Stossel Solves the Health Crisis with Capitalism

[Tsukasa Buddha]

I was actually watching Beck today and he had a libertarian circle jerk with Stossel and Penn Jillette.

Apparently, insurance is itself a bad thing. "If people had food insurance, they would always go gourmet."

... So they want people to pay out of pocket for everything because that would make them consider the value of each test and treatment and be "good" consumers?

 

[Patrick_R]

Rolfe are we supposed to be turned by anecdotal evidence all by itself? Lots of people will, don't get me wrong, but I don't think any self respecting critical thinker should.

 

[Patrick_R]

I was actually watching Beck today and he had a libertarian circle jerk with Stossel and Penn Jillette.

Apparently, insurance is itself a bad thing. "If people had food insurance, they would always go gourmet."

... So they want people to pay out of pocket for everything because that would make them consider the value of each test and treatment and be "good" consumers?

You don't get the point. The point is we have a 3rd party payer system. You don't shop for the best priced medical care with the best service. We don't care what it costs. The doctor knows this and he will offer us treatments that we don't actually need, he doesn't care, someone else is paying the bill.

Health insurance, just like universal insurance, will drive up the cost because of this serious flaw.

What they are recommending is something called a health savings account. It is a high deductible insurance policy with a tax free savings account that grows interest over time to help pay medical bills if you need it. This encourages us to price shop and it encourages Doctors to compete on price.

Already we see plastic surgery and animal care competing on price and the prices are not rising anywhere as fast as other forms of human healthcare.

 

[Patrick_R]

and yes if we had no insurance at all, we'd not only pay out of pocket, but medical bills would be low and we'd have higher income....medical insurance is an untaxable cash benefit. If we didn't get it the company would pay us cash - they don't care how we get the money. It would, of course, be more fair if government didn't tax income and didn't tax sales either... but thats another story.

 

[David Wong]

The Glenn Beck comment on the subject:



About as well-reasoned a defense of the American system as anything in this thread. A couple of incorrect examples, and then incoherently shrieked insults.

 

[oggiesnr]

and yes if we had no insurance at all, we'd not only pay out of pocket, but medical bills would be low and we'd have higher income....medical insurance is an untaxable cash benefit. If we didn't get it the company would pay us cash - they don't care how we get the money. It would, of course, be more fair if government didn't tax income and didn't tax sales either... but thats another story.

History proves this wrong. What happens is that people don't get medical care and die younger than they do now.

Suggest you go back and read the whole of this thread and the equally long from earlier this year about socialised medicine.

Steve

 

[Rolfe]

Have you actually read the thread, Patrick? I would recommend it.

Anecdotes of course have limited value. However, they do serve as examples. The number of "examples" of people being left without healthcare in the USA not because of one-off blunders, but because of obvious deficiencies in the system, is really quite striking. Some of the US anecdotes in this thread describe situations which simply would not happen in a universal system.

I would suggest you check your prejudices in at the door and actually read the thread.

Rolfe.

 

[Rolfe]

and yes if we had no insurance at all, we'd not only pay out of pocket, but medical bills would be low and we'd have higher income.....

Uh, not exactly.

If you had no insurance at all and every medical need was paid out of pocket, expenditure on healthcare would drop like a stone, certainly. But not because brain surgery or a quadruple bypass suddenly becomes as affordable as a Big Mac, but because very few people would actually have these procedures.

Some things are inherently expensive. Major medical and surgical interventions are in that category. The irreducible costs are such as to make even the rock-bottom price completely unaffordable to citizens on relatively low incomes. Nobody sells their product at less than it costs them to provide it - or not for long anyway. And nobody invests ten years of their lives and runs up student debt to the tune of tens of thousands of dollars to earn the sort of wage you can get flipping burgers either.

If you had no insurance, so many people would be priced out of the market that a sizeable chunk of the healthcare industry would simply pack its bags and go away to do something else. And bright, morivated school leavers who might have considered a career in medicine will become bankers instead. Drug companies producing expensive cancer drugs and so on would also take a major hit, as their US sales would go through the floor.

If you had no insurance, you'd have a higher disposable income, sure. And if you never suffer a serious illness you'll have more money. However, if you do suffer a serious illness you'll be bankrupt. Or dead. Probably both, actually, in that order. But think about it a bit longer. Would you really have that higher disposable income? Theoretically, yes. But instead of putting away a bit every month into your insurance plan, knowing (or maybe hoping, I don't like the sound of some of those insurance industry practices) that if you get seriously ill you can draw on that plan for far more money than you ever put into it, you have to think about making provision for paying the entire cost if that happens.

So really, if you had no insurance, and you wanted to be able to pay for major surgery if you happened to need it, you'd probably have to put every penny you can spare into savings. So much for having more money to spend. And too bad for those producing the goods you might have bought otherwise. (Yes, banking is beginning to sound like a really good career choice here....)

While I certainly don't disagree that some sectors of the US healthcare industry are bloated and overcharging, your premise that all essential healthcare can become practically affordable to ordinary citizens is simply nonsense.

Rolfe.

 

[Rolfe]

Short answer. Effective medical care is expensive. When an expensive need and a low-ish income come together, there are only two options.

• Other people pay for the patient's treatment.
• The patient does not get the treatment.

If the second one is the way you want to go, hell mend you. If you feel you'd rather live in a world where the first option is the popular choice, we're now only talking about the mechanics.

Rolfe.

 

[Blue Mountain]

Patrick_R, last year's major thread on this topic is here: This is the Government that You Want to Run Health-care? Please take some time to go through it and look at some of the links and studies pointed to from there.

 

[Rolfe]

Thank you Blue Mountain, that was what I was looking for.

That thread, Patrick, and the previous 780 posts in this one.

And read it carefully, and follow up the important links. Most of us posting here have already done all that, and we're not that keen on starting again from scratch just because you can't be bothered to get up to speed.

Rolfe.

 

[Cayvmann]

Oh sure, universal healthcare is arguable on totally pramatic grounds. I was just pointing out that far more radical "socialism", such as taking people's land against their will, was already SOP in America.

The problem seems to be that although the pragmatic arguments are unassailable, the ideological arguments are used to damn the idea. In spite of the fact that, as I said, far more radical socialism is already accepted in other areas. Like someone else said, it would work very well in practice, but we feel it doesn't work in theory.

How do you cope with people who characterise universal healthcare as "these commies want to take my money and use it to get medical treatment for someone else's child, when I need it to get medical treatment for my child!"

That "isn't even wrong", but it's the sort of mindset that keeps coming up.

Rolfe.

It's a matter of who the "socialism" benefits, isn't it? Yay, big business, boo lowly worker who is actually the reason the big business is big ( fascism ). It's really not socialism, if everyone doesn't own everything.

Supporting the 'general welfare' is not in any sense socialism, it's just good for the country and good long range thinking. Glad the founding fathers put it in writing. Those dirty communists ;-)

 

[ponderingturtle]

Seriously, Dan, Obama may be awesome, but even he is not going to deliver universal healthcare to the USA on a platter in ten minutes. It's a huge job and the transition ain't gonna be easy. In the meantime, people will still get sick.

There was another point that if we do mannage to reduce costs to a sensible level, we might have issues with all the managerial staff that gets cut.

 

[jimbob]

Looking through the thread I hadn't seen this covered fully:

I agree with you. I don't recognize the validity of corporations to exist. You can't create a limited liability entity that allows individuals to absolve themselves of accountability. This is no different than creating an imaginary friend to take the blame when things go wrong.... no good can come of this. I wouldn't consider it private healthcare if corporations were involved.

I think in a free market I would pay more to see physicians who had the highest cure rates. Physicians should be able to maximize their profits, this would drive the incentive to cure higher and higher.

This is la la land thinking. Modern healthcare (and every other technology) requires more knowledge, ability and technology than any one physician (or engineer or scientist) could possess.

My back of envelope calculations from a previous thread:

Look at the cost of supporting infrastructure...

Bump for Jerome...

The details please.

Will a general hospital in a large prosperous city magically be built on land that is cheap? If not how will the capital cost of a general hospital be reduced?

Will a 5-hour surgery not require a surgeon, anaesthetist, and supporting nurses? Will surgery currently requiring 5-hours in theatre, suddenly need less time?

Will the surgeon and anaesthetist spend a greatrer proportion of their working time in theatre? (Actually my rough calculation, completely unrealistically assumed that they spent 100% of their time in theatre). If this time is to be maximised by the free-market, how?

Aside: Does anyone have any figures for what proportion of a general surgeon's work is actually in theatre?​

Will the general surgeon, and anaesthetist accept lower wages, when their skills are still in demand?

Will the capital cost of the theatre be reduced? If so, how? Will it be depreciated over a longer time?

Why would the cost of medical equipment be reduced?

I have already asked these questions, or simlar ones, and your answers seem to say that you accept my calculations but in later posts deny their validity, why:

Originally Posted by JEROME DA GNOME
Quote:

Originally Posted by jimbob
Any specific examples?

The current problems in the American health-care system.

Quote:

Quote:
In a deregulated market, will economies of scale suddenly vanish?

Nope.

Quote:

Quote:
Will the capital cost and depreciation of medical equipmens suddenly reduse?

Nope.

Quote:

Quote:
Will medical treatment and diagnosis suddenly not need highly qualified workers? Will highly qualified workers, in a field where there is demand for their services suddenly not command high wages?

Nope and nope.

Quote:

Quote:
Will large hospitals not be needed, or will the capital cost of the hospital also not need to be covered? Will the land value of new hospitals vanish.

Nope and nope.

Quote:

Quote:
Without regulation, how do you protect against cartels?

Why should I protect against cartels?

Where are the costs going to be reduced. With specific examples (other than the free market pixie).

ETA: Here are my detailed calculations, hidden for brevity,

Please tell me which parts are not estimating the lowest plausible cost:

But they wouldn't make any money in selling inherently expensive treatment at below cost.

According to this the median net worth of a renting household was $4k in 2004 (if I am reading the data correctly)

How could a household with a net worth of that actually pay any more than $4k for anything? Especially as they are likely to be poor credit risks, so borrowiong the money would be difficult.

Can we get the coronary healthcare cost below $4k?

5-hour bypass surgery: General surgeon with less than 1-year experience, $170k, Anaesthetist , less than 1-year experience, median salary $145k.

Both work 60 hour weeks for 50 weeks a year. This means that their combined equivalent hourly rate is $105/hour.

Now they are not performing surgery all of that time, so the actual money that the they are paid as an hourly rate whilst in theatre has to be higher.

As well as the two highly-skilled doctors, you need support staff, (in one photo, the team seemed to be four people), so that makes two other wages that need paying directly during the surgery.

You also need to pay for the use of the theatre, and expensive equipment, say $3million, depreciated over 5-years, when the equipment is in yse 52 weeks per year, gives a theatre cost of $11.5k/week. Now the theatre can't be in use all this time, there has to be preparation, so (generously) we could also assume a 60-hour week for the theatre, which gives $190/hour just for the theatre. Actually it will cost a lot more than this, but I am making a conservative point.

So far just taking the cost of the theatre depreciation and the salaries of the surgeon and anaesthetist, both at the bottom of their respective pay scales, and both working 60-hr weeks in theatre, we get to $295/hour, or $14745 for the five-hour surgery.

You could probably double this for more realistic utilisation rates.

You now need to add in the cost of the other two team members, and of the provision of facilities, and of the proportion of the hospital capital cost that is being depreciated (say over 30 years), and the cost of the bed and accomodation over (three days) stay inhospital.

It soon costs more than the $4k that these people have.


Rolfe works in a free-market system providing medical care to animals, so I will ask him this next question:

If someone's pet needs treatment that costs more than they can afford, do you (as the representative of the free market pixie) reduce the price of the treatment, or does the animal not get any treatment?

And as to this argument:

It is because americians are signularly incompetent at managing systems.

...snip...

Well I used to say that was obviously absolute codswallop given the size and success of USA corporations but....

I know US anti UHC proponents have actually argued this...

To which I reply "British Railways...." We have a fine ability to cock up major projects, but the NHS still works far better than the US system.

 

[jimbob]

Yes I know that one, and it leads to/requires the incompetent goverment belief.

I am just wondering if there are any objective measure of goverment/public administration competence.

I don't know, but Italy has a betterinfant mortality rate than the US accorging to google...

It isn't usualy considered an exemplar of efficient and uncorrupt government....

 

[jimbob]

Mark Corrigan tells us a personal story not entirely dissimilar to Abigail's. I haven't ever had an answer about whether there's any possible care Abigail might have received if she'd been a US citizen instead of a little Scottish girl. Or whether Abigail would have been guaranteed to receive that care if her parents had been American, even if they'd been on a low income or unemployed.




Dan, would you explain the mechanisms through which this outcome could have been achieved in the US?




My God, I might be going to say something I'd regret here. Not much difference????? This is a staggering 28% higher infant mortality in the USA. I honestly had no idea. Given that there is inevitably an irreducible number of neonatal deaths that no amount of care can save, this is absolutely appalling.

One extra death for every 730 live births.

Sorry, I have to go away and calm down for a bit.

Rolfe.

Then there is the analysis that about a quarter of the differfence in adult life expectance can be attributed to firearms, which is a lot butstill leaves 75% unaccounted for...

I have found one estimation, in what seems like an appropriate journal.

Thank for for your research.

"The United States thus suffers from a life expectancy gap of 1.7 years."

Now add 1.7 years to your previous stats and tell me were we are.



Keep in mind that this is only one factor to be considered.

"These deaths account for 26.86 percent of the U.S. males' excess mortality when compared to peer nations, and 8.7 percent of the racial gap between black and white males in the United States."

So, yes Jerome, it is significant, but only explains about a quarter of the difference between the US and the other thirty-four other richest countries.


In fact I am surprised at the magnitude of the effect, but it still leaves 74% unexplained by gun-deaths.

 

[MysteryMammal]

Sure they are different. I don't think they are tottally irrelevant just because you say so. There are plenty of other government run organizations here that perform poorly, would you like a list?

I will point out how 20/20man's analogy of "Food Insurance" is faulty for you:

He said something to the effect of "With food insurance, I'll get steak. Heck, I'll just get everything."

Wrong, unless "food insurance" is going to run in a completely different way than health insurance. With health insurance you don't get to say "Doc, my knee hurts, I want a CT, MRI, PET and throw in some additional, old fashioned X-rays for good measure." Well, you can... if you don't mind footing the bill. Your health insurance company will refuse to pay for certain things they deem unneeded. This becomes even more evident when you go to fill an Rx. With "food insurance" you may wind up going to the grocery store more often, but you'll be returning home with a bottle of Boone's Farm and that horrible 70/30 ground beef, not a $300 bottle of whatever wine and filet mignon.

Also, I'd like to point out the whole "competition drives the drug innovations" point that amounted to "ZOMG! Look at all the drugs on the market!" Yes, that's a metric crap-ton of drugs on the market. Look at buproprion. Or should I say Wellbutrin? Or Zyban? Should I add an XL to the name? SR? XR? Also, look at the amount of medications on the market that are really just a combination of two existing medications. I'm a big fan of Co-Tylenol myself. All the painkilling benefits of codeine with an OTC that has never relieved any pain I've had. But if I ever break my arm again and have a fever at the same time, that Tylenol in there might be of some actual use.

Face it, 20/20boy solved nothing, threw out some stupid arguments, but may have made some valid points somewhere along the line... I just couldn't find them because I was too busy dwelling on stupid analogies like "Food Insurance."

 

[Rolfe]

Well, insurance is all about spreading risk. It's appropriate when we know some people will be left with big liabilities but others (probably most people) won't. Like house fires or burglaries or even bad car smashes.

So we make a deal. We'll all pay in a share of the likely total cost for the group, plus admin, and then that pot of money will be used to pay the liabilities of the minority who strike it unlucky. It works, because even those who pay in and get nothing back, like the security of knowing that if they did turn out to be the unlucky ones, they wouldn't have to worry.

So how does that work with this hypothetical food insurance? Everybody needs to eat. There's no asymmetry of risk. There will be no happy, lucky contributors who won't need to claim any benefits - the first, most essential component of any insurance scheme. Why pay into a common pot, plus admin, when everybody's needs are going to be about the same anyway? Might as well save the admin and just pay your way.

But supposing Stossel's daft plan did get implemented? All contributors are entitled to go to the supermarket and stock up on whatever luxury items take their fancy. The total cost, plus admin, still has to be covered by the premiums. Everyone would simply be paying through the nose for it - indeed, because that pesky admin won't go away, paying more than if they'd just coughed up at the till in the first place.

This is so damn obvious from the get-go, it's both why no such plan would ever be mooted, and why nobody would join it if it was. They'd take one look at the premiums and politely decline.

And if the scheme ever did get going, in some bizarre parallel universe, would the grocers immediately rub their hands and put up their prices? Might not be so easy. If Tesco does that, Sainsbury's is on to a good thing by keeping prices reasonable. Unless the "insurance company" was stupid enough not to mandate the use of the cheaper store. Even if prices did go up, all that would happen is that the premiums would rise in proportion.

It's completely insane. As an analogy it doesn't even get off the ground. Food, where everyone has similar and predictable needs, simply isn't suited to such an insurance system. As anyone with two neurones to rub together should surely see. And you can call it "universal food service" instead of insurance and it's exactly the same. It isn't even a starter without asymmetry of risk, and whatever you do, the premiums must cover the outgoings plus the admin, and you have to administer the scheme to stay in budget.

I'm quite disturbed by the number of people who are prepared to parrot this nonsense uncritically, without even noticing the falseness of the analogy. I can't decide if Stossel and his like, the people disseminating it who should have thought it through, are just idealogues and too stupid to notice, or manipulative and agenda-driven, and just hoping that most of the audience won't notice.

Rolfe.

 

[Chaos]

Well, insurance is all about spreading risk.

Indeed. If that Stossel moron doesn´t even understand that, well... that doesn´t really make him any dumber than other "free market" folks I could name.

And if the scheme ever did get going, in some bizarre parallel universe, would the grocers immediately rub their hands and put up their prices? Might not be so easy. If Tesco does that, Sainsbury's is on to a good thing by keeping prices reasonable. Unless the "insurance company" was stupid enough not to mandate the use of the cheaper store. Even if prices did go up, all that would happen is that the premiums would rise in proportion.

Actually, in that scenario Tesco is going to offer something somewhat fancier for a ridiculously inflated price. Since price is no longer a disincentive for getting something, insured folks will flock to its stores.

It's completely insane. As an analogy it doesn't even get off the ground. Food, where everyone has similar and predictable needs, simply isn't suited to such an insurance system. As anyone with two neurones to rub together should surely see.

I think you nailed it here. "Anyone with two neurones to rub together", indeed. Those without them come to different, entirely predictable conclusions.

I'm quite disturbed by the number of people who are prepared to parrot this nonsense uncritically, without even noticing the falseness of the analogy. I can't decide if Stossel and his like, the people disseminating it who should have thought it through, are just idealogues and too stupid to notice, or manipulative and agenda-driven, and just hoping that most of the audience won't notice.

Rolfe.

Makes you wonder, doesn´t it? We´ve noticed in other threads that libertarians seem to assume they´re the ones on top in the hellholes their ideology will create if implemented. Maybe Stossel pictures himself as the one pocketing the profit his food insurance makes?

 

[YoPopa]

But supposing Stossel's daft plan did get implemented? .....
snip......
It's completely insane. As an analogy it doesn't even get off the ground. Food, where everyone has similar and predictable needs, simply isn't suited to such an insurance system.

You've missed the point entirely Rolfe. Stossel's point was that food insurance would be a daft plan. Finding the flaws is what he wants you to do. You succeeded in finding the flaws, good for you.

As an analogy it does work quite well. There are a great many things about health care which are predictable. In my case these include the fact that I get a check-up once per year. I also take three prescription medicines currently and expect that in a few more years that will increase by one or two based on my family history.

Does it really make good economic sense for me to pay an insurance company so that the insurance company can pay those expenses which I know for a fact are going to occur? Or can I cut out the middleman and shop around for the best value buying direct from the provider with the best price/service/quality? The insurance company, whether it is public or private is an expensive middle man for these predictable costs.

There is significant risk in some aspects of health care and Stossel acknowledges that fact. This is a good reason for carrying catastrophic health insurance for those risks and Stossel knows it.

"Bad car smashes" are a good analogy to catastrophic health problems. Oil changes are not.