My correspondent continues our exchange:
Let me give you some reasons (I was pretty sure I’ve done this before), besides my assurances. First, let me point out some of my bonafides, so to speak. I’ve worked in the American health insurance business on and off since 1994, including time at 2 of the largest insurers, United Healthcare and Cigna. I’ve also worked with one of the largest German health care insurers, AOK (www.aok.de).
I’m not sure how this is applicable.
I’ve spent a great deal of time reading non-fluff articles about the situation and participated in short round-table of sorts on the problem of health care costs and delivery in the US with some similarly “high minded” people who happened to include a couple of professionals in the field, e.g. an executive at Allina.
OK, that’s cool.
Lastly, I’ve had the misfortunes of having to actually use both the American and German systems of health care, and of not being covered by a typical “generous” employer-sponsored health plan (which are all becoming rarer and rarer these days).
Tying one’s insurance to a business tax deductible employer sponsored program is just insane. It has multiple downsides and very few upsides. It means that many people can’t find insurance because they can’t find employment with an employer large enough to have a viable group. My employer, for example, despite having 7 employees, is having its insurance dropped by Blue Cross of Minnesota because we’re just too small to bother with (so I’ll be on the ACA-created marketplace to find my own insurance).
And this I can get behind and did so years ago (as my correspondent may recall). Many years ago I suggested group buys of insurance should be disconnected from employers, thus rendering pre-existing condition clauses obsolete. In a sense, the insurance exchanges are a step in that direction, although I envisioned private groups.
Plenty of those people could be self-employed or starting their own businesses or working for someone else doing the same. Instead, a significant portion of people take jobs they don’t really like or want simply so that they can have health insurance. One major effect of that behavior is a lot fewer start-up companies and a lot fewer employment opportunities and a lot less economic activity. Recall that most jobs in this country are created by small businesses. If I had not felt young and invulnerable back when we started VISI.com, but instead had been someone desperate for health care coverage, I never would have gotten involved. I had to go without health insurance to do that.
It also obscures the true costs of health care, providing perverse financial incentives and therefore effectively so totally distorts the market to make it any but a “free” market. The result is all kinds of money spent on marketing and lobbying efforts that would be better spent on real health care, and the resulting purchase by those who were marketed to and lobbied of less than the most effective treatments and insurances.
Lastly, it means millions of uninsured workers, which is neither good for them or society, on a purely economic basis. Most bankruptcies are caused by health care costs, and most people who file bankruptcy for health care costs actually both have jobs and some amount of insurance. Having no insurance or no job is, of course, going to make that situation that much worse.
Reason number 2: health care in America is insanely expensive, compared to every other country in the world. We spend 4 times plus the next most expensive country, and yet our outcomes are worse than the top 20 or 30 or 90 other countries (depending on who’s measuring and how) most of which spend far less than us. It’s insanely expensive for all kinds of reasons, one of which is that our drugs are far more expensive — even the very same drugs which are sold for as little as a tenth of the price in other countries.
But it is just one factor, and I hesitate to put drug prices on the spot – because it’s even much more well known that we spend a huge amount on end of life care. According to Medicare,
Medicare spent 28 percent, or about $170 billion, on patients’ last six months of life.
Most countries are not as fixated on stringing out life as long as possible. Add to this our poor eating, exercising, sleep, and work habits, and it’s no surprise that we may win second place for the most self-abusive society on the planet (Russia rings the bell). But if you wish to count the dollars spent on the remediation of illnesses coming from those sources, they become a measure of our irresponsibility, both individually and collectively, no?
I think I want to get rid of what I perceive as the big brush which misleads us, but don’t have the details to do so. But it does feel like apples and oranges….
Meanwhile, Big Pharma is among the largest and most profitable industries in this country, and have some significant “regulatory capture” as well as congresscritter capture (they spend more on lobbying than just any other industry) going on. For example, both the Medicare “doughnut hole” legislation under Bush and the ACA gave Big Pharma huge financial bonuses. In the former case, it prevented Medicare from negotiating(!) better drug rates for Medicare users, unlike Medicare’s ability to do that for all other medical services and unlike every major health insurance plan (HMO, etc.) in the country! That’s insane! And corrupt.
Agreed.. I’ve never understood why this has been allowed to stand. Although given government’s special standing, I should think some care would have to taken to ensure abuses of governmental power when buying drugs do not take place.
This is also why I distrust comparisons with other countries when it comes to drug prices. Why are they lower? Because the governments just order the prices to be lower? And if the company tries to withdraw a drug, the country might tell them to cease business entirely?
Hospitals in the USA are sort of like Major League Baseball in that they have bizarro, complicated exceptions to non-profit and anti-trust laws that everybody else has to abide by. And a large number of hospitals are VERY profitable these days, and their executive staffs of non-doctors are starting to look like the over-compensated C-suites of private businesses. And they’re making decisions to increase the profits which run direct opposition to good health care, implementing stupid policies that the docs would tell you are medically bad.
Oh, interesting. Exceptions to laws for hospitals … of course, if it’s not a free market in medicine, perhaps the exceptions are justified?
Given the move away from procedures and towards outcomes, I wonder how long excessive salaries might last.
Health care is also insanely expensive because of private insurance companies. Every cent they make in profit, in fact every cent they spend on anything other than direct payments to doctors, clinics, labs and hospitals is money NOT being spent on medical care but which WAS spent by an employer or insured to obtain medical care. And that amount is huge — it’s many, many billions. Sure, you might argue that that administrative overhead does buy some good, and that’s true. But the proportion is small. Most of it is fat, overhead and profit inflating the cost of health care, and enriching the few
Your personal health care quality is actually significantly diminished by this same situation. Every year, a typical employer renegotiates its health insurance coverage. That means, employees may and often do suddenly find that they have differing coverage and more importantly, don’t have coverage with the same doctors they had been seeing. Likewise, every year (or less, if a multi-year contract), those health insures are renegotiating their deals with “medical practice” businesses, e.g. large multi-office clinic chains (e.g. Allina, Fairview, Ridgeview, Walgreens, CVS, etc.). That means a particular set of clinics and/or an individual doctor may be covered by insurance XYZ this year but not next year. If you are a patient, you face the choice of changing doctors or not having your service covered by insurance. This means you suffer from a lack of continuity of care. It’s well known that seeing the same doctor at the same clinic for decades produces far better health care than changing doctors every year.
I’ve not heard that, actually. I would worry about seeing the same doctor year after year. I know they try to keep up, but frankly the insane way medicine improves makes me doubt a GP in his 50s is necessarily as uptodate as the doc just out of residency. I know my rheumatologist has told me not to trust what a GP does about gout and related diseases – they just don’t have the basic training. OTOH, having had the same doc for about 20 years now, at least there’s a little bit of a relationship there – he laughs at my jokes.
I could actually go on and on (and on) about this topic, with facts and figures to make your head spin or your stomach turn (depending on how much empathy you have for the sick and underinsured, or your degree moral idealism and belief in meritocracy). But I won’t. The American system of health care and health care insurance is huge train wreck. It’s corrupt. It’s inefficient. It causes widespread suffering. If fails to do the basics. The ACA is a small, inadequate bandage on the elbow of a banged-up and bruised bicycle accident victim. It’s better than nothing, but far short of what’s needed. Universal coverage (e.g. like Germany with its multiple private insurers but everyone IS covered at some base level) or single payer (e.g. like Canada, UK) is the only way to have any kind of sane healthcare in the current world.
And what I notice is a relentless focus on now, not on the future of medicine (yes, the financial future, but no not the medical future) – which is what the argument often came to be – if we change how we fund medicine, will companies still be motivated to research meds and procedures? I know that NewScientist has reported that certain fields are no longer actively researched by Big Pharma, even with our current system – leaving us with possibly critical deficits in, for instance, antibiotics (NewScientist 20 May 2014) (paywall):
This week, the WHO’s 194 member states are meeting in Geneva, Switzerland, to endorse a proposed action plan to save antibiotics. It includes a modest-looking call for “new business models to encourage investment in and preservation of new products”. Translated, that means we cannot solve this problem if antibiotics research and marketing continue to be governed solely by market forces.
Last week at another meeting in Geneva, healthcare researchers and pharma representatives agreed that companies must be paid more to invent antibiotics – but in a radical departure, profits cannot depend on drug sales.
There are no big profits in antibiotics, says Kevin Outterson, an expert in health law at Boston University, whose report on the issue was presented at the earlier meeting. Normally a company invests a great deal of money in research and development to get a drug to market, then recoups that, and profits, by selling it.
The problem, says Outterson, is mainly that older antibiotics that still work are off-patent and therefore cheap, so new ones that must compete cannot be priced very high. The only profit is in maximising sales – but this inevitably speeds up the development of resistance. So companies have deserted antibiotics in droves: 18 big companies were doing antibiotics R&D in 1990, but only five of those were still doing it in 2011.
