Comments on: Blame it on Fatty

By: james

james — Fri, 24 Sep 2004 21:24:18 +0000

jack – Can the US outlaw Pharm marketing? Its a good idea but is it constitutional?

By: Jason McCullough

Jason McCullough — Fri, 24 Sep 2004 21:02:49 +0000

Do you a source on the noncompliant diabetic costs? Google isn’t giving me much.

By: james

james — Fri, 24 Sep 2004 19:52:57 +0000

In the US, raw savings (savings account) has a lower return compared with other types of investment (stock market, property). In addition, the taxes on the return from savings investment is not as favorable as the taxes on the return from other investment.

By: Antoni Jaume

Antoni Jaume — Fri, 24 Sep 2004 17:50:29 +0000

rvman wrote that “Looking at this from a macro perspective, the first thing that hits me about this analysis is that universal health care would remove an incentive for private savings, just like Social Security did. One of the problems people have screamed about has been our low national savings rate – universal health care only makes that worse – especially since government would undoubtably run additional deficits to “pay” for it.[...]” However I think that most EU countries have a greater saving rate that the USA and mostly public health care, etc. So that looks a strawman to me. DSW

By: Ethesis

Ethesis — Fri, 24 Sep 2004 13:49:21 +0000

Posted by Jason McCullough Oh, file facts … about three hundred dollars property damage in a low velocity automobile collision, walk-in after being at the student health center, about 6,600 in CT scans, three dollars and change for meds, level 4 critical care charge. ////////// Another example being discussed on another board is ultrasounds in pregnancy. Studies have shown them to result in a reduction in the quality of diagnostic treatment of pregnant ladies. Many practices are moving to two ultrasounds per pregnancy rather than discarding them. Anyway, been interesting to read this thread, and to discuss insurance rates, underwriting and policies. Bottom line. Companies do underwrite when given the chance (compare individual policies to group policies) and that results in diabetics, for example, facing very significant difficulties in getting life and health coverage. Insuance pools with too many Fatties in them tend to go into death spirals. Much of insurance is the Fatties of the world trying to spread the cost of their risk on other people, often after they know that they are Fatties. Consider infertility treatment. There are demands that insurance cover it, without opt outs. Always by people after they discover they need it. Much of health care is for noncompliant diabetics in the end stage. Maybe as much as 15% to 20% of the public health funds spent in the U.S. Big difference in England (at least) is that dialysis is discouraged for diabetics over sixty. Way beyond the scope of my ability to suggest solutions, just a point.

By: Jack

Jack — Fri, 24 Sep 2004 08:21:33 +0000

James, since the largest part of the expenses of big pharma companies is marketing (at least double R&D and rising with each merger) with manufacturing a distant third and since those foreignmarkets still add to the pot in the sense that if the US separated its drug market from the rest of the world there would be less spent on R&D I don’t think that claim is all that relevant. What if the US outlawed direct to consumer advertising? What would teh effect be on 1)health outcomes? 2)drug company marketing budgets? 3)cost of treatment

By: james

james — Fri, 24 Sep 2004 05:18:02 +0000

How likely is the “willness to pay” to be a factor in the purchase of prescription medicine? The effect of a single large buyer does not seem plausable as a reason for the great differnce in Canada’s lower costs. Canada’s population is around 32.5 million. The two largest US health providers have 16.5 million ( UnitedHealth Group) and 15.6 million (Aetna Inc.) members. The fact that Canada and other nations employ regulatory measures to price fix is still the most likely cause of the pricing difference.

By: Ethesis

Ethesis — Fri, 24 Sep 2004 04:31:41 +0000

Getting back on target, the COBRA adjustments and the death spirals of pools with too many Fatties in them, that is a clearly observed and mature fact in the market in the U.S.

By: Ethesis

Ethesis — Fri, 24 Sep 2004 04:29:17 +0000

“the hidden US subsidies to the rest of the world on health care,” Someone needs to post a short essay on monopoly pricing at home and not away and how that works with a cost curve and competition. * ** **************** So if your first unit costs three dollars, your second two dollars and your third and subsequent units a dollar each, a home market that lets you sell the first three units for two dollars each will let you sell the rest at a dollar each in the abroad market and undercut competition that has the same cost structure, but no monopoly pocket. Interesting stuff. And, of course, I may be wrong.

By: BigMactAttack

BigMactAttack — Fri, 24 Sep 2004 03:52:01 +0000

james, Ultimately I don’t know that I really believe in the idea of savings. There are only resources directed here and resources directed there. But if I accept the more traditional definition of savings SS is a huge disincentive to save in the range of hundreds of billions of dollars. The government collects a trillion or so dollars in SS taxes which it spends and promises to future generations. If it did not collect that trillion dollars in taxes presumably some fairly large fraction of that amount would be saved in the traditional sense. Since minus the government guarantee most people would feel the need to invest in traditional, private savings.

By: Jason McCullough

Jason McCullough — Fri, 24 Sep 2004 01:33:51 +0000

Ethesis, the way you’ve written that story (lots of tests, discharged with cheap prescription, doesn’t come back, but no details about tests, treatment, illness, or possible illnesses) it’s impossible to tell if the expenditures were reasonable checks or gold-plating. “How much is the cost of French, German or any Scandinavian healthcare systems offset by the inefficiency in the US system. More specifically, the fact that prescription medicine is regulated in these countries and not in the US. In a purely free market system, it is extremely unlikely that the same drug would cost 100 dollars in the US and 20 dollars in Canada (France, etc). Doesn’t this in effect demonstrate an indirect subsidy of these national healthcare systems by the US?” It demonstrates that drug manufacturers will charge the maximum the market will bear in individual markets; it’s less in some countries because they have different willingness to pay (nothing new here), they have a single very large buyer in national insurance countries (clearly) and could break patents (theoretical, and I’m not aware of any measurements of the potential effect of this.) “Drugs cost more in the US than these national system countries” can be entirely explained by those factors without claiming evidence of subsidy. People keep mentioning “the hidden US subsidies to the rest of the world on health care,” (Megan McArdle foremost), but I’ve never seen a argument with numbers attached that supports this. It just kind of gets thrown out there as a vaguely plausible chain of reasoning.

By: Ethesis

Ethesis — Fri, 24 Sep 2004 01:12:58 +0000

It may be plausible that doctors and HMOs over-order tests to cover their actually there are statistics that indicate that there is no significant correlation between risks and expenditures. Guess I need to give a better example, one drawn from a file I looked at today. Student visits student health center. Charge $40.00. Then goes to E.R. Basic visit would be $200.00. To get up to acute level 4 and $600.00 over six and a half thousand dollars in tests had to be ordered. Whereupon the student was prescribed three dollars worth of medicine and did not come back for another health care visit for two weeks. All the tests were negative. It is interesting to watch the forces and counterforces. So, assuming one finds Chiropractors shady (which I’m not sure follows), this is a non-chiropractic example with the same principles. Usually the examples aren’t as pronounced, but there is a steady stream of points of this sort that are constantly hit rather than missed. And not that all medical providers get the same amount of money. Ortho surgeons seem to average 2-3 million a year once they are out in practice. Pediatric doctors seem to average about ninety thousand. That is a wide range. I’m on a board that hires Pediatrics docs for a children’s clinics and I take depositions of orthos from time to time. As far as I can tell, most doctors have no target income beyond “more.” Like lawyers and others, they see income as a marker in a competitive game that they’d like to win, and winning means more than the other guy. Not that they aren’t fine people (many are better than just fine), but after years of competition, markers become important.

By: james

james — Fri, 24 Sep 2004 00:17:57 +0000

How much is the cost of French, German or any Scandinavian healthcare systems offset by the inefficiency in the US system. More specifically, the fact that prescription medicine is regulated in these countries and not in the US. In a purely free market system, it is extremely unlikely that the same drug would cost 100 dollars in the US and 20 dollars in Canada (France, etc). Doesn’t this in effect demonstrate an indirect subsidy of these national healthcare systems by the US?

By: Dubious

Dubious — Thu, 23 Sep 2004 23:33:39 +0000

Yes, I realize such policies do exist, being most frequent for cancer as I understand it. As I understand it, they are also not very popular. I more meant the suggestion as a theoretical rather than practical way to circumvent the moral hazard problem. More of a remark than an endorsement. I think it’s highly probably that a single-payer system would, in the short run, produce lower mortality (or fewer DALY lost) per dollar than the current US system. I wonder though whether it wouldn’t stifle innovation. It is hard to imagine a National Health Service, under constant political watchdogging being as risk-taking and innovative as the current US decentralized and entrepreneurial health system. To open a new can of worms, because it would have monopsonist power in the drug and equipment markets, it would stifle innovations in those two areas as well.

By: Nicholas Weininger

Nicholas Weininger — Thu, 23 Sep 2004 21:56:56 +0000

An aside: it strikes me that an Austrian economist might object to your analysis on the grounds that (simplifying here) there is no such thing as an equilibrium in the real world anyway, nor is one necessary for viable service provision to exist. But I don’t know enough Austrian econ theory to explain or defend this properly; I’m speaking from half-knowledge. Any actual Austrians, or at least people who have made it all the way through Human Action rather than leaving it half-read on the bedside table, care to provide enlightenment?