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03/30/2008

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KPO Wizard

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Jack

"almost $400 billion, which is more than 3 percent of American GDP."

......... it does not bother me in the least that a society might spend 3 percent of its GDP on the medical care of its elderly citizens. While the projected growth might be troubling, it's only with tongue partly in cheek that I'd parrot the "starve the beast" concept of EARLY Reaganism, however instead of starving domestic programs as were their, stated, intent, perhaps it would starve our ability to engage in costly wars with little forethought.

But IS the projected cost a huge problem? Let's take a look:

"Medicare spending as a share of GDP will double by 2020, and increase some 3-4 times by 2050 to 10 percent or more of GDP. Dollar spending on Medicare patients would increase to over a trillion dollars by 2020. Less than half of the projected increase would be due to the further aging of the population, while the majority is the result of the expected continuing growth in spending on hospitalizations, surgeries, and drugs for the elderly of given ages."

.......... The "10% of GDP" would mean that we'd be devoting a much higher percentage of our resources to the medical care of those over 65. Looking closer, the dramatic rise in those costs are largely wages paid in the US, devices largely designed and mfg here, and drugs as Becker mentions have high first cost (more wages) and later low per unit costs.

Given higher than average wages in the health sector, of the trillion Becker projects perhaps $250 billion would be directly returned to the Treasury from taxes.

Then, contrary to Becker, it's my belief that efficiencies will take place as these costs continue to rise. If they don't? given the number of jobs related to Medicare then it's likely that efficiencies will be made somewhere else in our economy. We all know that a large percentage of our existing economy is comprised of utterly unnecessary make-work.

Looking back of over the econ history of the last century, we used a large percentage of "GDP" just to provide food for our table, then we spent heavily on two World Wars, Korea, and Vietnam, and more recently a hefty share of GDP was that of building new housing stock, along with the infrastructure of a federal highway system, lots of federal buildings and prisons. In the next quarter century we'll devote a high percentage of GDP to various types of elder care and make dramatic improvements in productivity in the rest of the economy to make up for it. My guess is that integrating Mexico into the NA economy will play a large role too.

Want some savings goals for this century? The US with 3,500 nukes to the UK's 150, and Russia's couple of thousand should LEAD the way to a build down to zero and work closely with UN, NATO, SEATO, and all others to ban nukes and make the factors of producing or delivering them contraband. Today we've the means to know who is cheating and can deal with them by simply taking out the illegal facilities. Once there is a treaty banning them for all, enforcement would be expected.

Are others here sick of those posturing in favor of frugality but willing to spend trillions on warmongery and spending more, even in peace time, on the military than all other nations combined?

Brn2Run

Saint Darwin asks some combination of "why care" and "why should I pay". We are probably all a little spoiled about this in developing countries, but we all have an interest in things like immunizations, diseases not being spread, etc. Though I may never call the police, I like that they are there and will reluctantly pay my taxes. Similarly, I like that my neighbors and co-workers likely can't give me more than a cold, so I do have an interest in them being healthy. Further, the technology developed in the creation of treating Erectile Disease could one day develop into a cure for cancer or something, so cost/benefit is hard to tally.

neilehat

Yes, medical practice has changed drastically in the last fifty years and Medicare is trying as best it can to keep up. There is one issue in this new development that bears close scrutiny, that of prescription drug coverage. If one crunches the numbers, I believe you'll find that it is actually costs less in the long run to treat chronic and other conditions through the use of prescription drugs than waiting until the conditions become so bad that radical medical intervention is required. What's the going rate for a quadruple bypass surgery and rehabilitation going for these days?

As for those who don't like even this development in medical care, perhaps we can go back to using the "Delta pill" when medical conditions become bad enough. Remember they only cost twenty-five cents a dose and you need to only use it once to achieve a 100 percent "cure" rate.

Tucker

But most of the costs are due to non-generic drugs. Monopolistic pricing decisions play a large part in both the costs of Medicare. This is a kind of essential problem that needs to be solved, and I don't see a solution here.

Jack

Becker does a good job of summing up the situation this week but offered few reforms other than mentioning the Jan blog.

He sez: (among much else)

Even if the uninsured did use emergency room care a lot and thereby raised the costs of others, a better way to handle that would be to mandate that everyone purchase basic health insurance that covers catastrophic health problems.

....... he joins Barack and Clinton in shooing us all into "insurance pools". But once we're all mandated to jump into the pool and they, mandated to take us, it seems they bring even less to the party than they do today.

One thing that typically happens when insurance has a threshold such as a "500 deductible", "catastrophic" and/or "above $15,000" the number of such claims increase and what might have been a $7500 event to be paid out of pocket, mysteriously doubles and the paperwork and haggling costs rise as well. At minimum there is no cost containment effect on the "catastrophic" program.

But is there on the paying out of pocket and shopping for a "good deal?" I don't believe there is as the individual is hardly equipped emotionally to price shop either his own health care or that of his loved ones. He's also not equipped from a technical aspect. Sure, perhaps he could find "a good family doc" with a reasonable charge per visit, but what happens when he advises seeing a specialist, or going down the hall to take various tests? Decline? Go shopping?

No, I think we'd have a far better chance of ALL having decent health care in a Mayo Clinic or Kaiser type of health care PROVIDER institution in which the costs of paperwork, squabbling, and yes insurance co CEO gleanings are applied directly to health care in a system not too unlike the VA which strives to lower costs by doing more preventative care.

Perhaps if we are lucky, or wise enough, to pass on electing the "stay the fatal course" candidate, that one of the two forward looking candidates, once in office will develop the spine or "discover" that we simply don't have enough wealth to continue to afford insurance company overhead and build a healthcare system in which insurance companies buy some health care facilities and provide a service or go find something else to do with their assets.

pepper

so long text,and I don't know some words.

Anonymous

Is there a cost benefit analysis done on what drugs are covered in health plans? My health plan just payed $500 for a foam to treat psoriasis. If I had to pay for it myself I wouldn't have bought it, not because I can't afford it but simply because it is not worth it. Why? I also take another drug which only costs $15, this second drug gets rid of 99% of my psoriasis, the $500 foam is for the other 1%.

Persona

I think its very interesant that thing that Becker said in the blog. Medicare is a system that have to evolucionate for supply all the necesities that exist in Usa.

Jim

If one thinks back to the early 1960s, one will recall that the primary argument against medicare was that it would break the bank. Guess what.

Below is a letter I sent in response to Professor Fuchs and Dr. Emmanuel relative to their recent commentary on health care costs. It is relevant here.

Even though both Professor Fuchs and Dr. Emmanuel make their livings from the medical-industrial complex, it is clear that their understanding of the current state of healthcare affairs is incomplete.

Right or wrong, the 17% of GDP spent on healthcare in the United States is one of the few steady engines of employment. Where would the good gentlemen propose that those dollars and hence the jobs go? To manufacturing? I don't think so. The United States is now a bubble economy and when one bubble bursts (dot com, real estate), there had better be another on ready to take over (health care, energy). At least the healthcare "bubble" is somewhat protected from asset hyperinflation.

Of course healthcare is expensive. Patients demand instant and high tech services and to live long, happy and healthy lives. Fuchs and Emmanuel question the value of healthcare but would admit that they want high quality healthcare for everyone. They hopefully would also admit that the life span is increasing and that 70 years of age is the new 55. I don't think that you can have it both ways.

It does not matter what pathways the money takes to pay for healthcare. If it all was funneled through the federal government, the cost would be the same or more given the amount of waste documented in that sector.

So the real issue comes down to cost. How to reduce the cost? Reduce use. Ration. Pay the providers less. Ration. Why would anyone go to four years of college, four years of medical school, three to five years of training,come out with $250,000.00 in debt, work sixty hours per week take call at night and on weekends with the threat of malpractice for the royal salary of $150,000.00 per year Pay for performance you say? By the way, physicians usually do not perform their own tests and therefore do not profit from them unless they are doing so illegally. Hospitals are not paid on a fee for service basis but rather on some derivative of the medicare formula.

The electronic medical record has not taken off generally because of cost, lack of physician acceptance, the necessity of work process re-design, lack of expertise and time expense. To compensate for those difficulties, huge amounts of money will have to be invested by the government or insurance companies. This is not likely to reduce costs at least in the short run.

If the good professors want to immediately reduce the cost of care by 30%, reform the medical tort system so that physicians and hospitals do not feel the need to practice defensively. Until that is done there will continue to be billions of dollars spent on unnecessary tests and procedures, unless, of course, Professor Fuchs and Dr. Emmanuel wish to certify in writing that the tests and procedures are unnecessary.


--------------------------------------------------------------------------------
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Jack

Jim, well you listed quite a number of the things that comprise our current system which you indicate will "break the bank". Most of it seems fairly accurate except for the aging canard of "saving 30% via tort reform, but then you knock down most of the other reforms as if the status quo would always be the status quo despite "breaking the bank"

A couple of questions:

Why would anyone go to four years of college, four years of medical school, three to five years of training,come out with $250,000.00 in debt, work sixty hours per week take call at night and on weekends with the threat of malpractice for the royal salary of $150,000.00 per year?

...........Hmmm, because they didn't favor going to college and having debt only to start at $30k as a teacher? But more seriously, why is it that they work 60 hours per week...... IF such is the case? Too few docs even with those from India and other nations coming in? Any ideas? Like opening up more slots for medical students before the ONLY way to find care is that of traveling to India?

neilehat

Jack, They're just beginning to understand why medical costs are so cheap overseas. They have "discovered" that these "medical practioners" have been "farming" organs, blood, etc. from the poor and destitute (for a less than nominal fee, "organ slaves") for years. And I won't even mention the practice of "liscensing". What ever happend to WHO? It may go far in explaining the mysterious rise in communcable disease's and HIV (not too mention the rise of drug resistant strains) in populations once far removed geograpically from the point of origin.

Jim

Jack,

Thank you for your thoughtful comments.

I don't know if the tort factor is exactky 30% but I do know from personal experience and study of specific issues in that regard that it is a significant number. Having looked at non-infused CT scans of the head on ER patients with no physical findings but with one or more of seventeen symptoms, and using current payment rates, I found that it costs $12,000 to find one positive case and that does not consider even whether or not intervention would be necessary in those cases. the incidence of positivity was 4-5% except for amnesia and/or intoxication in which case it was 9-11%. When I presented these findings to several prominent trial attorneys to ask if these numbers would justify not doing the CT scans in certain cases, the answer was "As long as you can convince the jury that what you did was reasonable." You can guess what the ER physicians said.

A teacher making $30,000 per year pays no taxes and probably receives an earned income credit and works nine months per year. I am speaking of persons who are interested in medicine but who look at primary care and say, "not worth it." In addition, many primary care physicians are females who work part time in their child bearing years and therefore contribute to the shortage. If one puts through more MD candidates, most will be attracted toward the higher paying specialties. Check out the Maryland Hospital Associations commissioned study on the physician supply in Maryland. I suppose going to India for you health care is an option, better than no health care at all, or maybe not.

"Breaking the bank" is referring to the cost and fiscal integrity of the Medicare program. As an aside, many poorer medicare patiens do not opt for Part B which pays physicians because it costs part of their social security income. That doesn't help with the problem of access and prevention.

And oh yes, the status quo will be very difficult to change but in the meantime, Medicare insolvency could treaten the entire system.

Saint Darwin Assissi's cat

Thinking about Medicare:
http://well.blogs.nytimes.com/2008/02/25/saturday-night-live-takes-on-drug-ads/
Enjoy!

Jack

Neil I'm hoping your comments do not indicate that you think the medical systems of other nations are necessarily inferior to our own. I've not been to India but have friends from their and my guess is that in that poverty wracked nation there is first world medicine for those with money and much lower standards for those who don't. Have you noticed companies encouraging their employees to be "medical tourists" so as to save money?

Jack

I don't know if the tort factor is exactky 30%

......... please keep in mind that our tort system also works to maintain standards and save the costs that would be spent were malpractice even more common than it is. Sadly, our nation seems to have become one where we sprinkle ice-melt on a walkway out of concern for being sued, instead of out of concern for passers by and invitees breaking a leg, hip or back.


but I do know from personal experience and study of specific issues in that regard that it is a significant number. Having looked at non-infused CT scans of the head on ER patients with no physical findings but with one or more of seventeen symptoms, and using current payment rates, I found that it costs $12,000 to find one positive case and that does not consider even whether or not intervention would be necessary in those cases. the incidence of positivity was 4-5% except for amnesia and/or intoxication in which case it was 9-11%. When I presented these findings to several prominent trial attorneys to ask if these numbers would justify not doing the CT scans in certain cases, the answer was "As long as you can convince the jury that what you did was reasonable." You can guess what the ER physicians said.

........... Hmmm, It strikes me as "interesting" how the numbers compare to real estate commissions where it is said that a good realtor will close a deal after dealing with about 20 clients. To the one that closes it seems like a lot for not much work, but they weren't there when the guy was hauling around the other 19. But I stray, perhaps; suppose, knowing the 5% odds what would you do or prescribe for a family member?

BTW every once in a while I get a glimpse of what the investment in a CT or other medical machine costs and what it returns by comparison to similar investments in other sectors and am sure that CT scan costs should be much lower than they are. We're all familiar with the under-utilization rate, right?

A teacher making $30,000 per year pays no taxes and probably receives an earned income credit and works nine months per year.

......... and often spends part of the summer on further education as once the semester begins there is little time for seminars and conventions in warm sunny places. As fellow capitalists hoping to efficiently allocate resources let's HOPE neither teachers nor others are routinely compensated by the EITC.

I am speaking of persons who are interested in medicine but who look at primary care and say, "not worth it." In addition, many primary care physicians are females who work part time in their child bearing years and therefore contribute to the shortage.

.......... THAT's a good one! 50 years ago women were hardly in medicine at all and now our 'shortage' is due to their entering the workforce? But perhaps your point is that of their sort of "wasting" limited MD training....... to which I again ask about more training facilities along with paramedics picking up more of the burden.


If one puts through more MD candidates, most will be attracted toward the higher paying specialties.


......... My first thought is "Great!!" perhaps surgeons in a flooded market will bid their salaries down from the million or so of today. But! then, I've little confidence in classical supply and demand in medicine....... in the US

Check out the Maryland Hospital Associations commissioned study on the physician supply in Maryland.

........ Has the AMA still got it choked down pretty tight?


I suppose going to India for you health care is an option, better than no health care at all, or maybe not.

"Breaking the bank" is referring to the cost and fiscal integrity of the Medicare program.

........ yes..... I wrote on that issue here. "Funny thing" that the US nearly doubles the share of its very large GDP that is spent on health care compared to other advanced nations where the outcomes are actually a bit better, but is having fits over Medicare going broke.


As an aside, many poorer medicare patiens do not opt for Part B which pays physicians because it costs part of their social security income. That doesn't help with the problem of access and prevention.

......... Indeed it does not. And more discussion would likely lead to the verboten topic of the ever widening wage-wealth gap in our once fair nation, with those who would be surgeons turning their noses up at $150,000 that is considered good money for college profs, the very top ranks of the military, and civilian service but who think $30k for teachers who, after all have a couple months off in the summer is just fine.

And oh yes, the status quo will be very difficult to change but in the meantime, Medicare insolvency could treaten the entire system.

Jack

I don't know if the tort factor is exactky 30%

......... please keep in mind that our tort system also works to maintain standards and save the costs that would be spent were malpractice even more common than it is. Sadly, our nation seems to have become one where we sprinkle ice-melt on a walkway out of concern for being sued, instead of out of concern for passers by and invitees breaking a leg, hip or back.


but I do know from personal experience and study of specific issues in that regard that it is a significant number. Having looked at non-infused CT scans of the head on ER patients with no physical findings but with one or more of seventeen symptoms, and using current payment rates, I found that it costs $12,000 to find one positive case and that does not consider even whether or not intervention would be necessary in those cases. the incidence of positivity was 4-5% except for amnesia and/or intoxication in which case it was 9-11%. When I presented these findings to several prominent trial attorneys to ask if these numbers would justify not doing the CT scans in certain cases, the answer was "As long as you can convince the jury that what you did was reasonable." You can guess what the ER physicians said.

........... Hmmm, It strikes me as "interesting" how the numbers compare to real estate commissions where it is said that a good realtor will close a deal after dealing with about 20 clients. To the one that closes it seems like a lot for not much work, but they weren't there when the guy was hauling around the other 19. But I stray, perhaps; suppose, knowing the 5% odds what would you do or prescribe for a family member?

BTW every once in a while I get a glimpse of what the investment in a CT or other medical machine costs and what it returns by comparison to similar investments in other sectors and am sure that CT scan costs should be much lower than they are. We're all familiar with the under-utilization rate, right?

A teacher making $30,000 per year pays no taxes and probably receives an earned income credit and works nine months per year.

......... and often spends part of the summer on further education as once the semester begins there is little time for seminars and conventions in warm sunny places. As fellow capitalists hoping to efficiently allocate resources let's HOPE neither teachers nor others are routinely compensated by the EITC.

I am speaking of persons who are interested in medicine but who look at primary care and say, "not worth it." In addition, many primary care physicians are females who work part time in their child bearing years and therefore contribute to the shortage.

.......... THAT's a good one! 50 years ago women were hardly in medicine at all and now our 'shortage' is due to their entering the workforce? But perhaps your point is that of their sort of "wasting" limited MD training....... to which I again ask about more training facilities along with paramedics picking up more of the burden.


If one puts through more MD candidates, most will be attracted toward the higher paying specialties.


......... My first thought is "Great!!" perhaps surgeons in a flooded market will bid their salaries down from the million or so of today. But! then, I've little confidence in classical supply and demand in medicine....... in the US

Check out the Maryland Hospital Associations commissioned study on the physician supply in Maryland.

........ Has the AMA still got it choked down pretty tight?


I suppose going to India for you health care is an option, better than no health care at all, or maybe not.

"Breaking the bank" is referring to the cost and fiscal integrity of the Medicare program.

........ yes..... I wrote on that issue here. "Funny thing" that the US nearly doubles the share of its very large GDP that is spent on health care compared to other advanced nations where the outcomes are actually a bit better, but is having fits over Medicare going broke.


As an aside, many poorer medicare patiens do not opt for Part B which pays physicians because it costs part of their social security income. That doesn't help with the problem of access and prevention.

......... Indeed it does not. And more discussion would likely lead to the verboten topic of the ever widening wage-wealth gap in our once fair nation, with those who would be surgeons turning their noses up at $150,000 that is considered good money for college profs, the very top ranks of the military, and civilian service but who think $30k for teachers who, after all have a couple months off in the summer is just fine.

And oh yes, the status quo will be very difficult to change but in the meantime, Medicare insolvency could treaten the entire system.

....... My guess it that it will 'fix itself' by our adjusting to spending more in that sector, hopefully less on the warmongering sector, forced efficiencies in both medical care and the rest of our bloated and inefficient economy, folks working longer (to an older age) and being "covered" by whatever a forward looking Admin and Congress designs before the whole mess goes broke.

neilehat

Jack, What you've come up against is the classic economic public policy paradox, "the guns or butter problem". We could print more money, but then that's inflationary and in the end makes everything cost more. Although with cheaper dollars. National Secruity or Healthcare, hmm - tough choice.

As for medical capabilities, I trust the licensed medical professionals of the AMA more than I do the medical practitioners out of "Delhi Poly-technic" or the graduates of the "Moombasa School of Witchdoctoring".

Jim

Jack,

What I would do for myself or for a loved one in the ER with symptoms or a history of trauma but with no physical findings would be to watch their neurological status with some cautionary explanations, probably at home. In most ERs that cannot be done because the physician and the patient are strangers to each other and therefore that approach cannot be trusted. It is interesting to note that the same patient with the same history and/or symptoms seen in a physician's office would be sent home with the cautionary instructions and perhaps referred for a CT at a later time, not being held to the same standard as the ER scenario.

By the way, the typical breakeven for a CT scanner in a hospital is two years, right or wrong, assuming the pro forma is reasonably accurate.

Physician assistants and nurse practioners are taking up some of the burden of initial visits but my own encounters with them have not been very useful. No doubt there will be more of that though.

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