Debate Over Health Care Yet Again Omits Elephants In the Room: Excessive Costs Due to Terrible Incentives and Pricing, Administrative Costs, Pharma Looting

I should write a long post but I feel like screaming and a short post can accomplish that.

A new Wall Street Journal story, Health Care’s Bipartisan Problem: The Sick Are Expensive and Someone Has to Pay, is narrowly very good and broadly terrible. Despite the fact that the US health care system is doing a worse and worse job of delivering results yet is chewing up ever more of national resources, the press and punditocracy almost without exception refuse to question the basic premise of how the system operates. Remember that the cost of the US health care system is roughly twice that in GDP terms of that of other advanced economies, yet delivers worse results. A reminder from 2014:

Despite having the most expensive health care system, the United States ranks last overall among 11 industrialized countries on measures of health system quality, efficiency, access to care, equity, and healthy lives, according to a new Commonwealth Fund report. The other countries included in the study were Australia, Canada, France, Germany, the Netherlands, New Zealand Norway, Sweden Switzerland, and the United Kingdom. While there is room for improvement in every country, the U.S. stands out for having the highest costs and lowest performance—the U.S. spent $8,508 per person on health care in 2011, compared with $3,406 in the United Kingdom, which ranked first overall.

That is roughly the same sort of performance Soviet manufacturing showed in the decade before the implosion of the USSR. From Yegor Gaidar’s book Collapse of an Empire:

In manufacturing per unit, the U.S.S.R. in 1980 used 1.8 times more steel than the United States, 2.3 times more cement, 7.6 times more [mineral] fertilizer, and 1.5 times more timber.

The causes include:

A pay-for-piecework system that rewards doctors for over-treatment. These incentives are reinforced by encouraging patients to expect too much of doctors and demand surgeries and medications rather than accept that they may have to live with limitations or a slow recovery. I hate to rely on anecdote, but how many doctors are like the now 75-year-old orthopedist I finally found after seeing God knows how many who either had no clue and/or were super eager to operate. For instance, when I called his office to come in because I was pretty sure I had broken my little toe, he refused to see me and told me to tape it to my next toe. And this month, I managed to bang the hell out of myself in a bad fall (proving at least that I have no bone density problems) when I already had an injury and set myself back and then some. I hobbled in to see him. He poked and prodded and made me move a bit, declared me to have not done any permanent damage, and told me I needed a couple of weeks to heal more and to rest. And for this he charged $100 (the functional equivalent of bupkis in Manhattan) when I hadn’t seen him in over 10 years. When I was in Oz, most doctors were of his school of practice: their reflex if a problem didn’t look scary was to tell the patient to wait ten days and call the office, and if things hadn’t gotten materially better, then they would investigate further.

Similarly, I’ve been appalled when I visit doctors and mention what I consider to be a minor complaint that they almost universally regard it as a request for meds and are creepily eager to provide them.

And ads like this only encourage this sort of thing. I only watch TV an itty bit when on the treadmill, yet I’ve seen this commercial on CNN in prime time repeatedly. Mind you, this is for a diabetes medication, yet it sure looks like they are selling a great club drug:

The TV version has all the dance sequences and none of the charts or scenes in the bathroom, so the “gee this is a super happy drug” message is even stronger.

Drug company rent extraction. The US funds a huge amount of basic R&D and demands way too little. Big Pharma has succeeded in creating an intellectual property regime that makes it more attractive to milk existing patents and cheat on drug marketing than discover new drugs. Over 85% of the so-called new drug applications for the last 15 years have been for extensions of patents on existing drugs based on minor reformulations. The industry also spends more on marketing than R&D, and you can be sure that the beancounters allocate as much overhead as possible to R&D. Yet they’ve managed to con much of the public and complicit legislators that they need fat profits to “innovate” when they instead go to CEO and executive bonuses

Even worse, drug company marketing abuses kill people on a large scale basis. Vioxx and Oxycontin are poster children.

Needless insurance company costs and burdening of doctors with unnecessary admin work. One of the big reasons for the shortage of primary care physicians is the every-rising hassle of dealing with insurance companies. My impression is most doctors spend a day a week fighting to get paid, on top of having to pay staff to deal with paperwork. That is driving more and more MDs into concierge practices and services focused on the rich, like cosmetic services and anti-aging, that are outside the medical/insurance regime.

Iatrngenic conditions are a big problem. This is not unique to American medicine, but I would love to see comparative statistics. For instance, between superbugs, MRSA, and pneumonia, anyone who is sick should avoid a hospital stay unless there is no other choice.

As we know all too well, Obama made his health care “reform” all about institutionalizing the medical industrial complex looting. The bill was written by health care industry lobbyists. Drug company and insurer stocks both rose when it was passed. Even though insurers are whinging on how they are having a hard time making enough money on Obamacare exchange plans (and this serves as their excuse for dropping them and/or raising premiums), the press seldom mentions that they made out handsomely on Medicaid expansion. And let us not forget that Obamacare also barred drug reimportation from Canada.

So having chosen to misuse a once-in-a-generation opportunity to have a go at the fundamental problems of a clearly broken health care system, Obama, as he did with the banks, sided with powerful incumbents at the expense of ordinary Americans. Some people may perceive that they have been helped, but I wonder how many have road tested their coverage via suffering a serious mishap. As readers know too well (and many have told us), if you are hit by a bus and get taken to an emergency room not in your network, the costs are all on your dime. Even if you schedule an operation in network, it is impossible to prevent the hospital from gaming the system and scheduling practitioners who are not in network as part of the team so as to run up a bigger tab (lawyers have told us you can contest the bill successfully if you’ve demanded that they schedule only in-network professionals and they agree, but why should people who are having to deal with the stress of recovery from a major procedure be put through fights like that?). As we’ve also discussed, many insurers are effectively excluding pre-existing conditions via narrow networks that do not include specialists that can treat them.

Yet the frustrating Wall Street Journal article does a fine job of discussing the problem of treating people with costly ailments in our current broken system without once acknowledging the structural issues that make American medicine so egregiously overpriced. While it does marshall some useful data, for instance, that 1% of patients account for 21% of health care costs, far worse than the usual 80/20 rule, it conflates that with the pre-existing conditions problem, when end-of-life care is a big ticket item included in those figures.

Nobel Prize winner Angus Deaton stated clearly what is wrong. The American health care system “seems optimally designed for rent seeking and very poorly designed to improve people’s health.” And nothing is going to get better until we tackle that problem head on.

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158 comments

  1. Leigh

    One of the dangerous side effects of electing multi-millionaires into office is you have a cadre of people who are completely out-of-touch with the reality faced by the average American. They might as well be governing us from Mars. They don’t give a damn about what the average citizen has to pay for healthcare, in their minds “that’s their problem – I got mine.”

    You can call it “rent extraction” – or whatever other fancy term – but lets please start calling it what is really is = greed! Greed has become a virtue. Greed is a bottomless pit – a greedy person will never reach a point of satisfaction.

    “There is a sufficiency in the world for man’s need but not for man’s greed.” Mahatma Gandhi

    1. Jason Boxman

      I’d straight up call it stealing. That’s what it is. Working class people are being robbed.

        1. Matt

          The ultra rich hate competition. Competition eats away at their profits. Trump’s plan of allowing insurance carriers to compete across state lines will help out quite a bit with lowering cost and improving coverage. Leigh, you are sort of looking like a bigot in the manner in which you stereotype billionaires by saying the all think in terms of “that’s their problem – I got mine.”

          Trump spent well over a $100 million of his own money self funding his campaign without the promise of winning. It could have all been wasted money. Yes, his assets are worth almost $10 Billion, but the amount of cash he had on hand to spend most would speculate is less than a billion. Trump could just be enjoying himself and his family till his days come to an end, but something compelled him to risk a big portion of his cash to try to help Americans.

          Trump is also the first president to threaten to take on Big Pharma and the corruption in the CDC. His meeting with Robert Kennedy about establishing an independent committee to investigate the safety or lack of safety in doing mass injections of vaccines in infants is something that no other president has ever had the balls to do.

          Yes, Trump says many things are stupid, but the policies that he is working on getting done when it comes to the economy and health care are going to benefit the Average American greatly.

    2. John k

      With Obama we elected a wannabe multi millionaire that quite reasonably expects to get his after leaving office. Kind of a no brainer, he’s just following the Clinton tried and true prescription.

  2. Jim Haygood

    How did we get here? During WW II, wage and salary caps were imposed in an almost sovietized US economy, to stop wartime labor shortages from causing a wage explosion.

    Employers responded by competing on “fringe benefits” which fell outside direct wage controls: namely, pensions and employer-provided health care. Linking health care to employment is a terrible idea, as it’s not portable. But our accidental health care system is still designed around this unintended consequence of wartime.

    Likewise, the individual health care market failed to develop, since individuals couldn’t deduct all their coverage expenses as employers could. Finally, Medicare and Medicaid price controls led to price discrimination, in which privately-paid care is charged more, sometimes many times more.

    Obamacare failed because it entrenched this incoherent dogs breakfast, rather than rethinking it from scratch. It’s doubtful that the petrified US political system, which isn’t even up to the task of ending the failed Drug War after 47 years, can redesign health care. Maybe they should appoint a commission and punt.

    By the way, the behavior shown in the video above is pure, full-throttle mania. They omitted the mirror-image depressive episodes, where that poor unshaven dude is out on a ledge in his pajamas, whimpering and threatening to jump. The mentally ill aren’t good on compliance. :-(

      1. rd

        That is effectively the Canadian system that is managed on a provincial basis (real “states’ rights”). If you track the Canadian healthcare discussions, it is clear that their system will have to increase spending (probably about 20% or so) to manage the aging population primarily because they have squeezed many costs out of the system over the past 30 years, effectively ending up with “hardened demand” (similar to hardened water demand after the easy conservation measures have been done). The US is still fat and poor quality, similar to American car manufacturing in the 70s and 80s, so there is lots of room for cost cutting while simultaneously improving quality. The question is, what will be the shock to the system that will drive that?

        I have been e-mailing my senators and congressman over the past several months telling them that they need to focus on reducing costs by 25% over the next decade – that would likely bring us down to where our national competitors will end up over the next decade. If they can structure an Obamacare replacement to accomplish that, then how it gets funded won’t really matter because everybody (except healthcare executives) will be ahead in the game.

    1. DJG

      Jim Haywood: Thanks for the perspective of a white-collar worker, but you leave out several important pieces. In WWII, the U.S. economy was still dominated by industry and agriculture.

      Wikipedia:
      The percentage of workers belonging to a union (or “density”) in the United States peaked in 1954 at almost 35% and the total number of union members peaked in 1979 at an estimated 21.0 million. Membership has declined since, with private sector union membership beginning a steady decline that continues into the 2010s, but the membership of public sector unions grew steadily.

      So let’s say that a third of the work force was unionized. And one of the main purposes of unions has been to provide medical coverage. My father’s union (printers) provided Scandinavian-level health care–and charged hefty premiums. But it was an incentive that kept membership high.

      Part of our current crisis is what happens when white-collar structures and habits take over the economy. It may be an “accident” that health insurance became attached to a job, but it is mainly in the last 40 years that health insurance is only affordable through a job. (Hmmm. Guess we all have to work in an office.) Likewise, pensions, now in ruins, were once available through unions and fraternal organizations. Now, we have what white-collar workers settled for: 401K plans and vaporous promise from employers.

      So: How did we get here? Short-sightedness. Class warfare. Free-market fundamentalism. Class warfare. Bad legislation like “right to work” laws. Class warfare.

      1. rd

        Healthcare is NOT affordable through a job – we just think it is because the employee doesn’t directly see the bill. A primary reason why median household disposable income has been stagnant over the past couple of decades is because what would have been pay increases have gone into employer contributions to skyrocketing healthcare insurance costs instead. The employers haven’t seen stagnant employee costs because of the benefit increases – that is a primary reason why they are often so focused on avoiding full-time employees that would require benefits.

        The biggest fraud out there is the canard that the private sector is controlling healthcare costs. Employers and private insurance companies have generally been unable to do that as their healthcare contribution costs have been outstripping inflation by a wide margin over the past couple of decades, so a primary tool for controlling their costs has been creative denial of coverage techniques instead of lowering the actual delivery cost..

        1. FluffytheObeseCat

          The U. S. health care provision system is private sector, at least the part of it you described here. Businesses contract with private sector companies like United Healthcare for employee coverage. The rent seeking dysfunction is largely within the private sector.

          1. Skorn

            The cadillac tax provision embedded in the ACA has been a great success in deteriorating formerly robust employer based healthcare plans. The tax scheduled to commence in 2018 effectively nudged, or provider cover, for my fortune 25 company to implement “consumer directed” plans this year.

            The deductible and coinsurance designs vary by service type (diagnostic, Rx plan, physical therapy, etc.), and requires careful research and planning to become the astute “consumer” our minders envision. A monumental time sink, and transfer of routine costs back to the employee. I almost feel bad for complaining considering how much worse the ACA exchange plans screw their members in costs and “out-of-network” fee gotchas.

            Several apps for price checking are “kindly” offered for regular use. My sinister favorite, a $500 carrot for Wellness Plan enrollment that mandates sharing all kinds of employee specific healthcare data markers with a 3rd party vendor. In the works of Lambert, what could go wrong.

            Consultant spin to C suite HR axe grinders, adopted in full by my company.

            http://www.drugchannels.net/2015/10/three-ways-c-suite-can-prepare-for.html

            “Consider alternative savings vehicles as part of your benefits communications. Cost shifting also requires that employees assume more responsibility in managing their own health and related expenditures. Providing tools that help them defray the out-of-pocket liability is a win for everyone.”

          2. lyle

            Actually large companies in general use the insurance companies as claims processors and the like, but do not use the insurance part of the business, because they are large enough to win by the law of large numbers. You file the claim with the insurance company, and they totalize the claims approved every so often and send a bill to the company. There is no element of insurance in this.

            1. JTFaraday

              That’s interesting. I’ve wondered about that. Actually a dumb, probably totally unnecessary question someone asked me once made me wonder about that. I have a very sensitive ear.

              To the extent that cuts costs for large corps, I bet that stands in the way of reform. I can’t understand why businesses aren’t screaming bloody murder to get rid of this thing.

        2. readerOfTeaLeaves

          Kaiser* Permanente has a really interesting history, springing originally from the idea that Kaiser Shipyards wanted to be sure that their employees were in excellent health. Remember, this goes back pre-WWII, when antibiotics were still new, the idea that diabetes could be treated with insulin was very recent in the 1930s, and the culture was still fairly collectivist for settlers from the Scandinavian and even many German states.

          Kaiser is now merging with Group Health Cooperative, which originated in the Seattle region with a group of docs who wanted a more patient-focused system — but Seattle’s early settlers, and many neighborhoods of the region (including Everett) had very high percentages of Scandinavians and Northern Europeans, for whom the idea of a cooperative was not automatically misunderstood as a form of communism. Cooperatives are registered with the state, and governance is done via boards, with member input.

          Kaiser-Group Health will probably have the largest database of long-term, longitudinal patient data within the US, which is a long, long overdue.

          ——–
          *Kaiser did not mean ‘the king of Germany’, but the word does originate with ‘Caesar’ and has long been associated with ‘king’. However, the US founder was just a guy named ‘Kaiser’, and the business holdings expanded to aluminum and materials related to ship building.

  3. Michael Fiorillo

    Greed has many forms, and rent-seeking is a description of a current and prevalent one that is enabled by our political economy and culture.

    Humans may have an innate “greed gene,” but we also have cooperative and altruistic ones; the struggle is to shape institutions that reward the latter and penalize the former.

    1. Carla

      “Humans may have an innate “greed gene,” but we also have cooperative and altruistic ones; the struggle is to shape institutions that reward the latter and penalize the former.”

      These are very important points. We can insist on living according to the values of our better natures, but we’d better wake up to that fact pretty fast!

      Here’s to all you true progressives: http://www.newslogue.com/debate/272/CaitlinJohnstone

      “Speak the truth, even if your voice shakes.”

  4. Beans

    Great post Yves.
    I feel like screaming, too. I am in the dental field and spend an increasing amount of time repairing damage from over treatment has been done in corporate dental practices and by unethical doctors. Over treatment is rampant and there is no incentive to stop it.

    It has become apparent that US healthcare serves to drive our economy, not to deliver health. Despite much talk about driving down the cost curve, as you pointed out, our healthcare policies are written to drive economic costs up not down. I believe this is a feature and not a bug. The same type of problems exists in education. These are the two industries that have seen job growth since the economic collapse.

    Reducing healthcare costs risks losing what little growth exists in the job market in the present environment. We not only need healthcare reform in a way that benefits patients, we need economic reform across the board.

    1. Katharine

      Individual practitioners can be trained by assertive patients, or abandoned if they prove untrainable, but unfortunately the training probably fails to generalize to their dealings with other patients. Those in private practice may be more amenable, but they are also increasingly rare. It’s a broken system. Yet access to it does prevent thousands of needless deaths, which is why the congressional rush to destroy the ACA strikes me as tantamount to mass murder.

      1. FluffytheObeseCat

        The U.S. health”care” system creates a feast or famine distribution of care. You either have insurance, and money-grubbing providers offering unnecessary procedures, or you have no coverage, and your basic needs go unmet.

        But, it’s a symptom of the fail in our larger political economy. Dentist are not part of the insurance system to the extent that medical practices are. They probably get 50% of their business via cash pay out here where I live. But like beans said, over-treatment is rampant. I never am free of upselling at dentists anymore. I’ve switch once due to it, and I don’t know where to go next. And I’m cash only.

  5. PlutoniumKun

    I think this is one of the most frustrating things about any discussions in health care – and not just the US. The raw figures are pretty clear – countries with either direct provision of healthcare (NHS in UK) or highly regulated public-private systems (France, Netherlands, Japan), have vastly cheaper systems. People in Britain often complain about problems in the NHS, but its rarely pointed out that the UK spends a fraction on healthcare of the US, and significantly less than in say, France or Germany. Almost all problems in the NHS are related to the fact that its a very cheap and poorly funded system, not that a public system is inherently bad or inefficient. The so-called ‘reforms’ imposed by neo-liberals from Thatcher and Blair onwards have only made things worse. The core argument should always be about preventing looting by either the private sector or (as occasionally happens) interest groups within public or hybrid systems. All else is noise.

    Incidentally, something which is often overlooked in the US and elsewhere is that the crappy US system is not actually about a lack of public funding. The US government actually spends more on healthcare than the UK! (refer to the link above). The French system, to take one example, is astonishingly good – not just in quality of healthcare, but in its fairness of distribution (an Australian friend of mine who fell sick with a blood cancer while travelling without insurance in France was treated and cured without any cost whatever, no questions asked, and a medical friend said his treatment was state of the art). And yet the French spend less on public provision than in the US. This is entirely down to corporate looting.

    As to Yves point about individual doctors, its unfortunate, but people are often acculturated into expecting certain things from doctors. I’ve spent the last 6 months helping two American friends settle in to Ireland, and one of the most difficult things is persuading them that they really don’t need to insist to the doctors that they need endless tests for this or that. The best doctors only prescribe drugs for a small minority of patients, and only recommend expensive tests if there is a real demonstrated need for it (the extent of over-testing and over-diagnosis in the US is shocking). An emergency consultant I know says that by far the most common medication he prescribes is paracetamol – he could tell people to just buy it in a local store, but they feel better if they’ve been given a prescription. He never tells them its the exact same as they could buy for a few cent a tablet, it seems to work better that way. MD’s here will more often than not just prescribe mild anti-inflammatories for most complaints. For a huge range of medical problems, all that’s needed is a little short term pain killing and some rest (or in many cases, exercise). But that’s just not profitable for drug companies or private hospitals.

    1. bmeisen

      Direct provision as in the UK has disadvantages as funding is (as I understand it) part of your tax bill and not distinct as a health-related budgetary factor for individuals. The notion of mandatory participation may also be less prominent in the UK than it is in other economies – maybe intentionally on the part of UK legislators as they could well be eager to disown having compelled their constituents to pay for something.

      But mandatory participation is the main point – a system of public health care provision can only succeed if it covers everyone, i.e. if no one can opt out. The pay-off for having to pay in is optimal efficiency and fairness in terms of distributing costs.

      It is not a surprise that 21% of costs are generated by 1% of the population. The crime is when a regime allows providers to exclude these high cost individuals, and even worse, does so while promoting excessive care and billing abuse among a privileged minority.

      I think indirect provision via mandatory participation in a heavily regulated, independently managed system of non-profits is the better choice than a UK-based system of funding via tax. While health care costs properly resemble tax, I believe we are wise to keep them distinct from tax. Linking premiums to income is also a good idea, including a cap which keeps the wealthy honest and in the system. Burying the premiums in a tax bill is suspicious.

      Everybody should know that being in, that being forced to buy health insurance from a state-sponsored non-profit, isn’t just OK. They should know that it makes better broader care accessible because it saves everyone money big time.

      Do international comparisons reflect the breadth of coverage? For example I bet that the German totals reflect comprehensively the costs of medical, dental, chiro, mental, and eye, foot, prescription drugs treatments for 80 million Germans. They do so because 80 million Germans are in the system and their health care costs are on the books. Do the US totals reflect the costs for 330 million Americans as comprehensively? I doubt it, i.e. the international comparison for the US is probably even more disgraceful.

      1. broadsteve

        There was a time in the early days when the NHS in the UK was at least nominally funded from National Insurance Contributions, which are paid by the employee in addition to income tax, with in addition, an employer’s contribution averaging about 13% of payroll . NIC’s supposedly went into a separate pot to be used solely for the NHS.

        Most people knew this was always a bit of a fiction but the idea of a hypothecated payment (note well: definitively not to be known as a tax), went well with the post WW2 welfare state settlement and accompanying narrative which most of that generation fully endorsed: Everyone would pay in to the kitty, everyone would get something out when they needed it.

        Then 20 or so years ago, I suspect as part of some neoliberal ‘softening up’ of the electorate, NIC’s started to be labelled as a tax and the idea of hypothecation – something that is usually explicitly denied for any other form of taxation in the UK – was debunked for NIC’S as well. In so doing the way was opened up politically to raid the NIC fund for other fiscal spend, or at the very least muddy the waters as to where NHS spending came from or how much was available for it.

        Interestingly now, and I hope as part of the pushback against perceived neoliberal wisdom which seems to be taking place, a Conservative politician was on TV yesterday saying that reintroducing the idea of hypothecation and that National Insurance is for the NHS may be one way of responding to the current ‘crisis’ in the NHS. If put into practice literally, it would mean a massive increase in NIC. (Non UK readers also note well, the NHS is always in ‘crisis’. Casting the runes over this is a national pastime, like discussing the weather).

        All of this is a long-winded way to get to saying that the idea of ‘mandatory participation’ really isn’t much of a thing in the UK as far as most people are concerned. I’ve never even heard the phrase. We, collectively, the people, pay for the NHS, simple as that. It’s death and taxes stuff, inevitable, and payment, as far as the majority is concerned, is a non-issue; how the money gets spent and quality, timeliness and (especially) abundance of service (not necessarily quality of outcomes) are the issues.

        Of course there are some objectors, and there are some who would want to privatise and have privatised parts of the NHS, and any politico or hanger-on looking for air time or column inches need only cherry pick an NHS failing or suggest some radical change, but as has been said before on NC …grifters gotta grift.

        1. bmeisen

          Thanks, appreciate your comments. Mandatory participation is the opposite of the American approach. In the American approach individuals are not compelled to explicitly participate in a health insurance plan. A mandatory system is one in which everyone is compelled by law to participate in a health insurance plan. Germany is an example of a mandatory participation system. Germans can choose between private or “public” plans but you have to choose one and pay NIC’s.

          Hypothecation is new to me – sounds like NIC contributions exceeded expenses, maybe thanks to responsible projections and careful fiscal planning on the part of British civil servants, and that these surpluses were invested, as they should have been, and earned respectably, such that some observers started to say that they shouldn’t be doing that but if they do that then the surpluses should be available for general gov’t needs. The result would have then been phase out of NIC’s and the establishment of tax.

          Generally single-payer plans can, maybe they should, generate surpluses. Like Social Security they don’t have to always be on the verge of bankruptcy. German “public” (gesetzlich) insurers adjust their premiums annually based on performance. When US plans generate surpluses do members get premium rebates?

          Interestingly through the taxes they pay, the non-insured in the US are paying for health insurance in the NHS sense. And they receive care when they go to an emergency ward or later when they are old and have no tangible assets anymore.

          1. reslez

            > In the American approach individuals are not compelled to explicitly participate in a health insurance plan.

            That was the case until the ACA (Obamacare). Individuals are now required to purchase a health insurance plan that complies with Obamacare. If not they pay a penalty to the IRS.

            > When US plans generate surpluses do members get premium rebates?

            Surpluses are built in. They’re called profits, and no they aren’t rebated (LOL). Obamacare providers are supposed to allocate a certain % toward actual care but this is easily and in practice gamed. If the profit margin isn’t high enough, or if the plan somehow makes an actual loss, they just raise rates. That’s how we get double digit increases year after year.

            1. readerOfTeaLeaves

              ‘Required’ or not, I’m aghast, irate, and contemptuous of a system where Congress members can not even articulate a fundamental fact that any kid in a 9th grade biology class grasps: illness (particularly contagions) are not like normal ‘consumables’.

              IF you buy a car, I don’t automatically get a car because you did.
              IF you get the flu and I’m behind you in the elevator, I’m at risk.

              My theory is that we’ve used up a lot of natural resources, so all the easy timber, fisheries, and wildlife related money is gone. The buffalo all got killed off, what now, Kemosabe? Well, the ‘what now’ became tech and bioTECH stocks, and Big Pharma and subsidies for corn and corn syrup.

              I actually think it’s progress that people are finally screaming mad about this whole mess.

              1. sierra7

                Some things in a “progressive, wealthy” society should not be, “for profit”.
                Healthcare and public education are two that we seem to refuse to understand benefit all the country.
                The horrific greed of some of our country will eventually destroy all of it.

        2. Adamski

          While NI is hypothecated for health, it is also for Social Security, and it has never fully covered the cost. That leaves other revenue to make up the gap, the largest source being income tax. Though the Tories keep raising VAT. Your NICs can only be used for health and Social Security, but a lot of your other taxes also pay for those things as well.

      2. Adamski

        Tightly regulated private insurance markets are not all the same as each other. Try “The Healing of America” by TR Reid which is actually a book of international comparisons in plain English. If you have the govt setting the fee schedule then it can behave like a single payer system even though it is technically private insurance. If you don’t do this like in France then there is a problem controlling costs. And in all systems there is the problem of the cost of the ageing population.

        In the UK nobody has the experience of an insurance company refusing to pay for treatment, but the NHS has a more subtle, invisible kind of rationing which is that it won’t fund all treatments. There is no unpaid bill, because there is never a bill in the first place. This may be good for the patient or bad. It does have the advantage that the govt directly controls the overall cost of the system.

        I feel that the US will not be able to introduce private “social health insurance” like northern Europe because it still means taking on the insurance companies. Even though it includes making the cross-subsidy of all the patients and the individual mandate much stronger, which is what those European countries are like, Obamacare on steroids. (And no being turned down for a policy, and the policy can never be cancelled by the insurer.) Because the insurers and big pharma can still threaten to kill the career of any Democrat who doesn’t let them write the legislation. Single payer carries the same political hurdle, but gets rid of it forever.

        HR 676, or the updated version of it from Physicians for a National Health Program, has two very important features about the overall cost. Anything medically necessary not only should be free (like the NHS) but would be — the NHP would only turn down paying for a treatment if there was a cheaper equivalent available, which it would pay for instead. The updated proposal caps the total spending of the programme at the same percentage of GDP that health currently gets. I don’t know how they combine the two criteria! But since the govt will write the fee schedule they could change it year to year to prevent the open-ended coverage from busting the %GDP limit I suppose.

    2. Carla

      “An emergency consultant I know says that by far the most common medication he prescribes is paracetamol ”

      That’s so funny — and sad. Paracetamol, more commonly known as acetaminophen in the U.S., actually does nothing for pain, but it can really f**k up your liver.

      Aspirin, on the other hand, can offer pain relief, prevent many, many cancers, prevent heart attacks and strokes, and possibly forestall dementia. And it doesn’t hurt your liver. (Aspirin can be dangerous for children under 18. But so, of course, is liver damage.)

      1. UserFriendly

        That is Tylenol for those of you who don’t read the active ingredients label, and yes there is scares evidence that it does anything besides reduce fevers. Ibuprofen is a much better bet.

  6. Clive

    In a lot of ways, fixing US healthcare reminds me of the Brexit conundrum. There’s a rotten, currupt and widely vilified institution seemingly incapable of reforming itself or being reformed. The captive participants must either make their escape or else force change externally — but the latter is difficult with no guarantee of success. And you might very well be looking at generational timeframes and who wants to wait that long?

    But whatever change is brought about through a sudden stop and overnight (or short) transition will be hugely dislocative. Everything is in the wrong place in the current system when compared to how you need things to be. While exploitative and extractive, nevertheless many non-elite people rely on the current arrangement for their livelihoods. The replacement systems, infrastructure, operational processes, legal frameworks, resources etc. cannot be put in place quickly. But how do you support the innocent people who are affected during the transition while also not ending up rewarding the bad actors?

    Can’t move forward, don’t want to go back or stay the same…

    1. PlutoniumKun

      I’m not sure it would be as disruptive as you suggest in the US, for the simple reason that there are two perfectly good systems operating in the US that could be expanded to provide fully comprehensive healthcare – namely Medicare and the VA system.

      There are precedents. For example, in Taiwan they explicitly copied the Medicare system from the US, but applied it universally. The Taiwan system is widely considered the best in Asia. Although it took a different route (less of a big bang approach), Canada also got its health system via an extension of a Medicare style arrangement.

      The problem in the US of course is that it would be catastrophic for wide sectors of the looting class, and many thousands of people would lose their jobs – especially in insurance. This would include of course lots of regular working people who are not responsible for their employers mendacity.

      Years back I had some interesting conversations with an in-law who was a GP when the NHS came into being. He said it was a goldmine for his family (his father was also a small town GP). The doctors medical council essentially persuaded the government that the benchmark for a doctors salary was a GP in a prosperous part of London. In reality, most earned far less because their patients couldn’t afford it (this was in those deep and dark days when medicine was seen as a vocation, not a passport to riches). The government at the time was well aware of it I’m sure, but decided that sometimes you need to issue cheques to keep sectors of society on-side. I’m sure if the US went the same route, similar cheques would have to be written.

      But to address the broader point, I’m not sure it would be as convulsive as you suggest. Politically, yes, but the administrative structures are already here, and could with relative ease be extended over the whole population. Single payer in the US could be implemented with far less practical difficulty than the creation of the NHS.

      1. Clive

        I was doing a crude assessment based on simple mathematics. To bring US healthcare spending in line with the OECD average, you have to redeploy 9% of GDP. In other words, to keep GDP the same, while reducing the amount spent on healthcare, 9% of the economy has to stop doing what they are doing at the moment and start doing something else.

        Of course, a large chunk of that 9% is unproductive and should be stopped. But if you happen to be one of the ones whose income depends on this “unproductively” you’re out of luck.

        Yes, over time, with effective countermeasures, the negative shock can be mitigated. But that takes effort and will. Easier to just throw people under a bus. It always is.

        1. PlutoniumKun

          I get your point, although I think it would take quite a long time, maybe a decade or more, to really start turning the cost curve down in direct healthcare provision as this would mean, for example, putting downward pressure on doctors incomes. There seems to be quite a clear link between single payer and relatively low pay for doctors.

          It would be an interesting hypothetical to wonder what would happen if, say, someone got to DT and he announced universal healthcare via Medicare to be Trumpcare, and he managed to push it through. Not impossible, I’d suggest, if the Dems played along and he bullied and bribed a few Reps. And lets say it was funded by a gas tax.

          The immediate result would presumably be a complete collapse of the health insurance industry. Presumably, this would cost a few hundred thousand jobs directly, and these may be concentrated in certain cities. I’d defer to those who know more about the world of finance as to whether this would have a contagion effect through the rest of the insurance/financial industry.

          It would take longer for Big Pharm to be effected, in that it would take years to get to grips with over prescribing and price gouging. I’d suggest it would be their profit margins that would be decimated, not employment, as drugs would still have to be developed and sold.

          A lot of hospitals would have to fire administrators too, there simply wouldn’t be a need for them. I would guess the overall numbers would be manageable, as in, they could be reabsorbed in related sectors over time.

          On the other hand, tens of millions of people would suddenly find themselves a lot richer with no private insurance to pay. That would be a hell of a fiscal boost to the economy.

          1. Jack

            And its not just the doctor’s incomes, but the number of doctors per capita. The AMA kept the numbers of doctors in the US down in order to keep incomes high, though supposedly they have relented on that goal recently. The US has about 2.2 doctors per 1000, where for instance the EU average is 3.3. The federal government is also at fault because of the limitation to funding residency programs, which are mostly funded via Medicare.

          2. J

            You know MD professional fees as a percentage of total healthcare spending in the US has gone down since the 1980s. Most doctors have seen their insurance reimbursements cut for many years now. And the billing and compliance requirements have done nothing but increase. Our country is spending a lot more on healthcare, but believe me, it is not going to the front line practitioners. It goes to the administrators, device makers, pharmaceutical industry, insurance industry, etc. The article also leaves out the fact that most physicians, especially younger ones like myself would prefer to practice in a less expensive, evidence based way that doesn’t order tons of low-yield tests, imaging, and procedures. We, however, are compelled to practice “defensive medicine” in order to cover our asses. This is another major reason care in Europe is cheaper: their docs don’t have the anywhere near the same litigious environment we have.

        2. Carla

          Clive, right now, it’s the patients who are getting thrown under the bus. Every. Single. Day. My late husband was one of them. Unlike insurance company workers, the bus headed for him killed him.

          1. Clive

            I knew that US healthcare was a lightning rod. But how little did I appreciate that, in addition to all the other fixes, it will need something like a post-apartheid Truth and Reconciliation Commission to figure out who is to be blamed, who is blameless and who are somewhere in the grey area between.

            These are exactly — it’s spooky, it’s almost word-for-word — the same arguments which those who are usually labelled the rabid “hard” Brexiters here are using to justify any collateral damage suffered by anyone. Cue endless handwringing about a divided nation, an intolerant society, and a callous but clueless ruling elite naïvely wandering into a quagmire they’re too arrogant to understand.

            The U.S. has bigger problems than I thought. At least swivel eyed Brexiters and Remoaners appreciate there is a divide and resolving it won’t be easy or pretty — or even possible. Many sensible, intelligent and I would assume otherwise compassionate US citizens are, apparently, still believing in magic sparkle ponies offering implausible mystical resolutions to US healthcare problems which somehow are totally consequence-free. Or, conversely, there’s a whole other bunch of retributionalists (largely seen below) who are ready to sacrifice a lot of the people who receive the benefit of 9% of your GDP because it is from an impure, heathen and unrighteous source. Crikey, you guys are one tough — and unforgiving — crowd when you’ve been riled up.

            1. Lambert Strether

              I’m not a worse is better guy, so I don’t want those who actually get a benefit from ObamaCare to suffer from its butchering.

              That said, Democrat “Save the ACA” framing throws the 20 million people who aren’t covered under the bus, ignores ObamaCare’s high deductibles and narrow networks, and the general crapfest of its administration, and worst of all, doesn’t advocate for the universal benefit that health care should be, because markets.

              All I want is for these guys to frame the argument: “Of course, Medicare for All is the real solution, but for now, let’s not make the ACA worse than it is….” And of course Democrat partisans can’t do that, so at best we get a return to the status quo ante.

              Thanks, Obama!

        3. Adamski

          The Medicare for All bill, HR 676, has provisions for a transition for the insurance company workers.

    2. reslez

      Let’s weep for those thousands of miserable souls who work in the health insurance industry, busily denying claims to sick people and hassling doctors and caregivers. Actually, let’s not — the people doing those jobs justly hate them.

      A world in which we can switch over to single payer is also a world in which we can pay for retraining a big chunk of those workers to become health care providers instead of deniers and confounders. This would instantly convert a big chunk of the workforce into a productive and honorable profession instead of scoundrels who actively create and profit from misery. It would be disruptive but the system rightfully ought to be disrupted.

      1. jsn

        And even if you just paid their full salaries for several years the cost would just hit par with Wall Street bailouts: we afforded that fully within the status quo, here at least health care would improve.

        1. juliania

          No CEO’s! No mansions! No private jets, yachts, casino jaunts! (For at least a few.)

          Thank you, Yves. Do be careful. Even with good sound bones, it’s repetitive falls that can get you. I know. Been there, done that. And even with Medicare, it’s been three years for me on minimum monthly payments that have really restricted my participation in the economy to food and shelter only, as mentioned above. Last payment this month, yay!

      1. Clive

        A 9% dislocation in GDP spread over a mere two, at best three, years is pretty wrenching. And training, redeployment to who knows where doing who knows what and, whoop-di-do, the right to claim unemployment benefits isn’t an “offer” I would accept with alacrity.

        But it’s always easy, isn’t it, to heap negative outcomes on other people, especially when you are not too keen on what those other people are doing, because, somehow, they apparently deserve it? What may seem to us like bad choices may, in fact, rather be not choices at all but necessities.

        1. marym

          My comment was meant to say that the issue is acknowledged in the bill, with plans and funding to address it in part. It was a rebuttal of a comment “heap[ing] negative outcomes” on other people. If your second paragraph was addressed to me, it is sorely misplaced.

          HR 676 is not only universal, but comprehensive – hearing, vision, dental, long-term, etc. I have no expertise in judging how disruptive to employment it would be. However, a national commitment to providing access to universal, comprehensive care would presumably have multiple areas of impact: older workers able to retire; younger people making different job and education choices; and jobs not just for doctors but for administrative, care-giving, technical and other workers at many levels and in many locations. Add a national commitment to publicly funded tuition at public colleges, and we’re all in a better world as far as employment possibilities. Displaced insurance workers should be of concern, and with a well run program of priority for training and placement, unemployment benefits, salary continuation, and of course health care, would be at least as much the beneficiaries of these expanded opportunities as anyone else.

          In a country where insurance worker clerical jobs are as likely as any other job of the 99% to be outsourced, automated, down-sized, underpaid, etc. using them as an excuse against Medicare for All is at best a flawed argument.

          1. Clive

            I’m all in favour of Medicare for All. “Displaced workers” though, by which you mean people who get fired, are a different matter. Rarely do people in that position deem their predicament to be “a price worth paying” as a necessary response to “hard choices”.

            You don’t create a more caring world by treating people carelessly.

            1. reslez

              I’ll weep for the hypothetical displaced workers after we no longer have 25,000 real, live people dying from lack of care per annum, plus millions more not getting the care they need.

                1. witters

                  Well, it is usually used in defence of the Military Industrial Complex. (“But if we cut back on the bombing and killing that will mean the bombmakers and killers lose their job! Where is your humanity”)

                  1. Clive

                    Wowsers, a whole new class of workers to be included in the forthcoming economic pogrom. Are there any others we should be aware of, just so’s they know?

            2. John k

              I’m far more concerned with providing permanent coverage for the 1/3 of the country with no or poor coverage than the vastly smaller number of temporarily displaced insurance workers.

              All change has losers, make changes that benefit the greater number. Nothing wrong with mitigating the cost to those paying the price, which the Medicare for all bill does, and which the various trade deals did not do.

            3. marym

              I agree. This is why I didn’t recommend that they be treated carelessly, nor does the bill which I support.

              If you think the level of care is insufficient, you’re a smart commenter on many subjects – suggest additional possible ways of addressing this problem instead of implying that people other than you who support Medicare for All don’t care about the private sector workers.

              1. Clive

                Well, how about we start with an acknowledgement that a realistic timeframe for transition to Medicare for All will not be achievable in anything approaching that which would be covered by a two or three year worker protection policy. 10 years sounds much more like it to me. The bill contains nothing like that sort of provision.

                1. marym

                  US Medicare for people over 65 was implemented one year after the law was passed. For universal Medicare the basic bureaucratic infrastructure is already in place, which would be a boost to an implementation timeline. Other than that, I have no understanding of what would be involved, how long it has taken in other countries, or whether those countries had preliminary or partial systems in place that would either facilitate or impede the conversion.

                  If you’re in the ballpark with 10 years, however the conversion is structured, can we presume such an extended timetable doesn’t mean that only at day 10-years+1 the lights go off in private insurance and on for Medicare for All?

                  My only experience with corporate mergers, when redundant operations and systems are eliminated, is that job loss can be in bulk; and in other cases, along with natural attrition, occurs in phases, with people needed to convert information, process work initiated under the old system, or function as part of the transition in work that can lead to further employment in the target environment.

                  The 2-year clock presumably would start for a given worker on the day that worker lost his/her job within the 10-year timeframe.

                  1. marym

                    Edit:
                    …extended timetable doesn’t mean that on day 1 the lights go off in private insurance and only at 10-years+1 go on in Medicare for All?”

    3. curlydan

      Correct, Clive. It would be a huge dislocation. While many in the comments above focus on the doctors and possibly CEOs of major health insurance or other industries, the larger chuck of affected workers are the paper pushers.

      When I go into a doctor’s office, I see a row of well educated and competent ladies (sorry, I don’t see guys) who are not nurses or doctors but receptionists and insurance experts and the paper pushing overhead of our f’ed up health system.

      Two-thirds of these ladies no longer need a job if Medicare for All comes along. In the long-term, that’s a good thing. We are wasting these ladies’ brains on this B.S. work. They can do better and more productive work elsewhere.

      In short-term, there’s pain. But at this point, it’s time to “rip the Band-Aid off”. A decent and universal health care system is what the U.S. needs most.

      1. Clive

        So there’ll be (or already are?) “deserving” unemployed and “undeserving” unemployed? Who knew? I’m sure all those out of work office ladies will take their lumps, manfully (or womanfully) reassured in the knowledge that their sacrifices are for the greater good. They can always pull themselves up by their bootlaces (or kitten heels). They’re a tough lot, clerical admin workers, a hardy bunch who I am sure will appreciate life re-purposing their existences. Just so long as they have understanding landlords and affluent husbands.

  7. Carolinian

    As Michael Hudson would say the parasites are “killing the host” and since the parasites are the ones in charge nothing seems to change. Apparently Trump did say in his news conference that he was in favor of lowering drug prices so it’s possible that someone who hasn’t been taught to know better might bring a little common sense to our screwed up situation. One wonders if this is one reason the elites are going so nuts over his election. Their wealth and status depends on keeping reform at bay at all costs. Still hoping for the best from Trump is a slender reed without a doubt.

    1. Cybthia

      I think that most Americans, including the President elect, understand that “pharma looting” is a major cause of excessive healthcare costs in the US. That’s a no-brainer. But very few Americans, and perhaps even the President elect himself, don’t understand at all that “rent seeking” is another major cause of excessive, way out-of-control healthcare costs in the US.

      And the rent seekers aren’t confined to the insurance industry either, they very much spill over into the provider side of things as well, namely the hospital industry. So if President-elect Trump wants to really reduce healthcare costs, he must first cut back on the amount of rent seeking going on the healthcare industry as a whole. But he can’t do that until he cuts back on the government-imposed regulatory burden on the industry.

      Keep in mind, too much rent seeking in the industry would have never occurred if overly burdensome regulations weren’t imposed on the industry by the federal government. Obama made the mistake of not understanding this, hopefully Trump doesn’t make the same mistake. Hopefully, he is smarter than Obama and thus won’t be fooled into believing what corrupt government bureaucrats tell him — the very people who stand to gain big by keeping the revolving door between the regulatory apparatus in government and the rent-seeking apparatus in the private sector in full swing.

      Don’t get me wrong, some government regulations are needed in order to maintain safe care and quality care for patients and improve their medical outcomes. But government regulations in healthcare have grown to the point that they have become a cancer on patient care. They are harming patients, if not killing them.

      The reason why government regulations on healthcare have grown to become a cancerous burden on patient care is twofold, IMO. First, many of these newly-mandated regulations, i.e. ObamaCare-mandated regulations, have caused doctors and nurses to focus on patient care issues that don’t matter, thus causing them to lose focus on patient care issues that really do matter. And often times, I ‘m talking about issues of life and death. What’s perhaps even worse, some of these ObamaCare regulations have even led doctors and nurses astray in terms of diagnosing and treating patients, leading to missed diagnoses or misdiagnoses and wrong or misguided treatment plans. I can offer many examples of this, including many more from fellow colleagues on the front lines of care, but I don’t have either the time or the space to discuss them here. (You can either trust my input on this, or the input from a clueless or corrupt revolving-door bureaucrat in back office. Take your pick.)

      Second, and perhaps even more cancerous to patient care, many of these ObamaCare regulations have caused providers, namely large hospital systems, to divert money and resources away from the bedside in order to pay for and support runaway bureaucracy in the back office. Then no one can figure out why quality of care and outcomes are going nowhere but down! Hate to say it, but anyone who doesn’t agree with me on this is either totally clueless or utterly corrupt. Let’s hope that President-elect Trump is neither.

      1. Outis Philalithopoulos

        “I can offer many examples of this… but I don’t have either the time or the space… You can either trust my input on this, or the input from a clueless or corrupt revolving-door bureaucrat… anyone who doesn’t agree with me on this is either totally clueless or utterly corrupt.”

        No one reading this blog knows you, your character, or your reputation. It isn’t reasonable for you to decline to present specifics and simultaneously insist aggressively that your opinion be taken on faith.

        The preceding should not be taken as implying disagreement (or agreement) with your theses.

      2. Phil

        I agree with you throughout. Whenever a “market” is as badly broken as health care will inevitably be, with severe information inequality between participants, demand that is infinite, and life and death at stake, there can only be a calamitous result from pushing the delusion that a “market system” can allocate scarce goods with any measure of social justice, or even with unjust efficiency.

        So I corroborate your certainty–an unpopular quality around here, you will discover–and would add that those arguing for a “regulated for-profit market system” in health care really do so, almost always, in either bad faith or blind dogmatism.

    1. PKMKII

      NJ is lousy with pharma companies. Booker (and for that matter Menendez) put the state’s corporate interests over the greater good, plus I’m sure he didn’t want to lose the vote and donations of those well-paid STEM workers at said companies.

    2. mad as hell.

      This is the guy that plans on running for pres. in 2020. The democratic party hasn’t learned a thing from Trump or Sanders. It just infuriates me that this huckster is gonna start getting attention from the MSM.

      1. flora

        Following in the footsteps of Billy Tauzin, Joe Lieberman, Tom Daschle, and Max Baucus? (some of Pharma’s favorite people.)

      2. Carla

        Don’t worry, mad as hell. The MSM won’t be able to tear itself away from the spectacle of Trump for several years. They won’t pay any attention to a Democrat for a long time. They’re a dog with a great, big bone. Of course, if the Democrat Party had a Brain, it could use this lack of attention to its benefit; but it don’t got a Brain. Stupidest damned people to come down the pike in decades.

    3. polecat

      Well, well ….I see that my Wa. State senator, Patty ‘the teacher in tennis shoes’ ( who voted for TPP fast tract) Murray, is 5th in campaign grift ….. just under ol #4, Corry ‘dealin my book’ Booker !!

      It’s ALL GOOD ….. if your a thieving traitor !

      ‘FORWARD … Into the Ditch’ … dead like.

    4. Erika

      Cory Booker is the same kind of “progressive” as Gavin Newsom, willing to take a stand on identity politics issues that don’t cost the established order anything while selling all the rest of us down the river, but at least Booker doesn’t look as overly slick as Newsom, I’ll give him that.

  8. flora

    To the list of high cost causes I would add the new Federal mandate for Electronic Health Records/Electronic Medical Records(EHR/EMR).

    “MD Anderson Cancer Center to cut 900 jobs due to losses from EHR rollout”
    http://www.modernhealthcare.com/article/20170106/NEWS/170109948

    Nothing wrong with the idea behind EHR or more inclusive health insurance options. Medicare for All would fit the requirement. Instead, we got even more looting opportunities for the private sector insurance, IT, Pharma, and various contractors. The patient and healthcare providers in this setup seem to be used mainly as a stalking horse for other entities’ financial gains.

    1. Spring Texan

      Not to mention that the VA’s very decent EHR was available for free. In the early 2000s the VA made an effort to spread it and had reached an agreement with the American Academy of Family Physicians to that end, but the Bush administration quietly killed that. Agree with the dentist who correctly says above: “Despite much talk about driving down the cost curve, as you pointed out, our healthcare policies are written to drive economic costs up not down. I believe this is a feature and not a bug.”

      No, we have to spend insane amounts of money on billing-centered, proprietary systems like Epic, because it makes more private wealth, and yes, that’s a feature!

    2. Erika

      I’ll confess it never occurred to me, the possibility of rent seeking in electronic records, but, having worked at a medical clinic before, I always saw it as an onerous burden. At that clinic, it would have taken excessive worker hours to digitize all our patient records, and this was a small clinic with perhaps a few hundred active charts (not including the several hundred archived in the basement). Meanwhile, patient records we received from large hospitals that already had electronic charts came in the same way we sent ours out, via the fax machine.

  9. Pat

    Can we just also address that the extreme rent extraction in our medical system has helped cause that explosion from the 80/20 rule so that 1% of the patients cause 21% of the costs. While Yves has addressed a version of some of the reasons, I think we need to see the flip side of them as well.

    1.) We believe in extreme measures to save life, even when those measures are likely to result in months or sometimes days of extra life usually in a hospital. And those who can afford it or have expensive insurance that make it possible can demand this.

    2.) That it has raised the development of a split personality of medical usage among the American populace. Yes, there are those, probably covered by high cost insurance they know little about, who seek medical care for any and everything. But more and more there are people who do not go to the doctor and won’t go to the doctor unless they have no other option, they simply cannot afford it. That leads to the flip side of my first item, things that should be a simple and affordable become expensive and dangerous. Infections which spread and ravage the body, Cancer ignored eating away, diseases that can be managed with care rampaging and destroying all because people cannot afford the doctors visit. This has been the case for a portion of America for decades, but now we have the irony of those with insurance who have scraped the payments for that insurance but cannot afford to use it except in an emergency and maybe not even then.

    Our system is expensive AND brutal. While there is humanity among many of the individuals within that system, there is none among those who design it, benefit from it, and dare I say it any more regulate it. Greed has erased the purpose from the equation. And because actual care has been systematically stripped from it to feed that greed our trajectory is worse and worse results for more and more money. And sadly few of our representatives have the will to say enough.

    1. Phil

      Yes, yes, a thousand times yes, for going to the root of the problem. Show me a society’s values, and I will show you their point of maximum emotional vulnerability, and how to profit from it. “Life” as a value somehow became “life-at-any-cost.” And not just end-of-life. The care of extremely premature neonates is an ongoing nightmare for everyone involved.

  10. Foppe

    Wrt pharma, the big elephant in the room is that basically all diseases of affluence (incl. cancer, though it may not look that way) are not meaningfully/reliably curable via medication. As such, the only game is disease management. This would suit them fine, except patents expire, so they have to come up with drugs with fewer undesirable (which are called “side”, but aren’t) effects. This by and large isn’t working, at least partly because of the priority shift in the direction of pure rent extraction, which (short/med-term) is more profitable and less risky. There just isn’t “enough” money in *curing* infectious diseases to make it worth their while, and the researchers who allocate grants for the NIH seem too beholden / cognitively captured to do much to change that. So I am doubtful that this industry will change until the incentives do, and until ‘doctors’ start looking at avenues not involving medication. (Such as, you know, our fuel: http://nutritionfacts.org/video/uprooting-the-leading-causes-of-death/ . See also T. Colin Campbell’s Whole: Rethinking the Science of Nutrition.)

    1. PlutoniumKun

      One of the best cures for one disease of affluence – coronary heart disease – is exercise. The Irish Heart Foundation developed a brilliant ‘treatment’ – a system of marked out walks known as Sli na Slainte (the route to health). The idea was that doctors would hand out a prescription which was essentially an instruction to do the local Sli na Slainte either alone or as part of a group. Its a huge success and has been copied worldwide – except, interestingly, in the US. I wonder why?

    2. glib

      Greger must be paid by someone to post this stuff. My blood markers jumped in the positive direction when I tried a low carb, high fat diet (and were quite poor on a semi-vegan diet). Plus the scientific bases for what he says are non-existant, in anthropology, paleology, evolution, or high quality clinical tests. Millions of others help each other on the lowcarber forum – one of many self-defense sites against pharma and agro.

      1. Foppe

        1a. By who? Big Broccoli, that lobby bigger yet much more nebulous than big meat/dairy? /sarc.
        1b. Animal ag saw what happened to Big Tobacco, and has taken that to heart. Hence idiotic journals like Meat Science (Elsevier), and lots and lots of funding.

        2. There are misguided grassroots / self-help groups everywhere, from Von Mises-inspired goldbugs to antivaxxers. Sorting and assessing information is the crucial skill, not good intentions.

        3. if you got your total cholesterol below 150 mg/dl or 4.0 mg/l that way, good for you, but any level higher than that means you’re still at risk. (-> Framingham heart study). But even if so, most people cannot, not even mentioning that almost noone can live on a true low carb diet long term. And yes, you can maintain levels like that throughout your life on the right diet — whole plant foods, no oil added. The notion that heart disease is inevitable is a lie.

        4. semi-vegan diets (with lots of processed foods, oils/fats added by the bucket) indeed won’t do the trick either. For it to work, you need to get most of your calories from fresh, mostly unprocessed plants.

        5. As for “evolution”, etc.: I’m really not interested in wasting my time on that. If you’ve convinced yourself that the reason chips/fries are unhealthy is that they contain starch, rather than that they’re lathered in concentrated fat, then fried at 200C, I can’t help you.

        1. Ernesto Lyon

          Vaccines are part of the problem now. There are too many, and they’re damaging our children.

          The stonewalling from doctors and the medical establishment is only destroying their credibility further.

          As for relevance, Pharma is pushing for more and more vaccines, and laws making them mandatory.

        2. glib

          with all due respect, people with cholesterol that low (below 150) die much sooner than those with higher cholesterol. This is perhaps my #1 irritant re: Greger, that uses discredited science to advance his agenda. no scientific integrity.

          People with low cholesterol have inferior immune systems, and die more often of cancer and infectious diseases. They die of stroke more often too. The following two links, the first was first published in the WHO web page, although it has since been removed, but the second is the most complete meta-analysis to date, late 2015, using studies from US, Europe and Japan. Clearly, if your cholesterol is above 200 you are at or close to the sweet spot. Below 160 you start dying significantly faster. See Figs. 1-3 to 1-11.

          https://renegadewellness.files.wordpress.com/2011/02/cholesterol-mortality-chart.pdf

          https://www.karger.com/Article/Pdf/381654

          For my age and gender, 250-300 is ideal. No woman should ever get statins because mortality continues to decline at even very high cholesterol. Regrettably for Big Pharma, while a diabetic and a cancer patient are walking cash machines, CVD victims tend to die too young and can not be used to increase profits. Peddling statins fixes that.

          1. Normal

            Glib assumes that low LDL is the cause and that death is the effect. The studies only establish correlation, not causality. In fact the more reasonable interpretation is the illness is the cause and low LDL is the effect.

            1. glib

              I suggested to skip the first figures just to avoid getting into LDL. Specifically, statins, a 10 billion dollars a year biz, are prescribed to lower total cholesterol. It is normal that pharma will seek and establish a way to profit from CVD. It is somewhat surprising that people here, so attuned to the way things work in the economy, balk at the idea that the cholesterol hypothesis is essentially a rent-seeking construct.

              1. Normal

                The cholesterol hypothesis preceded statins. That said, I wouldn’t balk at the idea that the statin industry embraced a convenient and widely accepted hypothesis in order to sell an unproven product.

                It was really a pretty clever maneuver. They proved that statins cause lower ldl numbers. The link to health was never established. The FDA fell for the con.

                1. glib

                  Yes, the cholesterol hypothesis was from a guy, Ancel Keys, now totally discredited, who chose to publish the 7 countries study when in fact he had studied 22. Plot the 7 and you see a trend, plot the 22 and they are completely random. But it has become such a gravy train, for agri and pharma, that it can not be stopped. The paper I quoted above was written by Japanese scientists and published in an european journal. I don’t think it could be published in an american journal. It is hard for everyone to accept that rent seeking distorts the system at this level.

          2. Foppe

            Euhm…
            Access to antibiotics and vaccines is inversely correlated with broad availability of animal products and processed / “convenience” foods, which cause diseases of affluence. Infectious diseases are not caused by having a low total cholesterol level. They’re caused by pathogens, that wreak havoc because of lack of access to ab/vaccines.

  11. JLCG

    Since 1995 I have had repair of a broken hip and a fractured radius, a cholecystectomy for gall stones, double cataract extractions and a couple of admissions into hospital because of fear of impending stroke and dehydration. I have had physical therapy and I have never being charged anything. The hospital I use has a magnificent parking structure, two restaurants , a tropical court. When I see my doctor I am greeted by someone, then by a nurse, then by physician assistant. All that costs money. The doctors are eager to ask for tests because they are terrified by lawyers. Lawyers advertise in television to recruit possible cases of some mishap that will result in their fat commissions.
    The system is as it is. To correct it will mean fewer women working, poorer lawyers, fewer insurance companies, fewer private hospital rooms, less convenient parking lots, less TV advertising, in a word a complete upheaval of the American system.
    By the way the malpractice system is like a ballet. Every step is choreographed. The doctors have paid their policies, the lawyers accuse, there is a settlement, the patient collects, the lawyers collect, the insurance company does not lose anything, all their expenses have been paid before hand by the doctors.

        1. Pat

          Medicare would still include charges to the patient, unless they have a private separate medicare supplement plan. (Depending on the ‘provider’ there is either a deductible/co-pay or co-insurance).

      1. Waldenpond

        It could be the person has only had procedures for which mcr provides full coverage and used only meds that mcr covers, but that would be unusual. Hospitals do have restaurants and courtyards etc. and yes, you do check in and then have basics done before the doc comes in the room. I have no idea where he is that isn’t balance billing, or where med insurance doesn’t increase for the doc after a lawsuit, could be outside the US.

        I get that the system could use less overhead in advertising, insurance etc but kicking women out of the workforce as the first cure let alone any part of it, oops.

  12. olga

    And let’s not forget equipment manufacturers, expensive fancy hospitals with over-million-dollar CEO salaries, pushy drug sales people… it all adds up. Should be called ‘rent extraction system” masquerading as health care system.

  13. Normal

    Great article, thanks. Though it’s only peripherally about Obamacare, I have to make the only important point about ACA:

    “It’s the pool, Stupid!”

    In other words, a limited size group having a high proportion of sick people. I believe that this factor alone is responsible for a doubling of premiums for about 8 million unfortunate souls. This factor is multiplied by the high costs described so well the the article above.

    1. jrs

      I don’t know, how then do you explain the massive increases in employer provided health insurance as well which shouldn’t be such a limited pool. This isn’t always visible to an employee depending on how generous the employer is in keeping up with rising costs or not, but costs are out of control there too. Limited pool really doesn’t seem sufficient explanation, but pure out of control costs does.

      1. Normal

        It’s not just whether there are increases but how much. Medical insurance is increasing by about 5% per year. While higher than overall inflation this is nowhere near the inflation for Obamacare which is running about 26% per year.

          1. Normal

            Actually very few insurance companies are making profits on Obamacare. Many have had huge losses and are leaving the business. That’s whey there are fewer choices in most markets.

            It really is the pool, not the profits.

            1. UserFriendly

              It’s the fact that doctors are so drastically in debt from our miserable education system that they require much higher pay. Same goes for lawyers who charge an arm and a leg which explodes the cost of malpractice insurance and causes over testing. Our whole corrupt country is so [family blog]ed up that I don’t even think anything shy of a violent revolution will ever change this cesspit of greed and selfishness.

    2. JustAnObserver

      single payer =>

      just one! pool of ~300 million or so =>

      All those actuarial tables now have enough data to work on =>

      Costs, even with pre-existing condition coverage etc., are now well defined, easily computable, and most importantly fairly stable at least in the short to medium term.

      1. Normal

        Single payer is the only viable model but neither Democrats nor Republicans in congress are willing to support it.

  14. ftm50

    Until I had a family member diagnosed with diabetes, I never knew how the Pharmacy benefit manger/Health insurance scam worked. Here is how it works for insulin.

    Drug company “real” price of an insulin pen i.e. the Canadian retail price, about $20. The price for an insulin pen charged US customer with crappy exchange plan (so-called U.S. list price) before they have met deductible, about $100. Price the PBM pays drug company about $20 a pen. PBM and Health Insurer pocket $80 a pen until patient meets deductible.

    So with 5k deductible plan and otherwise healthy diabetic using over 50 pens a year puts 4k of their deductible directly into the pocket of their insurer/pharmacy benefit manager. For what service, I don’t know.

    Such a wonderful system, built to tax those who can’t go without medication. Really unbelieveable in its extractive efficiency.

    And no doubt works the same with every other drug required for a chronic life threatening disease.

  15. dbk

    The problems with U.S. healthcare are well understood, and the solution – single-payer – isn’t rocket science, frankly. If every other developed country in the world could figure it out, the U.S. can too – and of course has, for two major groups (veterans – the VA, the retired/disabled – Medicare).

    The problem, simply, is a lack of political will sufficient to overcome the forces of rent-seeking (what a strange term, I had to look it up yesterday).

    I’ve followed this issue for years and read a good many of Lambert’s posts about the ACA. But now, I don’t know what can be done. That the Republicans would repeal the ACA and replace it with single-payer boggles the imagination, even though this is the obvious solution.

    Highly recommended: http://www.pnhp.org/ (Physicians for a National Health Program – for those in health-allied professions) and their sister-organization for members of the general public, https://www.healthcare-now.org/ (healthcare-now). The latter has many state chapters, too. PNHP publishes research papers, policy analyses, fact sheets – very helpful as background and talking-points.

    1. Erika

      Not every developed country has single payer. The Netherlands, for example, has a system of mandatory health insurance, albeit one that seems better constructed and managed than ACA.

  16. Dr. George W. Oprisko

    We looked into this as part of our alternative tax system. In 2014 the Federal Government paid ~$750 billion on Health related expenses an increase of ~7% from the year before. State and Local Governments and individuals paid nearly $2 Trillion more.
    The cost of paying MDs an average $350,000/yr is ~$70/month-USresident or ~$300 billion/yr

    It would cost half as much to simply hire them and put them on salary.
    WRT drug costs……….
    Most of the cost of developing new drugs is borne by the US Federal Government. Simply changing the existing practice of awarding patents for same to private companies, to awarding licenses to produce these drugs to companies on a competitive bidding basis for periods not to exceed a year, with re bidding required annually, and drugs provided at cost to government pharmacies, would eliminate the machinations currently endemic.
    WRT hospitals, simply returning to the district hospital construct, with hospital authorities similar to transit authorities, funding same via levies would make hospitals less expensive and would eliminate the need to pay out of pocket.

    INDY

    1. cnchal

      The cost of paying MDs an average $350,000/yr is ~$70/month-USresident or ~$300 billion/yr

      It would cost half as much to simply hire them and put them on salary.

      You can’t do that. Imagine the intolerable suffering from BMW and Mercedes sales people that would entail. They would only sell one instead of three per doctor.

    2. Katharine

      Interesting! Who are the “we” you refer to? Have you a website, or links to publications or reports that could be shared with others?

    3. craazyboy

      “hospital authorities similar to transit authorities”

      Ha. At least make the geographical monopoly smaller for our healthcare shoppers.

      I’ve read in some areas of the country people pay $15000 for an ambulance ride.

      I keep thinking there must be something in existing criminal code that applies to $15,000 ambulance rides and $3000 for a few stitches at an emergency room. Then we also have million dollar salaries for upper management at hospitals. In median cost of living AZ. I read a few years back that being a CEO and running the entire international Red Cross paid $300,000.

    4. Felix_47

      Yves has written a very good summary. Thank you. She brought up the multifaceted aspect of the problem. One area I differ with is the notion that the AMA restricts doctors to make sure they make more money. Maybe someone thinks this but if you go to any hospital in this country you find the medical staff is international in nature. At the hospital where I practice…..at all the hospitals I have practiced at over the years foreign trained doctors are very common. I recall learning at one of the med staff meetings a few years ago that the most common medical school among the 700 member staff was Baghdad University followed by schools in Sri Lanka. In Sti Lanka, since I did work there for a while, as I recall, there were twelve med schools and jobs in Sri Lanka for only 20 doctors per year. All the rest went to the US. I have worked in the medical communities in these countries and parents want their kids to go to med school not to practice in Sri Lanka, India, Afghanistan or Iraq or Syria or Nigeria or whatever but to be able to get to the USA and go into practice in the US system since it pays the best and they can be the lifeboat for their extended families. Those that cannot go to England, or Germany. Those that can’t do those countries look at eastern Europe or Russia. I wish for once commentators would think about the doctors they see in the hospital before they claim the AMA is restricting trade. The high cost is not because there are not enough doctors. There are more than enough doctors in the US. The high cost relates to the fact the system is fee for service. And even if a doctors comes from the slums of Rawalpindi when he gets to the US he expects to make a fortune. The high cost of doctors is caused by the tests and surgeries and treatments they prescribe. The more doctors the US has the higher the costs will go. In a doctor surplus environment fee for service is a disaster. You get what you pay for….tests and procedures….not time thinking about what is wrong with a patient and doing the job efficiently.

      Contrast the number of foreign trained lawyers you see, by the way, with the number of foreign trained doctors. Dean Baker often writes that the high cost of medical care is due to restriction of foreign doctors. On that he is way off base but I don’t think he has practice medicine. You have to have some US training to learn the terminology in English and how American patients think. In India, for example, patient satisfaction is not considered. The Indian, and other Asian and African cultures are very different. A year or so of training in the US is mandatory in order to see how women, for example, nurses, for example, and ancillary personnel and patients are treated here in contrast to the third world.

      We always hear about single payer saving money and the system. I work now in a single payer system. It is ridiculously inefficient and expensive. It is breathtakingly expensive. The more treatment a veteran gets the more disability money they collect. We are talking millions over a lifetime for a 25 year old kid with back ache. I see all these comments about how the VA is a model….it is insane to think that…..no one who has worked in that environment would think that. Doctors are smart. If you set up single payer and pay based on whatever metric…..they will meet it. You get exactly what you pay for. We really have single payer now. The government pays for most of US health care one way or another. Could one of the smart readers of NC explain how single payer is going to get doctors and others not to game the system if their income depends on it?

      One of the commenters mentioned that we could pay all doctors 350K per year as a salary and save money. He is on to something. This may well be the only solution. The only people who go to med school to learn what works and what does not are doctors. They are best equipped to ration medical care and cut out what is not needed. How do you motivate them to treat as needed and do no more…….simple……the same way we pay firemen to do EMT which is a sort of medical care. We need to put all doctors on salary. Why does the payment system change when the patient hits the ER doors? Did the problem change? In that case they will do the treatment that works and no more. Why would one do surgeries of no utility if it just means more work? Why would one prescribe expensive me too medication when something simple would work as well? Most doctors care less if some drug CEO makes 500 million or 1 billion. The people that care about that are in our congress like Joe Manchin. The average doctor…not so much. And maybe doctors should be prohibited from owning medical stocks or having an interest in medical products. The incentive would be to do as little as possible to take care of patients. To give them what they need……not what they want. We are satisfied with firemen being on salary and we don’t pay them to take an extra long route to the ER. Can you imagine if we paid firemen based on mileage? We don’t go and burn down buildings to keep them busy. So why not put doctors on salary. The commenter mentioned 350K and I can say after many years of practice that any surgeon making more than 250K in a normal work year, take home, is cutting corners or doing something. There is just not enough time in a year to make more.

      Of course, if we gave doctors the power to refuse to treat and not give patients what they want (they used to have it when there was a shortage f doctors relatively before the massive influx of foreign grads and domestic school expansion over the last 45 years) we are going to have to get rid of patient satisfaction scores. And we would have to have tort reform and essentially abandon malpractice lawsuits. We would have to let doctors police themselves the way they did in the 1950s and 1960s. Now the state medical boards are run by lawyers….but the bar associations are not run by doctors they are run by lawyers….how does that make sense? How are lawyers qualified to police doctors? They are just as qualified as doctors would be to police lawyers.

      We would have to get lawyers out of medicine in another way. I can’t tell the audience how many times lawyers have called me and asked me to put screws in a patients back with a spine fusion to convert a 30,000 soft tissue minimal injury case into a 500,000 personal injury case. And the patients for that kind of money are happy to lie down on the table. I can’t tell you how many worker’s comp patients want surgery especially when they are facing termination for cause or a shrinking job market. Without surgery everyone thinks they are malingering but as soon as the knife cuts they become credible to their families….because there must have really been something wrong…and credible to the lawyers deciding their cases….and they make money. When people are at the end of the line and have no other options they are aware that SSI and medicare at least keeps a roof over their heads and they can work for cash on the side. The people Angus Deaton writes about are mostly on medicare disability in all likelihood. I cannot tell you how many small businesses in the third world have been started by seed money from the US worker’s comp system….a part of medical insurance and medical care….and an expensive one run by lawyers. We would have to change our entire disability system to another sort of income maintenance system.

      Can this happen? I think the doctors would be happy on salary….we have a model in Kaiser and now Kaiser jobs are in great demand but Kaiser is subject to the same pressures unfortunately…..at least the ones that went into medicine to help patients would be happy. A lot of doctors would not be happy but where can they go? Back to Afghanistan? Pakistan?
      We don’t need doctors who are motivated by how much money they can make. I sure would not want one treating me.

  17. ScottW

    Great post. I have purchased private insurance for over 30 years and seen how the healthcare/health insurance system has devolved into a sea of greed and profit. When my son was born 25 years ago in Green Bay, we were not covered for the birth. I called the hospital and they gave me an exact quote of what the delivery charges would run, including the physician. The amount was spot on and under $2,000.

    Currently, I pay about $24,000 a year for insurance. I have two post-graduate children who are charged about $4,000 a year as part of the tuition. Not much discussed is the student health insurance scam that creates Universities as Obamacare gatekeepers. You have to provide proof of insurance, or the University forces you into its plan. While many undergraduates under 26 may remain on their parents’ plan, many are forced to either pay or finance another $4,000 plus a year on top of tuition. Who knows what that amounts to when finally paid back over 20 years on installments. For those remaining on their parent’s plan, unless they go to school within the tight network, the insurance is useless for seeing a doctor near the school they attend.

    Sadly, like the Military Industrial Complex, the Medical Industrial Complex is baked into the economy and political system. Here in the Boston area there are “monuments” to it everywhere in the form of pharma companies (Cambridge), huge private insurers (Partners Health in Somerville) and mega-hospital campuses (Longwood).

    Having spent considerable time in Europe, including France, medical care is barely noticeable. No drug ads on TV or newspapers and few huge Medical buildings. Local pharmacies are prevalent in which the pharmacist actually dispenses medical advice, rather than just counting pills.

    A relative spent a year in France teaching English to French students. She was covered under the French plan and saw a doctor a couple of times. His office was in a house and she paid something like $35 for the visit which was reimbursed. Another relative spent time in Cape Town and suffered a serious cut on his face requiring stitches, antibiotics and follow up. $200 out the door which was reimbursed in full by insurance.

    Every rational person understands we are being fleeced by the Medical Industry. Hillary stated we would, “never, ever” have single payer. Sen. Booker and 12 other Dems voted against the drug reimportation bill.

    The healthcare system will continue declining, but so long as the power elite and their top supporters have access to quality care, and the lobbyist money continues flowing, nothing will change for the better. Nothing.

    1. Elliott Gorod

      Scott
      You are essentially paying $24,000 a year for catastrophic coverage
      If you had a claim for $48,000 you would only be getting double what you pay each year
      To have a $48,000 claim happens to about 3 percent of the insured population
      If you defined catastrophic coverage as a $1million claim, it would be similar to walking into a casino and playing the wheel of fortune
      You go to the 50 to 1 odds space and plop down $25,000 in hopes of winning $1million
      How many times would you play that game?

  18. craazyboy

    I liked the diabetes managed cure commercial. I expect we’ll see a rebranded version, Ecstasy for Basset Hounds, targeted at the veterinary market and sold “over the counter” at Pets Are Us in the near future.

    side note: college memories of horse tranquilizer are coming back to me. luckily, I thought beer couldn’t be improved upon.

    1. rd

      My two favorites sets of pharma commercials are:

      1. The laxative prescriptions to address constipation from prescribed opiates (making sure you can poop properly while you are getting hooked on Oxycontin, fentanyl, and heroin prior to OD’ng); and

      2. The Viagra-Cialis erectile dysfunction commercials that generally feature beautiful younger women who apparently are concerned about erectile dysfunction problems in their male partners that rarely appear in the commercials except as a lone hand holding hers (does not seem to be a real world depiction of the actual issue).

  19. YaShureYoubetcha

    Yves,

    As a 75 year old retired physician (GP then ER then ophthalmology), I found the story about your (presumably) broken toe fascinating and disheartening in equal measure. When your elderly orthopod and I were young docs (say…Tet Offensive era) it is unlikely that either of us would have even know a physician who would have treated a broken toe with anything other than adjacent toe taping and the wearing of a stiff-soled shoe. (The exceptions being fracture of the great toe or a compound (IOW open) fracture.) The idea that anyone would now recommend otherwise appears to this old codger as simply daft, even allowing for the fact that normative Manhattan practice has always been more aggressive than that here in my flyover-land redoubt. Perhaps the change in what is considered best (or even allowable) practice says more about a drift in the tribal culture of the profession itself than a drift in evidence-based practice.

    Most (not all – but most) of us started out as idealistic youth, wanting to truly help humanity. Believe that or not, as you will. But out there in the real world, we all discovered that life on the streets serves like a great lapidary’s tumbler and the sharp edges of idealism invariably get worn off, to one degree or another. (Not just for doctors and nurses, either.) Humanity doesn’t always want help. And society has lots of discordant ideas, too. Altruism always survives (at least so far), but it can be an endangered species.

    I have no doubt that the young people entering nursing and medicine these days are initially at least as idealistic as we were. Probably more. But for them that lapidary’s tumbler is running ever so much faster. Counterproductive electronic health records which are nominally to improve care but are de facto to improve billing. The corporatization of practice, which means that almost every practitioner is responsible to a superstructure of MBAs and other general business trained administrators. And those folks, with honorable but rare exceptions, while kind to their mothers and beloved by their dogs, have absolutely no sympathy for the idea that practitioners bear any responsibility to anything but the organization’s top line. A friend of mine terms this dynamic, “The revenge of the ‘C’ students.” Time pressures and constraints. Lord, help us, time pressures and constraints.

    I may be wrong, but it seems to me that another danger lies herein. That of a sort of Darwinian artificial selection of the medical culture itself. As my generation (and the next one following) retires and goes on to whatever is next, the new group of physicians and nurses will know nothing but a heavy yoke on their shoulders and a bit in their mouths. Bits and yokes placed there by others and over which they have no control. What then? Once the culture becomes fully corporatized, will it even be possible to envision something better? And if some enlightened future Pericles wishes to steer us back to where we were prior to becoming completely lost, how will he or she do so? What policies will avail?

    “Culture eats strategy for breakfast.” Peter Drucker

    Perhaps I am wrong and all of the above is misapprehension and logical error. Since time immemorial the elderly have grumbled that the world was going to hell in a hand basket, when in truth the world was simply stumbling about in the dark, as usual. Perhaps I am guilty of that ancient error. I pray God that is so.

    I hope a broken to is the greatest ill you suffer for many a long year.

    Best regards,

    YSY

    1. Robert NYC

      I agree with you, I think virtually everyone who goes into medicine goes in for the right reasons and then they meet the system!

    2. Clive

      I wish I shared your optimism about the current / upcoming generation entering medicine. I had a long chat with my ophthalmologist (if you have bilateral Keratoconus, you can’t help but end up getting to know you ophthalmologist because of all that chair time) not long ago about medicine, commercialism, public care quality vs. private care quality and so on.

      We covered a lot of ground but the thing that stuck in my mind was when he informed me, with sadness, that there were few — borndering on none — of the current cohort or the previous one of medical students interested in becoming an ophthalmologist as a specialty. That was bad enough but the reason for it was worse. It was because ophthalmology wasn’t a glamour area. It struggled and usually lost out in a funding fight with pediatric care (sick kids are always good for funding £’s or $’s), oncology (everyone is scared of cancer and wants to hedge their bets) or acute medicine (blame TV dramas like ER).

      Today’s medical students can’t, taken as a whole, do anything much else other than to look where the money goes and follow it. And that’s even under the auspices of the NHS system (effectively a sort-of Medicare for All).

      As another commenter wisely noted above, this is all baked into the healthcare system, the ACA and the insurance-pharmacy behemoths are symptomatic of the underlying disease process but not causes. I don’t get at all how the eggs, flour, raisins and cherries can be unbaked, separated and easily reconstituted into a whole other different and better cake. Incrementally, you could come up with a new cake to gradually eclipse the existing cake. But many seem to think that you can throw away the existing cake then immediately have a different cake ready and waiting to take its place.

  20. Ivy

    It would be instructive to find some summary data on how health dollars are allocated among pharma, insurance, doctors, nurses, staff, overhead and similar categories. My suspicion is that there are gigantic costs that are hidden in plain sight (e.g., all the lobbying, ads for superfluous drugs) but are not apparent to the average person. That may be due to unfamiliar terminology, willful obfuscation or other reasons.

    Here is a brief example with made-up numbers (sorry for the formatting):
    total $1.00
    pharma .32
    pharma meds .15
    pharma staff .03
    pharma execs .05
    pharma lobby .04
    pharma G&A .05
    insurance .18
    insurance staff .03
    insurance execs .06
    insurance lobby .03
    insurance G&A .06
    hospitals
    etc

  21. ChiGal in Carolina

    Thanks for this, Yves. Makes me wanna scream too as I embark on my ACA $1000 monthly premium, $3500 deductible adventure, fittingly with a colonoscopy.

    The article Bitter Pill by Steven Brill, originally published in Time (now behind a paywall) and then as a book, details the role of hospitals and pharma in this debacle, and provides examples of details of hospital bills, which are meant to be unreadable.

    A PDF is available by googling.

    I always cross out the lines in paperwork that states I understand I may be responsible for out-of-network charges before signing.

    I honestly don’t think the docs are mostly the bad guys in all of this. EHR are designed to manage them for the purposes of billing and are a scourge on all who work in health care.

    See Roy Poses posts at Health Care Renewal Blog re managerialism.

    There is much to be disappointed in Obama over; the fact that he ran on providing national health care and gave us the ACA instead is the thing that has most impacted me personally.

    It was a change moment and he blew it. Now the Rs will get rid of Medicare or farm it out to Wall Street, which is the same thing.

    Such a tragic failure.

    1. Waldenpond

      There is a process I was unfamiliar with…. in the past, I received routine tests along with the annual that were designated by age. Currently, I hit the age for a particular screening test to occur every x amount of years but… I have never received the screening tests as my docs have moved shop and when I have found a new doc, the x amount of years starts over as if I had the test. My docs office just shut down and the building has been purchased w/employees and doc. There is an effort to have continuity of care (I don’t have to look for a new doc) but I am wondering if I will again restart the clock on preventive tests.

  22. Toolate

    The obvious points missing here are
    1) health and healthcare are not synonymous.
    Our focus needs to be on health. Healthcare is thought by most to account for only 10-20% of health outcomes.
    2) ADVERSE CHILDHOOD EVENTS (ACE) determine a tremendous portion of chronic disease and the likelihood of involvement with drug abuse,the criminal justice system etc.

    Unless we redirect wasted medical $s
    To upstream causes of ill health notbing will change.

    1. LAS

      Your point is well made, particularly if you also consider the impact of childhood and adult poverty on overall life course.

      Probably half or more of all medical conditions are traceable to social inequities or structural violence socially/economically/politically induced. That is, millions of people would be healthier if they had better affordable housing, preventive primary care docs, quality affordable food, sanitation, infrastructure, vaccinations, access to safe spaces for exercise, education and a stable living wage. For want of these things, so many chronic and infectious conditions develop.

      If we spend that 9% GDP (overspent on medical services) on social services and jobs building / infrastructure investment, we’d likely get much better health outcomes in the country.

  23. Robert NYC

    You and Lambert have done an incredible job of covering the health care issues. One of the only places I know of that accurately describes the subject. The MSM is beyond poor on this issue.

    At least Trump has promised to take on big pharma and he is speaking bluntly about the failings of the ACA. Who knows what he will do about any of it, but his rhetoric is refreshing. As for the drug ads on TV, the U.S. is the only Western country that allows this, which is emblematic of our corrupt and dysfunctional system.

  24. vegeholic

    Despite having the most expensive health care system, the United States ranks last overall among 11 industrialized countries…

    While undoubtedly true, this is irrelevant to the elites, and they are making the decisions. They do not care about your health care outcomes, or being ranked last as a nation. They care about their own personal health care outcomes, and by that measure they rank number 1. It is expensive but they have lots of money and the miracle cures are readily available without getting in line behind the commoners. The question is why the commoners go along with this abomination.

  25. Jim in MN

    I think the political system is far more disrupted than most people realize. We are at a unique juncture in which the ‘established interests’ can be turned. The knock on Trump’s idea of inter-state competition during the campaign was simply that the companies didn’t want it. But what if…..after a certain type of meeting at which certain things were said…..they change their minds? What if….after a certain type of meeting at which certain things are said…..they agree to roll back premiums?

    The real question now is, what should we ask for, aside from full government takeover/single payer? How should the valid issues that Yves has listed here be attacked? What if it’s as simple as saying, from the Fortune 500 boardroom, that administrative burden, excessive medical intervention, and gold-plating hospital and insurance property developments need to be curbed (at least for a while)? I’ve watched them throw out all the furniture in hospital headquarters offices after about two years just to redecorate. Maybe go five this time.

    Remember, it’s this or Bernie is next. Maybe the industry had better play ball while they still can.

  26. Knot Galt

    What follows is empirical. If there was someone who could collect enough of these I think someone could put a “face” to this man-made national catastrophe.
    In 2015, I went from a job that paid $60,000/year to a job that paid $14/hr. (That in itself is a different story and I believe it happens more often than not.) I was hired by a temp agency and was laid off around Christmas instead of being furloughed. The same company hired me again for a different position in January at $18/hr but I was still a temp and so I had no company-provided insurance. I had started developing skin and dietary issues that I tried controlling through education and changes to my diet. I was looking into ACA markets and, because of my higher salary the year before; I was not eligible for any government support even though my current wages warranted some of it. The best I could do was with a $500/month payment with a $6,000 deductible. What that meant was to keep my insurance is pay $500/month and spend $6,000 dollars BEFORE insurance would kick in to help.
    I signed up in March and retroactively paid for February and they sent me a bill for March. In April, for the first time ever, my lower left leg unexpectedly swelled up. I hadn’t done anything unusual nor overly physical to explain it. It didn’t hurt either. But it seemed like something that I should have looked at. I left work early at 1 PM to address the issue. I had yet to find a physician in my network who was taking new patients. And those that were available in my network were booking out 3 months and I needed to see someone immediately. According to my insurance provider, they strongly advised I go to one of their emergency clinics. So I went. I waited two hours and after I saw a nurse I waited another 45 minutes to see a doctor which lasted all of two minutes. I was informed the clinic I went to did not have the proper equipment to handle the situation and I was sent to their other clinic across town. When I went to check out, I still didn’t know what was wrong with my leg and I was billed for the clinic and seeing the doctor. At the other clinic, it was the same exact story only this time they sent me to the emergency room at the provider’s hospital.
    I signed in and was given a wrist bracelet with my identity info on it. I waited till 11PM when I was brought in. Two hours later, I was sent home with an ace bandage, an eight hundred plus bill (not including the emergency clinic bills), and a prescription to follow up with my general physician (even though I had not yet found one.) After paying the amount I owed, I no longer had any money in my account to pay the insurances monthly premium. My rent was due, and at $505/mo (which is a great deal, I live in a college town and I have A STUDIO APT.) I was going to have to wait two weeks to make the payment before it would be marked past due.
    But here is where it gets really good. About two weeks later, my swelling had gone down only slightly but I developed a painful red rash on my left knee cap that made it painful to bend. It was Thursday afternoon and I could no longer ignore ’it’. This was around the time Patty Duke had died from a Staph infection and thinking this might be a sign, I went directly to the hospital this time. (I had no other choice) They admitted me 5 hours after first arriving. I was kept in Triage until 4 am and finally given a basement room as a holding area. My first visit by a doctor was at 8 AM on a Friday Morning. The Specialist to remove the infection, if that is what it was, could only do it on a Sunday morning. The staph infection was confirmed and they wanted to keep me one more day to keep me full of antibiotics and observation. On the plus side, my chronic skin condition had greatly improved. On Monday, after my insistence, I was released. But not after I was fitted with a knee brace, a few prescriptions, and a follow up appointment with no less than 5 doctors in different offices spread throughout and around the hospital grounds.
    All said and done, my Bill came to over $12,000 dollars. Because I was in the hospital when my insurance premium became over 30 days late, the insurance company cancelled my coverage.
    Since this time, I see a naturopath and I have company-provided insurance with a $1000 deductible. I dare not leave my company and pray that I am not furloughed or worse, laid off. But these things are outside my level of control. When the collectors started hounding me I had to start screening my calls To make matters worse, I own property that I rent out and my tenants, both nurses, had had their hours cut back and they were late on a few months of their rent and the mortgages went unpaid. (At this time, my reserves had been depleted.)
    Thank the Lord, my deductible is now only $1,000/year but even that is a struggle. I share a computer connection and I have the same rent I had before because I elected to stay with a studio apartment. I shop at Farmers market because there I can barter and find trustworthy sources for my diet that keeps my skin condition in check. And luckily, if tragedy does strike again, I am covered. But, because of the medical event last year, the only way out for me was to declare bankruptcy. Luckily, I had property that I could fall back on. But that will be gone once it is sold to cover the bankruptcy. I will be left with some funds but nothing that will replace the properties I have.
    Premiums continue to rise and the insurance markets are something I will never enter into again. I have acquaintances that have their own businesses and they take advantage of the ACA by under reporting their earnings. So they can afford it but I’m not willing to try and game the IRS. I’d lose for sure. I have other friends who are independent and now premiums are at about $900/mo. I am planning on putting away the funds I will get into a safe I have recently bought to make sure I can cover my next “small” medical emergency. I just have to hope I don’t get a catastrophic disease or have a bad accident.(That’s another story. My auto insurance coverage has limits to keep my premiums affordable and the medical coverage wouldn’t cover all of a serious accident, if it were to occur.)
    And the pundits wonder why Trump won the election?! I’m sure I am not the only one that had a sucky medical story to tell.

    1. nycTerrierist

      Best wishes to you Knot.
      What a horrible story. This should not happen to anyone.
      The parasitical insurance industry and the sleazy pols who bailed them out deserve nothing but our rage and contempt.
      just ugh!

      1. Knot Galt

        Thanks for the well wishes! Being able to join my company insurance plan literally saved my life and I was able to overcome what ailed me. I still don’t know what caused it though.

        Although, as it turns out, The county sheriff came to my apartment door at 7:24 PM last night and handed me a summons for a medical bill, that went unpaid, from the described incident above. It’s the gift that keeps on giving!

  27. Katy

    Thank you, Yves! I’m so glad I found this website. I have been saying precisely what you said here (though not as articulately), to anyone who would listen, for years. I feel like Cassandra sometimes. It makes me want to run for state office so that maybe I could help make some changes–although I’m not sure what type of change one state representative who is unwilling to align with either the Democrat or Republican parties could make.

  28. baldski

    What did corporations do to reduce costs? Outsource!

    A friend of mine needed a quadruple bypass some years ago and was uninsured. The cheapest price he got in the USA was $45,000. He flew to Germany and got it done for less than $10,000. Let’s outsource. Contract with Germany, France,Holland, etc. for major operations.

  29. WhiteyLockmandoubled

    I enjoy a good health care rant as much as the next lefty. But this is just as damned wrong as all the rest of the stupid crap that the media puts out: “A pay-for-piecework system that rewards doctors for over-treatment.” That very same Commonwealth study you cited would have told:

    1. Yes, the US has the highest health care costs in the world.
    2. It also has the second highest out of pocket costs in the world, after the Swiss. We’re both outliers.
    3. But we go to the hospital LESS often and see the doctor LESS often than the average for the OECD.

    Although we have some overutilization issues, utilization is NOT a fundamental driver of the US health care cost problem. Saying so reinforces the neoliberal myth that bred Romneycare and Obamacare. “Fee-for-service” medicine drives up costs! Patients need “skin in the game.” Let’s switch to “value based purchasing!” That horseshit has allowed Washington to get away with not tackling the real cost drivers –corporate insurance, hospital and yes pharmaceutical oligopolies that charge whatever they want.

    Canada and many other wealthy nations pay physicians through some form of fee for service payment. That’s not what distinguishes the US.

    Thank you very much for apologizing for relying on anecdotes. Now stop it! Go read Zack Cooper et al, or, better yet, Erin Fuse Brown and Jaime King. Don’t be fooled by the polite nod to overutilization, they get it.

  30. phichibe

    Thanks Yves for another well-directed primal scream .I’m a beneficiary of Obamacare, and the insanity of our health-care system in very personal to me. Whenever this subject comes up (and I’ve been a single-issue voter on the subject since the 1992 election) I can only shake my head and steer them to T.R. Reid’s 2010 book on the subject. This book compares the healthcare systems in the U.S. with those of the UK, France, Switzerland, Germany, Japan, Canada (and maybe another). Reid, who had been a Washington Post reporter stationed in most of these nations, wrote a fantastic exposition of just how many better systems there are than ours. Here’s the Amazon link

    https://www.amazon.com/Healing-America-Global-Better-Cheaper/dp/0143118218/ref=sr_1_1?s=books&ie=UTF8&qid=1484359309&sr=1-1&keywords=t.r.reid

    It’s still worth reading.

    Cheers,

    P

  31. Davidt

    We look at and talk about individual procedure costs by hospitals and the price of the pharmaceutical drugs. We know this is not what the Insurance companies pay for them. The drug prices are hidden by a private contract with kickbacks that will not be made public.

    Instead of trying to unwind the medical costs look at the public insurance and hospital SEC filings. Not just the current but follow from way back how things changed both increases and decreases. Also compare the U.S. individual institutions cost of individual units that provide similar procedure or services with those of other countries. Do not get lost in the trap of, ” it costs them xxx” and stop your analysis. What we are looking for here is what the departments (?_) ratio comparisons are or something similar. Comparisons with adjustments of this type are not meant to be the answers but to stimulate the questions to go back and forth to look at the U.S. accounting with new eyes and questions.

    Hospitals in the past used allocations to move expenses around to the extent (do not know about today_) it was impossible to associate the actual component or total costs of an individual type of treatment or service the hospital was performing.

    Individual expenses were allocated by what they were allowed to charge for an individual service or procedure. The total expenses, total charges, and the difference “return or profit” was the major item looked at for totals. They were viewed like a regulated public utility such as the phone company as then most were non-profits. A small margin was expected but not an excessive margin like for profits of today.
    This accounting system of expenses by allocations is probably still in place and the way to unearth what is going on is to analyze the changes leading up to today.

    This information and questions brought forth with the comparison of other countries accounting may lead to new was to push and move the health care cartels. The health care industry will not change because people are dying for lack of health care but they will change if their accounting and SEC filings are misleading and/or fraudulent.

  32. KFritz

    Harry Shearer is fond of parodying the “We’re number one” chant, so here’s another “parody.” The US has the worst designed health care system outside of the third word (and many third world systems are better designed).

  33. jackiebass63

    I live in a small upstate NY rural area. There are only two choices to receive health care.We no longer have independent doctors to go to. All doctors have become employees of one of the providers. The whole system is under a so called non profit structure but everyone knows the term doesn’t accurately describe the organization. Unless you are wiling to travel 100 miles you are stuck with this system. Their sole goal is collecting their charges. My 96 year old mother was in one of their skilled nursing facilities. I faithfully paid her bill every month. Then one month I got a summary of 3 years payments. At the end of 2013 the balance was $0. At the end of 2014 it showed a balance of around $1800. I did the simple math and came up with the payments equal to the charges for a net balance of $0. When I posted this out to them they had no response but continued to insist they be paid $1800. This went on for 2 years then she died. During all of this time she was on medicaid so she was only allowed to keep $50 per month of her small pensions. The rest went as payment for her care. Upon her death she had $50 in a personal account held by the hospital and $17.84 in a checking account. I officially informed them of her death and financial condition, even though she died in their facility. They kept hounding me for payment , threatening to put the bill into collection. I told them they were welcome to her assets. They continued their threats. I’ve quit responding but I periodically receive the same threat. I guess my point is that collecting their charges is what is the most important thing. This same thing happens every day to poor people that have worked hard all of their life, end up with a small ($ 150,000) nest egg and end up in poverty. I todays world money, not quality is the most important thing. What happened to my mother wouldn’t happen in any other developed country with universal health care. The American public will continued to be screwed unless we adopt a form of universal health care, something I don’t see much chance of happening.

  34. equote

    RE: Drug company rent extraction. Regarding ‘intellectual property’ via patients and copyright, read the following: (pdf available via a web search)
    Boldrin & Levine: Against Intellectual Monopoly

  35. collins

    Blaming “greedy doctors” for driving up costs is like blaming the former Army private down the street for ISIS, since he was a veteran of the Iraq War. Yes, there are individual bad apples on every front line but they don’t give the orders.

    The US graph of the percentage of doctors who do charity care declines every year, and it’s an exact negative correlation to the rising percentage of doctors who become employed each year (rather than stay in independent practice).

    Look at the ownership of Private Healthcare (ie, for-profit, stock exchange listed companies, or truly private companies ) and it is simply incredible how concentrated it is by a minuscule number of hedge funds. Tenet Healthcare’s stock, for instance, looks like – 66% of the stock is owned by perhaps 6 hedge funds, with one fund (Larry Robbins, aka Glenview Capital Management ) owning 18% of the stock and controlling 1/3 of the Board seats. And unlike Warren Buffet / Berkshire Hathaway, hedge funds are not interested in owning and running companies long-term. Is this concentration unprecedented?
    And the Big Money is still Gov’t Money – Managed medicaid in the states (owned by Fortune 500 Companies) and Medicare ‘Advantage ‘ (same companies, on a national scale) carve out billions in profit (fyi, ‘rent seeking’ is a term most Americans are unfamiliar with).
    I know a doctor in the Northeast who works 65+ hours a week in the OR as an anesthesiologist , makes a good living (but not 350k!), and likely receives half of what he actually makes. His group practice sold out 4 yrs ago to a national company which flipped it to a hedge fund, which last year flipped it to another hedge fund. He said “I’m working for some guy on Wall Street who I never met and certainly never signed a contract with!”
    It ain’t the docs; follow the Real Money to reform the system. The docs (collectively ) can actually fix the system, but that would require Congressional approvals (national and state) in the face of millions of lobbying dollars, promised future careers for representatives in insurance and lobbying upon retirement, or careers for their sons and daughters right now, etc. Whereas the docs are powerless unless the Rep perceives the public will vote him out of office.

  36. Angry Panda

    Referencing the Gaidar book might make for good “blog optics” but is definition of bad form. Gaidar’s whole raison d’etre was taking the Soviet state-run economy and privatizing it (for the benefit of a handful of oligarchs) while also destroying the monetary systems (plural – there were three running in parallel) and eviscerating budget payouts (to pensioners, teachers, et cetera). And doing all this under the cover of neo-liberal slogans straight from the pages of…pick your favorite western financial paper, I suppose.

    This man, then, writes a book discussing the “avant” and “apres” of Soviet/Russian economy. One wonders if a scintilla of subjectivity does not enter into this analysis. [Why yes. Yes it does. Considerably.]

    In other words, I wouldn’t use any quotes from it or cite any figures from it without a) thorough double-checking and b) solid contextualizing. Historiography 101, know your sources and their biases. Secondarily, linking not to, say, an Amazon page for the book, but to…something apparently associated with the Economics department at San Jose State University? Which, of course, is not lifting this quote to support some point from a contemporary (read: neo-liberal) economics textbook without regard for objectivity or fact? [To wit, the “Great Rivers” project is cited without any context whatever – clearly the Soviet leadership just liked to indulge in these things without any cost-benefit analysis or strategic goals whatsoever.]

    Bad form. Bad, bad form. And that’s a shame because the rest of the post actually has merit, though to be sure it isn’t anything terribly new. The United States medical sector has been a roaring dumpster fire (from the standpoint of most consumers) for decades.

  37. Karen

    Brilliant article and commentary. This would be even more agonizing for me to read (it was agonizing enough) if I hadn’t discovered Liberty Healthshare. Nice rebellion going on there.

  38. Jason

    I’m a physician in the US. People don’t understand that for every patient-physician encounter that happens, there are THOUSANDS of administrative encounters that are going on in the background. These include insurance encounters — as well as government compliance encounters, encounters with quality-metric institutions, IT encounters, pharmaceutical encounters, lobbying encounters. This gigantic bureaucratic overhead is why healthcare costs so much in the US. The ACA not only legitimized the giant bureaucracy — they threw government subsidy at it. Insane. I agree with posters above, the whole system needs to be dismantled and rebuilt — but I have little faith that our corrupt government would have the right incentives in mind for the rebuilding.

    As for other socialized healthcare systems — they are not good answers either because they are all bankrupt or near-bankrupt. No country has figured this out well.

    I do agree with the posters above who mentioned the extremely high expectations of US citizens from physicians/hospitals. We have far more ICU beds per capita than most anywhere — and if you look at who is in them, most of them are filled with people at the end of their life who have no shot at meaningful independent life. Friends from other countries have such a refreshing honest way of accepting that humans actually can get ill and may actually die — and nothing can intervene in that.

    Marketing has trained US citizens to think that every belch or fart is a critical failure of their body and must be treated by some pill or procedure. Ridiculous.

  39. freedomny

    Healthcare is an issue very close to me. I have family members who are doctors who insist that insurance companies “are evil”. I am one of those people who very rarely gets sick – I can count on my hand the number of times I have gotten a cold. However, i was an athlete in my younger years, and now, in my 50’s, have had to get joint replacements. OMG – what is being charged is out of the world! I had one joint replaced 2 years ago, and now have to have another – my insurance company is already charging me fees that I didn’t have to pay for previously. I pay almost 800 a month for healthcare. Darn – I really think they tally up how much money they have spent on you over the course of so many years. You can be very healthy, like me, but all it takes is a very expensive operation to really financially drain you….

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