On the campaign trail, President Obama talks about Mitt Romney’s tax
proposals, Mitt Romney’s investments, Mitt Romney’s binders, Mitt
Romney’s dog. But when it comes to his own thinking, he is curiously lacking, and confines himself to slogans and platitudes.
Occasionally,
however, the mask slips, and the president tells us what he actually
believes. When he puts on his sunniest voice and hails the free-enterprise
system as “the greatest engine of prosperity the world’s ever known,”.
Go back and listen to the first debate. In a candid moment in the first debate
with Mitt Romney, the president accidentally divulged his real thinking
about how the world works. Government-directed programs, he said,
deliver goods more efficiently than private competition can: “Every
study has shown,” he argued, “that Medicare has lower administrative
costs than private insurance does. . . . And private insurers have to
make a profit. Nothing wrong with that, that’s what they do. And so
you’ve got higher administrative costs, plus profit on top of that.”
President Obama, in other words, believes that profit—the pursuit of
which drives the American economy—is a liability. There’s nothing wrong,
he says, with competing for profit—except that such competition
inflates costs and doesn’t deliver goods as efficiently as a government
program does.
The medicare lie:
Advocates of a public plan assert that Medicare has
administrative costs of 3 percent (or 6 to 8 percent if support
from other government agencies is included), compared to 14 to 22
percent for private employer-sponsored health insurance (depending
on which study is cited), or even more for individually purchased
insurance. They attribute the difference to superior efficiency of
government, private insurance companies' expenditures
on marketing, efforts to deny claims unrestrained pursuit
of profit, and high executive salaries.
However, on a per-person basis Medicare's administrative costs
are actually higher than those of private insurance--this
despite the fact that private insurance companies do incur several
categories of costs that do not apply to Medicare. If recent cost
history is any guide, switching the more than 200 million Americans
with private insurance to a public plan will not save money but
will actually increase health care administrative costs by several
billion dollars.
Medicare patients are by definition elderly, disabled, or
patients with end-stage renal disease, and as such have higher
average patient care costs, so expressing administrative costs as a
percentage of total costs gives a misleading picture of relative
efficiency. Administrative costs are incurred primarily on a fixed
or per-beneficiary basis; this approach spreads Medicare's costs
over a larger base of patient care cost.
Even if Medicare and private insurance had identical
levels of administrative efficiency, Medicare would appear to be
more efficient merely because of an artifact of the arithmetic of
percentages--Medicare's identical administrative costs per person
would be divided by a larger number for patient care costs.
The question I always ask that no one will ever answer is, "What do insurance companies do to lower the cost of healthcare?" My answer is, Nothing. What do insurance companies do to improve outcomes? Again, I say nothing. I would like to see Lou, some data showing how competition has improved anything in health care. What I would especially like to see is data that shows where competition beats actual research on how to best treat a given condition.
ReplyDeleteMedicare tries to control cost through several ways. One such way is to base treatment on research. Another way to control cost is to severaly penalize doctors and hospitals when a patient is treated for the same condition in a short period of time. You have an agenda and want to portray what Obama is saying about profit as something akin to praying to Satan. It is, however, disingenuous.
Profit is not a liabilty, and Obama didn't say that. Profit is what it is, is what's left after you pay costs. Existance of profit neither improves nor impairs the quality of care, in terms of quality, it is irrelevant. In terms of cost, again, it is what it is. As you point out, medicare is full of the sickest of patients while insurance companies have a drastically better risk pool. Is it more efficient then medicare just because it generates profit? I don't think so.
So many people are fascinated in this country with the idea that competition can somehow simultaneously improve outcomes while lowering cost. That's not going to happen. It sounds great until you are actually a doctor or bedside nurse having to deal with someone waving a stack of papers in your face of meaningless information they found on the internet that PROVES they know what is best.
If all you care about is cost Lou, then to every provider, you are nothing more then a payment stream. This is why I no longer work in the hospital.
As insurance companies have a 3-4% profit margin, removing that profit margin would make healthcare less expensive how? For how long, 1 year?
ReplyDeleteThe only thing that will reduce healthcare is get this fat country off it's fanny eat healthier, eat less, lose the weight. The results:
Lower cholesterol levels.
Lower blood pressure.
Less heart trouble.
Less joint damage.
Less diabetes.
Less weight means a lot less disease lower medical costs and perhaps a happier population but that won't happen as we are free to eat all the twinkies we want.
I agree with this 100%. But it's not related to the point you were making above. This comment down here basically puts the blame where it belongs, namely on Americans who chose to live unhealthy lifestyles. Can you name one Republican on the trail right now who are telling Americans to stop jamming their pie hole and get off their fat asses? No. And we won't find any politician willing to do that because you don't run for office and scold Americans for their brutally excessive and wasteful lifestyle, see: Jimmy Carter.
DeleteThe other issue Max is:
ReplyDeleteGovernment-directed programs, he said, deliver goods more efficiently than private competition can.
That is unfortunately not the truth as Government does not deliver services cheaper the market place.
When you start to compare apples to apples, I believe he is correct. When you look at where the majority of healthcare dollars will be spent in an individuals lifetime, a staggering amount is spent in the last few years of life. Insurance companies, by and large, are not tasked with managing the costs of this population. Technically, neither your nor I have any real basis to prove or disprove this point because medicare and insurance companies manage the costs of vastly different risk pools.
DeleteI will continue to make my point about medicare which is that they have implemented numerous, extremely rational ideas to try and keep costs down. Medicare is NOT a blackhole that a doctor simply bills and receives piles of cash from. Deep down, I believe you are as interested as I am in seeing the kind of change that will genuinely reduce cost, and I also believe we agree that consumption is what is driving the cost of care. However, what we are discussing is not where the real savings will lie. We are instead having a useless ideology fight. I am in favor of a single payer system because ultimately, I believe the most efficient way to manage the cost is to have a giant risk pool that includes the very sick as well as the very healthy. Right now, those two groups are separated and the tax payers pay for the sickest group while insurance companies collect premiums for a drastically healthier group.
insurance companies collect premiums for a drastically healthier group.
ReplyDeleteA much younger group at that.
The question on single payer is how to do it effectively with minimal overhead. Reduce the overall cost and not encourage the masses to see the doc when they have a cold or the flu.
How do you keep government from choosing the winners (young people) and losers (old people, very sick) in healthcare?
The government hasn't done well in this area in the past.
"The question on single payer is how to do it effectively with minimal overhead."
ReplyDeleteWell, I still believe the answer lies in the composition of your risk pool. The bigger your pool and bigger your diversity of old and young, the better the income/outpay. I also believe a system that is not focused first and foremost on profit is a better idea. Insurance companies do one thing and one thing only, they run a risk pool. I see nothing crucial or innovative in what they do. They are not doctors, they do not deliver care, they are middle men. Nothing more. As such, I believe they can be replaced.
"Reduce the overall cost and not encourage the masses to see the doc when they have a cold or the flu."
If we agree that much of the cost comes from bad decisions, the payer of health care doesn't really matter. Billions of dollars in this country are spent on convincing Americans to eat shitty food. A fraction of that is spent on encouraging us to eat better and be more active. to the rest though, as I have said before, health care is not food stamps. I don't see how slackers will get some benefit from going to the doctor for a cold as you suggest. To teach people to be healthy would conflict with the agenda of those who profit from our bad health as it is. This includes food companies, drug companies, big agra.
"How do you keep government from choosing the winners (young people) and losers (old people, very sick) in healthcare?"
This sounds a lot like a death panel fear. Given the endless interventions I have seen offered to old people that frequently bring no benefit of comfort or quality of life, I simply don't understand this fear. It's a rigid line that helps stop the discussion.
Absent from ideological discussions on health care, are rational views on where the money is spent. Uninsured patients show up in ER's, and that cost is dumped on tax payers or the hospital is forced to eat it, and they turn around and charge higher rates for everything else to insured patients. This seems kind of ridiculous to me.
ReplyDeleteInsurance companies, as I said above, collect premiums and pay out money. They don't deliver care, they don't innovate care, they don't pay for research to improve care, and they receive a cherry picked pool that is much easier to "profit" from. They are worshipped for their ability to turn a profit from this group, and anyone who points out they are not omnipotent is labeled a profit hating communist.
We treat healthcare like a commodity that it meant to be bought and consumed like food or a TV. We demand no responsibility of the consumer, and from the bedside, I can tell you there is an enormous push to focus our efforts on improving how people "Feel" about us the caregiver that exceeds efforts directed and clinical competency. The bedside nurse is becoming a person whose job is to protect the revenue stream at all costs.
Our discussions on health care are about ideology and not remotely about improving the quality of care or even asking what the majority of us want. Our system is designed to intervene, bill for procedures, and write prescriptions. Too many people are shrieking in terror about what the government will take away from them, but don't bat an eye at the fact our system LIVES on dysfunction and rewards those who manage dysfunction rather then fix it.