In watching the political turmoil associated with health care, I’m reminded of how populations fall into bell-shaped curves. Some attribute sorted into some kind of frequency is represented as a distribution having a small population of outliers on either side of a larger population representing the mean. There are normal distributions and distorted distributions. As you might imagine, the details and nuances require a good bit of coursework to comprehend.
So from between our bare feet on the Lazyboy recliner we can passively view on high definition television the spectacle of a kind of replay of The Empire Strikes Back. We can watch as a small cadre of elite influence workers (lobbyists) practice the art of propaganda upon a group of lazy thinkers. Dick Armey is still with us, but now he is stirring up the muck behind the curtains.
Some have cynically observed that what we are witnessing is one group of dumbshits rattling another group of dumbshits. A more polite description might be that it is a matter of the sly and conniving having their way with the analytically challenged.
People who are vehemently against big government somehow find it acceptable to be shills for big business in this battle. All in the name of marketplace economics. But the fact is that the medical industry “marketplace” is deeply distorted and is itself far from being a system that can respond to consumer demand. The supply and demand balance is not sensitive to the needs of the patient- supply and demand is a battle fought between insurance carriers (the economic consumer) and medical organizations (the supplier).
Consumers of medical services have few real choices- be sick or plug into a complex, gold plated system. In order for the medical system to be a functioning marketplace, there must be lower octane choices for the consumer.
That part of the affluence bell curve that cannot pay for modern, high tech, and expensive health services really must have access to a form of care that they can afford. The health care “debate” should focus on new forms of affordable medical services rather than simply new mechanisms of payment for a system that is economically distorted and inaccesible to significant numbers of people.
Medical school needs to be cheaper so that more universities can train more doctors to feed into the market. This is a supply & demand question that we seem to be unable to even define. The professional and business elitism of medicine must be toned down a bit. It is not sustainable.
Lamentations on Chemistry 
When price and cost are decoupled you have an engine without a governor. When those who are unproductive live off the productivity of others – by law – rights become unlimited appetites. The simple solution to healthcare, to all social problems derived of personal responsiblity, is zero insurance. Touch the hot stove, get burned. Now the individual is responsible for rational acts, oven mits, and future planing. The supplier cannot charge what its clients cannot pay. End the overhead of compassion’s massive taxation, allow corporations to prosper with 20% margins. Capitalism works.
My 87 year old mother has macular degeneration. The treatment is a monthly ocular injection of ranibizumab (Lucentis), $2200/eye-month or $52,800/year plus 12 doctors visits, together 100% reimbursed by Medicare. Given a nominal pathology incidence of 8%, 60 million Baby Boomers could run up a single disease tab of $26 billion/year.
At $2200/0.5 mg Lucentis costs $4.4 million/gram. This morning gold costs $952.467/troy oz or $30.62/gram. Everybody is being Red Queen race screwed.
“Medical school needs to be cheaper so that more universities can train more doctors to feed into the market”
Last time I looked grad school for chemists was free, and anyone in India or China can instantly get in a US school or take a US job. So how has that worked out? A 30% unemployment rate for chemists with dimming job prospects (Most chemists are not transferred to their companie’s Envi-health and safety division like you. THEY ARE FIRED and placed at the back of the line over the disease free 24 year old from China.
The problem has nothing to do with the doctors salaries.
I’ve not heard that there is a 30 % unemployment among chemists. Seems high.
Do you honestly believe that labor costs are not a big contributor to overall medical costs? Everything about medicine is expensive – labor, technology, capital equipment, pharmaceuticals, administration, and disposable … everything. Investors are attracted to investment in medical companies for one reason. The founders and investors of every medically related startup have one thing in mind, and it ain’t the wellbeing of your grandma. They aim to grab a piece of a pie that is growing faster than inflation.
Doctor scarcity, not salaries, is my point. How can an industry evolve to a more economically efficient model if it is held captive by self-regulating groups of stakeholders? By self-regulating MD and DO output and licensure, the docs have a stranglehold on the very definition of primary care giver. Any group with this kind of control will eventually find itself out of synch with the needs of the market owing to self interest.
Highly paid medical and insurance professionals have the benefits of our market economy, but without a lot of the messy and distracting pressures from a truly free market. Those who prescribe the consumption of resources are not the ones who pay. Those who pay make their profit by denial of services. The patient in the middle must find a way through the maze of unfamiliar rules while they are ill.
“Doctor scarcity, not salaries, is my point. How can an industry evolve to a more economically efficient model if it is held captive by self-regulating groups of stakeholders?”
Scarcity controls value when it comes to salaries. There is no higher law. I think you’re missing the bigger point. We should strive to provide healthcare through govt/non-profit means. It works well elsewhere, it can work here. Stop it with this blind faith in markets. Markets don’t do what you think you do. Stocks don’t always go up and the free markets hypothesis of the last thirty years has been gutted. Markets are neither, free, fair or efficient, because people control them.
Think creatively. You don’t need to lure in high priced investors to create efficient healthcare anymore than you need them to put a man on the moon.
Dang what was the profit of that moon mission anyway? How about the mars rover?
“I’ve not heard that there is a 30 % unemployment among chemists. Seems high.”
Both wrong. I just read 80% of all graduating chemists are unemployed.
http://www.epi.org/analysis_and_opinion/entry/college_graduates_supply_and_demand/
I can’t understand how everyone is worrying about health care when far more basic necessities – food/water/shelter – are not guarenteed/provided/… (insert your own term here) are by the government. Life is indeed good here.
I think we’re forgetting the purpose of insurance. It is to spread risk over a population of the insured by paying someone else to take it for you. At least that is the reason from the buyers point of view. From the insurance providers view, insurance is about taking payment for assuming liabilities which, in the aggregate, should not exceed the cash position at any given time. The extent to which insurance companies leverage their obligations with statistical wizardry is unclear to me.
Warren Buffett was blunt about it when he explained his preference for buying insurance companies. He said that insurance was a good business because you get the money up front. The “float”.
It is wrong headed to think of an insurance pool as a kitty for medical bills. Insurance works best when low probablility occurances are covered. High probability occurances- dental caries and corrective lenses- can’t generate too much profit on account of the relatively high probablility of a claim payout.
“The extent to which insurance companies leverage their obligations with statistical wizardry is unclear to me.”
I’ll set you up with my brother, an actuary. I think it is a dreadful job, but most actuaries report extremely high job satisfaction. I will admit it can be quite interesting at times too. On 9/11, they were all watching the attacks on TV when the president of the company called from the top floor: “What’s this going to cost us?” Time to get back to work. They had an answer within a few hours.
All in all, health insurance is a terribly complicated problem. We debated national health insurance one year back in high school (1987-88) and it hasn’t gotten any better since then. HMO’s were jsut begining to appear on the scene. By comparison, social security is much easier as it is most important to only a percentage of the population. Healthcare affects all of the population.
I certainly don’t know the answer. As I’ve mentioned before, suddenly adding 40 million+ people to the system in a larger way will put a tremendous strain on it until the system readjusts (i.e., more doctors, clinics and hospitals). Certainly the timing of the debate (in the middle of a large recession with the government already spending money it doesn’t have on programs that are of questionable effectiveness) is not helping the cause.
Actuaries are a very elite group. Passing the exams all by itself is a major accomplishment. It’s pretty cool that your brother does that.