Category Archives: Health Economics

Health care in the U.S. is slowly crumbling. Everyone (except those who are exceptionally financially secure) is dissatisfied, including patients. This report of an article in Health Affairs sums up the patient’s views:

“Chronically ill Americans are more likely to forgo medical care because of high costs or experience medical errors than patients in other affluent countries”

“Fifty-four percent of Americans surveyed said high costs prevented them at some point from getting recommended medical care, filling prescriptions or seeing a doctor when ill. Seven percent of the Dutch cited cost as a barrier to treatment.”

“In addition, 41 percent of the U.S. patients said they spent more than $1,000 over the past year on out-of-pocket medical costs. That compared to lows of 4 percent in Britain and 5 percent in France.”

“In short, the U.S. patients are telling us about inefficient, unsafe and often wasteful care. The lack of access, combined with poorly coordinated care, is putting these patients at very high health risk and driving up costs of care.”

Those who defend our health care say “we have the best care in the world.” (attribute to Bush, McCain, Limbaugh and their ilk) They simply don’t operate in the real world.

We have an opportunity here, the question is whether we’ll be able to act on it.

Washington Post has an op ed by Joseph Siglitz on the Obama’s economic challenges:

“Obama will also need to deal with some vast inefficiencies in our economy if we are to prevent further erosions in our standard of living. Some U.S. sectors are global leaders, such as our world-beating universities and the high-tech firms that thrive on the ideas hatched in our ivory towers. Others are embarrassing, such as health care, where Americans spend far more than citizens in many other industrialized countries and get underwhelming results. We need a bold approach here, reforming not just the way we provide medicine but also thinking more broadly about health. That means doing more about diseases associated with alcohol, drugs, tobacco and obesity, which have increasingly come to symbolize American over-consumption.”

Medicynic believes our system of healthcare has evolved to not contemplate value when considering treatment alternatives. Inefficiency is integrated into every level of our non system. In research the emphasis is developing patentable advances so as to develop new approaches that a company can monopolize for a generation. Despite laws that mandate reasonable pricing our new advances are priced to assure huge company profits rather than assure patients access. The U.S. private care system spends 30% of health expenditures on administrative overhead compared with 5-10% spent by Medicare. (Canada 17%, UK 12 %, France 10%) Suppliers and providers operate in a cost plus environment without any incentive to be efficient. Pharmaceutical manufacturers spend more on marketing than research and pass the costs along to all of us. They obfuscate mediocrity in order to maximize their bottom line rather than showing interest in patient well being or for for that matter the survivability of our health care system. Hospitals view healthcare in terms of product lines and profit margins rather than benefits to patients. Physicians almost never consider cost/efficacy when recommending interventions. How else to explain the popularity of use of expensive ($100,000 plus/year) interventions that have shown minimal effect on longevity.

As noted by Stiglitz notes we pay more and get less out of our healthcare than most other industrialized countries. Hopefully CHANGE is coming!

I am having difficulty with the current presidential campaign understanding how our political system reveres the stupid.

It’s simply stupid to believe that Palin is the “best” candidate the republican party could find for Vice President. She’s clueless, and unqualified. Her lack of qualification is manifest in her intellectual achievements (see her academic record, also review McCain’s); lack of national experience and basic knowledge of the world; skepticism regarding science and scientific method; performance in interviews after her selection; and in her loudly stated view that a African American son of a single mother who through the strength of his intellect became a highly respected lawyer and community organizer is one of the “elite.” It’s as if being smart is a problem. She simply makes no sense. Yet she is the best the republican party can do. Her choice and views are prime manifestations of stupidism in this campaign.

The presidential candidate for that party has proposed an elaborate shell game that is his health care policy. It will eliminate health insurance as we know it and move most of us to the expensive individual health insurance market. Many will not be accepted for insurance or charged outrageous premiums because of all things they are sick and need their health insurance. Nothing like a policy that works to eliminate coverage for those who need it most.

In regard to healthcare the question is who is more stupid. Those who propose a flawed bizarre policy or those who will seek temporary personal advantage in such a policy–by not having coverage or by buying cheap policies that don’t provide comprehensive coverage. I say temporary because we all will have illness at some point. When that happens these guys will have inadequate or no coverage and be unable to afford their treatment. At that point they may try and upgrade their health insurance policy and as noted above will be flushed out of the private insurance system. Not understanding the implications of segregating risk in health insurance and voting for a candidate who proposes such a policy is also a manifestation of stupidism.

With the economy tanking, the repubicans sell the notion that up is down and down is up. McCain a long term and recent proponent of deregulation now claims he has always been for regulation of financial markets; Palin wonders how a Democrat can propose cutting the military budget in a time or war, while McCain has stated he knows of waste and mismanagement at the Pentagon and can easily cut their budget. For these people, support of a stupid war is patriotic but paying for it with taxes isn’t. What isn’t stupid about this campaign?

Consider this election a ballot initiative on stupidism.

If McCain is elected and implements his health program you can say good bye to employer based health coverage and expect a salary cut.

The McCain health plan proposes to tax health benefits provided by employers as ordinary income.  If the employer stops providing health benefits (worth up to $12,000 or more) then there will be a tax credit offered of $5000/couple ($2500/person) to buy insurance in the open market.

You have to watch your wallet here.  By slight of hand the plan takes an up to $12,000 insurance benefit that comes with employment and throws you into a treacherous individual insurance market with $5000.  If you or a family member have a serious illness under McCain’s “plan” you will be charged more or even denied coverage.  If you are healthy you may be offered a variety of products many of which provide inadequate coverage that you only discover is inadequate after you become sick.  You will be rated each year and there is no guarantee of continued insurance coverage at any price if you are in great need.  Quite a program for insurers.

Adding insult to injury, you remember your health benefit that was being taxed as your ordinary income?  It was worth up to $12,000.  Guess whose money that is?  It was to be taxed as your income but as soon as the employer dropped coverage, your income became the employer’s revenue.  In other settings that’s what’s known as a salary cut.  It’s almost as obtuse and ingenious as leveraging mortgages or credit default swaps.

I should disclose that while I don’t particularly care for employer provided coverage, the McCain program would be an abomination.

1. Cost/Efficacy–Is the response to treatment worth the cost.  At most meetings cost is never mentioned when discussing results.  This in  an era of $100,000 medications and health cost inflation.

2.  Value–Presentations at meetings are geared to show off new medications.  At time the educational programs will objectively review the field and make unbiased suggestions but for the most part the programs are funded by the industry and the speakers are on the payroll.  As a result evaluations of alternative treatment and of course considerations of cost/efficacy are rarely heard.

2. Patent reform–Meetings are for the most part sponsored by drug companies (patent holders), enough said.

3. Conflicts of interest–It’s not unusual to have speakers touting results of studies who are on the payroll of the drug company that makes the product being tested.  Disclosure is not enough!