U.S. health-care system

Health care in the United States is the poorest in the developed world. We lag behind in every measure of health and are ranked 37th in overall quality by the World Health Organization.

Ironically we are also the most expensive: Almost twice as expensive as Switzerland, our closest in cost. Not surprising, since poor care is expensive care.

We have 46 million uninsured. All the others provide universal coverage. None of the proposals for change now on the table, including the president’s, address the issue of cost or quality. They merely shift around the responsibility for sharing cost, which will probably increase overall due to the additional administrative expense of determining eligibility and responsibility.

The administrative cost of our private insurance system ranges from estimates of 12 to 20 percent. The administrative cost of Medicare is less than 3 percent. Merely extending Medicare-type coverage to the entire population would free up enough funds to cover everyone without changing the way care is now rendered.

We Medicare beneficiaries do not think of ourselves as recipients of socialized medicine.

With everyone covered we could then turn our attention to making the changes necessary to improve quality.

Morton C. Creditor, M.D.
Emeritus professor of medicine, KU School of Medicine
Mission Hills

Comments

[CRD]

"2) The second link credibly argues that the gap in admin cost % between private health care and Medicare is a) smaller than Creditor indicated and b) caused primarily because Medicare claims have a higher dollar value."

I reckon it's fair for us to know, in the interest of full disclosure, that this linked article you cite was from the Council for Affordable Health Insurance (CAHI), an association of insurance carriers advocating for market-oriented solutions to the problems of our health care system. That bias doesn't mean that the argument is meritless, but we should certainly be aware of that bias, just as we should be cognizant of the links between an oil company and the author of a report debunking a link between fossil fuel usage and global warming.

[CRD]

"Didn't Sammy's link in his post of12:48:35 PM present a cogent argument against the Professor's views?"

I'm afraid it didn't. The link Sammy posted was an argument stating that infant mortality and life expectancy rates are insufficient measures for comparing the effectiveness of healthcare systems between nations. We do not know whether Dr. Creditor factored in the U.S.'s relatively poor infant mortality and life expectantly rates among developed countries in asserting that "We lag behind in every measure of health and are ranked 37th in overall quality by the World Health Organization." Sammy wants to debunk an argument that we don't know that Dr. Creditor's making.

There is, of course, room for Sammy to make a positive argument that U.S. health care system is, in fact, doing a splendid job for our citizens, including the 47 million or so uninsured, and that there is therefore no way that we could be doing so poorly relative to other developed countries.

"And does being a Professor of Medicine make one an authority on evaluating the performance of diferent systems?"

Of course not, and I never made such a claim, which you'll see if you'll review my posts. I merely said that, all other things being equal, when given an opinion by a medical expert on a medical matter versus that of someone without such known expertise, it's eminently reasonable to give more weight to the former's unsupported statement than to the latter's.

As for Sammy, you state:

"The second link credibly argues that the gap in admin cost % between private health care and Medicare is a) smaller than Creditor indicated and b) caused primarily because Medicare claims have a higher dollar value."

That's great. You're presenting a counterargument with support that may serve to counter Dr. Creditor's claim that Medicare administrative costs are as much lower than private insurance administrative costs as he claims. I thought you did a much better job of making that argument than you did addressing his claim that the U.S. has a relatively poor healthcare system when compared to other developed nations.

"Also, notice, I never have said anything about a free market in "health insurance"."

then we may not be too far apart in our views. I find the Singapore model intriguing.

[Sammy]

CRD - I provided several arguments that should, at the very least, cause someone with and open mind and some intellect to raise an eyebrow to Creditor's positions. Let me summarize:

1) The first link credibly argues how oft quoted stats (although none were specified by Creditor) used to measure healthcare can be counted very differently from country to to country. It zeroes in specifically on Sweden's (the country Creditor mentioned) method for counting dead babies.
2) The second link credibly argues that the gap in admin cost % between private health care and Medicare is a) smaller than Creditor indicated and b) caused primarily because Medicare claims have a higher dollar value.

If that doesn't do it for you, then how about this:

http://www.heartland.org/Article.cfm?artId=15524

This is another MD writing bad things about Canada's system. Are you going to take his expert opinion on blind faith given his credentials?

What is it exactly about these arguments that you don't consider credible?

w2kc - Adverse selection is the common economic argument against health insurance and there is merit to it. And I think Singapore's model handles it nicely. So did Tim Harford, who wrote "The Undercover Economist" where I first picked up on the idea. In fact, one part of Singapore's system uses a Miltonesque earned income credit to help fund health care costs for the poor.

Also, notice, I never have said anything about a free market in "health insurance". I think the "healthcare" (notice no insurance) market could stand to be a little more open. Good things could happen. Wal-Mart might take the next step from offering $4 generic prescriptions. Maybe they'll offer low-cost, basic health clinic that is inexpensive enough for even a low income person to pay for out-of-pocket.

Another option - like car insurance, require everyone to have health insurance. Not exactly wholly free market. But not single payer either. Seems to work with the car insurance market. And, again, this is an element of the Singapore system (except much of the insurance is self insurance).

[Engineer]

CRD
Didn't Sammy's link in his post of12:48:35 PM present a cogent argument against the Professor's views? And does being a Professor of Medicine make one an authority on evaluating the performance of diferent systems?

[Mark Robertson]

Over the next 75 years, scheduled benefits for Social Security ande Medicare exceed dedicated revenues by 33 trillion, measured in current dollars. The unfunded liability for Medicare is 6 times larger than it is for Social Security.(74 trillion=Crisis, Thomas R. Saving, National Center for Policy Analysis)
Medicare cost around 400 billion last year. LBJ predicted it would cost 9 billion in 1990. It actually cost 67 billion that year.
And the doctor wants to put everyone on Medicare? That would probably increase costs to over a trillion a year and then spiral upward from there, as is always the case with socialized medicine because of the elimination of supply and demand market forces.
Socialized systems are failing around the world. They are virtually all moving toward free market approaches.("Lives at Risk: Single Payer Health Insurance Around the World," Goodman, Musgrave, Herrick, p. 11)
Canadians wait an average of 17.8 weeks for treatment. (Fraser Institute.)
As the great Ronald Reagan said, government is not the answer, it is the problem.
And finally, it's hard to imagine that there is a liberal professor at KU. Thankyou.

Mark Robertson
Independence

[CRD]

whoops, that's 10:02:33 am.

[CRD]

Sammy, here's your post of 10:33 am, in its entirety:
_________

"We lag behind in every measure of health..."

Which measures? Wait times? Cancer survival rates? How about the number of foreigners who explicitly travel to the U.S. for healthcare?

The only measures I've seen quotes are life expectancy and infant mortality, both of which are plagued with problems that make cross country comparisons.

Posted by: Sammy | Feb 6, 2007 10:02:33 AM
____________

You weren't questioning any conclusions of business or economics -- you were questioning the assessment of an expert in the medical field that "Health care in the United States is the poorest in the developed world" -- you took issue with it without offering any support for your position.

I still say that, all things being equal, cooker fox is more than justified to give Dr. Creditor's expert opinion more weight than yours. Doesn't mean you can't make an argument to the contrary, but it means that if you want to overcome the presumption of expertise that common sense demands we grant a medical doctor and professor of medicine at a major university, you better come up with some sort of credible argument as to why our health care system doesn't in fact compare unfavorably to those of other developed countries.

Hope that helped clear up any confusion.

[Chris40]

Here's an interesting exchange with Friedman discussing health care.

http://www.andykessler.com/andy_kessler/2006/11/email_exchange_.html

As you'll see, it has nothing to do with squeezing the sick and elderly out of insurance groups to make them more profitable.

[Chris40]

Whispering, I take it you've never read Milton Friedman, and it's pretty much certain that you've never read Friedman's ideas on health care.

It's not exactly difficult to find the information and read about it. Google it. I did and there's quite a bit out there.

It sounds like you've seen a few John Stossel pieces on tv and digested your Friedman second hand and in 4 minute increments. You're smarter than that.

[whispering_to_kc]

Anyone with consumer experience in the world of 'individual health insurance' knows first-hand where health insurance in the USA would quickly go without the basic, fundamental rules that underwriters currently have to follow in regulated group plans. An anything-goes world of profit motive 'individual health insurance' is where Bush2 was pointing us to in his State of the Union address. Another Bush vision to pile on the others, like so much more manure.

Milt Friedman, free-market/unregulated, individual health insurance effortlessly slips each human being into a profitability category depending on their age and past medical treatments. Past medical treatment for the most simple/benign things will make you uninsurable.

Without any government regulation, it'd be only natural for free-market insurance underwriters to eventually require genetic testing to go beyond past, recorded medical problems and try for a look into the future. All in the name of 'good business' and insuring shareholder value with high corporate profitability!!

Milton Friedman, through John Stossel, has
already endorsed the free-market selling of body parts and organs. Yours, not theirs.

[Sammy]

CRDee - My 5:55 post was in response to your's and CF's earlier posts on "experts", if you haven't figured that out yet.

[Sammy]

CRD - Again - I'll point out my support for considering the Singapore system. They have a private and public system and it seems to be working for them. It's not completely free, but it's more free than our's, even with it's public component.

Incidentally, Gov. Blunt is moving toward some elements of the Singapore model in Missouri (at least the public clinic part).

For me not to believe that a freer market in healthcare would not do a better job, you'll have to give me an example where the free market failed to deliever a wide assortment of products for people of all income categories.

I can give you non-free market product categories where this failure is occurring - K-12 education, healthcare, airline travel (when it was heavily regulated), Social Security, long distance telephone (when it was heavily regulated).

Consumer freedom of choice drives companies to innovate. Take away that choice and you stifle innavation. Consider the improvement that have been made in healthcare over the last 50 years, much driven from the U.S., semi-free innovation model. Those improvements have made it possible to save millions of more lives each year. Take away choice and you'll blunt that improvement cycle. People 50 years from now won't be thanking you.

[CRD]

I'm sorry, but huh?

Let me state that again:

What makes you think a wholly free market insurance would seek to serve the old and sick, with profit as the only motive?

[Sammy]

CRD/CF - Most MDs receive very little, if any, business or economics training. How to split a guy open and repair his heart so he can continue to live, thankfully, is the type of question they are good at answering.

They aren't so good when it comes to figuring out how to best allocate capital to have the best chance of achieving goals such as getting more healthcare to more people.

Medicare is part of what's driving healthcare costs up. His solution? Let's do more of that and then worry about quality later. Sounds a bit like the old business axiom, we'll lose a little money on each unit but make it up in the volume.

[CRD]

"Believe it or not, a free market would find a way to serve more people at prices they can afford."

What makes you think a wholly free market insurance would seek to serve the old and sick, with profit as the only motive? I agree with whispering here -- there's a huge financial incentive to find ways not to serve that population. I'd like to hear your argument -- I need something more than a "believe it or not...."

[Sammy]

w2kc - So, are you saying you'd rather have a system with no profit than pay half to a system with profit?

Hear that? That's the sound of me sratching my head.

[Sammy]

"Health insurance profitability can only be maximized by eliminating the old and sick, avoiding needless expense on their care. ROI for their care is poor." -W2KC

That's like saying that the only way to maximize burger chain profitability is to eliminate people who eat burgers.

The current system is far from a free market. Believe it or not, a free market would find a way to serve more people at prices they can afford. Please name a relatively free market product category where this hasn't happened.

[Engineer]

There does not seem to be many who question that we have the most advanced health care system in the world, based on machines and devices per capita and on specialists per capita. These things and people are costly. One of the first proposals by the Clintons to decrease the costs of health care was to decrease the number of specalists being trained. Teaching hospitals would be paid for not training specalists.
http"//www.aps-spr.org/Public_Policy%2099Overview.htn and htp://wishworldview.con/michelle/malkin091800.asp
whispering--Elder care will be an increasing problem. But do you have a link to Friedman saying anything like your contention? You have made this contention, or one like it, before but have not responded when challanged.
There is much talk about efficiency. But can anyone point out a field in which government, at any level, has operated as effidiently as private industry?

[whispering_to_kc]

Health insurance profitability can only be maximized by eliminating the old and sick, avoiding needless expense on their care. ROI for their care is poor.

It's Milton Friedman/Ludwig von Mises economics!!

[whispering_to_kc]

If you can't refute the message, then attack the messenger? Good luck with this messenger.

One man's 'administrative cost' is another's mostly 'profit' ... and something close to 20% is highly profitable.

Thinking about health care and insurance purely from an economic perspective, old and sick people are a drain on market efficiencies. Free of government intervention, the free market will deal with the old/sick appropriately. While it won't be pretty, it will be efficient.

[CRD]

"My guess is that he's not an MD, but he seems to know a lot about economics -- which is quite relevant on this issue."

But it was wholly irrelevant to his original contention -- which had nothing to do with economics, but which was rather a statement about the quality of health care in the U.S. relative to other developed nations.

It's not an "appeal to authority" to say that, between a statement by a known expert on a field, and an opposing contention by someone with no known expertise, we would be justified in granting the former greater weight. It's a very common practice in most areas of our life, from the criminal justice system to medicine to having that leaky faucet repaired. There's a reason we go to experts.

Doesn't mean an expert can't be wrong, and it certainly doesn't mean that an assessment is going to be right just "because he/she is an expert," but we're generally justified in trusting our doctor's opinion on matters of medicine over our next door neighbor who happens to be an accountant.

Now, if cooker responds to an actual argument that Sammy makes (rather than just an unsupported assertion) with "sorry dude, your argument doesn't wash -- that guy's a doctor and you aren't," then THAT, my friend, would be an impermissible appeal to authority. If cooker went on to say in addition, "besides, you're just a measly accountant -- what can you know?!" -- that would be an ad hominem attack.

Glad I could help clear that up.

[Sammy]

btw...I'm not against making changes to our healthcare system. We can improve our system. I don't think a single-payer is the way to do this.

I encourage everyone to read Tim Harford's book, "The Undercover Economist". He was the first one to turn me onto Singapore's healthcare system. It seems like a viable solution that keeps individual choice in the mix while providing healthcare to all.

[Sammy]

Thanks for getting my back, Chris40. I appreciate that.

You bring up a good point on the low administrative cost percentage of Medicare. The link below is to a paper by a by a PhD that shows that the gap in administrative costs between Medicare and private insurers is not as big as reported by the likes Creditor, MD.

www.cahi.org/cahi_contents/resources/pdf/CAHI_Medicare_Admin_Final_Publication.pdf

One big reason why it's lower - because the cost per claim for Medicare is higher. An average Medicare claim ran $6,600 in 2003 compared with a private insurance claim average of $2,700.

Simple math - This paper says that the Medicare admin cost runs 5.25%. On a $6,600 claim that's $346. Put that same cost against a private insurance average of $2,700 and you get 12.8%. Hmmm....

So, the way to keep the admin cost percentage low is to make everything else more expensive. That doesn't sound too enticing.

[Sammy]

CF/CRD/Creditor - So, if you become seriously ill you're heading to Sweden, Great Britain or Canada to get treatment because you believe their systems are so much better?

Here's a link from a post I made on 1/19:
"This link provides reasons why infant mortality and life expectancy rates aren't good measures of healthcare system effectiveness across nations."
http://www.nationalcenter.org/NPA547ComparativeHealth.html

[Chris40]

But cooker_foxy relies solely on the MD's authority (appeal to authority), whereas he dismisses Sammy for lack of authority (ad hominem). Sammy, by contrast, questioned the ideas in the letter, not the authority (or lack thereof) by the person making the claims.

Sammy, by the way, seems more than capable of defending himself. He has linked to several documents on this issue before, and maybe he'll dig them up again. My guess is that he's not an MD, but he seems to know a lot about economics -- which is quite relevant on this issue.

From my point of view, the strongest point of the letter was the one dealing with administrative costs. If true, then that's about the best argument for universal care I've come across. Now, whether this point is true or not does not depend on this guy being a doctor.

[CRD]

Ah, but he didn't appeal to the authority of the M.D., Chris. He just said that, ceteris paribus, he would take the opinion of an expert in the field of medicine over that of someone without said expertise (Sammy). Now, would that mean that the opinion of the expert is inviolable, or that Sammy couldn't make and support his own arguments to the contrary? Of course not. But given what we have here, an assertion by an expert, and an unsupported dismissal of said assertion by one of no known expertise (to us, anyhow), it's eminently reasonable to give more weight to the former.

[Chris40]

"Personally I would trust an MD and Emeritus professor of medicine before I would trust your measures Sammy."

Cooker, just because a doctor says something doesn't mean it's true. In fact, it's often dangerous to let others do your thinking for you. And it's a pretty basic logical fallacy:

"An appeal to authority or argument by authority is a type of argument in logic, consisting on basing the truth value of an otherwise unsupported assertion on the authority, knowledge or position of the person asserting it. It is also known as argument from authority, argumentum ad verecundiam (Latin: argument to respect) or ipse dixit (Latin: he himself said it). It is one method of obtaining propositional knowledge, but a fallacy in regard to logic, because the validity of a claim does not follow from the credibility of the source. The corresponding reverse case would be an ad hominem attack: to imply that the claim is false because the asserter is objectionable."

http://en.wikipedia.org/wiki/Appeal_to_authority

[CRD]

I suppose Sammy could be an MD, but I'm sure he'll let us know if he is.

[cooker_fox]

Personally I would trust an MD and Emeritus professor of medicine before I would trust your measures Sammy. I suspect he has studied the problem much more indepth than most.

But then again you could always provide links to your information (as I wish he would have too) so we could have a more objective comparison. Although I know space is very limited on the letters so I can somewhat understand his ommision.

[Sammy]

"We lag behind in every measure of health..."

Which measures? Wait times? Cancer survival rates? How about the number of foreigners who explicitly travel to the U.S. for healthcare?

The only measures I've seen quotes are life expectancy and infant mortality, both of which are plagued with problems that make cross country comparisons.

[Joe Barone]

Thanks, Doc. I agree, and I wouldn't expect such a comment from an M.D. If the present neglect continues, the cost of health care will take down the economy and the nation.