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December 26, 2005

Paul Krugman: Medicine: Who Decides.

Paul Krugman’s latest effort on health care is, how shall I put this politely, insane?

No, I’m not the world’s biggest fan of the way in which the US health care market currently works but people really do want to think a little more about what he’s suggesting here.

Eventually, we'll have to accept the fact that there's no magic in the private sector, and that health care - including the decision about what treatment is provided - is a public responsibility.

That is, Congresscritters will decide what treatment you get. Well, they’ll try of course, but it won’t actually be them. It’ll be the same people that make a trip to the DMV so enjoyable who actually run the system on a day to day basis.

Worse, it’ll be the people who make the Army Corps of Engineers more expensive than private contractors who get to run it.

It’ll be the people who make New York’s Medicare program so expensive who actually run it.

Although some of the growth has been driven by the general rise in prescription drug prices of about 6 percent a year, much of it can also be traced to New York's failure to spend its money more prudently, according to an investigation by The New York Times. The spending is another reason the state's Medicaid program is, at $44.5 billion, by the far the largest and most generous in the country.

The costs can also be traced, in part, to years of industry lobbying in Albany. The nation's pharmaceutical companies have spent millions persuading state lawmakers not to adopt the kinds of controls that other states began instituting more than a decade ago. And pharmacist organizations have pressured the state program to pay pharmacies more than most other states for the drugs themselves.

It’ll be people like those who run our own dear NHS who run it as James Bartholomew points out:

Radiotherapy is vitally important. It saves people's lives. It is also time-critical. A tumour that can be destroyed on day one, may well have grown too big after three months to be treatable. So the patient dies.

The waiting time for radiotherapy in many centres in Britain is three months. People die because of this waiting.

Or the people who make NHS Doctor weep with frustration who will run it. It may well be that people like Mark Thoma think this is all a good idea but what will they say the first time a veteran sells his medals to get the prompt treatment denied him by the rationing that Dr. Krugman insists is necessary?

The standard waiting time for hip replacements in the orthopaedic department at the Royal Bournemouth Hospital, one of the nearest facilities to the Dukes' home, is six months.

Mrs Duke, who has been in pain with her hip for eight months, was told by her chiropractor that the wait might be 15 months.

Before the sale Mrs Duke, 85, explained: "It is very likely I will need a new hip and that is something we just cannot afford. If I went on a NHS waiting list I would have to wait forever, and at my age that's no good.

One thing that might be worth remembering. However badly the private sector can or has screwed something up there is always the possibility that the Government will do it even worse. Worth remembering that when you read a Krugman piece.

Tags

Via Ed Strong.


Health care seems to be heading back to the top of the political agenda, and not a moment too soon. Employer-based health insurance is unraveling, Medicaid is under severe pressure, and vast Medicare costs loom on the horizon. Something must be done.

But to get health reform right, we'll have to overcome wrongheaded ideas as well as powerful special interests.

For decades we've been lectured on the evils of big government and the glories of the private sector. Yet health reform is a job for the public sector, which already pays most of the bills directly or indirectly and sooner or later will have to make key decisions about medical treatment.

That's the conclusion of an important new study from the Brookings Institution, "Can We Say No?" I'll write more about that study another time, but for now let me give my own take on the issue.

Consider what happens when a new drug or other therapy becomes available. Let's assume that the new therapy is more effective in some cases than existing therapies - that is, it isn't just a me-too drug that duplicates what we already have - but that the advantage isn't overwhelming.

On the other hand, it's a lot more expensive than current treatments. Who decides whether patients receive the new therapy?

We've traditionally relied on doctors to make such decisions. But the rise of medical technology means that there are far more ways to spend money on health care than there were in the past.

This makes so-called "flat of the curve" medicine, in which doctors call for every procedure that might be of medical benefit, increasingly expensive.

Moreover, the high-technology nature of modern medical spending has given rise to a powerful medical-industrial complex that seeks to influence doctors' decisions.

Let's hope that extreme cases like the one reported in The Times a few months ago, in which surgeons systematically used the devices of companies that paid them consulting fees, are exceptions.

Still, the drug companies in particular spend more marketing their products to doctors than they do developing those products in the first place. They wouldn't do that if doctors were immune to persuasion.

So if costs are to be controlled, someone has to act as a referee on doctors' medical decisions. During the 1990's it seemed, briefly, as if private H.M.O.'s could play that role.

But then there was a public backlash. It turns out that even in America, with its faith in the free market, people don't trust for-profit corporations to make decisions about their health.

Despite the failure of the attempt to control costs with H.M.O.'s, conservatives continue to believe that the magic of the private sector will provide the answer. (There must be a pony in there somewhere.)

Their latest big idea is health savings accounts, which are supposed to induce "cost sharing" - that is, individuals will rely less on insurance, pay a larger share of their medical costs out of pocket and make their own decisions about care.

In practice, the health savings accounts created by the 2003 Medicare law will serve primarily as tax shelters for the wealthy. But let's put justified cynicism about Bush administration policies aside: is giving individuals responsibility for their own health spending really the answer to rising costs? No.

For one thing, insurance will always cover the really big expenses. We're not going to have a system in which people pay for heart surgery out of their health savings accounts and save money by choosing cheaper procedures.

And that's not an unfair example. The Brookings study puts it this way: "Most health costs are incurred by a small proportion of the population whose expenses greatly exceed plausible limits on out-of-pocket spending."

Moreover, it's neither fair nor realistic to expect ordinary citizens to have enough medical expertise to make life-or-death decisions about their own treatment.

A well-known experiment with alternative health insurance schemes, carried out by the RAND Corporation, found that when individuals pay a higher share of medical costs out of pocket, they cut back on necessary as well as unnecessary health spending.

So cost-sharing, like H.M.O.'s, is a detour from real health care reform. Eventually, we'll have to accept the fact that there's no magic in the private sector, and that health care - including the decision about what treatment is provided - is a public responsibility.

December 26, 2005 in Health Care | Permalink

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I've got news for you. Waiting time for appointments and treatments is already a reality. Incompetence in office and hospital administration is already a reality. Waiting time, mistakes and incompetence at pharmacies is a reality. The fact is Americans pay the asking price for sloppy service. I am not convinced that a single payer system would necessarily be worse. The system we have now is broken and ought to be fixed. If the private sector can't or won't fix it, I'll willingly and optimistically support a universal health care system paid for by tax payer dollars. It would be the best use I can think of for tax use for the common welfare.

Tim adds: I have no doubt that all of those things are true. The question is, will a universal health care system actually fix those things? Not whether it ought to, not whether it might, but will it? The evidence from those places that have such things is that these problems are worse, not better, in such a government run system.

Posted by: Hopkins | Dec 26, 2005 12:59:23 PM

"Eventually, we'll have to accept the fact that there's no magic in the private sector, and that health care - including the decision about what treatment is provided - is a public responsibility."

Hey, as there's no magic in the private sector, the politicians should be providing the most important things first -- and deciding what to provide regarding them too. Clearly, the most important things are food, housing, clothing.

And then to assure there are enough resources saved to supply the most important things, the politicians should also provide, and decide what to provide, regarding the less important things: transportation, consumer electronics, media...

Because there's no magic in the private sector, politicians can surely manage these things as well as medical care -- and if they can, don't they have a public responsibility to do so?

Hey, I once rode in a Trabant to a politically managed food shop, and survived! (Though those politicians didn't.)

Posted by: Jim Glass | Dec 26, 2005 3:25:05 PM

There is no one perfect system. I've worked both in the USA and the UK. Both systems have their merits, but both ration health care. The USA by financial barriers, the UK by waiting list.

The two big problems in the UK are short term-ism (no govenment looks much beyond the next general election) and, worst of all, the fact that the customers have not the remotest idea of the real cost of health care, and no goverment dares tell them.

The currnt administration is destroying morale in the NHS by bean counting and by the imposition of targets that have media appeal but do not equate to good health care.

My own view is that there has to be a front end charge (re-imbursed, or partially reimbursed as necessary) and then a genuine increases in RESOURCES rather than the current obession with process/targets/counting and so on.

Trouble is, any party manifesto suggesting moving away from the "free at the point of entry" principle would probably attract few votes than a committment to abolish the monarchy.

You do not make a baby thrive and grow by measuring it every thirty seconds and then chastising the parents if it has not grown. You make it grow by feeding it.

Posted by: Dr Crippen | Dec 26, 2005 3:39:18 PM

Private medicine is not actually illegal in the UK, so presumably the people who are dying and not having hip replacements either could not afford them or have chosen not to buy them, and thus would be waiting and dying under the US system too?

Tim adds: I think this was answered the last time you made this proposal. The people in the US have, of course, been paying much less tax than those in the UK and are thus able to, if they should wish, spend more on such health care from their own pocket.

And I’m not convinced that Krugman wants to stop at the UK system either. I think he’s gunning for the Canadian, where private health care is indeed illegal.

Posted by: dsquared | Dec 26, 2005 5:14:52 PM

Just a note from Canada: private health care in Canada is not illegal. Provincial funding to private healthcare providers was, until a recent Supreme court decision, contrary to law.

There is every likliehood that the trend towards more privately provided services in Canada will continue. A trend lead by none other than Paul Martin's personal physician.

Posted by: Jay Currie | Dec 26, 2005 8:53:31 PM

"The people in the US have, of course, been paying much less tax than those in the UK and are thus able to, if they should wish, spend more on such health care from their own pocket."

Can't go along with that, Tim. Tax IS lower, broadlym in the USA, but for the real poor - and, suprise, suprise, we are talking predominantly black/Latino - this does not enable them to purchase the medical care they need.

The tax breaks benefit mainly the high-earning Ivy League-ers, the Bushes, the Kennedys and so on.

In the UK we have much greater equality of health care, albeit the equality of mediocrity.

Posted by: Dr Crippen | Dec 26, 2005 11:54:45 PM

we are talking predominantly black/Latino - this does not enable them to purchase the medical care they need.

agree with that

Posted by: vophi | Dec 26, 2005 11:58:55 PM

we are talking predominantly black/Latino - this does not enable them to purchase the medical care they need.

agree with that

The US Census Bureau doesn't, at least according to an Economist article from 2002:

Graphic

Posted by: Tim Newman | Dec 27, 2005 5:10:58 AM

What percentage of hospitals in the US provide free care for people who can't pay? Some do, certainly. It's mediocre and slow (still faster than NHS, obviously) and the doctors aren't polite, but all "free" health care is like that. I really don't know if this sort of free care adds up to complete health care or not, of course.

The perceived "problem" with our health care system isn't that some people get shitty care; it's that some people don't.


...predominantly black/Latino...

Some people think you have to be religious to have a touching faith in mythology.

Posted by: P. Froward | Dec 28, 2005 5:04:28 AM

Tim adds: I think this was answered the last time you made this proposal. The people in the US have, of course, been paying much less tax than those in the UK and are thus able to, if they should wish, spend more on such health care from their own pocket.

The % of GDP spent on health by the US governments (Fed and State) is only a small amount lower than in Britain, and most of that difference has come in the last few years.

Posted by: Matthew | Dec 28, 2005 8:28:05 PM

Hmmm... The US spends around 17% of GDP on healthcare and this still leaves millions without adequate cover. The NHS spends around 8% and, despite its shortcomings gives a pretty good job in terms of bang for buck accordin to the OECD. Moreover the cost was around 5% GDP before the introduction of 'market' reforms which psuhed admin. up from 6% to 12% and rising as the accountants and consultants jump on the gravy train.

Making profit out of healthcare will always be the expensive option simply by providing non-clincial incentives to carry out treatment.

P.J. O'Rourke's quip about 'free' healthcare being more expensive was absolutely wrong.

Posted by: Charlie | Jan 31, 2008 11:32:26 PM