It is more complicated because the ruling classes have decided that we all must have choice and that if we decide to choose to house and feed ourselves rather than buy health insurance then we're blissfully choosing to forgo treatment when we have that heart attack or break a leg or whatever. Since we made a choice, we're not gonna go to the emergency room and have our lives saved or get that leg splinted only to run up a bill we could never pay. Of course, the taxpayers (yes, I'm one of them too) will pay it and we'll can all go back to pretending that we have the BEST health care in the world because we all have choice.
6
I knew Obamacare was going to be a major headache after I learned it was "mandated".
4
There are too many getting rich off the health care system who are not providing any care.
18
Is changing the mainstream American diet and culturally acceptable lifestyle habits really so complex?
3
We are the only country in the developed world that cannot provide acceptable healthcare to every citizens. What does it say about our elected officials who suppose to work for us and serve our interests? Mr. Mankiw's writing is confusing and misleading. For one thing, consumers do know what they need and want either from personal experience or through other people's experience. It may take time to find it out. We may not be smart, but we are no dummies.
12
Religion Can be an Externality:
By Letting Catholics Compete
Trump Can Fix Obamacare Without Congress
Catholic institutions operate universities, hospitals, life insurance businesses, credit unions, elementary schools, etc. but are prohibited from operating health insurance companies that reflect the Catholic idea of doing no harm. Somehow the government got away with imposing insurance business mandates that lock out Catholic competition because a handful of elective procedures relating to abortion, transgender surgery, contraceptives, etc. It is obvious that Republicans had no say in the design of Obamacare but many Democrats may also not have seen the anti-Catholic consequences. After-all, it was the executive rule-making, not the law itself, that imposed the handful of insurance mandates which violate Catholic teaching in a serious way.
Because the problem has been created by President Obama’s executive rule making, it could be solved by President Trump’s Executive Reform. Imagine Mr. Trump enforcing the Constitution and defending the conscience of millions of medical professionals by changing the regulations to allow the option of health insurance policies and mandatory health insurance requirements that “do no harm”.
Let “no-harm” health insurance policies be an option for individuals and businesses who want it. Rest assured that the additional competition will also “do no harm” and a lot of good to the health insurance and health care markets.
By Letting Catholics Compete
Trump Can Fix Obamacare Without Congress
Catholic institutions operate universities, hospitals, life insurance businesses, credit unions, elementary schools, etc. but are prohibited from operating health insurance companies that reflect the Catholic idea of doing no harm. Somehow the government got away with imposing insurance business mandates that lock out Catholic competition because a handful of elective procedures relating to abortion, transgender surgery, contraceptives, etc. It is obvious that Republicans had no say in the design of Obamacare but many Democrats may also not have seen the anti-Catholic consequences. After-all, it was the executive rule-making, not the law itself, that imposed the handful of insurance mandates which violate Catholic teaching in a serious way.
Because the problem has been created by President Obama’s executive rule making, it could be solved by President Trump’s Executive Reform. Imagine Mr. Trump enforcing the Constitution and defending the conscience of millions of medical professionals by changing the regulations to allow the option of health insurance policies and mandatory health insurance requirements that “do no harm”.
Let “no-harm” health insurance policies be an option for individuals and businesses who want it. Rest assured that the additional competition will also “do no harm” and a lot of good to the health insurance and health care markets.
3
My wife is from Spain. Here in California we have health insurance provided through her employer with a small monthly payment. She says there is no comparison. Spain is much better in her opinion. Her mother recently needed hospitalization and a gall bladder surgery. She paid nothing for that service.
I would really like to know why the U.S., which likes to think of itself as the best country in the world, cannot create a health care system as good as Spain's, which until 1975 wasn't even a democracy?
I would really like to know why the U.S., which likes to think of itself as the best country in the world, cannot create a health care system as good as Spain's, which until 1975 wasn't even a democracy?
38
Singapore, France, Germany; all countries that have figured it out in terms of effective and efficient health care systems. So if US economists claim they it cannot be figured out, it says more about US economists than about the problem itself.
On a side note, "single payer" concept is starting to be used along the same lines of Brexit concept before the UK referendum: something nebulous, without practical details on how it can be done,.
As described in information provided in next links, most of the rest of the developed world doesn’t use ‘single payer’:
http://pleasecutthecrap.com/most-universal-health-care-is-not-single-payer/
http://www.rstreet.org/op-ed/no-the-rest-of-the-world-doesnt-use-single-...
http://www.businessinsider.com/what-can-the-us-learn-from-the-french-hea...
On a side note, "single payer" concept is starting to be used along the same lines of Brexit concept before the UK referendum: something nebulous, without practical details on how it can be done,.
As described in information provided in next links, most of the rest of the developed world doesn’t use ‘single payer’:
http://pleasecutthecrap.com/most-universal-health-care-is-not-single-payer/
http://www.rstreet.org/op-ed/no-the-rest-of-the-world-doesnt-use-single-...
http://www.businessinsider.com/what-can-the-us-learn-from-the-french-hea...
11
The most important cause of high health care costs was left out. How can health care costs go down when the purchaser of healthcare (private insurance companies) wants costs to go up? The higher the costs, the higher the premiums collected.....profits are linked to the total amount collected. If insurance companies wanted to control costs, they would have been advising patients where to find low cost care.
15
Mr. Mankiw asks "Why is health care so complicated?" when he should be asking "Why is American health care so complicated?" The latter is a worthwhile question. Other developed countries have systems which are by most metrics better than America's. America is over-all a wealthy country; many of its people are intelligent. What makes America so special that it can't figure out how to provide decent health care to its citizens without worrying them half to death? Perhaps the answer lies in the fact that Mr. Mankiw could not even think of asking the right question. Americans are special because they're convinced they're special.
39
No discussion of healthcare policy can so lightly discuss the idea of the mandate and the objective of universal coverage. This is because it is proven by the experience of every other developed country that universal coverage - with all who can paying in is a key element of a working plan. Without that compulsion care is too expensive for those who get sick which of course can be anyone at any time.
The other common feature everywhere except the US is tight price controls.
Both these key, necessary features are in opposition to many people's ideology, especially Congregational Republicans and that's the reason they cannot after many years propose any plan that is not destructive.
The other common feature everywhere except the US is tight price controls.
Both these key, necessary features are in opposition to many people's ideology, especially Congregational Republicans and that's the reason they cannot after many years propose any plan that is not destructive.
25
The US Government should pay the tuition for all medical students if they would guarantee 7 years service at less than current wages. Flood thew market with employees. Get the AMA out of the way to build teaching hospitals.
14
Another major issue is that prices for services are not easily discoverable, comparable, or even meaningful. Even for a planned procedure for someone with healthcare, it is nearly impossible to determine what the out of pocket cost will be. Providers are unable or unwilling to provide quotations. Insurers are only able to talk about who is in network and who is not. Historical data is unavailable. Medicare reimbursement rates are impossible to decipher.
Price discrimination is the norm in the market, with different insurers paying different rates for the same service, and uninsured patients paying the most. And billing/reimbursement is so arcane that providers, insurers, and the government employ specialists to either increase revenues or decrease costs.
Buying an airline ticket is frustrating because of how opaque and confusing airlines have made ticket pricing. But it is a joy in comparison to buying anything in the healthcare market.
Price discrimination is the norm in the market, with different insurers paying different rates for the same service, and uninsured patients paying the most. And billing/reimbursement is so arcane that providers, insurers, and the government employ specialists to either increase revenues or decrease costs.
Buying an airline ticket is frustrating because of how opaque and confusing airlines have made ticket pricing. But it is a joy in comparison to buying anything in the healthcare market.
28
This article fails to mention the biggest factor of all: the all powerful health insurance lobby and the Wall Street/private equity forces ("externalities") that have engineered a hostile takeover of American medicine. How could this famous economist not mention these for-profit forces that inflate cost and extract money and energy from the system while mismanaging care for profit? Health care policy is hard because it is dictated by K Street lobbyists who use the half-baked theories and often biased (towards industry profits) "research" of the best Ivy League schools to drive policy that is wholly disconnected from the needs of the patients and those struggling to provide care on the front lines of American medicine. This is what happens when economists (and car dealers, home builders, and Junior Leaguers serving on hospital boards) tell doctors how to practice and patients when to die. Another media-darling economist once asked: " Why is it good when Americans buy cars but bad when they buy health care?"
21
This opinion piece actually illustrates another reason why health care policy is viewed as complicated: it's a lot of econ-speak that skirts the central--and rather uncomplicated--reasons underlying America's uniquely messed up health care "market."
Health care in the US is essentially driven by businesses that are unregulated monopolies or just too big or falsely revered to be challenged to change. Not unlike how banks had been viewed prior to the 2008 recession caused by banks unregulated, profit-driven culture.
Until we address the the fact that the "costs" of health care (fees, drugs, procedures) are set by businesses (doctors, health care systems, medical device makers, pharmaceutical companies) that operate like cartels, gouging "customers;" and until we acknowledge insurers are nothing but pass-through financial administrators adding little but expense and inefficiency to the process, you're not really dealing with health care in America.
These businesses need to change fundamentally -- it's the reform in "health care reform." Not so complicated, it just requires pushing back on these sacred cows--big business, and the myth that they are untouchable.
Health care in the US is essentially driven by businesses that are unregulated monopolies or just too big or falsely revered to be challenged to change. Not unlike how banks had been viewed prior to the 2008 recession caused by banks unregulated, profit-driven culture.
Until we address the the fact that the "costs" of health care (fees, drugs, procedures) are set by businesses (doctors, health care systems, medical device makers, pharmaceutical companies) that operate like cartels, gouging "customers;" and until we acknowledge insurers are nothing but pass-through financial administrators adding little but expense and inefficiency to the process, you're not really dealing with health care in America.
These businesses need to change fundamentally -- it's the reform in "health care reform." Not so complicated, it just requires pushing back on these sacred cows--big business, and the myth that they are untouchable.
23
This reply is great and a key part of the problem. Several other posts also other important issues in the health care problems. I would argue that a key issue is perverse incentives. Many of the health care players such as doctors, hospitals, pharma, etc are incentivized to do more and not control costs. In health care this gets tricky as reducing the incentive to do more will occasionally cause poor care. But if we incentivize both less cost and better care then we may be able to reduce costs.
Reducing costs of pharmaceuticals would seem to be easy as every other country negotiates with big pharma. To me this highlights how a big part of the problem with health care politics in the US is money in politics. All of the big players (insurers, doctors, hospitals, pharma, etc) are so big they make it nearly impossible to regulate them as they give so much money to politicians.
Reducing costs of pharmaceuticals would seem to be easy as every other country negotiates with big pharma. To me this highlights how a big part of the problem with health care politics in the US is money in politics. All of the big players (insurers, doctors, hospitals, pharma, etc) are so big they make it nearly impossible to regulate them as they give so much money to politicians.
10
Some of the "market" problems are specific to the system system in this country. High deductibles are not found in all countries. Why not try zero deductibles so that people will buy into the risk pool? Perhaps zero deductibles make people less cost-conscious, but there are more fundamental problems. How can people be expected to be cost-conscious when no one knows the actual cost of a lab test, a visit with a nurse, or a 5-minute opportunity observing the doctor staring at the screen and typing? Can you call it a "market" if it has no price system?
13
The real issue is that there is a moral hazard with the health insurance market. If an individual chooses to be uninsured or inadequately insured, in a true free market he or she will be denied care once she no longer has the resources to pay for treatment. In our society, though, we have a moral obligation to treat the ill regardless of whether they have the resources to pay. Thus, people will go uninsured or under-insured knowing they will get treatment regardless of whether they have the resources to pay or not. Consequently, we do not have a true free market and government must intercede. At a minimum, individuals should be required to have health insurance with premiums scaled to income.
6
Add to your list of problems: the term "health care" has no universal accepted definition in the United States of America.
There is not an accepted method to sort out "wants" from "needs." What some groups feel are essential treatments seem to other groups to be outrageous, flagrant expenditures.
Maybe other countries have figured out how to handle this issue; but, it ain't going to happen here, in our life times.
There is not an accepted method to sort out "wants" from "needs." What some groups feel are essential treatments seem to other groups to be outrageous, flagrant expenditures.
Maybe other countries have figured out how to handle this issue; but, it ain't going to happen here, in our life times.
7
"Free markets" has quasi-religious meaning to many on the right. They invoke that mantra even when it makes no sense. An economics professor should note that a common model for a free market would require price discovery and the ability to choose whether and when to buy / sell or not. The inability of consumers to a priori determine the price of a medical service is well documented. When we are laid low by illness we often can not and should not be burdened with these decisions.
This then leads us to a small number of government and/or closely-regulated insurance companies that provide clear and comprehensive mandatory coverage financed by taxes and fees for all citizens within a large geographical area. Compensation to the providers of medical products and services should be equitable and predictable.
This then leads us to a small number of government and/or closely-regulated insurance companies that provide clear and comprehensive mandatory coverage financed by taxes and fees for all citizens within a large geographical area. Compensation to the providers of medical products and services should be equitable and predictable.
4
Here's another key shortcoming in the article, that goes to the heart of why a free market, with voluntary purchase of health insurance, won't work.
On average the need for health care and its cost grow enormously as one ages (e.g. diabetes, cardio-vascular problems, most cancers, joint issues, end of life care and much more). Most young people simply don't focus on this inevitability, and if allowed will exercise their individual freedom to skip paying into the insurance pool at that stage of life. But when their time comes, maybe 30 or 40 years down the road, they won't be able to afford the needed care on their own and will demand help from the rest of us. That, in a nutshell, is the free-loader problem.
The solution is for all of us in society to collectively mandate that we all must pay into the pool throughout life, and then be entitled to withdraw later when the need arises. So there either has to be a mandate to carry health insurance throughout life or health care must be mostly paid for through taxation. Call it socialism, government interference in free choice, or whatever. But the Ayn Rand ideology of individual free market choices leading to the best result simply won't work in the health care realm. It's high time the Republicans figured that out.
On average the need for health care and its cost grow enormously as one ages (e.g. diabetes, cardio-vascular problems, most cancers, joint issues, end of life care and much more). Most young people simply don't focus on this inevitability, and if allowed will exercise their individual freedom to skip paying into the insurance pool at that stage of life. But when their time comes, maybe 30 or 40 years down the road, they won't be able to afford the needed care on their own and will demand help from the rest of us. That, in a nutshell, is the free-loader problem.
The solution is for all of us in society to collectively mandate that we all must pay into the pool throughout life, and then be entitled to withdraw later when the need arises. So there either has to be a mandate to carry health insurance throughout life or health care must be mostly paid for through taxation. Call it socialism, government interference in free choice, or whatever. But the Ayn Rand ideology of individual free market choices leading to the best result simply won't work in the health care realm. It's high time the Republicans figured that out.
37
everyone who drives a car is required to have car insurance. so why is it so controversial to require everyone who might need medical services to have health insurance?
39
Mankiw pretends that the US has to approach the problem from the beginning, working from theory. This is nonsense - many different kinds of healthcare system have been tried throughout the world while the costs in the "free-market" system of the US have been climbing. We know by now what works and what doesn't and other countries' system provide universal coverage at much lower cost. In detail there may be complexities in some systems, although single-payer systems such as that in Canada (or Medicare in the US) are actually pretty simple compared to the US system. But there is no question that what brings costs down is government control of pricing - the government must be the collective representative of healthcare consumers. They simply do not have the ability to bargain for prices individually.
18
Things become very complicated when politicians keep a lecherous middle man - the private health insurers - in the game. But this is what happens when there is an absence of integrity among policy planners to the point that they are unable to see the moral degeneracy involved in subjecting health care to the free market.
The private insurance system results in huge increases in cost - and decreased health outcomes - compared to single payers systems. But getting politicians who are controlled by health insurance lobbyists to make the moral decision - that's where things get complicated.
The private insurance system results in huge increases in cost - and decreased health outcomes - compared to single payers systems. But getting politicians who are controlled by health insurance lobbyists to make the moral decision - that's where things get complicated.
18
How come you did not mention successful models elsewhere in the world? They have yielded the healthiest communities motivated to stay healthy. What are they doing right, what is it we can learn from them? It is not about right or left Politics it is about the well being of a nation. Being the wealthiest what have we to show for ourselves!!
15
You have left out the number one problem. Each health care procedure in the US costs two to three times as much as in any other country. If we paid the same amount for the same procedure as they do in Switzerland or Japan, health care would be easily managed in the US.
9
This article really misses the point. Health care policy is so hard because everyone needs health care, but way too many people don't have a prayer of being able to pay market rates.
Next time you leave the house, pay attention to people around you. Can the cashier at the store afford health insurance? What about the server at a restaurant? Can the owner of the landscaping company afford to provide health insurance? Of course not.
Let's be honest about it. Either most people who don't work for large companies or the government need to be paid enough to buy health insurance (and actually do it), the government needs to subsidize or even provide health insurance, or we should just admit that we don't care about people that can't afford health insurance.
Next time you leave the house, pay attention to people around you. Can the cashier at the store afford health insurance? What about the server at a restaurant? Can the owner of the landscaping company afford to provide health insurance? Of course not.
Let's be honest about it. Either most people who don't work for large companies or the government need to be paid enough to buy health insurance (and actually do it), the government needs to subsidize or even provide health insurance, or we should just admit that we don't care about people that can't afford health insurance.
9
What you say is true but you didn't take the final step. Many (poor) can't afford the health care they need, and that means that the rest of us (rich or at least better off) will one way or another have to pony up the funds for them. Not the bland "government," but the rest of society. Real people who pay real taxes that are the real source of those "government subsidies." Taxes must be collected from the richer to help out the poorer, in this case to get health care. Nothing wrong with that -- those who have gotten more from society and its economy should shoulder the burden for those less fortunate. It's either that or (continue to) kick them into the gutter, which is not a characteristic of a great country.
7
The primary reason that per capita health care costs in the United States are so much higher than in other developed nations is because the prices we pay -- not the costs associated with the health care products and services we consume -- are so much higher than elsewhere. This is because as a society, we have (unwittingly) decided to compensate those responsible for providing our health care products and services (physicians, providers, allied healthcare professionals, payers, administrators, and executives) -- significantly more than those performing the same roles in other developed nations.
10
I've never quite understood the right wing fear that everyone but fellow right wingers are overusing health care and running to the doctor at the first sign of the sniffles. I'm sure that some consumers of health care consume too much of it, but I think far more of us avoid going to the doctor whenever we can. That has costs too. If we have the flu, we infect other people. If that lump is cancerous, hesitating may allow it to spread further. If we are much sicker than we realize we may die if we hesitate. Two years ago a friend who was prone to respiratory illnesses hesitated when she thought she had a bad cold or flu. By the time she went to the ER, her body was ravaged by sepsis and she died. There was no reason for her to hesitate except that, like most of us, she assumed that she would get better in a day or two.
But people whose views on human behavior are shaped by right wing economists believe that we are all lining up at the ER waiting for expensive and unnecessary treatment. Of course if it's your family you may just be rightly frightened when your loved one is showing symptoms that might be very serious. But if it's another family and especially if they are not rich, you think they must be overusing the healthcare system.
But people whose views on human behavior are shaped by right wing economists believe that we are all lining up at the ER waiting for expensive and unnecessary treatment. Of course if it's your family you may just be rightly frightened when your loved one is showing symptoms that might be very serious. But if it's another family and especially if they are not rich, you think they must be overusing the healthcare system.
9
There is so much wrong with this post, it is hard to know where to begin or believe its author is a Harvard economist. I thought maybe Mankiw was oversimplifying to make his point, but finally he launches into a somewhat arcane discussion of adverse selection, so that can’t be it. And if he’s going to go all wonky on us, why not talk about asymmetric information and imperfect markets. The free market model for allocation of resources makes some pretty bold assumptions about both rational behavior and price – viz. that participants are rational and that prices reflect all the information available about a product or service. This makes the model useful, but it also instructs us on how to apply it in the real world, and the first instruction is that the ideal market does not exist. Thus, ALL markets are regulated, and most markets are regulated by force, mainly through governments, which enact and enforce laws, but often through thuggery and sometimes, even, through the moral force of honor systems. So the “magic” of the marketplace always fails us, sometimes in small ways, when we buy a shoddy product, and sometimes in big ways, when we get our doctor bills. Magic isn’t real. Healthcare policy is hard because too many conservatives believe magic is real.
10
And single-payer is not liberal. It's pragmatic and efficient. I thought those were good things.
29
People who are insured "overconsume" healthcare?
I'd like to see the studies that confirm this finding. It's a common conservative trope, but the counties that provide essentially free healthcare show absolutely no evidence of overconsumption.
I'd like to see the studies that confirm this finding. It's a common conservative trope, but the counties that provide essentially free healthcare show absolutely no evidence of overconsumption.
11
I totally agree with your observation that people who live in countries with Universal Healthcare don't over consume. I disagree that their healthcare is "essentially free". People in other countries pay taxes for their healthcare. Americans pay premiums and have been convinced that premiums are somehow better even though much of what they pay goes to enrich people and not for their actual healthcare.
10
It would be good to study the effect of advertising on overconsumption. The US is a world outlier in that its medical system is structured so that medical vendors legally may, and have reason to, advertise products and services to consumers who don't directly pay for them.
6
The number of medical procedures per capita is similar in the US and Europe. Overall, it looks like people use about what they need.
7
A good summary of the angles of health care, but you forgot to mention that the drug and hospital companies invest heavily in the campaigns of Congresspersons and expect a return in the form of laws that a keep prices high and thwart generic drug production or importing. Investing in legislators is probably as profitable as investing in research for new medicines. Pharma 'bribes' more broadly and totally than most other industries. Reform campaign finance and you could reform health care, at least from the drug price point of view.
7
We have the best government that big money can buy. Bottom line fact.
3
All this is true but Mankiw neglects to mention the most important economic factor. Healthcare is a product for which the demand is inelastic. It costs (depending on where you live) 15,000 to 20,000 dollars to have baby. The birthrate is not going up if the cost fell to $3000 and it's not going down if it goes up to $30,000. Given this basic economic fact government involvement in financing the outcomes and containing costs is inevitable because only government has the resources and monopoly power to act effectively to constrain the working of this economic reality.
34
The Individual Mandate is comparable to Car Insurance. It is Mandatory to have Third Party Insurance to drive a car. This ensures that the high cost of Car Accidents can be covered even when drivers have very low income. If the architects of Obamacare had equated Universal Health Insurance with Car Insurance, its initial ready acceptance could have improved.
6
Why doesn't this "sixth-grader question" come up a lot, or at least just once a week in our media: "So how do all the other developed democracies do it, because they all have health care for everyone, just like school?" They somehow manage to do what we number one smart Americans don't do. Yes, they do it. Not perfectly, because perfect is a red herring, as in other things. And the same medicine costs much less in many other places, how about that? The corporate PR baloney spin on that one sounds convincing to many, until you look deeper.
52
Health insurance today is so complex because it mixes a combination of corporate insurance giants and the government. A single-payer system would resolve this. Medicare and Medicaid work. If the GOP weren't so dead set on eliminating the government completely (and giving all the tax breaks to the wealthy) we could solve this.
15
A further complication on getting people to purchase insurance is the question: What if I don't have any assets to protect? More people than you might think fit into that category. Young college graduates still living with their parents or friends. No assets and lots of bills. If they get sick or injured they present themselves at an ER and get treated. Bankruptcy may result but since there are no tangible assets to protect, who needs insurance?
One thing I've learned since the ACA was first proposed by the Obama Administration: a lot of people do not understand how insurance works. They only know that they hate being required to have it for their assets let alone being forced to purchase Medical Insurance by the ACA. Many of the loudest protestors get Medical Insurance through their employment - yet scream about the ACA mandate. (Granted they also scream about income tax, property tax, FICA, Social Security, and the whole list of deductions from their pay.)
One thing I've learned since the ACA was first proposed by the Obama Administration: a lot of people do not understand how insurance works. They only know that they hate being required to have it for their assets let alone being forced to purchase Medical Insurance by the ACA. Many of the loudest protestors get Medical Insurance through their employment - yet scream about the ACA mandate. (Granted they also scream about income tax, property tax, FICA, Social Security, and the whole list of deductions from their pay.)
9
There is one other complexity to system of caring for the ill that I would argue the WORLD has not figured out – and that is society’s desire for innovation. Many commentators to this article have written that all the other OECD countries have figured out how to provide universal health insurance, which is true. But NONE of them have figured out how to reward innovation. Indeed, the US is really the only country on the planet that rewards innovation. If the US switched to the UK or Canadian system, global innovation that strives to invent new means of diagnosing and treating disease will dry up. And with it will go thousands -- probably hundreds of thousands -- of good paying jobs. It could even trigger a depression here in the US. And most importantly all hope of improving and extending human life will wither. In 20 years the world would be decimated with resistant infections, once common surgeries would be risky, and medical practice would stay forever at the state it is today. It is a scary prospect.
I am not arguing that we shouldn’t find a way to care appropriately for everyone who is ill in our country – we should. We should also think very carefully about the unintended global consequences of any action we take.
I am not arguing that we shouldn’t find a way to care appropriately for everyone who is ill in our country – we should. We should also think very carefully about the unintended global consequences of any action we take.
4
One interesting lefty allegation is that having to pay for health insurance KEEPS people from innovating and starting businesses.
So let's look at two good examples: Canada (36 million) and California (39 million). Similar size places, with lots of natural resources and wealth, and many immigrants. Canada has the adored-by-liberals single payer insurance. California has nothing (except the ACA). But you can even go back before the ACA, if that makes it starker.
Which place is more innovative? Which place has more start ups? Which place has more entrepreneurs? Which place has people flocking to it to start new businesses and business models? Which place basically invented computers, smart phones and electric cars?
In THEORY, it seems if you have cradle-to-grave benefits, it will free people from having to work to pay their own way. But in REALITY....it doesn't work out like that at all. Having a socialist nanny state makes people passive and unambitious.
So let's look at two good examples: Canada (36 million) and California (39 million). Similar size places, with lots of natural resources and wealth, and many immigrants. Canada has the adored-by-liberals single payer insurance. California has nothing (except the ACA). But you can even go back before the ACA, if that makes it starker.
Which place is more innovative? Which place has more start ups? Which place has more entrepreneurs? Which place has people flocking to it to start new businesses and business models? Which place basically invented computers, smart phones and electric cars?
In THEORY, it seems if you have cradle-to-grave benefits, it will free people from having to work to pay their own way. But in REALITY....it doesn't work out like that at all. Having a socialist nanny state makes people passive and unambitious.
4
You may not know this but a very common response among people visiting the US is shock at how backward so much of the US is. They come assuming that the US is Silicon Valley and they leave remembering the homeless people begging on the streets, our pathetic infrastructure, our ridiculously expensive healthcare system and the absolute ignorance of the people of anywheresville that produces meth heads instead of an engaged and educated citizenry while screaming MAGA.
3
There is a lot omitted in this piece. For one basic thing: economics are a lot more complicated than just supply and demand. Assuming that the flow of buying and selling doesn't involve emotion on both sides and that decisions will be rational means that the conversation is incomplete.
The existence of a federal law mandating that people buy something is indeed unusual in the USA, but that is more a function of political thought in the USA than strangeness of ACA. We buy heavily into the faith that free markets make the best decisions and that leads us to believe that choice is good and more choice is better. Economic theorists have begun questioning the soundness of that belief.
The emphasis on overconsumption is questionable. Some people go off to the doctor at the slightest twinge. It may or may not have anything to do with cost. Profit as a motive for physicians and other providers also contains a kernel of truth, but I think it is more complicated than that. Always comes back to complictions, doesn't it?
The existence of a federal law mandating that people buy something is indeed unusual in the USA, but that is more a function of political thought in the USA than strangeness of ACA. We buy heavily into the faith that free markets make the best decisions and that leads us to believe that choice is good and more choice is better. Economic theorists have begun questioning the soundness of that belief.
The emphasis on overconsumption is questionable. Some people go off to the doctor at the slightest twinge. It may or may not have anything to do with cost. Profit as a motive for physicians and other providers also contains a kernel of truth, but I think it is more complicated than that. Always comes back to complictions, doesn't it?
4
This article leaves out the fact that US medicine has no price structure. My wife has been trying to get the cost of a local MRI (not whole body) at several facilities and has to make repeated calls to get the Federal tax ID of providers to see if they are in network with her insurance provider.
More calls to clarify if it is just the MRI procedure or includes the radiologist, and if so, which radiologist, and their tax ID, to determine if that radiologist's interpretation of the MRI images will be covered by our insurance.
So far, three days and 6 hours on the phone to get info from 3 providers. After repeated calls one facility said if we paid in cash and didn't use insurance we would get a rate lower than the negotiated insurance rate.
My wife is a skilled negotiator, and has a biomedical engineering degree, and works at a company that develops software that "reads" MRI's without human involvement.
More calls to clarify if it is just the MRI procedure or includes the radiologist, and if so, which radiologist, and their tax ID, to determine if that radiologist's interpretation of the MRI images will be covered by our insurance.
So far, three days and 6 hours on the phone to get info from 3 providers. After repeated calls one facility said if we paid in cash and didn't use insurance we would get a rate lower than the negotiated insurance rate.
My wife is a skilled negotiator, and has a biomedical engineering degree, and works at a company that develops software that "reads" MRI's without human involvement.
33
Let's also remember that at the time that the doctor recommends that MRI, time may be of the essence. It's awfully hard to be a good negotiator when you are facing the possibility of major surgery and have a lot more to do to prepare for it than spending 6 hours on the phone. The only time I needed an MRI was when my mammogram showed a suspicious lump that could not be felt by anyone and did not show up on an ultrasound. Believe me, I was glad to hand the negotiations over to medicare while I dealt with other things as I prepared for the unknown. Fortunately for me, the system worked smoothly, the doctors were excellent and the tumor was small. I've also had family members who had to deal with a more advanced cancer diagnosis while negotiating with how to keep working while recovering from surgery and undergoing chemo and radiation. Should they really be expected to negotiate price at that time. This isn't like buying a new car; it's your life that is at stake.
4
Health are policy is hard because corporate profits are the first concern, lower taxes are the next concern, and health care is at the bottom of the list.
Every other country in all of Western Civilization covers more people, costs less, and provides as good care. The best example is what the currently elected party wants to do: cut taxes and take the money out of healthcare.
As long as our system is primarily about money for the wealthy, rather than health for all Americans, we will continue to pay more and get less.
Every other country in all of Western Civilization covers more people, costs less, and provides as good care. The best example is what the currently elected party wants to do: cut taxes and take the money out of healthcare.
As long as our system is primarily about money for the wealthy, rather than health for all Americans, we will continue to pay more and get less.
44
This article misses the most important dynamic in the health market. The basic question, "How much will you pay not to die?" The answer is, "Whatever amount required, no matter how high." So the laws of supply and demand suddenly collapse.
6
I once read a news article about teaching economics to 6th graders:
“What is the basic economic problem all societies face?” the teacher asks her sixth-grade class.
A student raises her hand: “Scarcity.”
The teacher asks for a definition and the class responds, in unison: “People have unlimited wants but limited resources.”
Not bad for a bunch of sixth-graders.
Another important basic economic concept that makes health care policy so hard.
“What is the basic economic problem all societies face?” the teacher asks her sixth-grade class.
A student raises her hand: “Scarcity.”
The teacher asks for a definition and the class responds, in unison: “People have unlimited wants but limited resources.”
Not bad for a bunch of sixth-graders.
Another important basic economic concept that makes health care policy so hard.
6
The real question is how much will the rest of society pay to keep you from dying.
Will Congress appropriate $1 billion dollars to keep one person from dying? The answer, after much hemming and hawing, is "No".
Will Congress appropriate $1 billion dollars to keep one person from dying? The answer, after much hemming and hawing, is "No".
1
You left out a very important factor. A system that makes each doctor and hospital a profit center, billing for services and tests in which they are investors, undermines their reliability as objective medical providers.
25
Healthcare has 3 problems.
1. We have obese, overstressed, poorly-conditioned patients.
2. We have inefficient health care providers who are paid to over-document and under-treat. (I document 15-20 minutes per "patient encounter".)
3. We hospitalize at the end of life instead of using hospice. (If you have an ejection fraction of 25% or lower or you're using supplemental oxygen at 5L/min, it's time to talk to your pastor as well as your doctor.)
Things to focus on.
1. Subsidize exercise, not corn/wheat/soybeans/sugar.
2. Put payers and providers on the same side, so that we don't have to waste 25% of our time writing down the few things we actually have time to do for the patient. (This would also eliminate the costs of the literally tens of thousands of "billing specialists" who populate providers' and payers' offices, fighting over which claims get paid.)
3. The last two years of life are when we spend a large % of our lifetime healthcare dollars...unless we don't and die with hospice. Let the hospital be for those who are still vital and want to live, not just exist. Many in our hospitals go in a cycle from hospital to nursing home to home (with home health), and back to the hospital. It's a vicious cycle many of my patients consider to be hellish.
We could save money in farm subsidies, chronic meds, late-stage hospitalization, and a higher % of healthcare providers vs billers. You'd like the result...
1. We have obese, overstressed, poorly-conditioned patients.
2. We have inefficient health care providers who are paid to over-document and under-treat. (I document 15-20 minutes per "patient encounter".)
3. We hospitalize at the end of life instead of using hospice. (If you have an ejection fraction of 25% or lower or you're using supplemental oxygen at 5L/min, it's time to talk to your pastor as well as your doctor.)
Things to focus on.
1. Subsidize exercise, not corn/wheat/soybeans/sugar.
2. Put payers and providers on the same side, so that we don't have to waste 25% of our time writing down the few things we actually have time to do for the patient. (This would also eliminate the costs of the literally tens of thousands of "billing specialists" who populate providers' and payers' offices, fighting over which claims get paid.)
3. The last two years of life are when we spend a large % of our lifetime healthcare dollars...unless we don't and die with hospice. Let the hospital be for those who are still vital and want to live, not just exist. Many in our hospitals go in a cycle from hospital to nursing home to home (with home health), and back to the hospital. It's a vicious cycle many of my patients consider to be hellish.
We could save money in farm subsidies, chronic meds, late-stage hospitalization, and a higher % of healthcare providers vs billers. You'd like the result...
10
The problems presented by health care policy are complex, but the solutions are visible if one examines the history of and current structures for health care financing and delivery systems in place in other industrialized nations.
Other nations have faced the same list of problems Prof. Mankiw has described. In fact, there are health care economics professors in Europe and Asia who have devoted their careers to those problems. They have examined their own systems and those of other nations in depth. The European Observatory on Health Systems and Policies "supports and promotes evidence-based health policy-making through comprehensive and rigorous analysis of the dynamics of health care systems in Europe." http://www.euro.who.int/en/about-us/partners/observatory
There is a journal called "Health Policy" that presents scientific papers on these issues. http://www.hspm.org/hpj.aspx
Now that the GOP has failed in its effort to "repeal and replace" the Affordable Care Act, maybe there can be a bipartisan effort to learn from other nations and craft legislation to fit American values.
Other nations have faced the same list of problems Prof. Mankiw has described. In fact, there are health care economics professors in Europe and Asia who have devoted their careers to those problems. They have examined their own systems and those of other nations in depth. The European Observatory on Health Systems and Policies "supports and promotes evidence-based health policy-making through comprehensive and rigorous analysis of the dynamics of health care systems in Europe." http://www.euro.who.int/en/about-us/partners/observatory
There is a journal called "Health Policy" that presents scientific papers on these issues. http://www.hspm.org/hpj.aspx
Now that the GOP has failed in its effort to "repeal and replace" the Affordable Care Act, maybe there can be a bipartisan effort to learn from other nations and craft legislation to fit American values.
13
A voice of reason, but is there any reason to believe that such a thing as "American values" exists at this point?
4
Two reasons on s for the complexity. Healthcare is a service and not a commodity. It does not exist so corporations can make a profit. The Republicans have been trying to reverse the New Deal for generations and Obamacare is seen as a New Deal program.
4
There is an answer to these issues. Just look to modern, developed European economies. They have better outcomes at 40-50% less cost.
The very first thing that you notice about Europe is that they don't have a lot of insurance companies. Is that the recipe for their success?
The very first thing that you notice about Europe is that they don't have a lot of insurance companies. Is that the recipe for their success?
9
That is untrue; most European countries provide universal health care by USING non-profit insurance to cover their citizens.
It worth noting that no country in Europe has single payer health care. They all have different methods, but none are single payer. Only 3 nations in the world have single payer; Canada and the other two are in Asia.
It worth noting that no country in Europe has single payer health care. They all have different methods, but none are single payer. Only 3 nations in the world have single payer; Canada and the other two are in Asia.
2
If you want to know the real reason, I suggest you look at the average salaries of everyone involved in the health system in places like France and Germany. Then check out the hospitals - what, no marble floors and designer furniture in the waiting room?
6
I find an important aspect of it missing: price elasticity of demand. With most things, if it gets too expensive, people are typically in a position to either not buy or defer buying. That power to walk away makes a huge difference, as you've probably experienced if you've ever tried to buy a car. As far as healthcare is concerned, consumers simply don't have that choice in most cases. Supply and demand functioning assumes some kind of parity in the bargaining of both buyers and sellers. Just consider the absurdity of bargaining about pricing and conditions when you're laying in an ambulance. It's more than just consumers not knowing what they need. Not a huge fan of Mankyiw.
13
Leaving out the "economic" factors when considering ensuring health care for all, one still has to confront the elements of the "abuse" of a health care system- not "Health Care Industry"
This propels the issue out of solely "economics" into "psychology". Using a service unnecessarily because it is "free"
Maybe I missed something but after 15 years in Britains NHS and 15 years in Canada's health care system, I never saw or heard of a widespread well-funded program to "educate" consumers of health care. Understandable when considering that even health care professionals are still divided on the issue of "evidence based" practices. Maybe there have been initiatives that I am not aware of and anticipate rebuttable if this comment is published.
So assuming abuse will always be a factor, why do we just simply accept it and account for it in economic calculations and assume that on balance, it doesn't matter or contribute to overall health and health related medical functional status aka 'Quality of Life"
This propels the issue out of solely "economics" into "psychology". Using a service unnecessarily because it is "free"
Maybe I missed something but after 15 years in Britains NHS and 15 years in Canada's health care system, I never saw or heard of a widespread well-funded program to "educate" consumers of health care. Understandable when considering that even health care professionals are still divided on the issue of "evidence based" practices. Maybe there have been initiatives that I am not aware of and anticipate rebuttable if this comment is published.
So assuming abuse will always be a factor, why do we just simply accept it and account for it in economic calculations and assume that on balance, it doesn't matter or contribute to overall health and health related medical functional status aka 'Quality of Life"
1
I think we should have single-payer housing. Make all those rich people live in small houses, and get the homeless off the streets. I bet that would be cheaper. I know the vast majority of people don't want it, and are happy with their current living situation, but it's all about saving money and being fair.
4
Healthcare is as not complicated as most of these so-called experts claim. Nobel prize winning economist Kenneth Arrow figured this out in 1963. Every pundit and congressman should be required to read this paper (and be quizzed on it) before commenting or attempting to legislate on healthcare.
Over consumption is not the problem. It is price gouging, as enabled by the government. As many have pointed out, every other advanced country in the world has figured this out. Hence, universal healthcare paid through taxes.
Over consumption is not the problem. It is price gouging, as enabled by the government. As many have pointed out, every other advanced country in the world has figured this out. Hence, universal healthcare paid through taxes.
20
While prices are indeed high, these prices provide a large revenue and income to millions of people. It would not be very easy to get these workers to accept lower incomes.
Usually, if you have a large income, you are part of a powerful trade group that defends your position in the economic order.
Usually, if you have a large income, you are part of a powerful trade group that defends your position in the economic order.
Jonathan, have you been watching the trends in income inequality over the last 40 years? Most of the revenue goes to the people at the very top, the monopolists and executives of the healthcare companies. Talk to the average nurse or home healthcare provider and see how much they are making.
5
@James Ward - Look at the top 1% in income, according to an analysis in the NY Times. The largest group, at 14% of the top 1%, is doctors.
Or maybe you saw the article in the NY Times about the housing shortage in San Francisco, where a nurse complained she could afford an apartment there because her salary was only $180K.
The CEOs of the insurance companies are statistically insignificant. If they all worked for free, the impact on our $3 trillion health care spending would be nugatory.
Or maybe you saw the article in the NY Times about the housing shortage in San Francisco, where a nurse complained she could afford an apartment there because her salary was only $180K.
The CEOs of the insurance companies are statistically insignificant. If they all worked for free, the impact on our $3 trillion health care spending would be nugatory.
1
What a feckless analysis of health care. Nowhere is it mentioned that the consequences of lack of care are severe suffering, illness, and death, not to mention lack of productivity, wages, and taxes that result from employment. Nowhere it is mentioned that the individual mandate is essential for removing preconditional denial of insurance. Nowhere is it mentioned that we have no price regulation of drugs, that allows exorbitant price hikes at will by drug manufacturers. Nowhere is it mentioned that all the private arrangements and secret contracts between providers and insurers has resulted in a myriad of intransparent pricing structures, making cost comparison for even the planned healthcare products and services impossible. In short, what does this article actually explain, and to whom?
72
When insurance companies backtrack and leave health care completely. Was never and should never have been a benefit to keep people working for business owners.but too late now. Workers are enslaved because of a phony need for care. Emergency care is what people need. Not health care. Should be called emergency insurance.
1
This is all theory; correct on paper but devoid of some of the real life considerations:
(1) The laws are written under heavy influence of powerful lobbies; pharma, health insurers, hospitals and doctors/practitioners. Ordinary citizens that the laws are expected to serve have no clout on the law makers; hence the current problems.
(2) Greed. No need to explain this.
(3) Excessively legalized structure and resulting threat on all parties involved which makes most providers shun the decision making on prognosis and correct treatment.
The list goes on but unless above factors brought under control, no legislation will help.
(1) The laws are written under heavy influence of powerful lobbies; pharma, health insurers, hospitals and doctors/practitioners. Ordinary citizens that the laws are expected to serve have no clout on the law makers; hence the current problems.
(2) Greed. No need to explain this.
(3) Excessively legalized structure and resulting threat on all parties involved which makes most providers shun the decision making on prognosis and correct treatment.
The list goes on but unless above factors brought under control, no legislation will help.
13
It certainly doesn't need to be this complicated. Single payer/universal healthcare works so well for every other first world country, why not here? We want, we deserve this, our taxes should be taking care of us, and not paying for a hugely over bloated military. We should not have to continue to overpay for substandard care, especially when polls show the majority of US citizens support a universal system.
32
Single payer will have its own problems. Where will motivation to invest come from? How will supply be guaranteed? How will costs be controlled? I'm not against single payer, but imho, the same cost control issues will be in single payer, so it would be possible to fix the ACA to address those now without single payer.
1
Yes, single-payer does have challenges. What system doesn't? Still, other countries make it work; America can, too.
8
Only three nations in the world have single payer; not one of these is in Europe.
NO NATION IN EUROPE HAS SINGLE PAYER HEALTH CARE.
If the left does not even know this....how can we have a rational discussion about our options for reform?
NO NATION IN EUROPE HAS SINGLE PAYER HEALTH CARE.
If the left does not even know this....how can we have a rational discussion about our options for reform?
2
Perhaps we make it too complicated by splitting us into markets and government and then taking sides as to which should dominate.
We are one people who interact in markets as producers and consumers of products and services, and we also rely on government to maintain fairness and order.
Kenneth Arrow showed us why markets often don’t work well in health care. With a near universal need for health care over time, we need to exercise our role not just as consumers but also as citizens advocating for fairness and order, relying on our own government institutions. All other wealthy nations have done this quite successfully and at a much lower cost.
Medicare is not complicated. It can be improved and then would be an ideal program to provide all of us with health security. Medicare is a public insurance program with a private health care delivery system. Market aberrations such as adverse selection are not a problem in a public universal risk pool. Markets and governments work well when they work together, and, after all, they are our markets and our government.
We are one people who interact in markets as producers and consumers of products and services, and we also rely on government to maintain fairness and order.
Kenneth Arrow showed us why markets often don’t work well in health care. With a near universal need for health care over time, we need to exercise our role not just as consumers but also as citizens advocating for fairness and order, relying on our own government institutions. All other wealthy nations have done this quite successfully and at a much lower cost.
Medicare is not complicated. It can be improved and then would be an ideal program to provide all of us with health security. Medicare is a public insurance program with a private health care delivery system. Market aberrations such as adverse selection are not a problem in a public universal risk pool. Markets and governments work well when they work together, and, after all, they are our markets and our government.
13
It could be argued that Medicare is the root cause of the high cost of care in the US. The increase in cost of health care began exceeding the inflation rate at about the time Medicare was enacted. There are no cost control features in Medicare and few fraud controls. It is the perfect example of "when something is free you will get more of it".
Oh, and roughly 1 in 4 Medicare beneficiaries has a supplemental insurance policy because basic Medicare really isn't very good insurance...
Oh, and roughly 1 in 4 Medicare beneficiaries has a supplemental insurance policy because basic Medicare really isn't very good insurance...
3
I read these experts and they all seem to miss the obvious impediment to market control. Most of us live in single hospital markets with single specialty practices. Hard to get market forces here. The next thing that happpens in these markets is one insurer dominates small group policies
I live in one of those markets in Eastern NC. Bought small group policies for 25 years for my employees. BC/BS never offered me more than two choices and my rates increases by double digits every year.
Also, google RUC committee. It's a volunteer committee from AMA that sets the hourly rate for docs. For over two decades their self set rates have risen 4-7% above inflation.
Food for thought.
I live in one of those markets in Eastern NC. Bought small group policies for 25 years for my employees. BC/BS never offered me more than two choices and my rates increases by double digits every year.
Also, google RUC committee. It's a volunteer committee from AMA that sets the hourly rate for docs. For over two decades their self set rates have risen 4-7% above inflation.
Food for thought.
10
The underlying problem is that the per capita cost of health care is above the ability of the average person to pay. Yes, you may avoid any significant expenses before age 50 (other than childbirth), but probably you will eventually need a lot of care.
So, there is only one to handle the costs - the government finances them through general tax revenues, based on ability to pay, and gives benefits based on need. In short, single payer.
So, there is only one to handle the costs - the government finances them through general tax revenues, based on ability to pay, and gives benefits based on need. In short, single payer.
17
And our government gets costs down and in line with what other countries are spending.
4
If individuals can't afford them, then the government can't afford them either, since the only source of government revenues is individuals.
The correct answer is to cut the costs down to make health care affordable. Good luck with that!
The correct answer is to cut the costs down to make health care affordable. Good luck with that!
1
"For example, if patients don’t have to pay for each doctor visit, they may go too quickly when they experience minor symptoms." I live in a country with the dreaded socialized medicine, where I have to pay a minor part of my medical expenses per year. A couple of months ago, I saw a funny black mole on my ankle. It's a good thing I went to the doctor the next day, as it was melanoma. Since I had it looked at right away, I caught it so early that it was not a problem. If I had waited, treatment would have been a whole lot more expensive, for me and for the system. And my costs would not just have been in Swiss francs.
65
The idea that health CARE is inextricably linked with health INSURANCE is a fallacy. Most countries with comparable wealth to the US have decoupled the two, providing better health CARE without the confusion, waste, abuse, and bait/switch which comes with a lot of INSURANCE policies.
Basically every American will need some form of health CARE - from prenatal, to birth, to childhood vaccinations, to the occasional broken arm/leg that seem to accompany youth. They may need maternity care, and almost all of us will eventually need some form(s) of geriatric care.
A few of us will need extraordinary care for extraordinary ailments.
RARELY will we be able to predict what we as individuals will need. And if we predict wrong, then we will be hit with a crushing bill or the expense will be passed on to someone else.
If our nation is going to move on - as most comparable nations have - we must realize that health CARE for everyone must be the goal and stop the nonsense around INSURANCE.
Basically every American will need some form of health CARE - from prenatal, to birth, to childhood vaccinations, to the occasional broken arm/leg that seem to accompany youth. They may need maternity care, and almost all of us will eventually need some form(s) of geriatric care.
A few of us will need extraordinary care for extraordinary ailments.
RARELY will we be able to predict what we as individuals will need. And if we predict wrong, then we will be hit with a crushing bill or the expense will be passed on to someone else.
If our nation is going to move on - as most comparable nations have - we must realize that health CARE for everyone must be the goal and stop the nonsense around INSURANCE.
83
I am no economist. I'm just a doctor. But it seems to me you left off the most important part: healthcare bills are being written by lobbyists. These lobbyists work for the people that CONSUME the healthcare dollar: Insurance companies, drug companies, trial lawyers, nursing homes, and those providing useless expensive devices and services including inappropriate ICU care to the terminally ill. I am quite certain that you sir could write effective healthcare legislation that would save about half of what we spend, insure everyone, and provide better outcomes if the ultimate policy decisions were made by a panel of disinterested eagle scouts (not the ones in the Trump administration).
123
Bingo.
3
The healthcare industry, including doctors, have lobbyists too and they have been influential in getting us where we are today. The problem is that no one seems to be most interested in helping people live healthy lives and getting medical care when that is necessary.
5
So doctors have nothing to do with the high costs, and never lobby to protect their substantial incomes? I suppose it's just a coincidence that US doctors make more than twice as much as doctors in Europe....
2
Health care is not too complicated for most other countries in the developed world, who have operated universal health systems successfully for many years.
Another economist who believes that the US has to reinvent the wheel. Maybe that is what "exceptionalism" means.
Another economist who believes that the US has to reinvent the wheel. Maybe that is what "exceptionalism" means.
32
This is a good summary of issues that were first recognized over 50 years ago by a Nobel economist who *invented* the field of health economics.
Let me add a feature that few seem to focus on, that has salience for me lately: “healthy” people can flip suddenly, and without notice, to being “sick” people. Suddenly, they recognize the benefit of higher spending on care, care that they didn't expect they'd need and probably did not—often, *could not* have saved for.
Mandatory insurance covers that in a way that protects the society from either (1) watching their neighbors, friends or family die or suffer from lack of care, or (2) allowing people to free-ride on our social sympathy.
We sometimes talk about healthy people subsidizing the sick. In fact, the two groups are approximately one and the same, just at different stages of their lives.
Let me add a feature that few seem to focus on, that has salience for me lately: “healthy” people can flip suddenly, and without notice, to being “sick” people. Suddenly, they recognize the benefit of higher spending on care, care that they didn't expect they'd need and probably did not—often, *could not* have saved for.
Mandatory insurance covers that in a way that protects the society from either (1) watching their neighbors, friends or family die or suffer from lack of care, or (2) allowing people to free-ride on our social sympathy.
We sometimes talk about healthy people subsidizing the sick. In fact, the two groups are approximately one and the same, just at different stages of their lives.
11
" But co-pays and deductibles reduce the ability of insurance to pool risk"
this is often overlooked as insurance companies find out that low-copay policies become sick person magnets, so premiums for those policies skyrocket.
Even inexpensive drugs that people with expensive diseases buy become ways for insurance companies to segment their markets. http://www.nejm.org/doi/full/10.1056/NEJMp1411376#t=article
this is often overlooked as insurance companies find out that low-copay policies become sick person magnets, so premiums for those policies skyrocket.
Even inexpensive drugs that people with expensive diseases buy become ways for insurance companies to segment their markets. http://www.nejm.org/doi/full/10.1056/NEJMp1411376#t=article
1
Having been both an insured and an uninsured consumer I object to the paragraph about insured people being less cost conscious. We might have been in the era before most plans had high deductibles, copays, high premiums, narrow networks, and other treatment delaying aspects in place but not anymore. Now the most common thing to hear is how expensive a visit to the doctor can be even if nothing is needed or done or, even worse, if the visit is necessary and perhaps it can be delayed until the problem is worse.
Health care is hard. Setting up a health care system that works for all patients rather than for the bottom lines of companies that do little biological research, overpay their CEOs, cut patient staff ratios down to dangerous levels to make more money, or deny or lose claims, should be easy. Plenty of other countries have universal access health care systems. America has a wealth care system. It's one reason our health care is so fragmented and mediocre and why diseases go untreated.
All we ought to need to do any time we visit a doctor, go to the hospital, go to pharmacy, or a rehab facility, or for eyeglasses, or a dental checkup, or need any other medical attention, is to present an id card that entitles us to the treatment we need. We could eliminate the upcoding on claims, the lost work hours, the stress over the basics versus medical care. This is the 21st century and good medical care ought to be a right not a luxury.
Health care is hard. Setting up a health care system that works for all patients rather than for the bottom lines of companies that do little biological research, overpay their CEOs, cut patient staff ratios down to dangerous levels to make more money, or deny or lose claims, should be easy. Plenty of other countries have universal access health care systems. America has a wealth care system. It's one reason our health care is so fragmented and mediocre and why diseases go untreated.
All we ought to need to do any time we visit a doctor, go to the hospital, go to pharmacy, or a rehab facility, or for eyeglasses, or a dental checkup, or need any other medical attention, is to present an id card that entitles us to the treatment we need. We could eliminate the upcoding on claims, the lost work hours, the stress over the basics versus medical care. This is the 21st century and good medical care ought to be a right not a luxury.
27
It’s also a question of whether an insurance policy should cover the known and likely risks of a particular person, in addition to unforeseeable (and expensive) catastrophe, or any possible health risk.
2
Known and likely risks? Like if someone had cancer, you would exclude covering payments for recurring cancer treatments, because it is one of the person's likely risks?
5
Like if someone has asthma or diabetes or migraines, they should pay through the nose for life, because, well, just because?
4
We have to decide on one question, is health care a right or a privilege available only to those who can pay for it ?
The laws we make will follow from the answer to that question.
For example, we have decided that education ( through high school ) IS a right , so we pay for it with taxes. Other countries have already decided that healthcare is a right and they have paid for it with taxes. The price of our healthcare is vast compared to all other countries , we can only control costs with the power of the Federal Government . Policy is not hard at all , other countries are way ahead of us .
ps I am not an economist , I am a NURSE
The laws we make will follow from the answer to that question.
For example, we have decided that education ( through high school ) IS a right , so we pay for it with taxes. Other countries have already decided that healthcare is a right and they have paid for it with taxes. The price of our healthcare is vast compared to all other countries , we can only control costs with the power of the Federal Government . Policy is not hard at all , other countries are way ahead of us .
ps I am not an economist , I am a NURSE
88
If your goal is the best healthcare for the least money, single-payer is what has been shown to work all over the world. Our current system is designed not to maximize the health of citizens but to provide profits for companies. Until that changes, nothing changes.
75
Single-payer is currently the system in three countries, and the world has about 189 countries.
1
As described in information provided in next links, most of the rest of the developed world doesn’t use ‘single payer’:
http://pleasecutthecrap.com/most-universal-health-care-is-not-single-payer/
http://www.rstreet.org/op-ed/no-the-rest-of-the-world-doesnt-use-single-...
http://www.businessinsider.com/what-can-the-us-learn-from-the-french-hea...
http://pleasecutthecrap.com/most-universal-health-care-is-not-single-payer/
http://www.rstreet.org/op-ed/no-the-rest-of-the-world-doesnt-use-single-...
http://www.businessinsider.com/what-can-the-us-learn-from-the-french-hea...
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The rest of the civilized world has figured it out.
To them it is not rocket science.
To them it is not rocket science.
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Gregory Mankiw, yet another conservative pundit in The Upshot (there is no other kind), claims that "Insured consumers tend to over consume"
False. Look at Japan, Britain, France, Germany, Canada. All of the people of those nations are "insured," yet those nations spend vastly less on healthcare than does the United States. There are no barriers to seeking healthcare, no big expenses for seeing a doctor. And no "over-consumption."
"Health policy is hard" because right-wing ideologues like Mankiw and his colleagues at The Upshot continue to dissemble and mislead.
It's really easy: single-payer for all. Just like every Canadian enjoys, and at a fraction of the cost in America.
False. Look at Japan, Britain, France, Germany, Canada. All of the people of those nations are "insured," yet those nations spend vastly less on healthcare than does the United States. There are no barriers to seeking healthcare, no big expenses for seeing a doctor. And no "over-consumption."
"Health policy is hard" because right-wing ideologues like Mankiw and his colleagues at The Upshot continue to dissemble and mislead.
It's really easy: single-payer for all. Just like every Canadian enjoys, and at a fraction of the cost in America.
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The quantity of care many citizens of those countries do consume is greater. Often times, but more than a factor of two.
Its because of their lower prices the overall costs are less.
Price x quantity.
Its because of their lower prices the overall costs are less.
Price x quantity.
According to Milton Friedman, the lower the price of a commodity, the more people consume.
According to reality, people only consume as much health care as they need. http://www.pgpf.org/chart-archive/0006_health-care-oecd
According to reality, people only consume as much health care as they need. http://www.pgpf.org/chart-archive/0006_health-care-oecd
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I have insurance through my employer with no deductible and $5 copays. I WAY over consume healthcare because of this. I imagine the reason they don't overconsume in single payer countries is because they can't.
Government could take over many things and force them to be "cheap." But that doesn't mean they should. It should be the last resort. There are many changes that could be made to unleash the market that haven't been tried. Fix the tax incentives. Confront the AMA monopoly. Allow catastrophic policies.
The biggest problem is a small percentage of people who can't get some healthcare. (But even they can get a lot.) Seems like a pretty easy fix, which the ACA went a long way toward addressing.
Government could take over many things and force them to be "cheap." But that doesn't mean they should. It should be the last resort. There are many changes that could be made to unleash the market that haven't been tried. Fix the tax incentives. Confront the AMA monopoly. Allow catastrophic policies.
The biggest problem is a small percentage of people who can't get some healthcare. (But even they can get a lot.) Seems like a pretty easy fix, which the ACA went a long way toward addressing.
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The author is right in stating that consumers rely on a physician's advice to make well-informed healthcare decisions, but such decisions are NOT hard to evaluate. It is being done all the time by the consumers (patients) themselves, their physicians, and by third-party payers (insurance companies) who decide whether or not to approve and pay for a certain treatment for an insured.
It is also not clear why the author states that co-pays and deductibles reduce the ability of insurers to pool risk. Co-pays and deductibles are largely for shifting some of the healthcare costs from employers to consumers and also to reduce excessive or unnecessary use of healthcare services, and they are mostly accomplishing those goals.
It is also not clear why the author states that co-pays and deductibles reduce the ability of insurers to pool risk. Co-pays and deductibles are largely for shifting some of the healthcare costs from employers to consumers and also to reduce excessive or unnecessary use of healthcare services, and they are mostly accomplishing those goals.
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Yes, they reduce unnecessary medical care, along with a lot of necessary care, resulting in massive damage down the road. Penny wise, pound foolish.
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I was reading this article, thinking to myself about what a simple and concise explanation of the healthcare market this article is was. When I finally reached the end, I was surprised to see that it had been written by the author of my AP Economics textbook -- but I shouldn't have been. I should have been able to tell it was you from the moment I saw the word "externality." Well done Dr. Mankiw.
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Whoops. Mankiw invented neither the concept nor the term "externality". Joe, you suffer from "familiarity bias". Any economics textbook written in the last 40 years includes discussion of externalities.
Too bad your HS AP course didn't include work by more economists; but you still can experience that at the college level (HS AP courses are not always equivalent of college level despite using college level textbooks).
Too bad your HS AP course didn't include work by more economists; but you still can experience that at the college level (HS AP courses are not always equivalent of college level despite using college level textbooks).
Mankiw presents a basic economic review of the topic, but cowardly stops short of following through to the logical and relevant conclusions: the Affordable Care Act was designed as a minimal intervention in dealing with these issues. The rest of the world has more robust universal coverage systems, like the "political left" in the US wants, and those systems are less costly and more efficient. They often provide as good or better care and all cost substantially less.
The "political right" in the US, by contrast, is stuck with the simplistic view that Mankiw decries without naming it. They claim "the market" will somehow make healthcare work better for Americans, and threaten to tear down even the minimal reforms needed to address all the issues Mankiw describes. He is often called upon as an advisor to Republican politicians, so he apparently wants to avoid saying bad things about them, but the implication of his op-ed here is that GOP healthcare policy is just stupid on multiple levels right now.
The "political right" in the US, by contrast, is stuck with the simplistic view that Mankiw decries without naming it. They claim "the market" will somehow make healthcare work better for Americans, and threaten to tear down even the minimal reforms needed to address all the issues Mankiw describes. He is often called upon as an advisor to Republican politicians, so he apparently wants to avoid saying bad things about them, but the implication of his op-ed here is that GOP healthcare policy is just stupid on multiple levels right now.
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A further complication is the rather extreme divergence between the interests of the businesses involved and individuals. Individuals, presumably,would prefer to be healthy. Yet, pharmaceutical companies, doctors, and hospitals are very dependent on chronic disease and its associated treatments and interventions for their profits. Insurance companies are dependent on strategic denial of payments for their profits. The individual striving to be healthy with as few interventions as possible is left largely on their own until something goes terribly wrong.
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When an effective drug was found for tuberculosis and hospitals for that disease were closed, physicians in those hospitals completed new residencies and moved into other specialties.
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For Mr. Emoluments & his grifters/Goodfellas any form of ZombieCare beats the dreaded fraternal twin of RomneyCare. Skinny or broad repeal &/or replace ACA would “liberate" tens of millions of Americans from insurance coverage, & premiums would spike for most of the remaining unliberated stuck in the free market health insurance pool.
The Mooch on ZombieCare, health care, & his “free market” ... dreams: the goal of the Republicans should be to "let the free market take care of health care", just like with airlines?
“No one wants health care to be like the airlines. ‘How was the hospital?’ ‘Not great! My surgery was three hours late, my bed was double-booked so they dragged me out of the O.R. and then they sent my appendix to Albuquerque.’” — SETH MEYERS
The Mooch on ZombieCare, health care, & his “free market” ... dreams: the goal of the Republicans should be to "let the free market take care of health care", just like with airlines?
“No one wants health care to be like the airlines. ‘How was the hospital?’ ‘Not great! My surgery was three hours late, my bed was double-booked so they dragged me out of the O.R. and then they sent my appendix to Albuquerque.’” — SETH MEYERS
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This is a good general summary of the topic.
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Great Econ 101 explanation but how can "markets" finance society's valued public service such as health care? If health is an example of a market failure meeting a government failure what are options for prudent public policies to provide citizens with access to quality care at a sustainable cost to provide care? Clearly our private employer sponsored health insurance market model of financing care is no longer sustainable, what it encouraged was the development of monopoly driven for profit health care for those who have resources. Leaving others to depend on the kindness of strangers. So how is that working for our economy?
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Few of the players care about health care, but rather their own interests.
Why would elected representatives want to take healthcare from tens of millions of their fellow human beings?
Why would elected representatives want to take healthcare from tens of millions of their fellow human beings?
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No more paying Doc Brown with chickens, no more house calls, no more Doc Brown actually living in your area. Now it is Doc Brown Medical Inc.
Imagine the huge "non profits" such as the Cleveland Clinic without insurance. They have built huge beasts that must be fed. They have plenty of "profit" they just don't have shareholders to give it to. They build new buildings and parking garages and pay their executives outrageous salaries.
Insurance may have been at one time a solution but now is a large part of the problem.
We need to gradually move to single payer by lowering the are for Medicare over time and gradually raising the income levels to qualify for Mecicaid.