Question about costs of government health care

[Kyle]

On another thread, someone described how a national health care program will necessarily increase demand (millions of people who now have access to doctors for "free"). And since the supply will not be able to instantly increase overnight, prices will go up. This makes sense.

However, if you make that argument to someone who is pro-ObamaCare, they will say something like this:

Sure, but uninsured people still have access to emergency health care now. If an uninsured person gets sick, they try to ignore it. And then they get sicker and sicker until it becomes a life-threatening illness, in which case they go to the emergency room and then very often the hospital gets stuck with the multi-thousand dollar bill. If that person had access to insurance (from the government, presumably) they could have gone to the doctor when they first got sick, been prescribed a $20 generic medication and gotten better. So, in the long run, government health care would be cheaper overall.

How does the predicted cost-increase of making doctors and medicine available to everyone balance out against the proposed cost decrease in the situation outlined above?

[BridgeRunner]

How does the predicted cost-increase of making doctors and medicine available to everyone balance out against the proposed cost decrease in the situation outlined above?

Two responses:

1) Not every proponent of massive health care reform, including a public option, is an idiot.  They have actually thought this through, for a really long time, and they are betting that a decrease on catastrophic health crises on the public dime will alleviate the problem of providing care to all.  Seems a lot of of people have forgotten that not everyone we disagree with is a moron.

2) Costs won't decrease.  They will increase.  Sure, lots of people get huge amounts of medical care on the public dollar, way more than they would have needed with regular basic care.  But even more people, when faced with no financial consequences for making that midnight trip to the ER, are going to make that midnight trip to the ER, whether or not they actually need it, whether or not it's an emergency.  For example, medicaid users DO go to ER's more.  The copay is $0 unless admitted, $50 if admitted.  And, a lot of middle class, privately insured people also overuse ERs.  In fact, if one is to believe links to articles posted on medical blogs, the demographic that is rising fastest for inappropriate ER is middle class privately insured individuals.  Dunno why, maybe just more pressed to show up, on time, every day, for work and not miss when one is sick, ergo greater priority placed on demanding wellness NOW.  Maybe it really is overuse of medical advice websites, with their little "omg, go to a dr right away.  Maybe it's just that people want the best and perceive that that is available in the ER.  A mommy-board poster asked for advice on whether she should go to the ER for a gallbladder attack, because she was tired of the pain and wanted to get surgery scheduled asap.  She figured that would happen in teh ER.  She ended up deciding to go.  Bet if she didn't have a large copay, she would not have even thought twice about it.

Personally, I think both answers are part of the answer.

[grey54956]

So, who is at fault for not wanting to spend some money up front for early, and more cost efficient care?

   a.) the gov't.
   b.) the sick individual who neglects going to the doc until it becomes life-threatening.

Therein lies the problem.  

I carry my own insurance currently, as I am temporarily retired, i.e. out of work.  My policy is largely catastrophic, with a high deductible.  It isn't too expensive, honestly, and I figure I will need it if I suffer a catastrophic failure.

If I get sick, I go to the doc.  I pay for the visit out of pocket.  I get a prescription, which I may or may not be partially covered by insurance.  I take medicine, I get better, problem solved.  Overall, there is some cost to me, but I think it is incredibly cost efficient considering the fairly low premiums I pay.

More inclusive insurance is extremely expensive, but companies get tax breaks, so it isn't as painful to their pocketbooks.  They also have a large risk pool which allows them to negotiate a better rate, and socialize the expenses of their least healthy employees over the healthy.  However, when those sick employees run up the charges, even the large risk pool isn't enough to absorb it all, and rates go up.

Use insurance less, and only for the things that should really be covered by insurance.  Perhaps there needs to be some sort of medication union for people with chronic illnesses to negotiate better prices on supplies like blood pressure meds, test strips, and the like.  These costs are chronic, recurring costs associated with the treatment of some disease.  These are costs that can be planned far out into the future.  Insurance should be for accute, infrequent, and unpredictable events that create sudden expenses.

[BridgeRunner]

So, who is at fault for not wanting to spend some money up front for early, and more cost efficient care?

   a.) the gov't.
   b.) the sick individual who neglects going to the doc until it becomes life-threatening.

Is it responsible to use services one cannot pay for?

It ain't always about not wanting to pay for care. 

[Perd Hapley]

But in a lot of those cases, they could pay for the care.  Except that they spent the money on Cheetos, beer, and a plasma TV. 

[FTA84]

Sure, but uninsured people still have access to emergency health care now. If an uninsured person gets sick, they try to ignore it. And then they get sicker and sicker until it becomes a life-threatening illness, in which case they go to the emergency room and then very often the hospital gets stuck with the multi-thousand dollar bill. If that person had access to insurance (from the government, presumably) they could have gone to the doctor when they first got sick, been prescribed a $20 generic medication and gotten better. So, in the long run, government health care would be cheaper overall.

That is the variance is standard in pretty much all ideas.  It isn't that one side is heartless or the other side has unlimited compassion/guilt.  It is just glass half full / half empty.

That sounds much like the same argument for every brand of socio-economic welfare.  "If only we gave them opportunities X,Y, and Z, they wouldn't go around robbing!"  I've yet to meet someone in life that truly can't afford health care (maybe buy a smaller house, consider family planning and with only one partner, maybe don't drink so much, don't eat out 6 days a week).  Now, of course, we know that say something like public housing doesn't create doctors, lawyers, or engineers.  It may create 1 for every 1000 people that pass through them.


The same people that put off medical problems will still be putting off medical problems, and as was pointed out, the ones that were not over indulging in hospital services, now will begin to indulge.

The reason I don't want government controlled health care is simple.

The government doesn't do anything efficiently.   I don't say this because I think gov't types are inept, I say it because they have no incentive.

For example, every time a city/county/state runs out of money, do they cut public housing funds? No.  Do they cut back on pension funds? What about all the "slush" accounts? Do they fire non-essential people, never!

Do they cut back costs in anyway? Yes!  They cut busing, the fire fighters and the police.

You give gov't 10% of your cheese and for this you expect fire, police, teachers, postal workers, public transport, public works (streets, water, sanitation).  The gov't comes back and says, "Oh, well we mismanaged that cheese you gave us, so give us more of we'll cut the services you want most".  What choice do you have?

My prediction for gov't run health care, given the tendency to cut fire/police/busing.  When the system goes broke, and we all know it will, they will cut days on which you can have an MRI, or cut surgeries, and put up their hands and say "support a tax increase then!"

[makattak]

On another thread, someone described how a national health care program will necessarily increase demand (millions of people who now have access to doctors for "free"). And since the supply will not be able to instantly increase overnight, prices will go up. This makes sense.

However, if you make that argument to someone who is pro-ObamaCare, they will say something like this:

Sure, but uninsured people still have access to emergency health care now. If an uninsured person gets sick, they try to ignore it. And then they get sicker and sicker until it becomes a life-threatening illness, in which case they go to the emergency room and then very often the hospital gets stuck with the multi-thousand dollar bill. If that person had access to insurance (from the government, presumably) they could have gone to the doctor when they first got sick, been prescribed a $20 generic medication and gotten better. So, in the long run, government health care would be cheaper overall.

How does the predicted cost-increase of making doctors and medicine available to everyone balance out against the proposed cost decrease in the situation outlined above?

The economic problem from the above is very simple: what is the rate at which people get sick enough that they make use of the "free" emergency room care versus what would be the rate for the massive increase in demand.

The problem is that though emergency room care is expensive, it is also rare. Thus, it will decrease some emergency room use at a massive increase to other medical services. It trades one big bill for THOUSANDS of slightly smaller bills.

A related response is the idea of "preventative care." It's another crock. According to the CBO:

In an Aug. 7 letter to Rep. Nathan Deal, CBO Director Doug Elmendorf writes: "Researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness."

[MillCreek]

There have been many articles published on the Massachusetts experience in terms of making insurance available to all.  What is interesting is that the existing pool of primary care physicians in that state has been inadequate to handle the increased workload of thousands of new patients now with insurance.  If you can find a primary care provider, a routine appointment can take weeks, in some areas of the state. 

Because the new state-sponsored insurance provides reimbursement less than private insurers, providers are not that enthused about having large numbers of new patients with the state insurance, since they can end up losing money.  Any sort of national program will have to keep reimbursements competitive with the private insurers if they want to find providers who will take the new patients.  And even then, in many areas of the country, providers are maxed out with patients and cannot take any more. 

[grampster]

The arguments used by those opposed to nationalized health care tend to be  as emotional, hot button arguments just as much as those who propose it.  That's why they talk about cost more than the complications and cultural negatives it will bring.
Cost is an issue, but not the only one.

In my mind, the truth lies a bit deeper and its as simple as it is complicated.

1.  Human nature.  We all like free stuff or highly discounted stuff.  Health care will be no different.  Ergo, more demand, less ability to meet it.

2.  I'll agree with the government inefficiency argument.  There is no market incentive to curtail waste and fraud.  For profit health care has inefficiency but also  incentive to be cost efficient due to competition.  Socialists do not understand this, or they hate it because they are not successful in life.

3.  The personnel ripple effect.  Once government cranks up its scapegoat machine against folks making a good living as doctors, nurses, medical support folks of every kind (think about how many feed off health care in hundreds of fields), fewer and less talented people will go into those careers causing eventual larger shortages with lesser talented people providing care.   When's the last time you had a compassionate government worker handle any problem you have?

4.  Research ripple effect.  Less machines like DaVinci inter alia will be developed.  Medicine and medical research will slow down.  Health care will not be as inovative as in the past.  Less money in it because of government controls.  Lesser and fewer talents will stultify research.  Private grants will dry up.

5.  Maintenance of medical infrastucture will suffer from neglect.  Hospitals and emergency centers will decrease and or be less clean and sterile.  Lower pay will cause doctors to close offices and access to docs will be more difficult.

6.  Got a gripe with your for profit health provider?  Make enough noise and usually you will reach some sort of compromise.  Have you argued with a govenment bureaucrat lately over a misjudgment?  I just paid $15.00 at the state license bureau to correct the name on a title that THEY screwed up.

I could go on.  If one just sits and reflects for moment, the future of health care looks a bit bleak if it's socialized.

Government medicine is a compromise to a problem that is solvable in the marketplace.  You need to ask WHY are some in power so hell bent on ignoring those solutions?...even to the point of disdain or anger about needing to discuss them.

At the end of the day, its not even about health care, it's about power and the ability to oppress those the socialists despise.  If you disagree with this statement reflect a moment upon the modern day slavery imposed upon the so called minorities.  Every time a leader shows up in the native American, black, hispanic etc. groups that sound the bugle call of self reliance, education and cultural progression, they are shouted down, murdered, demonized or marginalized.  White politicians like Teddy Kennedy etc., black politicians such as..well. just about all of them, and the Al Sharpton/Jesse Jackson's of the world sustain their power and fortunes on the backs of those they claim to help, but actually each day add links to the chains of government reliance they place across the shoulders of those they claim to "help".

Can anyone point to the changes toward progress out of the culture of misery that has been solidified over the last 60 years or so by the demogogues mentioned above?

Government health care is just another step in the dissolution of America.

[Sawdust]

I nominate the above for Post of the Year.

Sawdust

[Headless Thompson Gunner]

Interesting article on the economics of "free" health care:

Obama’s More-for-Less Health Care Doesn’t Add Up

Obama wants to insure more people and lower the total cost of care. In economic terms, he wants to control price (P) and quantity (Q). What makes Obama think he can repeal the law of supply and demand?

To achieve higher Q and lower P, the supply curve has to shift outward, to the right. How does the government plan to increase the supply of health care? By making it less attractive to young men and women with a passion for medicine and a desire for independence?

Obama says he wants to encourage medical students to become primary-care physicians via financial incentives, reversing the trend toward specialization, which is where the money is.

Easier said than done, says Paul Feldstein, professor of health-care management at the Paul Merage School of Business, University of California, Irvine. “It takes a long time to produce more doctors.”

Once the government starts to dictate budgets and salaries in an effort to control costs, medicine becomes a less attractive profession.

Rationing is inevitable, Feldstein says, and there are only two options: with price and free choice or with regulation. Surely Obama spent enough time at the University of Chicago to understand his P’s and Q’s.

[taurusowner]

The OP is assuming that the same fraction of each dollar spent for health care that goes towards actual care under the current system will be the same under the government system.  This of course is completely inaccurate.  The cost/benefit ratio of anything under government control is skewed tremendously.  So the OP's assumption that the new health care system might have to perform fewer costly procedures in the future may be correct.  But that is referring to the real true "cost" of the procedure.  The OP fails to take added bureaucratic and palm greasing costs that will end up being exponentially larger. 

[makattak]

The OP is assuming that the same fraction of each dollar spent for health care that goes towards actual care under the current system will be the same under the government system.  This of course is completely inaccurate.  The cost/benefit ratio of anything under government control is skewed tremendously.  So the OP's assumption that the new health care system might have to perform fewer costly procedures in the future may be correct.  But that is referring to the real true "cost" of the procedure.  The OP fails to take added bureaucratic and palm greasing costs that will end up being exponentially larger. 

This may be true. But as I noted in my post, such realities aren't even necessary to show there will be no cost savings. All they do is show the costs will increase more under government run systems.

[MillCreek]

Huh.  A commentary on CNN this very morning making the same points I did about adding lots of new patients to the healthcare system:  http://www.cnn.com/2009/HEALTH/08/20/pho.doctor.shortage/index.html

[RocketMan]

It's very simple, really.  If the pool of money made available for health care (regardless of its source) increases, the cost of health care will increase to absorb that available pool of money.

[longeyes]

Societies build on "compassion" always end in absurdities like the one we are about to embark on.  Unbounded compassion is just another form of tyranny.

[grey54956]

It's very simple, really.  If the pool of money made available for health care (regardless of its source) increases, the cost of health care will increase to absorb that available pool of money.

Correct.  It's a bizarro-mixed up supply and demand model.  Usually, as supply of a commodity increases and demand remains constant, prices decrease.  But, if cash is the commodity in the system, as the amount of liquid cash increases and the buying power of that cash decreases, and prices rise to soak up the available cash.

This is why housing went crazy.  The banks, at the behest of the gov't freed up massive amounts of credit, so everyone could buy a house.  With so much credit (cash) available, the relative strength of the dollar dropped like a stone, causing and adjustment in home prices.  Prices went through the roof, not because the homes were so much more valuable, but because the relative buying power of cash dropped so much.  There is only so much value in a system.  Increasing the money supply means that this value must be spread over more dollars. 

If healthcare or other entitlements pass, we will see financial armageddon break out.  Expect massive increases in the cost of healthcare.

[longeyes]

Start by removing from it the people who shouldn't be collecting under the Social Security umbrella to begin with.  This isn't a welfare program.  Or wasn't.

[BridgeRunner]

And of course, this is why with WIC and foodstamp and other programs that prevent millions from facing starvation or malnutrition, the price of food has risen dramatically, making food unaffordable for the average American.

Oh, wait.  It hasn't.  Never mind...

[Headless Thompson Gunner]

And of course, this is why with WIC and foodstamp and other programs that prevent millions from facing starvation or malnutrition, the price of food has risen dramatically, making food unaffordable for the average American.

Oh, wait.  It hasn't.  Never mind...

It's a question of scale.  Food prices have risen some, even though foodstamps account for a relatively small portion of the food bought and sold in the country, and as such food stamps don't skew the overall market too much.  If everyone on the country received food stamps it would be a different story.

Also, you can only buy so much food on a given food stamp, so your buying power on a food stamp is strictly limited.  No such rationing will exist for government health care (or so they say).

Also, it's a lot easier to produce more food than it is to produce more doctors and hospitals.  It takes years, decades even, to produce more docs and hospitals, but only a year or so to plant more crops.  Any sudden increases in food buying can be easily absorbed by increased farm production.

Rocketman's point is a good one.  Don't discount it so hastily. 

As the ability to pay for a substance increases, both demand for that substance and the price of that substance increase.  We see it all the time. 

Over the past decade FedGov and the Federal Reserve made lots more money available for purchasing houses.  The inevitable result was a dramatic increase in both the demand for houses and the price of houses. 

Over the past few decades financial aid to pay for college tuition has become much more available.  College applications and attendance have risen and so has the cost of tuition.

In fact, even health care costs are a prime example of this phenomenon.  Over the past few decades the widespread availability of employer-funded health insurance has dramatically increased the average person's health care buying power.  Demand for health care is way up, and so is the price of health care.  This is not a coincidence.  Government funded universal health care will take these problems to the next level and beyond.

[brimic]

The arguments used by those opposed to nationalized health care tend to be  as emotional, hot button arguments just as much as those who propose it.  That's why they talk about cost more than the complications and cultural negatives it will bring.
Cost is an issue, but not the only one.

In my mind, the truth lies a bit deeper and its as simple as it is complicated.

1.  Human nature.  We all like free stuff or highly discounted stuff.  Health care will be no different.  Ergo, more demand, less ability to meet it.

2.  I'll agree with the government inefficiency argument.  There is no market incentive to curtail waste and fraud.  For profit health care has inefficiency but also  incentive to be cost efficient due to competition.  Socialists do not understand this, or they hate it because they are not successful in life.

3.  The personnel ripple effect.  Once government cranks up its scapegoat machine against folks making a good living as doctors, nurses, medical support folks of every kind (think about how many feed off health care in hundreds of fields), fewer and less talented people will go into those careers causing eventual larger shortages with lesser talented people providing care.   When's the last time you had a compassionate government worker handle any problem you have?

4.  Research ripple effect.  Less machines like DaVinci inter alia will be developed.  Medicine and medical research will slow down.  Health care will not be as inovative as in the past.  Less money in it because of government controls.  Lesser and fewer talents will stultify research.  Private grants will dry up.

5.  Maintenance of medical infrastucture will suffer from neglect.  Hospitals and emergency centers will decrease and or be less clean and sterile.  Lower pay will cause doctors to close offices and access to docs will be more difficult.

6.  Got a gripe with your for profit health provider?  Make enough noise and usually you will reach some sort of compromise.  Have you argued with a govenment bureaucrat lately over a misjudgment?  I just paid $15.00 at the state license bureau to correct the name on a title that THEY screwed up.

I could go on.  If one just sits and reflects for moment, the future of health care looks a bit bleak if it's socialized.

Government medicine is a compromise to a problem that is solvable in the marketplace.  You need to ask WHY are some in power so hell bent on ignoring those solutions?...even to the point of disdain or anger about needing to discuss them.

At the end of the day, its not even about health care, it's about power and the ability to oppress those the socialists despise.  If you disagree with this statement reflect a moment upon the modern day slavery imposed upon the so called minorities.  Every time a leader shows up in the native American, black, hispanic etc. groups that sound the bugle call of self reliance, education and cultural progression, they are shouted down, murdered, demonized or marginalized.  White politicians like Teddy Kennedy etc., black politicians such as..well. just about all of them, and the Al Sharpton/Jesse Jackson's of the world sustain their power and fortunes on the backs of those they claim to help, but actually each day add links to the chains of government reliance they place across the shoulders of those they claim to "help".

Can anyone point to the changes toward progress out of the culture of misery that has been solidified over the last 60 years or so by the demogogues mentioned above?

Government health care is just another step in the dissolution of America.

I nominate the above for Post of the Year.

Me too.

[Balog]

And of course, this is why with WIC and foodstamp and other programs that prevent millions from facing starvation or malnutrition, the price of food has risen dramatically, making food unaffordable for the average American.

Oh, wait.  It hasn't.  Never mind...

Am I a cold hearted bastard for thinking of 2 Thessalonians 3:10 when I read this?

[MicroBalrog]

And of course, this is why with WIC and foodstamp and other programs that prevent millions from facing starvation or malnutrition, the price of food has risen dramatically, making food unaffordable for the average American.

1. These programs do not "prevent millions from facing starvation and malnutrition" any more than Lisa Simpson's tiger rock deters tigers.

2. The price of food in the United States has in fact been artificially propped up by the government for nearly a century now. Most foods would be much cheaper if not for the government. It is specifically due to this intervention that I am enjoying real sugar in my Coke.

3. The purpose of the Food Stamp programs has been, in fact, to keep the food prices from falling and to make it easier for farmers to make a profit.

[brimic]

It is specifically due to this intervention that I am enjoying real sugar in my Coke.

Wehave to buy Mexican Coca-Cola to get the real stuff

[sanglant]

Wehave to buy Mexican Coca-Cola to get the real stuff

Mmmm, cuban sugar