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Here is an interesting article about health costs in the US compared to health costs worldwide: http://www.washingtonpost.com/business/high-health-care-costs-its-all-in-the-pricing/2012/02/28/gIQAtbhimR_story.html

Its long so here are some of the highlights:
1. The US pays much much more for everything.  A day in hospital is 4 times the cost in the US as opposed to Switzerland, which is the next most expensive.
2. If the US could get to Swiss levels, and Switzerland is ridiculously expensive as well, but if the US could get to Swiss cost levels, the federal deficit would be eliminated.
3. The well run system have their government set prices for drugs.  The US does not.
4. Individual Americans are victims of price gouging.  Passed out sick? Pay extra!!!
5. Obamacare is not going to fix this.  I find the following hard to believe but WaPo can hardly have made it up:
6. American health care professionals don't see any problem with this and insist government should not regulate prices.  Classic rentier mentality:
7. This price gouging applies to the the full spectrum of procedures:
http://www.washingtonpost.com/wp-srv/special/business/high-cost-of-medical-procedures-in-the-us/?hpid=z2

For an illustration of this in practice, here is a woman who had similiar treatments in US and UK.  Look at the price difference...US charged $103,322 while UK charged $4750.
http://www.dailymail.co.uk/health/article-2105680/This-woman-emergency-op-Americas-hospital-stars-NHS-So-did-best-care.html

Anyone advocating a free market in health should take a long hard look at these figures.  Its clear that having the government negotiating prices with drug firms and trade unions is far more efficient than having every sick person competing through insurance companies with every other sick person.  

And its also clear that the US budget deficit is not due to some generic failure of government.  Its a failure due to the private market in health care.  Fix that and your federal deficit goes away overnight.

I hate reading these stories... I just know at the end I will have two choices:

1) Resign myself to being slightly indoctrinated
2) Spend hours trying to figure out whats actually going on (what the numbers in the charts mean, what are the distributions of numbers that lead to the averages, etc)


I couldn't read the last page... is this really true? Does this include drugs used at the hospital?

bitcoinbitcoin113, yes, that's true, though I thought "Obama care" got rid of that.

As for the OP, yes. So what? This is something probably everyone knows by now. The problem isn't that we have private health insurance, or socialized, but a horrible bastardization of both. Since neither side (socialize vs privatize) will relent in the debate, there's nothing that will ever be done about it.

Its worth reading the article.  It says what I have been saying for a while - having government negotiate prices for healthcare is more efficient.  Also, you have expressed concerns about whether the US is sustainable.  Fix the health issue and the US is no longer a chronic runner of deficits. 

Not sure how that's possible, considering the entire federal health spending on medical is 846bil, and the budget deficit is 1,327bil

nice article.

the US healthcare = innocent people sacrificed to the Free Markets idol.

KP is a fine organisation.  But its not a health system - its just a small part.  According to wikipedia, the NHS copied KP in the some of the parts that are comparable.  However, the NHS takes all comers - KP cherry picks patients.

However, can I suggest you read the WaPo article?  It doesn't compare the US to the NHS.  The issue is not quality of care - its the over-charging for it.

Africa  = innocent people sacraficed to lack of food.
 :P

The regular price for Aspirin 40pc at I think 320mg each is 15€ around here, current EUR/USD is 1.3something.
So no not just 2 but 20 bucks for that.

p.s.
Could be this is the only example working this way.

http://www.washingtonpost.com/wp-srv/special/business/high-cost-of-medical-procedures-in-the-us/?hpid=z2

There is no way these numbers mean what you are supposed to think they mean. $35 for an angiogram in canada? That is the total cost of the procedure? No way.

Good find.  The American one is ridulously low too.  My guess is that its the materials; not the full procedure.

The overall point is correct though.  Americans are being overcharged and its the lack of a national price negotiation that causes it.  

Three reasons US healthcare is expensive:

1.  People are allowed to sue doctors, hospitals, and drug companies for hundreds of millions of dollars.  I mean, come on, does hundreds of millions really compensate a person better than a few million would?  Either way, they're set for life.

2.  Because the US takes a free and capitalist approach to the medical world, companies pour tens of billions of dollars into R&D for innovative new treatments and techniques.  So, the US has the latest and greatest treatments, but it costs a lot to recover those R&D expenditures.

3.  Because people are allowed to be treated without paying for it.  Illegals included.  Hospitals have to recover costs from people who don't pay somehow...

So, if you really want to fix US healthcare costs, stop allowing people to get $200M judgments when someone is maimed for life, learn to deal with a decrease in innovation of new medical technologies and treatments, and stop treating people who can't pay for it.

You missed the most important reason, which is that Americans don't know the actual cost of healthcare because they are "shielded" from it by our insurance policies. Specifically, most of insurance is paid by employers, so, if the total cost of covering you is $400 a month, your employer takes $325 of that out of your paycheck without you even knowing about it, and charges you only the remaining $75 a month. I guarantee you that if the law allowing employers to provide group coverage and get a big tax break on it was repealed, and people were forced to pay that entire $400 out of pocket, people would be forced to be choosy in their insurance plans, and demand the costs get reduced.

Out of curiosity, who here, who lives in USA, even knew that your employer pays about 75% of your medical insurance, takes that money out of your income, and doesn't even tell or report it to you? I only found out because my employer started offering insurance for same sex couples, and had to disclose that since the Federal Government doesn't consider same sex couples as married, the entire portion paid by the company for the spouse would have to be reported as extra income and taxed as such. (I.e. if I was married, I would pay an extra $60 a month for my spouse, and that's it, but since I'm not legally married, I pay the $60, the state discloses that they paid the other $340, that $340 gets treated as extra income I earned, a come tax time I have to pay an extra $80 out of pocket for every month I had insurance on my spouse).

Please read the article.  None of those is a significant factor.

I dunno, I work at a VA hospital (biomed research, not healthcare) but my lab is also part of a nearby private hospital so sometimes we have a choice of who to order through. It is common for supplies to be cheaper when ordered through the private hospital (although this is not always true and sometimes works in reverse). Some things are twice as expensive. This is due to the way the government grants contracts and approves vendors. There is usually a way to get your preferred vendor approved but depending on the scenario this could take months. No one has time to sit around and wait (you never really know how long the wait will be or the final price) so we just spend more, this is going on all over the country and just gets included in the cost of doing business and thus NIH grants, etc. The net effect is rising prices and siphoning money from the granting agencies (often taxpayers) to the overpriced suppliers.

I'm not saying this is the way it has to play out, just that single-, thirdparty-payer systems can be and are gamed. Large vendors will usually have entire departments devoted to dealing with the government.

So you refuse to accept facts that do not conform to your political views?  The facts have to be false, and if they don't appear to be false, you are being "indoctrinated?"

Well, it might be a bit extreme to say that you don't accept them.  Perhaps you reluctantly concede.

This is the reason why debates change nobody's minds.  Because you already assume the opponent is wrong and because you give your own position a "second chance," you can always find a rational retort after a while. 

There, in a nutshell, you have summarised the problem with idealists.

No, the very nature of any "media" is to indoctrinate. I thought I wouldn't have to explain that here. My bad.

edit: I'm not saying that is "bad", it is just how it has to be because most people don't care about details. If you want real information you need to find it for yourself. The prices for various medical procedures are an example of this. I get that they were trying to illustrate their point with those numbers, and their point may be correct. The numbers they present do not actually support it though.

If they have published numbers that don't support their point, show them.  Its the willingness to accept what they mean that is a problem.

In good time. This is worthwhile to be informed about.

Ah - so when you said "The numbers they present do not actually support it though" you haven't found the numbers that are "wrong" yet.

Isn't that sort of "you keep your facts and I keep my opinions" approach exactly what ineededausername was talking about?

Huh, you just agreed with me earlier...

I agreed its puzzling how it lists $800 for the angiogram in the Kaiser Permanente hospitals and $23 for Canada.  Both are impossibly low.  Perhaps its for the materials only.

So the numbers they present mean nothing on their own... I don't see where there is room for misunderstanding then.

Related. Went to an after-hours clinic yesterday after getting some methanol-containing shellac in my eye. Mom drove me. She sprained her ankle a few weeks ago and had her ankle x-ray'd. They billed her $1400 just for the x-ray.

Asked the doctor @ the clinic about it. They are equipped to do the same x-ray and would've charged $50. To have my eye examined under UV, and some other basic tests, cost me $40 (and I'm fine, btw). Pretty darn reasonable. I also waited a much shorter time in the clinic than my mom did in ER (granted, they were at different times, so somewhat non-comparable). He also prescribed me an antibiotic for bronchitis -- $10 for a full prescription, no gov't subsidization.

So, why do hospitals charge 28x more for the same procedure than an apparently-profitable clinic? Valet services? Subsidizing those who can't afford to pay the extreme prices?


ETA: Uncle's home insurance is covering my $40 cost to have eye examined (+having bronchitis looked at in the same visit), so total out-of-pocket cost for me - being uninsured myself - between bronchitis, a prescription, and having my eyes examined for damage after a can of shellac exploded, is $10.  ;D

Could it be because, taking marketing into consideration, hospitals are just much better at business and making a profit than that clinic? Why didn't your mother go to the clinic to begin with? Was there an assumption that the hospital would be better? And did she pay for that until you knew better?

She wasn't sure if the clinic was open and didn't have access to a phone or computer to check. She wasn't expecting anything like a $1400 charge from the hospital, either.

ETA: fwiw, she refused the splint they wanted to put on, as well as bandages. Someone pushed her from the entrance to the ER, did the x-ray, and gave her 2 Vicodin pills. She requested an itemized list -- waiting on it.

That does seem high. All my x-rays, whether at hospitals or clinics, typically cost from $90 to $300

Pretty much all profit is made on a mis-alignment of information. I don't think I've ever heard of a private enterprise subsidizing some customers by charging others more...although if you think about it, the base supply/demand curve could be seen that way - "reduce the price to get more customers", is the same effect but under a different name.

Hospitals vs clinics are similar to 24hr megamarts vs local grocery stores. They just have more stuff, are open all the time, and because you don't know what you want/need until you get there, you'll usually end up going to the bigger place.

Exactly -- one cannot claim to be either rational or open-minded if one assumes the opponent is always wrong, and then works from that assumption.
The numbers are correct until they are proven wrong.

So, you think that, in Canada, it costs $35 in supplies (anesthetic, contrast dye, ), as well as technician and doctor time for an angiogram?

The numbers are misleading 90% of the time, in my experience... So here is the source of that data:

http://i44.tinypic.com/34hvpfa.png
-Prices represent public sector fees for the province of Nova Scotia

-U.S. costs are based on commercial claims data from Thompson Reuters MarketScan Research Databases. The claims data was compiled by Deloitte Consulting LLP on behalf of Kaiser Permanente Health Plan. Any opinions or conclusions expressed herein regarding the data are not those of Deloitte Consulting LLP. Because a broad range of prices were available, the national 25th percentile (low), average, and 95th percentile are presented.

http://www.ifhp.com/documents/2011iFHPPriceReportGraphs_version3.pdf

Lets see what WaPo is comparing. First of all the numbers represent different things for each country, so let's focus on canada and the US. They are comparing the "public sector fees" in Nova Scotia (pop <1 million) with the "average commercial claim" in the US (pop > 300 million). Here are a few questions that need to be answered before comparing these numbers:

1) Is this "average" the median or the mean?
I don't know and Thomson-Reuters are dicks about releasing the data or even white papers explaining the data. The US price appears skewed toward the lower end though.
2) Are "commercial claims" the initial claims, or final adjusted claims?
-Ditto.
3) Who pays for the property and lab equipment in Nova Scotia? Do the doctor's have to recover costs here, or are those costs "off the books" (funded by taxes beyond the public sector fees reported in this chart)
- I don't know

The numbers presented are useless (they cannot support anything) without knowing the answers to these questions.

And oh yea, even the disclaimers of the WaPo's source says " Do not use this for anything important, also be wary of comparing across countries":

Below each chart:


So sorry, inau. Your policy of "the numbers reported in the news are correct until proven otherwise" has led you to draw conclusions that even the source of the data says not to. I guarantee that if we find the primary sources, there will be even more uncertainty that has been obfuscated at each step as this information traveled from the researcher's collecting it to your eyes.

I stand by my original post.

Wait, do these numbers include the government subsidy that people pay indirectly through taxes? Or are these just direct out of pocket costs?

For "Canada" (every country's number is calculated different), it is the fee that the Nova Scotia government pays to the doctor. This fee is negotiated once a year with the provincial medical association, most likely (I am guessing) there are various deals made so that equipment and property subsidies are traded for lower fees on certain procedures the politicians have heard complaints about.

I have seen elsewhere that the average cerebral angiogram (yes there are many different types of angiograms being grouped together here) cost over $400 to perform in Ontario in 2002. So the money to perform these procedures is coming from somewhere besides the fee displayed in the chart.

http://www.ncbi.nlm.nih.gov/pubmed/12500380

The chart you link to says the charge is for performing the scan.  It also says that the US cost commercial cost if $164 but that average fee charged in the US is $798.

Does that not reinforce the central point?

US citizens get charged more and the reason is purely a case of "charge what the market will bear." 

It is explained in the words below the chart. For "Canada", the number refers to the fee doctor's charge the Nova Scotian government for each angiogram. For the US, the three numbers refer to the 25th, "average", and 95th percentile commercial (not VA, medicare, or medicaid) insurance claims made for angiograms. The wide spread is likely due to the different types of angiograms (cerebral, coronary, renal, etc), more expensive procedures if there are complications, etc.


Incorrect, all three numbers are commercial insurance claims. They represent the 25th, "average", and 95th percentile claim values.


No, the chart tells us nothing about the total cost of care. Any amount over the $35 fee is somehow covered by the government from a different source of revenue. We also do not know if the percentage of different types of angiograms is the same between Nova Scotia and the US. Some types may be more common in the US and thus pull up the average price. This cannot be gleaned from those numbers. They do not show what you are supposed to think they show.


Perhaps, but that information is not present in these charts. We need to know the actual cost to the hospital of performing the different types of angiogram in each country. That way we can see if the US insurance providers are being overcharged compared to the public Nova Scotian insurance provider.

Another article with the same basic facts.

http://www.nytimes.com/2012/03/06/health/policy/an-interview-with-victor-fuchs-on-health-care-costs.html?ref=science

Money quote:

I don't understand, are we ignoring the misleading numbers in the WaPo article now or has it been acknowledged that we cannot trust the media to inform us?

I like this quote:

He mentions one change made during the Civil War and three things that many people consider scams that made the rich richer and the poor poorer. Anyway, if American's spend twice as much per capita as the rest of the world I want to know where that money is going. Insurance premiums? Hospitals? Pharm companies are definitely making more in the US, but prescription drugs "only" account for a couple hundred billion dollars a year. It seems like we should be able to figure out how much money is going where but I never see anyone quantifying this.

The Kaiser Permanent figures in the WaPo article show that the US citizen pays more.  Are you disputing that?

Can you post the specific number you are referring to?

The angiogram.  It shows the US citizen pays more.  Even at the lowest commercial rate, the US citizen pays more.

I really don't see how this is difficult to understand?

Nova Scotia Public Coverage:
Total Cost to Citizen = Share of Public Sector Fee + Share of Other Tax Dollars (that go to healthcare)

US Private Coverage:
Total Cost to Citizen = Insurance Premiums + Deductibles

The WaPo chart compares Nova Scotia public sector fee to Insurance claims. It is not a valid comparison. The claim rate is not even in the second equation (although it is related to to the premiums). The public sector fee is only a portion of what the Nova Scotian citizen actually pays, they pay additional taxes on top of this.

It is impossible to say which citizen pays more from the WaPo chart. It compares two completely different things, it is useless. On top of this, it groups together all angiograms, which will have wildly different costs. It needs to be established that the same proportions of each type of angiogram are performed on both populations.

I agree that US healthcare is overpriced, but that chart does not support this fact.

Thank you.  Feel free to contact them about methodology in their charts.  Is the price gouging is the bigger issue.

Wait, before moving on... do you understand what I am saying about that chart or not?

Of course - international comparisons are had and will always be an approximation.  The big picture remains the same - Americans are being overcharged and if it could sort out its health costs, the country's fiscal situation would be transformed.

No, this was not a problem due to approximation. It was a problem of either vast ineptitude or fraud. I just want to emphasize this, every time I see some statistic in the news and then go follow it up I find out the news was completely full of shit with that statistic. I don't remember the last time it didn't happen.

The point remains; Americans pay more and there is not a medical reason for their paying more.  If you are concerned about fraud or ineptitude, is that not the place to start?

No, the place to start is establishing a reliable source of information. So far we know it is not the washington post.

Fine.  When you find a source of information that says American pay less, do let us all know.  I can't wait.

Huh, that's not the issue. The issue is where that money is going and why.

*edit: see your thread title

A part of the extra goes to the vendors and the reason they charge Americans more is because they can.  A system where one person gets charged more than another just because they are in a weak negotiating position will always be efficient if the vendor has a patent based monopoly.

The "extra" is $700 billion a year... By vendors you mean medical equipment and consumable suppliers?

US population is 300 million or so.  The articles say that the average American pays $8000 per year compared to $4000 for the average of the other countries.

Does that not come to $1.2 trillion per year overpay?

EDIT: fixed my math.

Ah my number was from 2006. Your math is wrong somehow though. Total spending is like 2.5 trillion. Also I keep seeing people report this wealth effect:

http://www.kff.org/insurance/snapshot/images/OECDChart2.gif
http://www.kff.org/insurance/snapshot/oecd042111.cfm

So when calculating the "overpay" you need to accout for the US's high GDP per capita. So apparently it would be "expected" to be around 5k per capita, or $1.56 trillion. So by that calculation that's one-trillion "overpaying".

Then again some of the GDP numbers in that chart disagree with wikipedia by a wide margin:
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29_per_capita

Another thing to consider is that I have also come across people saying the US deficit is about $5 trillion a year if you count the money the government owes to itself to pay back the social security fund.

Edit: I read $1.2 trillion as $2.1 trillion

Edit2: Ok, I didn't read wrong

Sorry to interject, but you keep saying this


And considering our top causes of budget deficit are Social Security, war spending, and Medicare that supposedly gets way cheaper prices than private insurance, I don't see how just solving our medicine stuff will solve our country's fiscal situation. At most it's just one part of a much much bigger problem.

Medicare is not allowed to seek the best price.

$1.2 trillion per year is not small change.  If that was a tax cut to engineer a stimulus, or a fall in oil prices, celebrations would be in order.  An economic boom would be expected.

My bigger point is that a lot of posts here are from people saying "The US is doomed, buy guns and food and all democracy based societies will collapse real soon now."

The evidence is that the US is in robust good health.

For anything in US to change, Congress needs to agree to the change. Congress is split between two parties with diametrically opposing views on economics (free market vs social programs) and is gradually influenced by lobbyists and special interests that are spending millions to keep the status quo. Regardless of whether US is in good shape, nothing will change any time soon. Heck, how many decades did it take for Obama's healthcare reform to pass, which in the great scheme of healthcare is but an asterisk to the established system?

Maybe the US needs twice as much healthcare, because everyone's so dang unhealthy here?

Thats a good point.

So is the argument that America is richer so of course stuff is a lot more expensive.

However, American don't get more.  Assuming the drug is patent protected, an American who receives a tablet gets the same tablet a Canadian gets.  The American can be charged several times as much though.

America is richer than Canada.  But no-one argues that Americans should pay more for hard drives, or for shoes.  Why are tablets uniquely more expensive?

The argument of the article is that medicines are more expensive because a sick person is a poor negotiator and the US doesn't dictate prices the way better run systems do.  But I'm not so sure.  There is a big cultural thing here.  I came across this article today:
http://www.theatlantic.com/business/archive/2012/03/france-and-us-health-care-twins-separated-at-birth/254033/


You'd think someone who wrote that would have a view that the US should set prices by fiat fast.  But no.

A lot of Americans who think about this stuff are so steeped in free market fundamentalism that they can't bear to think of imposing that price control.  Paying the extra few $1000 for avoiding ideological confusion may be a valid trade-off.

Well make no mistake, the US healthcare system is by no means like a free market. This half-assed free market thing is probably the worst solution of all.

Thought I'd make the edit more visible. The insurance company (uncle's home insurance -- the can of shellac exploded in his basement, and my mom sprained her ankle on their steps) didn't require I call, was friendly and accepted my emails as proof-enough, and is sending a check directly to me. Even though I requested to waive my rights to potential future claims, the insurance company actually refused to let me waive that right and is willing to cover an additional $960 if ever required. Uncle's home insurance is also covering $1k of my mom's $1.4k cost, and she's going to attempt negotiating with the hospital to bring the cost down to $1k, so ideally she'll have no out-of-pocket expenses. I'll update as updates occur.  :)

ETA: Hospital reduced their obnoxious price down to $1.2k, only $200 out-of-pocket as home insurance covers $1k. Not terribly shabby.

1. The fact that Texas clamped down on malpractice lawsuits several years ago and hasn't seen any drop in medical procedure costs (malpractice suits by number have fallen to a mere fraction of what they were and malpractice insurance premiums did drop like a stone), which continue to grow at well above the national average, suggests this is not a significant factor.

2. The fact that pharmaceutical R&D budgets are dwarfed by marketing budgets suggest this is not the cause either.

3. The fact that other countries follow the same "treat first, worry about money later" policy suggests this is also not the cause.

Correct.  The article makes clear none of those three things matters from the point of view of the US citizens being price gouged.

Ok, fine.  :P

Do you have a source for this?

sure.

http://www.citizen.org/documents/Texas_Liability_Limits.pdf

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1635882

http://www.washingtonpost.com/blogs/ezra-klein/post/gov-rick-perrys-texas-medical-malpractice-law-what-it-does-doesnt-and-might-do/2011/08/02/gIQAlafZJJ_blog.html

This is pretty much what I found. The thing I was wondering is why they only include medicaire costs and not claim rates for procedures covered by commercial insurance or payed out of pocket.

http://i43.tinypic.com/24wrm8j.png

It looks like the relative cost of hospital visits is dropping, but imaging and testing is rising. Very interesting.

It looks like malpractice insurance only directly accounts for a small percentage of the total cost. The idea in limiting malpractice claims is more to reduce ordering extraneous tests.

I think what is going on here is a culture of defensive medicine. Defensive medical practice is "sticky". Once a doctor is trained, and used to running many tests, they are unlikely to change this practice just because of limited liability. We may have to wait for the next generation of doctors before we could expect to see an effect.

Well, when it's not coming out of the doctor's pocket, why NOT order all the tests that they need?

Why doesn't a mechanic check every single thing in your car when you get an oil change? Because people don't want to pay what that would cost. It is alot easier to replace a car than your health though.

It won't make any difference.  The cost comes from further up the supply chain.  Tinkering around with MDs incentives is an interesting pastime for legislators but it doesn't affect the cost issue to any meaningful extent.

You mentioned vendors earlier but then we got distracted. Where in the supply chain?

From the article:

So then the question is why are the insurers losing out so much.

Please read the article.  It takes you less time to read it than it takes me to copy paste the answers.

So it once again comes down to someone who wants data vs someone who wants a narrative that makes sense to them. If you are uninterested in the data just say so from the beginning from now on.

You have to know that most of these medical services are the cutting edge of technology and that technology is financed and researched in America.  It is like getting the PS7 while the rest of the world plays on the PS3.

How much would you pay to live forever?

I twould help you to read the article.  The US overpays but it gets the same stuff.

By "want data" you mean that you want to discuss the article without reading it.  That hardly seems useful.

Hawker, you must understand that bitcoinbitcoin113's research strategy is to scan and search for phrases in documents, so he can parse some special meaning from some particular phrase. I've noted this over and over in the discussion related to climate change. A solid and deep understanding of any topic is often counter to his goals.

Maybe.  Its a bit of a cheek to ask me to copy paste bits of an article that he is too lazy read.

No, I don't want to discuss the article. I want to discuss the data the discussion found in the article is based on.


This is not answered in the WaPo article. Unless I am missing something that article seems pretty dumb.

"Medical care costs so much in the US because prices are so high." ::)

Read the article.  Its answered in there. 

I just read it. The answer is not there.

I take it you missed this part then:

Really, how hard would it be to have actually read the article instead of childishly saying "I read it but can't find the answer."

That doesn't answer the question. Why are US insurer's at such a disadvantage?

Think a little how a small insurer is going to negotiate against a multinational company that has a patented drug the patient needs.  The insurer can't go elsewhere for the drug and can't walk away if it doesn't get a good price.

That makes sense, except some insurer's are pretty huge:


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

But they can't walk away.  If they refuse to pay, the patient dies and that sort of defeats the object.

Why can't they walk away (I mean at the point of offering a coverage plan)? In principle, any given insurance company can just refuse to cover certain eventualities they deem non-profitable. This may lose them some business, but that's what actuaries are for.

They will lose all their business if they are letting patients die.  People will pay every cent they have for an extra year of life and if 1 company can't offer it, that company will lose market share.

You can picture the adverts now.  "Insure with BigCostly Inc because unlike, SlighlyLessCostly Inc, we won't let you die." 

On the face of it this seems true, and it is probably impossible for the average person to make an informed decision regarding which medical care would give the most bang for the buck (hell, most of the time doctors are just making informed guesses). But would people really drain their children's college funds, etc if a doctor told them it would give them a 80% chance to stay alive an extra year?

The answer is yes but its off topic.  Google "usa medical expense last year of life" for stats if its a subject you are interested in.

The topic is why is private enterprise causing the expense.  As you say, its true that the insurance companies cannot negotiate as their marketing pitch requires them to offer the drugs and the manufacturers have patent protection.

In better run systems, the government sets the price. 

You're forgetting that, likewise, the drug and medical companies will lose ALL their income on some procedures if insurers chose not to cover it. So both, the insurers AND the medical providers will need to agree on a price. There's also the issue of all insurance companies declining some treatment if they feel it's unnecessary, so all of them let some people die. Finally, if it's just one medical procedure that isn't being offered, like, say, treatment and possible cure for Leukemia, if one insurance company advertises that they cover it while another doesn't, everyone who doesn't have leukemia won't care, and will stay with whatever coverage they had before, but everyone who does have leukemia will flock to this one company, and will likely bankrupt them as they are forced to treat more leukemia patients and raise their premiums to afford it, pushing everyone who doesn't have leukemia out.

That's the point.  They don't lose a cent.  The patient has to have the drug.  If the insurer can't get it, the patient will sell his house.  The drug company charges people buying without insurance even more so they win no matter what.

That's why the vendors are on 25% margin. 

if that's the case, then the ONLY option is government mandated prices, but that will very likely result in shortages; everyone can afford it, but it's not available because no one wants to make it. I just don't see how this can happen without going outside the bounds of market laws.Maybe if the goverment makes it using government owned factories and sells it only within the country borders...

In the US, the average cost per person is $7k/year, but look at the distribution of that cost:

http://www.ahrq.gov/research/ria19/ria19ch1.gif
http://www.ahrq.gov/research/ria19/expendria.htm

Correct.  National mandated prices are the only rational option.  Its the normal way of doing things in all advanced economies.

Oddly, the only country where the shortages that worry you occur is the USA.  And now you have looked at the economic incentives, you know why the US has drug shortages and other countries do not.

I still think you are jumping to conclusions. Why do you think healthcare spending has been rising exponentially worldwide for the last 50 years?
http://www.kff.org/insurance/snapshot/images/OECDChart3_1.gif

No - that's just you changing the subject.  Its a nice graph though.  You will notice that the US spends a lot more than anyone else.  Yet it has worse results.  You are wasting a ton of money and if that were fixed, the US deficit situation would be transformed.

I agree that the US spends more than everyone else. I have throughout this thread. What I am unconvinced about is that universal healthcare would fix this problem. I think it is more complicated than a single number can convey:


Is it normal for 5% of the population to be responsible for 40% of healthcare expenditure? I was looking for a chart like this for canada or the UK but haven't found one.

Also, I think that "cutting healthcare spending in half would fix america's deficit" is jumping to conclusions. It is not like that money goes down a black hole. It is being transferred from one type of person to another. To know if there would be an effect on the deficit we would have to estimate the opportunity cost of the money being spent on healthcare, know how much wealth is being transferred out of the country, etc.

Hawker, if I may ask, what kind of economics or business background do you have? I can't figure out if it's "none" or if you learned econ from someplace... "weird"... is the only way I can think of putting it. Basically a lot of what you are saying makes little to no sense when applied to the basic Supply/Demand on Price/Quantity chart.

Well the basic idea is that:

1) People will spend every last penny on healthcare

2) A large single payer/insurer will be able to negotiate better prices

Therefore, people will not make rational economic decisions when it comes to healthcare and government intervention is more efficient.

I call bullshit on your underhanded line of questioning which leads nowhere.

Irrelevant in every measure. Argue the points, not what you presume are the credentials or lack of credentials of the person you are arguing with. There rarely is no better expert than one who is passionate about a subject.

If you wish, I will personally engage you (with extreme confidence) in any of the following topics, even though I have no formal education in any of them:

- Computer graphics
- Philosophy of mind
- Climate change
- Filmmaking
- Environmentalism

Hasn't the money supply also been expanding exponentially worldwide for the last 50 years?

What's the rise in healthcare costs compared to say, GDP, over 50 years?

Thats cost to PPP, you will see a similar pattern if adjusted to GDP or GNP. You will also find there are different estimates for each of those values from different organizations (sometimes disagreeing by alot). I don't know the details.

I am sure a conservative Christian or a Green Peace environmentalist is VERY compassionate about their respective subjects, but I guarantee you that does not translate to the Christian's understanding of theology, anthropology, and biblical history, and it does not translate to the Green Peace environmentalist's understanding of climate, economics, or technology related to the environment. Marx and economists of the Soviet Union were very passionate about economics as well. That didn't mean the were correct.

My reason for asking is because this isn't the only place I've discussed econ with Hawker, and I am genuinely confused as to what his understanding of economics is.  If you wish me to be specific, the particular parts of his post which case me to (once again) raise an eyebrow were:

"National mandated prices are the only rational option"  (paying a price that's higher or lower than it's cost or utility is not "rational")
"only country where the shortages ... you occur is the USA" (how can things in a free market experience shortages?)

And many other claims in other topics, such setting a floor price for things (such as wages) does not translate to shortages for things (unemployment), that there is no such thing as competition in the market, and without price support, everything would cost close to 0 (or employers would pay EVERYONE only enough to keep them alive), etc. etc. etc. This even extended into a long debate about copyright industry needing government protection for price support, otherwise prices for all intellectual property will become $0. All of his points are exactly the same here; just replace "wages" with "drug prices" and "unions v.s. employers" with "government mandates v.s. free market insurance."

I am not asking for credentials, degrees, or certificates. I am only interested in where his understanding of economics comes from, because his ideas seem so diametrically opposed to reality that I don't even know where to begin to debate with him. I mean, is he a Keynesian socialist, a Marxist, someone who learned about basic economics and got confused about something somewhere, someone who is just guessing based on things learned by discussing this in forums, or is it just a language barrier issue? I don't know if discussions with him should be based on the assumption that this very basic and underlying tenant is true http://en.wikipedia.org/wiki/Supply_and_demand (http://en.wikipedia.org/wiki/Supply_and_demand), or if he uses some totally different system I'm not familiar with.

Again, completely irrelevant. Just because someone supposedly knows a lot about a subject does not mean that they don't. It might very well be the case that a particular Green Peace environmentalist does know a great deal about the subject matter at hand - or not.


His understanding would be exactly as he has portrayed it, possibly more so, but certainly not less. Same goes for your often ignorant understanding of free markets. It really doesn't matter what your background is. What matters are your ideas. Anytime you wish to be educated on that subject, let me know.


Sometimes overstating something is the only means by which to draw attention to the diametrically opposite and obtuse views of the audience.


Usually, that's a signal that you should start listening, at the very least. See my above statement.

Oh, and I'm dead serious about engaging in a discussion about free markets with you. Correct me if I'm wrong, but I seem to recall that your belief in them is so fervent, it borders on religion.

I would love to be educated on the subject, but I can't even start my education when I come to the table with the understanding that some abstract like a ¶ means the number 2, and someone else describes their idea from their understanding that a ¶ means the number 3. Until I understand what the other person's premise that they are building their ideas on comes from, I can't understand what it is they are actually trying to say.


If the purpose of the statement is to "overstate something" just to draw attention, as opposed to making factual claim, that only confuses things further.


Usually that's a signal to start listening. Sometimes that's a signal that I'm listening to a raving lunatic. That's what I want to find out.
My belief in mathematics and laws of physics is so fervent it borders on religion, too. I don't have a "belief in the free markets." I only have a basic understanding of how markets work based on certain specific laws of supply and demand, just as I have an understanding of algebra based on the specific laws of addition, subtraction, multiplication, and division.
In this case, I would love for you or him to educate me as to how, according to his claims, the following example is incorrect:


This is the 2+2=4 of economics. Econ101 day 1. Hawker has repeatedly asserted that this is not the case, that there will not be a shortage of pills, that there will not be a shortage of jobs, and that this law somehow does not apply. I want to know WHY. Why is this basic model wrong? I can't discuss mathematics when I base my understanding of everything on 1+1=2, and someone else understands it as 1+1=10. If I was asking where the econ background came from, it's only because that may shed light on why he believes it is wrong, or on the simple fact that he may not eve be aware of or understand it.

Of course. That's not what is at issue. I have no interest in disputing the mathematics. What I dispute is the desire and belief that the application of 2+2=4 to economics is better than the application of (2 + 2) * 1.012 - 0.2 = 3.848.

Nobody disputes the supply and demand curves. What you're missing is there are an infinite number of ways to shift the demand curve left or right and an infinite number of ways to shift the supply curve up and down.

Free markets, unmodified, in all their raw form, are not as wonderful as you think. They usually exploit, to the detriment of our future, because the market participants are individuals maximizing their own present reality.

Free markets should be constrained and regulated. Are they being constrained or regulated right now? Yes. Are they being constrained and regulated in the best possible way? Probably not. Are zero constraints and regulations the most desirable? Absolutely not.

In the case of your pill, a solution is to allow the government to tax things which cause people to need the pill, thus reducing demand for the pill (shifting the demand curve left), and then use that tax revenue to subsidize production of the pill, while moving the supply curve until it gets enough pills into the hands of those who need it.

With regard to the environment, taxes should be applied to things we want less of, and then the revenue should be used to subsidize that which we need more of which does not harm the environment.

Things we want less of (which are unsustainable and should be taxed):

- Natural resource depletion
- Wilderness destruction
- Pollution
- Inefficient products

Things we want more of (and should be subsidized):

- Super efficient products

Ah. if by 'universal healthcare' you mean state delivery, we are probably in agreement then. My objection to the US system is that it gives patent monopolies to the manufacturers and then any effort to enforce sensible prices is somehow called 'socialism'.  Many countries with fine health systems do the delivery privately.  The important thing is that it has to be close to free at the point of delivery and that drug costs are negotiated nationally so the drug company has to choose between abandoning a market and a profitable contract.

The odd thing here is that you are faced with reality in the form of a comparison of what Americans pay and what other countries pay. 

And your response is that this reality doesn't match Econ101. 

Really?

Does anybody know the best possible way? No. Does the US government mess up everything they try to regulate? Sure looks like it. Even if the intervention starts out OK, one unintended consequence inevitably piles on another until it is eventually worse than the "free market" result would have been. At least that is what I observe, if you have examples otherwise please educate me.


So, Government intervention has messed things up in the first place, getting us to the point where now we need further intervention on top to try to remedy the situation. US Drug patents make no sense. You have a 20 year window to take advantage and probably 10 years of this is spent in trials, so the rational thing for these companies to do is add something innocuous like an ester group on to mess with solubility and get the patent extended. Of course, the trials could have been done with the esterified prodrug originally (most of the time a drug can be improved this way), but it makes more sense for the pharm company to save it for later. Generic drugs are no more expensive in the US than elsewhere, but the pharm companies spend a ton on marketing to get patients and doctors "used" to the name-brand so they don't switch over even after it is off patent.

I'd like to say we could get rid of drug patents all together, but I can't see how this could be compatible with making the recipe public. So, drug recipes would have to be trade secrets, and even then wouldn't usually be that difficult to reverse engineer. Unless someone devises a way around that problem, perhaps a nationwide insurer is the best solution to drug distribution. Before concluding that, however, I would also be interested in how the government regulates the insurance industry, forcing them to cover certain conditions, etc and what effects that may be having.

Anyway drugs are still only like 10% of total healthcare spending. I want to return to this, which indicates the problem is more complicated:

http://www.ahrq.gov/research/ria19/ria19ch1.gif
http://www.ahrq.gov/research/ria19/expendria.pdf

This chart says that $1 trillion per year is spent on the healthcare of 15 million people in the US, then $1 trillion is spent on the other 300 million combined. It is clear we should focus on what is going on with this top 5%.

As you say, the issue is more complicated that drug suppliers.  The US has a work permit system for everything from barbers to real estate agents.  It costs less than 2% to sell a house in the UK and its about 6% in the US because of the work permits needed to be a broker.

Not sure why you are worried about 5% of people getting most of the expenditure.  One would assume that they are dying and most of the health money ever spent on you is normally spent in the last year of your life.

Anyway, my central point remains the same.  People post that the US is on an unsustainable course.  At any point, the US can transform its economy by controlling health costs.  Its not easy as the country seems to be dominated by a rentier class but it can be done. The sad thing is that the arguments against controlling costs are always the "free market will provide all we need" blather. 

Thank you! That makes a whole hell of a lot more sense than "set a price ceiling and don't worry about deficits" or "read the article." My confidence is restored.

I don't get it.  Once a person needs a drug, they need it.  You can't change the demand unless you kill them. 

I think that's the whole issue.  At what point do you let a person die because their healthcare is costing too much?

I guess in this case demand only goes up to a point where a person can afford it, or at a point where they believe their life is worth more that their family's savings.

By the way, since I used to sell insurance and understand that it is VERY much influenced by economies of scale, I'm all for a single, or just few, monopolies owning all medical insurance. The more people in an insurance pool, the cheaper it is per person (may be another reason why it costs less in other government provided healthcare countries) . I'm just not yet convinced as to whether that insurance should be government owned, a government regulated single monopoly (like power companies), or totally free market monopoly.

There is no need for government ownership.  The French system in the Atlantic article is close to 100% private. 

What's needed is the government to backstop price negotiations saying "If you guys can't agree a price, we will step in and impose one." 

I'm just worried that, in our recently global economy, that may result in the drug company moving most of their business to unregulated locations, and only selling the bare minimum to the newly price-ceiling imposed ones. But, were again back to square one, and this is an opinion on what may happen, not a fact.

You really think they will stop selling to the rest of the world and only sell to the US?  After all these years of the opposite where the US has periodic prices shortages and the rest of the world has steady supply.

Or you think the drug companies will carry on selling to Canada and the like but boycott the USA, the richest market for drugs of all kinds in the world?

Compare those risks with the certainty that under the present system there people suffer needlessly and then get price gouged. 

Anyway, we are as close to agreement as we are likely to get so I'll stop :)

Humanity, unconstrained and unchecked: http://www.economist.com/node/21549096?fsrc=scn/fb/wl/ar/overtherainbow

Agreed  :)

So, in the US, each year $1 trillion dollars is spent to extend peoples lives one or two years? Does this occur in other countries? I don't understand why you don't find this interesting.

There is no correct point at which to give up the fight.  I've an aunt going through it now and she's effectively given up before she even entered hospital.  I saw someone I love die and whenever the morphine was wearing off he would start screaming for someone to save his life.  He would have given everything he had and sold his soul for even a week more of life.  There is no right answer.

Americans pay more because they are charged more for the drugs and the doctor has the option to say "Get your check book."  In the UK its free at the point of delivery so that doesn't happen.  Fix the pricing problem and you fix the end of life costing so much problem.

http://www.nytimes.com/2012/03/13/business/global/india-overrules-bayer-allowing-generic-drug.html?ref=business

Here is an example of how governments are able to encourage fair pricing in a way that private enterprise cannot.


Of course, as well as the German drug company, one other body sees this as a defeat.


So not content with price gouging the American public, the US intervenes in India to ask that a German company be allowed to price gouge the Indian public. 

It's kind of ironic though. Patents encourage R & D. Would Bayer have invested in the R & D if they knew their patents were going to be ignored? Is the generic company going to pay Bayer royalties? Does the price the generic company is going to sell the product at account for the R & D costs?

Do you want to see well made movies where a great deal of effort goes into making them? Then make sure the producers are compensated for their efforts by not allowing copying.

I'm a little surprised at the irony here from both sides. Rassah wants to ignore movie copyrights, but likely thinks Bayer should charge what they want. Hawker thinks copyrights should be supported, but says screw the patents.

At least I'm consistent. Don't steal and distribute copyrighted material. Give the company that did the R & D their fair share.

I'm fairly consistent, too. I think Bayer should charge what they want, but also that a generics manufacturer should create whatever they want, and charge whatever they want, too. People who want brand name can pay for Bayer, and people who want generic patent infringing pills can pay for the cheaper ones. Bayer can make back their R&D expenses by focusing more on service, customized drugs, and by providing overall health maintenance (boutique medicine?). Since they will already have the drug manufacturing infrastructure in place, they can really underprice any generics manufacturer, and still keep customers by showing they they are competent, understand their products, and provide a better service. Much like it not really costing anything to set your own broken bone and stitch your own cut, but people still pay people who know what they are doing to take care of that.

Please read the article.  Of course Bayer gets royalties - the Indian government isn't stealing their IP.  Its merely enforcing the terms of the patent monopoly. 

I'm totally Ok with that.

Interesting, lets take Sorafenib as an example. I know nothing about it besides reading the wikipedia page. From that I have found it non-specifically inhibits multiple tyrosine kinases (tyrosin kinases mostly play important roles in pro-growth and pro-replication signalling cascades). I can tell you straight away that it is not specific enough, it will lead to messed up skin, mucus membranes, immune system, and blood vessels. All of this will impede living a fulfilling life, very similar to old school chemo. For most patients, it will not be effective in the long run (the dose needs to stay low to limit side effects). The low dose will give cancer cells opportunity to mutate to metabolize the drug or become "immune" to it. Yea sure, if dosed just right it might work (cure cancer) for any individual patient, but it is a long shot. This is what current biomed science is capable of producing right now. We need more data about each patient (ie the specific mutations present in each tumor), better ways of getting this data, and to streamline the drug development process so that we can design personalized drugs.

What you get with this strategy is people kept alive slightly longer (perhaps longer than they should be, but who am I to say) so the doctors can try something else. This is not necessarily good, and definitely very expensive. On the other hand, this practice is generating interesting data that may lead to a breakthrough.

Is this occurring more often in the US than in other countries? Is that what accounts for half of healthcare expenses going towards 5% of the population?

Lets assume you only get healthcare when you need it.

There are some born with disabilities and they probably consume more healthcare than anyone else.

Then there is the rest of us.  We consume some care immediately after birth, we get some immunisation and most people have at least one accident/minor illness that requires hospital treatment.  Then we get seriously sick, need a lot of care and we die.

Isn't it obvious that the bulk of the medical expenses will be spent in that final short period?  That's when you need it and if you are not ready to die, that's when you will throw money at the doctors to save yourself.  As the old saying goes "You can't take it with you."

Perhaps I've been watching TV too much (Royal Pains), but could part of the reason that 5% spends so much be because 5% is very very wealthy, and spends WAY more than average to get the best care they can? (Even if it's possibly a huge waste of money)

No doubt, but is that bulk larger in the US than elsewhere?

15 million people account for $1 trillion in expenses. What percentage of these people are costing over a million dollars per year, 100k per year, etc? How much are people in similar circumstances being charged in other countries? Does the treatment/care differ? What is a reasonable amount for society to spend?

I know its the news, but for a quick estimate:

http://www.sacbee.com/2012/03/11/4328036/million-dollar-hospital-bills.html

So as an estimate for the entire US, 7% of $1 trillion comes to 70 billion, while 0.2% of 15 million is 30 thousand people... for an average of $2.3 million per person in this group. That is just hospital bills though. We need to know what is spent on outpatient care, etc.

Edit= Actually we should be accounting for what percentage of the total expenditure goes to "hospital stays", which is 30-40%. This gives us an average of 900k or so for each person in the "million dollar" group. So something is wrong with the stats or estimate.

Incorrect. It's more like this:

1. Standard medical treatment for minor to moderate things which happen several times such as: sliced finger, concussion, broken arm, skin irritations, etc. Many people do nothing about these because they can't afford them. These things add up.

2. Expensive events which typically happen once or twice or three times in a lifetime and can extend life thirty years or more, such as: appendicitis, breast cancer and mastectomy, triple bypass surgery, skin cancer removal, etc.

3. End of life care. Very expensive.

Now, scenarios 1 and 2 are simply not affordable to a huge portion of the population, often with health insurance, and definitely without health insurance. In such situations, they don't get treatment and die. Those who do get treatment go on live life for twenty, thirty, or even forty or more years.

The percentage is much the same everywhere as far as I know.  I don't see how it could be otherwise.  When will you need medicine?  When you are sick.  When will you be sickest? In the period before dying.  So that's when you will have the bulk of your medical costs. 

What's unusual about the US system is that it costs a lot more for the same treatments. 

This is what the original Wapo article said.

Well its what everyone says - its true.  The point of the WaPo article is not that the US pays more but that the reason it pays more is that the US government doesn't set a price cap and allows "the market" to set the price. 

Same is true of UK and the rest of the developed world.

Read the article and try to make an informed comment.

I think reading the WaPo article makes you less informed. I guess it got me looking stuff up though. I need to get back to this eventually, the 5% thing is interesting.

High health care costs are 100% the fault of government intervention. why should it be different from any other industry? computers get cheaper every year because the government doesn't have it's tenticles all over it; distorting resource allocation. The market in health care is far from free, that's the problem.


related:

John Stossel
http://www.youtube.com/watch?v=3WnS96NVlMI

Peter Schiff
http://www.youtube.com/watch?v=u6eIBvrMY5w

Read the article please.  Its pathetic to post platitudes without informing yourself of the facts.

The government mandates that employers provide insurance to employees. People can't choose what they're covered for. They'll claim on things they otherwise wouldn't have just because they're already paying for it. It also reduces competitiveness in insurance.

Malpractice legislation means that doctors have to raise their prices to cover the risk of being sued.

Medical research is heavily regulated. Instead of just bringing a viable product to market, companies have to pass a ridiculous set of expensive, overkill double blind studies for many years just to get fda approval.

Patents grant a monopoly on drugs leading to monopoly prices.

Medicaid and Medicare hides the true cost of medical insurance from the consumer. socializing the cost is a tragedy of the commons situation, which leads to poor resource allocation.

God know what other laws are on the books that I don't know about.

So yes, “it’s the prices, stupid.”, but the prices are the governments fault. What America and basically every socialist country in the world needs, is a competitive free market in health care. Voluntary trade results in a vastly more optimal allocation of resources than any violence based solution the government can come up with.

Explain to me why electronics keep getting cheaper, but health care keeps getting more expensive.

Also, another take on this:
http://mises.org/daily/4434

asdf - the problem is the US is that your government refuses to control prices.  Even now, politicians are competing to ensure that they do most to stop price reductions.

http://www.nytimes.com/2012/03/23/us/politics/house-votes-to-kill-a-medicare-cost-control-board.html?ref=health

Every other well run country does control prices so Americans pay more for the same service.

You are of course correct that health is not a free market.  But most Americans are told that it is a free market! You end up with confused folk making slogans like:

http://4.bp.blogspot.com/_dDBCv4k4awU/S86ryvu59cI/AAAAAAAAAdE/NU6SUauTjok/s1600/s-MEDICARE-large.jpg

:)

The 2 point of the article are that

(1) Americans get particularly shafted and that
(2) the people responsible insist that any control on their pricing is "socialised medicine."

I've heard of these people. They must be plants.

I mean that is drone behavior if not. I dunno, in my time I've met some drones and people who just didn't consider what they were saying (like "credit unions are for farmers"...) but that is just pure drone if true.

Most people don't make the connection that if they are on Medicare or Social Security, they are on welfare.  To call them "drones" or "plants" is fun for you but it doesn't get around the fact that Americans are being charged vastly more than anyone else for medicines.

Asdf forgot the one big point I especially have an issue with, which is that "healthcare costs are high" is just a nebulous feeling most people have, without having concrete evidence for it. Specifically it's because companies are incentivized to cover a huge portion of insurance premiums for their employees for tax purposes, without even being required to let them know how much, and as a result, most employees believe their health insurance costs them something like $60 to $160 a month, when the actual figures are close to $300 to $450 a month. That money still comes out of the payroll budget, and I strongly believe that if the practice was ended, and instead all employers were forced to make all employees buy their own insurance while giving them all the money they are due (I.e. everyone gets a raise equivalent to the amount of insurance premium subsidy they were getting), not only would everyone in US get an extreme shock of seeing just how much their health insurance actually costs, and get motivated to do so something,  but they will individually start shopping for the best prices and services, driving insurance costs way down really fast.
Then the only question remains is do we have an individual mandate, forcing everyone to have insurance, or do we pass a notice/law that hospitals are not required and should NOT treat anyone unless they or their insurance can pay.

It is not the same as welfare. It is like a saving account that the government keeps for you. And yes someone who holds a sign indicating a failure to realize that medicare is run by the government is either a plant or a drone.

My understanding of the US system is that if you get sick at a young age or injured, you get Medicare and Social Security.  You may never have done a day's work in your life.  Its welfare.

Really, anyone who thinks that a system that takes money from the state is not welfare is, well, I don't know what to say.

It is more confusing than that. How much you get paid out is also related to how much you paid in. The money is not distributed on a purely needs basis.

I would agree this is "welfare", but many people would not. There is a stigma against welfare.

Just like there is a stigma to "socialised" in connection with medicine perhaps?  In both cases, there seems to be a terror of admitting that using the state to achieve social aims is legitimate.

So do you not agree that any of the interventions I mentioned drive up the price?

You think that the cause of high health costs is the fact that there isn't enough price fixing? nothing distorts the market more than screwing with the price mechanism. Price fixing always results in shortages (if too low) and surpluses (if too high). If price fixing worked, we'd all be speaking Russian right now.

You ignore the intervention that caused the high prices and then advocate more intervention to cancel out the first. How about removing the cause instead of treating the symptoms.

"Government is good at only one thing. It knows how to break your legs, hand you a crutch, and say, 'See if it weren't for the government, you couldn't walk.'" - Harry Browne

asdf - what you ignore is that government gives the drug manufacturers patent monopolies and then says there is a "free market" when it comes to pricing.  Take a nanosecond to think about that.  People are sick who will die if you don't get the drug and they have to negotiate with the drug manufacturer.

Are you really saying that, unlike all other advanced economies which have got it right, Americans are spectacularly stupid and would be unable to regulate those prices?

I don't ignore this fact, I'm just saying that the patent itself it one of the problems. If you make a law and then a consequence of that law is that you must fix prices, then you really need to rethink the viability the original law.

It's the same with deposit insurance. The gov guarantees deposits, eliminating risk of bank runs, then it needs to "fix" reserve requirements to stop the banks from creating infinite loans.

It's just making laws to fix the problems created by other laws. The gov removes risk and removes competition, which are natural market regulating mechanisms and substitutes it with it's own misguided regulations. Just let the market work!

Patents won't go away so that is an argument for doing nothing and allowing the rentier to carry on overcharging.  

Can I suggest you look at the fact that other countries, which also have the same patents, have effective health care services?  As the WoPo article shows, there is a reason why America uniquely doesn't and its that, uniquely, the US gives patent monopolies for drugs and then says there is a "free market" for their prices.  

I never claimed that patents would be eliminated any time soon. I just saying that the government is the source of all the problems and it is. The health care system would work just as efficiently as the electronics industry in a free market environment.

Sure, price fixing may help, but it's just treating symptoms without curing the disease.

At least we are agreed on how to fix the price gouging :)

Anyone remember what flying was like back before 1980's, when prices were fixed?

I hit my thumb with a hammer once.  It really hurt.  Does that mean people should not use hammers ?

Not to hit thumbs, no.

lol so then don't use price control to raise the prices.

Consider also:

http://www.mckinsey.com/Insights/MGI/Research/Americas/Accounting_for_the_cost_of_US_health_care (http://www.mckinsey.com/Insights/MGI/Research/Americas/Accounting_for_the_cost_of_US_health_care)

The US's health care costs exceed income-adjusted OECD averages the most in:

1. Outpatient care (by 436 bil, or 51%), which includes many discretionary services. It's been shown http://www.overcomingbias.com/2007/05/rand_health_ins.html (http://www.overcomingbias.com/2007/05/rand_health_ins.html) that medical spending actually has zero marginal value, so much of this is likely just plain unnecessary.
2. Drugs and nondurables (by 98 bil, or 39%), which is largely the work of the patent system. Notice how relatively small this category is (145/2053 billion total spending).
3. Health administration and insurance (by 91 bil, or 63%), which is partially the work of the excessive spending on advertising but is also connected to the issue of litigiousness.

http://mdsalaries.blogspot.ca (http://mdsalaries.blogspot.ca)

The US has the highest medical salaries (http://mdsalaries.blogspot.ca/ (http://mdsalaries.blogspot.ca/)) for general practitioners and nurses and the third highest for specialists - for this some blame licensing (cheap doctors from Vietnam can't just import themselves here) and many cite the issue of the US's higher educational system (medical school costs a lot of money that students don't have).

Not to any sort of relevant degree, as Texas has shown us.