peter and stephen,please respond to this statment, "The economic argument against the public option is simple. Yes, it may reduce monetary outlays, but it will do so by forcing providers to accept prices lower than what they would in a competitive market. The public option can do this because it will be subsidized by taxpayer money. Thus, the public option will crowd out other insurers and achieve monopoly pricing power. Once monopoly pricing power is achieved, then you will see a decline in both quality and supply of health services. The key is the lack of supply. At the monopoly price, the number of people willing to provide heath services will be suboptimal. This is why you have to wait six months for a CAT scan in England. Effectively, supply is rationed. And yes, "costs" will be lowered, but only if you just count cash outlays. If you count the implicit cost of the having to wait too long for health care services or receiving lower quality care, then it's not such a bargain. No free lunches I'm afraid.
This is textbook economics as to what happens with monopoly pricing. Don't need to be an ideologue at all to believe this."
peter, after criticizing my post on the article from the wsj you asked about paying physicians a salary. here is a great answer.
a few salient paragraphs from an author who is pro 'public-option',
"Is the wonk consensus solidifying that the health care system would benefit if doctors were paid on salary?
I hope not, and I hope this doesn't happen on a large scale. Not because I'm a doctor looking out for doctors' interests, but because it's bad policy. As any MBA or business executive will tell you, when it comes to personnel management, you get the behavior you incentivize. For most physicians, the behavior that is promoted by the fee-for-service system is patient contacts, and this mode of compensation is important in maintaining physician productivity.
Consider the emergency department, for example. If I have a patient volume of 100 patients per day, this is for basic purposes a static demand that has to be met. As it is, if I staff this ER with a group of motivated and efficient docs seeing 2.5 patients per hour, I need to provide 40 physician hours of staffing daily, or about 15,000 hours annually, equivalent to about 10 FTEs (Full-Time Equivalents). Predictably, when you drop the direct correlation between how much work you do and how much you get paid, there is a decrement in productivity. This amount may vary but might easily be 10% or more; this is often defended by physicians who claim that by going slower they are providing better care, which is actually a fair point. The consequence, however, is that I will need to hire another physician to staff my department, and, writ large, there will need to be 10% more ED physicians nationwide to keep up with demand. If those docs don't materialize, then the ERs will back up and waiting times and boarding will increase.
The same phenomenon will apply to, say, a Family Practitioner seeing patients in the office. Currently, the patients are scheduled in 10 minute blocks with little down time, just to keep the practice profitable. If the doc goes on salary and can see fewer patients for the same income, why would he not? It would be great for patients, too. Wouldn't it be nice to sit down and talk with your doctor without those time constraints? But again, the demand for these services won't go away just because the docs are working slower, and the consequence is that more PCPs will be needed to serve the same population, or that access to primary care services will erode.
Now maybe if these salaries were skewed to favor cognitive services, there'd be lots of proceduralists and specialists who no longer wanted to work so hard and do all those unnecessary procedures from the article, "
lastly, some thoughts on whether there is a 'crisis' from a recent thread at the economist about health care reform (see comments below the article),
"Now, the US spends 18% of GDP on healthcare (compared to ~11% for EU) and this will go up to 25% within 12-20 years (varied estimates), if left unabated, this IS THE REAL problem and can be addressed through a variety of very pragmatic things, beginning with “hanging all the lawyers,” NOT that malpractice awards or even insurance is a large direct contributory to healthcare cost, but “fear of lawsuits” causes “defensive medicine” which means multiple MRI/CAT scans when an x-ray and observation is really only warranted; use of outrageously expensive oncology therapeutics and end of life technologies which are minimally palliative, at best, I could list 20 things, but “physicians” will simply “go along” with patients and families instead of being frank and face potential suits once terminal patients die.
Of course cost controls, specifically, unabated price increases, is part of the mix, but as a previous poster correctly stated, US unlimited prices subsidize the world; e.g. US Pharmaceutical consumption is ~32-35% of developed world but accounts for >65% global profit for all transnational companies.
Other than the % of GDP, the “Healthcare Crisis” is PR “BS;” when one closely examines the perpetual 47 million without coverage; a few key points come up:
1)>80% of “illegal aliens” are included (10 of the “12 million, US “official number” in reality 22-25M illegal’s in US; 2) 5-10 Million “US Born” children of illegal aliens; 3) “college-age” students covered via University Health Services (minimal need for catastrophic care); 4) Under 30 “Healthy adults” who are transient in employment; Conclusion >15M are long term without coverage and a significant portion of these can either afford subsidized coverage or low-income “free” coverage (Medicaid).
For 250M American Citizens, the current healthcare coverage is fine though the costs must be better controlled.
Obama is seeking to establish the “Golden Goose” of Government “Administered” (READ: “dependant” upon politicians) Entitlements and 90% of American Citizens are satisfied with what already they have albeit lowering cost is a good objective."
what do you think? there is a lot of liberal hand waving, but the most vociferous articles i've read are high on emotion and thin on substance...
12 comments:
addressing the post to peter and stephen was of thematic importance, but anyone can post their thoughts on this...i'd love to hear what you have to say.
Hi Paul,
Great post. After finishing a residency on the US Canadian border, I wanted to offer my observations on Canada's system. I also wanted to throw in an argument against salary for physicians
Canada's system is often held up as what ours should be. Every one gets care and it is very egalitarian. Detractors often note that everyone will be helped, as long as they want to wait. It also functions as it does because it has a safety net: the US.
I did half of my shifts at a trauma center that was the closest hospital to the Province of Ontario. On a weekly basis, I received transfers from hospital in Ontario that did not have enough "neurosurgery beds" or "ortho beds." These patients were often transferred hundreds of miles with unstable nurologic conditions and open fractures. The most glaring examples of these were patients with spine injuries and unset open fractures that had been forced to wait and be transferred.
On a smaller scale, rationed care in Canada results in waits for things as simple as EKGs (recommended in the US to be done within 15 minutes of any US cardiac patient), X-rays, CTs, etc. There are US medical clinic all along the US-Canada border that cater to Canadian patients who fear they will not be treated soon enough and come south for their medical care.
This article details US misconceptions about Canadian care. Before bagging on the source (Heritage), at least look at it's well-documented arguments and keep in mind where most US "News" is coming from these days - CNMBC tingles and ABC infomercials.
http://www.heritage.org/Research/HealthCare/hl856.cfm
Paul nicely outlined financial dictates of managing staffing for an ER. Another difficulty of staffing the ER comes with the proposal of salaried positions. Besides the academic challenge and the ability to help people, the salary at the end of medical school and residency training is one of the big recruiting tools. Who is going to spend 90 hours weeks for 7+ years to basically be a fed worker? The process of becoming a physician will become less competitive, the caliber of applicants will drop, and health care will become less efficient. At that point, where is our safety valve?
The future of a national health care can be see in several existing gov't entities. While the VA has a great, portable medical records system, it has innumerable failures: I would hate to be a Veteran who is sick on a Friday because nothing gets done on the weekend. Having a heart attack on Friday night? They should be able to get appropriate physician and cath lab staffing by Monday at nine. Another thing that scared me about working at the VA that was great for training, but might not be ideal for patient care is that everyone does the work of the practitioner one step about themselves: med students do Intern work, Interns do Resident work, Residents do Chief work, and Chief communicate with Attendings who are available from 9-5 on weekdays. This was my experience at VAs in 3 different states, but I'd love to hear that's not the case everywhere.
The other two shining stars of efficiency are Medicare and Medicaid. Many doctors no longer accept these types of patients because of massive paperwork, extra staff required to deal specifically with the inherent hassles, and ridiculous reimbursement based on bizarre government mathematics in stead of market forces or basic inflation formulas.
When the big three gov't entities do not function well, does it make sense to expand the government stake in health care?
exactly john. i hear a lot of people hold up the government entities of which you speak as already working, inneficient and what should be our goal.
you are correct. i agree with you. people would not be happy with the care currently doled out by the government entities...
The future of health care scares me and I think that both of your are correct. Doctors should be paid well. Putting you on a salary would be a terrible idea. Paul, your statistics about who is really uninsured in our country is disturbing. There are perfectly good individual health plans out there now for those of us who are charged way too much by our employer. Chris gets his health care 50% paid for by his company and I pay individually for me and the kids. At times when money was really scarce I still paid for health care. That was a priority. I wasn't going to expect the government to step in and pay for it for me. I chose that over a big screen tv or a nice car. I have friends who chose the other and complain about not having health insurance. I don't want to be insensitive, but boo hoo. I know there are those out there who truly do need the help and that is what medicaid and medicare are for. I know that some doctors don't except them, but there are always some that do. Go to those doctors.
I'm getting frustrated with all of the policies changing for the minority of the country.
As Johnny pointed out the situation in Canada is not ideal and they rely heavily on the US. What is the ripple effect going to be if we change our health care? We are always so concerned with the state of all other countries..shouldn't this be taken in to consideration? I agree that health care costs could be controlled better...but the administration is going about it all the wrong way. They need to work with the insurance and pharmaceutical companies. That is where the problem lies...not with the doctors salaries.
Thanks for the post, Paul.
Paul,
Great points. I agree that putting the government in charge of health care is not the answer. However, you surely cannot think that there is not a problem with the rising costs of the current system. If not addressed, they will cause much bigger problems if costs continue to rise at this rate. I understand that total spending on of that package of GDP that included healthcare has not risen mucn since the seventies (I can't remember what else was in that in grouping, food and utitilites I think), health care spending itself most definitely has.
While I do think doctors should be fairly compensated (above what the average person makes), as a recent consumer of health care when trudy had our baby I was pretty appalled at the size of some of the bills that we recieved. Just one example is the Dr. who did the epidural, came in and spent 20 minutes with us getting that done for Trudy. That was all we saw him the whole time. His bill came in at $1800, an hourly rate of $5400 per hour. While that service is/was very valuable, I thought $1800 for 20 minutes was a little high.
What is the solution in your mind?
Darin
jenni: thank you for your comments. i think insurance coverage should be mandated. this would place more people in the risk pool and bring an immediate cost savings
darin: $1800 is a deceptive number. first, the anesthesiologist is required to stay in the hospital while the epidural is in. so that number is diluted over many hours. second, i don't know if you paid that total amount, but there is a school of thought at when medicare entered the health scene years ago and started saying, 'even though you charged x we will only pay y.' this caused a blossoming of rates as doctors increased charges as they knew they would only get 30% of their charge from medicare. this cause problems then for cash paying patients and private insured patients who saw their rates increase as well.
a large amount of the health care dollar does go to subspecialties. there is a crisis looming for primary care in america. if rates drop much more for those docs ($90,000-$130,000 pre-tax) these docs will leave the profession and either consult or become concierge docs.
there are those procedurally based specialties that make a lot of money and their may be room for cost savings. one way to do that is increase supply by training more doctors.
the answer is rarely getting the government to come in and artificially fix prices and gum up the system. interesting times.
i have some interesting data i drummed up from a price waterhouse coopers audit that i will try to post in the near future when i get the time.
and have peter and stephen flaked out? all they've offered to date is a few lines of criticism but no solutions or additions to the debate...
I have never said this before, but it might actually have some bearing: I am getting closer to retirement.
We have a $2500 deductible per person or $5950 for the family. Our primary Dr.'s bill hit the insurance first so we paid him the $2500 and the $1800 was paid by the insurance.(however actually paid by me thru higher insurance premiums)
Primary care doctors really only make 90k to 130k? The average I saw on several websites was closer to 150k with the low being around 110 k and high around 200k.
It looks like we are going to get some type of government involvment. What plan do you think would be doable?
Darin
i like mandated insurance, government regulation of private insurers with increased transparancy to allow for consumers to make better choices regarding value. this would allow market forces to force quality etc.
switzerland has a great model of mandated but privately run model.
a more comprehensive article i've found on the subject is found here
yes, something has gone awry when a pediatrician in utah makes less than a prison guard in california...
the numbers are correct. $150,000 sounds high as an average and breaking $150,000 in a private practice would entail subsidies from a big entity (IHC) or working a lot of hours and cherry picking your population of payors...
Your arguments and the information you are providing on this issue are impressive. I like getting your take on health care from the physician's view point. I tend to look at things through the administrator and budgeteer's view point looking at operations and the dollars and cents to fund large government programs.
I heard Peter Orszac (White House Budget Director) on NPR a couple days ago. He says the new health care plan will end up costing $1 Trillion. Then he claimed about $600 Billion of it will be paid for with money saved by fixing inefficiencies in the current Medicaid and Medicare plans. He cited specifically an inefficiency that overpays doctors and hospitals for certain operations and he said fixing that alone would save $177 Billion. The remaining $400 Billion needed to pay for the new public option will be paid for with "new found revenues". I almost drove off the road laughing.
1. "New Found Revenues" - Does the government produce and sell anything? Revenues are almost always new taxes and fees unless the government is going to sell off land or capital assets, which are one time revenues. In this case, at least some of the revenues are new taxes on employer sponsored benefits.
2. Money from fixing the inefficiencies in the current Medicare and Medicaid systems - Orszac just admitted that government is pretty bad at administrating health care. But in his head and in the heads of the current administration, they're thinking "But we're not the guys who made the bad government health care programs of the past. We're better and smarter than the guys before us." Even if we give Orszag, Obama, and the current administration the benefit of the doubt (that maybe they are the most genius health administrators ever), even if that were true, no one in this administration is going to be in their positions for more than a few years, and a government health care program will not go away...EVER! If Obama's administration manages to not screw it up, the guys coming in after this administration will, and the incoming health care program will be larger and much more expensive. Here's a thought, why don't they show us that they can even fix the current Medicaid / Medicare inefficiencies that they say will save us $600 Billion dollars first. Then maybe, MAYBE, they'll have a little credibility to say they're good health care administrators.
Oh, I also wanted to tell you that I'm getting certified as an EMT Basic. I plan on getting certified as a Paramedic within the next two years or so, although I won't be using the certification professionally. I know it's nothing compared to what doctors are able to do in terms of diagnosis and patient care, but the classes have been facinating.
So, last night the instructor said something that made me think of the government and the economy. This might be a little bit of a different topic, but I'd love to get your thoughts. We were talking about patients experiencing shock and the instructor said "the extremities will feel cool or cold and the patient will be shivering because all of the body's blood is rushing to the core - the vital organs. That's the body saying it has to perserve the core systems first, and the hands, feet, arms and legs can go if they have to." I thought to myself, what are our country's core systems? What are the heart and lungs of the U.S. political and economic system? And when our country goes into shock, what is the core that we have to protect, and what are the extremities that we might end up losing?
great thoughts chris. I agree in large part.
good luck with emt training...
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