
Why US health care costs grow: The most important chart in health policy - gronkie
http://theincidentaleconomist.com/wordpress/most-important-chart-in-health-policy/
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jswinghammer
I would list a few reasons that US health costs are so crazy:

1.) Insurance drives up the cost and hides true costs from consumers. What we
buy isn't even insurance it's pre-paying for health care (thinking of HMOs
here). My wife took medication for awhile that was $50 a pill. We paid $100
for 3 months worth of the stuff. Those true costs are hidden from us.

2.) You can't outsource it to China or India. If you've been to a Toys R' Us
ever you will notice that every toy there is pretty cheap by any standard that
you'd want to use. The reason is the cheap outsourced labor. If you want stuff
that isn't made in China you end up paying prices that are much higher and
more consistent with what you'd expect from the rate of inflation in the last
30 years.

We've been engaging in a devaluation of the US dollar for the last 30 years
(continuing a trend that's been happening since 1910). Those new dollars have
to end up somewhere so they end up in cost of medicine, lawyers, computer
programmers, etc. As a computer programmer it benefits me but after meeting
some family who are in less in-demand fields times are tough even for those
who have jobs.

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justinph
It's a mistake to think that market forces work in healthcare. When your
doctor says you need a test or a certain prescription, and here's where to get
it, you listen to your doctor. You don't haggle with him about where and how
much. Dealing with our medical system is difficult enough without having to
shop around while you're sick.

This wan't your point, precisely, but I just wanted to point it out.

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prewett
The times when I have had a high-deductible health insurance I definitely want
to know about the prices, but it's hard to get that option, because the
doctors assume that you aren't paying for it. Do I really want to pay $100 for
an X-ray of my teeth? Not necessarily: last time the dentist said my teeth
were great and they are feeling fine to me, so maybe I don't need an X-ray
every year, but they don't ask if I want a $100 X-ray, they just tell me to do
this and that and then charge $100. I went to one doctor for an eye exam and
they charged me $350 because they assumed I had insurance. The same exam at
another place cost $50. You could make your same argument about car repair
(when you're car isn't working you just want it fixed), but there the standard
practice is the give an estimate. In fact, places that do work without asking
you and then charge you for it are looked at as shady.

When the patient doesn't personally pay for the service, the cost of the
service has every incentive to go up. Is the service better? Generally, yes.
Is the "better-ness" necessary? In the case of my teeth, probably not.

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feb
Doing an X-ray every year even when it is not needed, does cost more and does
not improve your health. Actually, your body gets more doses of radiations
increasing the risks. Thus one can say that at the more expensive place your
health gets worse.

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muhfuhkuh
Price Inelasticity + Supplier-induced Demand = The current healthcare
economics in the US

Price Inelasticity = "Man, I hope this rebar sticking out of my chest doesn't
kill me. What is this ambulance doing to me? Hope it's not too expensive. Now
what's going on? What is this tube sticking out of me? And, what's the nurse
sticking into it with that needle? Whoa, there are _two_ doctors? Why? Who
authorized this? Whatever, my eyes are heavy. I'll figure this all out after
some rest."

Supplier-induced Demand = "Look, Patient X, you're going to need Foo, Bar, and
Baz done. I'm doing it not because you need it (because I think you're fine),
but because there is a 1000000:1 chance you _might_ need it, and if you did,
and I didn't do it, you'd sue me out of my profession. But don't worry, you're
covered, right?" (He'll also make more money, too).

Bi-partisan solution? Cap malpractice awards (screw the patient) _and_
institute price controls like Singapore, Switzerland, and Japan (screw the
healthcare provider).

Share the pain. It's the American way.

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SigmundA
I am not sure I see how this proves anything, it could be argued that all
measures that have been taken have "bent" the curve down which has kept it in
line with GDP, and that without those measures they would have "bent" upward
at a higher rate than GDP.

There is no precedent to compare against so it is unknown whether not taking
those measures would have been better or worse.

In my view healthcare is no different than national defense, in fact it is a a
form of national defense. Any argument that can be made for or against
nationalized healthcare can be made for a nationalized army and or police
force. The only difference between the two is which DNA is being defended
against, other humans, or microrganisms and our own DNA.

We all know national defense is expensive, but should it be privatized? I know
I do not want to shop around for my own private army to defend my life, I also
do not want to shop around for healthcare to defend my life, I want the best
the the society I live in can provide.

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kens
Can anyone explain what this graph actually shows? Specifically looking at the
upper-right 2008 datapoint, if Log(NHE/cap) is 9, then the per capita national
health expenditure is 1 billion? That makes no sense. (The original article is
behind a paywall, so I can't check it.)

It also seems highly relevant if other countries fall on the same line on the
graph or not. If other countries confirm the conclusion then it would be much
more solid, but if other countries have entirely different curves, then it
seems much more arbitrary that the US falls on the shown curve.

Finally, note that a tiny wiggle on this graph turns into a huge saving of
health care expenses. For instance, the difference between 9.0 and 9.1 on a
Log scale is 25%. I think this invalidates the claim that health care costs
can't be controlled, even if you accept the assumption that the future will
continue to follow the graph.

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vannevar
FTA: _We may rationally value additional spending on it if, by doing so, we
buy hope, peace of mind, and other comforts that we value more than the
dollars they consume._

I would add social stability to this list. Health costs per capita aren't
distributed evenly any more than GDP is. While society can tolerate that some
get a bigger share of the GDP pie on the plausible rationale that their
industriousness contributes to their wealth, it is less tolerant of the idea
that the wealthy should live while the poor die. If the new US health care
laws do nothing more than create a more equitable distribution of health care
then they would be a success.

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pkulak
I'm just supposed to know what the "ACA" is? Why don't people define acronyms
anymore?

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viggity
Affordable Care Act

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zwieback
_"The history of health care spending in the US is consistent with the
hypothesis that we view health care as a luxury good, one on which we spend
more of our wealth as that wealth grows."_

Not sure I agree with the wording here. You could just as easily say that
increasing wealth leads to increasing life expectancy and increased obesity
which leads to higher expenditures. I certainly don't view healthcare as a
luxury good on which I chose to spend more.

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TomOfTTB
But I think the definition you point to is part of the problem. By saying
"Luxury" it makes it sound like staying alive 20 extra years is the same thing
as buying a BMW and people tend to reject that.

But from a purely analytic standpoint the two situations are similar.

A luxury is something of value that most people don't have because it is cost
prohibitive. Well most people outside the western world don't live as long as
we do and aren't as obese as we are. Because they don't have the money to pay
for the health care that we do.

So in the limited confines of the study I think their assessment is accurate.
With the caveat being their study was very limited in that it doesn't address
individual acts that would surely bring health care costs down (as an example
negotiating on a national level for drugs is sure to brings costs down though
it might have other disadvantages)

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coliveira
There is a simple mechanism to limit the costs of health care used in other
parts of the world: create a law that caps the expenditure to a percentage of
the government's budget.

There is no reason the government has to put up with increasing costs, since
it has power to drive prices down by virtue of being the biggest buyer. The
opposite happens in the US only because health cost providers have figured out
that the government will absorb any cost increases (until it goes bankrupt).

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rwl
I'd like to see what this curve looks like in other countries. Are we in the
US the only ones who have failed to "bend the curve down"?

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jbooth
He doesn't provide a "why", just shows that the logs of gdp and healthcare
spending tend to correlate.

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aidenn0
The "why" is that health-care is treated like a luxury good in the US. Luxury
goods tend to not follow the traditional supply-demand rules as much.

