Technology, Not Presidents, Drives Healthcare Costs

By Megan McArdle, Bloomberg View | September 23, 2013
healthcare

  • September 23, 2013 at 1:57 pm
    PrintedMoney says:
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    Technology brings down costs and increases productivity. Going from a fishing pole to a net produces more fish in less time. The richest or those who see the most benefit of that technology are willing to spend the most in order to get the benefit that they see possible. They spend their own money and take their own risk. The latest cell phone may cost $1200 and few people will buy it, but the advance of cell phone technology puts cheap cell phones in the hands of all. When a third party steps in, the costs controls are warped and broken, and when the government steps in god help us all. Soviet medicine here we come, Vodka anesthetic anyone? If anyone wants to go back to the days of doctors making housecalls for reasonable prices, we need to get the middleman out and let people buy things directly and insurance needs to be catostrophic. The price of out of pocket costs would fall just as they do in every other non-perverted industry. This really is a simple issue but there is a chorus of psuedo economists chattering and pushing agendas when the answer is get everyone except the doctor and patient out of the doctor and patient’s conversation. As in all other areas being taken over by the government, quality will fall, supply will dwindle, and costs will skyrocket and be put on the back of the taxpayer whether directly or through inflation of the currency. The day of reckening will come when our lenders pull the plug, but it will likely be past the next election so the politicians could care less. The name of the game is protect the system at all costs and the people in that system will fight to protect it. Red pill anyone?

    • September 23, 2013 at 2:21 pm
      Justaguy says:
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      I think I agree but maybe I don’t. By the way, fishing poles were new technology. Nets existed long before.

      • September 24, 2013 at 4:02 pm
        youngin' says:
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        I kind of agree as well. I have long thought that the main problem with our CURRENT health insurance system is that the middlemen make many of the decisions and the consumer is not directly involved in the financial aspects of treatment. I would prefer to see health insurance act as catastrophic cover such as most other insurance does, and individuals handle the day to day expenses up to a certain deductible level.

        The “kind of” is a recognition of the fact that serious health problems start off as non-serious issues so cutting out the insurer from the day to day treatment may be counterproductive. Also a recognition that healthcare issues are extremely complex and consumers are not always going to be well-informed enough to make optimal treatment decisions.

    • September 23, 2013 at 5:51 pm
      Agent says:
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      Obamacare did not address the underlying issues and it shows in the way it was written. True reform would have done Tort Reform. Doctors and hospitals have been running scared for a long time. They order numerous tests with expensive MRI’s, Cat Scans and other tests so they won’t be sued for malpractice. Technology can help save lives, but it is expensive. With so much money diverted from Medicare to Obamacare, rationing will soon be upon us and doctors will be told sorry, can’t do this test for a senior patient due to cost. Medical Device manufacturers also have additional taxes put upon the products they make so that will increase the cost as well. Hospitals will be struggling and laying off needed nurses etc such as what the Cleveland Clinic just did. Obamacare is like a cancer eating the insides out of the medical profession and there is no cure unless it is defunded and replaced with a common sense approach.

      • September 24, 2013 at 1:01 pm
        Ron says:
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        Agent,

        Let me preface this by reminding you that I am against the ACA as it is currently written and an advocate for tort reform.

        Remember the August 7 article on IJ, “Doctors’ Fear of Lawsuits Trumps State Malpractice Tort Reforms”? Tort Reform does not affect how many tests doctors order, only reduces their malpractice premiums. By the time the reduction in premiums gets to us, ~10% of our healthcare costs, we might see a .1% reduction in premiums due to tort reform because doctors will still get sued, we just won’t see the larger settlements. That means they will still order the same tests they do now. If you have different data, please provide and cite your source.

        http://www.insurancejournal.com/news/national/2013/08/07/300912.htm
        http://theincidentaleconomist.com/wordpress/meme-busting-tort-reform-cost-control-2/

        I do not want you to praise Texas for bringing in more doctors and having less frivolous lawsuits. I want to see how tort reform will reduce my insurance premiums by a significant percentage.

        • September 24, 2013 at 3:39 pm
          Agent says:
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          So Ron, you say you are against the ACA as it is written and an advocate of Tort Reform. Let’s try to use some common sense here. Do you think healthcare costs are higher because of numerous expensive tests run by doctors to diagnose patients? Suppose a doctor had $10,000 worth of tests run and ended up not finding anything serious and then wrote a prescription. Suppose the doctor couldn’t diagnose and referred the patient to a specialist who ran his own battery of tests for another large amount. Don’t tell me this doesn’t happen because it has with my wife on several occasions. I have a hard time believing that we only see a .1% reduction in premiums due to Tort Reform. The customer/patient still has a substantial claim that the insurance company has to pay, much of which is the unending tests run. If claims were half of what they have been, I don’t think the premiums would be so high. If doctors are facing fewer lawsuits with capped settlements, perhaps they won’t charge so much or run the numerous unneeded tests and the claims won’t run so much. I noticed you focused on just Tort Reform to reduce your premiums. You are not looking at the big picture. There are so many things wrong with Obamacare that it is too much to put in a blog. Give me some of your ideas on how the law should have been written to do healthcare reform. Do you think they should have allowed companies to write across state lines and create competition between them? Do you think they should have created Pools for the Prex crowd and keep them away from the healthy to keep costs down? I would have been in favor of the Pools because if you lump all the Prex people in there with the healthy, that drives up the cost for everyone. We could have spent $50-100 billion on this reform instead of $1.6Trillion at last estimate and might just have solved the problem. The Obamacare Dream is America’s nightmare.

          • September 24, 2013 at 3:53 pm
            youngin' says:
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            I will just jump in here once again and point out that while “tort reform” is usually synonymous with “caps on non-economic damages”, it could and should mean any number of other things. I think caps are not a good solution to these types of problems but people gravitate to the idea because it is simple; the rare eye-popping malpractice awards get a disproportionate amount of press in the media and people think they are a bigger problem than they really are.

          • September 25, 2013 at 8:08 am
            Ron says:
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            Agent,

            Sometimes common sense does not prevail when there is statistical evidence to contradict it. As the previous IJ article stated, it is not settlements that doctors fear, it is lawsuits. That is why they order so many tests. Are you willing to state that tort reform should involve limiting the accountability of doctors? Should there be a committee that reviews any possible malpractice and they make the decision on whether or not someone can sue a doctor?

            You may have a hard time beleiving how little tort reform would save, but I cited a study based on results of Texas’ tort reform that you have praised multiple times. If you have other data, then please provide and cite your source.

            The reason I focused on tort reform is because I have not seen any data that indicates how much the other Republican ideas would lower my premiums. If you have that information, please provide and cite your source.

            I am all for the Republican ideas for health care reform. My problem is and always has been, WHY DID THEY NOT DO ANYTHING WHILE THEY WERE IN POWER??????????
            Hint: 9/11 and fighting terrorists does not count since the President and Congress were not overseas fighting.

            My guess is because the status quo was working for them and their major donors and did not actually care about those for whom health care reform would have helped. You may disagree, but until they start governing like they care about others it is difficult to believe their rhetoric.

            The only issue I have with the pools is the costs to the insured. I agree that they should pay more, but if you start pools for the uninsurable in the open market, will they even be able to afford the premioums. Most will just let the bills pile up then file for bancruptcy. How much better is that for them and the rest of us? We will continue to pay for them in our premiums when hospitals and doctors try to recoup that money somehow.

          • September 25, 2013 at 2:12 pm
            Libby says:
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            Agent- pools for the PreX group would create an adverse selection, which would result in unsustainable premiums for those in the pool. Grouping them in with the healthy supports the basic theory of insurance, the law of large numbers. The premiums of many pay the claims of the few. Pools for PreX, unless funded by the government which I assume you are against, is not good business sense.

          • September 25, 2013 at 3:19 pm
            youngin' says:
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            Grouping high risk insureds with low risk insureds definitely does not support the basic theory of insurance and has nothing to do with the law of large numbers. Insurance is based on grouping individuals of similar risk and charging them a fair rate based on the projected costs of the group. The law of large numbers states that as the group gets bigger, the aggregate cost of the group gets more predictable (and rates become more accurate).

            Forcing the healthy to buy insurance so that there is more money to pay the claims of sick people does not “spread the risk”, it just “spreads the cost”. I happen to support the individual mandate conceptually, but let’s be honest about what we are doing. We are forcing some people to subsidize the insurance premiums of others, plain and simple. And I’m OK with that, because if health insurers could charge each individual a truly actuarially sound rate, older and/or sicker people would not be able to afford insurance and women would have higher premiums – both things I don’t think are socially desirable.

  • September 23, 2013 at 1:59 pm
    Carson Hamilton says:
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    What budget?

    • September 25, 2013 at 10:40 am
      Agent says:
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      Ron, I know you are a stats man and obviously need a government website to consult to tell you something on about every subject. Why do you blindly believe the stats they are putting out? I do believe true Tort Reform will get rid of a lot of nuisance claims altogether and still provide enough benefits to the injured party without all the punitive damages that are triple the actual damages. States with no Tort Reform have the highest healthcare costs. Some years back, the plaintiffs lawyers ran most of the doctors out of Mississippi with numerous huge suits. Did that improve the healthcare of that state? Did that increase the availability of healthcare? Where do the people go to get treated now? Your question was why the Republicans didn’t do something when they were in power. I really don’t think there was any great uproar about getting something done with either Democrats or Republicans. If you remember, when Slick Willy was in power, he tried to run Hillarycare down our throat and ran into a brick wall. Nobody wanted Socialized Medicine then and the majority of Americans still don’t want it, but when Progressive Democrats seized control of the House in 2007 and the clueless Harry Reid had the Senate, they saw it as an historic opportunity to install all of their Progressive programs including Socialized Medicine. Electing Obama was the last piece of the puzzle to get it done. It is kind of strange that they still had a lot of people in their own party that had to be bought off, threatened and intimidated to get the bill passed in the middle of the night with no one reading it. In 2010, the people spoke in the mid terms and many of those voting for this travesty lost their seats and the House reverted to the Republicans. They are the one government branch that slowed the agenda down or we would already be much like Venezuela. I wonder how many who are up for re-election in 14 will run on the merits of Obamacare. I think they hope the subject doesn’t come up at the town halls, but it is surely going to be a hot topic when people find out the cost, deductibles, out of pocket and all the trouble with the exchanges.

      • September 25, 2013 at 11:14 am
        Ron says:
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        Agent,

        I am not sure why you keep saying that I need a government website to consult when I just cited 2 non-government websites to support my point. I need data to make up my mind and do not care about the source.

        I have asked several times, but here goes another attempt, WHERE DO YOU GET YOUR DATA AND/OR STATISTICS? If you give me a non-government site, I will go there and do the research.

        You said, “States with no Tort Reform have the highest healthcare costs.” Where did you get that information? And, more importantly, show me the health care premiums of the states with the highest and lowest healthcare costs for comparison.

        So, you agree with me why the Republicans did nothing about health care when they were in power. There was no uproar due to the war on terror, but if the Republicans were more pragmatic and less reactive in their governing, they would have implemented their solutions to health care to avoid what might happen if Democrats were to gain power, which was inevitable since we always go through cycles of power.

        The ACA is not socialized medicine.

        You said, “In 2010, the people spoke in the mid terms and many of those voting for this travesty lost their seats and the House reverted to the Republicans.” What about 2012 when President Obama won re-election by a significant margin (4.68 million votes), Democrats gained 2 seats in the Senate, and gained 12 seats in the House of Representatives. What were the people saying then?

        • September 25, 2013 at 1:00 pm
          Agent says:
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          I’m sorry Ron. I forgot you are an Independent and just cannot make up your mind from observing how the country is doing, see the economic chaos, the impending ruin of the country due to Progressive governance, don’t seem to watch the news as it unfolds so no wonder you have to go to the internet whether it is a government website which you have cited over 90% of the time or another one. Do you have a website which shows how badly Socialistic countries have fared economically in the past 30 years? Can you name one major country that has adopted Progressive spending, nationalized healthcare, high taxation and is currently economically viable? Also, please name the last time Republicans had control of the House, Senate and Presidency at the same time. That tends to be an impediment to getting anything through and passed into law. When Obama, Pelosi & Reid gained control, look at the mess they created. I do agree that the Republicans put out some idiots for candidates in 12 and some got bogged down on social issues instead of talking about economics so they lost. What goes around comes around. In 14, I believe the people will be so angry, they will kick out a bunch of Democrats and a few of the RINO’s that have gone along to get along.

          • September 25, 2013 at 1:53 pm
            Ron says:
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            Agent,

            You are confusing Independents with someone who is undecided. I make up my mind based on facts, data and statistics unlike Republicans and Democrats who only listen to their side’s talking points and rhetoric.

            You asked:

            “Do you have a website which shows how badly Socialistic countries have fared economically in the past 30 years?”
            Answer: No, but I never made any assertion supporting Socialism. If I have, please quote me.

            “Can you name one major country that has adopted Progressive spending, nationalized healthcare, high taxation and is currently economically viable?”
            Answer: No, but I never made any assertion supporting Progressive spending, nationalized healthcare, high taxation. If I have, please quote me.

            I get the feeling that you have me confused with someone else. I believe that we havve very similar views on the economy and the only difference between us is that I hold both Republicans and Democrats accountable and you can only blame Democrats regardless of the political structure when the econoomy struggles. i.e. President Reagan saved the economy without help from the Democrats that controlled at least 50% of Congress, It was the Republicans that created the surplus during Clinton’s administration, Democrats are to blame when the economy tanked during President George W Bush was in office and it’s President Obama’s fault that the recovery is not happening fast enough.

            I never blamed or credited any one side for any of the economical cycles this country has gone through because they both have contributed.

            You asked, “please name the last time Republicans had control of the House, Senate and Presidency at the same time”. Answer: 2002-06 Republicans had control of the House, Senate and Presidency. Is your memory really that bad?
            http://uspolitics.about.com/od/usgovernment/l/bl_party_division_2.htm

    • September 25, 2013 at 3:06 pm
      Agent says:
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      Libby, how naive you are! Do you not think that putting a couple million PreX people in with the healthy does not create adverse selection and rate hikes? Why do you think the markets have been increasing rates every chance they have gotten since this law was passed? They are no dummies and know what they will be picking up as soon as the enrollment starts. Why not subsidize the PreX Pools like is planned for the others? I would much rather subsidize the Pool business for about $100 Billion than the regular business for $1.6Trillion. If you get the enrollment you think you will, you will enroll a bunch of healthy people to help pay the freight. These two groups of people need to be kept separate or the PreX’s will continue to skew the losses adversely.

      • September 25, 2013 at 3:12 pm
        Libby says:
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        Are you sure you’re in the insurance business????

      • September 25, 2013 at 3:24 pm
        Agent says:
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        Ron, Ron, Ron. Please wake up and smell the coffee. You answered my question about Progressive spending and agreed with me. Had you been paying attention to other posts I have made, I hold Progressive RINO’s to blame as well as Progressive Democrats. You seem to try to put me in a box as a Republican just like Libby does. I have no great love for the majority of Republicans who go along to get along. McCain, Graham, McConnell, Boehner are good examples and need to be replaced by real Conservatives like Cruz, Lee & Rubio. The guard is about to change in DC whether they like it or not. I will agree with you that Obama has no clue how to recover this economy and does exactly the wrong things that insure the economy will be tepid at best. How is that 1-2% growth working out for us? Obamacare has also guaranteed companies will not hire, will reduce hours or lay off more people. Pay attention to the news sometime. By the way, when the Republicans did have brief control, we had the aftermath of 9/11 going on and the response to it was to go after the bad guys and deal with Sadam who defied the UN 17 times and every intelligence service in the world said he had WMD’s. Our current President knows that Assad has them now. What is he doing about it other than threatening them? They say there are several thousand metric tons of this stuff. It is a pretty dangerous situation, don’t you think?

      • September 25, 2013 at 4:42 pm
        Agent says:
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        Ron, I think you are the one confused. Perhaps you are an Undecided Independent judging from how you post. In every election, politicians try to cater to the Undecided Independents who can’t seem to make up their minds right up to election day. From what I have seen from polls, undecideds usually go liberal in most elections because they like to be promised things and the Progressives are very good at promising and then not delivering good results. I wonder if there is such a thing as an Undecided Conservative. I don’t think they will hear much from the Democrats that fit in with that belief. Probably not much from a RINO either since they promise what they can’t deliver. A Conservative is usually a person who believes in small government, strong national defense and low taxes and getting out of the way of small business so they can operate and be successful. I don’t think many Independents fill that bill from what I have seen.

        • September 25, 2013 at 5:06 pm
          youngin' says:
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          Independents have a hard time making up their minds because they try to vote with their brains, and most issues are not actually black-and-white despite the noise coming out of pundit fantasyland that party loyalists like to gorge themselves on. My god people, think for yourself! There are a whole host of issues that define one’s political inclinations and it baffles me how many people find comfort clinging to one party or the other. I guess it’s just the human instinct for association, the same thing that causes sports fans to be rapidly loyal to their teams. I have yet to find a politician or party platform that even remotely resembles my set of guiding principles that governs my voting decisions.

          • September 26, 2013 at 11:55 am
            Agent says:
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            Youngin, you are much like Ron and do not use your brain, have any common sense or have powers of observation and cannot see why Progressive Socialism is bad for the country. Apparently, you like the culture of corruption, all the entitlement mentality rampant in this society and think Obamacare will work despite all the evidence to the contrary. Why not just admit that you like Progressive ideas just like Libby and we will know where you are coming from.

  • September 24, 2013 at 11:08 am
    Whodathunkit? says:
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    The biggest thing is that the technology advances are market driven, not mandate driven. I have argued several times here that the government pushing down on costs without market interplay just causes economic consequences somewhere else in the marketplace. We can mandate home loans be given to everyone regardless of qualifications, but it will end up as a financial crisis that then impacts construction, real estate, property taxes and so on. Those who disregard history are bound to repeat it.

    • September 24, 2013 at 5:11 pm
      Agent says:
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      Great post Whodathunkit. I might add that Progressive Socialist policies have caused extreme harm to the country in the past century. Guys like Teddy Roosevelt, Woodrow Wilson, FDR, LBJ and now Obama have done a lot of damage. They might have started out thinking their ideas would do good, but it was a failed philosophy and still is. Throw in John Maynard Keynes who is worshipped by the left for his prime the pump, big government spending models and you can see the mess this country is in now. Politicians have really screwed this country over and expect us to just take it and keep on re-electing them.

      • September 25, 2013 at 5:04 pm
        Libby says:
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        The whole idea of being an independent (I was one for over 25 years) is they don’t believe in the ideals of EITHER party, but try to weigh all candidates and issues and vote for the one that best lines up with their values and priorities.

        • September 26, 2013 at 11:51 am
          Agent says:
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          And we know where your values and priorities lie Libby. When did you switch over to be a Progressive Democrat? If I were guessing, probably when you voted for Clinton, the serial liar, impeached but not removed President. We know you like him and his equally Progressive wife.

          • September 26, 2013 at 12:38 pm
            Libby says:
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            Well, as usual Agent, you would be wrong. I switched over in 2008. But I am a big Hilary fan. You’re right about that, at least.

  • September 26, 2013 at 5:01 pm
    Agent says:
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    So Libby, after all that thought about candidates to see where the candidates lined up on issues, you fell for “Hope & Change” and Progressive ideas that are ruining the country as we speak. Since you like her, do you remember she proudly proclaimed in the primaries that she was a “Modern Progressive”. That is another name for a Socialist big government, big spender control freak. Remember her saying it took a village to raise a child? How screwed up is that? Did she have a village of people when she was raising Chelsea? I maintain you were a closet Progressive Democrat who just said you were an Independent. Obama was right down your alley. I do admit that running a RINO against him was just Obama light although I don’t think McCain would have made this big of a mess.



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