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PeakTrader:

It’s a delusion not to acknowledge, in general, prices will go up and/or quality will go down. It just doesn’t add up. Of course, there will be winners and losers.

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Jerry, rather than picking winners and losers, we should allow the market to work, which tends to lower prices and raise both quantity and quality. So, everyone is a winner. Otherwise, there will be rationing, in one form or another,

Excessive regulation has costs – in time, effort, and money, which are not limitless. Deregulating, while keeping appropriate regulations, will free-up enough resources to subsidize catastrophic health care or preexisting conditions, for example, and allow a strengthening of the safety net.

Health care doesn’t materialize out of thin air, even when insurance is cheaper. You can pay less for health insurance and receive even less health care.

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Government has done a disservice to Americans, over many decades, making U.S. health care, by far the most regulated industry, much more expensive.

Reducing the cost of health care through deregulation will free-up enough money for taxpayers to afford subsidizing catastrophic health care or pre-existing conditions.

How to reduce medical costs:

1. Limit medical lawsuits and awards, to lower malpractice insurance premiums and unnecessary medical tests.

2. Lower standards to practice medicine (to increase labor)

3. Allow insurance companies to sell health-care policies across state lines (currently, average health care insurance ranges from a low of $1,254 in Wisconsin to a high of $8,537 in Massachusetts).

4. Allow innovation (example below);

Kaiser Microclinics At 50% of the Cost of a Full-Service Hospital

Two doctors working out of a microclinic at a mall could meet 80% of a typical patient’s needs. With a hi-def video conferencing add-on, members could even link to a nearby hospital for a quick consult with a specialist. Patients would still need to travel to a full-size facility for major trauma, surgery, or access to expensive diagnostic equipment, but those are situations that arise infrequently. The per-member cost at a microclinic is roughly half that of a full Kaiser hospital.

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Jeff Jacoby writes in the Boston Globe:

Imagine the sort of car you’d drive if government regulations made it illegal to sell any automobile that didn’t feature 380-horsepower direct-injection V6 engines, computer-controlled electric power steering, eight-speed automatic transmission, four-wheel-drive, automatic climate control, “smart key’’ technology, touch-screen navigation, backup cameras, LED headlights, acoustic glass, surround-sound stereo, and leather seat stitching.

If those were the minimum requirements every car had to meet before it could be sold, would you commute to and from work every day in a Lexus LS 460 or some other luxury vehicle? Well, you might, if the steep price wasn’t an obstacle. But it’s more likely you wouldn’t be driving at all. If the government barred you from buying anything but a high-end car, you’d probably have no choice but to rely on the bus or subway, or to find a job closer to home.

Increase the number of amenities that a product or service must include, and more consumers will be unable to pay for that product or service. That is why one of the simplest strategies for making health insurance more affordable is to reduce the minimum number of benefits that insurers are required to cover.

In every state in the union, legislators and regulators drive up the cost of healthcare by making insurance policies more comprehensive. Rather than allow the free market to determine which medical services health plans will cover, states force consumers to pay for an array of covered benefits they may not need or want.

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EMichael, do you even know the prices of health care?

When you go to the store, do you pay whatever price an item is selling for, no matter how ridiculous?

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In the free market, prices of goods fall and quality rises. Health care is also a good.

Or, maybe you want this type of system:

The British health care system:

“A quarter of a million people are waiting more than 18 weeks for treatment on the NHS, new figures show…for a range of treatments including oral surgery, rheumatology and geriatric medicine. This means that nearly 10% of patients are not being treated within the government’s waiting list target.

Civitas, the think tank, blames the monolithic nature of the National Health Service for “putting the patient last”.

It argues that the “customer” of the NHS business model introduced by Tony Blair and continued by Gordon Brown is the health secretary rather than the patient.

State control: staff pay is set centrally, capital expenditure is constrained, IT is a top-down programme and availability of drugs, such as expensive cancer treatments, is centrally determined.”

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With lower prices and higher quality subsidizing catastrophic health care or pre-existing conditions will be affordable. Otherwise, there will be rationing.

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EMichael, the WHO rated U.S. health care #1 in the world in both labor (e.g. doctors, nurses, specialists, etc.) and capital (e.g. hospitals, medical equipment, technology, etc.).

60% of the WHO rating criteria is based on equality. It seems, you prefer a much worse, but more equal, health care industry.

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Here’s what a MD said about the WHO:

Dr. T said…

“The WHO healthcare rankings are worse than useless: they are outright lies. The WHO relies upon self-reporting from each nation. Does anyone believe that Cuba or China provide truthful data?

The WHO rankings also overemphasize “coverage” (where the US ranks very low since we have many uninsured people who have to pay at the time of service — gasp!).

The reason we have fewer MDs per capita than Europe is that our mostly self-employed doctors work 60-80 hours per week while government-employed European doctors work 35 hours per week. This is another worthless comparison that the WHO uses to slam the US.

The WHO also ranks the US low for neonatal deaths because we have the strictest reporting standards of any country in the world. If a 30-week-gestational-age premie dies after a week in the NICU, we call that a neonatal death. Most of Europe calls that the equivalent of a stillbirth: they pretend the premature baby wasn’t born alive.

I could go on, but I think the point is made that we should ignore WHO healthcare ratings.”

Here’s what another MD said:

“How do you incentivize someone to take on 12 years of post-high school education, take on over $100,000 in education debt, work 80+ hour weeks, be responsible for life and death decisions for patients every day, pay for medical malpractice insurance, and work every day knowing that you can lose everything you worked for if the patient you are seeing right now sues you?”

And the son of an MD:

Don:

“Dad worked 80 hours a week on average, including three weekends a month on call. Few breaks for holidays. We rarely saw him during the week. Divide $250k a year (just guessing – he wasn’t one to talk about money) into 4,000 hours a year and you get about 60 bucks an hour. Out of that salary:

- 25% or more went to taxes

- $70-80k a year for malpractice insurance to protect his family and practice from all the worthless patient lawsuits by crooked lawyers.

- Salary for his administrative staff to process and follow up on reams of insurance and government paperwork.

- Costs of OSHA and other compliance overhead to run his clinic and x-ray machine.

I’m not saying we didn’t live comfortably. He took good care of us. Rather than credit his salary, I’d say God blessed him for all the pro-bono work he did for patients that couldn’t afford care but still took up his time. And trips to Africa on his own dime for medical missions.

I don’t know if these MD’s in other countries are as overlawyered and overregulated as US doctors are.”

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EMichael, we shouldn’t ignore economics. From article:

“Suppose you couldn’t raise prices, you couldn’t control costs, and you were morally obligated to meet the needs of customers who were eager to sue if anything goes wrong. This aptly describes the economics of a doctor’s practice today.

By occupation, I am a cardiologist and have been in practice for almost 30 years. For 17 years I helped build a large cardiology group practice and seven of those years I was its managing partner. Therefore, I am very familiar with the business of medical practice and the affect of government regulation. Politically, I long ago registered in the State of California as “None of the Above” because Independent is a political party in this state.

Most consumers consider healthcare a “right”. Somehow, Americans should have a right to excellence in health or better healthcare or easy access. But what most consumers really mean by a “right” is that healthcare should be “free”. That means someone else should pay for it. Some seniors feel that their Medicare payroll tax has already somehow invested in a “trust fund” and therefore their care should be free. Of course, the trust fund is a fiction, and the monies that working Americans pay into Medicare go to pay the expenses of current beneficiaries.

Physicians provide services of a similar if not more important kind. However, they are not reimbursed for the time they spend. They are not reimbursed for being more skilled or more efficient or more effective. They are reimbursed by the type of procedure they perform. If a doctor is deemed by his customers to be better than another doctor, reimbursement is still the same…Both at good hospitals and bad hospitals, a fixed fee is paid for every admitting diagnosis.

If you come through the emergency room and are identified as having pneumonia and are admitted to an ICU only to die 6 hours later, the hospital gets $4300. If you are more fortunate and survive in the hospital to be released 16 days later, the hospital gets $4300. It is, therefore, easy to understand why hospitals have no hope of reaping any profit from sick patients under this Medicare system.

Physicians are paid only for the face to face time they spend with you. They are not paid for any preparation for that visit or any services that may come after you leave the office. With the endless forms required for documentation of your visit by Medicare, physicians spend a considerable amount of the visit time either typing into a computer or filling out a form regarding the visit. If they do not, and cannot document the level of service they provide, Medicare can audit them and accuse them of committing fraud…The regulatory compliance under HIPAA and the new privacy guidelines create enormous additional paperwork burdens which represents an unfunded mandate… I employ two wonderful nurse practitioners who help me manage my patients and provide services for them in a manner much better than I could ever hope to accomplish myself. However, unlike the paralegal in my attorney’s office, these nurses cannot submit independent fees to Medicare.

As private physicians look ahead, they see nothing but more regulation. There are already 130,000 pages of federal regulation plus state laws, and this will only grow, probably exponentially. They see nothing but more risk with the criminalization of practice and the constant worry about whistleblowers. They see inevitably that there will be less reimbursement for their services. They see less job satisfaction, and they are running out of ways to adapt.”

Over 100,000 pages of government regulations created enormous inefficienies and raised costs substantially. So, of course, prices had to rise, one way or another. Current health care reform is the final nail in the coffin to bankrupt the private sector and take it over.

More people would buy health care if it was more affordable (without lowering quantity and quality). Yet, everyone should have health care insurance, because anyone can become injured or sick.

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Obamacare to cut work hours by equivalent of 2 million jobs: CBO
Feb 4, 2014

(Reuters) - President Barack Obama's healthcare law will reduce the American workforce by the equivalent of 2 million full-time workers in 2017, the Congressional Budget Office said on Tuesday, prompting Republicans to paint the law as bad medicine for the U.S. economy.

In its latest U.S. fiscal outlook, the nonpartisan CBO said the health law would lead some workers, particularly those with lower incomes, to limit their hours to avoid losing federal subsidies that Obamacare provides to help pay for health insurance and other healthcare costs.

White House officials characterized reduced hours as a reflection of new choices for workers. CBO officials pointed to older workers as one example, saying some nearing retirement could decide to keep their work hours shorter to maintain healthcare subsidies until they qualified for Medicare.

But the report also referred to healthcare subsidies in less upbeat terms, saying assistance would "reduce incentives to work" and pose an "implicit tax on working" for those returning to a job with health insurance.

The biggest impact would begin in 2017, CBO said, because major provisions of the law, including an expansion of the Medicaid program for the poor in half of the 50 U.S. states, will be well under way by then. The CBO said there would be smaller declines in work hours that would occur before then.

Work hours would be reduced by the equivalent of 2.5 million jobs in 2024, said the agency, which earlier predicted 800,000 fewer full-time jobs by 2021. The bottom line would be a slower rate of growth for employment and compensation in the coming decade, according to the report.

POLITICAL TUSSLE

The link that the CBO drew between the health law and slower employment growth is likely to become fodder for partisan attacks in this year's congressional election battle, which will determine who controls Congress in the final years of the Obama presidency.

Obamacare was unpopular with many voters before its botched October rollout. A month later, Obama weathered one of the biggest political blowbacks of his presidency as millions of people received notice that their health plans would be canceled because they did not meet the law's new standards.

Republicans, who have already made Obama's Patient Protection and Affordable Care Act (ACA) a top campaign issue for November, seized on the CBO report to press their argument that Obamacare is putting a damper on jobs growth and the economy.

"The president's healthcare law creates uncertainty for small businesses, hurts take-home pay, and makes it harder to invest in new workers. The middle class is getting squeezed in this economy, and this CBO report confirms that Obamacare is making it worse," House of Representatives Speaker John Boehner said in a statement.

But the CBO report undercut a Republican claim that so-called risk provisions that would compensate health insurers for unexpected losses amount to a bailout and should be repealed. The report said the provisions would actually net the federal government $8 billion over three years.

The White House pushed back on the argument that Obama's signature domestic policy achievement would mean an actual reduction in jobs.

"It's not that the businesses are cutting those jobs," said Jason Furman, who chairs the White House Council of Economic Advisers. He said the CBO report showed an impact on labor supply rather than demand for workers from employers.

The CBO report offered some bright spots on the broader fiscal front, saying the U.S. budget deficit would be a smaller than expected $514 billion in the fiscal 2014 year ended September 30. That is down from a previous estimate of $560 billion and a fiscal 2013 deficit of $680 billion.

But sluggish economic growth and stubbornly high unemployment would cause the improvement to be short-lived, it said.

Medicare, the huge government healthcare program for the elderly and disabled that has become a target for deficit hawks in recent years, will continue to grow at a slow rate 1.5 percent per beneficiary over the next decade. But as the U.S. population ages, overall Medicare spending will still top $1 trillion in 2024, versus $603 billion this year.

SIX MILLION ENROLLEES

The CBO said Obamacare would enroll 1 million fewer uninsured Americans than initially expected as a result of technical glitches that largely paralyzed the federal website HealthCare.gov in the first two months of open enrollment.

In a fresh forecast for 2014, the CBO estimated that 6 million people would sign up for private coverage through new health insurance marketplaces, down from an earlier forecast of 7 million. But the report predicted that the program would eventually overcome the deficit, signing up 24 million people by 2017.

The Obama administration says the health insurance marketplaces now operating in all 50 states and the District of Columbia have enrolled about 3 million people in private coverage so far, with volumes increasing following major fixes to HealthCare.gov.

Despite claims from Obamacare critics about the law's potential effects on hiring, CBO said the expected drop in work hours between 2017 and 2024 would result largely from worker decisions not to participate in the labor force, rather than from higher unemployment or the inability of part-time workers to find full-time hours.

"The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply, rather than from a net drop in businesses' demand for labor," CBO said.

According to the report, federal subsidies can be substantial, particularly for lower-wage workers who receive more under the law's sliding income scale. But that also means the benefits can be phased out as a worker's income rises.

"The phaseout effectively raises people's marginal tax rates (the tax rates applying to their last dollar of income), thus discouraging work," CBO said.

But CBO Director Doug Elmendorf told reporters that the labor market would adjust in time.

"It is analogous in some ways to raising the minimum wage, and that effect will reduce the demand for labor in the short term," he said.

http://www.reuters.com/article/2014/02/04/us-usa-fiscal-obamacare-idUSBREA131SQ20140204?feedType=RSS&feedName=topNews

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PeakTrader:

run75441 says: “What this really means is Labor can work fewer hours as a result of Obamacare causing healthcare insurance to be less costly”.

So, when Americans work fewer hours, they get the same or more health care? Does health care just materialize out of thin air?

Maybe, there will be more consumption of health care and less consumption of everything else, for a net loss, to reduce living standards.

Or, maybe, there will be less actual consumption of health care (reduction in quantity and/or quality). That would make it less costly.

And, of course, incentives matter.

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RJS & Jim:

Just because a percentage of workers decide to work less hours does not mean that hours worked in the aggregate will fall…if someone quits their extra job, whoever they had been working for will just hire someone else…the only way ACA could cause a reduction in hours would be if there were a labor shortage…we are no where near seeing a labor shortage, dont look to be anytime soon…

Yes, and the same logic would apply when a few more boomers retire a year or two early because they can afford an individual health insurance policy until they are eligible for Medicare. And in that case some underemployed younger person will be able to move up to a better job. (A year or two earlier.)

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PeakTrader:

RJS, there are many incentives and disincentives in Obamacare that amounts to a destruction of potential output.

The CBO stated: healthcare subsidies…would “reduce incentives to work” and pose an “implicit tax on working” for those returning to a job with health insurance.

For example, what if someone, who works 60 hours a week and doesn’t qualify for health care subsidies is better off working 35 hours a week and receiving health care subsidies. That’s a disincentive to work.

Also, disincentives are created for firms and the health care industry itself.

Obamacare is not like raising the minimum wage to correct a market failure, it’s creating a failed market.

When you tax something, you get less of it, and when you subsidize something, you get more of it. So, you get less success and more failure.

There are much better ways to help low-income Americans, e.g. promoting growth to raise tax revenue. So, government, and the economy, can afford stronger safety nets (e.g. for preexisting health conditions) and higher labor standards (including a higher minimum wage).

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Yes, it’s a blessing, until the money runs out.

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A few years ago, the WHO rated U.S. health care below Cuba. Yet, it rated U.S. health care #1 in labor (doctors, nurses, specialists, etc.) and #1 in capital (hospitals, equipment, technology, etc.).

I guess, you want a health care system like Cuba.

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m.jed

EMichael “Well, the entire civilized world (outside the US) has managed not to allow the money to run out on healthcare.”

Japan is oft-cited as critics of the American healthcare system because of its superior WHO outcomes on lifespans and other health statistics to which it compares favorably against the US. And yes, Japan has a national health insurance system. Except the co-pays are 30% for those under 70 years old and high earners above 70, yet the system remains under financial pressure. For the better part of a score, public polling in Japan has cited that roughly 60% of the population believes the finances to be inadequate, and co-pay increases are frequently debated as a way of bringing the system back towards solvency.

Consider also that Medicare is actuarially unsound by a factor of about 3:1, i.e., premiums are about 1/3 of what they need to be to bring the program to actuarial solvency.

Not that your comment was directly related to this, but if we’re going to debate about healthcare pre-payment financing mechanisms it needs to be on honest grounds – not the gaming employed by the Obama administration with CBO to hit some magical number that would sell politically but had no basis in reality (eg the doc fix), and not throwing out comparison to other developed countries without also noting that they have higher structural unemployment and lower structural GDP growth than the U.S, and have public finances that are in even worse shape than the U.S.

Linus – it matters a lot from a political capital standpoint. If politicians are handing out BMWs but telling people they only have to pay the cost of a Fiat, of course that’s going to generate political support – especially when people think they’ve actually paid for a BMW and don’t realize the disconnect.

Linus:

http://www.nejm.org/doi/full/10.1056/NEJMsr1307622

“Medicare beneficiaries on average pay approximately $1 for every $3 in benefits they receive.”

That’s not a sustainable financing mechanism. It is going broke.

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PeakTrader:

Linus, government doesn’t have to go broke for people to receive less services. Look what happened to many state budgets and the cuts in services over the past few years.

Resources, or money, aren’t unlimited. There are budget constraints. Spending and squandering too much today means less tomorrow, which this deep, long, and unnecessary depression makes much worse.

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I don’t know who’s worse. Do nothing Republicans, who can’t even recognize a problem, or do too much Democrats, who too often create more problems than they solve.

Can you imagine if your doctor was like these politicians?

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When comparing apples to apples, the U.S. has the highest life expectancy among Western Countries.

There have been studies that show when factoring out differences in car crashes, homicides, infant mortality rates (including measurement differences), etc., the average American lives substantially longer than the average Western European.

Moreover, the quality of life is better for Americans than Western Europeans. For example:

“The U.S. has the best record for five-year survival rates for six different cancers. In some cases the differences are huge: 81.2% in the U.S. for prostate cancer vs. 41% in Denmark and 47.4% in Italy; 61.7% in the U.S. for colon cancer vs. 39.2% in Denmark; 12% in the U.S. for lung cancer vs. 5.6% in Denmark.

Also interesting is the fact that there is often a significant difference between white and black cancer survival rates in the U.S., e.g. prostate cancer – 82.7% for whites vs. 69.2% for blacks. But even in that case, the five-year survival rate for blacks (69.2%) is still higher than for all European countries except Switzerland.”

Moreover, here’s what a recent study concluded (health care is a good just like any other good):

“Competition in health care spurs innovation, induces efficiency, and enhances quality, just as it does in other industries. The Business of Health examines the influence of market competition and government regulation on hospitals, health insurance, managed care plans, and prescription drug advertising. Reformers must determine which components of the system are suitable for market competition and which would benefit from more direct government control. While some hybrid of the two approaches has strong political appeal, two things are clear: the current U.S. system fails to take full advantage of the benefits of market forces, and the alleged benefits of government regulation may be greatly exaggerated.”

There’s plenty of evidence single payer systems are much worse. For example:

“Government researchers now note that more than 1.5 million Ontarians (or 12% of that province’s population) can’t find family physicians. Health officials in one Nova Scotia community actually resorted to a lottery to determine who’d get a doctor’s appointment.
These problems are not unique to Canada — they characterize all government-run health care systems.

Consider the recent British controversy over a cancer patient who tried to get an appointment with a specialist, only to have it canceled — 48 times. More than 1 million Britons must wait for some type of care, with 200,000 in line for longer than six months. In France, the supply of doctors is so limited that during an August 2003 heat wave — when many doctors were on vacation and hospitals were stretched beyond capacity — 15,000 elderly citizens died. Across Europe, state-of-the-art drugs aren’t available. And so on.

Single-payer systems — confronting dirty hospitals, long waiting lists and substandard treatment — are starting to crack, however. Canadian newspapers are filled with stories of people frustrated by long delays for care. Many Canadians, determined to get the care they need, have begun looking not to lotteries — but to markets.”

http://wizbangblog.com/content/2007/07/27/canadian-doctor-describes-the-nightmare-of-canadas-health-care-system.php

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I think, many Americans are in for a rude awakening from this on-going deep depression, Obamacare, and Baby-Boomers retiring (the last of the Baby-Boomers, born between 1946-64, will reach 65 in 2029).

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Dan, here’s a rigorous study by the NBER:

Comparing the U.S. and Canadian Health Care Systems

http://www.nber.org/bah/fall07/w13429.html

An interesting point is near the end of the page:

“Finally, the authors examine whether Canada has a more equitable distribution of health outcomes, as might be expected in a single-payer system with universal coverage. To do so, they estimate the correlation across individuals in their personal income and personal health status and compare this for the two countries. Surprisingly, they find that the health-income gradient is actually more prominent in Canada than in the U.S.”

run75441, your article implies the efficacies of the huge wave of U.S. cancer drugs approved by the FDA, over the past 20 years, were worthless and the U.S. is better at screening for cancer.

http://www.medilexicon.com/drugs-list/cancer.php

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Also, someone asserted the reason inflation in health care has been much lower is doctors and hospitals became much more efficient preparing for Obamacare.

However, there are other factors, e.g. the deep depression (i.e. Americans scaling back on health care), slowing increases in Medicare spending, many “blockbuster” drug patents expiring in 2011 and 2012, etc..

The CMS’ Office of the Actuary concluded “…the economic slowdown was largely responsible for the slow growth in health spending.”

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When people say the U.S. spends more on health care per capita than other countries, and cite a $2.9 trillion health care industry, they seem to ignore the fact that it includes much more research and development, more and better capital equipment, better clinics and hospitals, higher quality treatments, highly specialized doctors, etc..

The U.S. spends roughly $3,000 a year more per capita on health care than the average of developed OECD countries. Yet, U.S. per capita income is well over $10,000 a year more compared to those countries.

The WHO rated U.S. health care below Cuba, and yet stated the U.S. is #1 in the world in both labor (e.g. doctors, nurses, specialists, etc.) and in capital (e.g. hospitals, equipment, technology, etc.). I’m sure, the U.S. is also #1 in the world in research and development, and in new therapies and drugs, which not only benefit the U.S., they benefit the rest of the world.

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