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Old 03-07-2012, 10:36 AM   #21
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TORT REFORM. Our malpractice insurance premiums have to be one of the highest in the world............
From the follow up:

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In October 2009, in response to a request from Sen. Orrin Hatch (R-Utah), the Congressional Budget Office took a careful look at the evidence on defensive medicine and concluded that aggressive reforms to the medical malpractice system “would reduce total national health care spending by about 0.5 percent.”
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Old 03-07-2012, 10:38 AM   #22
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TORT REFORM. Our malpractice insurance premiums have to be one of the highest in the world............
This is true and it's a problem but it's relatively small in and of itself. Now if we took all the cost problems and market failures into account and "fixed" them together, we'd make a real difference. Part of the reason we still have a problem is that these require political solutions which are partially addressed by either side of the debate, and thus considered "off the table" by the other side. Trial lawyers and insurance/pharma companies are often on opposing sides of these debates and they all have powerful lobbyists.
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Old 03-07-2012, 05:46 PM   #23
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From the follow up:
Actually agree with some of Ezra's follow-up, however...

-The 0.5% figure for defensive medicine costs is HOTLY debated. There is solid objective evidence to refute CBO's incorrect (political??) analysis, such as-
UConn Advance - February 23, 2009 - Study shows defensive medicine widespread
-Reason I used ROE vs "profit margin" for health insurance co is that the former is a much better measure of overall corporate health (profitability over time). Profit margin is very easy to fudge. For example "administration" overhead costs can easily be inflated to disguise a higher functional profit margin (or vice-versa if the co is in economic trouble).
-Agree 100% with Ezra that true admin costs are way too high- for both insurers and HC facilities/providers. But much of that excess is due to arcane gov't regulations. And the oft quoted 3% overhead for Medicare is not consistent with GAAP as applied to business. Much of real Medicare admin is passed through to subcontracted private firms who do the heavy lifting of actual billing/collection.
- Ezra's analysis of high US physician (& nurse) income is fatally flawed. As shown by article from Ezra's own link, specialists in Netherlands, Australia, & Belgium make MORE than US counterparts when adjusted for national GDP. And real hourly pay is another issue. Docs generally work fewer hrs/wk in most other countries than in US. Australia general docs' work week is only 44 hrs, and it's 40 hrs in UK.
General Physician Average Salary Income - International Comparison
Comp work week for US generalists is 55+ hrs-
Physician Work Hours by Medical Specialty

Really hate to harp on a single article or reporter, but this issue is plenty complex without misguided attempts at gross oversimplification. IMHO needed solutions will come through step-wise reform rather than blind across-the-board gov't mandated price cuts which Ezra advocates. This poses a real risk of HC service shortages if cuts are so deep that reimbursement exceeds actual costs of care.
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Old 03-07-2012, 06:32 PM   #24
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This is one of those statements which, on the surface, seems self-evident. On the other hand, folks who have health insurance pay thousands of $ every year in premiums to the insurance companies, part of which goes to the negotiation of lower rates. Why should someone who elects not to carry health insurance benefit from these negotiations? The treatment itself may cost the same, but it's not obvious to me that the price should be the same.
Your point is interesting, and I have never thought of that.

On the other hand, I do not believe that auto body shops or construction companies charge less for people with auto insurance or flood or fire home insurance. If anything, it is the reverse. My own experience is that I can negotiate a better deal if I have to pay out of my own pocket for auto and home repairs. Why is it that health care is different, that the consumers are usually not even told of the costs beforehand?

Anyway, it would be for healthcare providers' own good that they treat people more fairly, or they will get onerous laws jammed down their throat by the almighty Uncle Sam.
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Old 03-08-2012, 11:04 PM   #25
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Sure....there are lots of hidden costs. But that's because we support health care providers in their decision making on our behalf. (You, patient, need these 6 tests just because I've ordered them for you...trust me. I will only glance at the results, not really needing that info in order to assist you. But I want you to feel like I'm really doing something, and ordering all this helps support my productivity with my partners in practice.)

IMO, true change can only happen once we decide, as a culture, that health care is a moral issue instead of a business opportunity.
This really hits home for me. I've been battling a vestibular problem for about a decade. I just sent an angry letter to my new otologist telling him I won't be returning to his practice as I felt he was putting me through unnecessary tests.
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Old 03-10-2012, 12:39 PM   #26
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The whole healthcare cost issue is indeed thorny. I hope folks can resist one-size-fits-all approaches to fixing it. This isn't a "two-sides" issue (like labor and management). There are doctors, lawyers, drug companies, pharmacy benefit managers, insurance companies, politicians, activists, consumers, young people, old people, sick people, well people, US manufacturers, OUS manufacturers, NON PROFITS, etc. etc. etc which all have a stake in this. And YES, profit is a motive. I highlighted NON PROFITS because in my old town, there were ONLY non profit (or maybe you call them not-for-profit) hospitals. In any case, a study was done in which the services offered by these non profits were shown to be 60% HIGHER COST than at FOR PROFIT hospitals less than 100 miles away (same state). No, there was no "profit", but that was because the non profits found ways to disperse the extra funds. I thought this would turn into a huge scandal, but it never did because most folks have health insurance and don't really care what HC costs.

One thing I'm surprised no one has really picked up on is the statement in the article (which is even TRUER than one might expect) that the US is bearing the brunt of HC research. Virtually ALL other countries benefit more form US research than the US benefits from the limited HC research of outside countries. In the article, this disparity was couched as a reason that US costs are so high - profits are MADE and THEN poured back into research. True enough, but if the US didn't do it, it probably would not get done. We could solve the HC "problem" tomorrow with this simple solution: "We the Congress of the US have decided that the state of HC in the US (and the world) is now sufficient. It is hereby illegal to do any more HC research in the US." Problem solved (unless you are a HC consumer, of course). Perhaps a bit tongue-in-cheek, but, realistically, think of the HC benefits those of us on this forum (okay, us geezers over 60) have seen. When I was a kid, transplants, bypasses, most current drug therapies, DID NOT EXIST. Now, they are all but routine. Expensive - but routine. Should we go back? Should we stop research? I think not. This is ONE situation in which cost "inflation" needs to take into account the "quality" and "alternative". Quick example: Does anyone know a single person who, in the past 20 years has had surgery for a stomach ulcer? Probably not, because the 3 generations of ulcer drug therapies have all but eliminated ulcers. Don't know the cost savings, but the pain relief alone has probably been worth the drug costs. If you knew anyone with an ulcer (25 years ago) I think you will know what I'm talking about.

I realize there are a lot more issues here than I've pointed out and I really am not taking a "side" (too many sides to figure out which one to be "on"). My contention is that if we let our Federal gummint "solve" it for us we may not like the lack of control we have over the services available to us AND, I submit, we STILL won't like the cost. Naturally, as a non-expert, I caution that YMMV.
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Old 03-10-2012, 03:21 PM   #27
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The whole healthcare cost issue is indeed thorny. I hope folks can resist one-size-fits-all approaches to fixing it. This isn't a "two-sides" issue (like labor and management). There are doctors, lawyers, drug companies, pharmacy benefit managers, insurance companies, politicians, activists, consumers, young people, old people, sick people, well people, US manufacturers, OUS manufacturers, NON PROFITS, etc. etc. etc which all have a stake in this. And YES, profit is a motive. I highlighted NON PROFITS because in my old town, there were ONLY non profit (or maybe you call them not-for-profit) hospitals. In any case, a study was done in which the services offered by these non profits were shown to be 60% HIGHER COST than at FOR PROFIT hospitals less than 100 miles away (same state). No, there was no "profit", but that was because the non profits found ways to disperse the extra funds. I thought this would turn into a huge scandal, but it never did because most folks have health insurance and don't really care what HC costs.

I think you got taken in by the name... ie, NON PROFIT... ... they are TAX EXEMPT entities... (sure, most of the time they are referred to as non profits, but that is only to have them not pay taxes ON their profits) There is nothing that prevents any tax exempt entity from making a profit.. and the amount of money they need to spend to meet the rules is very little... so their capital can grow and grow and grow...
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Old 03-10-2012, 03:40 PM   #28
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However, it would cost you $700 in airfare to fly to France to get said MRI!
True, but OTOH I had 2 CT scans, an MRI and just about every blood test imaginable done at a top lab in Guadalajara, Mexico for about $450 U.S. There are lots of self-described "health care/insurance" refugees from the U.S. living at Lake Chapala and elsewhere in Mexico who often now pay for their rent and food with what they save by not paying U.S. prices for health care. Sad but true.
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Old 03-10-2012, 03:48 PM   #29
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One thing I'm surprised no one has really picked up on is the statement in the article (which is even TRUER than one might expect) that the US is bearing the brunt of HC research.
Here is what the article actually said:

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This is a good deal for residents of other countries, as our high spending makes medical innovations more profitable. “We end up with the benefits of your investment,” Sackville says. “You’re subsidizing the rest of the world by doing the front-end research.”

But many researchers are skeptical that this is an effective way to fund medical innovation. “We pay twice as much for brand-name drugs as most other industrialized countries,” Anderson says. “But the drug companies spend only 12 percent of their revenues on innovation. So yes, some of that money goes to innovation, but only 12 percent of it.”
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Old 03-10-2012, 03:50 PM   #30
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True, but OTOH I had 2 CT scans, an MRI and just about every blood test imaginable done at a top lab in Guadalajara, Mexico for about $450 U.S. There are lots of self-described "health care/insurance" refugees from the U.S. living at Lake Chapala and elsewhere in Mexico who often now pay for their rent and food with what they save by not paying U.S. prices for health care. Sad but true.
Some time ago I read that U.S. insurance companies are starting to cover procedures done in other countries to take advantage of the lower cost.
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Old 03-11-2012, 08:57 AM   #31
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You have to look at the big picture. We live in a society where each of us competes for the same resources. Compare the salaries and benefits of healthcare workers to government workers and you will find that the salaries of healthcare personnel are inferior. Can you imagine the cost of healthcare if receptionists, janitors, and all the rest of HC employees were paid as well as govt. Workers? Why do teachers make so much more than RNs? Summers off, holidays off, no weekends, no nightshifts, a DB pension. Crazy. Hell, the high school janitor does better than the RN.
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Old 03-11-2012, 01:21 PM   #32
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1. Wages generally are higher. Wages are >60% of US HC costs.
I've always thought European doctors received less pay due to the fact their education was low cost or "free" versus the high debt* US doctors incur for their education. Obviously it isn't free; it is paid by their respective country's subsidies to the universities to keep tuition cost down. Their respective societies have determined that low cost higher education benefits their societies.

I always wondered if those subsidies to educate European doctors were included in the per capita cost figures. And if not; how much would that raise those figures.

And while folks complain about high health care inflation here in the states; just look at higher education costs.
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Old 03-11-2012, 01:44 PM   #33
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I've always thought European doctors received less pay due to the fact their education was low cost or "free" versus the high debt* US doctors incur for their education.
It seems, though, a root cause for all of the things that drive prices higher is the fact that nobody in the U.S. really negotiates the price of services. We just use what we use and the bill comes later.

Doctors get paid more because nobody shops for a lower cost doctor. As the return to being a doctor increases, the demand for medical school increases. Medical schools, seeing the value of a medical degree, increase tuition prices. Would-be doctors are willing to borrow to pay for school because the field is so lucrative. New doctors, then, demand higher wages to compensate for the higher cost of their schooling.

The simple fact that the end user is insulated from the cost of service inflates the price of everything along the way.
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Old 03-11-2012, 02:03 PM   #34
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It seems, though, a root cause for all of the things that drive prices higher is the fact that nobody in the U.S. really negotiates the price of services. We just use what we use and the bill comes later.

Doctors get paid more because nobody shops for a lower cost doctor. As the return to being a doctor increases, the demand for medical school increases. Medical schools, seeing the value of a medical degree, increase tuition prices. Would-be doctors are willing to borrow to pay for school because the field is so lucrative. New doctors, then, demand higher wages to compensate for the higher cost of their schooling.

The simple fact that the end user is insulated from the cost of service inflates the price of everything along the way.
+1. One of many factors...
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Old 03-11-2012, 02:34 PM   #35
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It seems, though, a root cause for all of the things that drive prices higher is the fact that nobody in the U.S. really negotiates the price of services. We just use what we use and the bill comes later.
Yes. Roemer's law.
When third parties[insuers] make the payments; the insured has NO incentive to comparison shop. Thus the US health care capacity will be fully utilized. Which drives up insurance premiums. Which drive the insured to utilize more health care to git "their money worth".

I have a individual $5000 deductible health insurance policy. It pays $400 annually for preventive health care. So I can find out about any life threatening issues which my policy wil pick up the majority of the cost. The small stuff I can weight whether to urue treatment or not. If I do pursue treatment; I git the insurer negotiable rate.
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Old 03-11-2012, 02:44 PM   #36
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There are significant differences in total earnings among the different specializations in the US. There is much less correlation to hours worked or years needed to specialize. Family doctors earn less than any other despite studying just as long and working as many hours, and the difference is often 3x. This implies that higher earning specializations earn more because they charge more and have greater leverage with insurance companies.

No data to support this, but my feeling is family doctors earn as much, perhaps less, but not more, than their counterparts in other countries, while specialists in the US earn considerably more.
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Old 03-11-2012, 03:42 PM   #37
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Yeah supposedly primary care is not a sexy area of specialization for med students and doctors who are choosing their specialty.

It would be interesting to see pricing trends for some elective procedures which are simple enough to comparison-shop, like Lasik.

When you have to treat a condition like diabetes or a major illness like cancer, it's not that easy to comparison-shop. For one thing, what are you going to do, put up your web research versus the recommendation of your doctors?

For another, you may not have the time to shop or consider alternatives.

So health care in general doesn't lend itself to supply-demand dynamics because it's not like comparison-shopping cars.
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Old 03-11-2012, 03:55 PM   #38
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The simple fact that the end user is insulated from the cost of service inflates the price of everything along the way.
And it goes even farther than this. Not only is the end user insulated from the cost of the service, but most end-users are even insulated from the direct cost of the insurance which pays for the services. "Someone else" buys the insurance.

Given the whacky setup, the real wonder is that costs aren't even higher.

If we had a true efficient market for health care insurance then the much-noted difficulties of individually price shopping for medical services would be largely insignificant.
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Old 03-11-2012, 04:22 PM   #39
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It seems, though, a root cause for all of the things that drive prices higher is the fact that nobody in the U.S. really negotiates the price of services. We just use what we use and the bill comes later.

Doctors get paid more because nobody shops for a lower cost doctor. As the return to being a doctor increases, the demand for medical school increases. Medical schools, seeing the value of a medical degree, increase tuition prices. Would-be doctors are willing to borrow to pay for school because the field is so lucrative. New doctors, then, demand higher wages to compensate for the higher cost of their schooling.

The simple fact that the end user is insulated from the cost of service inflates the price of everything along the way.
I agree, and also feel we have been conditioned over many years to simply accept YOY double digit increases and made to believe there is nothing we can do about it. Price is a function of what the market will bare, and the healthcare market in the US seems to know no limits.

Aside from the end consumers not having much negotiation leverage, the company sponsors of health insurance coverage themselves don't seem to do a very good job exerting what leverage they do have, as its much easier to simply pass on the cost increases to employees/retirees. We also seem to slice and dice and categorize various insured groups in such a granular fashion that leverage/standardization is also lost, while fraud is rampant. What a mess.
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Old 03-11-2012, 04:33 PM   #40
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And it goes even farther than this. Not only is the end user insulated from the cost of the service, but most end-users are even insulated from the direct cost of the insurance which pays for the services. "Someone else" buys the insurance.

Given the whacky setup, the real wonder is that costs aren't even higher.

If we had a true efficient market for health care insurance then the much-noted difficulties of individually price shopping for medical services would be largely insignificant.
I have tried to examine my insurance bills to look for errors but the information is not clear at all. They don't list doctors names and they use codes for treatment/test descriptions.
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