Healthcare Costs, Externalities, and Changing Social Norms
One of the topics I’ve railed about many times during the decade and change in which I’ve been blogging is that society would be much better off if we forced people to pay the cost of negative externalities they impose on other people through their behavior. An obvious example would be making polluters pay for the cost that the pollution they emit inflicts on everyone else.
But it turns out there are a lot of these behavioral externalities in healthcare. For instance, here’s an infographic I took from Blue Cross Blue Shield:
I imagine there are a few instances where obesity is a medical condition due to circumstances outside the control of a patient’s willpower, but I suspect that accounts for very few cases. Most people in today’s America have the ability, during most of their life, to control to a fair extent how much they eat, drink, smoke and exercise.
Elsewhere, Blue Cross Blue Shield also tells us this:
So assuming BCBS is correct, 86 percent of US healthcare costs come from treating chronic diseases. Chronic diseases include:
I am no doctor, but I understand some (and I hasten to repeat the word “some”) of the conditions can, in some cases, be brought about by a person’s behavior. For example, HIV can come from unprotected sex with prostitutes or IV drug use, diabetes from poor dietary choices and lack of exercise, and some psychotic disorders can be brought on or worsened by by drug use.
What if, going forward, we should cease to cover the costs of health conditions brought on by a person’s own behavior (when they can be identified as such)? This would be disruptive, so I don’t think it should be done cold turkey, but rather the way Social Security benefits get cut by ratcheting up the age at which a person can get benefits. For example, we could simply state that on date X, any new cases of lung cancer which are traceable to a person’s tobacco use are not to be treated at the expense of Medicare or Medicaid, and private insurance companies might be encouraged to do the same.
Note – people who used to smoke, or eat unhealthy, or not exercise a long time ago might have been submitting to societal pressures. But for the past few decades, the world has been a different place. Societal pressures now are to eat healthy, eschew illegal drugs, avoid smoking, avoid drinking in excess, and to exercise. We’ve moved from “smoke ’em if you got ’em” to “if you want to smoke, you need to do it in the smoking section.” Then we went to “you need to go outside to smoke.” These days you see smokers forced to stand some distance away from many office buildings if they want to get their nicotine hit. Next to where I work are some office buildings occupied by a health insurance company. Smokers who work there seem to be forced leave the premises completely (they are usually standing in the street, even in the rain). For many people, getting lung cancer went from the cost of conforming to social norms to being a consequence of anti-social behavior. If you get diagnosed with lung cancer, you may look for a medical facility that provides Lung cancer care and treatment services.
So what would be the effect of taking the treatment for these conditions off the public purse? I’d say the following:
1. We would see some number of cases of fraud where people would insist their behavior did not induce some outcome. A lying patient is harder to treat, so I’m guessing this would go some way toward worsening the outcomes of successful fraudsters.
2. The life expectancy and perhaps qualify of life of people who self-induce these problems would go down.
3. The incentive of people to minimize these behaviors would go up. Of course, not all of them would respond the right way, but some would. Particularly in light of the life expectancy issue in point 2. Overall healthcare costs would go down.
4. The cost to the public would go down.
Thoughts?
(One comment… I am pretty sure I recently read something proposing some part of this recently, but for the life of me, I cannot remember what or where. My apologies if I’m inadvertently stealing someone else’s idea.)
Kimel: “My apologies if I’m inadvertently stealing someone else’s idea.”
I think that person would be Adolph Hitler.
Maybe this was mentioned briefly in the original Freakonomics, I’m not sure, but in many or even most cases, people who behave ‘badly’ in these ways might actually *save* society money on net, simply by dying earlier. Dead people don’t collect Social Security, or burden their families or society, even while very few die soon enough these days to shorten their work lives appreciably. (I’d add that in some industries, blind seniority rules overpay people towards the end.)
I’d also add that in the system of rackets that is US medicine, nearly everyone dies expensively. And in the system of rackets that is US pharma, most also age expensively. No one stays young forever, regardless of behavior, and the patent system stands ever ready to bleed them dry to pay for the vast palaces of California rentiers. In the end, ‘good’ behavior lengthens the (largely artificially) expensive portion of life, possibly negating the externalities.
Therefore, under present-day social and economic conditions it might be morally reprehensible to “go there”, even if it would align well with bossy American puritanism to do so. That is, if it indeed turns out to be cheaper *overall* to have people smoke, ought we to turn around and encourage them to do so?
Maybe it would be best for the time being to leave the snide puritanism (and airy analysis of supposed externalities) to Paul Ryan & Co, and work instead on ridding ourselves of the racketeering.
Confused. At the same time you intend to correct the behavior of tobacco companies, the snack food industry, the car companies for destroying walking, school boards for removing sports curriculum, etc. Educating and creating incentives to improve people’s health OK. BUT the issue presented as moral weakness or am I missing something is an idea i believe I could resist.
BillB,
Actually, as I was writing the post, I had an uncomfortable thought that this was very close to what a different totalitarian-oriented politician might think. I was thinking “from each according to his abilities, to each according to his needs.”
After all, just about every person has the ability to control his behavior, and thus avoid imposing costs of their behavior on everyone else. On the other hand, that frees up resources that can be spent on people who get the short end of the genetic lottery and acquire a disease through no fault of their own.
PaulS,
This proposal does more than make it cheaper overall. It also reduces externalities and therefore aligns incentives.. As I said in the post, I approached this from the point of view of externalities.
Heim,
See paragraph 1 of the post. If it were up to me, companies would pay for the costs they impose on third parties. I don’t see the benefit of trying to educate a company into not dumping toxic waste somewhere when you can simply force it to cover all the costs of doing so.
I am not presenting it as a moral weakness, except insofar as dumping the costs of one’s behavior on one’s neighbor is a moral weakness. I am, however, pointing out that if anything it is easier now than at any time in the past to behave in ways that reduce externalities.
You really do not understand the cost drivers despite PaulS efforts and you can not establish that you would save money or get at the externalities. I daresay that one of the reasons that the incidence of Altzheimer disease is increasing–clearly a very expensive disease–is that people are living longer primarily because of better treatment of heart disease and cancer, but also likely because of a decline in smoking rates
people who behave ‘badly’ in these ways might actually *save* society money on net, simply by dying earlier.
Yeah, and if Blue Cross is trying to argue the opposite, you can be sure it’s true
Healthcare and and health insurance in the US is riddled with what in any other context would be called fraud. The biggest fraud is that market forces are going to increase efficiency and contain cost when the facts show they do the opposite.
Mike,
The problem is these things happen (or if, you will, are self-induced) by people that we love and we don’t want to lose — alternately are brought on ourselves whom we definitely don’t want to lose.
We want to save our sibling (half our genes) who shouldn’t smoke/ we want to save our cousin (quarter of our genes) who eats too much/ we want to save our nephew (eighth of our genes) who hits the bottle (in evolution of animal behavior terms this is called kin selection)/ and we wish our unrelated friend (no shared genes — group selection) wouldn’t ride a motorcycle.
But, until we get into a proper Brave New World where we say “our favorite person” the way we say “our favorite flavor” with no love or personal attachment emotions — it looks like we’ll be struggling to come up with the best health care system for the most humans.
My (predictable) proposal on that: we can choose any health system we want from any country we like but it wont stop the proliferation of financialization of US medicine (single payer Medicare certainly hasn’t) without a countervailing force: rebuilt US labor union density.
[cut-and-paste]
Nobody would argue I think that when 1935 Congress passed the NLRA(a) it consciously left criminal prosecution of union busting blank because it desired states to individually take that up in their localities. Conversely, I don’t think anybody thinks Congress deliberately left out criminal sanctions because it objected to such.
Congress left criminal sanctions blank in US labor law because it thought it had done enough. States disagree? States are perfectly free to fill in the blanks protecting not just union organizing but any kind of collective bargaining more generally — without worrying about federal preemption. Don’t see why even Trump USSC judge would find fault with that.
This column from the other day gives me hope that Krugman may (finally) be catching on to the centrality of re-building union density.
https://krugman.blogs.nytimes.com/2017/05/23/trucking-and-blue-collar-woes/
Mike, I sure hope you are not endorsing this plan. It is worse than what insurance companies try to do with preexisting conditions.
Mike, you make the common mistake of assuming people have more agency than they do, in fact, have.
Take obesity, for instance. US obesity rates have sloped upwards alarmingly since 1985 (map. https://m.youtube.com/watch?v=uH0tWM4H0h8). That’s one generation. Watching the map change, it appears as though the whole nation has edged upwards in step, though some areas, like the American South, have always led the way. In ’85, the highest rate on the map was 10-15%. By 2010, it was >30%.
Did millions of Americans take it into their heads to aspire to a more manatee-like profile? Or did one or more factors predispose them to obesity? Considering the body-shaming accompanying obesity, and the desperate and ineffective efforts people undertake to reverse it, I’d plump for the latter. […sorry…]
IF you want a society where these so-called choices deprive people of health care, then at the same time you must seek out and change or punish the overarching influences that define or at least nudge those choices. Advertising. Junk food. Antibiotics. Anxiety. A car culture. No public transit options. Plus, probably, many environmental pollutants whose effects we’re only now beginning to understand.
Heck, you could probably approach 20% of chronic ills simply by addressing the anxiety and loss of control imposed over the last generation by changes in US business and governmental norms.
Do people choose to be ill and disabled? Do people choose to be unemployed? Do they say, oh boy! here’s my chance to live in a shelter and have my feet amputated! Listening to the Right, you’d almost think so.
Terry,
I understand that healthier lifestyles will lead to people having longer productive lives which raises the likelihood of them getting diseases that they do not bring upon themselves. But I think I also have an idea of how the math works.
Take the guy who who would get diabetes, along with his feet amputated, at age 53. Perhaps you’ve ended his working career. And maybe he dies at age 65 due to complications brought on by the diabetes. Now, say you could have convinced him to improve his diet, lose weight, and do a bit of exercise so he never got diabetes in the first place. Now he works until he’s 67, enjoys retirement for about 20 years, and eventually lapses into alzheimers and dies five years later. You just got 14 more years of productivity out of the guy (perhaps at the top of his earning range too), he got to enjoy a couple of decades of retirement, and he never lost his feet. You’ve got to die some time, and the option that doesn’t involve diabetes and feet being amputated seems likes its better for all involved.
Jim,
Is BCBS really encouraging people to acquire the deadliest, quickest and cheapest diseases?
DD,
You are correct that people always want an exemption for those they love. And when the rules get bent for everyone, you end up with a system like the one we have.
Jerry,
How is it worse? And for who?
Noni,
I do assume that people have agency. I think it is a fair assumption. Every adult of normal intelligence in this country knows they should eat healthy, exercise, and avoid smoking. That may not have been clear in the 1950s or even the 1960s, but it has been true for decades. The fact hat people ignore what they know to be true doesn’t make it false.
Some people do choose to be disabled. Maybe not explicitly, but if they choose the behaviors that cause diabetes, they make that choice by default. The example I keep coming back to over and over is GW’s 2001 Economic Blueprint where he explained how he was going to cut taxes, boost military spending, and pay down the debt. In reality, he made a choice. If you cut taxes and boost military spending, you’re choosing to boost the debt, regardless of what GW said. Similarly, if someone chooses to shoot heroine, they are choosing to destroy their health. Period.
I do believe society has different obligations toward people who are disabled because a) they are born with a genetic defect or b) were hit by a car than it does toward those who are disabled because c) they overindulged in something they shouldn’t or d) because they were shot while in the commission of a crime.
When we treat a, b, c, and d the same, we don’t have the resources to adequately provide for a and b.
Note also… I have written a number of posts on externalities by corporations. I stand by them. But I see no problems applying the same logic to people.
Mike,
Worse – fewer people will have health insurance.
Who – the people who do not have health insurance, and the rest of us that have to live with those consequences.
Jerry,
One of the benefits of a program such as I am suggesting is that it will get a lot of people to change their behavior. The people who won’t change their behavior will end up not only suffering the health consequences, but having to pay for those consequences rather than getting other people to pay for their choices.
On the other hand, many people will change their behavior. That means many people without amputated feet, or with lung cancer. Not only does their quality of life increase, but the monetary costs associated with dealing with those issues go away.
The Guiness joke on memory. You always remember money owed to you and often forget that which is owed. Externalities have that quality. Positive one cannot be forced to pay. Negative externalities you wish not have to pay. The general welfare is important to all. Not having your neighbor have T.B. A good thing. Good sewage and clean water. Not having the plague. A good thing. Helping people to be the best. A good thing. Ignoring them because they are “losers” feels harsh no matter the cost-benefit analysis.
So has anybody figured out yet why some people chose to smoke? Become obese? Succumb to drug abuse? Use sugar to sweeten foods? Salt to add flavor? Eat fatty foods that taste good?, Prefer to use “fast food joints” as opposed to making their own lunches, or dinners .. or even breakfasts?
Has anybody figured out why people make the choices they make and which people are more prone to making “poor” choices or “good” choices?
Sounds pretty much like Mr. Kimel is advocating “its their own fault” reasoning used by elitist right wing nuts.
I also make note that the dollar costs shown by the Blue Cross link for just three “choices” — smoking, obesity, & excess alcohol — amount to 16% of total US health care spending in 2015 ($502 billion /$3.2 trillion)
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/downloads/highlights.pdf
I suppose you can throw in all the other chronic health care conditions that result from making “poor choices” in many things, and that might add up to 50% of total health care expenditures in 2015.. even 80% I’d have to suppose, depending on how Mr. Kimel and his ilk would decide how every single choice people make affect their health care needs.
Now if we could just figure out how to make people behave like we want them to … or is that already known? Using coercive measures like executing them if they murder people for example sure reduced he rate of murders in the US (compared to Europe’s rate with no death penalty). Or then there’s selective breeding .. aka Eugenics.. which is proposed from time to time by the right wing nuts (usually racists or religious nuts) to “fix” the problems with the human species and make things “better”.
I mean just think about how many unwanted pregnancies could be avoided simply by “abstaining”.. or did Catholics try that already… maybe not abstaining is one of the “bad” choices people make.
I’m not quite sure how people would determine which “choices” they make are the “bad” ones they should “pay” for as their own intrinsic costs in order to avoid everybody else paying for their extrinsic costs.
Maybe obese people just eat too much … and that’s driven by their desire to be gluttons I suppose… are they born with glutton inducing Genes? or do they learn this from early child-hood by parents that don’t care what or how much their kids eat. Do parents know where the limit should be for every child’s appetite, degree of exertions of energy storeed? Or perhaps they should know better than to feed them stuff the grocers sell that taste good but are not healthy. Perhaps only “organic” foods are the only foods people should use. And candy? Oh ma’god .. what have humans gone and done to themselves in finding and growing sugar cane? or coffee beans, or mining salt, or eating fatty meats, or fermenting fruits and vegetables? These things should be limited ..and then who decides what the “right” limit should be?. If we leave it up to individuals then we can be sure most won’t adhere to what is “right”.. so they’ll have to pay for being “wrong” in what they decide.
In other words, somebody has to define what’s healthy and what’s not and for whom and in what quantities and under what circumstance to avoid making the “wrong” choices. .. whether for health or any other human condition. Didn’t we try that once in the US already with alcohol? How’d that work out? And then there’s that “war on drugs” .. how’s that working out?
Mr. Kimel’s proposing he or somebody he approves of make our choices for us… and if we make the “wrong” ones by their definitions, then we should pay for them so nobody else has to . Good luck with that approach to controlling human behavior Mr. Kimel. Any other Utopian ideas?
Heim,
We all want fewer cases of TB. But TB, from what I can tell, is the perfect example of a disease that makes my case. As I understand it, TB preys on people with a weakened immune system. One’s likelihood of getting the disease goes up if a person has HIV/AIDS, various cancers, is undergoing chemo, has kidney disease, is a drug or alcohol abuser, or is a heavy smoker.
Now… TB has gotten hard to treat because some strains of the disease have developed resistance to many of the drugs used to treat it. Why? Because those drugs get used so often that the TB bacteria have learned from heavy exposure.
That could have been avoided if fewer people had required treatment in the first place, which in turn would have been a likely consequence of fewer people with heavy drug habits or HIV or lung cancer. And my proposal to internalize externalities has, as a consequence, exactly that.
The goal would not be screw unto the losers (to use your term) because they are losers. The goal would be to get people to change their behavior to have fewer people catching diseases in the first place.
Dear Mr. Kimmel, I too think that we could have better health outcomes if personal better practices were observed. In the early eighties I worked at SF General in a ward labelled HIV With TB and another labelled HIV with Infectious Hepatitis. Given President Reagan’s view of the gay plague as described at the time was let them die because of their practices. The costs of this let them suffer for their sins are enormous both in dollar terms and future human suffering. Victims or not the price is too high. Can soceity do better? Yes.
Mike, Penalizing people for poor choices does not work very well. All you have to do is look at our penal system for proof of that.
Jerry,
Ad how is penalizing people by making them pay for other people’s poor choices working out in the healthcare system?
It is not a penalty. It is the price of iiving in a civilized society, just like many of our taxes. At least most of the rest of the world has already figured that out.
Jerry:
It is called a community rating today rather than an individual rating which existed pre-PPACA when 29 million more people were uninsured.
Me: I am crying crocodile tears for smokers paying 50% more than the lowest cost insuree. This is a tough pill to swallow for smokers who self-inflict this damage to themselves. The 50% premium for smokers pales in comparison to the 300% above the lowest cost insure, the elderly will pay for just being old a condition which is unavoidable. Come on Louise, you can not be serious.
Maggie Mahar: Most people don’t know the vast majority of adult smokers in the U.S. are low-income, didn’t complete high school, and leading very stressful lives. This is why they smoke. As a recent study of smokers in New Orleans and Memphis quotes one of the research subjects:
I think it is pretty clear what this is saying.
Not to mention food deserts run.
Or the manipulation of the codes to make more money for corporations like United Health…http://khn.org/morning-breakout/lawsuit-alleges-united-healthcare-overcharged-medicare-for-advantage-plan-customers/
Wellness programs get better results using positive reinforcement
Dan:
Terrible and the “Pink Cadillac” with the black lady with the big Aretha Franklin hat driving from exchange to exchange cashing welfare checks. Maggie did teach me a lot while I was editing for her. Take away the worries and the need subsides.
Dan,
Food desserts are a problem, but they aren’t remotely the cause of the obesity epidemic in this country. A food dessert just means that the quality of food available is relatively poor, but not that the quantity eaten has to be enormous or that exercise must be avoided.
In college I subsisted largely on ramen and peas. Its what I could afford that I also had the skills and time (I was working a lot of hours) to make. The peas were usually canned and thus heavily salted. Ramen is crap. Despite the fact that the quality of my diet had become much worse than it was when I was in high school, I would guess I ended college in the same shape as when I left high school simply by knowing that even ramen and canned peas can be eaten in moderation.
“Wellness programs get better results using positive reinforcement”
Yes, but another rule of thumb is that people tend to get more of something if it is subsidized. We are subsidizing people’s bad behavior by spreading the costs of that behavior to other people.
I am sure your idea is well intentioned, but it appears to raise insuperable measurement problems likely (at least in a system with private insurers and health-care providers) to cause even more gaming and rent-seeking than we already endure. While a few behavioral causes have a high correlation with poor health — e.g. smoking — the correlations are weaker for other behavior, as are our understanding of the relationship between genes, behavior, condition (e.g. obesity), and health effects. For expensive issues such as Alzheimer’s, much heart disease, etc., it is very hard to assess the contribution of behavioral versus genetic or environmental causes. Assessing costs based on a purely statistical/epidemiological basis under such circumstances risks causing substantial injustices.
Think it through more carefully… this is not, I think, a viable way to think about health care costs and behavior in most cases (especially when many people require subsidies even to be able to cover the average cost of insurance for our bloated health-care costs).
The rest of the world has figured out how to provide healthcare for everyone without denying coverage because of lifestyle or preexisting conditions. Why can’t we? And they do it for roughly half our current costs with better outcomes.
They do what Trump can only promise.
“Is BCBS really encouraging people to acquire the deadliest, quickest and cheapest diseases? ”
Health insurers are trying to make profits which is why they complain about people with chronic disease. It is the person who does everything right and lives for 60-80 years with chronic diabetes that contribute more to health insurance than people who get diabetes and die quickly.
PQuincy,
Gaming the system exists everywhere we try something worthwhile. Someone netting a million a year in a cash business will have more of an opportunity to, er, reduce their taxable income than someone making 50K a year as an employee with a W2. It doesn’t mean most of us don’t favor progressive taxation.
Jerry,
We can be more efficient, but that doesn’t mean we can’t reduce externalities too.
Jim,
Again, I look at this from the angle of who is most deserving. I think people who lost the genetic lottery are not undeserving, and yes, I recognize they are costly to treat. But that’s the point of insurance.
But I don’t think the average person is deserving of being stuck with the bill for someone who repeatedly shoots himself in the foot either. It isn’t insurance when you cover someone who sets fire to their own house.
This “my struggle” thing is getting out of hand.
“We can be more efficient, but that doesn’t mean we can’t reduce externalities too.” ” It isn’t insurance when you cover someone who sets fire to their own house.”
But Mike, the process of worthiness-triage is itself an externality, and a big one. Health support is unlike any other purchasable good — it is not separable from the agent purchasing it.
Poor health affects the judgment of the agent. It cannot be delayed or dispensed with. It affects or negates the agent’s ability to pay. At an individual level it is unpredictable, as to the nature, timing, causation, and intensity of the problems that might be encountered. And there are other, powerful agents in the system working actively to undermine the ability of the individual to judge his choices.
You’re concerned with fairness. Given the nature of health care, the only way to fairly deal with the health care of a population is to provide it wholesale, track problems and their causes in the whole population, and deal with those underlying problems systemically.
In doing this, you accept the cost of treating people whose choices might appear to be causing their illnesses. This cost, looking at examples provided by non-US developed countries, is far less than the US-style cost of triaging for “blame,” roughly half of what is spent on US health care.
We must accept that any complex, unregulated population* will include people who, inherently or by reason of age or genetics, will be less than careful about their own health. To paraphrase Jesus, “children, elderly people, fools, the deluded, and those affected by prenatal or childhood poisoning (such as lead or fetal alcohol poisoning) will always be with us.” It’s far cheaper to accept this and just get on with it.
But there’s more. All those people I just mentioned? They themselves are essential to a complex population. Like it or not, they are our beta testers, our coal mine canaries. Their maladies allow us to understand the ways in which human beings can go off the rails, medically or psychologically. If, at a certain level of disability, they are simply discarded/disregarded, then their extreme examples are lost to learning.
Give a man a fish — it’s easier.
Noni
* “unregulated population,” i.e. Not being bred by an outside agency, unlike chickens, dogs, or mulberry moths.
Noni,
The problem is that we live in a world in which the costs of healthcare are very high and, in general, rising. Resources are not unlimited. Waits at urgent care just about everywhere are long. The fact is, the current system doesn’t work.
If it is unfair to expect that someone who repeatedly shoots himself in the foot to cover the costs of his poor decisions, how much more unfair is it to expect other people to cover for that person?
As to the extremes you mention… we have more extreme cases of every sort than the system can handle. Not all of them come from the heroine using population. Some of them are little kids who never did anything to anyone.
Mike – “We can be more efficient, but that doesn’t mean we can’t reduce externalities too.”
Agree! We can, but we should not bar health insurance nor price it out of range for the purpose of forcing people to change their behavior.
“we should not bar health insurance nor price it out of range for the purpose of forcing people to change their behavior.”
Yeah. I wonder if that is the purpose of this continued meme, or is there another “solution” in mind?
EM:
Nope, no change. They still have not understood what drives healthcare cost.
Run,
Absolutely they do not understand what drives cost.
But my response wasn’t so much about the cost, but what happens to people who cannot get health care because of their prior “bad acts”. If they are not going to get care, it seems like we just send them someplace to die. Wonder if Kimel has a name for those places yet?
EM:
It is a ridiculous notion being offered. This is covered through Community Rating. Furthermore the costs of providing care through fee for services makes it far more expensive than it should be when coupled to the uncontrolled costs of medical products. I scrapped out 3 million tablets for ~$800 one time.
“I look at this from the angle of who is most deserving.”
The system already works to reward the deserving.
If you are a smoker, overweight or alcoholic you get put at the bottom of the list for an organ transplant. That means you die while someone more deserving gets the donor organ.
However, if you get lung cancer there is no way to prove if it was caused by smoking. Both smokers and non-smokers get lung cancer. Same with diabetes or any of the other diseases you think people should be punished for having.
So what it comes down to is having the disease becomes the main evidence that you did something bad to deserve it.
In many poor communities good food is simply not available. People don’t have access to fresh fruits and vegetables. They don’t have cars, the buses take forever and they don’t have time to schlep downtown to the tony grocery, since they work and commute for long hours. In that sense they don’t have any agency.
run,
I can’t speak for other medical equipment, but if the OECD is correct, US spending on pharmaceuticals as a percentage of total healthcare spending is at the lower third of the range for OECD countries. (https://data.oecd.org/healthres/pharmaceutical-spending.htm)
Jim,
I haven’t suggested that Medicaid & Medicare not cover lung cancer and diabetes. I have suggested that they not cover costs brought on by a person’s own behavior. If we cannot prove someone brought it on themselves, we pay. Same as the decision as to whether to pay for the damage associated with a person’s house catching fire. You don’t pay if you prove its arson.
Bill White,
Mike:
Hungary is #1 at 30% of Healthcare expenditures going to Pharma. Healthcare Spending in Hungary is $1842. $552 is spent on Pharma in Hungary.
United States is in the lower third with 12.3% of Total Healthcare spending going to Pharma. The total Healthcare Spending in the US per person is $9452. $1,162 is spent on Pharma in the US.
While a lower percentage spent on Phama, people in the US still spend twice as much on Pharma then in Hungary. It is a reasonable Comp since they give Total Healthcare $ per person and the percent of Total Healthcare spent on pharma per person for both countries. I would guess the US spends higher $ than other counties also.
Hospital supplies (16%) are very profitable as is Pharma (20%). The amount of $ spent on procedures is also more expensive. PCP make about $180,000 per year and many specialists are around $400,000 per year in the US. Hospital stays are more expensive as well as doctor visits. We are a service for fee healthcare economy. The more services the higher the profit for the healthcare industry. Many of the services are not results based. Gawande, Reinhardt, Berwick, Mahar, Kliff, as well as many others would tell you this.
If you want to fix something:
– Like other and similar countries to the US globally, regulate the healthcare industry cost to slow the rising cost more than what the ACA did. Medicare and insurance companies do not have the same power as a healthcare industry supported by Congress.
– If you wish to pay less for healthcare to those chronically ill, the industry can change how healthcare is delivered and get away from the service for fees model. More healthcare is not necessarily better healthcare and with every invasive procedure, med, or stay; the risk increases for a bad outcome.
“If we cannot prove someone brought it on themselves, we pay.”
Then your proposal is DOA because you can’t make that determination. The link between smoking and lung cancer is statistical, you can’t prove they brought it on themselves. The analogy to fire insurance would be that your claim is denied because you live in a house made of wood which is more susceptible to fire than say a brick house. It doesn’t matter that you paid the premiums for 30 years while living in this house made of wood, the insurance company is happy to collect the premiums and will only bring up your poor choices in building material when your house burns down.
Jim,
If you find that a couple gallons of an accelerant were splashed around the house, you have evidence if arson. If someone shows up at the hospital with emphysema and lung cancer and significant amounts of nicotine in his system, you have your accelerant.
Run,
No argument. I was responding to this point:
“when coupled to the uncontrolled costs of medical products. I scrapped out 3 million tablets for ~$800 one time.”
I can’t run the numbers now but your Hungary example could probably be used to indict other wealthy countries, some of which are said to have efficient healthcare systems.
Mike:
My point was the sale price was obviously far greater than the cost
Jim,
I think you are omitting the idea that there will be a panel in charge of making the decision about whether it was chance or behavior.
I am sure Kimel will come up with another name that sounds nicer, but he can go back to the 30s when the Nazis had their Hereditary Disease Courts, and move on from that example.
“The rest of the world has figured out how to provide healthcare for everyone without denying coverage because of lifestyle or preexisting conditions.”
Not so much, no.
http://www.telegraph.co.uk/news/2016/09/02/obese-patients-and-smokers-banned-from-all-routine-operations-by/
oh, warren.
I love it when people post links they do not read.
“Hospital leaders in North Yorkshire said that patients with a body mass index (BMI) of 30 or above – as well as smokers – will be barred from most surgery for up to a year amid increasingly desperate measures to plug a funding black hole. The restrictions will apply to standard hip and knee operations”
.
How is that NOT denying them coverage based on lifestyle?
Looks like they are for a hip and knee surgeries and maybe one other procedure, Warren. But then UK is the one high income nation that has full blown socialized medicine with the physicians all employees of the state. The nation only spends 8% of GDP on medical care, less than half the percentage we do and well under the 10-12% one finds in places like France, Germany, and Canada, all of which do much better than does the US in performance and does not have any of these lifestyle rules that Mike K. is all worked up about having. I also note that in UK, health care is simply free outright, so they have financial lmits that may push them to do something like this, but the other high income nations do not do this. Why should we be doing this, unless one is on some morality crusade?
Barkley,
I have been consistent since I started blogging about not having an interest in controlling anyone’s behavior provided that it is between consenting adults and that it imposes no externalities on third parties. I have no interest in imposing morality, but I have even less interest in letting people export the costs of their behavior onto other people. I believe this post fits with everything else I’ve written.
Mike – “…but I have even less interest in letting people export the costs of their behavior onto other people.”
Paying for other peoples’ behavior comes with the territory, a territory extending far beyond healthcare. What if you don’t drive? Should you pay for roads and highways? What if you don’t smoke. Should you pay for anti- smoking ads and programs? What if you don’t have kids in school. Should you pay for schools? What if you don’t fly? Should you pay for airports? What if you have a job? Should you pay for job training? What if you don’t like th president? Should you pay for his security? Should I go on?
“I have no interest in imposing morality, but I have even less interest in letting people export the costs of their behavior onto other people.”
I suspect that if statistical analysis reveals that the obese or smokers or alcoholics actually save Medicare money by not living as long and as a result costing less in the long run, you will not be okay with some sort scheme that compensates them for subsidizing the health care costs people who aren’t overweight or don’t smoke or drink to excess.
In other words, if it turns out that these behaviors save money you won’t be writing an article about how we should be financially rewarding these behaviors because they are deserving.
It seems you have assumed that immoral behavior always imposes external costs on moral behavior. You don’t need any real concrete evidence to support that assumption. Its just a given.
Jim,
It isn’t morality. If you commit arson at your home and the resulting fire also burns your vehicle, you can’t ask the insurance company to refund you for the car accident that you would have otherwise been in. Smoking to the point of getting lung cancer in this day and age (as opposed to a few decades ago when the science wasn’t as clear) is the equivalent of burning down your own home.
If you commit arson ….
You just proved my point. You first claimed it was an externality that was costing others. When that claim is called into question you say it doesn’t matter. But if you take away the external cost to others as justification you have nothing left but your moral outrage no matter how much you try to disguise it with the repeated phony arson analogy.
The only reason fire insurance doesn’t pay in case of arson is you agreed to those terms when you signed the contract. If insurance companies thought they could make money selling policies that covered intentionally burning your own house they would do it.
Arson is illegal while smoking is not, Arson is intentional, but with smoking the intent is not to get lung cancer. There is no comparison between the two