TCS Daily


Health Care Crisis? How About a Recreation Crisis?

By John Merline - January 30, 2006 12:00 AM

When President Bush lays out his health care reform plan at the State of the Union address, the underlying premise will be that the nation spends too much on health care. That seems like a reasonable assumption. After all, national spending on health care has jumped 364% over the past 20 years, and now accounts for 16% of the nation's Gross Domestic Product. As Bush's National Economic Council director Allan Hubbard put it, "people are very, very frustrated about the cost of health care."

But do we actually spend too much on health care? And if so, what's the cause?

While health care costs are undeniably rising fast, this is not necessarily a sign of something wrong with the system. It could simply be a reflection of the legitimate preferences of an increasingly wealthy nation. After all, once basic necessities are met, it is reasonable to assume that an increasing share of each extra dollar earned will go to things that improve quality of life, like health care, beauty aids, or recreation.

In fact, that is what has been happening. Over the past 20 years, spending on recreation, health clubs, even lawyers, has climbed at about the same rate as health care. (See Table 1.) Yet nobody talks about a national health club crisis, or the need to reform the nation's recreation industry.

Table 1
Chasing Quality

As the nation has grown richer, it has ramped up spending in several areas, including health care, that improve quality of life.

Spending increase, 1984 to 2004

Computers

1,600%

Recreation

386%

Medical care

362%

Higher education

344%

Hair stylists and health clubs

301%

Legal services

279%

Housing

226%

Furniture

178%

Food

154%

Clothing

131%

Gross Domestic Product

198%

Source: Bureau of Economic Analysis

If there is a crisis in health spending, it is the direct result of government policy over the past four decades, which has encouraged the dramatic rise in third-party payment of health care.

Today federal, state and local spending accounts for nearly half of the nation's health care bill, up from 38% in 1970. In addition, the tax code explicitly favors insurance payment of even routine health bills. That's because only health care spending funneled through employer-provided health insurance gets a full and complete tax break.

The result is that consumers increasingly are shielded from the true cost of health care. In 2004, out-of-pocket spending accounting for just 12.6% of national health spending, down from 33% in 1970. (See Table 2.) With the true cost of care mostly hidden from consumers, they naturally demand more and more, pushing up spending and prices.

Table 2
Shielding Consumers
Out-of-pocket spending on health care as share of national health expenditures.

1960

1970

1980

1990

2000

2004

46.7%

33%

21.5%

19%

14%

12.6%




Source: Center for Medicare and Medicare Services

The problem is that most health care reform proposals -- including those offered so far by the Bush administration -- simply offer more of the same: more government spending, or more generous tax breaks for health care spending.

While that might achieve some worthwhile goals, cutting health costs isn't going to be one of them.

John Merline, former editorial writer of USA Today, is a writer living in Virginia.

Categories:

39 Comments

Efficiency
"...cutting health costs isn’t going to be one of them."

The laser eye surgery business is an example of what can happen in health care if the free market is allowed to flourish.
As most third party payors won't cover the procedure, demand by a public with limited resources has drive down the cost and improved the quality of the procdere.
Cosmetic surgery is likely not coverered by most HMOs yet there still seem to be a huge market.

Round up the usual suspects
Lost in this yammer is a simple and undeniable fact. The U.S. spends about 16 percent of GDP on health care -- that's about twice what most other industrialized countries spend. For this investment, we have poorer numbers in all measures of public health: life expectancy, infant mortality, etc.

Health care
the author is right on the money. The "lesion" as we say is in 3d party payers which is why costs are not scrutinized by consumers and why health care is so destructive of business activity. Now I mildly disagree with his statement that the Bush proposal is not doing anything new. The insistence upon high deductibles and medical savings accounts for less than catastrophic expenses is a major step in the direction of economic sanity. C. L. Lee, MD

Demographics have to be adjusted for
The US is an abnormal country. We take in huge numbers of immigrants from the 3rd world and tolerate an astounding array of poor health practices in the name of freedom. When you normalize for these two factors, the disparity in health results tends to disappear. The plain fact is that no health care payment system is going to alter the condition of immigrant teeth. No health payment system is going to alter the number of gang shootings or much alter the amount of illegal recreational pharma that is consumed in the US. To a great extent, we pay different because we are different and we shouldn't lose sight of it in our international comparisons.

There's a good case to be made in terms of a campaign for virtue that would affect health outcomes but that's not what most people talk about when they discuss health care reform.

Standard of Care is what matters
If that Internist didn't refer to a cardiologist for that little blip on the EKG and it turns out to be serious, what happens then? That little blip gets a referral whether it's from a multispecialty group or from a solo practice because three years later doctors don't want to be answering the question "why didn't you refer?" while the widow sobs in her handkerchief for the jury's benefit.

The relevant thing is the standard of care. If doctors go below the standard and insufficiently refer, they get sued, often ruined. In any case, they pay heavily no matter what the verdict is because their malpractice discounts for not being sued (which can be 50% off of a bill that's tens of thousands of dollars) just went away so even an unsuccessful, frivolous suit creates large costs.

If you go too far over the standard of care, the insurance companies will audit you and yank the money back. If you go too far below the standard, you are ruined in the courts. So what's a doctor to do? Go right along with everybody else in making the standard of care a case study in defensive medecine.

Not so different, in fact
Almost all the countries in Europe with better numbers have substantial number of immigrants, African and Asian, who are completely competitive in substandard health practices, including drugs. They are, however, insured, so that the problems can be dealt with early on, cheaply, instaded of later in the emergency room.

The factors you're talking about might make a differnce of a few percent. However, we're talking in many cases about twice as much spending in the U.S. per capita, for a worse reulst.

Computer Records
Dr. Lee,

Why can't I get a copy of my medical records on a CD or in some other digital device?
Record keeping efficiency appears to be an area where tremendous costs could be saved.

eric repeats old, refuted lies
The US health care costs have many causes. Law suits, defensive medicine to protect from law suits, life style choices, etc.

As to other countries getting better results, that to depends on how you measure these things. If you discount all those people who suffer for months waiting in queue for services, as eric does, then the costs can be reduced with no affect on "quality". If you discount the fact that different countries use different standards to measure these quantity, as eric does, then you can pretend that the numbers actually mean something.

See a different DR
Tell him/her to leave you alone or see someone else.

I personally would not get the surgery, but the procedure has become more efficient in cost and quality because most insurance won't cover it.

And yet


And yet people of Japanese decent live longer in the USA than in Japan, Americans of European decent live longer in the USA than in Europe. People of African decent live longer in the USA than in Africa. Yet when Americans are compared to Europeans we have poorer numbers in all measures of public health: life expectancy, infant mortality. Could it be that blacks live shorter than whites?

Please stop personal insults
But that.is all MarkTheGreat seems to be able to do. He cannot back up his statements. For example, life expectancy isn't really a mysterious number. It may not mean anything to MarkTheGreat.

who is "eric?"

Poor people in general live shorter lives.
But life expectancy for Japanese women in Japan is 88 years. What's your source that it's higher for Japanese women in the U.S. I also don't know that this is true for Europeans: again, what' s your source.

>Could it be that blacks live shorter than whites?

Nothing is more closely associated with longevity than income. Groups with less money don't live as long. So yes, on the average. Is your idea that we shouldn't count them?

meaningfull numbers
As I stated, life expectancy is affected by many things, not just how much money is spent on health care.

You posted these lies before, and they were shot down.
I have no doubt that in a couple of months we'll be shooting them down again.

That's one thing about leftists, they don't care about facts.

As usual
eric has to lie about what other people are saying in order to make it look like he makes sense.

backup: zero
You don't know what you're talking about. bottom line remains we spend twice as much on health care as most other industrialized societies, and have poorer public health results. Waving your arms and saying how much money is spent on health care isn't the only thing is just waving your arms. And please stop calling people you disagree with liars unless you have evidence that they are trying to mislead with information they know is wrong.

Mark, please stop posting personal insults

This is true in the countries with Government healthcare also!


This is true in the countries with Government healthcare also! Even in countries with Government healthcare longevity is positively associated with higher income.

As for the nubers you will have to look them up yourself.



If it were not for excessive licensing in healthcare more of us might be able to go to a relative fo


If it were not for excessive licensing in healthcare more of us might be able to go to a relative for healthcare. Otherwise there is no way to solve this problem.

The gauntlet that MDs must run to practice is an anachronism.
The gauntlet that MDs must run to practice is an anachronism.

And only doctors are allowed to write prescription for the simplest situation.

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, b
It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.
Adam Smith

of course it is
You're absolutely right. Sure, higher income is associate with better health outcomes everywhere.

But the problem's accentuated in the United States, with a big bulge of uninsured people, despite the huge expenditure.

liars
The evidence has been presented here in this forum a number of times, as you well know. Just check the archives.

Your facts are nothing more than your pathetic lies.

You have been shown many times why you can't do straight up comparisons. But you don't care. Facts don't get you where you want to go. Lies do. So you lie.

It's all you've ever done, it's all you know how to do.
You've lied so much, for so long, it looks like you've even managed to convince yourself.

eric, please stop posting lies

like to like
When you compare similar demographic groups in Europe and in the US, you find that medical condition in the US is equal to or better than that in Europe and other countries with socialized medicine.

When you compare the wealthy to the wealthy.
When you compare the middle class to the middle class.
When you compare the gansta drug culture to the gansta drug culture.

What is different is the ratios of the various groups.
This is what eric refuses to adjust for. Which is why his figures are nothing more than lies.

Priorities
What should be the highest priority, quality, competent health care or health insurance?
Fortunately for someone, the real issue of quality, cost effective health care seems to be drowned by the schreeching for health insurance.
Is that what the insurance companies want? Manddetory health insurance for all so they can rake in the bucks? Conspiracy theorists, where are you?
The conservatives solution is to make attempts at applying free market priciples, with help from government (socialism, but more efficient socialism!) so people can make thier own choices for health CARE.The opposition wants the government to fund health insurance (not health CARE) for all.
Why is no one arguing for nationwide medical clinics, such as those in the military, which would provide free care to those who qualify? Or are the insurcance companies and trial attorneys pulling the strings for national health insurance?

please bring facts instead of insults if you want to contribute, Mark

please back up what you say instead of a posting inane insults

Data
Where can one find objective data comparing the health of various countries as well as comparing their health care systems?
Again, the challenge is to find objective data.

More than one reality, apparently
The author of this article, like several I have read on this site, leaves out too many relevant aspects of the subject under discussion.

For instance, a person may seek health care, due to illnesses or injury, who would not, and now perhaps, cannot, subscribe to a health club membership, or who might not seek a lawyer.

I am one such person who seeks the help of doctors, pharmacists, and hospitals, but who doesn't belong to a health club, or has not had to employ lawyers. Health care can be a matter of life and death, where joining a health club is not.

This was a very biased article, and I would hope for better from the authors appearing on this site.

There is no proof of that.
'But the problem's accentuated in the United States, with a big bulge of uninsured people, despite the huge expenditure. '

There is no proof of that.

please back up what you say
>Which is why his figures are nothing more than lies.

you have no figures whatsoever, nothing: just assertions.

who is eric?

40 million uninsured
... including millions of children. You really think this has no impact?

That's funny
considering you have never once presented any facts, and you can be quite insulting when things aren't going your way

I have, you just can't accept any fact that you disagree with

another lie by eric
The 40 million number has been disproven so many times, that only someone totally disconnected from reality would keep pushing it.

MarkTheDeusch at it again
Score: Fortunato- 1 Mark- 0

Mark talks a lot but says amazingly little.

if MarkTheDeusch didn't exist it would be necesary to create him
mark, what do you contribute to society?? Other than your negativity, lying and smearing?

You're annoying and stupid. Everything you say about other people is directly applicable to yourself, do you understand that? You're telling us what a liar you are by accusing others of lying so much. Go back to your home in G'Dub's anus and leave the rest of the world alone.

TCS Daily Archives