Why conventional wisdom on health care is wrong (a primer) (2020)

Well, that was interesting.<p>What I&#x27;m unclear on is whether &quot;health spending&quot;, in this analysis, is defined as money paid to care providers such as hospitals and dentists, or money paid by citizens for healthcare. Because you&#x27;ve got insurers and PBMs taking profit.<p>The ratio of those two numbers is the efficiency of the American insurance model. How does it compare to the administration of a single-payer system such as the NHS?<p>Until I see some data indicating otherwise, I&#x27;m going to look at my £200pcm national insurance and my £9.90 prescriptions and my free ambulances, and Americans&#x27; $500pcm insurance and their unlimited prescription costs and their four-figure bills even when insured, and I&#x27;m going to continue to believe that Americans are punching themselves in the face.

GDP per capita and other &quot;per capita&quot; metrics are also unreliable metrics for household income, as they suffer from the same issue as averages. This is a common trap that is done in population statistics, as mean and averages are always easier to calculate and reduce the complexity of the calculations.<p>Large wealth inequality makes GDP per capita and average household spending not representative of a real-world median household. If healthcare costs have outpaced median income but kept up with mean income, that is a MASSIVE societal issue.<p>Most of the plots and arguments in the article overlook this, so I don&#x27;t trust the arguments much.<p>However, it is still interesting how strong the correlations are. It gives some interesting insights into what goes into the cost of running hospitals, I suppose.

This analysis in the end doesn&#x27;t show what it claims to show and actually proves the reverse - US Health care spending <i>is</i> much larger than other countries, it eats up <i>significant</i> fraction of productivity gains in other sectors (rises faster than income as shown by the 1.8 slope in the very first graph), and <i>does not</i> lead to better health outcomes. It actually proves we would be better off if we spent less and focused on lifestyle.

Summarized into 11 bullet points by Claude:<p>Here&#x27;s a summary of the key points from the document in 11 bullet points:<p>• Health spending is primarily determined by income levels, with higher-income countries spending more on healthcare.<p>• The rising health share of GDP is driven by increasing quantities of healthcare consumed, not primarily by price inflation.<p>• Technological advancements and intensity of care are major drivers of increased health spending.<p>• The U.S. health system is not uniquely inefficient; its high spending is consistent with its high income levels.<p>• Commonly cited utilization indicators do not show that the U.S. uses less healthcare than expected given its spending.<p>• Physician incomes and hospital profits do not explain the high U.S. health spending.<p>• The U.S. healthcare workforce has grown significantly, reflecting increased intensity of care rather than just higher wages.<p>• America&#x27;s mediocre health outcomes are explained by diminishing returns to healthcare spending and lifestyle factors like obesity.<p>• Rising healthcare spending does not mean reduced consumption in other areas due to productivity gains in other sectors.<p>• Price comparisons between countries are often methodologically flawed and do not accurately reflect true healthcare costs.<p>• The income elasticity of health spending is high, meaning people spend proportionally more on healthcare as they get richer.

Nothing makes sense.<p>One prescription I get is $1.30, another is $85.<p>My son goes to a specialist and all $395 is paid by insurance, while my wife goes to a different one and we pay $86 out of pocket after a $14 &quot;insurance discount&quot;, insurance pays nothing.<p>They&#x27;re both in-network. I save my old antibiotics and such because it takes so long to get into urgent care, and it&#x27;s expensive, and I can&#x27;t go to my regular doctor for a sinus infection because it takes two weeks to get in.<p>Thankfully I pay $0 out of my check for Blue Cross since my employer pays for it. I just have co-pays, deductibles, etc

The big problem with modern health “insurance” (as opposed to catastrophic major medical insurance, which is true insurance), is that it prevents the formation of of health care businesses that cater to different socioeconomic strata. I most other businesses, there are usually product offerings at different price points, eg Ford Fiesta vs Ford Raptor R, bespoke steakhouses vs Denny’s, Wal-Mart vs Nordstrom, etc.<p>There are some hard to discover offerings in healthcare but overall very little differentiation.<p>Why don’t we have multiple chains of monthly subscription diabetes centers, for instance? If it weren’t for insurance and over-regulation of every aspect of healthcare, we would see market flourishing in the US as there is an over abundance of chronic illness.<p>I sympathize with the PoV that we want someone else to pay because it’s expensive, but another way to solve that would be to remove all the regulatory capture and industry collusion and predatory middlemen (PBMs I’m talking to you) and let new delivery mechanisms evolve. Let supply adapt to demand.

This is fine as a high level economic discussion, but I think it misses the point of the complaints from actually US consumers: when I consume healthcare as an individual I am paying with a blank check, and I am therefore likely to be tricked into consuming more health care than I would otherwise choose to afford, perhaps to a ruinous degree.<p>I think ordinary consumers care much less about whether their country spends a nominal share of GDP on the heath sector, than about whether they will be unexpectedly bankrupt by consuming health services, and this is why people are actually mad.

A quick reading of the summary shows a lot of debunking and just one item that explains the bad health of North Americans:<p>Diminishing returns to spending and worse lifestyle factors explain America’s mediocre health outcomes<p><a href="https:&#x2F;&#x2F;randomcriticalanalysis.com&#x2F;why-conventional-wisdom-on-health-care-is-wrong-a-primer&#x2F;#rcatoc-diminishing-returns-to-spending-and-worse-lifestyle-factors-explain-americas-mediocre-health-outcomes" rel="nofollow">https:&#x2F;&#x2F;randomcriticalanalysis.com&#x2F;why-conventional-wisdom-o...</a>

If I&#x27;m understanding correctly, by &quot;income&quot;, this article means &quot;actual individual consumption&quot;, which is the amount of money spent by a household. Thus, the article is saying that for countries where households spend more, they spend more on healthcare. Given that healthcare is a huge fraction of household expenditures (almost 20%), this seems tautological. Am I misunderstanding something?

N=1, or, Story Time!<p>In 2017 my wife and I were living in Portugal for several months. When we needed to refill her prescriptions, our short-term rental host said, &quot;Go to the ER.&quot;<p>Backstory: we&#x27;re well familiar with ERs in the U.S. Due to various conditions, we&#x27;ve been to at least a dozen ERs a total of perhaps twenty times. For anyone who doesn&#x27;t know, unless you are actively dying, visiting the ER in the U.S. is sloooow. The average time to see a doctor, in our experience, is about an hour.<p>So we replied: &quot;the ER? seriously?&quot;<p>He assured us it would be fine, so we walked ten minutes to the ER and signed in. We had barely turned in the history paperwork when they called us to go back. No preliminary check-in with the nurse -- straight to the doctor.<p>She said, &quot;Why did you come to the ER? We could have been busy and you would have had to wait.&quot;<p>We explained how our host had assured us this was the best way to go, and that the ER would take care of us.<p>The doctor nodded and said, &quot;Sure, I&#x27;ll sign for the prescriptions, but just remember it might take more time the next time.&quot;<p>We went back to the front desk. Remember, we had no travel insurance, this was full freight. &quot;That will be twenty-eight euro.&quot; We happily paid, and walked out the door, prescriptions in hand, less than 30 minutes after we walked in.<p>Bonus: the cost to buy the prescriptions, again with no insurance, was <i>less</i> than the co-pay in the U.S. with employer-healthcare.<p>N=2: When my daughter was visiting me in Bangkok, she got a bit of a gastro issue. Same as in Portugal, we had no insurance for her. I took her to Bumrungrad, one of the best hospitals in Thailand. We were in and out in under an hour, including picking up the prescription, and the total cost was under $100.<p>I&#x27;m not trying to rebut the article, just throwing out some details.

&gt; Health spending is determined by income<p>Whoa. That&#x27;s eye-opening. If country X spends less than country Y, rather than surmise that country X is more efficient with their healthcare spending we might want to look at whether country X has less per-capita income than country Y.<p>This makes sense, though it&#x27;s very surprising. I&#x27;ve seen so much commentary here about how much better the Europeans are at dealing with healthcare than us Americans...

I skimmed what I can while on break. What I didn’t see is something I’ve heard from doctors but can’t verify. It’s that insurance companies require them to do extra procedures or have extra employees they don’t think they need. Some who didn’t take insurance say it keeps their cost down.<p>One told me the insurance companies incentivize him to treat patients like an assembly line where cash only lets him spend one on one time with customers. He also might treat people for several things on the same bill which he claimed he’d have to itemize and charge separately for with insurance.<p>So, do people here have specific examples (esp links) to support or refute those anecdotes? If they were true, it would mean insurance rules were driving much of the cost. Looking at their causes, my first guess would be how they respond to losses from both real malpractice and greed-driven lawsuits. I can’t imagine that costs aren’t impacted by this with all the lawyer ads I see for suing insurance companies. ;)

If anyone, like me was looking for the UK and the NHS on those graphs - it&#x27;s labelled GBR (I guess), assuming that&#x27;s not Gibralter

I notice that the terms &quot;debt&quot; and &quot;bankruptcy&quot; (and their variants) appear nowhere in the article.

Nope. The price of something is somewhere between the cost of production and what the market will bear (with exceptions not relevant here). The well-to-do in the USA will bear high prices, and The State doesn&#x27;t care about the rest. This is a bit of agi-prop for the health insurance industry. The graphs go up on the right: good; and down: bad. Arrrrr!!! There MIGHT be content, but that is not the message. And btw the &quot;(a primer)&quot; in the tag line is (according to this linguist) setting you up to think you&#x27;re stupid if you don&#x27;t get it.

Healthcare became like public education in the USA, a political ideology that subverts the body politic to support jobs for people who do not have real skills but whose great granddad had 33 degrees in secrecy. In other words it is entirely a support system for the least of the privileged, while also paying huge sums to the owners and &quot;providers&quot; of those systems (textbooks, syringes, insurance, etc).<p>If U.S. Americans did not have an irrational verve for education as the supposed panacea of democracy, there would be no public education system. If they did not believe the intense pseudoscience of the medical industry, they would not care about health insurance.<p>But as they are under the sway of such false conscience, the system of gradual decline called inflation pays for unqualified people to keep a livelihood at the expense of a misled and deluded public. That expense is not only the costs of running these systems but their detriments to the health and education they pretend to treat.<p>The increased spending on healthcare is no different than spending more on education or the &quot;homeless problem&quot;, it is simply a politics of shifting more funds into systems that are legally obligated to pay high sums for a lot of nothing. It only appears different than education because we pretend its not completely wrapped up in public spending and politics like education is. Obama made sure that healthcare would hold such a place as education in the system with the reforms to healthcare, and the people applauded this.<p>High incomes paying more for healthcare is simply those who can afford it using the system that ultimately pays for the health and education of the rich at the expense of the health and education of the poor. After all we know that nobody who is rich is paying any of their healthcare bills, they have excellent health insurance for that.