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2. There's a shortage of doctors in America, and qualified doctors from other countries are not allowed to practice medicine in the United States.

Are you sure about this? What do international comparisons say about physicians per capita in countries around the world?

It's conventional supply-and-demand economics to suppose that if there were more doctors, each doctor would make less money overall, and thus the services of each doctor would be cheaper for patients. But actually the economist Martin Feldstein, who conducted a study of the issue in the 1960s based on data from Britain and the United States (with two rather different systems of providing medical care to citizens), found out that generally doctors refer business to other doctors. So that as the number of doctors goes up in a society, the use of doctors' services per patient goes up, and thus overall societal spending on medical care goes up, as does spending per patient. What figures do you have about what is actually happening in different countries, and which countries currently have the best supply of comparable medical personnel?

It's been shown that in the US when you add more doctors into the system the amount of treatment and procedures done scales up. There is an incentive for a doctors office to stay busy, after all.

That's hardly surprising. When you increase the supply of a good, consumption of that good goes up.

And I should say, prices don't really go down. This is what happens when the suppliers get to dictate the consumption.

Not in all cases, only in this particular case. The reason is that consumers have basically zero price elasticity of demand - they don't care since the insurance company is paying.

If everyone switched to very high deductible insurance, that situation would change very fast.

Your reasoning for point 4 is horrendous and terrible. You are advocating for the return of snakeoil. There are already problems with homeopathic remedies and "magnets" and all this other crap that gives people false hope and leads them to avoid making medically difficult choices while lining the pockets of shysters.

Seems like snake oil is a problem either way. FDA testing for efficacy before approving prescription drugs is a totally different ball of fur--unless you expect legitimate physicians to write prescriptions for snake oil?

You can suggest someone take anything they want if it's available without a prescription. You just can't say on the label that it's effective.

What exactly is being argued for if not that prescriptions should be allowed even when efficacy is unsure?

But what is the cost of trying to legislate these people away?

> But what is the cost of trying to legislate these people away?

Consider that many other first-world nations also legislate away drugs that aren't more effective than a placebo and yet still spend a significantly lower percentage of their GDP on health care.

The costs are not always felt in fiscal terms. There is also the cost of an increasingly complex set of legal codes. There is also the cost of broadly-worded laws being applied in ways they were never intended to be applied, etc.

true, but maybe you should start with cost in fiscal terms and then go to solving all other mythical problems that bother you?

You're claiming that we (in the US) have a simple legal code, and therefore it is inconceivable for someone to commit a crime without knowing that what they were doing was illegal? (i.e. 'complex set of legal codes' is a 'mythical' problem)

I would really like a justification for the down-votes. I have no one providing discussion as to why I'm off-base. All I have is a post that I consider to be bordering on 'troll' (i.e. calling all concerns outside of the fiscal realm 'mythical') getting up-votes.

Maybe because you're completely off-topic? Like previous commenter noted there are many countries with much more complex "legal codes" than US, yet their healthcare doesn't cost as much.

Though if you have any evidence that cost of US healthcare is so high because it's so over-regulated, then you're free to provide it.

A partial solution to #1 came about during the Bush administration--"Health Savings Accounts", which are bound to your normal health insurance but work as a regular savings account. You put pre-tax money into them, keep a balance from year to year (the older MSA expired every year and you lost your money) and you can even take your money out of the HSA, just by paying taxes on it.

It didn't catch on, largely because people are used to having relatively comprehensive health insurance from their employers. Until you break the employment/insurance bundling nothing else will budge. And no one who has a job with health insurance wants to break the bundling.

I would love to have an HSA that is completely portable that I could drop some tax free money in each month and save up for when I need to get healthcare (like when I had ACL reconstruction).

IMHO, the fact that Obamacare did not expand on HSAs shows affordability is less important than control.

An additional problem with an FSA (you can only get an HSA if you have a high-deductable policy) is that the list of acceptable expeditures is limited and the funds expire every year.

I would love to have some tax-free healthcare money to spend, but I cannot guarantee that I will need penicillin, surgery, etc. this year.

I don't want to consign $5,000 to an account with a significant chance that I will simply have to forfeit the money at year's end.

Right, that's the point of the HSA. HSA's don't expire every year, you just put money into them, keep the money, and have the option of taking it back out and paying taxes on it.

And at least in my state, $5000 is a high deductible--my provider offers a $5000 deductible plan with an HSA. You do end up paying more than $5k out of pocket before hitting the deductible since there's coinsurance and copays and shit like that, but keeping $10-15k in an HSA--knowing you still have full access to that money and it doesn't expire every year (and then perhaps topping it off every so often)--is not a bad plan.

A better solution would be to combine HSAs and 401ks, which many people already have, and allow tax-free withdrawals from the 401k to pay for qualified health-care expenses.

I have an FSA. If it looks like I might have money at the end of the year I stock up on over the counter stuff, cold medicine for us and the kids, ibuprofen, hearing aid batteries (for my 9 year old son), maybe an extra pair of glasses for one of us (in fact if I have enough this year I'm getting prescription sunglasses). Heck even band-aids are an eligible expense. It's pretty easy to come up with something to spend that excess on that you will use. One of my son's hearing aids is getting close to it's expected end of life so I will be budgeting to buy a new one next year. So far I have never had a year where I couldn't use the money by the end of the year.

One thing to note, after this year over the counter meds (like ibuprofen) won't be eligible without a prescription, but band-aids still will be so thanks government for making the program less useful.

It didn't catch on

HSA enrollment has been rising by about 2 million people per year for the last few years, and is now at about 10 million people [1]. I'd say it's catching on.

I cannot recommend the HSA/High Deductible combination highly enough, especially for primary care. The difference between seeing an overworked doctor who is paid by insurance and an independent doctor who is paid by you? Night and day.

For anyone in Seattle, I strongly recommend http://www.qliance.com/ for primary care. Monthly fees for unlimited primary care, probably lower than your phone bill. They're cheap and indescribably excellent. (I don't work for them. I'm not associated with them in any way beyond being an extremely happy customer.)

[1] http://www.ahipresearch.org/pdfs/hsa2010.pdf

On #4: surely in practice the choice is often going to be not "drug A or nothing?" but "drug A or drug B?" where drug B is an established standard treatment. In that situation, choosing drug A does harm if the drug isn't effective, even if the drug itself is perfectly safe.

Yes, and in fact it would be bad for the drug companies bottom line, so I doubt they'd go for it in the first place.

It would essentially create two groups of drugs. The pre-legislation guaranteed effective drugs and the post-legislation unguaranteed drugs.

As you point out, the unguaranteed drugs would kill people, through inaction. No doctor wants to risk killing their patient, so if at all possible they'll go for the safe pre-legislation alternative.

This would greatly hurt sales of new drugs, which is the last thing drug companies want to do.

Likely a doctor would prescribe the standard treatment first (assuming it has a decent track record), and only resort to the new, unproven alternative if the standard didn't work. Or, the standard might have undesirable side effects and the patient themself would opt for the unproven alternative.

> 1. Health insurance, but not treatment, is fully tax deductible. So if you buy your own penicillin, it's with after tax money, but if your insurance company buys it, it's pre-tax money. That's one of the reasons that health insurance is so widespred in America even for routine medicine like antibiotics and checkups. That's a major contributing factor in why the administrative costs are so high.

That's not completely true - someone else mentioned Health Savings Accounts.

There are also flex spending accounts, which are tax deductible. However, you only get to change the Flex Spending amount once a year or when you change jobs, get married, divorced, or have children (and possibly a couple of other events). That's okay for chronic problems and other things that you can plan for, but not so good for unexpected events.

Under previous law, there was no legal limit on flex spending accounts. Obama care limits them to $4k.

>Under previous law, there was no legal limit on flex spending accounts. Obama care limits them to $4k.

Maybe in that last sentence your confusing HSA with FSA? Under previous law there was/is a $5,000 limit on Flex accounts. As far as I know that limit is not changing (I'll find out for sure in December when renewal time comes around) however Obama care will no longer let you use a Flex account to buy over the counter medicine like ibuprofen without a prescription (starting Jan 1, 2011), band-aids are still OK.

Edit: Upon further research I can definitely say with certainty that I have no idea what the hell will happen next year. I've spent the last thirty min trying to trace through http://docs.house.gov/energycommerce/ppacacon.pdf and the US Code to figure out what the changes to FSA's are and am getting nowhere. wikipedia suggests that the limit will actually drop to $2,500 in 2013 rather than the $4,000 next year suggested by anamax. I'm going to have to spend a lot more time on this.

According to http://www.irs.gov/publications/p969/ar02.html#en_US_publink... , there is currently no statutory limit on FSA (Flex Spending Accounts) contributions although every plan must impose a limit.

In other words, your plan can impose a $1M limit today.

I'm still trying to track down how Obamacare changes that.

For point # 3, it's actually even worse than that. These days, the best doctors also do a fellowship after residency. It's slightly less ridiculous than a residency, but it's another 2-4 years of being underpaid tacked on to the previous 10.

My buddy, who is nearly finished with his cardiology fellowship, is nearly 300k in debt at this point. On the other hand, that dude has already saved some lives and I'd trust him w/ mine in a <dorky pun>heartbeat</dorky pun>.

Among the reasons (first list): #s 2 and 3 are ways in which the AMA restricts supply in the US. The AMA may claim 'quality' (and who can gainsay claims of quality in health care) but one suspects that restricting supply and keeping salaries high is an at least equally valid (note the round about elocution) reason.

Claims that something is 'complicated' can be used to obscure and it seems to me to that one very clear source of problems in health care is the AMA. On the other hand, the AMA represents pretty much all doctors in the US and if they're earning above market salaries you can bet that most of them would strongly defend that. "They spent so many years in med school"; "they have so much student debt"; and "health care is unimpeachably a matter of quality" - right?

Financial markets are 'complicated' and that's why we can't do anything about those either.

Another quick comment about doctors and pay (because I had this conversation the other day w/ a young doctor). Doctors are incentivized to prescribe costly tests. They get paid more w/ every test/procedure, and tests also serve to cover their asses. Patients also, often, demand the testing.

Those who are against tort reform often use some statistics showing that tort fees only account for a tiny percentage of health costs, but they miss a deeper relationship between the fear of being sued (most doctors get sued at some point in their career) and the defensive, expensive, care doctors give.

"[Doctors] get paid more w/ every test/procedure."

This is not generally true. As a physician, I don't get paid any more if I send people to get labs, XRays, MRIs, or any random expensive test.

The exceptions to this are if as a small business owner, I happen to also own the X-Ray machine, or lab. Or, if you personally perform a procedure (like a surgeon), then the procedure does get you paid more, but you generally get referred to the surgeon when you have a problem.

I agree the other incentives do exist though. "Cover your ass" and "patient demands". But those are an issue with malpractice liability and patient education perhaps.

"There's plenty of people and organizations that will test proven safe drugs for efficacy for free or nominal cost once drugs hit market, and efficacy will get understood with time."

So if testing the efficacy of new drugs costs only a nominal amount of money, how would eliminating this requirement save us enough money to make it worthwhile? Also, if anything the market shows us that no one is willing to test the efficacy of drugs except for the drug companies. How many non-profit pharmaceutical companies are there, other than MAPS?

Parallel efficacy testing across a market is cheap. Efficacy testing under a central federal agency is expensive.

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

How do you get around that? Inventions and creative works get around it with patents and copyrights, respectively. How does an efficacy-testing company protect its results, since as matters of fact, they aren't covered by copyright.

Free riding is usually considered to be an economic "problem" only when it leads to the non-production or under-production (in a collectivist sense) of a public good (and thus to Pareto inefficiency), or when it leads to the excessive use of a common property resource.

I'm arguing that free riding isn't a problem in this case.

Drug companies have a rather unique demand for credible certification of their products' efficacy. Of course, some certifications will simply be shills for the drug companies, but doctors and health insurers will learn which certifying agencies are more honest than others and hence certification from a more honest firm will be worth more to the drug company since it will boost sales more.[1] It's no more of a "free rider" problem than Google, which has tons of free riders (search users) but whose customers (advertisers) want there to be more free riders, not less. Likewise, drug companies will want to get a certification that has tons of doctors and insurance companies and pharmacies that respect that certification, even though those are all "free riders".

Sounds similar to public companies paying for their own ratings agencies. I agree such a system seems like it could work for health and food safety; I'd like to see some real-world examples of a highly-functioning one in, say, another country.

I'd like to see some real-world examples of a highly-functioning one in, say, another country.

So would the other countries. That's game theory for you.

> Allow any doctor in a country with reasonably competent medical standards to practice in the United States.

The malpractice lawyers will love this one.

But put another way, is there any country that claims it has a surplus of doctors? I'm skeptical of claims that there is a "shortage of doctors" in the US and other developed countries when you compare rates to third world countries. FWIW Canada has long claimed it has a shortage of doctors too. In practice that means there's a shortage of doctors in rural Manitoba and Saskatchewan which is why such a high proportion of doctors in Saskatchewan are from South Africa.

I don't think there is so much a shortage of doctors as a lack of nurse practitioners etc. who have the legal authority to treat the medically trivial ailments (e.g., coughs, colds) that most of the time is why we go see a doctor.

Since the medical profession is self governing, it is a cartel and therefore it is in the interests of doctors to control supply to keep prices high.

As a doctor in England that has seen the American system, there are a lot of interesting points.

I agree with number 3 on specialisation; a doctor should first "learn how to learn" then specialise. If they change their mind, they can easily relearn. Most stay with one thing, with many becoming ultra specialists ie. knee surgeons.

Wouldn't that mean that you disagree with lionhearted? The undergraduate and medical school degrees are supposed to give general, not specialized knowledge. Residency is the specialized section.

Re #2: Most new Canadian doctors get their American certification as a "warm up test" for the Canadian test, since the American test is similar, but easier than the Canadian test.

I find this a little hard to believe, because American licensing and board exams are expensive and usually are taken over the course of many years.

For example, the licensing exam (USMLE) has 4 parts, one of which involves travel to the US for an in-person oral exam.

Edit: It looks like Canada might be accepting USMLE as equivalent to their exam. In that case it would make since to only take the US exams, allowing you to be potentially licensed in both countries.

"Technology has progressed such that we don't need government protection from ourselves as much any more."

Well said. Government agencies pretend to protect the individual but in fact they are bound by the strong insurance industry lobby.