The Costs of Inaction
The United States had a decent bite at the apple of health care reform about fifteen years ago when Bill Clinton was president and Democrats controlled the House of Representatives and the Senate. Initially, the need for some kind of major reform was widely accepted. But naturally there were disagreements about exactly what to do. And there were also powerful interests opposed to reform. And there were political opportunists determined to simply deny the administration any kind of victory. Naturally, they started denying the problems were real, etc., etc.
The costs of inaction over the past fifteen years have been high. Ben Furnas has made charts and graphs that should finally make it clear that the status quo is unacceptable. Over on the left you can see the trajectory of per person health care costs. Back in 1994, we were already spending over twice as much per person as the OECD average. There are a lot of ins and outs to that, obviously, but it’s telling that the gap between the United States and the next biggest spender — Norway — was pretty enormous.
Over time since then, costs have gone up across the board. The gaps have only gotten larger. Ben cites a McKinsey study that “found that the United States spent $650 billion more on health care than peer OECD countries even after adjusting for wealth.” That’s about $2,000 per person in excess spending. This produces a problem for public finances, for firms that provide their employees with health insurance, and for individuals paying for health care.
Oftentimes, you’ll see one or another of these problems looked at—you’ll see an “entitlement crisis” or you’ll see car companies with crazy labor costs or you’ll see individuals with stagnating wages—but that encourages people to think of solutions that really just involve pushing the problem around. You can shift costs off the government and on to individuals and businesses. Or off businesses and on to individuals and the government. But actually tackling the problem requires a comprehensive approach.
Nor do we appear to be getting anything of value in exchange for our extra money:
It would be one thing if America’s massive health care expenditures since 1994 were yielding first-rate results in health outcomes and the quality of care. Unfortunately, this isn’t the case. In practically every international comparative measure of health quality, the United States lags behind other developed nations who spend just a fraction of what America does on health care.
A recent Commonwealth Fund study found that across 37 indicators covering quality, access, efficiency, and equity, the United States achieves “an overall score of 65 out of a possible 100 when comparing national averages with benchmarks of best performance achieved internationally and within the United States.” In other words, the United States as a whole is performing well below the standards of health, efficiency, and care that are realistic and have been achieved in the most successful U.S. states and other developed nations. And the trends are pointing in the wrong direction: “On those indicators for which trend data exist, performance compared with benchmarks more often worsened than improved… between the 2006 and 2008 Scorecards.”
Obviously, these kind of facts don’t determine what the right course forward should be. But the evidence is pretty overwhelming that what we’re doing isn’t working and it’s working less and less as time goes on. Read here for much more.
55 Responses to “The Costs of Inaction”
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January 8th, 2009 at 9:39 pm
Here’s the solution: HR 676 Conyers-Kucinich single payer health care plan
Here’s the problem: The HMO’s don’t want to have to compete with Medicare-for-All and have bought off just about everyone
Here’s what we are: f’ed.
January 8th, 2009 at 9:46 pm
The problem, from the information above, is the US simply needs to improve care for the poor (i.e. expand medicaid) not implement universal coverage. Yes America spends more (mostly because they are allowed and encouraged to) but I don’t see why letting a bunch of old rich people spend millions on cost ineffective care is such a problem. With regard to wealth inequality letting old rich people spend their money on health care is probably better than having them save it.
January 8th, 2009 at 9:50 pm
I’d love to think that universal health care would address this. However, in practice, it’ll kick money into a health sector wasted on private insurers and, just as important, health-care providers eager to make a profit off the most inefficient and costly care. This is American capitalism.
I don’t mean that as an argument against universal health care. It’s a necessity. I just mean that we should be prepared for the next step, but also for the backlash when America’s poor cost efficiency gets even worse, and conservatives taunt us for the expense. We can at least insist on the question of equity, while also moving slowly toward a broader attack on the conservative assumptions.
January 8th, 2009 at 10:03 pm
That’s why the hyper bullshit incrementalist approach on this one totally fails. Fighting with private insurers while trying to get care to everyone will just turn into bureaucratic mess.
January 8th, 2009 at 10:09 pm
In practically every international comparative measure of health quality, the United States lags behind other developed nations who spend just a fraction of what America does on health care.
Yeah, but look at the bright side. If you’re a hopelessly senile 90-year-old who’s spent the last decade rotting away in a nursing home wearing adult diapers, we’ll happily spend hundreds of thousands of dollars on heroic medical treatments to extend your life (such as it is) a few more weeks.
January 8th, 2009 at 10:10 pm
Comparing life expectancy without looking at differences in ethnicity and lifestyles is ridiculous. There’s a huge difference across different demographic groups, from Asian American women who live to 90 on average, to Native American men who live to about 55 on average. A better measure of health care is the survival rate for individuals (of the same ethnic group) with the same diagnosis across different systems. On that score, American health care blows away the competition. Compare cancer survival rates with those in France, Britain, or other countries with nationalized health care.
January 8th, 2009 at 10:19 pm
“Comparing life expectancy without looking at differences in ethnicity and lifestyles is ridiculous.”
OK, let’s do that. French: smoke more, drink more, have god awful food — live longer and better.
QED.
January 8th, 2009 at 10:41 pm
Zaid,
“drink more, have god awful food ”
The French drink more but eat less. The food may be richer but the portions are smaller. Oh, and the wine helps A LOT!
January 8th, 2009 at 10:47 pm
“Seriously, though, I don’t know who the left-wing simpletons think they are convincing when they write that comparing life expectancy at birth with other countries is proof positive that our health system produces bad health outcomes. One would have to be a moron to think that, given all the other factors beside health system quality that go into life expectancy at birth, and that life expectancy at birth is not a very good proxy for health outcomes. But left-wingers are nothing if not simplistic.”
Reading through way too many long academic peer reviewed papers called “studies” brought me to that conclusion, not just a random correlation.
And drinking is not good for you. All the good parts can be found in grape juice.
January 8th, 2009 at 10:51 pm
You don’t even have to adjust for lifestyle, if you simply adjust for homicides and auto accidents the US has the highest life expectancy in the OECD. Not that life expectancy has anything to do with the quality of a health care system anyways, but if morons like Zaid (Really Zaid, “the HMOs”? How is life back there in 1992? Welcome to the 21st century. We have Tivos and Bluray now.) or Matt want to trot this out there as some sort of evidence, let’s not stop them. I’m never one to prevent someone from making a fool of himself.
January 8th, 2009 at 10:54 pm
Reading through way too many long academic peer reviewed papers called “studies” brought me to that conclusion
I call bullshit. Show us just one “academic peer reviewed paper” that suggests life expectancy at birth is a good way to measure the quality of a health care system and I’ll personally buy you a pony.
January 8th, 2009 at 10:58 pm
“I call bullshit. Show us just one “academic peer reviewed paper” that suggests life expectancy at birth is a good way to measure the quality of a health care system and I’ll personally buy you a pony.”
You didn’t my statement right. I said the studies showed me how their health systems produce better outcomes, not just life expectancy. Also, what kind of point are you trying to make by me using the word HMO? Bluray? WTF?
I have a Wii, is that related?
January 8th, 2009 at 10:59 pm
While using life expectancy alone is foolish to talk about health outcomes, ignoring it altogether is also absurd. The results of a private health insurance system in a place like India have been well observed, as opposed to what happens when you socialize health insurance to life expectancy.
January 8th, 2009 at 11:15 pm
Foreigners are terrified of being sick or injured when visiting the United States. Their sense of things is that the US is a filthy, disease encrusted, violent, badly maintained place. Their sense is also that if you’re sick or injured in the United States the general quality of care is appalling, and treatment is either nonexistent or penurious.
Who are we to argue?
January 8th, 2009 at 11:50 pm
You don’t even have to adjust for lifestyle, if you simply adjust for homicides and auto accidents the US has the highest life expectancy in the OECD.
Cite please.
Seriously, though, I don’t know who the left-wing simpletons think they are convincing when they write that comparing life expectancy at birth with other countries is proof positive that our health system produces bad health outcomes.
Liberals generally don’t think the US health care system “produces bad health outcomes.” They think it produces pretty mediocre outcomes, and that such outcomes don’t justify its uniquely stratospheric cost.
January 8th, 2009 at 11:50 pm
Shorter Fred: if the US was just bigoted white guys like me, health care wouldn’t be a problem.
January 8th, 2009 at 11:52 pm
Not that life expectancy has anything to do with the quality of a health care system anyways…
Huh? What the fuck are you talking about? The quality of a health care system is obviously not the only factor influencing life expectancy, but it’s clearly one factor.
January 9th, 2009 at 12:01 am
Al: But left-wingers are nothing if not simplistic.
Oh, the recursive irony.
January 9th, 2009 at 12:19 am
Another thing, dont’ we have medicare — a single-payer universal system — to take care of our elderly? What would happen if we didn’t have that to life expectancy?
January 9th, 2009 at 12:52 am
Cite please.
With pleasure. This is pretty widely known, and the fact that there are people citing the raw life expectancy numbers as some sort of evidence is beyond laughable. It’s enough to completely discredit them on the topic.
http://blogs.wsj.com/numbersguy/does-the-us-lead-in-life-expectancy-223/
Murders, suicides and accidents can have a big effect on life-expectancy stats because their victims die younger, on average, than victims of disease. And, they argue, the health-care system can’t do much to prevent those kinds of deaths. After adjusting for those kinds of deaths, the U.S. ranks at or near the top of developed nations in life expectancy
Full results of the study are in their book:
http://www.aei.org/books/bookID.859,filter.economic/book_detail.asp
What the fuck are you talking about? The quality of a health care system is obviously not the only factor influencing life expectancy, but it’s clearly one factor.
A very minor factor, and one which it would be nearly impossible to separate out the other very significant causes. Among all of the other measures one might use it is a very poor choice. It would be like measuring the quality of high school drivers ed programs by how many students ever get into an accident at any point in their life.
But I’ll play along, sure, let’s assume life expectancy is a valid measure to use. So I guess that means the US has the best health care in the world right, since they rank the highest once you take out the homicides and accidental deaths?
January 9th, 2009 at 12:56 am
Foreigners are terrified of being sick or injured when visiting the United States. Their sense of things is that the US is a filthy, disease encrusted, violent, badly maintained place. Their sense is also that if you’re sick or injured in the United States the general quality of care is appalling, and treatment is either nonexistent or penurious.
Ahh, that must be why more foreigners travel to the US for medical care than to any other country in the world, right?
http://www.forbes.com/2008/05/25/health-hospitals-care-forbeslife-cx_avd_outsourcing08_0529healthoutsourcing.html
Geez people, is this really the best you can do?
January 9th, 2009 at 1:02 am
Another thing, dont’ we have medicare — a single-payer universal system — to take care of our elderly?
Yup, we sure do. And the cost of Medicare is also completely unsustainable, to the tune of a $30 trillion unfunded liability.
What would happen if we didn’t have that to life expectancy?
I think you need to get your story straight. First the life expectancy is bad and it’s because of our poor health care system, now our life expectancy is good but it’s only because of Medicare. How about a little intellectual honesty and consistency?
January 9th, 2009 at 1:04 am
“That said, I would like to see the evidence that any particular health plan (including Obama’s) will decrease national spending. I would think that most left-wing plans, which call for universal coverage of one sort or another, will drastically increase health spending.”
This lefty fantasy seems to be premised on two idiotic ideas, as near as I can tell:
1) Private insurance companies are the biggest cost factor in health care.
2) Under nationalized health care, we’ll put Granny out on a ice flow instead of spending all that expensive end-of-life care on here.
What the idiot lefties forget is that health care is expensive because it’s skilled labor intensive, and in our country, that skilled labor (physicians, nurses, technicians, radiation physicists, etc.) gets paid well. Also, because our health care industry is innovative, and innovation is expensive. They also forget that Granny votes and is more politically active than they are, and Granny won’t let you put her on an ice flow.
If folks like Matt get their way, the average middle class American will get the sort of health care charity cases get now, and only folks like Matt or Ted Kennedy will be able to pay for the highest quality health care.
January 9th, 2009 at 1:06 am
“Yup, we sure do. And the cost of Medicare is also completely unsustainable, to the tune of a $30 trillion unfunded liability.”
The question is not whether there’s a lot of costs in healthcare, because healthcare is expensive. THe question is whether Medicare does a better job than private insurance ad is less expensive, and there’s no doubt that it is.
January 9th, 2009 at 1:13 am
Ahh, that must be why more foreigners travel to the US for medical care than to any other country in the world, right?
That fucking canard? Dear me. A friend of my family remortgaged his house to get experimental brain cancer treatment in New Jersey. It got him an extra few weeks, at best. Being the location for last-hope, edge-case treatment is meaningless when it comes to the day-to-day management of healthcare. It’s no big shakes to talk up having best restaurants in the world if the population goes hungry.
At the same time, foreigners know that for the kind of basic care that they take for granted back home, the US is a pile of shit. And that if they’re heading to the US on holiday, they know the need to carry a travel insurance policy that will pay millions of dollars in health expenses. They know that they’ll check your insurance card and swipe your credit card at the ER before they take your temperature or check your pulse.
Foreign governments know that too, which is why the US model of healthcare is a model of emulation for precisely fucking no-one. So spare us that particular species of shit.
January 9th, 2009 at 1:16 am
If folks like Matt get their way, the average middle class American will get the sort of health care charity cases get now
Of course, Fred only says that because he’s scared shitless he might be proved wrong, and that Those People might not have to live in fear of going to the doctor.
That’s because Fred is a despicable human being.
January 9th, 2009 at 1:19 am
Pseudomonas,
What’s today’s “last hope, edge-case” treatment is often tomorrow’s routine treatment. If there weren’t a health care industry with the incentive to push the edge of the envelope, health care as a whole wouldn’t progress.
January 9th, 2009 at 1:26 am
“Those People might not have to live in fear of going to the doctor.”
If by “Those People” you are referring to poor African Americans, Pseudomonas, don’t you worry. They’re already getting gold-plated health care via Medicaid. I know this from a nurse who treats them. A woman from the ghetto who goes to hospital to delivery a baby gets top-notch treatment gratis, and even gets a goody bag with free formula, etc. to take home (and taxi vouchers to boot). Same with the illegal aliens the nurse treats, most of whom can’t even read Spanish. They have heard of “Wic” though (or “week”, as they pronounce it), and aren’t shy about asking for it.
January 9th, 2009 at 1:54 am
And I’m sure that that nurse is best friends with your wife, Morgan Fairchild.
What’s today’s “last hope, edge-case” treatment is often tomorrow’s routine treatment.
Doesn’t help that much if today’s routine treatment is routinely denied, you fetid turd of a man.
January 9th, 2009 at 2:45 am
If there weren’t a health care industry with the incentive to push the edge of the envelope, health care as a whole wouldn’t progress.
You understand that that has exactly jack squat to do with zaid’s point, right?
What, exactly, is your problem with healthcare being affordable? How is affordable healthcare BAD? Other than that it doesn’t allow you to be a significantly large enough dick?
January 9th, 2009 at 2:46 am
On a shallow note, nice Postal Service reference.
January 9th, 2009 at 6:46 am
Re: better measure of health care is the survival rate for individuals (of the same ethnic group) with the same diagnosis across different systems. On that score, American health care blows away the competition.
It’s not possible for the ebove to be the case across all diseases and for the US to have a lower life expectancy. And the Right’s claims in that regard have long since been debunked as due to either earlier diagnoses in the US (hence longer “survival” periods until death inevitably comes) or to the pointless prolongation of terminal patients final days. The US does no better at actually curing terminal diseases than other advanced countries.
Re: If folks like Matt get their way, the average middle class American will get the sort of health care charity cases get now
The average middle American votes, so that will not happen.
January 9th, 2009 at 7:45 am
I used to actually think Al was more than a cheaply hired troll.
January 9th, 2009 at 8:26 am
That’s because Fred is a despicable human being.
How wonderful, the old “if you disagree with me about how to properly provide and fund health care it must be because you’re an evil person”.
January 9th, 2009 at 8:40 am
“You understand that that has exactly jack squat to do with zaid’s point, right?”
It was in response to Pseudomonas’s point, not one of Zaid’s even more puerile comments.
“Doesn’t help that much if today’s routine treatment is routinely denied, you fetid turd of a man.”
Who’s getting routinely denied routine treatment, Pseudomonas?
January 9th, 2009 at 8:48 am
The question is not whether there’s a lot of costs in healthcare, because healthcare is expensive. THe question is whether Medicare does a better job than private insurance ad is less expensive, and there’s no doubt that it is.
This is so mind-numbingly dumb I don’t even know why I’m wasting my time replying to it.
For starters, Medicare does not do a better job than private insurance. Why do you think more and more Medicare beneficiaries are enrolling in private Medicare Advantage plans? The MA plans offer higher benefits and do a better job of managing costs.
You’re also completely ignoring the fact that one of the reasons government-funded care appears to have lower costs is that a portion of the cost increases in private insurance for the under 65 crowd are because of Medicare/Medicaid. Let’s simplify this a bit. Let’s you and I are the only two people covered, you’re on Medicare, and I’m not. We each average $100/year in costs with the same doctor. Next year to cover the cost of providing care and overhead the doctor determines he’ll need $105 each. CMS tells him, “Sorry, we’ll give you $103, and we’re the government, so you’ll take it and you’ll like it.” Where do you think the other $2 comes from? That’s right, now my insurer gets charged $107, and the Zaid’s of the world say “See, private insurance is more expensive!” What you fail to realize is that without someone to shift the cost to, gov’t-funded care will no longer be able to artificially hold down costs, that is unless the doctors get squeezed, or the quality or quantity of care provided decreases.
January 9th, 2009 at 9:39 am
AB, that’s very persuasive, but how do you explain the fact that other more advanced countries have socialized medicine, spend far less of their GNP on Health Care and deliver universal coverage adn better health?
January 9th, 2009 at 9:43 am
They know that they’ll check your insurance card and swipe your credit card at the ER before they take your temperature or check your pulse.
If that’s what they think, then they are absurdly disinformed.
January 9th, 2009 at 9:55 am
Why do you think more and more Medicare beneficiaries are enrolling in private Medicare Advantage plans? The MA plans offer higher benefits and do a better job of managing costs.
It probably has something to do with the fact that government payments to private plans are on average 12% higher than traditional Medicare.
http://www.cbpp.org/7-19-07health.htm#q1
January 9th, 2009 at 10:36 am
They know that they’ll check your insurance card and swipe your credit card at the ER before they take your temperature or check your pulse.
Never worked in healthcare, have you?
January 9th, 2009 at 10:51 am
AB, that’s very persuasive, but how do you explain the fact that other more advanced countries have socialized medicine, spend far less of their GNP on Health Care and deliver universal coverage adn better health?
They consume far less care (particularly, they do not spend absurd amounts of money on end-of-life care, less money on defensive medicine, much lower levels of early cancer screening, etc), doctors make much less money, they ration care to a greater extent then we do, they get a fantastic subsidy from the US on drug prices (this one is huge), and in most cases they are still spending at unsustainable levels. Better health? That’s not really true. The quality of our care is just as good or better, the problem is cost and access. The marginal health care dollar does not give you much return, which is why our obscenely higher levels of spending do not translate into better outcomes (that also has something to do counter-productive treatment, a symptom of defensive medicine and misaligned incentives that encourage too much care, much of which can do more harm than good and is simply money thrown into a hole).
Most of the systems typically held up as models have pretty severe flaws, and the other countries are working hard to try and fix them. Instead of trying to emulate systems that are broken in different ways than our own we should be trying to build the better mousetrap. The country that we should be looking to more often is not the UK, Canada, France, or Germany, but Singapore.
January 9th, 2009 at 11:13 am
There need to be targeted government scholarships for medical education, especially in primary care and obstetrics. We can’t continue to outsource medical education.
Also, the age of eligibility for medicare could be lowered to 55, over a period of years.
This would be the equivalent of putting money in people’s pockets.
January 9th, 2009 at 11:13 am
What do you mean by outsource medical education?
January 9th, 2009 at 1:59 pm
Fred are you trying to defend Medicare part D? That’s a feat I thought no conservative would try.
Considering that Medicare’s administrative costs are something like 2-3% and private insurance is generally at least 30%, it’s easy to see which one is more efficient. The parts of Medicare/Medicaid that have been privatized have been disasters. They did it in my state with medicaid and it’s ridiculous.
January 9th, 2009 at 2:49 pm
Wow Fred. You really are a bigot, huh?
January 9th, 2009 at 3:30 pm
Considering that Medicare’s administrative costs are something like 2-3% and private insurance is generally at least 30%, it’s easy to see which one is more efficient.
The number is actually more like 17% vs. 5%, but again, another totally misleading statistic that sounds good to someone with a laughably superficial knowledge of the subject, but is correctly dismissed by those of us who actually know what they are talking about.
A couple of quick points:
1) taxes make up a decent amount of the private sector costs
2) collecting premiums is one of the components of admin costs, but it is not included in the Medicare cost estimates, and in fact there is no cost of capital included in that number, and Medicare’s cost of capital is not 0
3) another significant portion of the admin costs is reviewing claims to prevent fraud, something the private sector does much better than Medicare, and something where the return on investment is significant (i.e. Medicare could lower claim costs by spending additional admin dollars on fraud prevention, and the savings will outweigh the costs)
But all of this is irrelevant, because the annual trend is the problem, not insurer admin costs.
Once again you show that you really don’t understand the problems with health care financing in the US. Costs are increasing at an alarmingly high level. Slicing off a percentage of that (i.e. removing the admin costs and profits of the evil health insurers) only buys you a few years, it does nothing to fix the problem.
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