High cost for health care in America

[Balto1]

America is a low tax country. NZ is a high tax country. It’s not about population. It’s about the fact that Americans aren’t willing to pay more tax so neither major political party wants to lose votes by suggesting that citizens would have to pay much more tax.

This is one of the frustrating things about the debate. When you factor in private insurance premiums, which are simply taxes by another name, the United States is either the #1 or #2 highest-taxed country in the world. The average American family spends 20% of its income on health insurance. Eliminating private health insurance (and all the weirdness that comes with it like deductibles, copays, supplemental insurance) and funding a national health care system by “raising” taxes would save the vast majority of Americans a lot of money.

 

[Trinacria2020]

Eliminating private health insurance (and all the weirdness that comes with it like deductibles, copays, supplemental insurance) and funding a national health care system by “raising” taxes would save the vast majority of Americans a lot of money.

As a European I can say this is not actually the case. The vast majority of middle and upper-class Europeans (this includes the British) carry private insurance. Their NHS is for the working poor, elderly and immigrants. And there are waiting-lists for the smallest of procedures…the kind hopefully you will NEVER know in the US. Those with the private insurance often get sent abroad to lower-cost EU countries (Poland is a common choice) OR opt to travel abroad on their own dime to have procedures done. My wife is an OBGYN and works both at a state-run hospital (for the benefits/pension) and has her own private practice on the side (working about 1/2 the time there she makes roughly the same salary as her state job). Take this as purely anecdotal, but you can do your own research on other systems…there just isn’t a perfect model anywhere.

 

[FiveLinden]

Ah, yes… for all 5 million of you - how quaint. NYC alone has a population of just under 9 million

Can you explain please the reverse economies of scale that make it less rather than more efficient to run good public health systems in places with large populations?

 

[Balto1]

As a European I can say this is not actually the case.

Every single analysis of Bernie Sanders’ single payer proposal, from across the political spectrum, has found it would reduce U. S. health care expenditures by hundreds of billions of dollars annually while providing coverage to the tens of millions of people who effectively have no health insurance or access to health care.

And there are waiting-lists for the smallest of procedures…the kind hopefully you will NEVER know in the US.

I pray every day that we know them, given the way we’ve reduced wait times: poor people just don’t get the procedures.

Take this as purely anecdotal, but you can do your own research on other systems…there just isn’t a perfect model anywhere.

No one is proposing a perfect model, just a switch from probably the single worst model on the planet.

 

[_Ruby]

Balto1:

Eliminating private health insurance (and all the weirdness that comes with it like deductibles, copays, supplemental insurance) and funding a national health care system by “raising” taxes would save the vast majority of Americans a lot of money.

As a European I can say this is not actually the case. The vast majority of middle and upper-class Europeans (this includes the British) carry private insurance. Their NHS is for the working poor, elderly and immigrants. And there are waiting-lists for the smallest of procedures…the kind hopefully you will NEVER know in the US.

May I ask where you get your figures from? In 2017, only 10% of the U.K. population held private insurance, 76% of which came from employers rather than self purchased plans.

In addition to this, The fact the single payer system is in place substantially lowers the cost of private healthcare because people would not purchase it at all otherwise. In 2017, the average cost of private insurance for a healthy 30 year old was 650 pounds a year. I myself looked into getting private healthcare for my husband and I in 2018 and could easily find cover for less than £1000 pounds a year for each of us. You do not need to be considered ‘wealthy’ in order for that to be affordable. People pay more for their cable tv subscriptions a year.

Having worked in the NHS for the last 10 years and currently in a healthcare organisation which offers a private option, a very small percentage of our private patients have insurance, they just opt for self pay if they want to skip a wait for elective procedures.

It’s undeniable there is some kind of wait list for Elective procedures, but that is the point of triage and prioritising urgent patients. I’d rather wait to see someone about an elective procedure than deny myself seeing a doctor at all because I could not afford the co-pay or worry about sinking my family into debt.

 

[Trinacria2020]

Every single analysis of Bernie Sanders’ single payer proposal, from across the political spectrum, has found it would reduce U. S. health care expenditures by hundreds of billions of dollars annually

Hmmm…no disrespect, but that statement sounds a bit sycophantic. MANY industry experts and political analysts have crunched the numbers and arrived at the opposite conclusion. To say “Every analysis” is just blatantly untrue.

 

[Trinacria2020]

10% of the U.K. population held private insurance,

The info comes from various sources and I’m speaking in generalites as my statement was the majority of middle-class (by their own means or through jobs) + Upper-class Europeans. In Britain as an example, 6% of the population are classified as “elite” (i.e. Upper-Class) and as you say 10% of the population has private insurance. In France that number jumps from 10% upper-class with ~24% of the population covered with private insurance. Italy with 10% of upper-class and ~30% of the population with private insurance. Once again, I’m speaking in generalities as opposed to taking just the UK as a case, but the point being made is the same; the upper-class/people with means across Europe by and large pay for additional Health Insurance as opposed to reliance on the State system.

 

[Socrates92]

Can you explain please the reverse economies of scale that make it less rather than more efficient to run good public health systems in places with large populations?

It should be intuitive, I think. We’re talking about a system run by gov’t bureaucracy, not a cost-cutting, efficiency-finding production plant. (Even in the corporate world, economies of scale are only a thing up to a certain point, until they become diseconomies of scale.)

 

[Theo520]

In America, there are 330 million people who can pay taxes so that the government can pay for universal health care.

NZ is an isolated island, smaller than a large city in population.
You can’t extrapolate it’s situation and policies to a large country.
For starters, nobody enters NZ without a visa.

 

[Thorolfr]

Once again, I’m speaking in generalities as opposed to taking just the UK as a case, but the point being made is the same; the upper-class/people with means across Europe by and large pay for additional Health Insurance as opposed to reliance on the State system.

But as Ruby pointed out, “additional health insurance” costs a lot less for Europeans than what most working age Americans spend out of pocket for private insurance because basic health care is already covered. And even in the US, some people on Medicare purchase additional insurance, but those policies are quite a bit cheaper than what they would spend on private insurance if they were under 65.

 

[KMC]

Every single analysis of Bernie Sanders’ single payer proposal, from across the political spectrum, has found it would reduce U. S. health care expenditures by hundreds of billions of dollars annually while providing coverage to the tens of millions of people who effectively have no health insurance or access to health care.

While you and I agree that reducing the cost of healthcare is critical, don’t you think a little skepticism would be prudent when it comes to ANY claim that any government program will reduce “expenditures by hundreds of billions of dollars annually?” I mean, can you name one federal government program that is cost effective? Every election gives us another politician making grand claims about how their program will save incredible amounts of money (like Obama saying healthcare costs would drop by 3000%). Medicare’s unfunded liability is reported to be $37T…so do we really more of the same?

Why not test any proposal first with a smaller population (like a state) to see if the proposed solution is better than the current state?

I’m not saying stick with the status quo…I am saying the track record of politician’s promises is quite bad, and their word (or their plethora of “studies”) should not be trusted.

 

[RCIAGraduate]

Do you believe subsidized HSAs (both sides of the aisle seem okay with refundable tax credits so maybe a voucher system can work, National Review had a couple of articles endorsing such a concept) could work (something like Singapore’s System)?
That said, while it’s not universal, could a generously funded (and I mean generous) high risk pool (let’s say $120-$240 billion a year as unrealistic as it sounds) do well to balance out the cost of medical care, especially for conditions that might be considered “inelastic” like rare diseases or pre-existing conditions; that said, aren’t the ACA Exchanges already basically an open ended high risk pool with an opt in provision but the issue is that more subsidies are needed to balance out the costs of accounting for pre existing conditions (theoritically, healthy people signing up is suppose to balance out costs but that didn’t work out but if we can bring back CSRs (while they weren’t legilsated appropirately apparently, it seems ending them hiked the deficit) at a higher level or reworked the premium contribution scheme (one recommendation I heard was to lift the income caps and we could lower the share of OOP like requires 5% on premiums or total OOPs (premiums/deductibles) as capped at 10)?

It left a huge hole in out of network issues for emergency care.

Alternatively, could moving towards a free market (yeah that’s a platitude) and funding EMTLA (a larger scaled up funding stream for Uncompensated Care like let’s say $180 billion to $240 billion or let’s say $365 billion or a billion a year to sound less bad) to let hospitals create their own indigent care systems also be a solution; alternative, use that large amount as a block grant (Heritage and others endorse a block grant concept but seem to base it off current funding rather than a larger sum)?

Or is there a way to expand Medicaid to all the uninsured (and perhaps those who find themselves denied by insurers or those struggling with medical bills like back up/secondary coverage) without causing employers to drop their more marginal employees from health plans?

 

[Balto1]

Once again, I’m speaking in generalities as opposed to taking just the UK as a case, but the point being made is the same; the upper-class/people with means across Europe by and large pay for additional Health Insurance as opposed to reliance on the State system.

Yeah, rich people gonna rich people. I don’t care about rich people, I care about the tens of thousands of poor people who die in America each year because they can’t afford health care.

It should be intuitive, I think. We’re talking about a system run by gov’t bureaucracy, not a cost-cutting, efficiency-finding production plant.

There are currently like 55 million people on Medicare and administrative costs are 2%. This blows any private insurance company out of the water.

While you and I agree that reducing the cost of healthcare is critical, don’t you think a little skepticism would be prudent when it comes to ANY claim that any government program will reduce “expenditures by hundreds of billions of dollars annually?”

A Koch-funded study of Sanders’ bill had to leave cells in data tables blank in hopes people wouldn’t go to the effort of doing the math and showing that conservative analysis found M4A would save 200 billion a year.

Why not test any proposal first with a smaller population (like a state) to see if the proposed solution is better than the current state?

That would be much more expensive, partly for economies of scale and mostly because unless people from out-of-state were banned from seeking medical treatment you would still have all the administrative costs of dealing with private insurance for non-residents. Most of the savings comes from going from thousands of health insurance schemes to one.

 

[Trinacria2020]

Yeah, rich people gonna rich people. I don’t care about rich people, I care about the tens of thousands of poor people who die in America each year because they can’t afford health care.

The point was not that “rich people gonna rich people” (whatever that means, since there was no working verb in the sentence), it was that given the means MOST people would opt for medical care outside the state system (the rich simply have means to do so). I understand this topic can be highly contentious in the US. I’m simply pointing out that I personally get the benefit of both models as a citizen/tax payer of the US and the EU both. I have no emotional attachment one way or another. But I will say that in the US health insurance was made mandatory for everyone back in 2015; if you don’t have health insurance, the IRS will penalize the individual/family for every uninsured month when you do your returns. But the biggest “bloc” of uninsured are actually children/under 20 years of age, who would get it for free anyway. Meaning, most without health insurance simply don’t know they are eligible (or are illegal and could not have it anyway). So, it seems to me it’s more of a problem of lack of information as opposed to coming up with an entirely different plan.

 

[_Ruby]

. Once again, I’m speaking in generalities as opposed to taking just the UK as a case, but the point being made is the same; the upper-class/people with means across Europe by and large pay for additional Health Insurance as opposed to reliance on the State system.

The shopping habits of the ‘elite’ are not exactly a great barometer to judge the baseline. To use rather simple analogies, the reliability and quality of a Ford car isn’t diminished because the elite opt to by a BMW or a Porsche. If you have money, you are going to spend it on ‘extras’.

Private care in the U.K. is done by the same doctors that work in the nhs system, your standard of care or your quality of doctor is no different. What you do get is nice private rooms, hotel style toiletries in your bathroom, a more comfortable bed, your own tv/entertainment options, nicer menu options (+ wine) at mealtimes. Obviously if you have the money to pay for those perks and want them, you’d opt for private insurance. It should be noted that if an emergency takes place, in 90% of cases, you will be transferred straight to an NHS hospital for intensive care. Your private option will only cover you for nicer facilities and a shorter wait time, your odds of surviving that surgery or treatment are absolutely no different.

The ‘elite’ are obviously going to pay for perks the state’s funded system doesn’t. A good use of tax payer money is not going to be in providing nice shampoo in your hospital room or the option of red wine with dinner.

When the middle/lower class start stretching Themselves to afford healthcare because they are afraid they will die or be denied treatment, then that would be indicative of the state system seriously failing

 

[Peeps]

But as Ruby pointed out, “additional health insurance” costs a lot less for Europeans than what most working age Americans spend out of pocket for private insurance because basic health care is already covered.

What is considered “basic health care” in Europe?

I have the feeling that Americans would expect a lot more from “basic health care” than the Europeans. But I’m just speculating–I would like to know what Europeans expect from “basic health care.”

Thanks!

 

[Metis1]

The ACA actually reduced the rate of medical inflation until 2016, which is just a tad suspicious why it skyrocketed that year with an election. Prior to that, medical inflation was just over 9% per year for the previous 10 years.

The bottom line: we have the highest medical costs here in the States with 17% of our GDP paying for it, and yet our outcomes ranks only in the 30’s in international comparison. The Canadians spend roughly half as much, have universal healthcare, and their outcome is higher. Also, pharmacy costs are less, and when I’m there (I live only a 20 minute drive away), I see lots of American cars at them.

 

[JoeShlabotnik]

Koch-funded? I would not trust anything sponsored by the Koch brothers. They usually support whatever is best for the Kochs.

 

[aper1]

You’re aware much larger countries than New Zealand have universal healthcare, right?

Name the ones with universal health care that are in close proximity to the US’ population, besides the communist/authoritarian countries.

 

[dochawk]

Do you believe subsidized HSAs (both sides of the aisle seem okay with refundable tax credits so maybe a voucher system can work, National Review had a couple of articles endorsing such a concept) could work (something like Singapore’s System)?

Expansion and modification of HSA seems to meet more of the requirements for efficiency than anything else.

Professor mode: to reach efficiency, the last dollar spent should cost the recipient/decision maker exactly one dollar. If it costs him less, he will consume more than it is worth to him, and if it is more, he won’t consume what he would willingly have paid for. [this is a general economic principle that applies to anything that one pays less than or more than the full cost]

In practice, we’re not going to be able to design a system that does this for everyone, given differing medical histories and income–but we can certainly get a lot closer than we are now.

An experiment was run decades ago with a $1 copay on medicaid (and exempting those for whom it would actually be a hardship, iirc[If I were designing it, I’d give them an extra few bucks a month]). Even that single dollar was enough to significantly reduce usage. That wasn’t because people avoided needed care, but because they didn’t consume as frivolously. With no financial cost, and no job to miss, care was being wasted on routine sniffles and bruises that the middle class wouldn’t skip work or otherwise spend an hour to get. [a darker or more cynical view was that it was a form of entertainment for the idle; I’ve seen a similar phenomenon practicing law.] {yes, I am a lawyer that then got a Ph.D. and spent time as a professor before reluctantly practicing law again to pay tuition . . .}

The HSA expansion that you suggest would want to be designed such that as often as possible, the last service consumed (or not) was one for which the person could keep the full price in the HSA if not spent. This might mean a 10% or 50% copay (from the HSA) for the first couple to several thousand dollars, then the “donut” with 100% from HSA, and then a small copay or stop loss.

As far as out of plan, the real problem is the impossibility of “price discovery”, and a system in which list price can routinely be 20 times the normal transactional price, but “gotcha!” if they catch you unconscious out of plan . . .

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