Reexamining what makes health care so expensive. | Hacker News Reader

Reexamining what makes health care so expensive.

reason.com

13 pointscwan27 comments

"The rise of HMOs was enabled by an earlier federal government attempt to rein in health care costs, the Health Maintenance Organization Act of 1973. The idea behind HMOs was that these insurers would control costs by offering a wide array of preventive care to their subscribers. That sounds like a plausible idea until one realizes that people, on average, change insurers every four years or so. An insurer that invested in preventive care was unlikely to reap the cost-saving benefits."

That's an interesting response to the HMO phenomenon, which I remember was touted as a solution to ballooning health care costs. The cost containment didn't happen, which is an important lesson for today's predictions about efforts to contain health care costs.

I also read this as one of the most important points in the article.

I wonder if requiring insurance companies to accept all customers, regardless of risk or pre-existing conditions, would create incentives for insurers to promote more preventative care.

Since customers could still switch providers, insurers wouldn't know whether or not they'd be holding the short straw when the customer gets sick in 10 years, but that wouldn't matter since they'd have the same chance as any other insurer of 'reap[ing] the cost-saving benefits' of their own preventative care.

Unless the insurance company holds 50% market share, the odds are pretty high that they won't reap the purported benefits of preventative care.

If a companies market share is 10%, their odds of reaping the benefits of P(customer switches) x 10%.

Regardless, I'm not sure how an insurance company will manage to get people to eat less and exercise more.

Seems then that a public option would be good for health because the insurer of the public would want to reduce costs over the life of the member. If a lot of the costs are due to diseases that could have been prevented cheaply earlier in life, then total health care bill would be lower and thus the public option could operate much more cheaply than a private insurer with a 4 year outlook.

Again, this is another data point on the short sightedness of our nation. We continue to look less and less far into the future and the human race is suffering. We are paying more for less quality. The environment is suffering.

We need a vision. we need to look into the future. we need a more longterm outlook with perhaps some short term sacrifice so that we don't end up some day not existing.

The HMO trend was based on the assumption that people were usually going to work for the same company for a long time. It made tons of sense, and still does in a union-provided health plan context, for example.

Perhaps the trend will be for employers to pay the tax, drop their company-based health plans, and then their employees will purchase their own plans that follow them around. Then, these plans will keep individuals in longer, making it more worthwhile to focus on prevention and overall health.

> The idea behind HMOs was that these insurers would control costs by offering a wide array of preventive care to their subscribers.

Nice theory, but preventative healthcare doesn't reduce costs. (Good plumbing and sanitation does.)

See http://prescriptions.blogs.nytimes.com/2009/08/18/the-proble... http://prescriptions.blogs.nytimes.com/2009/09/03/when-preve...

and so on.

Preventative healthcare doesn't (and can't) address many of the things that drive healthcare costs.

You're only correct if you ignore patients' longevity and quality of life. Those may not show up as line items on a budget, but they represent real costs to society. When setting public policy it's a mistake to ignore those factors or treat them as externalities.

I'm not ignoring those things. I'm pointing out that the claims that preventative healthcare will save money are wrong.

We can argue about whether specific preventative measures are worth what they cost. My point is that it is dishonest or ignorant to say that they'll save money.

One unavoidable reason why health care costs go up is simply Baumol's Cost Disease.

http://en.wikipedia.org/wiki/Baumol%27s_cost_disease

In short, health care hasn't experienced the same productivity gains as manufacturing, agriculture or many other areas. The cost of medical services is proportional to income, while the cost of cars, computers and groceries have gone down relative to income. Therefore, the opportunity cost of visiting the doctor has gone up.

There is little we can do to fix this without mass producing medicine.

Health care has problems that go way beyond the Baumol Effect. Costs have well outpaced income. Many studies suggest this. . . e.g. http://southflorida.bizjournals.com/southflorida/stories/200...

There is a lot we can do to fix this without mass producing health care. Currently a lot of the treatments being given are ineffective, or not cost effective, or even actively harmful. Physicians often have to act based on guesswork and anecdotes because there are usually no published treatment best practices that suit particular patient circumstances. For example, if an elderly diabetic patient presents with severe lower back pain should that be treated with pain medication (various kinds), surgery, physical therapy, or just do nothing? Ask three physicians and you'll probably get five different answers.

Clinical research on comparative outcomes analysis should help fix this problem. Software developers can help by building applications to record and report the data necessary to do that research. If all patient charts were stored in interoperable formats and properly coded we could mine a huge quantity of data to determine optimal treatments for each common combination of problems.

You seem to be right, that would be what is happening.

So, how do we mass produce medicine?

One-size-fits-all cures. You can buy a treatment, but whether or not that treatment works for your disease is your own responsibility. Let the buyer beware - if you die, it's your own damn fault.

Medicine's not the only industry that faces this problem. Education also requires that the product be tailored to the customer. Except in the public education system, the government did try to mass produce it, having standard curricula that all students must learn, and if it's not appropriate for your brain, that's your own damn fault. Go drop out of school or something.

Those of us who went through the public school system know how that turned out...

Easiest solution is to embark on a serious 10-year plan to double-and-then-triple the number of newly-created mds passing through the system.

This can't be done immediately -- it'd take time for institutions to ramp up their teaching staff and associated facilities -- but it could be done over time.

Some federal program that'd make funds available on condition of a particular school hitting a particular # of enrollments would the simplest solution; given a choice between mad money and placating the AMA boffins most administrators would take the money.

There's no real shortage of people capable of being decent physicians; most of the selectivity of medical school admissions is b/c the # of slots the schools allow is low.

Physician supply is a long, long way down the list of fundamental issues with US healthcare.

Right now, we as a nation have bigger fish to fry - such as making the moral decision on whether we as a society feel healthcare should be a right or a privilege, and getting the right alignment between economic incentives and effective healthcare.

If we're talking about mass-producing medicine you need more physicians at some point.

Your larger points may hold but I think you're underestimating the need for more physicians in the future.

There's firstly the obvious aging-population demographic; the older people get the more health care they'll want and thus if you hold the population of physicians constant (as a % of the overall populace) the demands upon the for physicians' attention will become greater as time moves forward; you might say "so hire more nurse practitioners!" but I suspect that won't be the answer, and I think that'll be clear after the next point.

The second point is that as medical knowledge has increased over the years medicine itself has gotten much more complicated. Problems that had no answer can now be examined and more-complicated disease mechanisms and cross-interactions (etc.) can be looked at. This is particularly true in gerontological settings -- old people have lots of problems mutually-compounding each other -- but it's complicated problems aren't the unique purview of the elderly.

To practice future medicine well will require more time and attention on the physician's part; getting that time back in the face of increasing demand for physician's time probably requires more physicians, doing more-thorough work on fewer patients.

And even in the present day most major teaching hospitals only really get by by slave-driving their residents; get rid of the residents and there's not enough doctors available at prices the institutions can afford to keep the hospitals working at full capacity.

No, physician supply is a fundamental issue. The price of medicine is high in part because of scarcity: there are (doctor's working hours) x (number of doctors) doctor hours available for consumption.

People desire more doctor-hours than exist, hence some rationing mechanism is needed. By increasing the number of doctor-hours (either increase number of doctors or doctor working hours) you can reduce the scarcity.

You can't eliminate scarcity simply by making a moral choice.

Sure you can reduce the price of physician time by increasing the supply, but that isn't practical for several reasons.

1. The high price is largely due to the need to pay off education loans. Physicians commonly finish training $200K+ in debt. Even if there were more physicians, they would have to charge almost as much just to make ends meet. To solve that you first need to find a way to cut the price of education.

2. Very few people want to be physicians, and fewer still have the intelligence and talent to do it well. Treatment by a quack is often worse than no treatment at all.

3. The only way to get a lot more physicians in to industrialized countries is through immigration from developing countries. However the political climate has turned against immigration (I think that's a bad change, but it's unlikely to reverse any time soon). And importing physicians leaves those developing countries bereft of medical care they desperately need.

4. Most physicians already work long hours. You can't squeeze much more out of them. Or if they do work longer, quality of care suffers.

(1) is easily solvable given enough political will; a federal program funding medical loans in exchange for N years of post-education service in particular hospital systems.

There are successful models for this in use in the army (both at the level of things like ROTC and also at the level of becoming a doctor-for-the-army); if the federal government's role in healthcare expands a program like this producing physicians for "general service" is entirely reasonable.

(2) is correct in principle but without firmer #s it is hard to say if it's materially limiting.

A look at an actual chart is revealing:

http://www.aamc.org/data/facts/charts1982to2007.pdf

...page #3 (as printed on the page) has a matriculation chart:

- in the 1982-3 period 16,597 students matriculated

- in the 2006-7 period 17,759 students matriculated

...which is ~7% increase of 20 years.

The last page has a graduation chart which is similarly flat.

By comparison, the # of full-time fall enrollees at degree-granting institutions:

- in 1982: 7,220,618

- in 2007: 11,269,892

...which is a ~50% increase over 20 years ( cf http://nces.ed.gov/programs/digest/d08/tables/dt08_188.asp ). I've omitted part-timers as largely irrelevant wrt the # of future medical school students.

Now it's possible that:

- there's been a nearly-constant supply of students enrolled in college each year who are interested in and capable of becoming physicians

- ...almost the entire 50% increase in student enrollment has been in students uninterested in medicine and/or incapable of becoming competent physicians

...but that extreme of a shift seems rather unlikely.

What seems more likely is that medical schools have decided to hold class sizes mostly constant over the years, with a slight upward trend (which I'd wager is mostly accounted for by the opening of new medical schools over those decades, not by increased class size at existing institutions).

If that scenario pans out -- that the pool of qualified candidates is larger than the current matriculants -- than while your point (2) is a limit on how far the supply of physicians can be increased it wouldn't be the case that we're necessarily close to that limit..

The question of whether training more doctors is feasible is tangential to the point that making a moral choice won't make medical services less scarce. It may not be feasible, and in that case there is no solution to the problem of scarcity of medical services.

Regarding increasing the number of doctors: plenty of people want to be physicians. In 2007, 42,315 people applied to medical school, but only 17,759 were accepted.

http://www.aamc.org/data/facts/2007/mcatgparaceeth07.htm

The people who are rejected are fairly close in scores (GPA, MCAT) to those who were accepted and there is plenty of overlap between the accepted/rejected distributions.

Let me do a little normal-distribution-fu. Assume that MCAT VR of 8.3 is the cutoff for "intelligence and talent to do it well". If we accepted every white person above that cutoff, we could train about 10,728 more white doctors per year and a few thousand more asian doctors.

(I picked 8.3 so I can call you a racist if you say you want a higher cutoff. ;) )

Regarding point 4), I agree.

In any case, while increasing the supply of physicians may not be feasible, this doesn't mean it is the case that making a moral choice can cure issues of scarcity.

Thank you for making my case more succinctly.

I'm intimately familiar with the specifics of medical education as a family member of mine is a high-up muckety-muck at one of the world's better academic hospitals (won't be more precise than that).

There's a perception amongst outsiders that medicine is unbelievably difficult that only a handful of people qualify for medical training on their merits; a more accurate assessment is that the # of slots is fixed and the admissions are as selective as they need to be to filter down the applicant pool to the # of available slots.

It'd take time to ramp up to being able to handle that many students -- medicine is mainly taught by working under the supervision of existing experts, and there's a finite supply of expert-hours at the moment -- but the present rate of doctor-production is far from what it could be without a material drop in applicant quality.

This is a bad idea for a number of reasons. Why water down the quality of physicians rather than increase the number of Physician Assistants or Nurse Practitioners? They are more than capable of providing basic preventative care.

They are also less expensive for the system.

What in what I suggested suggests that the quality of physicians would be materially watered-down.

It will be your word against mine but I assert that there are plenty of people fully capable of becoming competent physicians getting turned away from medical school each year.

They are turned away because the schools only have N slots per year and the turned-away applicants are not amongst the best N applicants that year.

It's unclear how far down the applicant pool you could go before you start allowing in the fundamentally incapable, but I have a hard time believing the current matriculating class size is anywhere near that threshold.

I don't disagree the world could clearly use more NPs.

The issue I can foresee though is that medicine is getting ever more complicated and specialized with time; there's an upper limit on what NPs are capable of covering after which point you need physicians.

Same way as any other service industry: standardize and automate. You can't automate much of the physician to patient interaction, but there are a lot of ancillary activities such as record keeping and billing which currently create huge costs for no direct benefit in patient care. Most of that clerical work could potentially be automated.

Mass producing medicine is easy.

Mass discovering and FDA-approving new medicines is the hard part.

You can mass produce pills, but you can't mass produce prescriptions for the pills. The cost of getting a doctor's permission won't go down regardless of how cheap drugs are.

That wouldn't help with costs anyway. You'd be paying about as much for a bunch of new patented drugs - actually more if they were good enough to get you to switch from generics. You might get better treatment, but not cheaper treatment.

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