American Health Care--Posner's Comment

Last December, the McKinsey consulting firm published a report which states that despite the much higher per capita spending on health care in the U.S. compared with peer countries, the longevity of Americans (even if only that of white Americans is considered) is lower than the average of the comparison countries. This is true, according to McKinsey, even though the prevalence of disease is less in the United States than in those countries (with the principal exception of diabetes, a consequence of Americans' obesity). Because Americans smoke less than the people in those countries, smoking-related diseases are actually lower in the United States. The report attributes to the higher cost of health care in the United States to higher physician incomes, physicans' control over the number of medical procedures and their ownership of testing and other facilities, which drives up utilization, much higher prices for procedures, higher drug prices, and other factors. To which should be added the exemption of employer-provided health benefits from employees' income tax and the very high overhead costs of health insurers. Against this, the Preston-Ho article that Becker summarizes points out that the more extensive screening and aggressive treatment of selected cancers, notably breast cancer and prostate cancer, in the United States result in lower mortality from those cancers than in the peer countries. That is an important point, but it does not establish the superiority of our health-care system. To establish (or refute) that superiority would require conducting a cost-benefit analysis. I have my doubts that such an analysis would vindicate the U.S. system. We spend some $2.5 trillion a year on health care. Our peer countries spend about 60 percent as much per capita on health care and this implies that if we spent at the same level as they, our annual health-care expenditures would be $1.5 trillion. The question, therefore, is what benefits are we obtaining for the additional $1 trillion that we are spending? Suppose the additional screening for and treatment of cancer that we do compared to what the peer countries do is $100 million a year (I have not been able to find an estimate of that cost); that would leave $900 million in "excess" health-care expenditures to explain. A related point is that the causes of the lesser emphasis in the peer countries on cancer screening and treatment have not been explained. Is it simply a lack of money? Or is it a medical judgment? There is some skepticism in medical circles concerning the overall efficacy both of mammography and of screening for and treatments of prostate cancer. Treatments for prostate cancer are expensive in dollar terms but more so in side effects, which often are permanent. Different people, and perhaps different populations, make different tradeoffs among the various factors that affect a decision on screening and treatment. I also question the Preston-Ho suggestion that the shorter average life span in the United States compared to that in the peer countries should be treated as a completely exogenous factor. Treating it as such results from an artificial distinction between medical care and public health. Obesity is not a disease, but it is a serious public health problem. A rational allocation of health-care resources might require a shift in resources from end-of-life medical treatments to preventing obesity. Such a shift might increase longevity much more cheaply and effectively than more screening for cancer. So might greater efforts to reduce the murder rate, improve prenatal and infant medical care, reduce speed limits, reduce unsafe sex, increase liquor and cigarette taxes, improve education, reduce poverty, and prohibit motorcycles. It might be argued that the additional costs of health care that are created by obesity have an offsetting benefit: they reduce the cost of being obese and so increase the net benefits of heavy eating. But the higher health costs of the obese are externalized, in part anyway, to the taxpayer (also to the other members of their insurancce risk pool, if health insurance companies aren't allowed to discriminate). I doubt, moreover, that the obese gain more in enjoyment of food than they lose in the health and other costs of being obese. Much obesity is a result of ignorance (both of calories and of the health effects of obesity), bad habits picked up from parents and peers, negligent parenting, and poor impulse control (i.e., very high discount rates). And speaking of obesity, its prevalence in the United States undermines studies that find that people attach great value to small improvements in quality and quantity of life. The fact that so many Americans eat badly, don't exercise, drink (or "text") when they drive, and otherwise endanger their life and health, implies, since one can eat well, drive sober, and exercise, etc., at relatively low cost, that people don't value small improvements in quality and quantity of life very much--unless the improvements are paid for by someone else! Even if we are receiving $1 trillion in benefits from the "extra" $1 trillion that we paying for medical care, it doesn't follow that the $1 trillion in extra costs isn't too much. The reason is that we face, in my opinion, a fiscal crisis; something will have to give and maybe it should be some medical care. The national debt this year will almost equal the Gross Domestic Product (true, the "public" debt--debt owed to entities outside the federal government--is lower than the overall national debt, but the debt owed the social security trust fund, for example, is a real measure of likely future fiscal obligations), and it will continue to soar at least until the economy, and with it federal tax revenues, recover. But it probably it will soar beyond that because the Bush Administration established a precedent of $500 billion annual federal budget deficits that the Obama Administration will follow and probably raise. The health-care reform wending its way through Congress will expand benefits without, it now appears, controlling costs. It is a misfortune that Congress didn't begin with trying to control costs, and then consider whether the nation can afford to expand benefits.

Comments

[Anonymous]

Summing up it seems that some minimum healthcare must be provided for everyone. It may be financed through mandatory insurance or tax money. The controversy relates to the level of minimal insurance.

This is an issue of cost-benefit analysis, where costs include socially unproductive costs arising when insurers screen patients, and benefits include the benefits of liberty.

[Anonymous]

Does anyone remember the good-ol-days of Quacks and Patent Medicines? Evidently not. Such were the joys of unregulated markets. Which gave rise to the Pure Food and Drug Act (which most Free Marketers today would like to see eliminated, simply look at the international internet "drug" sales for a current developmental model) and the licensing and regulation of the Medical Profession.

As for all these individuals coming to the U.S. for medical care, they come from a completely different socio-economic background than you or I. Quite simply, they are wealthy and rich and can go whenever, whereever, to get whatever type and kind of care they desire. Unlike you and me. As for the efficacy of high cost American Medical Care, just look at the likes of Michael Jackson of late. Now there's a poster child for uncontrolled American medical care. And you want us to give up control?

[Anonymous]

External “normative” Control is an additive. When it is imposed by politicians who know little of the art and science of what they are regulating, it can only add to the cost of the thing they are regulating. When rent seeking oligarchies hold sway over these regulators, we are all made to suffer even higher costs still.

Information, once it is produced, coded and archived, is operatively free. The economic benefit that accrues to anyone from the production of information should not be artificially augmented by the expansion of either “property rights,” or the further propagation of “protective” regulation. If, and to the extent that such an augmentation occurs, we are left less able to build technology on technology. We lose much of the exponential benefit that can accrue from the vistas that each discovery opens to our imaginations.

Man should only be limited by the limits of his mind and imagination—not by “do-gooders” throwing random rocks at him in the name of protecting others. Maybe I have lived a sheltered life, but I have never met a truly creative person who wanted to throw roadblocks in the way of other creative people. The only people I have ever met that did want to trip others up were those who couldn’t create anything themselves, but needed so desperately to seem to others that they could.

Posted by Buggs Bunny

[Anonymous]

While universal health care faces many problem, most of them coalesce around one issue: money. There exists the widespread belief the federal debt already is too large, so the government could not afford to support universal health care.
Is this belief correct?
.
Do you believe a balanced federal budget or a federal surplus is more prudent than a federal deficit? Consider this: All six depressions in U.S. history began with a series of federal surpluses:
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
.
Do you believe federal deficits cause recessions? Consider this: There have been 9 recessions in the past 50 years. All began with reductions in federal deficit growth and all recoveries coincided with increases in deficit growth.
.
Do you believe large deficits are an unsustainable burden? Consider this: In 1971, the federal government ended the last vestiges of the gold standard. The purpose: To give itself the unlimited ability to create money. Therefore, the government can service any size debt. No debt is an unsustainable burden for the federal government.
.
Do you believe federal deficits cause inflation? Consider this: Every period of significant price growth since 1969 has been associated with rising energy costs. Not one of these inflationary periods was associated with federal deficit growth.
.
Do you believe federal deficits crowd out lending funds? Consider this: The government borrows to support deficit spending. So money lent to the government immediately returns to the economy for further lending. Deficits add lending money to the economy, which is why deficit spending stimulates the economy.
.
Do you believe our children and grandchildren will pay for today’s deficits? Consider this: There is no historical relationship between tax rates and deficits. Tax rates are based solely on political considerations. Generally, Democrats raise tax rates and Republicans lower them, irrespective of deficits. Unless tax rates are raised and the government runs a surplus, our children and grandchildren will not pay for today’s deficits.
.
Given these facts, what do you believe about the government's ability to pay for universal health care?
.
Rodger Malcolm Mitchell
rmmadvertising@yahoo.com
www.rodgermitchell.com

[Anonymous]

While universal health care faces many problem, most of them coalesce around one issue: money. There exists the widespread belief the federal debt already is too large, so the government could not afford to support universal health care.
Is this belief correct?
.
Do you believe a balanced federal budget or a federal surplus is more prudent than a federal deficit? Consider this: All six depressions in U.S. history began with a series of federal surpluses:
1817-1821: U. S. Federal Debt reduced 29%. Depression began 1819.
1823-1836: U. S. Federal Debt reduced 99%. Depression began 1837.
1852-1857: U. S. Federal Debt reduced 59%. Depression began 1857.
1867-1873: U. S. Federal Debt reduced 27%. Depression began 1873.
1880-1893: U. S. Federal Debt reduced 57%. Depression began 1893.
1920-1930: U. S. Federal Debt reduced 36%. Depression began 1929.
.
Do you believe federal deficits cause recessions? Consider this: There have been 9 recessions in the past 50 years. All began with reductions in federal deficit growth and all recoveries coincided with increases in deficit growth.
.
Do you believe large deficits are an unsustainable burden? Consider this: In 1971, the federal government ended the last vestiges of the gold standard. The purpose: To give itself the unlimited ability to create money. Therefore, the government can service any size debt. No debt is an unsustainable burden for the federal government.
.
Do you believe federal deficits cause inflation? Consider this: Every period of significant price growth since 1969 has been associated with rising energy costs. Not one of these inflationary periods was associated with federal deficit growth.
.
Do you believe federal deficits crowd out lending funds? Consider this: The government borrows to support deficit spending. So money lent to the government immediately returns to the economy for further lending. Deficits add lending money to the economy, which is why deficit spending stimulates the economy.
.
Do you believe our children and grandchildren will pay for today’s deficits? Consider this: There is no historical relationship between tax rates and deficits. Tax rates are based solely on political considerations. Generally, Democrats raise tax rates and Republicans lower them, irrespective of deficits. Unless tax rates are raised and the government runs a surplus, our children and grandchildren will not pay for today’s deficits.
.
Given these facts, what do you believe about the government's ability to pay for universal health care?
.
Rodger Malcolm Mitchell
rmmadvertising@yahoo.com
www.rodgermitchell.com

[Anonymous]

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[Anonymous]

In response to Rodger Malcolm Mitchell:

You say that there is no relationship between taxes and deficits, that deficits do not cause inflation, etc. I might, for the sake of argument, agree with you. After all, these are hard issues to dice; at least they are harder to prove than the fact that the Inverse square law governs the gravitational pull between massive bodies. So let’s just not think about it any harder than we have to. Let’s leave the science to the geeks let our imaginations roam.

If money were some kind of detached thing that could be printed and offered for payment that would always be accepted, I would say that government could pay for anything it, or anything else for that matter, desired. After all, since the government can print money at will, well; we could not only pay for medical care for everyone, we could pay for the cure of every “condition” known to man. We could also create and treat newer diseases such as “I-don’t-want-to-have-to-earn-a-living-itis,” or “sexual deficiency disease (SDD),” or “rage dependency disorder (RDD), or “money deficiency disorder (MDD).” Man; the list can go on and on, and we can all get treated forever for everything that can turned into a disease. Why, if the government can just get a handle on healthcare, we can move all our issues to the realm of healthcare and live happily ever after.

While we’re at it, let’s build the starships. Yes, the government can print money for that too. Yes, in one felled swoop, we can handle over-population; and people alienated at not having anything real to think about with their Blackberries and 500 channels, and; lighten the burden on the planet by moving mass quantities of people into space.

Oh! Oh! Oh! Speaking of mass quantities, I got another idea. Oh! Oh! Oh! Let’s get the government to pay for operations for everyone so that they can be able to eat 2 tons of food a day—unrestrained government healthcare spending can pay for that. Oh! Oh! Oh! Then, we can have the eyes of the opposite sex worked on so that when they look at our new 5 ton bodies, they can be overwhelmed with sexual desire—a potentially unlimited money supply can pay for that too. Oh! Oh! Oh! And if doing the deed is now more difficult for our newly ballooning bodies, we can now be implanted with the heavy earth-moving construction equipment required to move the massive folds moved around so that we can live out our days in cybaritic bliss.

But the question still remains: Who is going to pay for it? Value is not paid for with money. Value is paid for with value. Money is only a medium of exchange—that’s all it is. The father of the idea that money can be printed at will and used to pay for the cure to all ills was John Law. Look him up. He ruined France about 300 years ago with this idea.

Arnold Dingfelder Horshack

[Anonymous]

Effort, devotion, & love is the price we as a society pay 4 our Einsteins, Newtons, & Michaelangelos !!! Higher value costs more.

Congress must help fund health care 4 Autism NOW, & Create a Savant! More Einsteins, Newton's, & Michaelangelos!! Help r Country help itself!

~EquiisSavant

(Mary Katherine Day-Petrano, the famous Savant Autistic (DX:) with the Juris Doctorate degree who "Thinks in Pictures" posts as the sensational EquiisSavant now being follow across the Country on matters of Obama's Health Care Plan for America on Twitter !!!)

[Anonymous]

Mary Katherine Day-Petrano, the famous Savant Autistic (DX:) with the Juris Doctorate degree who "Thinks in Pictures" posts as the sensational EquiisSavant on Twitter, Bio HERE:
http://www.equiisautisticsavantartist.webs.com/

[Anonymous]

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[Anonymous]

Judge Posner writes:

"[S]peaking of obesity, its prevalence in the United States undermines studies that find that people attach great value to small improvements in quality and quantity of life. The fact that so many Americans eat badly, don't exercise, drink (or "text") when they drive, and otherwise endanger their life and health, implies, since one can eat well, drive sober, and exercise, etc., at relatively low cost, that people don't value small improvements in quality and quantity of life very much--unless the improvements are paid for by someone else!"

While Posner evidently would draw another conclusion, the circumstances of which he complains spell LIBERTY, an idea very much opposed to the agenda of intellectuals who presume to tell their fellow citizens how to live.

[Anonymous]

Horshack, You're not a shill for the Insurance Industry or in their pay are you? This is the same old rhetorical ploy employed by the Industry to torpedo Health Care Reform. Both past and present, by spreading fear, intimidation and confusion, within and without.

It's all about Profit Margins maximization and these guys in the Industry will use any device to maximize it in order to achieve their bonuses. Even consigning a child to an early grave by denying coverage or forcing "less than profitable" Health Coverage plans off their books focing millions, 45 million as of last count, into the abyss of "No Medical Coverage".

Public versus Private Health/Medical Coverage? It's time. The Privatized Free Market Health Care System in the U.S. has proved time and time again that it is incapable of doing the job and made the Country the medical/health care laughing-stock of the World.

Neil E. Hatfield

[Anonymous]

I find the Obamacare bills terrible. But let us just ask for a few things: 1) no coverage for illegal immigrants, 2) An insurance system that takes care of medical accidents and gets rid of the adversarial legal option. It is okay to fine or revoke the licenses of bad doctors but allowing a lottery system for lawyers to become millionaires is ridiculous. Also 3) roll all medical malpractice insurance into this system so that doctors do not need to buy separate coverage.

[Anonymous]

Judge Posner is correct that obesity is a substantial problem in the United States. But Americans live for food; they are willing to pay any cost (including an excess $1 trillion in health costs) to keep enjoying it.

In fact, there is a political party that represents the interests of all those who treasure food in America:

http://reasoncommercejustice.blogspot.com/2009/07/party-for-people-who-just-want-to-eat_06.html

Balthazar Oesterhoudt

[Anonymous]

No Mr. Hatfield,

I am no one's shill, nor am I in anyone's "nefarious" pay. Neither do I sleep in coffins or drink blood. A part of myself has been called a "shape shifting lizard"--but we will leave that for pretty ladies to decide. Incidentally, I am writing this on a Sunday in the daylight hours--So Baby Jesus is unlikely to strike me dead with his thunderbolts at this moment for having allowed myself to be seduced into the devil's (insurance companies') thrall.

Levity aside, in the present state of affairs the insurance companies and medical care provider industry have too much pricing power, and so are extracting vast rents at our expense. Government involvement over the period of 150 years has been the primary driver of our overbearing medical industry oligopoly. We are at a crossroads. This crossroads requires us to rein in this oligopoly, either by completely unraveling the government sponsored protections that the medical industry oligopoly enjoys, (my preferred solution), or by having the government go "all-in" in the fashion of certain European nations who practice cost controls through a system of "socialized medicine." In either case, a market (private or public), will choose the outcome and drive down the ridiculous costs.

If you're going to truly solve this problem, these are your only alternatives, as 150 years of government supports for this oligopoly have all but completely ruined much of what we could have extracted from a number of healthcare traditions that came before it. New approaches must be forged. But they can only be forged by looking at the problems completely afresh. Government must be all in so that we can experiment with policy driven alternatives--or it must be all out of it so that we can experiment with alternative modes of healthcare delivery. The compromise middle is what we have tried, and that has only lead greater oligopoly.

I usually choose the middle road in most matters, but the middle road, in this situation, has been little more than a blind behind which the medical industry oligopoly has unjustly, with the aid of its government cronies, enriched itself at the expense of everyone else.

Arnold Dingfelder Horshack

[Anonymous]

Mr. Horshack,

My apologies. My response to you first post was but a reaction to the form of rhetoric used, which has been utilized by the Oligopoly and its "syncophants" to cloud and confuse the issues surrounding Health Care Reform in this Country both in the past and in the present. And by such methods, stop Congressional reform from effecting any real Reform needed by the Nation and its People.

Once again, my apologies.

Neil E. Hatfield

[Anonymous]

A commentator wrote: "LIBERTY, an idea very much opposed to the agenda of intellectuals who presume to tell their fellow citizens how to live."
We constrain the liberty of thieves by enforcing property rights, but beyond that we don't tell them how to live. Is this so hard to understand?

[Anonymous]

we should know more about our topic

[Anonymous]

"LIBERTY, an idea very much opposed to the agenda of intellectuals who presume to tell their fellow citizens how to live.
that is a good post

[Anonymous]

It seems that research such as what McKinsey produced is so easy to skew to fit within our belief system. As you touched on, it's all too easy to leave out the findings that don't strengthen our argument and only mention those that do. Is that the definition of "propaganda?" If you haven't, go visit a German concentration camp and you'll see that it was "propaganda" that enabled Hitler to deceive his entire country... We'd better watch out!

[Anonymous]

When you make a claim like "Why do people come to the US to get treatments" Please also present a piece of evidence, maybe some statistics provided by a reputable government agency or educational organization. Otherwise, please don't make such statement. Plus, a handful of people coming to get a state-of-the-art treatment for some really rare disease does not translate to a better health care system overall.

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