Health Care: Cost Estimates may Scuttle Plan

By Frank Hagan | Related entries in health care reform

CMS, the Centers for Medicare and Medicaid Services, part of Health and Human Services, has provided some analysis of the new senate plan forwarded by a group of Democratic senators and majority leader Reid.

The “estimated financial effects” include some that may cause some moderate Democrats to withdraw support. An estimated 5 million Americans are expected to be dumped into the government plan by employers, while still leaving 24 million legal residents without insurance at all. Medicaid rolls would swell by 18 million, putting further pressure on state budgets that are already hurting. And overall health care spending would be increased by 11 billion dollars due to increased taxes and fees passed on to consumers.

New and increased taxes of 29 billion dollars and proposed cuts of 493 billion in Medicare help offset the costs of the plan, but have some problems of their own: reductions in payment to providers could result in less choice for seniors, a politically risky proposition. In some areas, losing a Medicare provider could result in the loss of all services for that area.

Net costs, after proposed cuts in spending and increases in taxes, is estimated to be an increase of 234 billion dollars. The report hedges its bets, though, with this statement, appearing right after the cost estimate:

The actual future impacts of the PPACA on health expenditures, insured status, individual decisions, and employer behavior are very uncertain. The legislation would result in changes in the way that health care insurance is provided and paid for in the U.S., and the scope and magnitude of these changes are such that few precedents exist for use in estimation.

The Senate plan relies on cuts and taxes that are unlikely to remain in the bill as horse-trading begins to gain passage, reducing further the “accuracy” of the CMS estimate.

The proposed Medicare “buy in” provision for residents 55 and older draws opposition in and of itself, with Sen. Joe Lieberman voicing his opposition:

Sen. Joe Lieberman told Senate Majority Leader Harry Reid Sunday that he couldn’t support a new Medicare proposal floated as a compromise to the public option, a development that complicates the bill’s path towards passage before the end of the year.

In a meeting in Reid’s office just off the Senate floor, aides said the Connecticut independent reiterated his concerns with the public insurance option and told the Nevada Democrat that he couldn’t support a new plan to allow people as young as 55 to buy into Medicare.

Missouri Democratic Sen. Claire McCaskill declared she would “absolutely” vote against any bill that increases the deficit, as President Obama has promised to veto any such measure. And even senate liberals have reservations:

And it’s not just moderates who have problems with the Medicare buy-in. On Friday, a group of 10 Democratic senators, including Wisconsin’s Russ Feingold and Vermont’s Patrick Leahy, wrote to Reid, worried that expanding the program without changing the rates Medicare pays to doctors would curtail seniors’ access to care. The letter came a day after a report by the Centers for Medicare and Medicaid Services found that the bill’s Medicare savings “may be unrealistic.”

After boldly announcing that a compromise had been reached, Reid saw his party’s senators “walk back” the statement. The compromise was only to send the proposal to the CBO for financial impact score, they said, most adding they remain committed to the idea of a deficit-neutral bill. The Politico article sums up the situation from Sen. Reid’s perspective:

If he kills a public option or the Medicare buy-in plan, he could lose the support of Sanders and several of the more liberal members of the Democratic conference. But keeping either of those plans, or one that would “trigger” a public option if private insurers don’t hold down costs, would lose Lieberman – forcing Reid to find at least one moderate GOP senator to advance the proposal.

To win the most likely potential GOP defector, Sen. Olympia Snowe (R-Maine), Reid would likely have to make modifications and slow the debate down since she’s signaled that the Senate needs to take more time to deal with the expansive issue.

Cross posted to FrankHagan.com


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39 Responses to “Health Care: Cost Estimates may Scuttle Plan”

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  3. chris Says:

    http://crooksandliars.com/susie-madrak/study-bush-tax-cuts-cost-more-twice-m

    That’s all I have to say :)

  4. WHQ Says:

    One of the points brought up in the blog post chris links to is one of priorities. We hear so much about how much the US spends on healthcare as a percentage of GDP compared to other industrialized nations. But it’s not simply a problem of how much we spend. It’s also about what we’re getting for our money.

    If Americans enjoyed 10 more reasonably good years of life than their counterparts in around the world, I don’t think we’d be complaining about percentages of GDP. I don’t know what these estimates being put forth have to say about outcomes for those who would be lacking health care were it not for the changes proposed in current legislation. I also don’t know if they are accounting for the aging Baby Boomers, which are going to cause us to increase health-care spending unless we are willing to let a generation disproportionately die prematurely. (Are they looking at future spending with the legislation versus future spending without the legislation or are they looking at future spending with the legislation versus current spending? I don’t have the time to dig in, so I admit that I’m blegging. But either way, what about the additional benefits realized at that additional cost?)

    If we spend more on health care and the result is a sufficiently healthier population, I don’t have a problem with that. And I don’t think reading the current legislation will tell you enough about that to make a judgement one way or the other. I say that because my understanding is that costs and outcomes are driven on the delivery end, which isn’t being tinkered with much by the current legislation, either directly or in a significant way through incentives. (Not that I necessarily think it should be, yet.)

    What I think is good is that more and more people are at least thinking about what medical practices result in the best outcomes relative to the resources expended. And I think that beneficial changes in health-care delivery can be made subsequent to changes in the insurance model. I just hope that what’s being proposed in the current health-care legislation doesn’t hamper future, beneficial changes to health-care delivery. I’m not in a position to know. It’s just too complicated and beyond my competencies for me to form an opinion on that.

    All that aside, and getting back to chris’ link, I’d be curious to know what those complaining about the costs of health care have to say about, for instance, how much we spend as a percentage of GDP on our military relative to other industrialized countries. (Or paper clips or yo-yo’s or Yagi antennas or llama chow or Tarot-card readings or pepperoni or Botox injections or…)

  5. Mike A. Says:

    I have to agree with anyone who references Yagi antennas in their post!

  6. Frank Hagan Says:

    The link Chris provides is interesting, and I haven’t really examined it in detail yet, but my first impression is that it compares two completely unrelated things. While both tax cuts and spending programs can add to the deficit, they are not the same in the impact on the overall economy.

    It makes the basic mistake of comparing the sins of the prior administration to the sins of the current administration and forgiving the current administration. Yet we pay for both administration’s errors. Two wrongs do not make a right, but they do make a poorer, and less free, populace.

    Beyond that, a tax cut can spur individual spending, grow private sector jobs, etc., as well as have the negative effects that deficit spending brings. I was troubled by the Bush tax cuts because they removed so many people from the Federal tax rolls, with estimates as high as 40% of wage earners no longer paying any federal income tax (they still pay payroll tax to fund Social Security and Medicare). But, I will agree that spending and tax cuts should be curtailed to contain deficits. We need fairness in our tax code, and that should include the poor and middle class actually paying income taxes. A flatter, fairer tax code should be implemented.

    You really have to dig into the stats on health care to get closer to the truth. If you look at the methodology of the studies, you find some surprising things (some studies, like the famous WHO studies, weight factors like “financial fairness” of the system as heavily as life expectancy) . Because we criticize ourselves freely and rarely compliment ourselves, perhaps because of our Puritan beginnings, we rarely note that Americans have the greatest long-term survival rates for many diseases … cancer survival rates are higher for most cancers, heart attack survival rates are higher, etc. Our average life expectancy is lower by some measures, but primarily due to free will choices (we eat too much, smoke too much, and engage in more risky behavior.) We also have ethnic and racial minorities that have lower life expectancies for various reasons that are unrelated to the health care delivery system. (Life expectancy is also measured by the age of the population; a country with a younger population overall has a higher average life expectancy, while countries with aging populations have lower expectancies … this is because a male born in 1970 can be expected to live to 67, while one born in 2000 has a life expectancy of 77 years). Source: PDF file from the Census Bureau.

    Spending as a % of GDP is probably not a fair way to compare our military spending to that of other countries … the US ranks 27th in the list of spending by % of GDP, behind countries such as Oman, Qatar, Saudi Arabia, etc. But as a total of all military spending world-wide, we spend about 42% of the money. In effect, we subsidize the western democracies with our defense spending so they can spend as little as 1.3% (Belgium).

    Defense and domestic defense spending (“Homeland Security”) are about 21% of expenditures. Social Security is another 21%. Medicare and related programs like S-Chip are another 20%. “Safety Net” programs are about 11% (commonly called welfare programs). So the various payout programs to individuals are over 50% of the federal expenditures (see this article for an easy to understand pie chart.)

    After the first ten years of Medicare, studies showed that there was no increase in life expectancy for the seniors enrolled in it. In short, making health care “low cost” did nothing to make the seniors live longer. It seems intuitive that access to advances in medical care would provide longer life, but poor individual choices trump medical advances.

  7. WHQ Says:

    We need fairness in our tax code, and that should include the poor and middle class actually paying income taxes. A flatter, fairer tax code should be implemented.

    Really? Is there a good reason for the poor to be paying federal income taxes? And how poor is poor? What if they can’t feed themselves?

    Our (federal income) tax code is about as flat as it’s ever been. Why does it need to be flatter, particularly in light of the regressiveness of other taxes? How do you define fairer, and how much does fairness count relative to being workable?

    (Boy, this thread could go off the rails in a big way….)

  8. Tony Deal Says:

    What is wrong with the Democratic Party?
    How can one party suck at both being the opposition part (the Bush years), AND being the majority party (the Obama 1st year)?
    Well, let’s take a peek at what the party has done in the previous eight years.
    1. Passed the Patriot Act.
    2. Gave President Bush the authority to wage war against “Terrorism”
    3. Funded the entire war in Iraq.
    4. Sent the troops to war without proper planning or over-sight.
    5. Lowered restrictions on banking rules and regulation.
    I know, it sounds like the Republican Party, but really, each one of the above mentioned accomplishments was met with a majority of the Democrats in both houses. That’s right, Democrats.
    Now, I’ll admit they moaned and groaned after a few years of marching blindly along with President Bush. But that didn’t stop the majority of Democrats in Congress from voting to fund the war, every single year.
    The Patriot Act has been law for quite a while now. Democrats have claimed over-reach of authorization for the president, but nothing has been done about it. Secret wire-tapping is still authorized and practiced against American citizens, legally. All the other provisions are still in place. Yet, the Democrats in Congress have done nothing, not one single thing to address their own party’s concerns.
    Unlike the Republican Party, who, after leading the way into the “greatest threat to our economy since the great depression”, now in opposition, have stymied the progressive agenda from the start. They decried the stimulus package as it was being written, when everyone was agreed it was necessary and needed to be big, and targeted, they steered the entire program, limiting its size and decrying it as wasteful. This of course was not the rhetoric needed in the time of crisis, but it suited their needs and they achieved limits their popularity should not have allowed.

    They still set the tone with the notion that it hasn’t accomplished enough. As if they had an alternate plan that would have accomplished more.

    They lead us where they wanted to go while they were the majority party with a Republican president.
    They lead us where they wanted to go when they were in minority with a Republican president.
    They are still leading us where they want to go as a minority party with a Democratic president.
    The Republican Party has been lock-step in opposition to everything President Obama has requested, with the exception of increasing troops for the war effort. They have been an effective opposition party.
    It’s absolutely astounding to watch.
    And exactly how incompetent can the Democratic leadership be?
    How did Joe Lieberman become the swing vote for Health Care Reform, (Pushing for the Republican point of view)?
    How does the same man keep his powerful posts? Joe Lieberman, who switched parties to keep his job, and backed the Republican nominee for president over the current leader of the Democratic Party, He is the one vote that could ruin the Democrats public option. Why, because the Democratic leadership is pathetic. They wanted a majority more than a working policy. They to Mr. Lieberman in and let him keep his powerful seats to gain a majority. Unfortunately, the leadership failed to notice that Joe Lieberman is not loyal to anything except his seat in Congress. He changed parties. He spoke at the Republican convention. What more does the Democratic leadership need? It’s a sad day when the leadership can’t even recognize a republican in their midst. He may have once been a democrat, but that was long ago.

  9. Frank Hagan Says:

    WHQ – I favor a single federal tax, encompassing both payroll and income taxes. Simplifying the tax code would go a long way toward eliminating the ability of the political class to reward their friends with special tax breaks, which leads to abominations like the alternative minimum tax as others try to plug the holes.

    Right now, the poorest wage earners pay the most in payroll taxes, but we then refund that with the Earned Income Credit on their income taxes. The bottom 20% of earners pay just $5 a year net in all federal taxes. But we take 8% of their pay throughout the year and return it to them. Stupid. Even the poor should contribute so they have some “skin in the game”; it would encourage more political participation. But the burden should be light.

    It would be much better to establish set percentages and then pay that, with no deductions. It can be progressive if you like, using the existing average payments for the not-well-connected: 1st quintile of earners = 4%; 2nd quintile = 10%; 3rd quintile = 14%; 4th quintile = 18% and the top fifth of earners (those with household income over $89,000) would pay 26%. That’s the actual average payment now (the graduated system has the larger rates for every dollar over a certain amount, but on average, that’s what the people in those income quintiles pay).

    The marginal tax rates would have to be worked out, but it would start with total tax at 2% (employers match the 2% of payroll tax), and when you move into the 2nd quintile (at about $10,000 in earnings), the rate has to increase so that you pay the equivalent of 10% on all earnings (employer share of payroll tax is still in there, so the total rate would be somewhere in the 6 to 8% range).

    The money collected would be the same, but the guy with the house on the hill would pay the same percentage tax as the guy renting his place in the valley. And you wouldn’t have to have people file income taxes; a year end statement could charge or refund taxes if needed (i.e., a refund might come about if you were earning $50 an hour at the beginning of the year, with the tax deducted weekly, but lost your job in June and were unemployed the rest of the year).

  10. Nick Benjamin Says:

    @WHQ:
    Most folks who complain about healthcare as a proportion of GDP are leftists so they’d prefer a smaller military budget. I agree largely because a majority of the world’s defense spending is us, and given the extremely low odds of us fighting some other big spenders (Japan, the UK, etc.) that seems excessive. If I was King of America I’d probably cut down on Navy surface ships (each of our 11 Carrier Strike groups has more aircraft than most air forces, and there are only 10 non-US carriers in the entire world). I’d probably convert more of the USAF’s fighter squadrons to A-10s, too. They’re cheaper, better at blowing up terrorists, and it does not take that many F-15s to blow enemy air forces out of the sky. I’d use some of the money to add boring units to the army. Particularly units we use a lot — MPs, Civil Affairs, Infantry, etc.

    But back to health care budgeting.

    Cost projections take into account the aging population. That’s not actually the major reason our costs keep going up. Europe and Japan have bigger problems with aging populations and their cost increases are comparable to ours.

    @Frank:
    Part of the reason we have higher survival rates in terrible diseases is we that survival rates measured in years from diagnosis, and we aggressively search for cancers. So if both British and American live 15 years after getting breast cancer, but American women are diagnosed within the first year our survival numbers are gonna look great. To prove we’re actually better at fighting cancer, rather than simply being more aggressive, you have to look at life expectancy.

    Your arguments about life expectancy are simply bizarre. You are simply mistaken if you think we smoke a lot compared to the rest of the world. We are probably the fattest people in the history of humanity, but no rich country is getting thinner. Compared to other rich countries we don’t drink. And as for your point on older countries having worse life expectancy keep in mind that several European countries are so old their populations are falling. The rest are maintaining their population numbers by immigration.

    IMO the best way to compare health systems is life expectancy at five. That eliminates the weirdness that results from the ways different countries count infant mortality. And a quick check of wolframalpha shows that US 5 year olds can expect to live to the age of 78, but French Five-year-olds will make it to 81.

  11. WHQ Says:

    Frank, I agree with you more than I expected I would, though still not totally in the details, mostly in spirit. I think it’s a farce that SS is treated as a special and separate thing from other federally funded items, with its own tax and “trust fund,” and I agree that our tax code is overly complicated.

    I’m curious to know what you think of capital gains and dividend taxation. To me, income should be income, period. (Well, for me, it is, because I don’t make enough, given the size of my family, to pay an income-tax rate higher than the capital-gains or dividend rates.)

    I’m dubious of the idea that our poorest would be (significantly) more politically engaged if made to be some small amount of federal taxes. I think they’re too busy just getting by to notice. But that’s a minor point.

    As far as structuring tax rates by quintiles, I think it’s something that’s attractive only because the readily available data on taxes paid are structured that way. What you did, as you stated, was to take the actually-paid averages over the quintiles to arrive at the rates. That might not be a bad way to go over the short term, but, then again, it might. It would depend on the distributions within the quintiles. What it would do, in the short term, is closely maintain revenues while eliminating a lot of accounting work.

    The problem I have is that quintiles can take on very different meaning over time as income distributions change, such that the rates you suggest could become inappropriate. Since I enjoy thinking about things numerical, I once came up with a smooth-curve formula for tax-rate versus income based on the inverse tangent. It could be adjusted year-to-year (or some periodic basis) to account for inflation and income distributions and could be used directly to compute taxes based on taxable income or to produce tax tables. I know it’s too wacky in its specifics to ever happen, but the general concept is something that might work.

  12. Tully Says:

    Life expectancy is a truly shitty proxy measure of health care quality, systemic or otherwise. HC quality has only a marginal effect on LE stats in developed countries, as Frank notes. The way we eat, how many miles we drive, the high propensity of young inner-city males to kill each other … all of these have a greater impact on LE stats than HC system quality.

    On top of that, each nation measures and reports the sub-stats that feed the LE stat (such as infant mortality) somewhat differently, making it even less suitable for cross-national comparison purposes.

    Obviously that unsuitability does not deter people from using it anyway, but constant misuse does not miraculously render it suitable.

  13. kranky kritter Says:

    So then what in your estimation is a good proxy measure of healthcare quality?

  14. Tully Says:

    Why use proxy measures? Remember that proxy measures are by definition at least one layer of abstraction away from measuring anything at all but themselves, Kranky.

    How about using direct measures, such as actual outcomes from the actual treatment of specific diseases and conditions? Though even that can be affected by factors not related to the quality of health care received.

  15. Tully Says:

    To further illustate how lousy life expectancy stats are as a proxy measure of health care quality, and why even incidence-specific measures can be deeply flawed:

    [sarcasm]

    Vatican City has the world’s lowest national rates of cervical, ovarian, and breast cancer. Australian aborigines have a near-zero to zero incidence of Tay-Sachs disease and cystic fibrosis. And let’s not forget to acknowledge the Inuit for their eradication of sickle-cell disease in all five of its variants, beating out even the Norwegians in that respect. Congrats to all of them on their superior-to-the-U.S. health care systems!

    [/sarcasm]

    Point made?

  16. kranky kritter Says:

    One problem with direct measures is that they can only be taken for specific treatments, so you don’t get that nice “overall average” that everyone wants.

    That sort of grail is maybe not worth pursuing. But if someone wanted to use direct measures, then you’d at least have to assemble some sort of basket of treatments weighted by how often they were received.

    And Nick does raise an interesting point about aggressive treatment. Seems like overultization/excess testing happens a lot here in the US, and while that’s probably to some marginal good in catching things while they are most treatable, it does consume lots of extra dollars. And presumedly it do so in the face of a law of serious diminishing returns. Thoughts?

  17. WHQ Says:

    And presumedly it do so in the face of a law of serious diminishing returns. Thoughts?

    In some cases, not just diminishing returns but actual negative effects. FREX, X-rays cause cancer and false positives cause quite a bit of stress, which has its own health consequences. Proper risk management is not irrational avoidance of one set of risks while ignoring the others raised by said avoidance.

  18. kranky kritter Says:

    Mmm. I saw a report the other day suggesting that CAT scans can trigger the onset of cancer. And not at a trivial rate, either.

  19. Tully Says:

    One problem with direct measures is that they can only be taken for specific treatments, so you don’t get that nice “overall average” that everyone wants. That sort of grail is maybe not worth pursuing.

    Indeed. The only reason for pursuing that nice average seems to be to make specious generalist claims, one way or another. At least that’s the only way it seems to actually be used, isn’t it? There does not appear to be any other actual utility involved, does there? So why use questionable proxies at all, if actual comparisons on specifics are available, and have actual utility?

    Um, that’s not really the point Nick raised, but a tangential one. Nick’s point that earlier diagnosis structurally distorts the survival stats has some meat to it, but the claim that this obscures identical results is easily debunked by examining the longer-term stats. For Nick’s point to be true there would have to be NO difference between long-term cancer survival rates under different HC systems despite earlier detection and commencement of treatment (and even different treatments) in one system. But we do indeed have better cancer survival rates than other nations, and part of the reason for that is earlier detection and earlier treatment. The earlier the detection, the earlier the treatment, the better the chance of survival. QED.

    The point that over-screening may fail in terms of overall societal cost-benefit is a separate consideration, and a valid one. But I would beg to note that said societal cost-benefit consideration keys on a specific point of view that is NOT that of the individual patient. The patient may well (and usually does) have a somewhat different viewpoint about said cost-benefit, because the benefit is THEIR life being saved if they hit that early-detection lottery against the overall cost-benefit “book odds.”

    Indeed, that illustrates something that’s key to the whole debate. Some want to take those sorts of very personal decisions away from patients and their doctors, and place them in the hands of society the government. But that involves society the government taking over the system, doesn’t it? And placing the good of “society” (as society the government determines it to be) over the good (and the liberty, rights, and freedoms) of the individual? Hmmm. What do we call political systems like that?

    At the same time, other factions claim that part of the inefficiency problem is that individuals don’t have a real grasp of the cost side of the equation as relates to them personally, and therefore make their consumption decisions based on a “free ride” mentality.

    The urge to save humanity is almost always only a false front for the urge to rule it. — H.L. Mencken

  20. Chris Says:

    KK, I just saw that report as well, and I just got a ct scan done a couple weeks ago :0/

  21. Nick Benjamin Says:

    Life expectancy is a truly shitty proxy measure of health care quality, systemic or otherwise. HC quality has only a marginal effect on LE stats in developed countries, as Frank notes. The way we eat, how many miles we drive, the high propensity of young inner-city males to kill each other … all of these have a greater impact on LE stats than HC system quality.

    As you pointed out simply using results from any specific disease is worse because those vary significantly across populations. Life expectancy has several major advantages:

    1) It is not easily gamed. Long-term survival rates can be artificially increased simply by doing lots more tests. If you catch Breast Cancer two years before the the other guys do you’ve got two free years in the long-term survival rates game. If you’re an asshole it’s even easier — it’s not like a woman with a lump in her breast knows whether it’s cancerous, so a Doctor who finds lots of lumps and declare them all cancer looks like a miracle worker because most of his patients live decades after diagnosis. OTOH you know when your mom died.

    2) It is not subject to over-analysis. Different populations have different medical problems, and deciding which diseases should be counted (and how much they should count) is not a trivial task. For example if you use lots of the diseases fat people get our numbers are gonna suck because we’re fattest. But if you use liver diseases the Irish, and Czechs drink a lot more beer than we do:
    http://en.wikipedia.org/wiki/List_of_countries_by_alcohol_consumption
    For the Czechs it’s almost double (BTW: Luxembourg is more than double on this list, but it’s a tiny country with low Liquor taxes surrounded by big countries with much higher liquor taxes, so a lot of their alcohol is actually consumed by foreigners.

    It’s true you’ve got to factor in things like infant mortality, which are measured slightly differently in different countries. That’s why I used life expectancy at five. His point about inner-city kids killing each other is less relevant, but I checked US and French life expectancy at 50 anyway. Ours was almost 81, theirs was more than 83.

    Tully’s absolutely right when he says we’re fatasses. But we’re also teetotalers. France is #6 on that alcohol consumption list, we’re #43. Greece is worse than us in terms of smoking and drinking, and it’s a much poorer country to boot, but their life expectancy at birth is better than ours (I had to use birth, Wolfram Alpha doesn’t have data for them at 5 or 50).

    IMO fattasses that spend almost 50% more than drunks do on health care should expect to live at least as long as the drunks. And we spend 16% of GDP on health care, while the French only spend 11.2%. In absolute terms the disparity is worse — they spent $3,600 per person we spend $7,100.

  22. WHQ Says:

    The patient may well (and usually does) have a somewhat different viewpoint about said cost-benefit, because the benefit is THEIR life being saved if they hit that early-detection lottery against the overall cost-benefit “book odds.”

    The other side of this, though, is the role of doctors in over-testing. Not all of it is patient-driven, and even some that is gets plenty of help from the doctor. My personal opinion is that there has to be a push for better stardards for best-practices among physicians. How many and sever of symptoms for a brain tumor does someone have to exhibit before you, as the physician, decide to send them for a CT scan (layered x-ray, btw)? Some people are going to ask for tests, and I say, if they do, inform them of the risks of testing versus not, and let them have them if they still want them. But physicians should be assessing the risks/benefits on a purely rational basis and shouldn’t be sending people, say, with headaches, and nothing else indicitive of brain problems, off for CT scans unless the patient insists despite the doctor’s advice. People should have the choice. I’m fuzzy on whether or not someone else, including an insurer, should pay for it in every case.

  23. WHQ Says:

    This was fun:

    Some want to take those sorts of very personal decisions away from insurance companies, and place them in the hands of patients and their doctors. But that involves patients and their doctors taking over the system, doesn’t it? And placing the good of “patients” over the good (profits) of the insurance companies? Hmmm. What do we call health-care systems like that?

  24. kranky kritter Says:

    Indeed. The only reason for pursuing that nice average seems to be to make specious generalist claims, one way or another. At least that’s the only way it seems to actually be used, isn’t it? There does not appear to be any other actual utility involved, does there? So why use questionable proxies at all, if actual comparisons on specifics are available, and have actual utility?

    All good points except the specious part. The general proxy can indeed be used to make specious claims if you’re intent upon debating only to support a preconceived point of view. Anyone who wants to make specious claims can do so by selective use of any data, right?

    For my part, I don’t have any interest in proving any particular approach is better. Instead, I’m interested in trying a variety of approaches, hopefully finding a convergence of data. Nick seems pretty interested in plumping life expectancy and demeaning treatment outcomes. Data doesn’t lie iof you understand its limits and pay close attention to it. But people can use it to mislead, and that’s always a problem.

    I think you’re doing a good job of pointing out the various catch-22s in healthcare. And I’ve been listening to you speak to various aspects of it for several years now. So it doesn’t trouble me that in this particular post you’re speaking to the issue of individual choice. Things you’ve told me on other occasions make me comfortable that you understand that individual choice, desirable though it may be, can in fact contribute negatively to the basic problem, which you define as a problem of limited supply and unlimited demand. Which, as you say, can only be solved via some form of rationing. There’s a real conflict between the desire for as much treatment as one wants and the growing need for costs to be manageable across the socioeconomic spectrum, right?

    We both know that as costs continue to rise comparably to the rates of the past several decades, the price will become more and more untenable. Since we live in a republic that functions via representative democracy, we both know that if the prices (and dislocations) become more untenable for more people, voters will opt for an approach that pools risk. Leaving aside for a moment any question of moral rectitude or economic efficiency, I think we would, if pushed, agree that the tea leaves suggest that healthcare in America is going to move closer towards some sort of single-payer/single adminstrator approach. Whether we like it or not. Absent some astonishing economic turnaround, I can’t foresee any big turn towards freer markets and multiplying private provision. Do you?

    That’s why I am hoping that the system can evolve to allow for a variety of choices within a unified system. People who want more protection and more treatment should pay higher premiums. People who want less should pay less. But if they decide later that they want more, there should be some premium for upgrading.

    And people should be able to have options that include the ability to keep their costs down by agreeing to pay more of the cost of actual treatment. So for example, suppose you hurt your wrist. And the protocol is not to get a CAT scan for the best image of your injured wrist until other approaches (x-rays, rest, immobilization, cortisone) have failed. If you want to skip ahead to GO and get that CAT scan right away, you pay more of the cost than if you waited. Maybe you get one “skip ahead to Go” option per year. I dunno, point is, such things can be managed rationally, even if the government is involved.

  25. Tully Says:

    The general proxy can indeed be used to make specious claims if you’re intent upon debating only to support a preconceived point of view. Anyone who wants to make specious claims can do so by selective use of any data, right?

    You’re missing the larger point, which is that the generalized LE stat is completely useless as a proxy for HC system quality in a developed nation. It simply does not measure what it is being purported to measure. What very little correlation there is between aggregate LE and HC system Q is completely drowned out by other more highly-correlated factors. Its only real utility is as an intra-national indicator, assuming that all other relevant factors have been adjusted for — itself a monumental task and near-insurmountable obstacle. As an international comparitive it’s essentially useless due to multiplication of much stronger factors. So why use it that way at all? (Only one reason: to rationalize/justify pre-determined political positions.)

    Nick continues to try to dismiss what utility LE does have in specific-outcome analysis through his “stat-gaming” argument, but as I said, a review of specific-condition treatment outcomes pretty well destroys that case. There is nothing terribly ambiguous about a positive biopsy for malignancy or metastatic-stage diagnosis of same, and the stats for specific conditions and specific treatment outcomes are easily rendered robust and usable for cross-national outcomes comparisons for specific conditions. We do indeed outperform the world in many specific areas, mostly due to three factors. Earlier detection, leading-edge treatment, and quicker commencement of treatment after detection.

    Those better outcomes are the direct result of the higher price we pay for health care. As is the shrinking affordability of them. Pain, gain.

    Which, as you say, can only be solved via some form of rationing. There’s a real conflict between the desire for as much treatment as one wants and the growing need for costs to be manageable across the socioeconomic spectrum, right?

    Not exactly. While economists speak of “market rationing,” it’s not really rationing at all, but the aggregated outcome of free choices made by individuals achieving a dynamic equilibrium. Real rationing is the controlled distribution of scarce resources, goods, or services, REGARDLESS OF market equilibrium. REAL rationing is the only way to limit the “excess” cost growth of HC. But that cost growth is “excessive” only in the sense that it grows faster than GDP. Health care is hardly the only sector to exhibit such growth over the ages. Consider, for example, the growth in the %GDP cost of the transportation sector for the years 1900-1950 … did we see a need for government rationing of cars because that sector grew faster than GDP? How about computing services and hardware over the last half-century? We gonna ration that? Heh.

    The excess cost growth problem for tech sectors (and health care is assuredly a tech sector) is common to ALL developed nations, including the vaunted single-payer nations that ALREADY have de facto rationing, such as the UK. Trying to avoid that inherent market-demand pressure by assigning the rationing decisions to government just changes the pressure from market pressure to purely political pressure. In anything resembling a democratic system the result is the same — excess cost growth — as market demand is never allowed to reach an equilibrium point. I do not see that as a feature of governmental control, and outside of a purely tyrannical statist system it demonstrably does not “solve” the “problem.” We pay increasing amounts of our incremental next-dollar income for health care because as both individuals and a society we want it, pure and simple. The demand is in the price-inelastic range, and until it reaches the elastic range excess cost growth will continue.

    There are no magic wands here. No silver bullets.

  26. Nick Benjamin Says:

    For my part, I don’t have any interest in proving any particular approach is better. Instead, I’m interested in trying a variety of approaches, hopefully finding a convergence of data. Nick seems pretty interested in plumping life expectancy and demeaning treatment outcomes. Data doesn’t lie iof you understand its limits and pay close attention to it. But people can use it to mislead, and that’s always a problem.

    The reason I push Life expectancy at five is it is simple, easily measured, very difficult to game, and measures the health outcome people care about the most: life.

    Treatment rates are great when you’re discussing treatments, but none of the health bills we’re talking about was written with specific treatments in mind. They were written with the entire system in mind, and I have yet to see a statistic that sums up the entire system better then life expectancy. It’s possible the number is bad for some reason (ie: maybe American fatasses are harder to keep alive then Irish drunkards), but IMO it’s highly unlikely that every Industrialized country has an overall healthier lifestyle than we do.

    I sincerely doubt our lifestyle is so much unhealthier then theirs that they can get measurably better results (higher life expectancy) overall while spending roughly half what we do.

  27. WHQ Says:

    Nick, it seems to me that you’re injecting far too much opinion into your basis for using life expectancy to measure health-care quality. It’s not compelling to know that you doubt that other countries’ lifestyles are healthier than ours. And what do you count as lifestyle? Do crime rates, occupations and wars fall under lifestyle?

    When there are multiple factors involved in determining life expectancy, which specific, narrow factor can I not point to as the reason for the differences in life expectancies among industrialized nations by suggesting that the aggregate of the other factors can’t be that different among those industrialized nations? Why can’t I point to any given factor “X” and say that all the other factors must even out, so factor “X” must be the cause?

  28. Nick Benjamin Says:

    @Tully:
    Whenever somebody makes a distinction between the academic meaning of the word and the “REAL” meaning I get skeptical.

    As far as the British system being rationed, the government system is, indeed, rationed by the government. But there’s no law against a purely private practice. That means that, by your “real meaning” definition the Brits do not have rationing. If the private market there is too small for your taste that’s an indication that almost nobody who actually has to live with NHS rationing is so unhappy with it that they go to private hospitals.

    As for treatment outcomes,
    You’re cherry-picking. I can cherry-pick too:
    http://www.rwjf.org/qualityequality/product.jsp?id=47508
    We suck at stomach-cancer and hip fractures. Apparently our advantage with most other cancers is not statistically significant. In terms of overall care in 10 studies these guys reviewed comparing quality in the US to Canada Canada won five, and three did not show statistically significant differences. That’ right the second-crappiest health system in the industrialized world went 5-2 against us.

    The problem with your argument about cost growth is that it treats health care as just another sector of the economy. In economic theory that works great. In reality I have never met a person who gets more utility from $999,999,999,999 then they do from their spouse. In other tech sectors choices are easier — a $999,999,999,999 computer just won’t sell.

  29. Nick Benjamin Says:

    @WHQ:

    It’s not compelling to know that you doubt that other countries’ lifestyles are healthier than ours. And what do you count as lifestyle? Do crime rates, occupations and wars fall under lifestyle?

    I’m talking about industrialized nations. None of those have experienced a truly major war since Vietnam, and we were the only industrialized nation that actually took significant casualties. None have been occupied since the Soviet Empire fell.

    By lifestyle I mean the biggies — weight/diet/exercise, alcohol, cigarettes, and drugs. We are clearly fatter than anybody else, which implies our diets are worse and/or we get less exercise. But we do very well in per capita cigarette and alcohol consumption. Greece’s cigarette consumption is 3,000 per person per year:
    http://en.wikipedia.org/wiki/List_of_countries_by_cigarette_consumption_per_capita
    And they still beat us in life expectancy from birth. I can’t find data for life expectancy at 5, tho.

    Other lifestyle choices don’t produce statistics (weed consumption per capita data is hard to find), or only affect a tiny slice of the population. For example our homicide rate is 5.8 per 100,000:
    http://en.wikipedia.org/wiki/List_of_countries_by_intentional_homicide_rate
    That’s .000058% of Americans. That’s a tragedy, but it’s not gonna account for two full years of life expectancy. Especially life expectancy at 50.

    When there are multiple factors involved in determining life expectancy, which specific, narrow factor can I not point to as the reason for the differences in life expectancies among industrialized nations by suggesting that the aggregate of the other factors can’t be that different among those industrialized nations? Why can’t I point to any given factor “X” and say that all the other factors must even out, so factor “X” must be the cause?

    You can, but the problem is there just aren’t that many other factors between industrialized countries. We fight more wars, and have more crime, but even if we were the only country in the world to do those things it still wouldn’t knock years off the average person’s life. We are excessively fat, but the Canadians are close behind, and I have yet to find an industrialized country that doesn’t smoke or drink more than we do. What else would you use?

    Regardless of that, the issue here is life expectancy versus alternatives. And alternatives all have their own flaws. The cancer survival rate’s Tully’s using would be of limited value even if they weren’t a) cherry-picked, and b) artificially inflated by early discovery. You could try something like death rate, but that would be biased against the Europe because European countries are much older than us.

  30. Tully Says:

    Precisely, WHQ.

    Problem being that I’m not the one cherry-picking, Nick. That’s your straw man. And apparently you didn’t bother to read the paper you’re citing other than to cherry-pick, or you might have noticed they say much the same things I have above about the usefullness of LE and LE-derived measures as a proxy measure for HC quality. Not that the Robert Wood Johnson Foundation is an impartial-peer-review-publication organization (it isn’t, and has a definite agenda) or that the authors relied extensively on early-to-mid 90′s stats themselves (they did, which seems somewhat odd for a 2009 paper claiming in the title to be a “Timely Analysis of Immediate Health Policy Issues,” and purportedly evaluating quality in a sector characterized by high rates of technological change) but here, since you insist, from the paper you tried to cherry-pick:

    An important issue in health care quality measurement, as in other types of research that attempt to ascertain causality, is that it is very difficult to adjust for factors outside the health care system which contribute to particular health outcomes, such as socioeconomic status, lifestyle, and disease incidence or prevalence.

    Got that? Clear enough? And specifically referring to the use of mortality/LE-derived measures as HC-system quality measures:

    Although very interesting as indicators of health status, these [both derived and generalized mortality/LE measures] all fall short as measures of health care quality because they tend to be significantly influenced by factors other than health care.

    IOW, I don’t think that paper says what you think it says. It does, however, note some of the areas where we excel and some where we suck. Or rather, where we excelled and sucked fifteen years ago or so.

    As for your “rationing” argument, it’s indicative of a base ignorance of the field. The mere existence of privatized elements in the UK does not negate the fact that most Brits get nothing but government care, and that said care is 90% or more of their national HC expenditures, or that the taxation to fund same effectively prevents all but the upper classes from accessing any substantial care outside the NHS. NHS rations, and they have little choice unless they have much higher incomes than average. It’s essentially the same as claiming that Medicaid recipients really don’t have any rationing being imposed on them because they can always go to the Mayo Clinic and pay for it themselves.

  31. WHQ Says:

    It’s essentially the same as claiming that Medicaid recipients really don’t have any rationing being imposed on them because they can always go to the Mayo Clinic and pay for it themselves.

    Couldn’t the same be said about most Americans with private insurance? Isn’t really a matter of what is or is not covered by your insurance unless you’re wealthy enough to cover your health-care expenses out of pocket? Or are you discussing the degree of rationing rather than the existence of it?

    Side bar: I thought you were an advocate of a single-payer system a few years back, Tully, during the Centerfield heyday. Is that right, or did you simply provide lots of information about single-payer in health-care discussions without actually advocating it?

  32. Tully Says:

    Couldn’t the same be said about most Americans with private insurance?

    Not really, because they still have some choice on obtaining their insurance and on seeking outside services if their insurance doesn’t cover what they want. If you’re on Medicaid, you by definition entirely lack the financial ability to seek any other option. In the UK, if you’re not at least solidly middle class, the amount of taxes paid for NHS has pretty much swallowed the funding you would need to seek outside services. If you’re middle class or better, you can of course join the other Brits who travel to other nations to get medical care rather than waiting through the queue-rationing of NHS. Just because you theoretically pay for services in such a system as the NHS doesn’t mean you will ever get them.

    Many Americans also travel to get treatments at cheaper cost. And many insurance companies will pay for that — even with the travel costs to, say, India, it’s still cheaper for them to go there for a bypass than to get one here. American health care is indeed shockingly expensive by any standard.

    I thought you were an advocate of a single-payer system a few years back

    I did frequently state that the way trends were running, that’s where we would probably eventually end up. And I did frequently say that as far as “bending the cost curve,” that was probably the only way to actually control excess cost growth. (See above re: excess cost growth and rationing.) That’s not remotely the same as advocacy. I am opposed to nationalized government-controlled health care for what I consider sound reasons, this one among them.

  33. WHQ Says:

    I couldn’t get to your link, Tully. The website is restricted by my empoyer’s internet software under the category “Advocacy Groups.” [I guess that officially makes you a right-wing nut-case.;)] But I get the gist, though I don’t equate single-payer with nationalized, government-controlled health care. (Of course, I image you’ll be able to tell me why I should and that I’ll lack an adequate rebuttal.)

  34. Nick Benjamin Says:

    @Tully

    Problem being that I’m not the one cherry-picking, Nick. That’s your straw man.

    Dude, you are claiming that sources you have not cited, say that in general we do better on cancer than anyone else.

    In terms of general health there are many important measures that count besides cancer. You picked one that supports your argument. That’s a cherry. Which you picked, rather than picking the death rate from preventable disease.

    And according to an actual data source:
    http://www.nationmaster.com/graph/hea_dea_fro_can-health-death-from-cancer
    Our cancer death rate is mediocre. So you not only picked a specific subset of diseases (Cancer) that looked good for us, you picked a specific measure (survival rates for particular cancers) that looked good. Apparently the pro-US bias in those survival rates is bigger than I thought.

    You gonna have to work a little bit harder than that to win this point.

    And as I said I never claimed Life Expectancy was perfect. I just claimed that it was a decent measure of a health system’s overall effectiveness because it actually measures overall health. OTOH all you got is a vague claim that we do better in one specific set of diseases that most people never get (cancer). Which is apparently not true, because the French, Scandinavians, Brits, and Aussies have lower cancer death rates.

    As for your “rationing” argument, it’s indicative of a base ignorance of the field. The mere existence of privatized elements in the UK does not negate the fact that most Brits get nothing but government care, and that said care is 90% or more of their national HC expenditures, or that the taxation to fund same effectively prevents all but the upper classes from accessing any substantial care outside the NHS.

    “Base ignorance?” You try to redefine words and accuse me of “base ignorance?” And then you claim a literal interpretation of your “real definition” shows ignorance? Come on now.

    Heck by your argument we already ration to a huge chunk of Americans — the elderly largely can’t afford non-Medicare insurance, homeless vets can’t afford anything but the VA, Medicare recipiants (by definition) can;t afford anything but Medicare, and at any given time 10-20% of Americans are without healthcare because they can’t afford anything. And if middle-class Brits are rationed because they can’t afford private health care (a point many of them would dispute, especially given that less of their tax money, per capita, goes to health care), it’s pretty clear a huge chunks of Americans are rationed too.

    @WHQ
    You didn’t miss much.

    An NC Doctor told a fat chick she was doomed because she was too fat, and got in trouble because he poked her when he did it.

    The anecdote was used to illustrate the point that under universal health care we’d all pay for that fat chicks bad habits.

    And apparently Tully dislikes the idea of universal care because he’d prefer to see costs for everybody spiral out of control (as he admits they will probably do without single-payer), to paying for that fat chick’s diabetes meds.

  35. WHQ Says:

    I checked out the link here at home. It was, um, interesting. I’m not surprised it was blocked at work. That’s all I have to say about that.

  36. Tully Says:

    I never claimed Life Expectancy was perfect. I just claimed that it was a decent measure of a health system’s overall effectiveness because it actually measures overall health.

    Nick, all you’ve done is make claims for LE as a generalized proxy metric for health care system quality that are completely unsupported and are contradicted by the very sources you cite. LE is not a usable metric for the quality of a health care system, for reasons understandable and verifiable by any with a minimum of statistical/casuality analysis background. Your own sources say so. Repeatedly. The only metrics that are capable of valid proxy use are those assessing treatment outcomes for specific conditions. Even these cannot give a comprehensive picture unless aggregated properly, which no one to date seems to have done.

    Sorry, but I’m not able to cure willful ignorance. The light bulb’s gotta wanna change — picking metrics because they suit what you want to believe does not magically make them valid metrics. Yes, that’s willful base ignorance on your part.

    Dude, you are claiming that sources you have not cited, say that in general we do better on cancer than anyone else.

    Since you’re apparently unequipped to locate any valid sources of condition-specific cross-national data (perhaps you can’t access google) here’s some cites of the most recent published studies of cross-national cancer survival rate comparisons. (From non-U.S. sources, I note, just to proactively head off your inevitable claim of biased nationalism.) If you lack the resources to access the full text of the 2008 Lancet Oncology study, or the intellectual capacity to comprehend the data therein, here’s a handy chart of some of the areas covered. The Telegraph article on the 2007 study already has non-specific charts on overall cancer survival rates, and yes, the LO authors did adjust for the things you think are gameable.

    The reasons for this disparity do indeed involve structural/cultural differences in HC systems and utilization, particulary in greater population screening, earlier detection, and aggressive treatment.

    And apparently Tully dislikes the idea of universal care because he’d prefer to see costs for everybody spiral out of control (as he admits they will probably do without single-payer), to paying for that fat chick’s diabetes meds.

    If you’d tell me what general area of the country you live in, I will be happy to provide local/regional references to clinical personnel who can assist you with that profound reading comprehension problem you exhibit. Or were you misrepresenting what I’ve said on purpose?

    Here, I’ll try to keep this brief, though I’ve already said it all above, but seem to have stated it in a fashion above your comprehension level and limited attention span. ALL health care systems in ALL developed nations that are not tyrannies or dictatorships exhibit and suffer from the excess cost growth problem, regardless of their form of health care system, whether it’s single-payer like the UK or blended like the US. In addition, observation indicates that the greater the amount of state control of the health care system, the more nanny-state anti-freedom tyrannical behaviors based on health care justifications said state tends to exhibit.

    Free states have excess cost growth problems because people in general demand more additional health care for each additional dollar in income. Period. Demand for health care is price-inelastic. BTW, the US is not even high among OECD countries in excess cost growth. We’re right about average or a hair under. Since you have trouble finding such data, I’ll provide this handy pointer to the OECD web site of frequently requested health care data.

    Or you can remain in willful base ignorance, arguing based on your own opinions and desires, rather than on the facts.

  37. Tully Says:

    WHQ: Yeah, Zombie does have a tendency towards utilizing graphics that over-emphasize the point, eh? But I trust you, unlike Nick, got the point of the text itself.

  38. Nick Benjamin Says:

    @Tully:

    LE is not a usable metric for the quality of a health care system, for reasons understandable and verifiable by any with a minimum of statistical/casuality analysis background. Your own sources say so. Repeatedly. The only metrics that are capable of valid proxy use are those assessing treatment outcomes for specific conditions. Even these cannot give a comprehensive picture unless aggregated properly, which no one to date seems to have done.

    In other words your argument is that health care is impossible to measure.

    I disagree.

    And if you disagree with that statement you have to use life expectancy. Period.

    Nobody will ever “properly” aggregate the data. Most sources I can access say we’re best on cancer survival rates, but mediocre on the death rates. This means one of those two numbers is total BS.

    I’m assuming the cause is that a) comparative studies focus on a few cancers; whereas Wikipedia lists almost 200:
    http://en.wikipedia.org/wiki/List_of_cancer_types

    BTW, your source wasn’t very good. It was a study of less than a half-dozen forms of cancer, using data from 1999. And it used 5-year survival rate.

    If you’d tell me what general area of the country you live in, I will be happy to provide local/regional references to clinical personnel who can assist you with that profound reading comprehension problem you exhibit. Or were you misrepresenting what I’ve said on purpose?

    Do I have to call Justin on you you silly person?

    Which of these statements is untrue:

    1) You believe health costs will sink us.

    2) You believe that eventually we will be forced into a government-dominated system to get them under control.

    3) You oppose this inevitability because it will hamper some abstract thing you call “freedom,” and increase another abstract thing you call “tyranny.”

    In other words you’d prefer costs to go up, which necessarily leads to people dieing, to paying taxes because taxes are anti-freedom.

    BTW, we are already more anti-freedom by your definition than the Brits. They pay less tax money for health care per capita than we do, but they still have access to private medicine. Maybe you should study that OECD page some more before you talk about how bad government control is.

  39. Robert Says:

    I think that if the federal government was truly serious about stimulating the economy, they would certainly realize how many people work at lousy jobs just so they can get the benefits.
    If these same people were able to get health care outside of a corporation, there would be many more small businesses starting up.

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