do illegal immigrants in the US currently use the existing emergency healthcare system?
Given poor access for illegal immigrants and my suspicion that when they’re counting dead babies or maternal corpses they do it on the by counting noses, rather than citizenship papers, this still leaves us too many dead mums and bubs to bring up the LE the way you talk about. Of course, it’d help, but probably not as much as you’d expect.
And if you try to solve the problem I’m raising you actually encourage illegal immigration to the US, which feeds into the cost pressures it’s health system already has.
”what would happen if the US govt just made Medicare membership available to anyone willing to pay a certain premium? i.e. opened it up as an insurance provider similar to Japan’s National Insurance? Would that be enough?”
Isn’t the US Medicare a fairly basic level of cover? And what premium are you asking for? If the premium is too high, then it doesn’t provide any additional cover, because it’s competing with existing options. If the premium is too low, the level of care is insufficient or you’re running the entire thing as a loss making venture [2]. And you’re probably picking up the most needy cases (which is a good thing) but those are the ones with the highest need for health care which means you’re picking the worst part of the risk pool to spread your overall risk across.
[1] It’s from the Daily Mail, so we can safely assume this is the highest estimate of UK illegal immigrants we’re going to get anywhere outside of a Neo-Nazi website.
[2] Which is probably a bad idea given the US deficit projections, which are a separate topic. Let’s investigate next time we’re talking about the decline and fall of the US.
April 17, 2012 at 10:37 pm
I doubt illegal immigration is that relevant. Most figures for the proportion of uninsured Americans range from 15 to 40% of the population – taking 15% as the minimum, this means that a maximum of 20% of all uninsured people are illegal immigrants. Also, a larger proportion are under-insured, and I think (I’m not confident of this) that under-insurance often affects obstetrics – it’s a high cost procedure that insurance companies sometimes don’t cover.
I think at the moment illegal immigrants in the USA do what the rest of the poor do, and use emergency health care. I wouldn’t know, though. I guess they can get private cover if they can afford it – isn’t there a law about to be passed somewhere in Texas that tries to ban private companies from hiring or serving illegal immigrants? If so I guess that means that previously they could buy private health care if they could afford it …
But yeah, if illegal immigrants make up a large proportion of the uninsured, then improving access for Americans wouldn’t net those easy gains. I don’t see much discussion of that in health policy circles though, and I suspect they don’t consider it a serious part of the reason for US health care problems.
As for medicare – I don’t think it is that basic, really, and I’m guessing that a realistic premium would be that which is charged in Japan, plus a bit – certainly affordable for the working poor. I don’t know anything about the complexity of health care financing at the lower end of the US health insurance market, but if Europe and Japan can offer affordable premiums, surely the USA can. And it wouldn’t just be expanding the risk pool to include those who can’t get insurance due to pre-existing conditions – the working poor and self-employed would benefit from such a program too, and would sign up.
April 20, 2012 at 5:13 pm
I think Paul is confusing “cost” with “price”. There’s always a cost – time. money, energy etc, and sometimes it’s expressed (partly) as a price. But there may or may not be a market – a place where some particular supply and demand meet in a bargain over price (which will be partly money, but also time and maybe effort). Price in this sense is not used to match supply and demand in more than a minority of transactions – it’s not used in families, inside companies, inside governments, in charities and private welfare organisations and so on. Together these make up rather more than two-thirds of all economic activity. Tellingly, they are not often used where multiple disparate factors of production have to be coordinated (prices can tell you how many cars to make, but they are not much good at telling you how to make a car).
Cost calculations are everywhere, but mostly factored into outcomes via bargaining, command and control, planning, consultation and so on in a myriad of combinations. I agree with paul that good health outcomes seem to involve a high measure of autonomy at the local level, coupled with central evaluation of procedures and central control over major costs. A centralised bureaucracy is not the answer – but a small central bureaucracy oversighting a lot of local delivery probably comes close to ideal. What form this takes is another matter.
BTW, life expectancy does not seem to be a very good comparative measure of health outcomes. Just about everywhere made major gains over the C20, so it’s obviously not due to (medical) health delivery:
http://www.j-bradford-delong.net/movable_type/2003_archives/001846.html
Probably more about drains than doctors.
April 21, 2012 at 10:48 am
I’m not sure what Brad de Long is trying to say with those graphs. The major gains over the C20 are largely due to hygiene improvements before 1950, and then to improvements in access to and quality of health care after that (the universal care era). But if you look at the Africa chart, it barely changes until the 1950s (the post-colonial era!) I’m not sure why this makes it a bad comparative measure of health outcomes. Sure, there are better measures in specific topics (survival for cancer, healthy life expectancy for quality of life, etc.) but as a baseline comparator on a blog I don’t think it’s a bad idea to combine life expectancy and infant mortality.
Drains are important and doctors are important, but the really big improvements come about through basic access to basic care – availability of a clean hospital capable of doing a C-section when you’re giving birth, affordable antibiotics when you’re sick or injured, vaccinations when you’re young. This isn’t exactly rocket science but it’s basically all stuff that has only become available in the era of universal care. Which is why I think that if the USA can come up with a system to guarantee that stuff to its population, it’ll improve on those basic LE and infant mortality measures very fast.
November 7, 2012 at 12:30 pm
company setup…
[…]Lessons in Cost Containment from ObamaCare « Compromise and Conceit[…]…
October 23, 2014 at 1:52 pm
sneakers kid
Lessons in Cost Containment from ObamaCare | Compromise and Conceit
August 25, 2021 at 12:22 pm
aries Lovers
Lessons in Cost Containment from ObamaCare | Compromise and Conceit