Doctors as symptom

by Russ Roberts on June 25, 2009

in Health

Greg Mankiw writes:

For obvious reasons, I have been thinking a lot about healthcare
recently. One important question is, why does the United States spend
so much more on healthcare than other nations do?

There are surely myriad reasons for the international differences, but part of the answer can be gleaned from this passage by Uwe Reinhardt, Gerard Anderson, and Peter Hussey (via an old post of Ezra Klein)

He then quotes a passage about how much doctors are paid in the United States relative to the rest of the world. They're paid a lot more.

But doctors' incomes are not a cause of higher spending. Doctors incomes being high are a result of the same underlying forces that cause higher total spending in the United States relative to the rest of the world—an increase in the demand for medicine driven by third party payments–governmental and private (with the latter tax-subsidized by government).

Doctors pay in the US is also affected by supply limitations imposed by licensing and medical school accreditation. This keeps prices from equalizing internationally as there are barriers to foreign doctors practicing here.

Be Sociable, Share!

Comments

comments

50 comments    Share Share    Print    Email

{ 50 comments }

Taylor June 25, 2009 at 12:25 pm

Russell,

Ha! Is Mankiw trying to push some form of a "micro" Wage-Push theory of medical price inflation?

Good grief, will these fallacies NEVER die?

Greg Ransom June 25, 2009 at 12:52 pm

"Doctors pay in the US is also affected by supply limitations imposed by licensing and medical school accreditation."

If I'm not mistaken, Milton Friedman wrote his dissertation on this.

Where I live, it seems every doctor and dentist is foreign born.

Greg June 25, 2009 at 1:22 pm

Greg Mankiw asked: "[W]hy does the United States spend so much more on healthcare than other nations do?"

Russell Roberts said: "[the] underlying forces that cause higher total spending in the United States relative to the rest of the world [is] —an increase in the demand for medicine driven by third party payments–governmental and private (with the latter tax-subsidized by government)."

But the rest of the developed world (as Mankiw notes) spends less on health care. All this while the rest of the developed world has higher levels of third party payments (mostly by government).

Thus it is Russell Roberts' post, not Greg Mankiw, that fails the test of rational argumentation.

Zach kurtz June 25, 2009 at 1:22 pm

It's not just supply issues, but in the US, it costs more to become a doctor and to stay in business. Doctors need higher wages to pay back student loans and pay for malpractice insurance.

I wonder how actual living wage would compare.

(Of course most doctors are still well off, so you don't hear them complain much about their wages).

Debashish June 25, 2009 at 1:26 pm

"Doctors pay in the US is also affected by supply limitations imposed by licensing and medical school accreditation. This keeps prices from equalizing internationally as there are barriers to foreign doctors practicing here."

I don't disagree with this statement. But how much does it help explain why doctor's fees in the US (and even spending on healthcare generally) are higher relative to the rest of the world? Don't most countries have similar licensing/accreditation bodies and similar barriers that don't allow foreign doctors to practice easily? Do we know whether such accreditation bodies ensure a smaller supply of doctors in the US (compared to similar bodies in other countries) or that barriers for foreign doctors are stronger in the US?

Sam Grove June 25, 2009 at 1:44 pm

It costs more because we've been able to afford more.

Methinks June 25, 2009 at 1:46 pm

Other countries don't have the chronic obesity problem we do. Type II diabetes alone adds $170 billion per year and is rising.

I'm always suspicious of these healthcare cost comparisons as I can never find what's baked into the then numbers. For example, how much of the difference is preventable by the differences in lifestyles and the resulting lower diabetes and heart disease rates in countries like France. Also, are the healthcare costs for socialist healthcare systems inclusive of the amount spent on private insurance or not? How much of what is included in U.S. statistics elective plastic surgery?

Russ Roberts June 25, 2009 at 1:47 pm

Greg,

The rest of the world has third party payments but they have decided to limit those payments and thus they have lower demand. The US government's payments are much less limited. In the rest of the world demand for medical care is lower. We are headed in that direction.

Methinks June 25, 2009 at 1:47 pm

"how much of the difference is preventable…"

should be "how much of the difference is explained by…"

Dallas June 25, 2009 at 1:57 pm

MD supply restrictions (licensing and medical school accreditation) are controlled by the AMA and they have been using that monopoly to obtain extra income for their members for at least 50 years. That is why a MD's earns 2 to 3 times as much as a Ph.D.'s in a related field such as biochemistry or molecular/cellular biology, taking the same amount of time, cost, education and effort as an MD.

This is a very standard monopoly game of restricting supply. There has always been more qualified applicants to med school that positions allowed by the AMA.

We should note that in other area, when the demand increases for a specific education, the systems responds very rapidly and we usually get a glut of aerospace engineers, computer programmers, marine biologists, etc. — with different fields at different times. The supply of MD's never has exceeded the demand or driven down the incomes.

The solution to this problem is to take the licensing and medical school accreditation along with immigration of MD outside the influence of the AMA. Why should the medical union have any say over accreditation of schools and why can't the licensing of MD's be similar to other professionals like Lawyers, Engineers etc. where obtaining a license (in calif.) does not depend upon having a degree from an accredited school, just on testing, qualifications and experience. Remember your life also depends upon that structural engineer doing the calculations correctly on that building you are probably in or that bridge you are using.

John June 25, 2009 at 2:03 pm

When your decisions affect people's lives you generally get a bigger paycheck than if your decisions do not.
That is why airline pilots, lawyers, CEOs, and of course doctors, get compensated more than janitors and dishwashers.

James June 25, 2009 at 2:11 pm

@John,

No, when there are fewer people who can perform the job, those people get paid more. There are far fewer people that can competently craft and read legal documents than there are that can empty your garbage can. There are far fewer people that can safely land a 747 than can wash your dishes.

Supply and demand is the reason some jobs pay more.

Greg June 25, 2009 at 2:11 pm

Russ,

Thanks for the response.

Yes, a third party payer system, of and by itself, tells us nothing about the cost of healthcare.

I spoke to my doctor about the cost to see him and the cost of tests, referrals, etc. He indicated that he didn't know the cost before hand because most of his practice is figuring out what is wrong. So he couldn't give me a quote before rendering service.

And after he knew what was the problem, he still wouldn't know the cost because of third party payer negotiated schedules and discounts.

I'm not sure that economic models are at all predictive of the health care market with, or without, third party payer systems.

I know however that I don't want my financial future to be on the hook every time I enter the system. I do not want pills or therapy or surgery or chemo or amputations or any of that stuff; they are not like consumer goods and services.

John June 25, 2009 at 2:25 pm

James,
It's not strictly supply and demand. There are some highly specialized professions that do not carry a high level of responsibility, and thus do not demand high compensation.
A glut of lawyers would not necessarily result in a lowering of their fees, it would more likely result in idle lawyers going into politics to craft laws that would give them more work.

John Dewey June 25, 2009 at 2:48 pm

Russell Roberts: "an increase in the demand for medicine driven by third party payments–governmental and private (with the latter tax-subsidized by government)."

Professor Roberts, I respect your opinion and would appreciate a clarification of your argument.

Do third party payments prevent spending control? or does government interference in insurance contracts prevent insurors from exercising spending control?

Of course individuals will reduce demand for services when they pay directly for services used. But profit-seeking third parties would also control demand through contractual language – if governments allowed them to do so.

I do not have the expertise to select the most cost-effective treatments and negotiate the lowest rates with health care providers. I believe my insuror, acting on behalf of my employer's thousands of workers, has both expertise and purchasing power I'll gladly pay for.

Rvturnage June 25, 2009 at 2:51 pm

Certainly hiding the true cost of coverage via 3rd party payments and subsidies increases the demand. But this chart linked to below compare per capita spending on a variety of things — electronics, clothing, recreation — and we spend more than other nations on all of them as well.

http://www.nytimes.com/interactive/2008/09/04/business/20080907-metrics-graphic.html?th&emc=th

I agree with Sam Grove. A large part of the demand for health care, which helps drive the cost, seems to be because we can afford it.

Marcus June 25, 2009 at 3:00 pm

Rvturnage, interesting link. Thanks.

It is also interesting that the Times didn't include health care in with those charts. Perhaps they don't want people to make that kind of association.

John Dewey June 25, 2009 at 3:09 pm

"I agree with Sam Grove. A large part of the demand for health care, which helps drive the cost, seems to be because we can afford it."

Did Sam say that? He's a pretty smart guy.

Per capita GDP is significantly higher in the U.S.:

U.S. ….. $46,859
France … $34,208
Germany .. $35,442
Japan …. $34,100
UK…….. $36,523
Italy …. $30,580

If the people of a nation have much greater disposable income, why not spend more of it treating medical conditions and improving quality of life?

LowcountryJoe June 25, 2009 at 3:16 pm

Doctors also have to cover their cost and make an economic profit. Some of those costs have to be insurance and the risks associated with litigation.

Angela June 25, 2009 at 3:17 pm

Count me on the Sam Grove bandwagon.
We are a very wealthy society (bigger houses, more disposable income) and choose to spend that extra income on health related items.

As an example: many American kids get braces now a days, which is certainly not the case overseas. Also adults are getting braces more and more (15-25% of many practices). This procedure is both pretty expensive and primarily cosmetic. It also isn't usually paid by insurance (50% coverage with $1000 lifetime max on most policies).

We spend more on health because the marginal benefit is worth it.

Mr. Econotarian June 25, 2009 at 3:30 pm

To be informed on this, you must read "Congressional Research Service Report RL34175 The U.S. Health Care Spending: Comparison with Other OECD Countries"

http://wikileaks.org/leak/crs/RL34175.pdf

Unfortunately, there isn't a "smoking gun" on US medical and doctor costs:

1) The US has fewer hospital admissions and doctor visits than the average OECD country.

2) The US has a below-average number of hospital beds and practicing physicians per population

3) US has a higher than average number of staff per hospital bed and nurses per bed

4) US has a greater supply of advanced technological equipment than other OECD countries, with nearly twice as many CT scanners per capita as the OECD average and three times as many MRI machines

5) The United States also performs far more heart procedures per population than the average OECD country and an above average amount of organ transplants per capita, but does not perform more of all types of surgical procedures.

6) Americans pay less out-of-pocket for health care (as a percentage of total health care spending) than residents of most OECD countries

7) US. general practitioners and nurses are the highest paid in the OECD, and U.S. specialists are the third-highest paid in the OECD.

8) US health care professionals also enter the careers with substantially more educational debt than in other OECD countries. In 2006, 86.7% of new medical school graduates had outstanding educational loans, with an average total educational debt of $129,943.16 Depending on how the repayment is structured, the annual payments could be as low as $7,000 per year (with payments over 30 years) or as high as $18,000 per year (with payments over 10 years).

9) The US is one of eight countries in which wait times
for elective surgery are reported to be low.

10) In terms of doctor visits to primary care physicians, a five-country survey found that Americans had the greatest difficulty getting care on nights and weekends and were the most likely to forgo care because of cost.

My thoughts…

Regarding education costs, if a doctor is paying $20k/yr to pay off education debts, across 100 patients that is $200/yr, not much.

I think there should be more analysis on the "gatekeeping" on the production of doctors. The US has a low number of doctors per capita. This may be a factor driving up doctor pay costs, and could be due to over-regulation of doctor production.

On the other hand, it is interesting that US patients pay almost the least out-of-pocket. I suspect this is due to state level regulation on health insurance combined with the (tax law driven) employer-based system we have that might force out higher-deductible plans because an employer would only sign up to a handful of plans, whereas its thousands of workers might sign up to 50-100 different plans across the population to meet their own needs.

Everyone should keep in mind that government plans in France and Japan have 30% co-pays (on highly regulated prices though).

I also want to know why US hospitals have so many non-doctor/nurse staff. Perhaps we need more security guards and janitors due to our culture…

I have a real suspicion that doctor-owned MRI clinics and the like are a cause of costs (Your ankle is swollen, better go to [my] MRI clinic…)

Greater transparency in medical costs would help. I suggest that Medicare go to a computerized auction system, where enrollees would go to a web site and the cheapest bid from a doctor would win the procedure (plus all bids would be made public, providing better information for everyone about the market).

Christopher Renner June 25, 2009 at 3:32 pm

Greg,

The rest of the world has third party payments but they have decided to limit those payments and thus they have lower demand. The US government's payments are much less limited. In the rest of the world demand for medical care is lower. We are headed in that direction.

Posted by: Russ Roberts | Jun 25, 2009 1:47:19 PM

Wouldn't "supply" and not "demand" be reduced by the payment restrictions? It stands to reason that people in Canada, Europe, etc. would still demand all the healthcare they could get since their marginal cost out of pocket is zero.

Bill June 25, 2009 at 3:40 pm

I like the title of this piece. This whole process appears to be about treating symptoms without addressing the disease.

I content that the X millions of uninsured (pick your number) is also a symptom. The disease is a system that is heavily regulated and where supply is severely restricted.

We can paper over the symptoms, but until we address the source of the disease (FDA, AMA, congress) we will only get sicker. If we could remove those three malignant tumors, the system would heal itself pretty quickly.

Greg June 25, 2009 at 3:41 pm

Christopher Renner said: "It stands to reason that people in Canada, Europe, etc. would still demand all the healthcare they could get since their marginal cost out of pocket is zero."

But they only fill teeth that have cavities.

The demand isn't totally under a person's control. Assuming that people don't inflict cavities on themselves in order to get them filled, people only have control over the extent of the medical intervention, not if one is actually needed.

Christopher Renner June 25, 2009 at 4:01 pm

Greg, you're correct that a non-hypochondriac is not going to demand unnecessary medical procedures. My point was that any kind of medical cost control in a third-party payer system, which is the subject of this post, will tend to reduce supply of medical care(and I was thinking that Russ just mistyped "demand" and meant "supply" in his comment).

Demand isn't going to be reduced one bit, as long as the marginal benefit of a particular procedure/medicine to the person demanding it is greater than their marginal cost. In a third-party payer system, this marginal cost is reduced to the copay, if one exists at all.

Greg June 25, 2009 at 4:07 pm

As far as I know, people are free to be treated outside the single-payer system if they wish. They may be prevented from having insurance, but cash is usually acceptable to providers.

So "basic" supply is free and "extended" supply casts money.

Christopher Renner June 25, 2009 at 4:20 pm

I'd strongly recommend you read a bit of Sowell's writing on the matter, if you haven't. Here's a recent column and here(on Google Books) is Chapter 3 from his "Applied Economics" titled "The Economics of Medical Care".

Greg June 25, 2009 at 4:37 pm

Thanks for the links. They are too extensive to read quickly. However, the Google excerpts don't include much in references (and the two I saw were The Economist and WSJ); it reads as anecdotal material, not something more rigorous.

We need empirical research as input for policy and it seems like there is little of that in the public discussions.

Christopher Renner June 25, 2009 at 5:28 pm

Sowell, in his books at least, has more hard facts cited than anyone else I've read, ever. Though to be fair I don't think I've read any of Friedman's or Hayek's academic works thoroughly.

The empirical data is out there and widely available. The challenge is to sort through the nonsense that's usually promoted by advocates of one policy or another(e.g. life expectancy in a country as a measure of how well its healthcare system works).

mandeville June 25, 2009 at 6:23 pm

The doctors are in on this. I wish I could solicit the government to compel everyone to use the products my customers make.

Why should there be a "right" to have health insurance? What this means is people will get it for less than they can afford, and in some cases, for free. But if something is provided for free, why should there be insurance to cover the costs? The Obama plan is to cut out the middleman, the insurance companies, who can only exist when something must be privately paid for, and let the government pay for all medical costs directly. This means that the democratic party's electorate, the economic bottom half of our population, will vote to force the top half to provide their health care. Mind you, not their insurance, but their entire cost of health care.

After this, they will move on to the next "right", but it won't matter because we'll be broke.

mandeville June 25, 2009 at 6:45 pm

There is no such thing as a "healthcare system". Every market that ever existed was subject to scarcity, which is the reason for prices. If something weren't scarce, there would be no prices for it. Markets such as health care are not "systems", so it is nonsense to describe them as "broken". What the Dems mean by saying our healthcare system is "broken" is really that scarcity prohibits everyone from equal enjoyment.

Likewise, robbery and redistribution fixes the problem of income inequality, doesn't it? This is the long term goal of our democratic socialists. They don't want their voting constituancy to have to pay for anything.

Our health care markets work fine. They aren't broken. People don't have rights to equal enjoyment of healthcare. Period.

vidyohs June 25, 2009 at 6:57 pm

I have to let the Sam Grove bandwagon pass me by.

We don't pay more because we can afford it.

We pay more because my Dad and his peers stopped looking at the bills once they had insurance.

When no one is looking at the bills and demanding proper accounting and explanation of charges, price creep upward is inevitable.

That coupled with a lawyer industry that evolved to feast just off of medmal is why we pay more.

The more responsibility was removed from, and/or given up by, the consumer to pay for his own personal consumption, the higher the costs crept. And, are of course still creeping, and Obama is only going to make it worse, we will pay more and get less.

Sam Grove June 25, 2009 at 7:03 pm

There are always a variety of factors that determine the price of goods and services.

In the provision of medical services, we see that there are politically imposed restrictions on supply and politically imposed stimulus on demand (ie. insurance mandates, tax policy, etc.)

We've been able to afford more services and higher prices, so, given the above, we have more services and higher prices.

Dr. T June 25, 2009 at 7:15 pm

"MD supply restrictions (licensing and medical school accreditation) are controlled by the AMA and they have been using that monopoly to obtain extra income for their members for at least 50 years."

I really tire of reading this unsubstantiated crap. The AMA is a professional association of physicians with membership of less than one-fourth of practicing doctors. The AMA does not control medical schools, does not control the application process, does not control class size, does not control allocation of residency slots, and does not control licensure of physicians.

Medical schools are expensive to operate. Much of the funding comes from the federal government. Med schools are reimbursed on a per student basis, but they cannot expand class size and expect increased federal reimbursement. The federal government has felt that medical school size should be limited, so increased funds have not been available.

The federal government, through Medicare, provides most of the funding for residency slots. It decided in the 1990s that we were producing too many specialists, and it decreased funding for specialist residencies and fellowships and increased funding for generalists. This had the side effect of causing specialist shortages. With a shortage, you get charge increases.

Licensure of physicians is performed by each state. The standards are minimal: confirmed MD degree, no felonies, no substance abuse, and no string of lost malpractice cases. The state medical boards do not try to limit physician licensure: you have to be really bad to even get a license suspension.

The definition of a cartel is a group that regulates prices or charges by limiting supply. The AMA doesn't ask doctors to strike or have sick-ins in order to limit supply and raise prices. The AMA has a lobbying group with good financial backing. It sometimes can influence healthcare-related rules and regulations. However, I cannot think of a single action by the AMA in the past twenty years that has substantially increased what physicians are able to charge patients and insurers. Unless someone can point out such an action, I suggest that they not promulgate the theory that an AMA "cartel" is why medicine is so costly.

Medicine is so costly because of bad actions on the part of US citizens and their elected representatives. In the 1960s, routine medical care was paid out-of-pocket by almost everyone. Later, people wanted comprehensive health insurance or HMOs. The federal government responded to voter wishes by creating a tax-payer financed healthcare plan for the elderly and for the poor (Medicare and Medicaid). With few people paying for routine care directly, there was no pressure to keep charges low. There also was no pressure to minimize tests, procedures, and drugs. So, doctors, hospitals, pharmacies, and their suppliers were free to raise their charges. That's why we have the most expensive health care in the world. A fantasized medical cartel was not the cause. It would be just as illogical to say that the American Bar Association cartel is the reason why most legislation is ambiguously written and requires reams of lawyers to interpret and why liability law greatly favors consumers.

John Galt June 25, 2009 at 7:19 pm

So, you're basically saying healthcare is so expensive because muirgeo gets paid too much?

mandeville June 25, 2009 at 7:33 pm

Health care products and servcies are priced exactly where they should be based on the current market regulations. Consumers of these products adjust their behavior accordingly. It is totally absurd to claim that health care is too expensive given its consumption in this country. Health care is too expensive in undeveloped countries, but not here. It's cheap here.

The dems have got you right where they want you. They've got you admitting something is broken!

The real debate is about who pays, not how much it costs.

Snarky June 25, 2009 at 7:43 pm

I really tire of reading this unsubstantiated crap.

Hmm. A person who's compensation is at the level it is because competition is limited by licensing is arguing that his compensation level isn't the result of licensing? That can't be right.

Snarky June 25, 2009 at 7:46 pm

The real debate is about who pays, not how much it costs.

You are right, of course. Because it never matters how much things cost.

John Galt June 25, 2009 at 7:50 pm

Well, it never seems to matter when someone else is paying, anyway, does it?

K Ackermann June 25, 2009 at 10:16 pm

Here is a surprising study on child health care.

vidyohs June 25, 2009 at 10:30 pm

Listen to Dr. T, he laid it out about as clear as I have ever seen it.

Snarky,

I suppose you're free to find and employ an unlicensed physician. Why not, licensing isn't important is it? It isn't important that people who represent themselves as qualified to cut into your spinal cord be required to certify that they at least know what spinal cord is, is it?

I won't deny that there are bad doctors out there, but from my observation of having sat through countless depostions now it is more obvious that there are a plethora of scumbag attorneys and really "don't give a sh.t" patients who will not listen to the intelligent and reasonable advice of their doctor…….like don't go into child birth weighing 350lbs when you're only 5' tall.

Yeah there are some bad doctors, but they are far out numbered by the really stupid patients they have to attend.

orthodoc June 25, 2009 at 11:58 pm

"MD supply restrictions (licensing and medical school accreditation) are controlled by the AMA and they have been using that monopoly to obtain extra income for their members for at least 50 years."
"Hmm. A person who's compensation is at the level it is because competition is limited by licensing is arguing that his compensation level isn't the result of licensing? That can't be right."

Can we please please please stop claiming that the AMA has anything to do with the supply of doctors. It doesn’t. It has zippo, nada, zilch to do with it. The number of medical slots is set by the AAMC (American Association of Medical Colleges), which has been trying for 15 years to INCREASE the number of medical school positions. I would also point out that opening a medical school isn't like opening a cooking school. You need academic physicians to teach, you need a substantial infrastructure, and you need a hospital willing to serve as a teaching site.

The number of residencies is set by the Federal Government, which pays hospitals for the post-graduate training of physicians.
As for “certification,” that’s done by the various state licensing boards, and by the American Board of Medical Specialties.

The AMA, which I don’t belong to, by the way, is an advocacy group and PAC. Not that there’s anything wrong with that.

Finally, doctors’ incomes are set for the most part by CMS (again, the Federal Government) via Medicare rates and the ICD/CPT/DRG system. You do procedure X, you get paid $Y. If you do a thousand X, you get $1000Y. As the reimbursement has dropped for procedure X, doctors have responded by doing it faster and trying to do more of them. Simple. For example, the reimbursement for a total hip replacement has dropped 20% since 1992, while the CPI has risen 40%. So a given total hip replacement is being done for 60% less than 17 years ago; the reason for increased cost is that they work, more people are old enough to have arthritis, and more people want them.

brotio June 26, 2009 at 1:08 am

Don't you people understand?! The only way you can truly be free is if you open up your heart and accept Government as your Savior. Our Government loves us and cares for us – from the womb to the tomb! Lord Obama knows how much liberty we need in order to be free, so just STFU and let him do his job on us!

I figured I'd save Yasafi the trouble.

Seth June 26, 2009 at 9:36 am

"Also, are the healthcare costs for socialist healthcare systems inclusive of the amount spent on private insurance or not?"-Methinks

Good question.

"We've been able to afford more services and higher prices, so, given the above, we have more services and higher prices." -Sam Grove

Sam – I can see that being a good reason why we spend more dollars per capita. Does it also make sense as an explanation of why we spend more as a percent of GDP?

John Dewey June 26, 2009 at 9:40 am

Dr T: "I really tire of reading this unsubstantiated crap. The AMA is a professional association of physicians with membership of less than one-fourth of practicing doctors. The AMA does not control medical schools, does not control the application process, does not control class size, does not control allocation of residency slots, and does not control licensure of physicians."

Not sure what you mean by "not control the medical schools". Doesn't the AMA appoint half the members of the Liaison Committee on Medical Education (LCME)?

"The 17 members of the LCME are medical educators and administrators, practicing physicians, public members, and medical students. The Association of American Medical Colleges (AAMC) and the Council on Medical Education of the American Medical Association (AMA) each appoint six professional members. The AAMC and AMA each appoint one student member. The LCME itself appoints two public members, and a member is appointed to represent the CACMS.

The AMA-sponsored LCME controls the accreditation of medical schools:

"Most state boards of licensure require that U.S. medical schools be accredited by the LCME, as a condition for licensure of their graduates. Eligibility of U.S. students to take the United States Medical Licensing Examination (USMLE) requires LCME accreditation of their school."

Snarky June 26, 2009 at 12:09 pm

Well vidyohs, you certainly have changed my mind with your well reasoned, non-hyperbolic post. I certainly won't be dealing with anyone on a professional basis from now on that isn't properly licensed.

Phil June 26, 2009 at 1:13 pm

Do third party payments prevent spending control?

ABSOLUTELY!

I used to be a state medicaid/medicaire auditor and the MA population in particular-have inordinately high utilization rates, even when there's not an underlying high-risk behavior, condition or disease (HIV/AIDS, teenage pregnancy, substance abuse, etc) that occurs at higher rates in the MA eligible population.

Outside the MA population-think about it, do you go to the cheapest drug store or the most convenient when you have pharmacy coverage. Do you think GE ever priced its newest MRI machine based on a market of individual payers or what they could expect to get from insurers.

Third-party payment arrangements are the ruination of the healthcare market, not its salvation.

John Dewey June 26, 2009 at 5:02 pm

seth: "Does it also make sense as an explanation of why we spend more as a percent of GDP?"

A higher per capita income allows for higher proportional spending for non-essential goods and services. Lasik eye surgery, breast augmentations, shorter queues (excess capacity), and hair implants are all non-essential services which might attract some of that higher income.

A higher per capita income allows for higher insurance premiums to fund proportionately higher prolonged end of life care. Such care may seem to be essential, but it is apparently not essential in nations where limited by bureaucratic control.

A disproportionately high number of billionaires and near-billionaires in the U.S. can – and do – fund medical research spending at far higher levels than in other nations.

Seth June 26, 2009 at 5:27 pm

Thanks John Dewey. That makes sense. Good stuff. I guess if a millionaire spends $1,000 on Italian leather loafers, he spent a higher percent of his income on that than I did.

steep June 26, 2009 at 6:58 pm

Maybe doctors in the US get paid more because they're more efficient. It doesn't take months here to get in to see a specialist or to have an MRI or CAT Scan. They seem to be able to work in their own patients plus those that come from Canada, etc in a much timelier fashion than in other countries. It could be the saved time and convenience that we're paying for.

Previous post:

Next post: