5 ms·

This article correctly pointed out very early on that the third-party payer system inflates demand and prices for drugs. If you disagree with that assertion, t

This article correctly pointed out very early on that the third-party payer system inflates demand and prices for drugs. If you disagree with that assertion, then you're welcome to disagree with mine as well. Otherwise, if you think having coverage denied for a treatment by a private corporation (that owes you nothing beyond what is contracted) is politically incendiary, wait until you see the government (theoretically "for the people") deny that same payout. Death panels, anyone? By making it even harder to refuse to pay for a treatment, a single-payer system would increase demand and therefore prices even further. This is Econ 101 stuff; it's not some rabid flight of fancy.

fsg7sdfg789 11y ago
If my understanding is correct, other nations with single payer systems have lower health care costs and frequently better outcomes than in the US. Econ101 is good for teaching concepts about how to think about economic interactions, but when the data doesn't match the theory, you can't stick with the theory.
- vidarh 11y ago
  Every other country on the planet have lower health care costs than the US by a large margin. US public healthcare spending alone, excluding private payments and insurance, places the US in the top 20, possibly top 10, in government spending on healthcare. In other words, Americans pay more than citizens of most developed countries over their taxes, and then pay about the same again to private insurers...
  - rational-future 11y ago
    That's an interesting argument, but it misses the fact that the US is effectively subsidizing the healthcare in the rest of the world.
    - dragonwriter 11y ago
      Even if that's true -- and people asserting that never support it -- I don't see what the point of that is in defense of the status quo US policy. If that is the reason that Americans are paying so much more for healthcare and not getting any more benefits, it would be better for Americans if the US stopped doing that.
      - lmm 11y ago
        If the US stopped doing that there's no reason to assume that another country would magically step up to the plate. What if, as is the point of the article, the US stopped doing that and the world simply stopped getting as many new drugs?
        dragonwriter 11y ago
        > If the US stopped doing that there's no reason to assume that another country would magically step up to the plate. Another country, no, because that would be irrational and stupid (just as it would be for the US, if the argument atht the US is actually doing that is correct.) On the other hand, if the US is subsidizing the rest of the world, that means the US is substantially reducing the marginal benefit of expenditures in the subsidized domain by other countries, disincentivizing their own expenditures (direct or through policy which promotes drug development.) It would be irrational to expect the removal of that subsidy and the associate disincetives not to result in increased expenditures.
  - dragonwriter 11y ago
    > Every other country on the planet have lower health care costs than the US by a large margin. To put it in concrete terms, of OECD countries (comparable non-OECD data is harder to get), the #2 country in per capita healthcare spending (Switzerland) spends about 72% of what the US does per capita. > US public healthcare spending alone, excluding private payments and insurance, places the US in the top 20, possibly top 10, in government spending on healthcare. Again, to provide some concrete numbers, in the OECD, the US is #3 (behind Norway and Netherlands) in per capita public healthcare spending. It also has the second highest proportion (52%, just barely behind Chile) of total healthcare expenses that are private, rather than public.
  - hugh4 11y ago
    This is true, but on the other hand the US does have a much higher standard of care. In my experiences with the US hospital system I've been shocked by the way every single town seems to have all the fanciest, newest equipment. A scan that you'd wait days for in Australia you can get on the spot in the US. That money is going somewhere.
    - DanBC 11y ago
      > That money is going somewhere. A lot of it is going on over diagnosing and over treating, both of which cause harm. https://en.m.wikipedia.org/wiki/Unnecessary_health_care https://en.m.wikipedia.org/wiki/Unnecessary_health_care
      - fredkbloggs 11y ago
        So you're agreeing at least in part with my original assertion, then. Namely, that we probably need to be less willing to pay high prices for drugs (and by extension other treatments) because in many cases they are of much less value than other things we could buy instead. Right? I mean, overtreatment has negative value, so it's hard not to imagine that what was paid for it couldn't have been better spent on something else. Anything else. Throwing the money into a fire would have provided more value.
        specialist 11y ago
        No. Over testing and over treatment is unrelated to the (initial) high price of drugs and other treatments.
    - beagle3 11y ago
      Just this week I got a 2-month wait from a US hospital for a scan I got a 1-month delay outside the US. And that's a major, top ten US hospital, not some dinky place no one has heard of (but it's a non-standard scan setting, I'll grant you that). And the out-of-pocket (despite having insurance) is almost as high as the entire scan if I did it privately in the other place (which I pay zero for - it's all covered) > That money is going somewhere. Mostly to the pockets of the health insurance companies, which rake in ridiculous profits for providing services which are essentially non-existent and not needed almost anywhere else in the world.
- fredkbloggs 11y ago
  Well, as the article pointed out, some part of what the US is spending money on is subsidizing those other countries. How much? That would be interesting to know. There's also the small problem that "health care" doesn't have a UPC code; what people in those countries get and what people in the US get are not the same thing (which doesn't mean that the US standard of care is better, only that they're different). So it's pretty hard to look at what people are spending in two different places for two different things, with a probably large subsidy involved, and conclude that a theory about supply and demand for identical goods in a free market is wrong. Let's put it another way: it seems that you must disagree with at least one of the following statements: (a) Higher demand, ceteris paribus, means higher prices. (b) A single-payer system implemented in the US would likely cover more treatments than the system that exists in the US today. (c) Covering more treatments means more demand for treatments. (d) A single-payer system would not shift the supply curve for treatments. With which do you disagree? It seems like most of the interesting arguments here are around (d), but there doesn't seem to be any evidence against it. Of course, again, there is some seriously massive distortion going on here, so it's hard to be sure.
  - specialist 11y ago
    With which do you disagree? Well, everything. Including but limited to your random assumptions, weird logic, and counterfactual conclusions. Single payer enables the capitation model for healthcare. Lowering costs by incentivizing prevention.
  - beagle3 11y ago
    I disagree with arguing (provably wrong) theory in the face of hard data (which disproves said theory) - drugs and care are significantly cheaper in every single payer market, and provide better outcomes as measured by life expectancy and many other measures. > So it's pretty hard to look at what people are spending in two different places for two different things, with a probably large subsidy involved, and conclude that a theory about supply and demand for identical goods in a free market is wrong. It's actually quite easy, just like you do with e.g. a McDonald's meal or a bottle of coke (e.g. the US subsidies these indirectly through corn subsidies, no other country does). It's not the same everywhere, not by a long shot, but it's functionally quite close. Same drugs and similar are cost much more in the US. The market is not free - it is illegal for you to have your medicine shipped from Canada or India or anywhere else.
Permit 11y ago
>Death panels, anyone? Can you elaborate on this? Do you have any examples of death panels in countries with socialized medicine? Or at least of the government refusing to pay for medicine?
- refurb 11y ago
  Look at the recent decision by the UK's cancer fund to stop paying for a bunch of cancer drugs, including ones like Kadcyla which dramatically extends life in metastatic breast cancer.
- greeneggs 11y ago
  There are lots of news stories about this in Britain. A couple examples from 2015: http://www.economist.com/news/britain/21640343-well-meaning-gesture-causing-more-and-more-trouble-benign-or-malignant http://www.economist.com/news/britain/21640343-well-meaning-... http://www.dailymail.co.uk/health/article-3106130/Ovarian-cancer-drug-row-Breakthrough-treatment-won-t-available-NHS-s-deemed-expensive.html http://www.dailymail.co.uk/health/article-3106130/Ovarian-ca...
  - ZeroGravitas 11y ago
    Notably, the first article is arguing that the evaluation of medical effectiveness (or as they say in the USA, "death panels") is a good thing.
- fredkbloggs 11y ago
  Others have provided examples; I was actually making the opposite point with respect to the US. "Death panels" was a phrase used by politicians to drum up hysteria around a hypothetical single-payer system refusing to pay for a treatment. My contention is that such hysteria would make it nearly impossible, politically, for a US single-payer system to refuse to pay for any treatment, no matter how expensive or ineffective. This would of course drive up demand and therefore prices even moreso than the already distorted third-party payer system that exists today.
  - 11y ago
beagle3 11y ago
> Death panels, anyone? By making it even harder to refuse to pay for a treatment, a single-payer system would increase demand and therefore prices even further. This is Econ 101 stuff; it's not some rabid flight of fancy. Your interpretation of Econ 101 apparently is a rabid flight of fancy, - because if you look at the data, single payer systems pay less (often an order of magnitude less) for the same drugs. First of all, the number of payers doesn't actually figure into Econ 101 arguments, because the demand is driven by the number of customers, who are generally speaking independent of whether the payment flows through one or 20 payers. If anything, it lets producer strongarm any one payer - as the customers shift to paying through other payers. There isn't much incentive for affordable prices. In a single payer system, if the producer will charge too much, they have no one to sell to - which gives them an incentive to price it affordably. Furthermore, the market is not free, neither in the US nor in single payer markets. The US market is regulatorily tilted towards producers (e.g., it is illegal for you to buy your medicine abroad, even if it is the same one produced in the US by the same factory and company, and maybe even same batch). Single payer markets are tilted towards the buyers. Death panels already exist in the US, except they are privatized. Do you really believe that private-for-profit insurance companies just give everyone everything that could help them? If you do believe that, then - yes, I think it's some rabid flight of fancy. I've known quite a few cases in which they don't. And if you don't, then you agree that death panels already exist.

fsg7sdfg789 11y ago

If my understanding is correct, other nations with single payer systems have lower health care costs and frequently better outcomes than in the US. Econ101 is good for teaching concepts about how to think about economic interactions, but when the data doesn't match the theory, you can't stick with the theory.

vidarh 11y ago
Every other country on the planet have lower health care costs than the US by a large margin. US public healthcare spending alone, excluding private payments and insurance, places the US in the top 20, possibly top 10, in government spending on healthcare. In other words, Americans pay more than citizens of most developed countries over their taxes, and then pay about the same again to private insurers...
- rational-future 11y ago
  That's an interesting argument, but it misses the fact that the US is effectively subsidizing the healthcare in the rest of the world.
  - dragonwriter 11y ago
    Even if that's true -- and people asserting that never support it -- I don't see what the point of that is in defense of the status quo US policy. If that is the reason that Americans are paying so much more for healthcare and not getting any more benefits, it would be better for Americans if the US stopped doing that.
    - lmm 11y ago
      If the US stopped doing that there's no reason to assume that another country would magically step up to the plate. What if, as is the point of the article, the US stopped doing that and the world simply stopped getting as many new drugs?
      - dragonwriter 11y ago
        > If the US stopped doing that there's no reason to assume that another country would magically step up to the plate. Another country, no, because that would be irrational and stupid (just as it would be for the US, if the argument atht the US is actually doing that is correct.) On the other hand, if the US is subsidizing the rest of the world, that means the US is substantially reducing the marginal benefit of expenditures in the subsidized domain by other countries, disincentivizing their own expenditures (direct or through policy which promotes drug development.) It would be irrational to expect the removal of that subsidy and the associate disincetives not to result in increased expenditures.
- dragonwriter 11y ago
  > Every other country on the planet have lower health care costs than the US by a large margin. To put it in concrete terms, of OECD countries (comparable non-OECD data is harder to get), the #2 country in per capita healthcare spending (Switzerland) spends about 72% of what the US does per capita. > US public healthcare spending alone, excluding private payments and insurance, places the US in the top 20, possibly top 10, in government spending on healthcare. Again, to provide some concrete numbers, in the OECD, the US is #3 (behind Norway and Netherlands) in per capita public healthcare spending. It also has the second highest proportion (52%, just barely behind Chile) of total healthcare expenses that are private, rather than public.
- hugh4 11y ago
  This is true, but on the other hand the US does have a much higher standard of care. In my experiences with the US hospital system I've been shocked by the way every single town seems to have all the fanciest, newest equipment. A scan that you'd wait days for in Australia you can get on the spot in the US. That money is going somewhere.
  - DanBC 11y ago
    > That money is going somewhere. A lot of it is going on over diagnosing and over treating, both of which cause harm. https://en.m.wikipedia.org/wiki/Unnecessary_health_care https://en.m.wikipedia.org/wiki/Unnecessary_health_care
    - fredkbloggs 11y ago
      So you're agreeing at least in part with my original assertion, then. Namely, that we probably need to be less willing to pay high prices for drugs (and by extension other treatments) because in many cases they are of much less value than other things we could buy instead. Right? I mean, overtreatment has negative value, so it's hard not to imagine that what was paid for it couldn't have been better spent on something else. Anything else. Throwing the money into a fire would have provided more value.
      - specialist 11y ago
        No. Over testing and over treatment is unrelated to the (initial) high price of drugs and other treatments.
  - beagle3 11y ago
    Just this week I got a 2-month wait from a US hospital for a scan I got a 1-month delay outside the US. And that's a major, top ten US hospital, not some dinky place no one has heard of (but it's a non-standard scan setting, I'll grant you that). And the out-of-pocket (despite having insurance) is almost as high as the entire scan if I did it privately in the other place (which I pay zero for - it's all covered) > That money is going somewhere. Mostly to the pockets of the health insurance companies, which rake in ridiculous profits for providing services which are essentially non-existent and not needed almost anywhere else in the world.
fredkbloggs 11y ago
Well, as the article pointed out, some part of what the US is spending money on is subsidizing those other countries. How much? That would be interesting to know. There's also the small problem that "health care" doesn't have a UPC code; what people in those countries get and what people in the US get are not the same thing (which doesn't mean that the US standard of care is better, only that they're different). So it's pretty hard to look at what people are spending in two different places for two different things, with a probably large subsidy involved, and conclude that a theory about supply and demand for identical goods in a free market is wrong. Let's put it another way: it seems that you must disagree with at least one of the following statements: (a) Higher demand, ceteris paribus, means higher prices. (b) A single-payer system implemented in the US would likely cover more treatments than the system that exists in the US today. (c) Covering more treatments means more demand for treatments. (d) A single-payer system would not shift the supply curve for treatments. With which do you disagree? It seems like most of the interesting arguments here are around (d), but there doesn't seem to be any evidence against it. Of course, again, there is some seriously massive distortion going on here, so it's hard to be sure.
- specialist 11y ago
  With which do you disagree? Well, everything. Including but limited to your random assumptions, weird logic, and counterfactual conclusions. Single payer enables the capitation model for healthcare. Lowering costs by incentivizing prevention.
- beagle3 11y ago
  I disagree with arguing (provably wrong) theory in the face of hard data (which disproves said theory) - drugs and care are significantly cheaper in every single payer market, and provide better outcomes as measured by life expectancy and many other measures. > So it's pretty hard to look at what people are spending in two different places for two different things, with a probably large subsidy involved, and conclude that a theory about supply and demand for identical goods in a free market is wrong. It's actually quite easy, just like you do with e.g. a McDonald's meal or a bottle of coke (e.g. the US subsidies these indirectly through corn subsidies, no other country does). It's not the same everywhere, not by a long shot, but it's functionally quite close. Same drugs and similar are cost much more in the US. The market is not free - it is illegal for you to have your medicine shipped from Canada or India or anywhere else.

Permit 11y ago

>Death panels, anyone? Can you elaborate on this? Do you have any examples of death panels in countries with socialized medicine? Or at least of the government refusing to pay for medicine?

refurb 11y ago
Look at the recent decision by the UK's cancer fund to stop paying for a bunch of cancer drugs, including ones like Kadcyla which dramatically extends life in metastatic breast cancer.
greeneggs 11y ago
There are lots of news stories about this in Britain. A couple examples from 2015: http://www.economist.com/news/britain/21640343-well-meaning-gesture-causing-more-and-more-trouble-benign-or-malignant http://www.economist.com/news/britain/21640343-well-meaning-... http://www.dailymail.co.uk/health/article-3106130/Ovarian-cancer-drug-row-Breakthrough-treatment-won-t-available-NHS-s-deemed-expensive.html http://www.dailymail.co.uk/health/article-3106130/Ovarian-ca...
- ZeroGravitas 11y ago
  Notably, the first article is arguing that the evaluation of medical effectiveness (or as they say in the USA, "death panels") is a good thing.
fredkbloggs 11y ago
Others have provided examples; I was actually making the opposite point with respect to the US. "Death panels" was a phrase used by politicians to drum up hysteria around a hypothetical single-payer system refusing to pay for a treatment. My contention is that such hysteria would make it nearly impossible, politically, for a US single-payer system to refuse to pay for any treatment, no matter how expensive or ineffective. This would of course drive up demand and therefore prices even moreso than the already distorted third-party payer system that exists today.
- 11y ago

beagle3 11y ago

> Death panels, anyone? By making it even harder to refuse to pay for a treatment, a single-payer system would increase demand and therefore prices even further. This is Econ 101 stuff; it's not some rabid flight of fancy. Your interpretation of Econ 101 apparently is a rabid flight of fancy, - because if you look at the data, single payer systems pay less (often an order of magnitude less) for the same drugs. First of all, the number of payers doesn't actually figure into Econ 101 arguments, because the demand is driven by the number of customers, who are generally speaking independent of whether the payment flows through one or 20 payers. If anything, it lets producer strongarm any one payer - as the customers shift to paying through other payers. There isn't much incentive for affordable prices. In a single payer system, if the producer will charge too much, they have no one to sell to - which gives them an incentive to price it affordably. Furthermore, the market is not free, neither in the US nor in single payer markets. The US market is regulatorily tilted towards producers (e.g., it is illegal for you to buy your medicine abroad, even if it is the same one produced in the US by the same factory and company, and maybe even same batch). Single payer markets are tilted towards the buyers. Death panels already exist in the US, except they are privatized. Do you really believe that private-for-profit insurance companies just give everyone everything that could help them? If you do believe that, then - yes, I think it's some rabid flight of fancy. I've known quite a few cases in which they don't. And if you don't, then you agree that death panels already exist.