‘If you are really sick, call 911’

June 25, 2008

‘If you are really sick, call 911’

Why do many doctors’ offices have answering machines with this initial response? Price controls. Why does it take so long to get an appointment, if one is even available? Price controls. What will happen if our next president, in the name of universal health care, increases third-party responsibility for medical care? More price controls.

United States health care spending is escalating faster than growth in our gross domestic product. This trend, mixed with technological advancement and an aging population distribution, is unsustainable. Our government finances approximately 50 percent of health care spending. The Centers for Medicare and Medicaid Services reported medical spending was more than 16 percent of GDP in 2007. In 10 years it is projected to exceed $4 trillion and comprise nearly 20 percent of GDP. The Medicare trust fund is expected to become insolvent by 2019. As a result, Medicare and Medicaid control prices to restrain spending. Market forces are foregone. Price controls lead to shortages. Quality of care deteriorates, and you have difficulty getting to talk to a nurse or doctor.

This week Congress is debating further cuts to Medicare reimbursement superimposed on annual inflationary erosion of fee schedules. Physicians’ office rent, employee, and other overhead costs continue to increase. They are relying upon answering machines rather than nurses to triage phone calls. Subsequently, access to care is further jeopardized for many Americans. Increasing overhead and liability concerns, in the face of declining reimbursement, lead physicians to decrease availability for the indigent and uninsured. Only half the nation's doctors are accepting new Medicaid patients because reimbursement is insufficient to cover the costs and inherent risks of providing care. Michigan, where I practice, is expected to face a 12 percent doctor shortage by 2020. National studies reach similar conclusions regarding physician shortfalls. Graduating medical students, with debt up to $200,000, are rationally less likely to consider careers in lower paying primary care specialties.

Medicare price controls and byzantine bureaucracy have resulted in a misallocation of health care resources. Primary care shortage is a perverse outcome. Over two-thirds of health care expenses are influenced by behavioral factors. Two-thirds of US citizens are overweight, twenty percent smoke tobacco, and alcohol consumption is epidemic. (www.cdc.gov/nccdphp) People need their internists, family physicians and pediatricians. They are the most qualified to help patients with preventative health care and chronic disease management. These primary care coaches can help them with expensive health problems potentially under personal control, yet primary care residency positions remain vacant, and emergency rooms are overcrowded.

Some argue that medical care demand is inelastic, the quantity of care demanded is not sufficiently influenced by prices, and increasing consumer responsibility for payment will not curb health care spending. However, much of health care is not emergent. Many patients are sophisticated enough to become informed health care consumers, as they are for other goods and service. Prices effectively allocate scarce resources. Half of the United States population spends very little on health care, while five percent of the population consumes almost half of the total amount. There is opportunity for a more just allocation of the $2 trillion dollars spent, annually, on health care in the United States. The RAND Health Insurance Experiment, completed in 1982, identified considerable price elasticity, wherein some personal financial responsibility for health care did not significantly affect quality of care. (www.rand.org)

Galen institute founder Grace-Marie Turner, (www.galen.org), at this year’s Acton University, prioritized three social justice principles for health care reform: human dignity, subsidiarity, and charity. As humans created in the image of God, we have the responsibility to care for our health. Secondly, care of the poor, vulnerable, and those unable to care for themselves ought to occur at a level of society closest to those in need. Government should be the provider of last resort, not the first. Finally, charity must be sustainable: resources are not unlimited and so in health care as in every other form of charity, it is important to match the available assistance with genuine need.

The common good would be better served by market oriented reforms coupled with compassionate subsidization for the poor and vulnerable, rather than by expanding third-party health care. The American Medical Association proposal for health care reform, which incorporates these precepts, is compelling. (www.voicefortheuninsured.org) Tax law changes could more justly allocate the $120 billion federal tax subsidy for employer-provided health care to provide millions with access to health insurance, and improve family security. Insurance industry reform, including measures increasing inter-state competition, could foster premium affordability. People might take better care of themselves with increased incentives for improving personal health and with the help of primary care physicians.

It will take sound economics working in concert with good intentions to bring about real health care reform that provides more and better access to the people who need it. Government expansion and price controls won’t take us toward that goal.

Comments

Mom: lmarmstrongw@hotmail.com

Yes, this article has inspired me:

If you don’t have the money for health care, just die.
It’s your fault you’re sick, so please croak real quick
And don’t sob, moan, groan, or cry.
You’re to blame.

I have med school debt to pay—now there’s a tragedy.
You say you can’t pay a mere $1000 co-pay
Yet you still want a doctor to see?
I have a golf game.

Too bad you can’t pay for a screening.
I’ll shed a tear while complaining over here
That to lower costs would be too demeaning.
Who would practice medicine as a calling?

Yes, market forces are a one-way street.
My fees rise constantly like your blood pressure I see
And as a feat it’s really neat
That if you just write a check I’ll ensure it is falling.

Cough up the cash or cough up blood and phlegm.
Why just today I have thousands in my own medical IRA!
But the working folk who can’t afford it—we have no use for them!
Just die now and stop all that stalling!

Andrew: adpdo@yahoo.com

"Virtually all studies show the inelasticity of medical costs"

Chris, cite some studies.

You clearly have never worked in an emergency room. The only patients I ever see at 1am because they have a bug bite are medicaid patients. The only patients that come in to the emergency room and say "well, I just wanted to get checked out" have medicaid. Every other person, sane or otherwise, go to see their family doctor during normal bussiness hours at less than half the cost.

Having to pay even the tinest co-pay for a "non-emergent" emergency room visit would cut those stupid visits in half within 6 months. Gas and cigarettes cost way too much for some dumb slob to wander in a 1am for a bug bite and have to be responsible for part of the bill when I tell him he'll be fine.

BBub: bobbuyerbob@aol.com

Once again, Acton publishes a market evangelist apology for market failures. Don't you ever tire of worshipping capitalism despite its huge flaws (like not being able to provide medical insurance to 50 million Americans, including 9 million poor kids).

Excuse me, what you are sayng is we should pay even more taxes than the 50% of the GDP's 16% for healthcare. Why don't you get right to it and, as you refer to capitalism worshipping, take everyone's paycheck and just give us an allowance each week. Socialist, Marxist, where do you stop. Your line of reasoning belongs in Cuba or Vietanam. Oh wait, it's already there. Didn't Michael Moore make a movie about how great the healthcare system is in Cuba. Oops, that's right what country in South America did Castro visit last year when surgery was needed?

This July fourth, I'm thinking back to a history lesson. Wasn't there a revolution, started in Boston Harbor, over a 1% tea tax?

J. Ankrom:

How much will a person spend for one more day of life? Indeed!

I am sorry but far too many people have a very unhealthy fear of death and need to get over their fantasy of living forever. Especially living forever at everyone elses expense.

Unskilled geriatric care in nursing homes alone is draining public insurance funding and will only become worse as the state and federal government expands its non-existent health care 'right' to include cradle to grave coverage for all.

"Do not be deceived. A man reaps what he sows."
Children too selfish to care for their aging parents and adults who have made a self-concious decision to remain childless should not be handed the means to avoid responsibility for their choices or to alleviate their fear of death which is the inevitable fate of all men.

No one has a right to the fruit of someone elses labor or their expertise simply for a chance at having one more minute, hour, day or month of life. If a doctor wishes to assist his neighbor in love, that is an individual choice, just as it would be the choice of a contractor to make repairs on a neighbors house or automobile. These are not things which should be mandated by government. Judgement upon the selfish unloving man will be rightly administered by our Creator who is far more just and wise than men posing as gods. And likewise, God will judge the selfish man who stamps his feet, casts his vote and demands his neighbor pay for his chance at one more minute, hour, day or month of life.

We are commanded to, "Love our neighbor as we love ourselves." If you are not a doctor you have no right to a doctors time, skill or equipment simply because you want it to prolong your life or the life of someone you love. If you are a (fill in the blank) would you want your neighbors demanding your services at a discount or for free? Would you want the government dictating the fees you can charge? Would you want society demanding anything from you? Just because you wish you could physically live forever does not entitle you to having your wish granted.

There are those who argue that society should be forced to "love their neighbor." Meanwhile, they refuse the preaching of the Gospel which is the only means to the grace which can provide the motivation to love one's neighbor as himself. Furthermore, they refuse to require or mandate children to "Honor their mother and father." Instead, they conspire to push for government policies and legal force to allow for the theft of money and manpower, in order to provide this 'love.' This socialist mentality is the height of hypocrisy, and all of it amounts to nothing more than, "Calling evil, good and good, evil."

Tracy Michele Jue: juetm@juno.com

I thought this article summarized especially the medicare (elderly patients) very well. In California, there are approximately 6.6 million medicare patients. This year the state plans to decrease reimbursement of 10% for medication and other services. Eventually Medicare patients will have to purchase there own insurance in order to pay for medication. Most medicare patients have to purchase there own dental care. I have seen some dental companies offering cleaning fees for a reasonable price for uninsured but any other dental care are offered at full price. Most of the elderly people I know are still working to pay off medical bills. I difnitely think there should be a reform in health care especially as We are seeing less Medical care for the elderly.

Nicholas DePrey: Nicholas.DePrey@ge.com

Reforming the insurance industry and reallocating the federal tax subsidy for employer-provided health insurance are certainly low-hanging fruit for one-time reductions in premiums and overall healthcare expenditures. But I am not sure that either would have any prolonged effect on curbing the long-term growth of our total medical expenditures as it consumes a greater and greater proportion of our GDP. As Dr. Condit mentioned, we need to encourage consumers to take their health into their own hands. Only then can we manage to constrain the spiral of increasing medical costs.

I didn't believe it the first time I read the RAND experiment in my economics class, but it is a very convincing argument for the price elasticity of medical care, and is widely regarded as the gold standard for such studies in the field of econometrics. Its brilliant methodolgy proves this to be true: People do respond to prices, even when it comes to their health.

Unfortunately, the most price-elastic healthcare expenditures for consumers, according to the RAND survey, are the preventive and diagnostic procedures. When money is tight, the first thing people forgo are the checkups and the screenings. If we could provide incentives for people to get checked out frequently for the types of conditions that lead to late-stage chronic diseases (the ones which are the most expensive to treat), we can reverse that statistic about the 5% of the population that consume half of all medical spending. It is demonstrated in a number of European studies that mass screening and early treatment of a population for any type of cancer with an incidence rate greater than 1% is far cheaper for a society than treating only patients in late stages. And these preventive measures will only improve in terms of accuracy and cost as diagnostic technology improves. We need to build in incentives into insurance plans for people to take care of themselves and get screened for costly chronic conditions. Early Health.

This would be a monumental shift in the way we approach healthcare. A single-payer system destroys incentives for people to take care of themselves and would be a step backward.

One another note, here is an article about how political bureaucracy is stifling healthy competition among medical equipment manufacturers and putting greater pressure on providers who accept Medicare patients:

http://www.nytimes.com/2008/06/25/business/25leonhardt.html?_r=2&ref=business&oref=slogin&oref=slogin

gilbert: camele@bellsouth.net

How much will a person expend for one more day of life, especially if the expenditure comes mostly if not entirely from someone else's pocket? How likely, then, is universal health insurance ever to be affordable in a society wherein obesity, tobacco usage, and alcohol are epidemic ?

There is this, also, to consider. If physicians are able to charge what the market will bear, and what the market will bear is determined by available insurance, then, unless universal health insurance is limited and frugal, insurance will always chase ever rising health care charges.

Then, there is this. Unlike automobile insurance or fire insurance which insure events people willingly try to avoid and hence insurance reimbursements occur only when people fail to avoid what they dread, medical insurance is the opposite: people seek to avoid pain and illness and disease and death, and medical insurance reimburses every time they seek avoidance. Thus, people are indirectly subsidized in behaviors which at the time they find pleasurable -- smoking, excessive alcohol consumption, overeating, not exercising -- but eventually are life-threatening. Take away the subsidy, make people bear the cost of their behavior, including proportionate insurance premiums, and we no doubt will see market forces affecting insurance and health care.

Greg Westcott: gregorywestcott@gmail.com

C'mon, Chris! How can you have such confidence in the American people with their decisions on their own health care and yet so little confidence in them becoming infomed, aware and prudent shoppers of the care they need? You are talking out both sides of your mouth.

Nobody spends my money better than I do, and monitary incentives are pure in every good consumed...including medical care. More and more of us are buying health insurance for the things we cannot afford but paying cash for the things we can simply because it makes good economic and financial sense. Premiums in the open, non-group market are cheap. Unfortunatley, almost half of the 40 millioin Americans (election years always drive this number up) w/o health insurance make $75,000 annually and don't buy it because it's not a priority. Additionally, the number of Americans who are eligible for state and federal assistance programs but never enroll is staggering! They are included in the uninsured number as well.

"Pure economic whimsy"? Let's give the free market a ride and see. Once we go the other direction, we can never go back. Just ask Canada (what a mess!).

Chris Manes: lokicsm@aol.com

Virtually all studies show the inelasticity of medical costs. And of course this accords with common sense: people go to doctors when they need to go to doctors, not on a whim. And when they need to go, they go. Therefore the idea that the "free market" can magically provide low cost medical care is pure economic whimsy. Worse, it is market evangelism.

Once again, Acton publishes a market evangelist apology for market failures. Don't you ever tire of worshipping capitalism despite its huge flaws (like not being able to provide medical insurance to 50 million Americans, including 9 million poor kids).

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