4 ms·

1 idea to reduce healthcare costs and improve quality: * Institute a national, single-payer health insurance program.

tptacek 17y ago
I think he's saying the same thing, but his proposed program is a high-deductable+HSA plan.
pwnstigator 17y ago
One second-order benefit of universal healthcare is that countries with such plans view health problems as a social cost, so there's more regulation of food production, industrial practices, et cetera. Consequently, Western Europe is a safer and environmentally cleaner place, in many ways, to live.
yummyfajitas 17y ago
This will help how? There are few economies of scale to be gained by going national [1], and single-payer gives consumers no incentive to consume less. [1] You save a bit of money by having the IRS collect payments, but the billing department is not a major component of healthcare costs.
- abstractbill 17y ago
  It seems to be working rather well in a large number of other first-world countries (I'm speaking from experience - I'm British, and my wife is half-French and grew up in France. Now we live in the US where we enjoy just about everything except for the healthcare system). "single-payer gives consumers no incentive to consume less" Having been fortunate enough to live in a country with a single-payer system, I never saw the kind of over-consumption you're hinting at.
  - RyanMcGreal 17y ago
    I live in Canada, and have to laugh at free market fundamentalists who claim that single payer monopsonies encourage over-consumption. When it's pointed out that Canadians actually see doctors less frequently than Americans, they turn around and conclude that Canadians can't get access to doctors.
    - pwnstigator 17y ago
      Mouth-breathing teabagger reasoning: It's soshullism, therefore it must suck. Also, Canada's cold and Europe can't decide on a common language, so no point taking those people seriously. I also find it odd that these people can focus on the comparably miniscule problem with the Canadian and British systems, while completely ignoring the glaring faults of ours.
  - yummyfajitas 17y ago
    I didn't say it couldn't work. I said that there are minimal (if any) benefits to a national health care system, as opposed to city, state or private systems. The economies of scale just aren't there. As for overconsumption, the RAND experiment (as well as plenty of other statistical studies) shows that consumers will consume up to 40% more health care than they need if it is free (but not if they must pay out of pocket for it). Most likely your country either prevents this via other rationing mechanisms (which are politically infeasible in the US) or else you observed it but were unaware of it.
- Retric 17y ago
  I have seen numbers anywhere between 15 to 30% as the overhead / billing cost of healthcare in the USA. It depends on what you call overhead, but pre approval for a procedure is not free. Neither is 3 or 4 letters back and forth between the healthcare provider and the insurance company. PS: Many small doctors’ offices have 1/3 of their staff devoted to dealing with insurance and billing issues.
  - yummyfajitas 17y ago
    A pre-approval may cost $10-20. An unnecessary procedure may cost $1000. If you cut admin costs by $100 at the expense of $1000 in unnecessary procedures, you will lower the percentage of overhead quite nicely. You will also be wasting $900. Is there any reason to believe the (highly competitive) health insurance market is far from the optimum overhead/healthcare ratio? If you know better, why don't you build a startup to exploit this and get rich?
    - Retric 17y ago
      Insurance companies don't directly pay for the total costs of pre-approval so they optimize to minimize personal costs independent from the total cost to the system. In other words doctor's offices don't bill them for the time a sectary spends filling out their forms. Which means doctors include that overhead cost as part of the cost of procedures. Also while each insurance company's internal system is streamlined each doctor's office needs to deal with several companies’ which increases their overhead costs even more. It's like a large game of Prisoner's dilemma where several people have already defected. http://en.wikipedia.org/wiki/Prisoners_dilemma http://en.wikipedia.org/wiki/Prisoners_dilemma PS: A doctor making 200k/year spending 5 minutes on a pre aproval cost's someone more than 10$. The patent needs to show up which costs them even more money etc.
      - yummyfajitas 17y ago
        How large is the cost of a secretary filling out a form compared to an MRI? You are talking about adding a few dollars to the cost of an a procedure priced at $400 or more (I don't need preapproval below $400). A doctor only needs to get involved in the case that a preapproval is not granted, i.e. when the procedure appears unnecessary.
- tptacek 17y ago
  Uh, isn't this --- respectfully --- ass backwards? The benefit of going national is that you greatly expand the risk pool. All I know about insurance I got from listening to Robert Schiller's financial markets class on iTunes, but, I'm pretty sure that's how insurance is supposed to work.
  - yummyfajitas 17y ago
    Work out the numbers and you'll see why it isn't. The variance in health care payouts over a pool of N people is proportional to sqrt(N), whereas the mean is proportional to N (see the central limit theorem). For a family of N=1 to N=4, sqrt(N) is of the same order of magnitude as N. This is bad, since you can't reasonably predict how much you need to pay. This is why insurance makes sense for me (N=1) or a family of N=4. Once N=10,000, sqrt(N) = 100, so the variance is only 1/100 of the mean. At N=100,000, it's only 3/1000 of the mean. Every factor of 10 increase in the insured pool lowers the standard deviation by a factor of 0.316=1/sqrt(10).
    - tptacek 17y ago
      That's a good point. But you've ignored adverse selection. Many of the people commenting here have no insurance coverage, because they're 22 and it is irrational for them to pay for coverage they're not mandated to have. I see that if people were i.i.d., the difference between BCBS's risk pool and Medicare's risk pool would be irrelevant. But they aren't.
      - yummyfajitas 17y ago
        I don't need people to be i.i.d. Statistical independence along with some minor technical conditions are sufficient. http://en.wikipedia.org/wiki/Lyapunov_condition http://en.wikipedia.org/wiki/Lyapunov_condition http://en.wikipedia.org/wiki/Lindeberg%27s_condition http://en.wikipedia.org/wiki/Lindeberg%27s_condition Lumping in seniors with 22 year olds does not reduce the variance any more than lumping in 22 year olds with more 22 year olds does. Statistical variance is not a major contributor to the cost of health insurance. You are simply wrong on this point. Additionally, adverse selection has nothing to do with a variable risk pool. Adverse selection is a problem caused by asymmetrical information: if you know you are sick, you might lie to your insurance company about preexisting conditions to gain insurance. Adverse selection also has nothing to do with a variable risk pool.

I think he's saying the same thing, but his proposed program is a high-deductable+HSA plan.

One second-order benefit of universal healthcare is that countries with such plans view health problems as a social cost, so there's more regulation of food production, industrial practices, et cetera. Consequently, Western Europe is a safer and environmentally cleaner place, in many ways, to live.

yummyfajitas 17y ago

This will help how? There are few economies of scale to be gained by going national [1], and single-payer gives consumers no incentive to consume less. [1] You save a bit of money by having the IRS collect payments, but the billing department is not a major component of healthcare costs.

abstractbill 17y ago
It seems to be working rather well in a large number of other first-world countries (I'm speaking from experience - I'm British, and my wife is half-French and grew up in France. Now we live in the US where we enjoy just about everything except for the healthcare system). "single-payer gives consumers no incentive to consume less" Having been fortunate enough to live in a country with a single-payer system, I never saw the kind of over-consumption you're hinting at.
- RyanMcGreal 17y ago
  I live in Canada, and have to laugh at free market fundamentalists who claim that single payer monopsonies encourage over-consumption. When it's pointed out that Canadians actually see doctors less frequently than Americans, they turn around and conclude that Canadians can't get access to doctors.
  - pwnstigator 17y ago
    Mouth-breathing teabagger reasoning: It's soshullism, therefore it must suck. Also, Canada's cold and Europe can't decide on a common language, so no point taking those people seriously. I also find it odd that these people can focus on the comparably miniscule problem with the Canadian and British systems, while completely ignoring the glaring faults of ours.
- yummyfajitas 17y ago
  I didn't say it couldn't work. I said that there are minimal (if any) benefits to a national health care system, as opposed to city, state or private systems. The economies of scale just aren't there. As for overconsumption, the RAND experiment (as well as plenty of other statistical studies) shows that consumers will consume up to 40% more health care than they need if it is free (but not if they must pay out of pocket for it). Most likely your country either prevents this via other rationing mechanisms (which are politically infeasible in the US) or else you observed it but were unaware of it.
Retric 17y ago
I have seen numbers anywhere between 15 to 30% as the overhead / billing cost of healthcare in the USA. It depends on what you call overhead, but pre approval for a procedure is not free. Neither is 3 or 4 letters back and forth between the healthcare provider and the insurance company. PS: Many small doctors’ offices have 1/3 of their staff devoted to dealing with insurance and billing issues.
- yummyfajitas 17y ago
  A pre-approval may cost $10-20. An unnecessary procedure may cost $1000. If you cut admin costs by $100 at the expense of $1000 in unnecessary procedures, you will lower the percentage of overhead quite nicely. You will also be wasting $900. Is there any reason to believe the (highly competitive) health insurance market is far from the optimum overhead/healthcare ratio? If you know better, why don't you build a startup to exploit this and get rich?
  - Retric 17y ago
    Insurance companies don't directly pay for the total costs of pre-approval so they optimize to minimize personal costs independent from the total cost to the system. In other words doctor's offices don't bill them for the time a sectary spends filling out their forms. Which means doctors include that overhead cost as part of the cost of procedures. Also while each insurance company's internal system is streamlined each doctor's office needs to deal with several companies’ which increases their overhead costs even more. It's like a large game of Prisoner's dilemma where several people have already defected. http://en.wikipedia.org/wiki/Prisoners_dilemma http://en.wikipedia.org/wiki/Prisoners_dilemma PS: A doctor making 200k/year spending 5 minutes on a pre aproval cost's someone more than 10$. The patent needs to show up which costs them even more money etc.
    - yummyfajitas 17y ago
      How large is the cost of a secretary filling out a form compared to an MRI? You are talking about adding a few dollars to the cost of an a procedure priced at $400 or more (I don't need preapproval below $400). A doctor only needs to get involved in the case that a preapproval is not granted, i.e. when the procedure appears unnecessary.
tptacek 17y ago
Uh, isn't this --- respectfully --- ass backwards? The benefit of going national is that you greatly expand the risk pool. All I know about insurance I got from listening to Robert Schiller's financial markets class on iTunes, but, I'm pretty sure that's how insurance is supposed to work.
- yummyfajitas 17y ago
  Work out the numbers and you'll see why it isn't. The variance in health care payouts over a pool of N people is proportional to sqrt(N), whereas the mean is proportional to N (see the central limit theorem). For a family of N=1 to N=4, sqrt(N) is of the same order of magnitude as N. This is bad, since you can't reasonably predict how much you need to pay. This is why insurance makes sense for me (N=1) or a family of N=4. Once N=10,000, sqrt(N) = 100, so the variance is only 1/100 of the mean. At N=100,000, it's only 3/1000 of the mean. Every factor of 10 increase in the insured pool lowers the standard deviation by a factor of 0.316=1/sqrt(10).
  - tptacek 17y ago
    That's a good point. But you've ignored adverse selection. Many of the people commenting here have no insurance coverage, because they're 22 and it is irrational for them to pay for coverage they're not mandated to have. I see that if people were i.i.d., the difference between BCBS's risk pool and Medicare's risk pool would be irrelevant. But they aren't.
    - yummyfajitas 17y ago
      I don't need people to be i.i.d. Statistical independence along with some minor technical conditions are sufficient. http://en.wikipedia.org/wiki/Lyapunov_condition http://en.wikipedia.org/wiki/Lyapunov_condition http://en.wikipedia.org/wiki/Lindeberg%27s_condition http://en.wikipedia.org/wiki/Lindeberg%27s_condition Lumping in seniors with 22 year olds does not reduce the variance any more than lumping in 22 year olds with more 22 year olds does. Statistical variance is not a major contributor to the cost of health insurance. You are simply wrong on this point. Additionally, adverse selection has nothing to do with a variable risk pool. Adverse selection is a problem caused by asymmetrical information: if you know you are sick, you might lie to your insurance company about preexisting conditions to gain insurance. Adverse selection also has nothing to do with a variable risk pool.