Health Care Finance Versus Health

To echo what Ezra Klein says here, it really can't be pointed out enough that health care policy reform is mostly about improving people's economic situation so that we have fewer cases of medically driven financial catastrophe or insurance-induced labor market rigidity. Broadening the supply of health insurance should make the population somewhat healthier, and as the gains would be concentrated among the worst-off Americans the equity value would be very real, but the overall impact would be relatively modest compared to the gains available in other areas.

The most likely gains in public health would come from improvements in lifestyle factors, predominantly diet where many Americans are eating plenty of food but not enough nutrition, and exercise where many Americans aren't engaged in nearly enough physical activity. There are a lot of very cost effective things you could do on this score, but it hasn't been a topic on the political agenda and there are few interest group pressures here. I will say that one reason I think curbing carbon emissions may not be as costly as some think is that adapting to a lower carbon lifestyle would, in most instances, entail adopting a healthier lifestyle.

The other thing is that insofar as health care really can have dramatic impacts on health outcomes, the most important things tend to be the simplest and most basic ones. Here lack of insurance is a problem, but so are the vast array of supply-side restrictions. It ought to be quite cheap to get a basic tooth cleaning or medical checkup or secure a routine diagnosis and prescription. But it's generally not because entrepreneurship in medical services is strongly discouraged by the current rules, the law tends to require full-fledged doctors and dentists in situations where they're not needed, and there are incredible impediments to increasing the supply of general practitioners and so forth.

Photo by Flickr user Normanack used under a Creative Commons license

Comments

As a self-employed person who often thinks about giving-up my own business and getting a full-time job just for health benefits, I would like to add the healthcare reform may also provide more space for small businesses and spur entrepreneurship.

Posted by Josh E | May 17, 2008 12:33 PM

I'm not up to doing actual research on a Saturday morning to back this up, but I think there's evidence out there that people with health insurance do get better outcomes. Having a "medical home," addressing problems before they become crises, etc., including getting regular advice about those all-important lifestyle issues, all make some difference.

But you're right that the real goal of "health care reform" as currently understood is cost control. If our only concern were health, investments in public health would be the optimal approach.

Posted by BobN | May 17, 2008 12:34 PM

All for health care reform.

Posted by Mila Kunis | May 17, 2008 12:53 PM

A modest proposal -- let Dems suggest that soft drinks, chips and snake cakes be struck from the list of approved food stamp purchases, call it the anti-PepsiCo corporate welfare amendment. If equity requires a substitute allow personal paper products replace the junk food.

Posted by petty boozswha | May 17, 2008 1:00 PM

A modest proposal -- let Dems suggest that soft drinks, chips and snake cakes be struck from the list of approved food stamp purchases, call it the anti-PepsiCo corporate welfare amendment. If equity requires a substitute allow personal paper products replace the junk food.

Posted by petty boozswha | May 17, 2008 1:02 PM

A modest proposal -- let Dems suggest that soft drinks, chips and snake cakes be struck from the list of approved food stamp purchases, call it the anti-PepsiCo corporate welfare amendment. If equity requires a substitute allow personal paper products replace the junk food.

Posted by petty boozswha | May 17, 2008 1:03 PM

"To echo what Ezra Klein says here, it really can't be pointed out enough that health care policy reform is mostly about improving people's economic situation so that we have fewer cases of medically driven financial catastrophe or insurance-induced labor market rigidity."

Well, no.

While both of these items are indeed significant benefits to be achieved through universal healthcare, they're not "mostly" what gets achieved. Let's run down the list, shall we?

1) Eliminating healthcare related financial bankruptcy.
2) Eliminating healthcare related job lock-in.

These are important to the crucial demographic of trust-fund economic royalists like Matthew, but let's go on to the others.

3) Providing healthcare to the 45 million Americans currently without insurance.

Not an issue Matthew cares much about, but then again, Matthew isn't much of a progressive.

4) Creating the largest progressive economic redistributionist program since Social Security.

The Edwards/Clinton plan largely consists of those earning more than $250,000/yr subsidizing the healthcare costs of folks making less than $100,000/yr. Income disparity is not an issue Matthew cares much about - in fact he seems to actually support increased income disparity, given his opposition to public funding of college education.

5) Establishing a universal system creates political incentives for future rationalization.

All kinds of future systemic healthcare improvements, be they on the cost-control side or on the better services side, become possible once you establish a federal responsibility for healthcare for everyone. Political forces have incentives to press for a more efficient system.

Posted by Petey | May 17, 2008 1:17 PM

"I'm not up to doing actual research on a Saturday morning to back this up, but I think there's evidence out there that people with health insurance do get better outcomes."

Ya think?

Folks who can go to see doctors and go to hospitals when they're sick have better outcomes than folks who don't?

I'm not sure I follow you here.

Matthew's idea that uninsured folks with cancer should just eat better and get more exercise seems far better to me.

Posted by Petey | May 17, 2008 1:23 PM

There doesn't seem to be much actual evidence that any particular lifestyle change, other than quiting smoking, leads to impressive health gains. Take a look at the massive controlled dietary study done by the Women's Health Initiative-- women eating significantly "healthier" diets showed no improvement in health outcomes. The science needs to precede the policy on this and for the most part the science is not there, just a lot of hype.

Posted by Alonzo | May 17, 2008 2:47 PM

Matt's point about supply restrictions is a good one. When Republicans talk about malpractice insurance and such it is usually to try to prevent any reform, but in the context of a Democratic push to radically improve the health care situation there would be a real place for reforms in malpractice insurance and restrictive work rules as part of cost containment, which will be key.
One example: my sister is a midwife. They cost way less than MDs, and the outcomes are just as good, as long as there is someone on call to take over in emergencies. The reason they are only rarely used is that the legal expenses are too high - if there is a bad outcome (and there always are a few in deliveries) all the lawyer has to do is tell the jury, "There wasn't even a real doctor there!"
This would also be a problem if people start getting routine checkups and diagnoses without an MD, even if the results are just as good overall.

Posted by peter | May 17, 2008 3:05 PM

i looove blue heelers.

Posted by jb | May 17, 2008 3:34 PM

I'm sorry, I just have to call bullshit on this entire line of reasoning.

Yes, it's true that clean water has saved millions more lives than penicillin. Public health, rah rah rah.

But the point of the matter is that public health can't solve all problems. Individually, health is luck, and the ONLY thing that really loads the dice in your favor is youth.

So, absent a magic machine that that turns back time, public health will never change this dynamic. If you have a society with people, it is an inescapable FACT that a number of them will get sick and they will suffer unimaginable pain and suffering.

Even in a utopia where everyone lives a perfectly healthy life, non-smokers will get lung cancer. People will get crippling arthritis in their hips. People will get cancer. People will exercise and still have heart attacks. People will fall off a street curb, hit their head, and suffer brain damage. People will get diabetes even if they're not obese. Pregnant women who took all their vitamins and did lamaze will have life-threatening deliveries. The older you get, the more it approaches a statistical certainty that you will suffer.

So, for most of us in health care reform, the question isn't this bullshit about financial problems or labor market rigidity (seriously, blow me on that one). It's what do you do to alleviate this inevitable human suffering?

The focus on health insurance is because it's how you get health care in America. That's how you get in the door. Yes, we could tilt at windmills and come up with another way people could get in the door, but most of us think tilting at windmills is a self-centered indulgence when you literally have people dying in agony.

insofar as health care really can have dramatic impacts on health outcomes, the most important things tend to be the simplest and most basic ones.

Bullshit. You take a person who has cataracts and remove them, not being blind anymore is an incredible health outcome. You take a person crippled by arthritis and give them a new hip, the ability to walk across a floor and not be in screaming agony is an incredible health improvement.

There is this fucked up utilitarian notion that health care only counts when it's preserving perfect health. It's total bullshit--vaccines are awesome, but there's value in healthcare beyond fucking vaccines. In a world where there was a choice between getting the right amount of morphine as I lay dying of bone cancer and getting a vaccine for chicken pox, I know which one I'd choose.

Sure, financial catastrophe is bad--but what's even worse is putting people in a position where they are forced to accept LITERAL PHYSICAL TORTURE from an untreated medical problem so they don't drive their family into bankruptcy. And when others face death because they didn't have the insurance to get them in the door.

Fear of bankruptcy isn't why most people buy insurance--it's equal parts talisman against getting sick and peace of mind knowing that, if your luck runs out, you or your family will minimize your suffering. And job lock happens because people are afraid to expose themselves to possible death and torture just to start their own business. They'll put up with the shit boss instead.

Public health is wonderful. But "more walking and fruit" is simply nowhere near a substitute for a society that ensures access to all levels of health care.

Posted by anonymiss | May 17, 2008 10:07 PM

Good God, Matthew - do you think everyone is wealthy or is unencumbered and guaranteed health care if they will just work and do everything right?

Many of us don't have medical insurance and panic if we get sick, and we desperately fear getting injured. My ex broke his ankle when not insured, and it cost him $17,000 in medical bills.

I had a gallbladder attack, and surgery was recommended. I didn't have insurance as I am an unemployed caregiver of a sick elderly parent. I toughed it out and practically quit eating anything for a month and never did get the surgery. But I am fearful.

This time, I had an ear blockage and it wasn't going away. Doctor said I might need tubes - and also a MRI. (The tube surgery would be at least $5,000). I told him no way, I don't have insurance, just pretend you are a vetrinarian and use the cheapest and most creative treatments you can devise.

I fear every day when I go down my basement steps to wash clothes - will I slip and fall and break a leg or my hip? If I do, can I get by without going to the hospital? Just buy some crutches or a walker and hope for the best?

Good God, please get a grip. The people in the real world may do everything right and end up 1 step away from the streets.

The fact that most modern democracies have Single payer universal health care, spend less of their national GDP on health care - ought to tell you something.

We have been brainwashed to think our country is better than all others. Well yes we love our country, but we lag behind in education, health care and jobs.

People shouldn't feel that they either can't get health care or that they must lose their home and cars and their childrens' future in order to get medical treatment.

Wake UP! Go on the streets and talk to some real people - get out of your ivory tower, please!

Posted by Laura Roslin | May 18, 2008 12:47 AM

Re:The fact that most modern democracies have Single payer universal health care

Not true. Single payer is actually rather rare. However it is true that all major First World nations except the US have some provision for universal healthcare.

Posted by JonF | May 18, 2008 12:03 PM

It ought to be quite cheap to get a basic tooth cleaning or medical checkup or secure a routine diagnosis and prescription. But it's generally not because entrepreneurship in medical services is strongly discouraged by the current rules, the law tends to require full-fledged doctors and dentists in situations where they're not needed, and there are incredible impediments to increasing the supply of general practitioners and so forth.

You are obviously ignorant of the policies of reimbursement. Medicare reimburses about $35 for a health check up. Medicaid is even worse, at about $25. Private insurance companies average about $45 for a "routine" check up. Do you really think thats "too much" when a plumber visit costs upwards of $100.

The problem is the insurance companies are skimming 25% off the top for pure profit and administrative waste that has nothing to do with patient care.

You also flat out ignore the presence of PAs and NPs. They are allowed to open up their own clinics in most states and can do anything a doctor can do, EXCEPT surgery. So what privileges are you going to give them that they dont already have? The ability to do brain surgery solo? (they already assist surgeons in the most complex surgeries).

Dentistry is an ENTIRELY different field than medicine, you cant lump them together. In dentistry there are major restrictions on what "dental assistants" can do. In medicine, the ONLY restriction on PAs/NPs is that they cant do surgery solo.

One more note on PAs/NPs. Its a myth that they result in cheaper care. They do get paid less than doctors, but the INSURANCE COMPANY pockets the difference, the consumer never sees that. The consumer pays the same premiums and copays regardless of whether they see an MD/PHD or a PA fresh out of college.

Posted by joe blow | May 18, 2008 12:59 PM

One example: my sister is a midwife. They cost way less than MDs, and the outcomes are just as good, as long as there is someone on call to take over in emergencies. The reason they are only rarely used is that the legal expenses are too high - if there is a bad outcome (and there always are a few in deliveries) all the lawyer has to do is tell the jury, "There wasn't even a real doctor there!"
This would also be a problem if people start getting routine checkups and diagnoses without an MD, even if the results are just as good overall

Well MDs generally dont want to back up midwives, because the legal liability is huge. OB is a field that is devastated by the jackpot lottery justice system. Remember that OB/GYNs are liable all the way up until the kid is 21 years old. That means the birth can be totally fine with no complications, and at age 15, the kid is diagnosed with a learning disorder and the parents sue the OB for a perfectly fine birth that happened 15 years prior. Its absolutely insane.

I've got no problem with midwives being the first line of response for birthing. But you dont understand how insurance works if you think its going to save money for patients.

Insurance companies charge teh same premiums and copays REGARDLESS of whether you use a midwife or an ob/gyn. There are no discounts to the consumer, the insurance company pockets the difference.

Midwives are already allowed by law to do anything an ob/gyn can do, EXCEPT do surgery solo. They can already be first assistants to ob/gyns, and they can script for any drug than an ob/gyn can script. So when you hint that they should be allowed to do more, I want to know what you mean by that. What are you going to "allow" them to do that they cant do already? Do c-sections solo? Thats ridiculous.

As you stated, midwives work with ob backup, so in addition to the insurance practices, you arent going to see any savings until midwives start working solo with no OB backup. Most women will balk at that proposal.

I see a lot of ignorance on these boards about how midlevels are being "held back" by evil doctors. But its obvious that none of you even know what the regulations are for what midlevels can and cant do. They can do ANYTHING A DOCTOR CAN EXCEPT FOR RUNNING SURGERIES SOLO. So when you say they should be allowed to do more, you really dont know what you are talking about.

If you want midwives to be more "empowered" and be seen as more of a legit alternative to MDs, then you need to work on lawsuit reform. Midwives used to be much more prominent in american birthing practices, that is until the lawyers infiltrated the field. Get rid of the shark lawyers, and the midwives will resume their former place of prominence in american birthing.

Posted by joe blow | May 18, 2008 1:14 PM

Joe blow is spot on. The problem is not as much from the regulation side not letting NP's/PA's practice solo, it's the lack of cheaper premiums for seeing them.

There is a huge problem in medicine with reimbursement and how it works. As a physician, I can tell you that primary care is difficult. It is insane that a general internist gets paid 140K while a radiologist/dermatologist gets 400K. It's one (of many) factors that led me to subspecialize.

We have one of the lowest primary care docs:specialist ratios in the world. Reimbursement is a huge reason why. Having more NP's or PA's to diagnose/treat garden variety illness, and offering folks cheaper premiums for it would be a great start in cutting some costs in medicine and get more people access to primary care.

Posted by Zarco | May 18, 2008 2:50 PM