From the guy who runs Medicare:
In other words, Berwick’s column accidentally teaches us an important lesson. When consumers are in charge and responsible for paying their own bills, markets are very efficient and costs come down. But when government policies cause third-party payer, consumers have little if any incentive to spend money wisely – leading to high costs and inefficiency.
Defenders of the status quo argue that the market for healthcare somehow is different than the market for things such as computers. But here’s a chart (click to enlarge) showing that relative prices are falling in one of the few areas of the healthcare system where consumers spend their own money. And I’ve previously noted that the same thing applies with abortion, where prices have been remarkably stable for decades. Regardless of one’s views on the procedure, it does show that costs don’t rise when people spend their own money.
That’s common sense and basic economics. But it’s not a good description of Obama’s healthcare plan, which is explicitly designed to increase the share of medical care financed by third-party payer.
It’s almost as though they have a hidden agenda to increase the scope of government power.
It’s almost as though they have a hidden agenda to increase the scope of government power.
The agenda to increase the scope of government inefficiency/corruption is I think the more direct concern. And I do not currently see any power that can stop it. Is there any hope of economic reform? And without economic reform is there any hope?
Slightly reduced government only reduces the consequences of government inefficiency slightly. Fundamental reform is still required. What power can offset special interests, reduce legislation and increase its efficiency? Where is the mandate for reform and the political means to enact it at the scales required?
While reducing spending will help more than increasing taxes, neither will solve anything without legislative reform. Perhaps the hope is to reduce the size of government to a point where it stops being a law unto itself and again becomes accountable to the people. Perhaps overweight legislation falls over without a similarly overweight bureaucracy to support it. Is this the hope?
I’m a free market guy by any standard, but it’s worth pointing out that spending has been rising in veterinary medicine just as quickly as human medicine. They now have veterinary oncologists, when 30 years ago all they had was the guy with the sleeping gas.
My point is that America is getting wealthier at the same time that medicine is learning new tricks for treating your hurt. We are choosing to spend our discretionary income on healthcare, both for ourselves and for Fido.
Hidden?
I think it’s pretty plain to see, no?
But Brock, they didn’t have insurance plans for dogs and cats. Plus they didn’t put cats on kidney dialysis back then either. It was the old back room death panel with Dad, Mom and Junior petting Fido while he got his shot.
My older dog has Chronic Lymphocytic Leukemia and eats about $300/month worth of meds. I guess I should do my part to “hold down medical costs” or “bend the cost curve” for the Good of the Nation and Dear Leader by euthanizing her or something.
Brock, you have it exactly backwards with pet medicine and insurance. The system currently in use for veterinary health care is in fact often used as an example of how a less regulated market based system works better than what we have for ourselves.
I have my dog on a common plan offered by Banfield. It costs me a couple of hundred dollars a year, and covers two comprehensive physical exams per year, and one dental cleaning. If she needs any additional work or drugs, I get a significant discount.
At her last exam, they noticed a suspicious lump. I had it removed and sent to a lab for analysis, and it cost me something like $200. Adding a zero wouldn’t get you that procedure for yourself. Similarly, my dog has knee problems. Banfield could have done x-rays, given me an analysis, and done any corrective surgery for me at a reasonable discount. But I had the easy option of taking her to a specialist. I quick consult indicated that it was worth my time to pick up an additional plan that would cover that. So I got high resolution x-rays, analysis from a specialist, and a sequence of therapy that ran for several months, and total out of pocket costs were around $500.
All this is possible because the plans are designed to be cheap enough to be widely available, and to offer the basic services you need. They aren’t forced to cover everything and everyone, whether they need it, want it, or can afford it And at the same time, the plans are covering basic things and just discounting extras. There is no third payer intruding into the mix and making decisions on whether and how much to pay for a process, it’s either a standard part of the plan and covered, or it’s not and I pay it. And that, predictably keeps the costs down, because a procedure that costs $10k simply won’t get any takers. Yet somehow they manage to offer procedures that would cost $90k or more on a human for $1500 or less.
This result is exactly what basic economics and market theory would lead you to expect, yet somehow it can’t work applied to human health care.
I agree with David. The cost of veterinary care hasn’t increased anywhere near the rate of human medical care, precisely because veterinary care still operates largely on free-market principles.
About a year ago my cat Reggie became ill. I took him to the vet and she diagnosed him with acute kidney failure. He was only three years old. She admitted him to the animal hospital where he spent four days on an IV which used fluids and medication to flush out his kidneys. He made a full recovery. The total cost including follow-up visits came to a little over $1000. I didn’t have any insurance plan for him.
I made a free choice to spend the money on him, as opposed to having him put down and spending the money on a vacation or something. It’s a year later and he’s doing fine.
(We still don’t know what happened. She thought he had been poisoned somehow, but he’s an indoor cat and I’m very careful with cleaning products and insecticides. She even sent a sample of his food to a lab for testing, but they didn’t find anything wrong with it. The only thing I can think of is that he may have eaten a poisonous bug.)
I don’t think Brock’s focus was just “costs are rising”, but instead “we’re so damn rich we’re finding stuff to spend money on in a endless field of options.”
Health care is virtually limitless. Which is why the discussion of “having enough” is so pernicious. KennedyCare: 24/7 nursing staff, on call doctor -team-, medical helicopter to commute, home examination room…. And we’re moving into the era of honest ‘replacement parts’ and tailored drugs.
The problem is that choosing to spend more on health care is regarded as a failure of the system.
On the subject of health care for pets, my Filipina wife says, “Americans are crazy! In the Philippines, we love our pets. But if the dog starts limping, it ends up in the pot!”