Would Paul Ryan's voucher plan help control medical costs, or drive them further up?

It will drive down the demand for health services, because seniors will have to forego health care once their voucher runs out. It will lead to lower costs because seniors will die sooner, thus not have to be supported by what is left of Medicare.

Sorry too tired to be verbose but it sucks as an idea!

It would cost the elderly Americans more.

Ryan’s entire basis for claiming his plan would control cost is “the free market.”

As an example of how the “free market” seemingly magically controls cost, he offers Medicare Part D… which apparently controlled costs slightly better than the CBO thought it would.

Here’s a sort of interview where he defends his plan.

It’s complete bullshit, though, because Medicare Part D’s cost savings did not come from consumer choice. It’s also not insurance. And America’s “free market” insurance is tremendously more expensive than single-payer insurance in other countries.

And, of course, the CBO says the Ryan plan won’t control costs.

It’s classic right-wing ideology. You just have to have faith in the free market to solve all our problems. And if the evidence shows the free market isn’t working, it’s because you didn’t have enough faith in it.

I like the idea that he’s putting new ideas on the table.

But as far as the content of the actual idea, its not a smart move.

It’s not really a new idea to privatize Medicare. Republicans have wanted to do that ever since Medicare started.

What’s new, I think, is the level of fraud being used to sell this plan.

It’s an interesting plan. There is no question in my mind that competition spurs better results. We fare better when companies are competing for consumer dollars than when they compete for government grants or subsidies. If they are competing for consumers they tend to make better products at lower cost. When they are competing for government dollars they tend to hire more lobbyists and lawyers.

When the free market is enabled, companies try to design products the consumers want and will buy. When the government is involved the government defines the product and companies try to comply with those requirements. Innovation gets left by the wayside.

The Ryan plan has put this issue up for debate. Leaving the status quo is a recipe for disaster. If we can talk about the options rather just eliminating our options we may find a better way. So far it is the only plan I’ve seen that tries to address the long term. The other side of the slate is noticeably blank.

@Jaxk, why does your elegant theory on the benefits of free market competition so seldom actually hold true in the real world when it comes to the health insurance market?

If the free market really does result in better health insurance, why is health insurance so much more expensive in America than in single-payer countries? Why do so many Americans lack adequate health care compared to such countries?

@Qingu

Because we’re not comparing apples and apples. Other countries are not nearly as litigious as we are. Other countries don’t have the incredibly costly and time consuming drug approval process we do. Other countries don’t force a visit to the doctor for simple medication.

Why would you believe that the cost problem can be fixed by simply moving the cost to the government? (and spending more money on it in the process)

Fundamentally, because health insurance, like some other aspects of the economy as roads and large-scale research projects, is not something that actually works well with profit-based incentives.

I also don’t really see the relevance of your comments about “other countries” to the supremacy of the free market and competition. It seems like you’re grasping at straws to explain away the failure of your theory to match reality.

I should probably elaborate on why it doesn’t work well. Here are some reasons:

• Because consumers of health care and insurance—unless they themselves are actually medically trained—are rarely informed or rational actors.

• Because people do not choose to become sick (and thus their “choice” of purchasing medical treatment is fundamentally different from the purchase of other consumer products).

• Because for-profit insurance companies incentivize denying sick people care. Insurance companies that did not do so would be out-competed by more profitable competitors.

• Because for-profit hospitals incentivize providing redundant or unnecessary procedures.

That’s just off the top of my head. It also seems a better explanation for why our health care system is more expensive and less efficient than what you’ve offered.

@Qingu

You asked me why it was different in other countries. Why would then try to slam me for showing the differences?

And if you look at the projects you mention, they are not government projects but rather government paid. Still performed by private industry.

Let me take your objections one at a time.

“Because people do not choose to become sick (and thus their “choice” of purchasing medical treatment is fundamentally different from the purchase of other consumer products).”

Consumers actually choose the coverage they need. For instance I don’t really need mammograms or pregnancy coverage, so I probably don’t need that coverage. The government defines a one size fits all program that may not fit my needs. (Although I will admit that if I get pregnant, I’d be out of luck).

“Because for-profit insurance companies incentivize denying sick people care. Insurance companies that did not do so would be out-competed by more profitable competitors.”

Good blanket argument as long as you don’t look too closely. As it turns out medicare denies more claims that private insurance. Take a look at page 5 where it says denials. Medicare denies 6.85% of claims while Aethna (the next closest) only denies 6.8%. most are down in the 2–4% range.

“Because for-profit hospitals incentivize providing redundant or unnecessary procedures.”

So let’s see, since hospitals are generally losing money on these procedures, they need to make it up in volume? The truth is most of the unnecessary work is testing and is done to prevent lawsuits. If they take out your appendix and it wasn’t necessary the lawsuits increase to their detriment.

Overall, you need to rethink your arguments. They just don’t hold up to any scrutiny let alone close scrutiny.

i wonder if there will ever come a day when either @Qingu or @Jaxk is defeated in debate by the other, and fundamentally changes his philosophy

Yes, you pointed out differences. You really think think those differences make other countries twice as cheap and much more efficient than our free market (which you’re arguing should already be cheaper and more efficient on top of all that)?

1. My point was that consumers of health insurance have wildly different needs. I’m a healthy young adult; my grandma has breast cancer. Our needs for health care are fundamentally different than our needs for smartphones, food, or housing.

2. It’s not just about denying claims, it’s also about rescission, or effectively pricing sick people out of your insurance policy. It’s not profitable for insurance companies to cover sick people period.

3. “The truth is most of the unnecessary work is testing and is done to prevent lawsuits.” Can you back up this claim? I’m certainly willing to agree that this accounts for some of it, but most?

Also, considering the bulk of your argument concerns excessive lawsuits, how do you explain the CBO’s finding that tort reform would only save about $54 billion over ten years?

That’s a tiny fraction (½ of a percent) of the cost of health care, and cannot account for anywhere close to the huge difference in spending between the US and other countries.

(Edit: from the horse’s mouth, here’s the CBO report on tort reform. Probably the money quote: “Thus, even a reduction of 25 percent to 30 percent in malpractice costs would lower health care costs by only about 0.4 percent to 0.5 percent, and the likely effect on health insurance premiums would be comparably small.”)

@cockswain, I’m not arguing with Jaxk to change his mind. Though one can always hope. :)

If you turn me into a liberal, I’ll kill myself. I’ll get back to you on the other parts including the ridiculous CBO estimate in a while. I need to break for business.

Well, maybe I should stop arguing with you, since I wouldn’t want you to die.

Just for reference (because I keep on mentioning it), the US spends about $7,200 per person on health care. That’s about twice as much as almost every other first-world country, all of which have (1) public health insurance and (2) higher life expenctancies than us.

source

@Qingu

I’m getting quite used to the idea of liberals misusing statistics. For instance we have the highest incidence of traffic fatalities of the countries you list. 3–4 times as many in some cases. This dramatically affects the life expectancy and has nothing to do with health care. But it is an oft used statistic to support an erroneous conclusion.

As for the CBO report, they are looking at the cost of malpractice insurance. That is but a very small piece of the puzzle. Defensive medicine is the major driver and where the costs can be dramatically reduced. The study referenced puts the cost at $1.4 billion ANNUALLY for just MASSECHUTES. If we take that through the 50 states we’re looking at $70 billion annually. And without much work I can find studies that put the number much higher. By-the-way, it also gives you a sense of the excessive tests that you were questioning above.

I don’t think you have to worry about my killing myself. You’d need to come with real relevant data to make your point before there’d be any danger of that.

My argument was not remotely focused on life expectancy. If we had the same life expenctancy as all those countries my point would still stand.

And it’s clear you didn’t read the CBO report. That’s okay, but you should know they don’t ignore defensive medicine; here is what they have to say about it:

Proponents of limiting malpractice liability have argued that much greater savings in health care costs would be possible through reductions in the practice of defensive medicine. However, some so-called defensive medicine may be motivated less by liability concerns than by the income it generates for physicians or by the positive (albeit small) benefits to patients. On the basis of existing studies and its own research, CBO believes that savings from reducing defensive medicine would be very small.

You also didn’t read your source. The 1.4 billion doesn’t translate to 1.4 billion in savings. It’s 1.4 billion in certain procedures: “plain film X-rays, CT scans, magnetic resonance imaging, ultrasounds, laboratory testing, specialty referrals and consultations, and hospital admissions.” The article doesn’t suggest that every one of these procedures is unnecessary; presumably many of them are often useful.

And if you think multiplying this figure in MA (a very populous state, with universal health insurance coverage to boot) by 50 gets you a national figure, your math skills need a lot of work.

@Qingu

I did read the report and they assign no value to defensive medicine. They also state that it deserves more research. I provided more research. They tend to talk around it but don’t do anything with it.

As for the research I provided, it is unclear how you could have read it and come up the statement you made. They say

“About 83 percent reported practicing defensive medicine, with an average of between 18 percent and 28 percent of tests, procedures, referrals, and consultations and 13 percent of hospitalizations ordered for defensive reasons.” Immediately followed by “Such practices were estimated to cost a minimum of $1.4 billion per year in Massachusetts.” It is pretty clear they are talking about defensive medicine practices and not the testing criteria discussed in the setup.

And since they said these defensive medicine practices cost a minimum of $1.4 Billion, I feel a 50 state expansion gives a reasonable thumbnail sketch. What do your math skills tell you it’s worth?

Jaxk, why do you think every dollar spent on defensive medicine would, with tort reform, equal savings to health care costs?

Your source doesn’t remotely address this. It simply puts a dollar figure on MA’s defensive medicine procedures.

As for “multiplying MA by 50,” MA has universal health insurance coverage, so you can’t treat it as a median state. But this is a minor point.

I guess my basic point is this. You are asserting that tort reform would save hundreds of billions of dollars in health care costs.

You freely ignore the CBO’s direct contradiction to your claim… despite this being their entire job to figure out.

You cite a single source in support of your claim… that doesn’t remotely support your claim.

I mean, you’re going to have to give me more to go on here, Jaxk.

@Qingu

You never get it all but it’s a big enough number to go after. As for the national costs, even by my rough estimate, it agrees with many of the studies.

Here’s a few examples:

“In a study published last year by the Pacific Research Institute, the total impact of the current tort system on medical expenditures was estimated to be $124 billion annually”

“Tillinghast (2000) estimated the cost of defensive medicine at $70 billion nationally”

“A recent study reported that over 93% of Pennsylvania physicians reported engaging in defensive medicine in various forms” (Studdert et al.)

“In fact, some estimates report that the practice of defensive medicine costs the American health care system in excess of $100 billion dollars annually” (Managed Care Magazine. March 2005)

Jackson Health Care did a national study in 2009 and estimated the cost at $650—$850 Billion annually.

And here’s a slightly different take how to do tort reform.

Here’s an indication that tort reform works. It provides both sides an opportunity to voice their opinion so I think it’s fairly even handed. And remember that it takes many years for doctors (or anyone) to change their behaviors. So Tort Reform will not have an immediate affect but rather a long term impact.

Basically, it seems very shortsighted to simply say, there’s not much there. The evidence would indicate otherwise (from a variety of sources). Let me know if you need more. There’s lots out there.

I had written a whole bunch of responses and my browser shut down on me. Lost it all, and I am too tired and miffed to do over. I’ll answer everyone tomorrow. And for now, thanks to all for your thoughts on this.

@Jaxk, I’m not disagreeing with you that doctors often do unnecessary procedures, and that this places a significant cost burden on our health care system (in fact I’m pretty sure I mentioned this earlier).

I’m disagreeing that tort reform will lead to significant cost savings in this avenue. The CBO has explicitly said otherwise. Part of the problem is that much of “defensive medicine” is subjective, and it’s not at all clear that fear of malpractice suits solely motivates any given defensive medicine procedure. Also, much of your rhetoric is operating under the assumption that every single malpractice suit is unwarranted, which is of course nonsense.

In addition, Obamacare contains a number of provisions aimed at reducing such procedures. I mean, this is the whole point of the comparative effectiveness research provisions—to eliminate unnecessary and expensive defensive medicine procedures.

And the total savings in this area, even in the best case scenario, are not even close to the huge gap in health expenditures between America and other civilized countries, which is what started this whole tangent in the first place.

I’m not opposed to tort reform, but you and other conservatives seem to think it is this magic bullet that can solve all of our problems with health care. It’s just nonsense. I mean, the numbers in the sources you cited are, when applied to total health care costs, miniscule. Reducing doctors’ malpractice insurance premiums —as far as I can tell, the notable effect of tort reform—simply does not translate into significant cost reductions in health care in general, or even necessarily into less defensive medicine.

As it happens, the WP just published a blogue about this very subject, for anyone interested:

Meme busting: tort reform = cost control

Jaxk, I don’t expect you to read that if you don’t feel like it, but it is basically a more detailed version of the position I’ve argued on here.

@Qingu

Interesting. The link I had above evaluated the same data from Texas and came up with different results. I suppose that’s not surprising. I would however, state, the I don not think Tort Reform is a magic bullet. That’s a democratic talking point. I do however think that there is just too much money in defensive medicine to ignore. When doctors are surveyed to find out how much defensive medicine they practice, they seem to think it’s a big portion of their daily business. As cited above 83% of doctors in Mass think they practice defensive medicine and 93% in Pennsylvania think they do. The estimates of it range from 10% to 15% of all our medical cost go to defensive medicine. And defensive medicine by definition is to avoid lawsuits.

What I find interesting is that even you and your advocates seem to think Tort Reform is a good idea (you’ve said as much). While me and my guys also think it is a good idea. We just have different ideas on the amount of money involved. Your guys don’t think there’s much there, while we think there’s a lot. So regardless of the actual savings why are we dragging our feet on this if we both agree it should happen. Here’s my take and it is only my opinion.

Democrats want to reorganize first then then adjust for savings. Republicans want to adjust for savings first and then reorganize if needed. We’re at an impasse (or we were). Now what we’ve done is to put in place a system that satisfies no one. It creates a huge government bureaucracy but doesn’t address the cost (Republicans hate it). While it creates a huge government bureaucracy, it doesn’t change the fundamental system (not single payer nor any public option), the Democrats hate it. OK I’m generalizing.

One thing I learned years ago, is that you can’t reorganize to fix a broken process. Many companies have tried this and it never works. You end up with a new organization with the same broken processes. You need to fix the process and then reorganize to optimize the system. I see the defensive medicine as a broken process. Since we both seem to think it should be fixed, that’s where I want to start. Call me crazy.

1. I think you are conflating “defensive medicine” with “absolutely unnecessary procedures.” What fraction of defensive medicine would a doctor consider unnecessary? What fraction of that is actually motivated by fear of lawsuits, as opposed to (or in addition to) other reasons? And, more importantly, what is the best way to cut back on such procedures? Like I said, HCR actually contains a number of provisions designed to cut back on what you’re calling defensive medicine.

2. “We just have different ideas on the amount of money involved.” No, there actually isn’t that much money involved. You haven’t given any evidence whatsoever that there’s more than a sliver of total health care costs at stake when discussing tort reform. This is the most important sticking point in our discussion. If the money isn’t actually there, then this entire discussion is a footnote at best, a red herring at worst.

And if there isn’t any significant money at stake with tort reform, the reason “my guys” are dragging our feet is because there are significant downsides to shifting malpractice. You would need to replace it with some other kind of disincentive, because in many cases doctors are making poor decisions and malpractice suits, for all its flaws, is one of the only bulwarks in our system against malpractice.

3. I’m not sure what you mean by “reorganization.” The Ryan plan is a huge reorganization as well. And as far as popularity, Obamacare as a whole is unpopular, but the individual provisions within the plan are mostly very popular. In many cases people have no idea whatsoever what HCR actually entails. And the people that do hate it typically hate it for different reasons. Democrats “hate” HCR because it doesn’t contain a public option and is a windfall for insurance companies, not because they think it won’t achieve cost savings and insure almost all Americans… which is the point of the legislation.

And a general point about reorganization vs. fundamental change. I always find it ironic that conservatives, the people who historically favor gradual, incremental social evolution, so often want to fundamentally change our social programs (before Ryan’s plan to privatize Medicare it was Bush trying to privatize SS).

Liberals also want fundamental change. Single-payer would have been fundamental change in the other direction. And Obama gets a lot of flack from his base for being conservative in the classic sense—of compromising and chipping away at the flaws of systems, rather than tearing them down and rebuilding.

Maybe there’s something to criticize there. On the other hand, I think it’s very easy—especially among people who do not have a responsibility to actually draft such legislation, like you and me and regular voters—to underestimate the negative effects of fundamentally changing complex systems. Unanticipated consequences: It’s better to deal with the devil you know than the devil you don’t know. And I think this is important to keep in mind when discussing health care reform, or any major reform in American society.

@zenvelo Ha! Clever point. We could save all the money we currently spend on healthcare by just not having any.

@janbb Thanks.

@marinelife Copy that.

@Qingu Well said. We are the only developed country on Earth with no public option or public healthcare system. Trusting everything to the magic of the free market has gotten us to the bottom of developed nation in healthcare outcomes and the top in cost. We pay nearly 2 times as much per capita as the top nations pay. There is nothing in that that suggests to me that the magic of the free market is going to work for healthcare cost control.

@tedd It certainly has put the issue front and center. I think his plan stinks like 3 day old fish, but the entire system has endemic problems and needs serious work. And it does have folks talking.

@Qingu I am sure there is much more spin to come.

@Jaxk I don’t follow how government grants or subsidies have anything to do with healthcare insurance. Subsidies are what Republicans insist we must continue for oil companies, not senior citizens. Single-payer healthcare has no impact on what services the medical care industry offers. It remains free-market. The only difference single-payer makes is the government is the insurance company, not a for-profit business.

It would seem to me that you’re right that tort reform should be on the table in looking for cost control. But that has no bearing on whether single-payer or free-market insurance is more efficient. The topic here is Medicare versus free-market insurance for seniors. Let’s keep the focus on that. Cost control is a separate but vital issue. And if we don’t get cost under control, medical costs will bankrupt America whether we stick with Medicare or switch to all private insurance.

And there is no way lawsuits account for the huge difference. The world’s 31 rated system is the French system, which features single-payer/private hospitals and doctors. Their system insures everyone, even tourists while in France, and it does it for about 10% of their GDP> We leave 52 million uninsured, and spend over 17% of our GDP. And we are on target to hit 25% by 2025. That will bankrupt us. Since the status quo is so clearly not working, doubling down on the status quo is heading in a dead wrong direction.

@ETpro, Jaxk had brought up tort reform—or rather, the problem of overly zealous malpractice suits—as an explanation for why Americans, with their supposedly ideal free market health care, pay twice as much in health care compared to other developed countries with public health care.

His other explanations were the FDA’s drug approval process and… I’m not sure how exactly to interpret “forcing people to visit the doctor to prescribe medicine.”

@ETpro

I would disagree that single payer has no impact on services. The government has total control of what services are covered and to what degree. They determine what medication will be covered and how much they will reimburse for procedures, as well as what procedures will be covered.

Also cost control is the whole point here. If there were no cost problem there would be no need for reform nor would we be looking at medicare going bankrupt. The drivers of cost are essential in looking at any alternative or reform.

I have searched relentlessly for data from France or other European countries to get a dollar figure for malpractice. To no avail. This is not the first time nor will it be the last. There is an article from Ezra Klein that describes some of the differences in handling malpractice in France. He too states that finding real data is a challenge. I submit his article for information not opinion. The basic point here is that it seems a bit short sighted to say the difference is single payer vs free market when it’s obvious that other differences affect the cost as well. We’re only haggling about how much. I would think that getting the lawyers out of the process would be worth a lot.

You can have single payer alongside self pay. Let’s just get rid of the private insurance bullshit. Well, we don’t have to make private insurance illegal or anything, but let’s get rid of this ability for them to own and control the industry. No more private insurance attached to jobs, and people should be able to self pay or use the public system. Supposedly I cannot self pay for a CT scan because I have insurance. That is ridiculous.

@Jaxk, the problem is, we have calculated the effect of one of those differences—malpractice—on our own health care system. And its effect is miniscule.

Do you have any information to suggest that malpractice reform would result in non-miniscule cost savings? You keep on saying we “disagree” or we’re “haggling about how much.” Well, how much do you think, and why?

(And please remember, defensive medicine costs =/= malpractice costs =/= tort reform savings to HC)

@Qingu

Here’s my problem with that. I could throw out a number but I’d have nothing to back it up. The CBO minimizes the effect but that seems a bit unrealistic since we know the defensive medicine cost can be in the hundreds of billions. We also know that by definition defensive medicine is to avoid lawsuits. We also know that Europe handles this differently. The article cited above about France, indicates that the claims have been moved out of the normal legal system and are handled more like arbitration. The government now pays those claims rather than any insurance company and frankly it’s not clear if those costs are even counted in the medical costs. We also know that in Europe it is much more the burden of the plaintiff to prove malpractice while here it’s more the defense to prove no wrong doing. A subtle shift but significant. Further we know that countries in Europe are addressing malpractice (such as France) to improve the process and reduce costs (so somebody thinks it has value).

Now to put a dollar figure on it would be difficult for me. But even a small percentage would be quite lucrative. If we want the government to get into the insurance business, let them pick up malpractice insurance. I could get behind that. As I said before habits and practices won’t change overnight. So any tort reform will take a while to impact defensive medicine.

Also since you kicked me for providing only one source initially, I would caution you about putting all your eggs in the CBO basket. We don’t know what criteria they used and they’ve been wrong before.

There are two basic questions I’d like you to answer, and if you can’t, I really hope you’ll seriously rethink the argument you are making.

1. What percentage of defensive medicine—and, related, what percentage of malpractice suits—do you think are actually unjustified?

2. If your goal is to eliminate unnecessary and costly medical procedures, why do you think tort reform is a meaningful answer to this problem when every source I’ve cited says it’s not?

Now, I fully agree that the source of America’s expensive health care has a lot to do with unnecessary and costly medical procedures. But I think a better solution to this problem would be to shift health care away from a fee for service model, and towards a model where health care providers get paid for the total quality of care they provide. Another helpful idea would be to establish a standardized “best practices” across health care; that way doctors would know to avoid unnecessary procedures, a new fee system would have some grounding—and, to boot, these best practices could shield doctors in unjust malpractice suits.

@Qingu

A couple of rules. Typically I don’t post things without reasonable backup data. I’ve just been down the road where I’m held to a much higher standard on this than virtually anyone I’ve seen. I’ll provide answers as well as I can, provide backup data, and let you know if this is just my best guess. The only thing I ask is that if I’m held this standard, you provide the same for your proposed solution. In other words, hold yourself to the same standard.

First a little background. In 1999 Insurance companies paid $4 billion in malpractice claims. 25% of all doctors get sued annually and 50–65% of doctors get sued at least once during their career (When Good Doctors Get Sued, 2001).

Legitimate or not, these figures put the fear of god into doctors. It’s not the off chance that they will be sued but rather ‘the odds on bet’. This is what spurs the defensive medicine. What makes it worse is that the higher the awards, the more likely a lawyer will take a questionable case. Kind of risk reward analysis. Additionally since the insurance company is doing the same risk reward analysis, they may pay a junk lawsuit just because it is cheaper than the cost of defense. And let’s not forget that even if a case is dismissed the defense lawyers still cost a fortune.

Now for some numbers, According to New England Journal of Medicine about 40% of malpractice lawsuits groundless. This number is disputed by, guess who, The Trail Lawyers. Nonetheless, I have no problem believing it. As for what percentage of defensive medicine is unjustified, by definition, all of it.

For you second point there are a number of reasons. First let me address your two sources. Both assess the same data in the same way. They look at the couple of states that have capped liability and conclude there’s nothing there. It seems pretty anemic and doesn’t look at a broader perspective. Nor does it look at different methods of tort reform such as the health courts (the avenue I think has the best chance of success). The health courts are coincidentally, more like the system used in France.

Despite what you may think, I’m not closed minded on all this. Best practices are already distributed throughout the medical proffession, they’re just not dictated by the Department fo Health. There are also doctors that will provide unlimited health care for an annual fee, it’s called Concierge medicine. It’s fairly new and hasn’t come into it’s own yet but doesn’t involve government takeover either.

The basic point in all this Defensive Medicine, is that we need to get doctors back to making their best diagnosis instead of worrying about who’s going to sue. I find it interesting that if you look at where the government is responsible for malpractice lawsuits (the military) they don’t have a problem restricting tort liability. It’s called The Feres Doctrine.

Anyway, I hope I’ve answered the question.

@Jaxk Back before Medicare kicked in for me, when I had a healthcare policy with a for-profit company, I had virtually no control over what they did and didn’t chose to cover. I had nominal control when selecting a provider, but opnce the selection was made, I had no effective control. Leave them, and lose coverage of whatever the issue was.It’s now a pre-existing condition..

At that time, insurers routinely rejected a large percentage of claims on first submission, forwarding them back with paragraphs full of mumbo-jumbo legalese about why their policy didn’t apply to whatever the claim might be. They had learned that enough of their customers would be cowed by the legal blather, and unwilling to read through the fine print of the policy to see if it was true, and would just roll over for them and play dead. It boosted profits to collect premiums but not pay benefits.

I could have “upgraded” to a high-end provider to get more items covered, but it would have cost me $2,500 a month instead of $600. The wonders of free-market capitalism at work. Frankly, I’d rather trust in voting the bastards out if the government starts treating me as shabbily as the magical, absolutely egalitarian for-profit folks did.

Of course, all those free-market abuses, including just cancelling policies after collecting years of premiums, if a customer became ill and would need extended care—those are all handled by the Affordable Care Act. But your free-market friends are determined to repeal that and goo back to the good old days when we were “protected” by the profits over people truths of free-market perfection.

As to cost control, the discussion here is about cost, yes, but not on a broad, global scope. IThis is about Ryan’s kill Medicare plan and its impact on cost. For that discussion, other things we can and should do to reign in runaway costs are irrelevant/.

@JLeslie That’s actually what I prefer. There will be those who are well to do and want more than a single-payer system provides. They should be able to have that. I do favor an individual mandate, though. Everyone must be covered wither in the single-payer system or privately. The reason is we have an individual mandate now, and it’s costing us a fortune. It’s called the Emergency Room. We are a society too compasionate to just let someone lie on the hospital floor and die because they don’t have insurance. When they can’t pay for the services rendered, all of us who pay for our healthcare get stuck with a portion of their bill But @Jaxk and his friends are fighting hard to make sure that cost multiplier stays just as it has been as well.

@ETpro

Excellent attempt to distort my position. You say: ”@Jaxk and his friends are fighting hard to make sure that cost multiplier stays just as it has been as well.”, yet all of my posts have been about reigning in costs. How can you possibly read that as saying I want things to stay the same. It boggles the mind.

And as for the cost control on a broad basis it is absolutely relevant. I can’t believe you would think otherwise. The Ryan plan provides credits for health care and the whole argument is whether seniors will have to kick more money than they do now (or will in the future). If medical care costs can be reigned in on a broad basis, that has major impact on whether the Ryan credits will be sufficient. These points are connected.

It never ceases to amaze me that Democrats feel compelled to compare their plan to doing nothing at all instead of comparing the plans. Of course if you look at medicare, the democrats plan really is nothing at all.

As for your pre-existing condition, Republicans have agree with fixing that since the beginning of this whole health care debate.

Unless we fix this broken process we will go bankrupt. Obama care does not bend the cost (according @Qingu‘s favorite source, the CBO) and merely shifts $500 billion out of medicare to pay for Obama care. How the hell does that fix the problem? The Democrats have nothing on the table but instead choose to spend their time railing against the only thing that is on the table.

It seems to me, there are three choices.

1. do nothing (AKA the democrat plan)
2 . consider and maybe tweak the Ryan plan
3. offer a new plan (or hell, any plan)

Option 1 seems to be your choice.

Jaxk, you didn’t answer my question remotely. Let’s say you’re right and most doctors get sued, and 40% of these suits are groundless.

Now please walk me through the math. What alternate system are you suggesting (liability caps?) And how would such a system produce significant cost savings in health care?

Please feel free to be as pedantic and point by point as you like. Because so far you’ve basically repeated two points over and over (defensive medicine is expensive! Doctors are afraid of malpractice suits!) without explaining how you would produce cost savings in these areas, and in the face of several legitimate sources that contradict such an idea.

It’s also remarkable that you keep on accusing Democrats of “doing nothing at all.”

Your party didn’t seem to think Obamacare does “nothing,” they were railing against it as a socialist takeover for a year. The more levelheaded CBO (which of course you feel free to ignore at your leisure if it contradicts your ideology) says it produces significant savings in health care costs and reduces the deficit. One way it reduces Medicare costs is by shifting away from fee-for-service payment, which the hospitals are apparently quite angry about.

The CBO does say the Ryan plan doesn’t do anything to reduce health care costs, on the other hand, and simply shifts costs to seniors. The “credits” you mentioned are tied to inflation, not to health care costs (which rise faster than inflation). What on earth do you think the Ryan plan does to address health care costs in general or Medicare costs in particular?

@Qingu

Let me answer your second post first. We are talking about Medicare. That was the question and @ETpro has even asked us to refocus on that. So when you throw in the Obama Care it merely reduces medicare by ½ a trillion. The payments to doctors through Medicare are substantially reduced without regard to rising health care costs. For some reason they feel they can simply pay doctors less and that will generate savings even though they know they must approve another bill each year to increase payments to doctors. Count the first as savings and ignore the second because it would screw up the accounting trick.

Then you go into your wellness program which is highly speculative and generally increases the cost to hospitals in pursuit of an ever diminishing medicare dollar. Just like the preventative medicine that actually raises the cost of care rather than reducing it.

If you have a Democratic plan for saving medicare, I’d be interested to hear it.

@Qingu

I’ll get back to you on the other post but for now I need a break. I will say however that I answered your questions. Maybe you didn’t ask what you really wanted to know.

@Qingu

I wanted a break but couldn’t stand the idle. As I said above my preferred solution is the Health courts. Lawsuit caps are at best an interim step to solving the problem. Since the CBO limited the response to caps I feel justified in saying they did not do a comprehensive study. And even at that they say they need more research.

Health courts are more like what they do in France and as I’ve also stated if you want to compare their service and cost, you should look at more than whether it is nationalized. There are more pieces than that. Here is a guy that better describes the Health Courts and why they represent not only a major change in the way we handle claims but why they benefit both doctors and patients alike. We need to take the fear of lawsuits out of the medical profession and get back to letting them do thier best work.

@Jaxk I do owe you an apology. Indeed you have been proposing measures that address cost control, and it was entiorely wrong to paint you with the same brush as those on the right who only talk about psuedo-cost-control that is actually intended to further empower healthcare insurers to extend their abuses. I apologize for including you personally in that group.

Still, I do not see how a separate debate on what would work for cost control answers the question as to whether the Ryan Plan itself accomplishes anything to that end. It seems to me it would make an already bad situation worse, not better. And it would make it far worse if accompanied by a repeal of, or defunding of the Affordable Care Act; as it would let insurance giants go back to their past abuses and then some. Taxpayers would have to chose between paying more to cover the rising costs or letting many seniors who did not have deep pockets go without any care other than the current individual mandate—the Emergency Room.

Obamacare doesn’t “merely” reduce Medicare payments by 500 billion, Jaxk. And you are conflating wellness with preventative medicine, which are really nothing to do with each other apart from both being advocated by democrats (and I’d be fine with a smarter, more targeted preventative program to save money—preventative care actually has a lot more to do with defensive medicine, by the way).

And you have not remotely answered my questions. Walk me through the math. Show me how health courts, or whatever proposal you like, will actually end up saving significant money.

Your source does not do this; he/she simply asserts that health courts will magically eliminate $650— $850 billion in spending every year. You need to fill in the gaps.

Nothing I’ve seen, in anything you’ve posted—and you’ve posted a lot—has shown how reducing malpractice payments will translate into reduced health care costs. That is the answer I’m waiting for—show me how, exactly, this would happen.

@Qingu

First I’m not conflating it I’m comparing it. And preventative medicine has nothing to do with defensive medicine.

The dollar figure you so vehemently demand is a difficult number to precisely determine Most of the data is more ancillary and suggestive rather than concrete. For instance This study found that in states that
imposed a package of tort reforms including caps on damages and
collateral source rule amendments, hospital costs grew 5 to 9 percentage
points less than in other states for Medicare patients with heart conditions
without adverse effects on selected outcomes, such as mortality.

CBO estimates that implementing the package of tort reforms described above would result in a 0.5 percent decrease in health expenditures (Reference 1), while other methodologically strong studies put the effect of “direct” reforms (noneconomic damages caps, collateral-source rule reform, not allowing punitive damages, and not requiring defendants to pay prejudgment interest on damages awards) in the 5 percent range

The problem with both the CBO number and the other studies are that they don’t go to the root cause of the problem. By limiting the amount of a claim you’re not affecting the mindset of the medical profession. In other words claims can be just as frivolous and frequent even though the payout may be less. If you want to eliminate defensive medicine (and I do) you need to separate the medical decision from the legal decision. I believe the Health Courts do this much better than liability caps. So whether you believe the CBO’s number of $11 billion annually or the other studies of $130 billion annually, nether really addresses the root cause. Nor does either evaluate the benefit of addressing the root cause.

Basically I don’t dismiss the CBO so much as I find rather narrow and restricted. It is also at the low end. The other report you cited, I do totally dismiss as obviously flawed. They try to compare Texas against the rest of the country while many of the other states have widely varying tort reform laws of their own. You simply can’t tell what they are comparing.

Frankly if this answer isn’t good enough for you I’m done.

@ETpro

I’m not sure why we’re missing each other on this point. One of the more common arguments against the Ryan plan is the it does not keep up with the cost of medical care (or insurance premiums). That over time the medical costs escalate faster than inflation and that seniors will be paying more and more of the medical costs.

Now if we can do something to slow or reduce the overall growth medical costs it would seem the this would be less of an issue. In other words if we could bring the growth of medical costs down to the rate of inflation the Ryan plan would be more acceptable (or at least less offensive).

@Jaxk On that, we agree. If we let medical care get to 25% of our GDP or more it will bankrupt our economy. It matters not whether that happens under a single-payer plan like Medicare, or a private, for-profit scheme. But Medicare is more administratively efficient then for-profit insurance. Slice it how you like, real administrative costs are lower despite all the right-wing think tanks Herculean efforts to make down = up. Every single payer system in the developed world acheivces FAR lower per-capita cost and spoends a far lower percentage of their GDP on healthcare than we do. They spend a far lower percentage of their GDP, and their costs aren’t escalating far in excess of inflation as ours are. And they achieve better healthcare outcomes than we do. That’s measuring mainly hard numbers such as life expectancy, deaths in childbirth, infant mortality, and deaths from preventable cause. No matter how hard you try, you can’t really spoin all that into being just the opposite of the stark picture it paints.

I welcome discussion of how to contain costs. That is a must do that I feel Obama gave short shirft. But the Affordable Healthcare Act is a good starting point and the Ryan plan is a non-starter. That dog won’t hunt.

@Jaxk, I can’t download the pdf of your first study right now, but the title seems quite selective (just heart patients)?

But I think you’ve hit at the heart of the problem, and our disagreement; the “mindset.” So here is what I’d like you to explain:

Let’s say I’m a doctor who practices defensive medicine. Let’s also say that you institute health courts and/or liability caps, or whatever, with the purpose of making malpractice suits less scary to me.

Why would I practice less defensive medicine?

I still get paid for every service I do. There’s a profit motive for me if I continue doing it. And the threat of lawsuits are still there; I just have to pay less in my own malpractice insurance. “Better safe than sorry.”

We both absolutely agree that the root problem here is doctors doing too many unnecessary procedures. But I still don’t see how malpractice is a major contribution to this problem. I think the major contribution to this problem is the fee-for-service pay structure. And I don’t really see why this should even be such an ideological dispute. We have plenty of data to compare, and in other countries without fee for service, HC is much cheaper and unnecessary procedures are much rarer.

I hate fee for service. The best hospitals, Johns Hopkins and Mayo, have doctors on salary. A friend of mine, he is a surgeon, who makes tons of money, wants to know what insentive he will have for being a good doctor and learning new pricedures if he can’t charge a lot of money for those things. Fuck him. Half our country works for a salary and works hard, and care about being better and helping people. Military doctors are paid a salary, and not a very high one, but a very reasonable one, and they care about medicine, the patient, and doing well. Integrity. Work ethic. Love of medicine. I want the doctors back and the businessmen out of the field of medicine.

Sorry to interrupt your discussion, just had to throw in my 2 cents.

Yeah, greedy doctors are definitely an elephant in the room. Nobody wants to criticize the noble profession of medicine, but a lot of these people clearly do not deserve the money they make.

@JLeslie There is talk of moving to fee for outcome, which might be a tough transition to manage, but should produce far better care and lower costs if we can figure out an equitable way to do it. It would eliminate the greedy doctor part of the cost equation, which @Qingu is talking about. No more piling on unnecessary tests and services just to run up the bill.

@ETpro

I try to question these statistics when they come up and maybe I question too much. Nonetheless, it would seem appropriate to look a little deeper before you begin throwing around statements like you did above. You seem to think if you can throw out enough statements and call them ‘Hard Numbers’ that no one will challenge them. Unfortunately I will.

Let’s look at life expectancy. I’ve long argued that things like car accidents have a huge impact on life expectancy. And I’ve even posted some statistics on that above. Auto accidents will skew these numbers and have nothing to do with medical care. But OK you ignore that. Let’s look at another set of numbers where auto accidents would have less impact (no pun intended). If you look at life expectancy past the age of oh say 65, and compare it with the UK. If you live to 65 in the UK you can expect to live another 16.9 years. If however you reach 65 in the US, you can expect to live another 17.1 years. The longer you live in the US the longer you can expect to live so that at age 80 the difference gets larger. This is for men the numbers for women are even better. These are a better measure of medical care without the impact of things like accidents. The older you are the more medical care you need. The more medical care you need, the more you benefit by living in the US.

Now let’s look at infant mortality and still births. They are much more affected by birth weight than any other single cause. It would seem appropriate to look at the causes of low (or even high) birth weight before damning the medical system. We know that women are having babies later in life and commonly have caesareans (causes low birth weight). We know that druggies tend to produce low birth weights. We know that smoking tends to produce low birth weights. Again I miss the connection to damning the medical profession or the health care system.

As far as deaths fro a preventable cause, you’d need to show me what they are.

The health care costs are killing us. Obama care does nothing to fix that. According to CBO Director Doug Elmendorf “Rising health costs will put tremendous pressure on the federal budget during the next few decades and beyond. In CBO’s judgment, the health legislation enacted earlier this year does not substantially diminish that pressure.”

Simply nationalizing health care is not a fix. If you don’t like Ryan’s plan what would you do? Obama care will not bend the cost curve and unless we do, it will bankrupt not only medicare but the nation as a whole.

@Jaxk Stats in living longer might just mean Americans are much worse at accepting death. Not much different than saying babies are born with low birth weight because of the mother not the doctor.

@Qingu

I know you think you’re making a good point but it’s not they way it works. First, I’ll completely ignore the fact they we have a shortage of doctors and they have plenty of work. In fact they’re turning away Medicare patients rather than doing excessive work on them.

If you’ve been to the doctor, what usually happens is that they do the general exam but farm out the testing or any specific procedures. to a specialist. In fact most of the defensive medicine is farmed out specifically to spread the risk. If the specialist doesn’t find anything then he’s the guy you sue. And he’s the guy that gets the billing. do you honestly believe that the doctors are trying to run up the billing for someone else?

@Jaxk My MIL was complaining last time I saw her that her doctor was insisting she come back to the office for lab results, run of the mill labs, no cancer diagnosis, or anything that need a next step of lots of information. My MIL asked to just have the lab results sent, they wouldn’t. In the office, results normal, my MIL asks why it was necessary for her to come all the way back to the office, the doctor’s reply, “Medicare is paying you don’t have to pay anything.” My MIL will never go back to her again.

I have to wonder, are you very healthy?

@Jaxk If you cherry pick the statistics you want to take a look at, you can prove just about anything you want via statistics. You are most certainly cherry picking. I will venture a guess that the WHO when they chose the set of statistics they would look at for all the world’s major health systems did not set out to find just the right combination to place the USA #37 in the world in outcomes, and yet #1 in cost per capita.

“In fact most of the defensive medicine is farmed out specifically to spread the risk.”

You keep on making assertions like this. Is this actually the “specific” reason? Or is it one consideration that some doctors make?

In my view, human beings rarely make decisions for any one reason, and oftentimes make decisions without considering deeper reasons. Spreading malpractice risk may be one reason. Profit incentive may be another, concurrent reason. Or doctors may just do this without thinking at all about it, because it’s the way they’ve always done it without thinking about it.

And beyond that, specialists are a fundamental part of the way medicine is practiced now. Doctors are not lone gunmen fighting diseases; they are parts of complex systems, each expected to do his or her part to treat the patient. The challenge is making this whole system work most efficiently.

And @Jaxk, I really wish you would give up trying to compare the US health care system favorably to other civilized countries.

65 year olds living an average of 0.2 years longer than their British counterparts is an absurd statistic to tout as successful. I’m much more concerned with the facts that (1) the British spend almost half as much as we do on health care and (2) the British actually manage to insure all of their citizens.

@JLeslie

Doctors don’t give diagnosis or consultation over the phone. It’s bad form and would look horrible in court. Of course I can’t comment on the experience of your MIL (I don’t know what MIL is), it may very well be good example of abuse or there may be other reasons I just don’t know. As for the WHO statistics, they were picked up by the proponents of national health care and I am merely trying to get people to look a little closer and understand that they are not a ‘tell all’ set of numbers. Although in that regard my success rate has been dismal.

@Jaxk Bullshit. These were test results from bloodwork, and they are told over the phone, and mailed out to patients every day. The doctors who still require patients to come in for results like cholesterol, CBC counts, bacterial and viral cultures are theives. My endocrinologist posts my results online, I can see them whenever I want. If something is abnormal and needed to be addressed, she would call me to let me know a change in meds. If I had questions then I would make an appointment. My GYN is a pain because I always have to call to get normal results, but they will always give them to me also over the phone or mail them.

Again, are you very healthy? Do you go to the doctor much? Just curious, how old are you?

@ETpro

You are right about statistics. However if you look at high level numbers and they appear to be bad, the normal response would be to look closer and see why. See what needs to be changed if anything. WHO numbers have been touted as the source of conclusions rather than the reason to look deeper. That typically, ends in erroneous conclusions and changes that don’t impact the problem. And worse yet when your conclusions prevent any deeper look at the causes.

@JLeslie

I’m older than dirt and very healthy.

About the defensive medicine being farmed out, my personal experience is this is not the case. I just got into a conversation with rarebear, one of our resident Family Practice physicians, because I wanted a jelly to see a specialist, and he insisted a GP could deal with the problem in question. I still think the jelly should see a specialist. I know oh so many people who are treated by GP’s for hypothyroidism, or not treated, when I know for a fact an endocrinologist would be more aggressive than the GP. I got into a conversation once with Dr_dredd, another GP jelly about her own PCOS condition. i accused GP’s and GYN’s not knowing what the hell they are doing all to often with these female problem and that they should go to see a reproductive endocrinologist. She argued with me, tried to explain to me why the treatment she had been on since a teen and prescribes to her patients was acceptible, and then admitted she just started seeing a reproductive endocrinologist after meeting one during her internship or residency, can’t remember. Basically, I feel she was agreeing with me, in the sense that her doctors did not refer her. To this day I don’t see why it is acceptible in her mind for GP’s and GYN’s to either treat women with this ailment and not know more about the hormones, or not to refer to a specialist. They just continue to prescribe drugs that mask the condition, and relieve symptoms.

@Jaxk That is your problem regarding this issue, very healthy. God forbid you ever have a lot of illness or difficult to diagnose and treat health problems. The people who know the fuckheads in the medical system best, the ridiculous unjust fees, are those of us who have to deal with them because we are sick.

@JLeslie

You have a point. 20% of the population account for 80% of the health care costs (I can’t seem to get the link to post normally but here it is http://www.chrt.org/publications/price-of-care/issue-brief-2010-08-health-care-cost-drivers/ ). It is reasonable to assume the 20% would have a somewhat different take on how health care should be managed. For instance the 80% may want more flexiblity while the 20% may want more coverage. That’s just an example not a position. The trick is to analyze why there’s such a difference.

@Qingu

It’s not reasonable to ask me to give up what I believe. Even though I may not convince you it should at least give you a view of why there may be opposition. I’ve tried to present why I don’t think the WHO numbers tell the whole story. If you find my response irrelevant, that’s your call. I consider it very relevant.

It’s reasonable to ask someone to give up what they believe when what they believe is demonstrably and uncontroversially bullshit.

I mean, do you agree that Europe spends half as much on HC as we do? Do you agree they insure all of their citizens, unlike we do? Do you agree that they provide a similar quality of care?

If you don’t agree, then I’m happy to have that discussion and provide more evidence. But if you do agree to all these things then there is no rational basis left for your belief. Then you’re just a hack living in an alternate partisan reality.

@Jaxk I want to point out that I am not looking for some sort of impossible free ride in my health care. What I am looking for is a just system with integrity. It is not anywhere close to that right now. It won’t be under Obama’s plan from what I can tell. Although, I do not know all the cost saving measures the plan employs, if any. I will never understand why people harp on well care, I think preventative care is very important, but when you are sick, that is when medical care really really matters. I hate that I have to feel mentally insane dealing with my physical illness because my insurance and the doctors are so awful, so truly unfair, when it comes to fees and billing. Not all doctors, diagnostic centers, and hospitals of course, but so many.

@Qingu

Actually, I have not argued against any of those points. Our health care is more expensive, my point from the beginning has been why, not whether it is. I agree that Universal Health Care means everyone is covered. And that we provide similar services with similar out comes. When I say we compare favorably, I mean that our service may be better or worse in any given situation but that overall we provide comparable levels of care.

Where I know we disagree is in defensive medicine. And I see a system like they have in France as a method to virtually eliminate that expense. I also think we disagree on the prevalence of doctors cutting your heart out just to get the extra fees. There are a couple other issues where I don’t know whether we agree or disagree, such as the cost of prescription drugs. about 20% of all medical expense is for prescription drugs. I think we could benefit from negotiating prices in Medicare and allowing more over-the-counter drugs rather than forcing you to see a doctor for every little thing.

And finally I’m quite sure we disagree on whether nationalizing medicine is a solution to our problems. When you say tort reform is not a silver bullet, I would say that nationalizing health care is not either.

@Jaxk I’m ready to agree that there are things we can learn and apply to improve our numbers by looking at the micro-level instead of the macro level. But when the macro level is so overwhelmingly damning of the US system, I am not about to believe that little twists and spins here and there actually prove that we are number one in the world.

@Jaxk One more comment – the sick want flexibility. I don’t understand why you would think otherwise? We have to go from one dissappointing doctor to the next. We certainly don’t want to have a limited choice. If I have to be stuck with this private insurance set up, it is not the amount of coverage necessarily, it is being treated fairly. Not being charged more or less because I have insurance, but being charged a reasonable fee. My EOB last year stated I had $9,000 of service, and I paid $3,500 because of my insurance companies negotiated fees and my coverage. Again, bullshit. First of all, $9k is probably completely outrageous and gouging. Secondly, I just had to pay over $1,000 for a CT scan, because the negotiated price was over $2k. If I had no insurance it was $700 out of pocket, but I am not allowed to get the out of pocket price because I have insurance, Huh?

Years ago when I had an ectopic pregnancy, I went to get my methotrexate shot, because ectopic pregnancy can be life threatening, and my insurance would not approve it. The insurance woman at the hospital tried and tried, I was sitting with her while she talked to the person from my insurance compant. I asked her how much is it, I’ll just pay npw, and fight later. $400. When she called to the pharmacy she mentioned I was a patient of Dr. Maxsom’s. The pharmacist said if I go to his office they will send the med there, and it’s just $50. Seriously, fuck them. Gouging my insurance company, and the insurance company is obviously stupid.

Sorry for the anger, but it has caused me so much anguish. I am needing to destroy my pregnancy after 4 miscarriages, and I have to deal with that?

My doctor ordered a mammogram a couple of years ago, because I had some discomfort in my breast. I was due for a yearly one anyway, so I was just going to go ahead and get one done, even though I had been reluctant before. Since it was coded diagnostic, I was charged. If it had been coded routine, which it was, I was due for a routine mammogram, it would be free. What that means is if I have a reason to get a mammogram, like I found a lump in my breast, I pay; but if I am just 40 years old and seem perfectly healthy it is free. Do you really think that policy is ok?

It goes back to when you are sick, that is when you really really care about heath care.

I feel 100% sure none of that hassle would have happened to me in socialized medicine, or when I was in the military health system.

@Jaxk, we are looking at defensive medicine from two completely points of view, and I think this is the problem.

You’re looking at it as a problem for the supply side. Defensive medicine is a problem that suppliers (doctors) have to deal with. Lessening defensive medicine will make doctors happier and wealthier and that happiness and wealth will “trickle down” to the consumers of health care.

Now, we agree on prescription drugs. And I’m glad to hear you say you don’t think tort reform is a silver bullet. But I really wish you’d question your overall “supply-side” worldview, on this and on many other subjects.

Just saw this op-ed in the Economist about the fallacy of “the free market makes health care more efficient.”

http://www.economist.com/node/21518818

The basic point is that the medical industry, unlike other industries (like shoes), is a special case where inferior and more expensive products can, and often do, out-compete effective and cheap treatments.

@Qingu

If you’re believing articles like you posted above, there is little chance that we would ever reach agreement. Think about it for just a minute. The technology is not ignored but rather thier competition is doing quite well with similar technology. If the medical industry is buying the other guys stuff, they’re doing it for a reason And if these guys think they can compensate for whatever deficiency thier product has with a marketing campaign, it almost never works.

Marketing campaigns are good for commodity products like shoes or pans. Products that are widely available, of similar quality, and are marketed to the public. None of those apply here. It is (presumably) highly technical, varying quality and sold to highly competent medical specialists. Despite what you may think, this kind of equipment is not sold to a clerk. If these guys think a very expensive marketing campaign is the best use of thier IPO money, my advice would be, don’t buy their stock.

“If the medical industry is buying the other guys stuff, they’re doing it for a reason”

The reason being, the company spent much more money on marketing, not because experts have determined it works better.

That was explicitly noted in the article. It’s odd that you seem incapable of internalizing it. I mean, are you incapable of admitting that the market does not always favor the best product?

@Qingu

No need to get snippy. The article does not say that.

From the article:

“Why hadn’t this company been able to generate significant revenues? Were its technologies inferior? No, said an independent molecular biologist I talked to. Its product was certainly as good as the competition’s. Moreover, it had actually gone to the trouble of getting its technology approved by the FDA, which the competition hadn’t. (In this sub-sector FDA approval isn’t yet mandatory.) But it hadn’t marketed itself well.”

@Qingu

There is reference nor indication that anyone else had to run a multimillionm dollar marketing campaign. Only the these guys thought they did. They apparently are having trouyble convincing customers their product is as good or better. They apparently think spending more money on marketing will do that. Buy thier stock if you think they’re right.

Wait. You don’t believe that successful medical and pharma companies commonly run multimillion marketing campaigns?

You mixing apples and oranges here. If you’re trying to sell to the unsophisticated public, a massive marketing campaign can work. That’s why the shoes argument works. If however, you’re trying to sell to a small, well informed, niche market, it won’t. Have you acquired any of thier stock yet? I suspect given thier strategy, the IPO will be fairly cheap.

@Jaxk, they are selling to insurance companies and for-profit hospitals.

So, I’m not really sure what you’re saying here. Are you saying that successful medical companies wouldn’t waste millions on marketing to such people because these well-trained experts would just see right through the marketing campaigns? (And thus the invisible hand churns the health care market into a froth of maximal efficiency?)

Oh, and just to be clear: having a panel of independent medical experts evaluate medical products and procedures to decide what insurance/providers should pay for is a wonderful idea and something I wholly support.

@Qingu

Yes that’s pretty much what I’m saying. Try this one, If you want spy-ware for your computer. There’s lots out there and it is all of similar technology. Talk to your IT manager and get his recommendation. It probably won’t be the one that is advertised the most but rather the one that works the best. In fact, I wouldn’t be surprised to have him recommend some freeware that has never been marketed at all. Meanwhile the rest of us schlubs will be buying whatever is advertised the most. And do you think a massive marketing campaign will change his recommendation? Basically unless these guys are making ‘tongue depressors’ I think the guy making the purchasing decision is knowledgeable and has evaluated the product.

If your recommendation for government control is accepted, I would think these guys should be spending thier money on lobbyists rather than marketing.

@Jaxk, first of all, if you’re going to give a condescending little rhetorical example, it generally helps if your example makes sense (spy-ware is not desirable, fyi). I also think it’s cute that you have so much faith in your IT department.

Anyway, you appear to believe that the market is efficient because the objects of these multimillion dollar marketing campaigns are so smart that they’d never be tricked. A couple of points.

1. They’re really not that smart.

2. Even if they were that smart, this still isn’t a counterpoint to the fact that pharma and medical device companies spend enormous sums on marketing. I mean, the pharmaceutical industry spends almost twice as much on marketing as it does on research — tens of billions of dollars each year.

As for shifting to lobbying, no it wouldn’t… because the panel is independent. (And surely you know that these companies already spend meteoric amounts on lobbying.)

@Qingu

OK you seem to be knowledgeable about IT issues, managers, competence, etc. Being such an individual, are you more easily swayed by marketing campaigns or the actual product. Would you be likely to buy the PCmatic (they’ve had a lot of ads recently) solution or is there something better. Of course we need to know if you’re an IT manager since you’ve just told us they have no credibility. And of course whether you work for the government because you’ve just told us they have much more credibility.

You keep going back to your big Pharma argument which doesn’t really pertain. They do advertise to the general public. They do run huge marketing campaigns aimed at the uninformed masses. It’s not clear what you think this proves.

Finally I may need some clarification on your proposed solution. You say a medical board will decide which equipment is acceptable for medical reimbursement. So if these guys (generic guys), decide that your company above is the winner, the other 3 or 4 companies go bankrupt as they wouldn’t be able sell thier equipment. This is quite different than other government approval since it generally works that if you meet their guidelines you gain approval. In areas where it pertains everybody meets them and there is no differentiation on which is better. So which way are you suggesting we go? Where the panels approves one and the others die or where we simply get approval and everybody does it.

@Jaxk, look, some people are more rational in their responses to marketing than others. I’m sure there are many IT specialists, doctors, insurance executives, and hospital administrators who do automatically ignore marketing and evaluate products objectively. I’m also sure that there are many such people who are not so smart, or who do not do adequate research, or who are just lazy, or who are borderline corrupt and will choose products by companies who give them free stuff.

Clearly the fact that so much is spent on marketing means this strategy works, despite your ideological belief that it shouldn’t. I mean, this is the whole problem with your worldview. You have an irrational faith in the market to sort itself out, much like the faith a religious person has. Reality just doesn’t work like that.

And Big Pharma advertises to the general public, but it also advertises to doctors and hospitals.

As for my proposed solution, the medical board would function much like a peer-reviewed scientific organization. They would make recommendations for what Medicare, Medicaid and (ideally) private insurers should cover and what hospitals should pay for. Ideally, I’d like them to have as much power as possible, since such a board would resemble that of a single-payer government run health care system, which are proven to be more effective… but I realize this is a pipe dream in our current system.

But no, protecting companies with high marketing budgets who make inferior products from bankruptcy wouldn’t be in the board’s prerogatives. Not sure why you think this is a matter of concern.

@Qingu

The point you seem to refuse is that people that are knowlegdeable are less influenced by marketing simply because they already know what works and what doesn’t those that are not intimately knowledgeable can only evealuate what they’re told in the marketing brochure (tv ad or whatever).

I’m actually more interested in you concept of this board. Saving a company from bankruptcy is not the issue (I don’t know why you think it is). Say you and I both make an x-ray machine. Both use similar technology, both give similar results. Your image is slightly bigger than mine but my cost is slightly less than yours. So this board would then pick one over the other. Say they pick yours. I then go bankrupt because I can’t sell my product (ie no one will be reimbursed if they use mine). Is that the scenario you would expect?

just an fyi, this is the only thread I’ve been paying attention to lately and I love it. Great work, gents.

@Jaxk, I agree, knowledgeable people tend to be less influenced by marketing. “Tend to” is the operative phrase. And insurance executives are often not knowledgeable about health practices; oftentimes hospital execs aren’t either.

As for your X-ray machine example, if both are acceptable and affordable I don’t really see why the board would blacklist one. But surely you are familiar with the idea of private companies bidding for public contracts?

@Qingu

The executives are virtually never the guys evaluating the technology.

In your example about the IPO. It is reasonable then to assume that all of the comapnies (it appears to be 3 or 4 of them) make sufficiently high quality products toi be accepted by this board. Is that true?

@Qingu

Not trying to ignore you comment on bidding for government contracts but that is quite different. If I bid on a government contract, a win will certainly boost my business. But a loss won’t stop me from selling my product or service to others. If the government controls the entire industry, there are no others to sell to.

Depends on how much the board delegates to local institutions.

And I haven’t really given much thought on how such a hypothetical board would evaluate medical supplies. The actual board in the HCR plan has much more limited authority and is basically an independent research arm that Medicare can consult. What I’d prefer is something like NICE. Are you familiar with that body causing the problem that you’re worried about?

@Qingu

I’m not sure we’re talking about the same problem. I see two possible scenarios with this board . One is that the board certifies the equipment much like they do now. In you IPO case it would simply mean that the other companies need to get that same certification. I’ll make they assumption they do that. At that point nothing has changed and if your guys want to sell more they would still do their marketing campaign. I don’t see how this would change much. The other guys didn’t get FDA approval because they didn’t need it. There’s no indication that thier product was in any way inferior.

The second scenario is where the board actually defines the vendor. You can use this equipment and not others. This creates a whole new problem by driving competition out of business. With no competition there is very little incentive to improve. Hell you’ve already got a lock. Even if you do continue to improve, you are the only guy looking at advancements rather than several all competing to improve faster. Generally when one company garners a major piece of the market, the competitors are constantly battling to make their product better or more appealing. when they do come up with something a little more innovative, all the competitors immediately start trying improve on that.

I know you don’t believe in this free market competition, but that is the way it works. Basically the way I see the boards you’ve linked above, they’re not specifying vendors but rather processes that could use any approved vendor. Such as for a specified symptom you’d run certain test and if positive would prescribe a type of drug. The testing equipment could be any number of vendors and the drug could come from any number of pharmaceutical companies as long as they were FDA approved. None of this would change the issue that your IPO company has which is that the industry was using somebody else. They choose marketing as a way to differentiate their product while others might choose to improve their product.