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06/23/2013

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Eric Rasmusen

The simplest explanation for the difference in health care procedure costs between countries is that the newspaper got it wrong. After all, we've got a newspaper reporting on a study by "health care plan industry leaders," which I suppose means Obamacare advocates reporting on numbers from an insurance lobbying group.

It does look as if the measurement is of actual prices paid rather than list prices, though--"Prices for the United States are calculated from a database with over 100 million paid claims that reflect
prices negotiated between thousands of providers and almost a hundred health plans." http://www.ifhp.com/documents/2012iFHPPriceReportFINALMarch25.pdf

I don't see why an insurance company would be willing to pay unnecessarily high prices for procedures, however. A colonoscopy is a good example. It is unpleasant for the patient, so I doubt there is any great demand for it, unless state regulations compel it to be covered (which is quite possible). Indeed, I've wondered whether it would be cost-effective if the cost-benefit included the time cost to the patient. But insurance companies must think it's worth it, or why would they cover it? And since it is pre-scheduled and not something patients are likely to want a particular doctor for, couldn't the insurance companies easily exclude expensive doctors from their networks?

Eric Rasmusen

I'm confused as to how we should measure the real cost and benefit of health care if it has price ceilings, if we're interested in wealth maximization. See http://wp.me/pNETr-lH . If anyone wants to enlighten me, please do. It surely has been thought about.

Biggy82

The interesting question is to how implement this professional model and how it could be enforced, even if via self-enforcement. How can incentives be allocated in this model?

Ken Schulz

"This is not actually the correct way to compare U.S. and foreign prices: picking a different nation to compare the United States with for each procedure."
It is exactly the correct way, if one is interested in process improvement: one always benchmarks against the best-in-class performer. The market-basket comparison is only appropriate if you suppose that nations are in competition for 'customers' who are looking to minimize their lifetime costs for a desired level of quality - not a very realistic view, I would think.
Once one has identified best-in-class performance, one compares in detail to learn what elements in one's own process can be improved, or eliminated. I believe this will only happen when medical-care providers are willing to team with engineering disciplines who have expertise in process efficiency and safety assurance. This approach is independent of the choice of professional or competitive models.

jim kirby

The high prices in Amerika would tend to the level of the lowest price for every procedure if Obamacare, Medicare and other insured care dollars could be spent in other countries like Canada, Mexico, Czech Republic, Hungary, India, Cuba and Thailand.

Indeed, the reason we have Part D coverage is directly attributable to the fact that Amerikans had been buying their drugs at great prices from Canada! Part D was a Bush gift to Amerikan drug companies and not founded in any concern for the Amerikan patient.

David Glenn


Isn't it because the U.S. offers more health activities than any other countries? Or isn't it because
doctors suggest operations which are not that necessary?

Thomas Rekdal

With all due respect, I think both Becker and Posner are dealing with trivialities. Not a word from either on PRISM, the NSA surveillance scheme, the legal implications of Snowden's actions, the Supreme Court's gutting of the Voting Rights Act, the undermining of state initiatives through the standing rules outlined in Hollingsworth v. Perry, or the political and legal implications of the DOMA decision.

Yes, as a federal judge, I am sure Judge Posner is under certain restrictions upon what he can and cannot saw about contemporary decisions. But are these restrictions not dependent upon a context in which the Supreme Court rarely and reluctantly reaches constitutional questions? Why should we not have the benefit of Posner's thought in a world where all sorts of political agendas are openly on display?

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