A McKinsey report on US healthcare costs says "the overriding cause of high U.S. health care costs is the failure of the intermediation system — payors, employers, and government — to provide sufficient incentives to patients and consumers to be value–conscious in their demand decisions, and to regulate the necessary incentives to promote rational use by providers and suppliers...

"To be effective, reform in health care will need to apply sound principles on both the demand and supply side of the system."

Ezra Klein discusses the report: "We pay way too much, and get nothing for it.  We pay because most actors in the system seek profits rather than wellness." (via BlueNC)

Comments

[David Boyd]

Good to see market loving Ed make an appearance.

Begging to differ with Ezra Klein, we pay because most actors in the system are isolated from competition.

[Dr. Mary Johnson]

Yes indeed. Blame it ALL on the "supply side's" failure to provide sufficient "incentives" for wellness.

Hello? It's a free society Ed. And to coin a phrase, it's the market, stupid. People in this country can (and will) do whatever they want with their bodies. MANY will spit in your face and call you names if you tell them they can't. And when they go to the doctor, they will expect to instantly get "the best" of everything (including outcomes). And if they don't get what they want (ncluding a consultation from those overpaid specialists) whenever they want it (no matter if they're wrong), they will sue.

It's not rational. But it is what it is. And it is far past the time this society took a really good look in the mirror and stopped back-handed blaming everything on the "providers".

Medical care, especially the kind and variety of medical care available in this country costs money. Contrary to popular belief, it's not free.

On "we pay too much and get nothing for it". I've been in primary Pediatric care for thirteen years . . . fighting the battle of "well child care" is a good deal of what we do everyday in Peds. Yet you ought to hear the complaints about the costs of a (labor-intensive) check-up & vaccinations. And we're on the bottom end of every reimbursement plan known to man. Then there's the little matter of often being treated like scum by the men of business and law who so intrude upon what we do.

What have the do-gooder pundits/politicians/journalists done about it?

My Social Security statement really looks like one belonging to someone "rewarded" for spending 11 years slaving away in college, medical school & post-graduate medical education . . . and then three years in the indentured servitude of public service (please don't get me started on my experience being "isolated from competition").

NOT.

*By the way, lately, every time I try to link commentary from my blog to this one, it appears to be blocked. So in this case, I linked the website.

[Robert P.]

Wow, quite a bunch of wingers you have here Ed. Read the report folks, simple numbers that add up to this, the free market doesn't work for medical care.

[Dr. Mary Johnson]

As I have discussed on my blog, Robert P, the thing I hate about studies is that they can be interpreted in a variety of ways to suit a variety of agendas . . . including socialized medicine.

Due to the heavy involvement of the government in the way we currently do "business", the best this country can claim is a pseudo-free-market system.

And the government has done such a swell job with the piece of the pie it already has.

[David Boyd]

Notwithstanding Dr. Mary's protestations , Robert P., there is no free market in the US for medical care. At best, it's some sort of accidental hybrid beast with numerous players and competing agendas that may or may not align with end-user needs and wants, hence McKinsey's statement:

...MGI found that the overriding cause of high U.S. health care costs is the failure of the intermediation system — payors, employers, and government — to provide sufficient incentives to patients and consumers to be value–conscious in their demand decisions, and to regulate the necessary incentives to promote rational use by providers and suppliers.

If there were a free market they wouldn't be arguing that patients and consumers don't have 'sufficient incentives' to be 'value-conscious' and that providers and suppliers need incentives to promote 'rational use' of medical services. My God, man, this is what the free market does.

[DrFrankLives]

"Medical care, especially the kind and variety of medical care available in this country costs money. Contrary to popular belief, it's not free."

We have more man hours lost to medical issues per dollar spent on health care than almost any other Western country.

Simply put, we're not getting anywhere NEAR what we're paying for, and other countries get a lot more per healthcare dollar spent than we do.

[DrFrankLives]

Medicare has the lowest overhead of any American healthcare insurance plan.

[meblogin]

My "prior" health insurance agent recently bought a $1,000,000 home and enjoys his new memberhship at the local country club.

Is he overpaid? I think so....but then again I hear some heart surgeons are making several hundred thousand per year.

I know a drug salesman...$300,000 per year.

I know a pediatrician...barely a $100,000 and has to pay all expenses.

answers?

[The CA]

No incentive to save. As long as someone else bears the brunt of expenses, there is little incentive to cut costs and little competition for a lower price. That's why HSA's are a good idea. They provide you with coverage for large expenses that may occur at a much lower cost with a tax benefit. Your car insurance doesn't cover oil changes but it does cover accidents. Thus you have an incentive to find a lower cost mechanic for the oil change, and there is more competition among mechanics for your business. This brings prices down and you still have the protection of insurance if your car is seriously damaged.

Government contol of health care will destroy any incentive to lower prices or to keep costs down by the consumer and will result in scarcity of goods just as it did in the former Soviet Union.

[DrFrankLives]

Right, Sam, because the Soviet Union is the only known model of single payer health care in the world. No other currently exiting countries have tried it, and it was a miserable failure that rought down the governments of every other country that did. Like France, Sweden, Canada, Germany, Italy, Chile, Norway, Finland, England, Ireland. Miserable failures all...

[Dr. Mary Johnson]

Protestations David? I said that the BEST we could claim was a "pseudo-free market". You called it an "accidental hybrid beast". Apples and apples.

And David, you're right. That IS what a free market does. If we had a "free market", I could bill for my time the way ANY other "providers" of services (like lawyers or plumbers) do. If we had a "free market", I would not need to clear every test/study I order through a third party. If we had a "free market" (getting paid appropriately and quickly for my services), I could do pro-bono & charity work as I saw fit. If we had a "free market" I could provide "courtesy" services to colleagues without being clocked for "fraud". If we had a "free market", I would have full sample closets . . . stocked by the drug rep who dropped off a lunch in exchange for time to discuss his/her products. If we had a "free-market", I would not have been run out of Asheboro on a rail because I was a competitive threat to the local "non-profit" hospital's "controlled affiliate".

We are facing doctor shortages in the very near future. Everyone I know my age or slightly older is talking about getting out early because they are so fed up. Of course, the older generation that sat by and let much of this happen, will get out and rest on their laurels and fat bank accounts. An entire generation of doctors - my generation - has been sold out. How long do you expect to recruit the brightest and best to the profession if you keep sucking any hard-won benefits the providers have EARNED dry . . . or if you just turn it all over to a government that cannot police itself out of a wet paper bag?

The brightest and best are better off becoming business & insurance executives and lording over the doctors. That only takes a Master's Degree. The hours and perks are better. Plus there is no malpractice insurance to worry about, you certainly don't have to follow any rules, and you get paid a whole lot more.

Medicare is also ripe with fraud and abuse. And I've seen how patients get treated in comparison to those with money and/or "real" insurance plans. Perhaps some of the "low overhead" is due to the fact that the government hasn't even tried to police what is going on.

You wanna talk about government-based "single-payer" plans? Give me evidence that the government does anything more than a horribly inefficient job (where mediocrity thrives) with what it's got now.

Meanwhile, "citizen journalist" Edward Cone wants to talk about healthcare . . . but recently de-linked a local physician . . . a "local voice" . . . from his blogroll because she called him on the gang-bashing tactics we see deployed so often on this blog. He routinely plugs a perennial Presidential candidate who promotes MORE federal programs without talking to the doctors who have been burned by them.

You're not going to fix anything about healthcare until you-all start listening to the people . . . we like to be called doctors as opposed to "providers" . . . who are in the trenches.

[David Boyd]

Right, Mary. Sorry. Posted that in reference to this from your previous post:

"isolated from competition".

NOT.

We agree that there is not a functioning free market for health care in this country. For folks to blame the mess that is health care in this country on the free market in efforts to get the government more involved because there is no other alternative is dishonest.

[The CA]

What David said.

[The CA]

The Soviet analogy was not meant to be limited to health care, but an inherent problem in government controlled economies- the resulting scarcity of goods and bad quality of the goods that are produced as a result.

[DrFrankLives]

Markets don't work in some instances, Sam. I realize that goes against your other religion - freemarketology, but it's actually a fact.

[Dr. Mary Johnson]

This link from Overlawyered kinda proves my point about the expectations of the "market" in this country.

As for the benefits of a single payer-system, please make sure you read the Telegraph link in the post.

There is NO WAY this kind of thing would even be proposed in the US. People would be marching in the streets screaming for blood.

[Doug H]

The weak point where the system might break could down be when people stop becoming doctors due to the hassle and rising malpractice insurance. Then the pharms will have no one to push their meds. Then what will everyone do?

[The CA]

If "freemarketology" is my "other religion", what is the first one?

[Bubba]

"For folks to blame the mess that is health care in this country on the free market in efforts to get the government more involved because there is no other alternative is dishonest."

Indeed.

The blame for the mess lies elsewhere.

"Politics is likely to shape the future of medical care as far as the eye can see. It builds upon popular political ideas, on old habits and predispositions, even resentment and envy. It inflicts pain without end."

Hans F. Sennholz,
Professor Emeritus Grove City College

From mises.org.

And then we have people who offer up wisdom like this:

"Medicare has the lowest overhead of any American healthcare insurance plan."

.....while completely ignoring this factor (from the Sennholz article):

"Few observers dare to state that spiraling health-care costs are the inevitable consequence of a 1965 Social Security amendment molding Medicare and Medicaid. It provided a basic welfare program that covers most persons aged 65 and older as well as all needy individuals. Soon after its passage some four million patients rushed to seek treatment and some 18 million Americans registered to have 80 percent of doctor and surgeon bills paid by the new system.

By now, in 2006, Medicare provides health benefits for 41 million elderly and disabled persons, and Medicaid, a joint federal-state program, serves some 50 million poor beneficiaries. It is the fastest-growing item in most state budgets and accounts for some 20 percent of total state spending."

This bears repeating:

"It is the fastest-growing item in most state budgets and accounts for some 20 percent of total state spending."

[DrFrankLives]

I assumed from our earlier discussions that you were Christian, Sam.

And Dr. Johnson, a cite to overlawyered is hardly reliable.

[DrFrankLives]

"It is the fastest-growing item in most state budgets and accounts for some 20 percent of total state spending."

Because of skyrocketing medical costs.

If you are saying that Medicare and Medicaid are the reasons for the skyrocketing costs, you are engaging in post hoc ergo propter hoc - a logical fallacy.

[Connie Mack Jr]

Medicare has the lowest overhead of any American healthcare insurance plan.*DrFrankLives

Right! Except for one small or large problem John. Medicare has no government employees to run the program and cut the checks or the instant wire transfers to the hospitals or Doctors for their services and cash flow to keep the employee checks from bouncing. Medicare paper chase is bid out or subcontrated out to Large Insurance companies who control the amount of bucks to hospitals and Doctors for the services. When your poor little doctor has his accounting department to call Medicare for approval of a operation, Guess who the accountant talks to about the approval and the bucks they will recieved from a Government issue check or wire transfer. Some young kid just out of college who answers to the name Travelers medicare processing and can I help you.

The kid than shuffles though a large Manual of about 15,000 pages and informs you the amount they will pay for operation and pops a approval purchase order for the Vendor, in a nutshell it is classic state fascism at work.

Or for some of our Animal Farm Orwellian supporters, it is the classic security program of the Hen house. The Fox is the security chief.

[Connie Mack Jr]

And Dr. Johnson, a cite to overlawyered is hardly reliable.*DrFrankLives

Give it up John. Dr Mary has already clean your clock about lawyers, when you didn't even know about her cases nor the merits of them and the conclusion.

Rushing to Judgement seems to be your Nifong weakness about matters of law with those who have already been screw by it as Dr Mary was.

ps....John! I still love you for your humanity concerns...hugs and kisses

[DrFrankLives]

At least I can conjugate.

[The CA]

Dr. Frank, you weren't reading well. I was merely making an observation in the disparity in which Christians are treated. I have never said what I was/am.

[billg]

In the last several years, I've had major surgery, two minor surgeries, and suffered through the long and ultimately final illnesses of both parents.

In each instance, inquiring about prices for treatment was a futile exercise because our costs were the same at any facility that fell under the insurance umbrella. Prices may, in fact, have been cheaper at some facilities, and higher at others. But, because our choice of care providers was effectively limited to those sanctioned by our insurance coverage, looking for a better deal was a waste of time.

Everyone in the health care industry knew that, too.

(And, after coping with the bureaucratic morass surrounding my parent's illnesses and the resulting blizzard of insurance and hospital issues, I wish a goodly number of people a long afterlife in hell.)

[Burns]

I've always laughed at the "market" argument in health care.

"Gee, Doc, before you put that defibrillator on me, what are your rates?"

"Hold on, hold on, I am sure I found lydocaine for less than that!"

[The CA]

Can someone explain why it is necessary for government to control health care. How does that work, and why stop at health care?

"Gee, Mr. Storeowner, before you sell me that bread to eat, how much do you charge?"

[Dr. Mary Johnson]

DrFrank I find "Overlawyered" very much on-the-money in many of the cases they cite in what they call their "Bad Medicine" category.

They certainly seem to have taken a decided dislike to John Edwards . . . a plus in my book any day;-)

Like billg, I've spent the last several months on the patient-end of the equation. I am fortunate in that the physicians and institutions I used (this time) were top-rate and my experience was good each time I went under the knife (or the laser).

I know how the game is played . . . but even I was amazed when I reviewed the insurance statements. The difference between what the doctors/hospitals billed and the (absurdly lowball) amount the insurance company actually negotiated and paid blew my mind. I actually called the insurance company - because I could not believe the statement was right. I got one of those sassy phone operatives who asked me, "Are you complaining?". The real cost of the care I received must certainly be somewhere in the middle.

Alas, those without insurance and least able to afford it are being billed at the high rate.

It is madness.

[Bubba]

"If you are saying that Medicare and Medicaid are the reasons for the skyrocketing costs, you are engaging in post hoc ergo propter hoc - a logical fallacy."

That's the second time on this thread you've proven you don't bother to read what people are posting.

Read the mises link again, friend.....this time, for comprehension.

[Bubba]

"But, because our choice of care providers was effectively limited to those sanctioned by our insurance coverage, looking for a better deal was a waste of time."

Just wait to see how good your choice will be under "single payor" or "universal health care", or whatever little scheme gets cooked up by our government in order to "solve" the problem.

Meanwhile,this story is interesting to note.

Excerpt:

"The party's health spokesman Tony Ryall believes people are responding to the dumping of thousands of patients from non-urgent surgery waiting lists.

Ryall says people are worried that you have to get sicker and sicker to get surgery in a public hospital."

[Connie Mack Jr]

At least I can conjugate.DrFrankLives

I conjugate in jive with the latin verbs and pronouns John. What you do with your personal life with others and the postions is none of my business. However, I hope you are not having a relationship with a Republican Foley religious goat to prove you are a fair and balance spiritual democrat.

[Connie Mack Jr]

At least I can conjugate.*DrFrankLives

Oops John! I forgot the jive term of conjugate. According to the City of Oakland Dictionary Willieki web site.

" Where two or three are gathered in my name at the joint. I will conjugate with my bitches"

I like the spiritual aspect of the term don't you John?

[billg]

1. Government doesn't control health care. The people who pay the bills do, and that's primarily insurance corporations. Both of my parents had to deal with an instance when they were discharged from hospital against the explicit wishes of the attending physician because the insurance company said "Time's Up!". It happens all the time.

2. If health care is available to them, people won't care who runs it. When you're sick, no one cares about politics or ideology. Health care debates by ideologically committed partisans, of any flavor, come perilously to fiddling while people die.

3. One obvious problem with price shopping for health care is that patients don't know what's going to be done to them. Because stuff happens, doctors and nurses don't know either.

4. Bubba, my point was not that my choice of care providers was limited. (I was limited to any hospital in Wake County, where I live. My care was provided by the same hospital and same physician I would have chosen if I paid out of pocket.) My point was that my cost at any of those facilities would have been the same. That constrained my incentive to price shop to, umm... zero.

5. I lived in the UK for some time. Whatever the inefficiencies and problems of the NHS, people don't do things like skip meals to buy drugs, or vice versa. They may sometimes wait too long, or see a doctor they don't like, but they do get care. Brits think we're either nuts or callous, or both, to not consider access to health care as a basic public responsibilty. They're right.

[The CA]

We're not British. We have a thing called a Constitution with different rules for our country than the British, or Canadians, or French or everyone else. You can't just do something because other people are doing it.

[Ed Cone]

Many of the arguments made here against an increased governmental role in US healthcare seem to boil down to saying "government participation is bad," without addressing the reality of high costs and poor results that we face in our current system, and lower costs and better results elsewhere. I'm more interested in solving the quantifiable problems with our healthcare system than in arguing political philosophy. We're paying too much for too little now.

[David Boyd]

Little question we're paying too much for too little. McKinsey's recommendation is for consumers to become more value-oriented on the demand side and for providers to become more rational on the supply side. How best to accomplish this - more government participation or a more market oriented approach?

[Dr. Mary Johnson]

I wondered when you were going to join the conversation, Ed. I love it (not) when you throw something out there, but don't state your own opinion . . . then lecture those of us who do.

For instance, the revelations about Jim Black (King of the Democrats who ran Raleigh for eight years) coming out of Raleigh are more and more lurid . . . apparently deals for legislation regarding healthcare were sealed in the men's room. It's probably where that deal for kindergartener eye exams was made. You'll have to forgive me, I just read the N&O article and I am still steaming.

My opinions about the government's performance in the business of medicine are NOT "political". They are born of 13 years of experience in "the business" . . . seeing every bad thing that could happen, happen. I've been banging my head against a rock for nine years . . . FIGHTING the very kinds of things that Jim Black is getting busted for now (the same "gentlemanly", untoucable,sleazey arrogance) . . . and I have been blown off . . . by law enforcement . . . the the politicians . . . and by our local "citizen journalists" (including you).

As for my "advocacy" organizations in Raleigh, I cannot even get an e-mail list of my colleagues out of the NCMS/NCPS so I can share my experience (and my blog) with other doctors - so we can network and discuss the problems we face (besides reimbursement). They do not want the peons to network. They want us to pay dues. It's about control.

I am outraged at what my profession is becoming. And I have not seen ANY evidence that the government knows up from down . . . or that the political windbags in Raleigh and Washington can fix it (as they pander to the voters who only want everything about medical care to be free).

But it's NOT free. Even if the government does take it over, it will not be free. And I daresay costs will go up even more . . . because of fraud and abuse. But it will be hidden and nebulous until the money is long gone. You don't even have to look at Medicare & Medicaid (disproportionate share barely got a blurb in the papers). Look at Katrina aid and contracting in Iraq . . . billions wasted. Few even blinked. It's expected.

Do pray tell, if you want to talk about "quantifiables" what do YOU suggest?

[Connie Mack Jr]

You can't just do something because other people are doing it.* Sam

Sure you can Sam! A thug assaults your ass, you blow his ass away in a surprise defense move with a 357.

Happens all the time in North Georgia for medical aid.