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Warren Buffett says health care costs are a bigger problem than corporate taxes

249 points by wojt_eu 9y ago

wojt_eu 9y ago
“If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re about 2 percent of G.D.P.” By contrast, he said, while tax rates have fallen as a share of gross domestic product, health care costs have ballooned. About 50 years ago, he said, “health care was 5 percent of G.D.P., and now it’s about 17 percent.”
- euroclydon 9y ago
  It's interesting to consider what it really means for something to be a drag on the economy. I mean, every dollar spent on healthcare is literally part of the economy -- it's not siphoned off into some void. Companies make a lot of money in healthcare. Healthcare employee a lot of people. Folks like being healthy.
  - mifreewil 9y ago
    You're right it's not being siphoned off into some void, it's being redistributed from some groups of people to other groups. If healthcare was delivered efficiently so that it was affordable and kept people healthy then that would be ok. There are so many inefficiencies with monopolistic practices such as inability to import drugs from outside US, healthcare networks, and on and on.
    - larrysalibra 9y ago
      Monopolistic practices == industry protected from competition by government violence. If the health industry wasn't, you'd have people making a killing importing 2 dollar generic antibiotics from overseas to compete with the 70 dollar generic antibiotics sold at CVS.
      - lostboys67 9y ago
        And then the scandals when it turns out these generics are fakes as happened in Africa with faked AIDS drugs or drugs with a nugatory amount of active ingredients
      - tw04 9y ago
        You'd also have people performance plastic surgery in their shed killing people. There's obviously middle ground somewhere, it's just we as a country lately have a REALLY hard time accepting the fact that compromise isn't a four letter word. At least some of us...
    - deleted 9y ago
      [deleted]
  - misja111 9y ago
    That is true but the healthcare industry doesn't bring any money in from abroad. So for the average international competetiveness of American companies, it's bad.
  - larrysalibra 9y ago
    Time and other resources are scarce. The more resources that are tied up in the healthcare the less available for other things. Other countries are getting better health results for way less money which all other things equal makes Americans comparatively less well off. When I pay $1500 and dozens of hours of time for something that costs $2 and 15 minutes in another country, I am less well off. I like being healthy, but I'd rather be more healthy for less money than less healthy for more money. You are right, the money isn't transferred off into a void, it is a wealth transfer from consumers to the healthcare industry.
  - Retric 9y ago
    Broken window fallacy. Total Money spent on heath care has very poor correlation with outcomes. Largely because it includes things like medical billing and advertising which increases costs without providing any benefit. You also often do more dangerous and unnecessary procedures and give more drugs risking poorly understood interactions. Something like 80% of the benefit of modern heathcare comes from the first 10% of spending. EX: Sanitation and quarantine are cheap and amazing tools to stop the spread of disease where hospitals are extremely expencive and gather sick people together to spread disease. A vaccine is vastly cheaper and more effective than dealing with outbreaks.
    - larrysalibra 9y ago
      Bastiat for the win! https://en.m.wikisource.org/wiki/Essays_on_Political_Economy/That_Which_Is_Seen,_and_That_Which_Is_Not_Seen https://en.m.wikisource.org/wiki/Essays_on_Political_Economy...
    - dredmorbius 9y ago
      “In all, 86 per cent of the increased life expectancy was due to decreases in infectious diseases. And the bulk of the decline in infectious disease deaths occurred prior to the age of antibiotics. Less than 4 per cent of the total improvement in life expectancy since 1700s can be credited to twentieth-century advances in medical care.” ― Laurie Garrett, Betrayal of Trust: The Collapse of Global Public Health https://www.goodreads.com/author/show/12627.Laurie_Garrett https://www.goodreads.com/author/show/12627.Laurie_Garrett
  - dredmorbius 9y ago
    The impacts are several-fold: * Inefficiencies in delivery mean that those for whom low-cost interventions are most beneficial, most especially pregnant women, and infants and children, don't receive preventive and supportive care which offsets future problems. * High healthcare costs translate directly to high labour costs, exacerbating the competitve disadvantages American labour faces relative to the rest of the world, and obviating much or all of the advantage of the greater efficiencies of such labour. * What health care services as are offered are, counter to my first point, late and heroic measures which do little to extend life or its quality, but keep sick patients alive longer. They are delivered largely based on capacity to pay, rather than social need. * Programmes to increase overall community well-being, ranging from vaccinations, education, and other public-health measures, to treatment of drugs and drink addiction as medical rather than criminal problems, aren't provided. Entire towns and states fall victim to epidemics of entirely preventible conditions: measles, mumps, cervical cancer, HIV/AIDS, alcoholism, drink driving, heroin and opoids additions, cocaine and meth addiction. * I won't even talk about mental health services. They are a national embarassment and shame to all Americans. Instead, a handful of insurers, hospitals, drugs manufacturers, equipment manufacturers, and service providers (look up medical transport for an eye-opener) are skimming off fat profits whilst delivering little of actual value, and actively eroding the competitive and health viability of the country as a whole.
  - zaptheimpaler 9y ago
    The issue is relative efficiency. If I spend $500 more on treatment X in US vs. another country, that money is paying a healthcare employee, but the employee is also "paying" with their time. A more efficient system that needs less employees frees up other people to contribute to the economy in more ways. All of those extra people health insurance companies employ because they can get away with it would get other jobs and hence increase the total productivity. The same argument applies to bloated costs of equipment. If a surgical sponge is $500 vs. $10 elsewhere, i doubt the added benefit justifies the extra $490. That $490 is coming out of someones pocket and its a complete waste. This graph [1] also shows the same story. The return on investment measured by life expectancy in the US is pathetic. The extra money is just not helping... so its either being misused or stolen, probably both. https://ourworldindata.org/the-link-between-life-expectancy-and-health-spending-us-focus#life-expectancy-vs-health-expenditure-over-time-1970-2014ref https://ourworldindata.org/the-link-between-life-expectancy-...
    - ptaipale 9y ago
      One difference is that the U.S. system gives a lot to the people who pay a lot. Rich people have access to the most advanced cancer treatments in world, for instance. But child mortality is relatively high among poor people (which is a shame on US.). Of course, this is indeed bad for efficiency, if you consider health outcomes vs. spending. And inequality: wealthy people live longer. But then there are questions of fairness. Elsewhere, in a so-called welfare state where I live, all children get very good care and child mortality is low, but for instance, when I consider myself - a fairly well-to-do person although not wealthy by US standards - I pay a lot to the system but it gives me very little attention. No regular health checks that are normal in the US for people who have a health insurance through employment, no screenings for cancer (women get several types of specific screenings but men do not). (We use 9 % of GDP to public health, vs. 17 % in the US.) I know that the care is quite good if I run into a life-threatening situation, but with smaller trouble such as broken bones or a pneumonia, I'll be prioritized down after drug addicts who have a more serious condition that they have inflicted themselves. And they never contributed to the system which tells me to go to a private clinic. Fortunately the social problems resulting in non-contribution are still quite small, but an increasing number of people are not giving anything and are consuming more and more of the resources.
  - TuringNYC 9y ago
    There are a lot of good responses to your question, sibling comments, but let me provide an orthogonal view: consider how many innovative companies are NOT being formed because worried workers cling to their generous big-company insurance plans -- plans which are so costly to buy independent that they are not real options. This is a major concern for me as an entrepreneur and parent.
- DarkKomunalec 9y ago
  “If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re about 2 percent of G.D.P.” While I guess I have no problem with this statement specifically, it's a bit too close to "the top 1 percent of Americans will pay 45.7 percent of the individual income taxes" : http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-federal-income-taxes.html http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-fede... The problem with the latter statement is of course that it makes it sound like the top 1% is unfairly burdened by taxes, while hiding the fact that the richer they get compared to the rest, the larger a share of taxes they'll pay. Taking it to the logical extreme, if all income went to the top 1%, they'd pay 100% of income taxes, while the lazy 99% contribute zero! Someone quickly give the rich a tax break!
  - jstanley 9y ago
    Do you think the top 1% of Americans consume significantly more government services than an average 1% of Americans? If not, why should consuming those services cost significantly more money? It might feel right that rich people should pay more, but that's not how any other market works - why should government services be different? EDIT: To all of the people saying rich people consume more government services than poor people: you're forgetting about welfare payments. In the UK this is the largest government expenditure, and it is consumed almost entirely by people who are not paying for it.
    - mpweiher 9y ago
      Because society is not a market. Markets are artificial constructs that serve society. Not the other way around.
    - DarkKomunalec 9y ago
      I can think of three reasons, from least to most libertarian: 1) You're proposing a flat dollar amount be paid as tax by every citizen. This will be most painfully felt by the poorest. What sort of society do you think this leads to? 2) The rich do employ a lot of people, whose education and safety were provided for by taxes. Then there's all those road and water networks they use to deliver goods to the markets they own, and the large amount of property and contracts they have that are enforced by the state. So yes, I do believe they use more government services than the average person. 3) Plenty of markets work that way: https://en.wikipedia.org/wiki/Price_discrimination https://en.wikipedia.org/wiki/Price_discrimination Furthermore, in a market, the seller sets the price, and the buyer is free to take his business elsewhere. And there's plenty of countries to choose from - so why should government services be different?
shaqbert 9y ago
Good news is that the amount of health care spending is a choice. E.g. other western countries are running a health care cost to GDP ratio from 10%-13%, sometimes offering vastly superior and equitable outcomes than in the US. The bad news is that this is a choice Congress and Senate are taking on behalf of the American people. And with the partisan divide and lack of agreement on fundamental values, things won't really change. Add in a rapidly aging population, and being cognizant of the per capita health care spending steeply increasing at later stages of life, kicking the can down the road won't make the later adjustment any easier...
- xmj 9y ago
  Socialism in healthcare brings rationing, waiting lists, supply shortages and all the kinds of things you don't want when dealing with people's lives.
  - cmrdporcupine 9y ago
    A free market also rations. Just with entirely different acceptance criterion. Criterion which (when applied to health care) happen to not intersect with most mainstream systems of ethics and morality. Constrainted, non-infinite supply, basically infinite demand. What a great business to be in!
    - problems 9y ago
      To be fair you can't exactly call the current system in the US free market. There are ridiculous restrictions on hospitals and insurance companies that prevent proper competition from occurring in many cases. While single payer is often a better system, it's not without its problems - in Canada ER wait times are ridiculous, my sister had to wait 10 hours recently and if you want to find a GP? Good luck. Everyone is booked solid. I thought Obamacare seemed like a good compromise to be honest. Unfortunately it doesn't seem like that's been a miraculous solution. I think some sort of free market solution with a safety net on the low end could do the job, but I don't know what that would look like. And I don't think we've seen any proposals in that direction.
brohoolio 9y ago
Healthcare costs create huge problems across the economy, increasing the cost of everything from manufacturing to higher education. Between myself and my employer, it costs about $20,000 to insure my family a year. My employer shares much of the cost breakdown and it's interesting how goes to prescriptions and how much of that goes to specialty drugs to keep a handful of people alive. $500 million dollar spend on healthcare. $120 million goes to prescriptions. $40 million of that went to specialty drugs, representing 1.7% of the prescriptions. "The average ingredient cost of a single-source brand prescription increased by 14.9% in 2016 to an average $745 per prescription, mainly driven by high-cost specialty drugs. The average ingredient cost of multiple-source brand prescription increased by 49.5% to an average $585 per prescription. The average ingredient cost for a generic prescription decreased by 10.9% to an average cost of $34.04 per prescription. "
- slackingoff2017 9y ago
  Drug prices are high in the US but drug spending overall is nothing compared to overall healthcare costs. With a handful of exceptions, even the most expensive drugs cost 10k a year. In contrast a few weeks in the ICU can easily top 100k. A visit to the ER is usually 1500 just to walk in the door. Healthcare costs are largely a result too many middle men and overhead from extremely high healthcare provider salary.
  - chii 9y ago
    > overhead from extremely high healthcare provider salary. may be there isn't any competition (which could be because it's quite hard to establish a new healthcare clinic/hospital)? Also, are there limited supplies of health care professionals that cause their salaries to grow to such a high number?
    - slackingoff2017 9y ago
      There's an artificial limit on the number of doctors
- forvelin 9y ago
pavlov 9y ago
The middleman role of insurance companies in American healthcare seems completely useless. They're not serving patients, doctors nor the national economy by siphoning off enormous profits from the 17% of GDP that gets spent on healthcare. Getting rid of them would be extremely hard, of course, given how well entrenched they are thanks to lobbying and regulatory capture. Insurance companies are a massive-scale version of the car dealerships that have managed to keep Tesla out of many US states by taking advantage of local legislation -- nobody would want to deal with a car salesman or an insurance company given the choice.
- dredmorbius 9y ago
  As with most politically-powerful entities: first shrink, then drown. That, ultimately is how the tobacco industry was (mostly) quashed.
- devoply 9y ago
  You have to be determined, not just determined, but Ralph Nader determined. If you are Ralph Nader determined, then in America there is no company or lobby that can stop you. That's in fact one of the best things about America, out of everything else. That activism can't be stopped. That free speech is for the most part respected. And if you are determined to get some truth heard, you will eventually succeed if you try hard enough.
- smt88 9y ago
  > seems completely useless Some people (not me) would argue that their existence and competition create better choices for consumers. For example, in theory, a single-payer system could have a single price (via taxes) and a single level of coverage. By contrast, private insurance companies are able to offer many different products depending on someone's tolerance for risk. I don't think the private, market-driven system for health care is better in that regard, but some people do.
  - Broken_Hippo 9y ago
    1. You can have single payer with the option for private insurance. Many countries do that. From what I can gather, here (Norway) one can get quicker service with the private doctors. The national health plan still pays the private doctors the national rate, and you pay the difference.
RichardHeart 9y ago
Health care costs would be lower, if more people were able to provide health care service. If the world focused less on rate my sandwich apps, and more on fixing humans, the prices would be much more affordable.
ransom1538 9y ago
Americans unable to afford healthcare are just waiting in line to become bankrupt. A study done at Harvard University indicates that this [medical costs] is the biggest cause of bankruptcy, representing 62% of all personal bankruptcies. http://www.investopedia.com/slide-show/top-5-reasons-why-people-go-bankrupt/ http://www.investopedia.com/slide-show/top-5-reasons-why-peo...
heisenbit 9y ago
In the US the health care cost since 95 went from 13.1 to 17.1 while in Germany they went from 9.4. to 11.3. It is actually way worse than the article tells if one considers the age structure of the two countries where Germany has 21.7% over 65 vs. the US with 15.25%. The non tangible cost are also non negligible. There is friction in the job market as changing job risks incurring a potentially catastrophic coverage gap. There are bizarre industries focused on renegotiating issued medical bills, collecting those or managing the health related bankruptcies. Pricing of pharmaceutical usually generally defies the laws of gravity as the incentives of regulators, suppliers, distributors, doctors and insurers have been distorted beyond anything resembling a fair playing field. In such an environment playing games is superior than providing value and adhering to generally accepted rules. When it comes to pricing the costs of providing the service is often the least important input. Steve Balmer recently: “If you look at these tax deductions for employer-provided health [...], they’re really subsidies to the affluent, which I guess I hadn’t thought about them.” The biggest problem society faces at the moment is the vanishing middle class and lower qualified jobs that are still providing enough to subside. For the latter the cost of food, shelter, fuel and health are key. Lower the cost of living and there will be more jobs that are worth taking.
- fetbaffe 9y ago
  Yes, remove the tax deductions for employer-provided health care is good start. Employers should not decide what kind of health care you have access to, as little as for food.
  - maxxxxx 9y ago
    That was one thing McCain had right in 2008. Removing employer health insurance would also remove a lot of political controversy like whether contraception should be offered. It's simply should not be the employer's business.
faragon 9y ago
Amazon could disrupt providing Health Care services in the US. Current price overhead versus over developed countries is huge, so an efficient provider could shock the whole HC market.
ewood 9y ago
Why the U.S. pays more for health care than the rest of the world https://www.youtube.com/watch?v=gXBPKE28UF0 https://www.youtube.com/watch?v=gXBPKE28UF0
ivanhoe 9y ago
Looking from the outside, it seems to me that the root of the problem is not about the health care in US, but about the prices of health related services and products? Prices are so inflated, hospital and medication bills are huge compared to what the same things costs in Europe or elsewhere.
kauffj 9y ago
The most insightful and thought provoking analysis of health care I've seen in the last several years is this one: https://randomcriticalanalysis.wordpress.com/2016/09/25/high-us-health-care-spending-is-quite-well-explained-by-its-high-material-standard-of-living/ https://randomcriticalanalysis.wordpress.com/2016/09/25/high... It argues that the high cost of health care in the United States is explained by its extreme wealth and that health care is a superior good (https://en.wikipedia.org/wiki/Superior_good https://en.wikipedia.org/wiki/Superior_good). This is a much different explanation than what is given by either political party. Anyone have any points in support of or against this argument?
- zip1234 9y ago
  Health care costs have an incentive and price transparency problem. If hospitals had to post their prices on the internet and people had an incentive to save money, the costs would go way down. There may be some truth to the argument, but the author ignores the ability of a market to drive down prices and improve products. As it stands, we have a market, but the lack of price transparency causes significant inefficiencies. The government should tweak the current system to require open data standards. This would allow a value-for-money comparison when people choose physicians/treatment and increase the efficiency of the system.
psyc 9y ago
There are no sane constraints on the prices. Instead of "price is what the market will bear," it's "the market will bear whatever price." This creates an irrational drain on the rest of the system. Whoever is sucking on that drain is doing well, though. My grandfather used to get a shot that was $12,000 a pop, and didn't do anything.
hudu 9y ago
The pharma industry should open up; it is dominated by corporatism and their monopoly patents driving up prices, which make individual spending on drugs rise till an unaffordable level for the lower income.
bischofs 9y ago
I really think health care costs in the US are a byproduct of Americans obsession with convenience. Most lifestyles can be lived without any physical activity - the whole country is designed around the car. Traveling around a bit I've seen other cultures still require people to walk somewhat to get places and people will also just go on "walks" whereas Americans will go for a "drive" Food culture is also responsible, just jamming food into your face as quickly as possible rather than enjoying a meal is for sure and American thing. Add all this up and you get 60% obesity rates in adults and getting worse.
bedhead 9y ago
There are many, many problems with healthcare in the US. Off the top of my head, the big ones are: * Endless number of middlemen and administrators. * Every player in the healthcare chain benefits from higher prices. * No price transparency. * Tacit collusion is rampant. * "Cost no object" mentality to treating the dying. The last one, while insensitive, is true nonetheless, and it's alarming that over 50% of all healthcare spending takes place in the last two years of a person's life. We have basically decided that it's okay to spend literally any sum of money on a dying person in order to prolong life by an average of a few months. And the problematic word there is average, because some people do live a lot longer, and that's what we all look to. I realize this is grim and seemingly lacks humanity, but unfortunately that doesn't make it not true. Charlie Munger, who is on the board of Kaiser Permanente, said this same thing yesterday..."over-treatment of the dying" was the biggest problem they faced. It's reminiscent of our approach to college education - justified at any cost. So we push millions of kids into a schooling system that's not right for them, and the result is a lot of crappy education, worthless degrees, student loans, etc. Once we flip the switch to "there is no price you can put on _____" things get sideways FAST.
- gambiting 9y ago
  Well, the argument here is that for example, there are types of cancer which have extremely low survivalability rate, like 1 out 10 people who get it survive it. But we still treat them, and sure, right now 90% of them die but the data is used to create new drugs which in the future might improve the odds. If we just straight up said "it's very unlikely this person will survive so we won't spend $$$ on trying treatment" then we wouldn't get anywhere with many different medicines.
  - killjoywashere 9y ago
    Those are pharma dollars. Different pot of money.
- rcarrigan87 9y ago
  Keeping people alive too long is definitely a really difficult problem. Having walked through many dementia floors in nursing homes, I'd prefer to have some reasonable way of opting for assisted suicide in my will. Maybe once a consortium of doctors verifies I'm at a specified stage of dementia. Assisted suicide is another tricky area but I think it is humane when administered properly.
ralfd 9y ago
Obligatory Slate Star Codex Link: http://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ http://slatestarcodex.com/2017/02/09/considerations-on-cost-... Scott Alexander examines "cost disease" in the sectors of health care and education.
- brownbat 9y ago
  Strongly recommend the work on Random Critical Analysis linked to by SSC there. Approx. zero people reading this will believe the conclusion, but RCA argues that the US is not really an outlier on healthcare costs. There's a dizzying amount of data and statistics levied for the argument. It's a fascinating read even if you don't agree just because of how much is put into the argument. https://randomcriticalanalysis.wordpress.com/2014/11/24/national-healthcare-expenditure-united-states-versus-other-countries-the-us-is-not-really-an-outlier/ https://randomcriticalanalysis.wordpress.com/2014/11/24/nati... https://randomcriticalanalysis.wordpress.com/2016/09/25/high-us-health-care-spending-is-quite-well-explained-by-its-high-material-standard-of-living/ https://randomcriticalanalysis.wordpress.com/2016/09/25/high...
  - akamaka 9y ago
    Incredible. This blogger indeed uses a dizzying amount of graphs, but doesn't mention until the end that he has built his entire argument on the assumption that Americans "choose" to spend their higher income on health care.
    - rcafdm 9y ago
      That was mentioned at the very start of the 2nd link (see "superior good") and it's true virtually everywhere in the long run (especially in developed countries with reasonably reliable growth in disposable incomes and where we have pretty reliable data). If we want to identify systems that might allow us to contain costs on the margins knowing who spends least or the most is not informative in and of itself. Rather we should be interested in residuals with the best model, as in, who is furthest below trend (as a function of comprehensive consumption or disposable income), what plausibly explains this, and whether are we actually willing and able to implement those sorts of features in our system.... Incidentally these patterns are not only found in health care, the basket of goods has changed and continues to change as countries get richer: https://randomcriticalanalysis.wordpress.com/2017/05/09/towards-a-general-factor-of-consumption/ https://randomcriticalanalysis.wordpress.com/2017/05/09/towa...
british_india 9y ago
The real problem with health care is that it's a gravy train for all involved. Doctors, who don't invent anything new and who just practice garden-variety medicine are wildly overpaid. They don't like it be known, but the average doctor earns a quarter-million a year. Totally unjustified. Then there are the medical device manufacturers, big Pharma and the hospitals. They all are getting rich off the current system. That's what needs to change.
- kingbirdy 9y ago
  Doctors are so highly paid as a function of their scarcity, which is itself a function of the high barriers to entry (intense schooling, selective admissions, high costs). I think the first 2 barriers are necessary to keep quality high, but doing something about the 3rd could help lower costs by increasing the supply of doctors, and I certainly think that's a better solution than being mad at the doctors for accepting a high salary that's offered to them.
  - MagnumOpus 9y ago
    Schooling costs are high because of the length of the program - four years of pre-med, four years of med school. Compare in the UK - five years instead of eight, taking 2 years of pre-clinical courses and 3 years of clinical courses, subsidised to a good extent by the state. UK doctors seem equally skilled, and have minimal student debt. Scarcity being a function of selective admissions is a tautology. To be useful, selectivity would need to be to some objective minimum standard, rather than enforcing an ever-changing standard that enforces the restriction of the profession to an arbitrary small number of entrants.
- potatote 9y ago
  I believe that the big pharma and the insurance companies are certainly part of the problem, but rarely do we mention doctors as a contributing factor (albeit relatively small) to the high cost. The American Medical Association (AMA) does its duty to restrict the supply of doctors [1]. Countries like India, which produces plenty of high quality doctors, does not require aspiring doctors to go through an additional (unnecessary) 4 years of undergrad education. That would hugely cut the cost down in training the doctors. Secondly, doctors on average makes $200K/year [2] or more. I have four housemates, who were trained in Myanmar (went through five years of medical school there right after high school) and scored above 95th percentile or more in all three steps of their USMLEs, to get into the residency programs in the US. One of them is going into general practice (family medicine) in Virginia and her starting salary is: $210K/year. I have no doubt that she (or anyone who has been trained 5 years in a decent med school--without the 4-year undergrad prior to that) is more than capable of treating generic diseases and illnesses. But this shows that we can train doctors cheaper and that we can reduce their pay by quite a bit (no hard-working person in other profession--except maybe Banking--could easily earn $210K/year to do such a relatively uneventful--in my opinion--job). I regret quitting med school in Myanmar in the third year. Then, I thought med school training involves too much rote learning (a lot of memorization in organic chem for example) and that I'd rather do something more 'exciting' like tech or math. I was wrong. [1] https://mises.org/library/how-government-helped-create-coming-doctor-shortage https://mises.org/library/how-government-helped-create-comin... [2] https://www.theatlantic.com/health/archive/2015/01/physician-salaries/384846/ https://www.theatlantic.com/health/archive/2015/01/physician...
dalbasal 9y ago
I’m not American, but I’ve been hearing about your health system for a several years. Ironically, I know more about it than my own country’s (Ireland). Several years ago, there seemed to be a lot of talk about how much The US spends (private & public) per capita on health. It’s a lot more than everywhere else. This was usually presented in the context of the health care “regime” A UK-esque system, a Swiss-like system, etc. Lately, that comparison seems to come up less. Obama-care, Trump-care or Bernie-care would mostly deal with who pays & how, not how much. The “who pays” question is a favourite ideological one so politicians and commentators are comfortable with it. But, I think the “how much” question is probably the more important one, and the harder one to solve. If the US could get costs down to average European rates, then I’m sure a workable system could be found within the confines of most ideological frameworks. The problem is that getting costs down is almost impossible. Costs are salaries of doctors & nurses, a giant pharmaceutical industry, thousands of radiologists, ultrasound technicians, the machines they use (far more frequently than europeans)… Getting costs down to EU levels would be mean the medical industry shrinks like manufacturing shrunk two generations ago. I don’t have a solution to suggest, but I do suggest toning down the ideological discussion. The problem is more of a technical one.
- zanny 9y ago
  Is it technical? There is a reason the US is unique in the world in both its unsocialized healthcare and in its costs. While socialized medicine now may not reverse the out of control spending, we can observe that the lack of it was the most likely cause. In the semi-private market of American healthcare that has been around since the 70s, the incentives structure has been absurdly broken for so long it should be no surprise you pay more for mediocre results. At this point though, going with the known working solution sooner rather than later is the technically most plausible way to stop the cost expansion. It is exactly like people debating about national debt - you can't complain or argue about how to pay it off until you stop adding to it every year, often with an increasing deficit (which is how republican administrations for the last 30 years have governed). It is crazy to argue that in the moment your house is on fire to try this untested strategy of using giant fans to blow the fire out that nobody else has done versus going with the tried and true use a fire truck to extinguish the blaze. Experiment after everything isn't on fire.
ChicagoBoy11 9y ago
Yes, this is an academic article, but I can think of no better resource for a pretty sane discussion on all the insanities in our healthcare system: http://faculty.chicagobooth.edu/john.cochrane/research/papers/after_aca_published.pdf http://faculty.chicagobooth.edu/john.cochrane/research/paper... The thing that is pretty remarkable is that you unfortunately realize just how far either political party is in addressing any of the issues brought in the piece.
CWuestefeld 9y ago
By this argument, we should also be examining why we spend so much on education. In 2010, the United States spent 7.3 percent of its gross domestic product on education, compared with the 6.3 percent average of other OECD countries. Surely spending dramatically higher amounts than other countries, with no better effects, is enough to drive us to consider how we can reduce the costs of education - and should make us think long and hard before considering proposals that we should throw even more money at this. It's surely true that having a well-educated workforce improves productivity, but it's also true that having a healthy workforce does the same. I'm having trouble finding much difference between the two examples.
alistairSH 9y ago
Question for y'all... Have your health care providers started being more conscious or out-spoken about cost? Mine definitely have, both for prescriptions and procedures.
moomin 9y ago
Frankly, I just stubbed my big toe and that's a bigger problem than US corporation tax.
jcfrei 9y ago
Would it be a worthwhile idea to open up health care internationally? Maybe insurance companies could create global standards for medical procedures, so that clients could choose in which countries they want to perform a procedure and then receive or pay the difference with regards to the cost of a national procedure. This could introduce some level of competition without jeopardizing quality - or am I missing something?
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chaibiker 9y ago
And entirely ignored seems to be the demand side of the question, why is that? Could expenses be higher than we want if we are less healthy that we should be? I see a lot of unhealthy habits associated with the subsequent associated costly interventions required. Just because we see no path forward to affect demand, leaving it out of the discussion will ensure the debate is framed only as which system can provide that volume of healthcare for a little more or a little less.
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pow_pp_-1_v 9y ago
I had kind of hoped that Trump would stumble into single payer health care as a solution for healthcare needs of his base and would somehow get it passed through congress with support from democrats. Alas, nothing of that sort seems likely.

249 points by wojt_eu 9y ago

“If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re about 2 percent of G.D.P.” By contrast, he said, while tax rates have fallen as a share of gross domestic product, health care costs have ballooned. About 50 years ago, he said, “health care was 5 percent of G.D.P., and now it’s about 17 percent.”

euroclydon 9y ago
It's interesting to consider what it really means for something to be a drag on the economy. I mean, every dollar spent on healthcare is literally part of the economy -- it's not siphoned off into some void. Companies make a lot of money in healthcare. Healthcare employee a lot of people. Folks like being healthy.
- mifreewil 9y ago
  You're right it's not being siphoned off into some void, it's being redistributed from some groups of people to other groups. If healthcare was delivered efficiently so that it was affordable and kept people healthy then that would be ok. There are so many inefficiencies with monopolistic practices such as inability to import drugs from outside US, healthcare networks, and on and on.
  - larrysalibra 9y ago
    Monopolistic practices == industry protected from competition by government violence. If the health industry wasn't, you'd have people making a killing importing 2 dollar generic antibiotics from overseas to compete with the 70 dollar generic antibiotics sold at CVS.
    - lostboys67 9y ago
      And then the scandals when it turns out these generics are fakes as happened in Africa with faked AIDS drugs or drugs with a nugatory amount of active ingredients
    - tw04 9y ago
      You'd also have people performance plastic surgery in their shed killing people. There's obviously middle ground somewhere, it's just we as a country lately have a REALLY hard time accepting the fact that compromise isn't a four letter word. At least some of us...
  - deleted 9y ago
    [deleted]
- misja111 9y ago
  That is true but the healthcare industry doesn't bring any money in from abroad. So for the average international competetiveness of American companies, it's bad.
- larrysalibra 9y ago
  Time and other resources are scarce. The more resources that are tied up in the healthcare the less available for other things. Other countries are getting better health results for way less money which all other things equal makes Americans comparatively less well off. When I pay $1500 and dozens of hours of time for something that costs $2 and 15 minutes in another country, I am less well off. I like being healthy, but I'd rather be more healthy for less money than less healthy for more money. You are right, the money isn't transferred off into a void, it is a wealth transfer from consumers to the healthcare industry.
- Retric 9y ago
  Broken window fallacy. Total Money spent on heath care has very poor correlation with outcomes. Largely because it includes things like medical billing and advertising which increases costs without providing any benefit. You also often do more dangerous and unnecessary procedures and give more drugs risking poorly understood interactions. Something like 80% of the benefit of modern heathcare comes from the first 10% of spending. EX: Sanitation and quarantine are cheap and amazing tools to stop the spread of disease where hospitals are extremely expencive and gather sick people together to spread disease. A vaccine is vastly cheaper and more effective than dealing with outbreaks.
  - larrysalibra 9y ago
    Bastiat for the win! https://en.m.wikisource.org/wiki/Essays_on_Political_Economy/That_Which_Is_Seen,_and_That_Which_Is_Not_Seen https://en.m.wikisource.org/wiki/Essays_on_Political_Economy...
  - dredmorbius 9y ago
    “In all, 86 per cent of the increased life expectancy was due to decreases in infectious diseases. And the bulk of the decline in infectious disease deaths occurred prior to the age of antibiotics. Less than 4 per cent of the total improvement in life expectancy since 1700s can be credited to twentieth-century advances in medical care.” ― Laurie Garrett, Betrayal of Trust: The Collapse of Global Public Health https://www.goodreads.com/author/show/12627.Laurie_Garrett https://www.goodreads.com/author/show/12627.Laurie_Garrett
- dredmorbius 9y ago
  The impacts are several-fold: * Inefficiencies in delivery mean that those for whom low-cost interventions are most beneficial, most especially pregnant women, and infants and children, don't receive preventive and supportive care which offsets future problems. * High healthcare costs translate directly to high labour costs, exacerbating the competitve disadvantages American labour faces relative to the rest of the world, and obviating much or all of the advantage of the greater efficiencies of such labour. * What health care services as are offered are, counter to my first point, late and heroic measures which do little to extend life or its quality, but keep sick patients alive longer. They are delivered largely based on capacity to pay, rather than social need. * Programmes to increase overall community well-being, ranging from vaccinations, education, and other public-health measures, to treatment of drugs and drink addiction as medical rather than criminal problems, aren't provided. Entire towns and states fall victim to epidemics of entirely preventible conditions: measles, mumps, cervical cancer, HIV/AIDS, alcoholism, drink driving, heroin and opoids additions, cocaine and meth addiction. * I won't even talk about mental health services. They are a national embarassment and shame to all Americans. Instead, a handful of insurers, hospitals, drugs manufacturers, equipment manufacturers, and service providers (look up medical transport for an eye-opener) are skimming off fat profits whilst delivering little of actual value, and actively eroding the competitive and health viability of the country as a whole.
- zaptheimpaler 9y ago
  The issue is relative efficiency. If I spend $500 more on treatment X in US vs. another country, that money is paying a healthcare employee, but the employee is also "paying" with their time. A more efficient system that needs less employees frees up other people to contribute to the economy in more ways. All of those extra people health insurance companies employ because they can get away with it would get other jobs and hence increase the total productivity. The same argument applies to bloated costs of equipment. If a surgical sponge is $500 vs. $10 elsewhere, i doubt the added benefit justifies the extra $490. That $490 is coming out of someones pocket and its a complete waste. This graph [1] also shows the same story. The return on investment measured by life expectancy in the US is pathetic. The extra money is just not helping... so its either being misused or stolen, probably both. https://ourworldindata.org/the-link-between-life-expectancy-and-health-spending-us-focus#life-expectancy-vs-health-expenditure-over-time-1970-2014ref https://ourworldindata.org/the-link-between-life-expectancy-...
  - ptaipale 9y ago
    One difference is that the U.S. system gives a lot to the people who pay a lot. Rich people have access to the most advanced cancer treatments in world, for instance. But child mortality is relatively high among poor people (which is a shame on US.). Of course, this is indeed bad for efficiency, if you consider health outcomes vs. spending. And inequality: wealthy people live longer. But then there are questions of fairness. Elsewhere, in a so-called welfare state where I live, all children get very good care and child mortality is low, but for instance, when I consider myself - a fairly well-to-do person although not wealthy by US standards - I pay a lot to the system but it gives me very little attention. No regular health checks that are normal in the US for people who have a health insurance through employment, no screenings for cancer (women get several types of specific screenings but men do not). (We use 9 % of GDP to public health, vs. 17 % in the US.) I know that the care is quite good if I run into a life-threatening situation, but with smaller trouble such as broken bones or a pneumonia, I'll be prioritized down after drug addicts who have a more serious condition that they have inflicted themselves. And they never contributed to the system which tells me to go to a private clinic. Fortunately the social problems resulting in non-contribution are still quite small, but an increasing number of people are not giving anything and are consuming more and more of the resources.
- TuringNYC 9y ago
  There are a lot of good responses to your question, sibling comments, but let me provide an orthogonal view: consider how many innovative companies are NOT being formed because worried workers cling to their generous big-company insurance plans -- plans which are so costly to buy independent that they are not real options. This is a major concern for me as an entrepreneur and parent.
DarkKomunalec 9y ago
“If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P.,” Mr. Buffett said. “I mean, they bounced around some. And now, they’re about 2 percent of G.D.P.” While I guess I have no problem with this statement specifically, it's a bit too close to "the top 1 percent of Americans will pay 45.7 percent of the individual income taxes" : http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-federal-income-taxes.html http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-fede... The problem with the latter statement is of course that it makes it sound like the top 1% is unfairly burdened by taxes, while hiding the fact that the richer they get compared to the rest, the larger a share of taxes they'll pay. Taking it to the logical extreme, if all income went to the top 1%, they'd pay 100% of income taxes, while the lazy 99% contribute zero! Someone quickly give the rich a tax break!
- jstanley 9y ago
  Do you think the top 1% of Americans consume significantly more government services than an average 1% of Americans? If not, why should consuming those services cost significantly more money? It might feel right that rich people should pay more, but that's not how any other market works - why should government services be different? EDIT: To all of the people saying rich people consume more government services than poor people: you're forgetting about welfare payments. In the UK this is the largest government expenditure, and it is consumed almost entirely by people who are not paying for it.
  - mpweiher 9y ago
    Because society is not a market. Markets are artificial constructs that serve society. Not the other way around.
  - DarkKomunalec 9y ago
    I can think of three reasons, from least to most libertarian: 1) You're proposing a flat dollar amount be paid as tax by every citizen. This will be most painfully felt by the poorest. What sort of society do you think this leads to? 2) The rich do employ a lot of people, whose education and safety were provided for by taxes. Then there's all those road and water networks they use to deliver goods to the markets they own, and the large amount of property and contracts they have that are enforced by the state. So yes, I do believe they use more government services than the average person. 3) Plenty of markets work that way: https://en.wikipedia.org/wiki/Price_discrimination https://en.wikipedia.org/wiki/Price_discrimination Furthermore, in a market, the seller sets the price, and the buyer is free to take his business elsewhere. And there's plenty of countries to choose from - so why should government services be different?

shaqbert 9y ago

Good news is that the amount of health care spending is a choice. E.g. other western countries are running a health care cost to GDP ratio from 10%-13%, sometimes offering vastly superior and equitable outcomes than in the US. The bad news is that this is a choice Congress and Senate are taking on behalf of the American people. And with the partisan divide and lack of agreement on fundamental values, things won't really change. Add in a rapidly aging population, and being cognizant of the per capita health care spending steeply increasing at later stages of life, kicking the can down the road won't make the later adjustment any easier...

xmj 9y ago
Socialism in healthcare brings rationing, waiting lists, supply shortages and all the kinds of things you don't want when dealing with people's lives.
- cmrdporcupine 9y ago
  A free market also rations. Just with entirely different acceptance criterion. Criterion which (when applied to health care) happen to not intersect with most mainstream systems of ethics and morality. Constrainted, non-infinite supply, basically infinite demand. What a great business to be in!
  - problems 9y ago
    To be fair you can't exactly call the current system in the US free market. There are ridiculous restrictions on hospitals and insurance companies that prevent proper competition from occurring in many cases. While single payer is often a better system, it's not without its problems - in Canada ER wait times are ridiculous, my sister had to wait 10 hours recently and if you want to find a GP? Good luck. Everyone is booked solid. I thought Obamacare seemed like a good compromise to be honest. Unfortunately it doesn't seem like that's been a miraculous solution. I think some sort of free market solution with a safety net on the low end could do the job, but I don't know what that would look like. And I don't think we've seen any proposals in that direction.

brohoolio 9y ago

Healthcare costs create huge problems across the economy, increasing the cost of everything from manufacturing to higher education. Between myself and my employer, it costs about $20,000 to insure my family a year. My employer shares much of the cost breakdown and it's interesting how goes to prescriptions and how much of that goes to specialty drugs to keep a handful of people alive. $500 million dollar spend on healthcare. $120 million goes to prescriptions. $40 million of that went to specialty drugs, representing 1.7% of the prescriptions. "The average ingredient cost of a single-source brand prescription increased by 14.9% in 2016 to an average $745 per prescription, mainly driven by high-cost specialty drugs. The average ingredient cost of multiple-source brand prescription increased by 49.5% to an average $585 per prescription. The average ingredient cost for a generic prescription decreased by 10.9% to an average cost of $34.04 per prescription. "

slackingoff2017 9y ago
Drug prices are high in the US but drug spending overall is nothing compared to overall healthcare costs. With a handful of exceptions, even the most expensive drugs cost 10k a year. In contrast a few weeks in the ICU can easily top 100k. A visit to the ER is usually 1500 just to walk in the door. Healthcare costs are largely a result too many middle men and overhead from extremely high healthcare provider salary.
- chii 9y ago
  > overhead from extremely high healthcare provider salary. may be there isn't any competition (which could be because it's quite hard to establish a new healthcare clinic/hospital)? Also, are there limited supplies of health care professionals that cause their salaries to grow to such a high number?
  - slackingoff2017 9y ago
    There's an artificial limit on the number of doctors
forvelin 9y ago

pavlov 9y ago

The middleman role of insurance companies in American healthcare seems completely useless. They're not serving patients, doctors nor the national economy by siphoning off enormous profits from the 17% of GDP that gets spent on healthcare. Getting rid of them would be extremely hard, of course, given how well entrenched they are thanks to lobbying and regulatory capture. Insurance companies are a massive-scale version of the car dealerships that have managed to keep Tesla out of many US states by taking advantage of local legislation -- nobody would want to deal with a car salesman or an insurance company given the choice.

dredmorbius 9y ago
As with most politically-powerful entities: first shrink, then drown. That, ultimately is how the tobacco industry was (mostly) quashed.
devoply 9y ago
You have to be determined, not just determined, but Ralph Nader determined. If you are Ralph Nader determined, then in America there is no company or lobby that can stop you. That's in fact one of the best things about America, out of everything else. That activism can't be stopped. That free speech is for the most part respected. And if you are determined to get some truth heard, you will eventually succeed if you try hard enough.
smt88 9y ago
> seems completely useless Some people (not me) would argue that their existence and competition create better choices for consumers. For example, in theory, a single-payer system could have a single price (via taxes) and a single level of coverage. By contrast, private insurance companies are able to offer many different products depending on someone's tolerance for risk. I don't think the private, market-driven system for health care is better in that regard, but some people do.
- Broken_Hippo 9y ago
  1. You can have single payer with the option for private insurance. Many countries do that. From what I can gather, here (Norway) one can get quicker service with the private doctors. The national health plan still pays the private doctors the national rate, and you pay the difference.

RichardHeart 9y ago

Health care costs would be lower, if more people were able to provide health care service. If the world focused less on rate my sandwich apps, and more on fixing humans, the prices would be much more affordable.

ransom1538 9y ago

Americans unable to afford healthcare are just waiting in line to become bankrupt. A study done at Harvard University indicates that this [medical costs] is the biggest cause of bankruptcy, representing 62% of all personal bankruptcies. http://www.investopedia.com/slide-show/top-5-reasons-why-people-go-bankrupt/ http://www.investopedia.com/slide-show/top-5-reasons-why-peo...

heisenbit 9y ago

In the US the health care cost since 95 went from 13.1 to 17.1 while in Germany they went from 9.4. to 11.3. It is actually way worse than the article tells if one considers the age structure of the two countries where Germany has 21.7% over 65 vs. the US with 15.25%. The non tangible cost are also non negligible. There is friction in the job market as changing job risks incurring a potentially catastrophic coverage gap. There are bizarre industries focused on renegotiating issued medical bills, collecting those or managing the health related bankruptcies. Pricing of pharmaceutical usually generally defies the laws of gravity as the incentives of regulators, suppliers, distributors, doctors and insurers have been distorted beyond anything resembling a fair playing field. In such an environment playing games is superior than providing value and adhering to generally accepted rules. When it comes to pricing the costs of providing the service is often the least important input. Steve Balmer recently: “If you look at these tax deductions for employer-provided health [...], they’re really subsidies to the affluent, which I guess I hadn’t thought about them.” The biggest problem society faces at the moment is the vanishing middle class and lower qualified jobs that are still providing enough to subside. For the latter the cost of food, shelter, fuel and health are key. Lower the cost of living and there will be more jobs that are worth taking.

fetbaffe 9y ago
Yes, remove the tax deductions for employer-provided health care is good start. Employers should not decide what kind of health care you have access to, as little as for food.
- maxxxxx 9y ago
  That was one thing McCain had right in 2008. Removing employer health insurance would also remove a lot of political controversy like whether contraception should be offered. It's simply should not be the employer's business.

faragon 9y ago

Amazon could disrupt providing Health Care services in the US. Current price overhead versus over developed countries is huge, so an efficient provider could shock the whole HC market.

ewood 9y ago

Why the U.S. pays more for health care than the rest of the world https://www.youtube.com/watch?v=gXBPKE28UF0 https://www.youtube.com/watch?v=gXBPKE28UF0

ivanhoe 9y ago

Looking from the outside, it seems to me that the root of the problem is not about the health care in US, but about the prices of health related services and products? Prices are so inflated, hospital and medication bills are huge compared to what the same things costs in Europe or elsewhere.

kauffj 9y ago

The most insightful and thought provoking analysis of health care I've seen in the last several years is this one: https://randomcriticalanalysis.wordpress.com/2016/09/25/high-us-health-care-spending-is-quite-well-explained-by-its-high-material-standard-of-living/ https://randomcriticalanalysis.wordpress.com/2016/09/25/high... It argues that the high cost of health care in the United States is explained by its extreme wealth and that health care is a superior good (https://en.wikipedia.org/wiki/Superior_good https://en.wikipedia.org/wiki/Superior_good). This is a much different explanation than what is given by either political party. Anyone have any points in support of or against this argument?

zip1234 9y ago
Health care costs have an incentive and price transparency problem. If hospitals had to post their prices on the internet and people had an incentive to save money, the costs would go way down. There may be some truth to the argument, but the author ignores the ability of a market to drive down prices and improve products. As it stands, we have a market, but the lack of price transparency causes significant inefficiencies. The government should tweak the current system to require open data standards. This would allow a value-for-money comparison when people choose physicians/treatment and increase the efficiency of the system.

psyc 9y ago

There are no sane constraints on the prices. Instead of "price is what the market will bear," it's "the market will bear whatever price." This creates an irrational drain on the rest of the system. Whoever is sucking on that drain is doing well, though. My grandfather used to get a shot that was $12,000 a pop, and didn't do anything.

hudu 9y ago

The pharma industry should open up; it is dominated by corporatism and their monopoly patents driving up prices, which make individual spending on drugs rise till an unaffordable level for the lower income.

bischofs 9y ago

I really think health care costs in the US are a byproduct of Americans obsession with convenience. Most lifestyles can be lived without any physical activity - the whole country is designed around the car. Traveling around a bit I've seen other cultures still require people to walk somewhat to get places and people will also just go on "walks" whereas Americans will go for a "drive" Food culture is also responsible, just jamming food into your face as quickly as possible rather than enjoying a meal is for sure and American thing. Add all this up and you get 60% obesity rates in adults and getting worse.

bedhead 9y ago

There are many, many problems with healthcare in the US. Off the top of my head, the big ones are: * Endless number of middlemen and administrators. * Every player in the healthcare chain benefits from higher prices. * No price transparency. * Tacit collusion is rampant. * "Cost no object" mentality to treating the dying. The last one, while insensitive, is true nonetheless, and it's alarming that over 50% of all healthcare spending takes place in the last two years of a person's life. We have basically decided that it's okay to spend literally any sum of money on a dying person in order to prolong life by an average of a few months. And the problematic word there is average, because some people do live a lot longer, and that's what we all look to. I realize this is grim and seemingly lacks humanity, but unfortunately that doesn't make it not true. Charlie Munger, who is on the board of Kaiser Permanente, said this same thing yesterday..."over-treatment of the dying" was the biggest problem they faced. It's reminiscent of our approach to college education - justified at any cost. So we push millions of kids into a schooling system that's not right for them, and the result is a lot of crappy education, worthless degrees, student loans, etc. Once we flip the switch to "there is no price you can put on _____" things get sideways FAST.

gambiting 9y ago
Well, the argument here is that for example, there are types of cancer which have extremely low survivalability rate, like 1 out 10 people who get it survive it. But we still treat them, and sure, right now 90% of them die but the data is used to create new drugs which in the future might improve the odds. If we just straight up said "it's very unlikely this person will survive so we won't spend $$$ on trying treatment" then we wouldn't get anywhere with many different medicines.
- killjoywashere 9y ago
  Those are pharma dollars. Different pot of money.
rcarrigan87 9y ago
Keeping people alive too long is definitely a really difficult problem. Having walked through many dementia floors in nursing homes, I'd prefer to have some reasonable way of opting for assisted suicide in my will. Maybe once a consortium of doctors verifies I'm at a specified stage of dementia. Assisted suicide is another tricky area but I think it is humane when administered properly.

ralfd 9y ago

Obligatory Slate Star Codex Link: http://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ http://slatestarcodex.com/2017/02/09/considerations-on-cost-... Scott Alexander examines "cost disease" in the sectors of health care and education.

brownbat 9y ago
Strongly recommend the work on Random Critical Analysis linked to by SSC there. Approx. zero people reading this will believe the conclusion, but RCA argues that the US is not really an outlier on healthcare costs. There's a dizzying amount of data and statistics levied for the argument. It's a fascinating read even if you don't agree just because of how much is put into the argument. https://randomcriticalanalysis.wordpress.com/2014/11/24/national-healthcare-expenditure-united-states-versus-other-countries-the-us-is-not-really-an-outlier/ https://randomcriticalanalysis.wordpress.com/2014/11/24/nati... https://randomcriticalanalysis.wordpress.com/2016/09/25/high-us-health-care-spending-is-quite-well-explained-by-its-high-material-standard-of-living/ https://randomcriticalanalysis.wordpress.com/2016/09/25/high...
- akamaka 9y ago
  Incredible. This blogger indeed uses a dizzying amount of graphs, but doesn't mention until the end that he has built his entire argument on the assumption that Americans "choose" to spend their higher income on health care.
  - rcafdm 9y ago
    That was mentioned at the very start of the 2nd link (see "superior good") and it's true virtually everywhere in the long run (especially in developed countries with reasonably reliable growth in disposable incomes and where we have pretty reliable data). If we want to identify systems that might allow us to contain costs on the margins knowing who spends least or the most is not informative in and of itself. Rather we should be interested in residuals with the best model, as in, who is furthest below trend (as a function of comprehensive consumption or disposable income), what plausibly explains this, and whether are we actually willing and able to implement those sorts of features in our system.... Incidentally these patterns are not only found in health care, the basket of goods has changed and continues to change as countries get richer: https://randomcriticalanalysis.wordpress.com/2017/05/09/towards-a-general-factor-of-consumption/ https://randomcriticalanalysis.wordpress.com/2017/05/09/towa...

british_india 9y ago

The real problem with health care is that it's a gravy train for all involved. Doctors, who don't invent anything new and who just practice garden-variety medicine are wildly overpaid. They don't like it be known, but the average doctor earns a quarter-million a year. Totally unjustified. Then there are the medical device manufacturers, big Pharma and the hospitals. They all are getting rich off the current system. That's what needs to change.

kingbirdy 9y ago
Doctors are so highly paid as a function of their scarcity, which is itself a function of the high barriers to entry (intense schooling, selective admissions, high costs). I think the first 2 barriers are necessary to keep quality high, but doing something about the 3rd could help lower costs by increasing the supply of doctors, and I certainly think that's a better solution than being mad at the doctors for accepting a high salary that's offered to them.
- MagnumOpus 9y ago
  Schooling costs are high because of the length of the program - four years of pre-med, four years of med school. Compare in the UK - five years instead of eight, taking 2 years of pre-clinical courses and 3 years of clinical courses, subsidised to a good extent by the state. UK doctors seem equally skilled, and have minimal student debt. Scarcity being a function of selective admissions is a tautology. To be useful, selectivity would need to be to some objective minimum standard, rather than enforcing an ever-changing standard that enforces the restriction of the profession to an arbitrary small number of entrants.
potatote 9y ago
I believe that the big pharma and the insurance companies are certainly part of the problem, but rarely do we mention doctors as a contributing factor (albeit relatively small) to the high cost. The American Medical Association (AMA) does its duty to restrict the supply of doctors [1]. Countries like India, which produces plenty of high quality doctors, does not require aspiring doctors to go through an additional (unnecessary) 4 years of undergrad education. That would hugely cut the cost down in training the doctors. Secondly, doctors on average makes $200K/year [2] or more. I have four housemates, who were trained in Myanmar (went through five years of medical school there right after high school) and scored above 95th percentile or more in all three steps of their USMLEs, to get into the residency programs in the US. One of them is going into general practice (family medicine) in Virginia and her starting salary is: $210K/year. I have no doubt that she (or anyone who has been trained 5 years in a decent med school--without the 4-year undergrad prior to that) is more than capable of treating generic diseases and illnesses. But this shows that we can train doctors cheaper and that we can reduce their pay by quite a bit (no hard-working person in other profession--except maybe Banking--could easily earn $210K/year to do such a relatively uneventful--in my opinion--job). I regret quitting med school in Myanmar in the third year. Then, I thought med school training involves too much rote learning (a lot of memorization in organic chem for example) and that I'd rather do something more 'exciting' like tech or math. I was wrong. [1] https://mises.org/library/how-government-helped-create-coming-doctor-shortage https://mises.org/library/how-government-helped-create-comin... [2] https://www.theatlantic.com/health/archive/2015/01/physician-salaries/384846/ https://www.theatlantic.com/health/archive/2015/01/physician...

dalbasal 9y ago

I’m not American, but I’ve been hearing about your health system for a several years. Ironically, I know more about it than my own country’s (Ireland). Several years ago, there seemed to be a lot of talk about how much The US spends (private & public) per capita on health. It’s a lot more than everywhere else. This was usually presented in the context of the health care “regime” A UK-esque system, a Swiss-like system, etc. Lately, that comparison seems to come up less. Obama-care, Trump-care or Bernie-care would mostly deal with who pays & how, not how much. The “who pays” question is a favourite ideological one so politicians and commentators are comfortable with it. But, I think the “how much” question is probably the more important one, and the harder one to solve. If the US could get costs down to average European rates, then I’m sure a workable system could be found within the confines of most ideological frameworks. The problem is that getting costs down is almost impossible. Costs are salaries of doctors & nurses, a giant pharmaceutical industry, thousands of radiologists, ultrasound technicians, the machines they use (far more frequently than europeans)… Getting costs down to EU levels would be mean the medical industry shrinks like manufacturing shrunk two generations ago. I don’t have a solution to suggest, but I do suggest toning down the ideological discussion. The problem is more of a technical one.

zanny 9y ago
Is it technical? There is a reason the US is unique in the world in both its unsocialized healthcare and in its costs. While socialized medicine now may not reverse the out of control spending, we can observe that the lack of it was the most likely cause. In the semi-private market of American healthcare that has been around since the 70s, the incentives structure has been absurdly broken for so long it should be no surprise you pay more for mediocre results. At this point though, going with the known working solution sooner rather than later is the technically most plausible way to stop the cost expansion. It is exactly like people debating about national debt - you can't complain or argue about how to pay it off until you stop adding to it every year, often with an increasing deficit (which is how republican administrations for the last 30 years have governed). It is crazy to argue that in the moment your house is on fire to try this untested strategy of using giant fans to blow the fire out that nobody else has done versus going with the tried and true use a fire truck to extinguish the blaze. Experiment after everything isn't on fire.

ChicagoBoy11 9y ago

Yes, this is an academic article, but I can think of no better resource for a pretty sane discussion on all the insanities in our healthcare system: http://faculty.chicagobooth.edu/john.cochrane/research/papers/after_aca_published.pdf http://faculty.chicagobooth.edu/john.cochrane/research/paper... The thing that is pretty remarkable is that you unfortunately realize just how far either political party is in addressing any of the issues brought in the piece.

CWuestefeld 9y ago

By this argument, we should also be examining why we spend so much on education. In 2010, the United States spent 7.3 percent of its gross domestic product on education, compared with the 6.3 percent average of other OECD countries. Surely spending dramatically higher amounts than other countries, with no better effects, is enough to drive us to consider how we can reduce the costs of education - and should make us think long and hard before considering proposals that we should throw even more money at this. It's surely true that having a well-educated workforce improves productivity, but it's also true that having a healthy workforce does the same. I'm having trouble finding much difference between the two examples.

alistairSH 9y ago

Question for y'all... Have your health care providers started being more conscious or out-spoken about cost? Mine definitely have, both for prescriptions and procedures.

moomin 9y ago

Frankly, I just stubbed my big toe and that's a bigger problem than US corporation tax.

jcfrei 9y ago

Would it be a worthwhile idea to open up health care internationally? Maybe insurance companies could create global standards for medical procedures, so that clients could choose in which countries they want to perform a procedure and then receive or pay the difference with regards to the cost of a national procedure. This could introduce some level of competition without jeopardizing quality - or am I missing something?

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chaibiker 9y ago

And entirely ignored seems to be the demand side of the question, why is that? Could expenses be higher than we want if we are less healthy that we should be? I see a lot of unhealthy habits associated with the subsequent associated costly interventions required. Just because we see no path forward to affect demand, leaving it out of the discussion will ensure the debate is framed only as which system can provide that volume of healthcare for a little more or a little less.

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pow_pp_-1_v 9y ago

I had kind of hoped that Trump would stumble into single payer health care as a solution for healthcare needs of his base and would somehow get it passed through congress with support from democrats. Alas, nothing of that sort seems likely.