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  • The Dangers of Decompartmentalized Health Care Spending

    Posted by Shannon Love on August 12th, 2009 (All posts by )

    So the Democrats have a problem convincing senior citizens that socialized medicine won’t diminish the already dubious quality of care they receive through Medicare. [h/t Instapundit]

    Seniors no doubt base this suspicion in large part on their 50+ adult years of watching politicians over-promise and under-deliver. They probably remember back to 1965 when Medicare itself was sold as a cost-saving measure, and today we’re told it’s going to bankrupt the government unless we socialize 15% of the economy. They no doubt wonder how long it will be before Obama’s ideological descendants will tell us that Obama’s miracle plan is a disaster than can only be solved by more socialism.

    Seniors have another reason to be nervous. Obama’s plan will put them in direct competition with everyone else for health care spending.

    Right now we compartmentalize government health-care spending. We have one program for the poor (Medicaid) and one for the elderly (Medicare). Each is paid for by a separate flat tax on wages. The government doesn’t spend any money on health care for the middle class. This means that if the government spends more money on health care for the poor it doesn’t automatically mean they spend less on the elderly. More importantly, it means that when the government spends more on the poor or elderly it doesn’t directly mean middle-class families have less spent on them. Middle-class families might see their payroll taxes go up but they can compensate by trimming spending in all of their budget areas. Those taxes don’t come directly out of their health-care budgets. With the current system, health-care spending is a nonzero-sum game, i.e., spending more on one compartment does not automatically mean spending less on another compartment.

    Right now, medical spending is like baking three separate pies for three siblings. Each sibling gets his or her own pie, so they don’t quarrel over who gets the biggest slice.

    With Obamacare, that will change. The walls of the financial compartments will crumble. All medical spending for everyone will come out of one big financial pot. Suddenly, health-care spending will become zero-sum. Spending more on the elderly or the poor will automatically mean spending less on middle-class families and vice versa.  Middle-class families won’t be able to accommodate increased spending on the elderly by trimming other parts of the family budget. Even if middle-class people pay more taxes into the entire system, politicians will always have to balance spending those increased taxes on the elderly and poor against the needs of middle-class families.

    With Obamacare, medical spending will be like baking one pie for three siblings. If one sibling gets a bigger piece that automatically means the other two siblings get smaller pieces. The one-pie system has a built-in automatic source of conflict.

    The elderly consume 70% of all health-care spending.[updated here and here] That means that when it comes to cost control they will bear the brunt of the burden. If we don’t cut spending on the elderly we can’t reduce costs without simply denying care for everyone else. When it comes down to a choice between spending on old people and children, the elderly know full well who we are going to pick. The elderly themselves will choose to spend money on their grandchildren rather than themselves.

    Worse, if health care is not supported by its own specialized flat tax, health-care spending on the elderly and poor comes into direct competition with all other government spending, and with all of the groups that disproportionately benefit from that spending or pay the taxes that support it.

    We should think long and hard before we set up a political dynamic that pits the interests of the productive and powerful against the interests of the non-productive and powerless. It is unwise to make people choose between care for their own children and care for their parents and poor strangers. The current compartmentalization, flawed at it is, at least protects the most vulnerable people from this fate. We can pay for medical care for the poor and elderly without compromising the level of care for our children or reducing any other government function.

    We shouldn’t casually throw that away.

    [Related post: Why We Think We Can't Afford Medical Care , Rationing Vs Allocation]

    [Update (2009-8-13 8:21pm): CodeMonkey’s Mike makes my argument more succinctly than I did.

    The advantage of the compartmentalization is that by creating dedicated pools of money, it can ration care without wholesale denying care to any class. Medicare is a fairer compromise because it caps the liability of the productive to the non-productive in a way that balances the needs of many non-productive who are genuinely in need with the need for restraint on the burden placed on the productive. Obama’s plan will invariably break that balance and pit both classes against each other, and it will be the younger generations that will win the lion’s share of resources.

     

    51 Responses to “The Dangers of Decompartmentalized Health Care Spending”

    1. Plumpplumber(balding) Says:

      Well, Shannon, that was well written. The elderly already know how this is gonna play out. You see, this argument is actually moot because we are bankrupt. Just waiting for the other shoe to drop. I’m 52 yrs old, and I know our country has been shipwrecked economically. And the Obama stands up and says “don’t worry, this ain’t gonna cost anything”. Hot steaming piles of bull hockey. The actual term is passive euthanasia, by the way. So, the President is a bald faced liar, and is determined to destroy capitalism. Well, my father died three years ago of Alzheimers, and it was very hard. You know what? He begged me to kill him. I’m a Christian, and I couldn’t do it. But I respected his wishes from years ago, and withheld the feeding tube. Pallative measures only. So, I understand both sides of the argument, but we as a society can’t euthanize the unfit and elderly. This whole subject makes me ill, and unfortunately, it’s not going away.

    2. veryretired Says:

      I come here because your posts are so often concise and penetrating in their analysis. This is another good example.

      I recall a graphic from some years ago which showed the general rise in costs for several segments of the economy over the course of the 20th century. Medical costs rose in step with other sectors until about 1967, a few years after the passing of the big Great Society programs of Medicare and Medicaid. Then medical costs started climbing at a rate well above the rest of the economy.

      The idea that a government program would be more economical than the private alternative(s) has been a standard claim of the progressive statist faction for over a century in any number of areas. I would be surprised if it has ever been true, and the evidence of the current major state run medical programs certainly contradicts that assertion.

      I just had another birthday a few days ago, and each day now is another step in the twilight toward that final sunset. I shudder to think that the decisions regarding any end of life issues I and my family might face would be decided by some officious little paper shuffler somewhere, authorized by commission X, established under regulation Y, derived from paragraph Z in a 1000+ page bill passed by a bunch of pols who never even read what they were voting on.

    3. Susan Lee Says:

      What burns me is – I already have end-of life plans made between me, My DH and our church. I surely don’t want that “officious little paper shuffler somewhere” to be overruling & interfering in the plans I’ve made for a Christian exit from this life.

      Susan Lee

    4. Jonathan Says:

      The medical system, like the legal system, depends heavily on the discretion of well-meaning people. What happens when we replace the ethos of “do no harm,” of professional accomplishment, of serving your customers, with cost cutting for the greater good? That’s what will happen if we replace the current system with one intended to minimize costs according to central directives.

      If you go for surgery at some hospitals, maybe all of them, you are invited to sign consent documents including authorization for the hospital to withold extraordinary measures in case, by some accident, you end up in a vegetative state. Reading the fine print may reveal that the hospital is asking your consent to starve and dehydrate you to death if in their judgment you are beyond recovery. I wouldn’t sign that but a lot of people do, and almost always it works out OK, because most medical practitioners are reasonable and look out for the patient’s interests. I think it’s quite dangerous to further centralize the system and to shift its goals away from service to the individual.

      Plumpplumber: My condolences on your father’s passing and my sympathies to you.

    5. Michael Kennedy Says:

      The 1967 date is very good. I have a long post on my blog about what happened. The short version is the insurance cannot cope with prepaid care and the incentives it creates. Medicare in 1965 guaranteed its own destruction. We will eventually get back to a cash market for health care as they are doing in Canada right now.

    6. onparkstreet Says:

      “The medical system, like the legal system, depends heavily on the discretion of well-meaning people. What happens when we replace the ethos of “do no harm,” of professional accomplishment, of serving your customers, with cost cutting for the greater good? ”

      Jonathan, as a physician that absolutely worries me. If you take away ‘do no harm’ what is to guide me? What am I to be in that case? I shudder to think.

      (Plumpplumber – my condolences as well. That must have been so very difficult.)

    7. david foster Says:

      I think the “decompartmentalization” point is an important one, and not only in healthcare. In almost any situation, people can argue that decisions being made on some local level could/should be made at a higher, more global level, resulting in greater efficiency. Most often, they are wrong.

      This can often be observed in business when an attempt is made to centralize engineering or sales activities across multiple diverse lines of business, rather than allowing each business unit to “compartmentalize” its own resources.

      The Soviet Union, of course, was in theory the ultimate extension of this concept, with one set of planners allocating all resources across the entire economy.

    8. Brett_McS Says:

      Obama to old people: Take a pain pill.

    9. elf Says:

      Good post. I am already paying cash to at least one important (and very good) MD. I predict that’s they way of the future (is now) whether this plan passes or not, if you want care.

      The real health care/insurance card = legal tender.

    10. tdaxp Says:

      If we’re going to spend a lot of public funds on health care, we have a basic choice as to who will determine spending priorities: politicians or technocrats. As politicians don’t know the details and rarely care enough to act on that knowledge anyway, an “aggregated” system under a Federal Reserve-like technocracy would be far superior of a patchwork of Congressional bills and laws.

    11. Plumpplumber(balding) Says:

      Thanks, everyone. It seems to me that as I get older, the rules we used to play by are changing daily. I had a thought last night that it seems that Obama is going to sacrifice the elderly with crocodile tears. If the only thing that matters is the bottom line, the horrors will be the order of the day. My wife is a RN, and I’ve heard her tell me that older folks are at the end of the line if this travesty gets passed. Folks are wising up, and they are seeing that Obama and his policies are literally an open grave. Insofar as paying cash to your Doctor, that’s a great idea.

    12. Dont Tread On Me Says:

      I believe a useful way to think about the proposed centralization of health care to the national level (i.e. de facto and increasingly de jure nationalization) is to compare the way a small and large public school system operates.

      In the small system – like the one where I grew up – a large fraction of the voters have at least a casual relationship with the school board. They are the merchants, doctors, leading citizens in town. You can go see them. You run into them in the grocery store. The school board knows personally many of the parents, students, and teachers that their decisions impact. They personally pay enough taxes to have skin in the game. There are lots of informal means to inject flexibility into the way the system works.

      In the large system – say Detroit or Houston or LA – the school board is quite remote. The members of the school board tend to be professional politicians. They know almost none of the involved parents, students, or teachers personally. The system is so large that it has to be run on rules, the main players are the organized unions, and performance is – in every case I know of – horrible. Despite some heroic exceptions, this environment tends to attract and retain mediocre time-servers as teachers and administrators.

      I expect Federal health care to be a lot like the Detroit school system.

    13. sam Says:

      Why does it feel like I’m consistently going to get screwed by the government in the future?
      Social Security? Sure keep paying in, but you’re probably not gonna see any of it.
      Pension? Ya right….
      Gold plated insurance that will pay for top notch care 50 years from now when you need it (and after you’ve been paying premiums for a product you’ve rarely used for 50 years? Too bad, by the time you’re ready to get the triple bypass, stint operation the government will be cost controlling for the good of us all.

      The future sucks.

    14. furious Says:

      The elderly themselves will choose to spend money on their grandchildren rather than themselves.

      Or not. The elderly vote out-of-proportion to their share of the electorate (nothing wrong with that), children under 18 can’t vote. Whom do you think Congresscritters fear most? Maybe our pre-Boomer elders realize that they’ll need healthy, productive little taxpayers to keep Social Security alive, but the inner-directed Boomer crowd with their fabulous active lifestyles? Not so much.

    15. Knucklehead Says:

      Color me hopelessly cynical, but the drive by this Democrat administration in league with this Democrat congress, has nothing to do with bringing health care, or health insurance, to anyone.

      As Shannon mentioned, Medicare and Medicaid (and Social Security) are so-called trust funds. They are not, however, trust funds in any sense of the term ordinary citizens understand. They aren’t composed of assets collected and stashed for future or present income generation. They are jut income taken in by somewhat “flat” taxes on wages and distributed to fund healthcare (and SS) services. There were no income generating assets stashed during “fat” years for distribution in “lean” years.

      What the US federal government (that thing that is of, by, and for us) is after is the money paid into private health insurance premiums. That’s what they want to nationalize. All the rest is window dressing. Our “public servants” (and too many of My Fellow Citizens) are addicted to Other People’s Money.

    16. Knucklehead Says:

      OOPS! My bad. Shannon didn’t mention trust funds. He mentioned funded by flat taxes on wages. I reorganized in my head but not on the screen. Didn’t mean to put words into Shannon’s mouth.

    17. Buck Smith Says:

      One maddening thing about the debate is how we never get the per capita numbers for medicare and Medicaid. By doing a little searching and even less math, I find that federal spending on Medicaid is north of 200 billion dollars. US population is around 300 million. If one in every 20 people is poor and gets help from Medicaid, we are spending $13.3K per poor person on healthcare! That is a lot of money! Where does it all go?

    18. Jimyoyo Says:

      Shannon:

      Could you point to where you found that 70% on the elderly figure from? I am entirely sympathetic to this post, but from what I could find (2004 data) it appears people 65+ consumed about a third of the total healthcare dollars.

    19. hoipolloi Says:

      Great post, but I don’t agree with this:

      “We should think long and hard before we set up a political dynamic that pits the interests of the productive and powerful against the interests of the non-productive and powerless.”

      The older population in this country is not powerless because they vote. They also benefit from the real/perceived notion that they are less able. People want to be kind to the elderly and the elderly have no problem requesting kindness from the government. My impression about Medicare and Social Security has always been that elderly voters were feared by politicans, who constantly expanded the entitlements to win votes.

      I’m willing to entertain that that decompartmentalization of health care spending could be a positive, in the sense that politicans will have to tread more carefully before expanding SS or Medicare (or whatever we will call health care for seniors). But you are still right — the fights about this will be ugly and uncomfortable.

      And, I’d wager, they will illustrate the folly of going further down the road of government health care instead of trying ot get the government out of this business.

    20. Shannon Love Says:

      Buck Smith,

      If one in every 20 people is poor and gets help from Medicaid, we are spending $13.3K per poor person on healthcare!

      By arbitrary definition, the bottom 1/5 (bottom 20%) of the population is defined as “poor”. That gives a poor population of 60 million. However that definition doesn’t actually mean that those people are not self-supporting or that they make use of Medicaid. Different states pay out different amounts and use different criteria for who qualifies for Medicaid. This makes it difficult to tell what we as a nation are paying per poor person.

      But your correct that such data appears to be hidden or at least plays very little role in the decision making process of the poverty police wonks who usually compile such data.

    21. Colin k Says:

      Social security and Medicare have been transfering wealth from the young to the old for over 40 years. Why should they stop now? Compartmentalization also firewalls spending by the young to a large degree. Once it all goes into one pot there will be more to take away from me than just Medicare taxes.

    22. charles austin Says:

      When it comes down to a choice between spending on old people and children, the elderly know full well who we are going to pick.

      Yeah, the ones who vote. Some years ago I read that we are the first society in history that spent more on our elderly than on our children, reversing the ancient trend of looking towards the future and the next generation. So, how’s that working out for us?

      The elderly themselves will choose to spend money on their grandchildren rather than themselves.

      But it isn’t their grandchildren, it is someone else’s grandchildren. Your generalization of all grandparents wanting to take care of all children just doesn’t work.

    23. Shannon Love Says:

      Jimyoyo,

      Could you point to where you found that 70% on the elderly figure from? I am entirely sympathetic to this post, but from what I could find (2004 data) it appears people 65+ consumed about a third of the total healthcare dollars

      I’ll check on it. Whatever the percent, it a big chunk far of proportion for their population so my main point still stands. We can’t control spending on medical care without controlling spending on the elderly.

    24. Shannon Love Says:

      Jimyoyo,

      By utter coincidence, I just read this Kausfiles post which quotes the President as saying:

      THE PRESIDENT: So that’s where I think you just get into some very difficult moral issues. But that’s also a huge driver of cost, right?
      I mean, the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here.

      So, I was in the ball park is you include the chronically ill. It still means that since a minority of the population which is mostly elderly generates most of our health care cost. That means that any cost savings are going to come at their expense.

    25. willis Says:

      What you have identified as a problem, the pitting of one group of citizens against the others, is recognized by congress as an opportunity. The citizens of Georgia were implored to re-elect Saxbe Chambliss in order to avoid a filibuster-proof senate. Well we did and how many filibusters have you seen? Our republicans are as corrupt as the democrats. Now they get to reap the benefit of inheritly corrupt legislation without being associated with it. As for the problem (from the citizenry point of view) of pitting one group against another. What if you are filthy rich, discover you cannot get allocated a treatment for your fatal, but curable desease, and John Murtha is your congressman. What are you going to do? What will Murtha do?

    26. Jimyoyo Says:

      Shannon Said:
      —————————————
      Jimyoyo,

      By utter coincidence, I just read this <a href=”http://www.slate.com/blogs/blogs/kausfiles/archive/2009/08/12/will-you-won-t-you-be-on-my-death-panel.aspx”Kausfiles post which quotes the President as saying:

      THE PRESIDENT: So that’s where I think you just get into some very difficult moral issues. But that’s also a huge driver of cost, right?
      I mean, the chronically ill and those toward the end of their lives are accounting for potentially 80 percent of the total health care bill out here.

      So, I was in the ball park is you include the chronically ill. It still means that since a minority of the population which is mostly elderly generates most of our health care cost. That means that any cost savings are going to come at their expense.

      —————————————–

      I don’t think it advances our side of the debate at all to reference ANYTHING that comes out of this guy’s mouth as true. What does the “chronically ill” component have to do with overall spending? They are not a separate category at the tables I was looking at. The figures are what the figures are by age.
      http://www.cms.hhs.gov/NationalHealthExpendData/downloads/2004-highlights.pdf
      I don’t mean to get pissy about it, but I hate getting caught being sloppy by the other side! That is their shtick.

    27. ilovebenefits Says:

      This is an excellent set of comments on a very real issue, that I suspect few have really focused on. We know that there are only three sources of ‘revenue’ for health care expenditures. These are what plan sponsors (employers), taxpayers, or consumers (patients) pay for each health care service.

      However, while these are three different pockets, they are three pockets of the same suit. In the end it is the consumer who pays either directly at the time of service, in otherwise lower wages or higher prices for goods or in taxes. The last two are ‘hidden’ taxes on the consumer/patient.

      So the citizens of this country should be rightly concerned. When costs are hidden (taxes or prices/wages) there is little, frankly no, incentive to conserve scarce medical resources.(And I am not even talking about end of life decisions here – that’s another topic). As we have seen several times before, prices will rise much faster than general inflation making health care financing unaffordable (Medicare in the mid 60′s, Part D earlier this decade to name two instances.)

      There is no reason to believe that with a large government entitlement program the same will happen again, with no control on rising costs. CBO estimates, as far as they go (ten years) are more than likely correct if not understated AND the post ten year trajectory is likely much much worse.

      They will need to control the federal deficits sooner rather than later and the tax base will exhaust its ability to pay for these programs. Unless we drastically improve industrial production, innovation and capital creation we will essentially bankrupt the country, its people and our future.

      Follow this debate and other important health care issues at http://www.ilovebenefits.wordpress.com

    28. Shannon Love Says:

      Jimyoyo,

      I welcome the correction. But my main point still stands. From your link:

      Per person personal health care spending for the 65 and older population was $14,797
      in 2004, which was 5.6 times higher than spending per child ($2,650 in 2004) and 3.3
      times spending per working-age person ($4,511 in 2004). The relative gap in per person
      spending between these three age groups has not changed much since 1987.
      In 2004, children accounted for 26 percent of the population and 13 percent of PHC
      spending, while the working-age group, including the baby boomers, comprised the
      majority of spending and population, at 52 percent and 62 percent respectively. The
      elderly were the smallest sized group at 12 percent of the population accounting for the
      remaining 34 percent of spending.

      Clearly, we cannot significantly reduce overall health cost without significantly reducing the cost of care for the elderly. Even if you cut 10% across the board, per capita children would be cut $260, working age $450 and the elderly $1,400.

      I would also not that “working age” cover people between 50-65. That means there are a lot people in “working age” category that many consider themselves as elderly or soon to be elderly. That is relevant to the political decisions they make.

    29. Anonymous Says:

      YOU WROTE:

      The dangers of decompartmentalized health spending: “The elderly consume 70% of all health care spending. That means that when it comes to cost control, they will bear the brunt of the burden.

      WRONG. There’s a way to reduce costs without hurting our seniors or our doctors:

      Tort reform would reduce “defensive testing” and lower malpractice insurance fees and so reduce costs without reducing care.

      IOW: Lawyers can bear the brunt of the cost of reform, not seniors.

      Why isn’t this in the bill?

      SIMPLE: The Democrat Party is in the tank for trial lawyers – like John Edwards.

      TORT REFORM WOULDN’T COST TAXPAYERS A PENNY – IT WOULD SAVE BILLIONS – AND A BILL COULD BE WRITTEN IN UNDER 10 PAGES.

      THE GOP FAVORS TORT REFORM.

      WHAT A CHANGE FOR THE BETTER? THEN, VOTE GOP IN 2010.

    30. Anonymous Says:

      POTUS says “potentially 80 percent.” Get the weasel word? He uses 80% (OMG!!! We can’t have that!!!) which is the soundbite grabber. But he prefaces it with “potentially.”

      Well potentially I could climb Mount Everest, but it ain’t likely.

      The “chronically ill” includes many who are not “near the end of their lives.” Often the “chronically ill” can be those who are denied insurance. I thought those people were one of the “compassionate” big pushes for this demolition of American health case as it is. Oops. A little disclosure there which may have been unintentional.

      Some random thoughts: How about pooling the “uninsurables” and spreading them across the board in ALL insurance companies, plans etc. Perhaps an additional SMALL tax increasecould be used to go to the companies that participate to help offset. A fourth “compartment,” or exppanison of Medicaid … like assigned risk in automobiles. (The profits insurance companies report has come under fire. Like it’s dirty money.) And/or what about tax breaks for companies who pool and provide coverage for these people? How about requesting use of standardized forms (the HCFA comes to mind, something like that) to be used to facilitate continuity acrosss providers. The market settled on a cassette tape format, VHS, CD and DVD formats … incentivize them to standardize.

      The WSJ has an interesting article by John Mackey of Whole Foods with some other interesting ideas.

      The bigest point is to keep the federal government out of our personal lives.

      I find it ironic — beyond ironic — that many of the same people who want to keep the government “out of my bedroom” are pushing this like it was the Promised Land of milk, honey, and “care” from cradle to grave.

      Stay out of the bedroom, but get into my casket?

    31. david foster Says:

      A random thought…if someone suggested that convicted murderers should be executed rather than kept in prison for life, and identified the saving of $2 million or so in lifetime support costs for the individual as a major benefit, “progressives” and even old-line liberals would be horrified…there would be much talk about how “you can’t put a dollar figure on the value of a human life, even that of a criminal.”

    32. Kev Says:

      Great post, though I too have so say something about this quote:

      We should think long and hard before we set up a political dynamic that pits the interests of the productive and powerful against the interests of the non-productive and powerless.

      Except that’s not how it’s working right now; the productive (real citizens who work real jobs) don’t have nearly as much power as the non-productive (Congress, POTUS, government workers). This is the dynamic that needs to change.

    33. Shannon Love Says:

      Kev,

      Except that’s not how it’s working right now; the productive (real citizens who work real jobs) don’t have nearly as much power as the non-productive (Congress, POTUS, government workers).

      Yes and no. We have a kind of general conflict of interest between taxpayers and taxconsumers. If a taxconsumers wants more money for their interpretive dance ensemble, that doesn’t cost the taxpayer anything but the money they have to toss into one huge collective pot. The taxpayer can still adjust their own spending to get what they need whether that is health care or dance lessons.

      In dynamic of health care, the conflict is direct and immediate over the same service/benefit. Its dollars spent for health care and only health care. A dollar of health care spent on the elderly is a dollar not available for children. Even if you raise taxes, you still have the inherent conflict of splitting a larger pie. If a taxconsumer gets more health care, that means a taxpayer gets less health care. The taxpayer can’t get more health care by changing their own budget.

    34. Shannon Love Says:

      Anonymous,

      There’s a way to reduce costs without hurting our seniors or our doctors: Tort reform would reduce “defensive testing” and lower malpractice insurance fees and so reduce costs without reducing care.

      Tort reform would only produce a one time savings. It wouldn’t alter the basic dynamic of increasing health care cost driven by increasingly powerful and expensive medical technology. Long-term it would only shift the growth curve over a couple of years into the future.

    35. CFDad Says:

      …when it comes to cost control they will bear the brunt of the burden.

      One of my concerns is that is not what will happen, not that I support national health or Obama’s plan. The elderly are a voting block and will be pandered too by the politicians.

      My son has cystic fibrosis. My fear is diseases that affect specific voting blocks will get all of the funding and those suffering from “orphan” diseases will get none. There are a lot more votes in making pronouncements about Breast Cancer & AIDS then there is helping the 30,000 souls with cystic fibrosis. Moreover, I fear that donations to the Cystic Fibrosis Foundation (www.cff.org) will dry up for two reasons. One – CFF gets some big time donations from those evil rich people Obama wants to tax poor. Two – Once the government takes over health care, ordinary people will not write the $10-$100 checks that get my small suburban fund raising committee bringing in >$150k per year. People will start to say, “The government will take care of paying for research, I am not donating.” I used to live in the UK and that is the attitude of the folks there.

    36. Jimyoyo Says:

      Shannon Love Says:
      August 13th, 2009 at 12:35 pm
      Anonymous,

      There’s a way to reduce costs without hurting our seniors or our doctors: Tort reform would reduce “defensive testing” and lower malpractice insurance fees and so reduce costs without reducing care.

      Tort reform would only produce a one time savings. It wouldn’t alter the basic dynamic of increasing health care cost driven by increasingly powerful and expensive medical technology. Long-term it would only shift the growth curve over a couple of years into the future.

      ——————————–
      Sorry, Shannon, but you are way off base on this. You really have no idea how much defensive medicine is occurring in today’s litigious medical environment. It is NOT the increasingly powerful and expensive medical technology, but how OFTEN it is being utilized, many times to avoid it coming back to bite you in a lawsuit. Take the defensive component out of the equation and it probably drops 35% b itself. It most certainly would alter the basic dynamics.

      And if we do get to universal health care provided by the government, do you honestly think they will allow the legal industry to continue this kind of medical lotto? Please. The current medical tort situation is just a temporary stalking horse mechanism the currently allow to produce their desired end-result.

    37. Marty Says:

      The problem is far bigger than just one health care pie–it’s that there is one federal budget pie. Health care will have to compete with defense, national parks, the courts, foreign aid, and on and on—and the decisions will be made by people balancing all those competing claims, and then telling the health care bureaucrats how much money they have to spend. Those bureaucrats will then decide what is covered and what isn’t, and what are the reimbursement rates.

      The doctor and clinic and hospital then become really mostly diagnosticians. Once the situation is diagnosed, they can pretty much just look up on the govt website what treatment options they have, and then see if their organization offers any of those treatments at the too-low reimbursements offered–and, it may be a pretty limited list if it is a condition that is expensive to treat or the individual is at the wrong stage of life based on whatever criteria are used, and if the condition doesn’t have a strong political constituency.

      This is what happens everywhere there is a single-payer system, and it is INEVITABLE. No way around it, not a matter of getting good people to run it, it is embedded in the logic.

    38. Anonymous Says:

      sl – thanks 4 replying!

      i disagree with your reply:

      you wrote:

      # Shannon Love Says:
      August 13th, 2009 at 12:35 pm

      Anonymous,

      There’s a way to reduce costs without hurting our seniors or our doctors: Tort reform would reduce “defensive testing” and lower malpractice insurance fees and so reduce costs without reducing care.

      Tort reform would only produce a one time savings. It wouldn’t alter the basic dynamic of increasing health care cost driven by increasingly powerful and expensive medical technology. Long-term it would only shift the growth curve over a couple of years into the future.

      wrong.

      it would end defensive testing, and it would lower malpractice insurance which would lower fees. these savings are recurrent, not just next year, but every year into the future (not just a couple!) driving the angle of the rate of increase from a 45Degree angle to a 15Degree angle.

      as the population ages the savings go UP.

      there is no other way to save as much.

      none.

      also:

      it is intellectually dishonest to argue that improvements in healthcare technology is inflationary.

      if you want to pay 1970 prices for healthcare today you csn: settle for 1970 healthcare.

      if you want to drive a 1975 pinto you can for less than 2gees.

      but telling me a honda civic at 15gees represents inflation of 700% is bogus.

    39. Knucklehead Says:

      Putting aside the government motivation for “healthcare reform”, cutting costs for healthcare related services is an issue that has to be attacked from several angles.

      Technological improvements would certainly help: cheaper/faster/smaller (i.e, more portable) equipment would help, of course. Of course, hand in glove with that comes new procedures, techniques, etc that are added to the demand side of the issue.

      Tort reform has to happen but no Dem controlled admin or congress will go there.

      Increase supply of health service providers would make doctors and nurses less expensive. Of course the AMA is not going to allow that to happen without a fight. But in all honesty we probably need to make entry into the medical professions less difficult and expensive. Who the heck is going to go to school for 10 years, emerging with 100s of thousands of debt, and work for $100K. Heck, without tort reform they’ll never be able to work for $250K.

      Demand is potentially the toughest part of this to try and control. Some people run to a doctor for every sniffle, ache, or tummy upset. Some people never go. But everyone wants to be cured, or to live a reasonably decent life, should they have a disease.

      I cannot back this up with hard data, but I do spend time with folks in the health care delivery and pharmacy worlds. They seem to agree that a disproportionate number of the type 2 diabetes suffers are also medicaid recipients. They also seem to largely agree that type 2 is one of the most preventable diseases. This applies as well to AIDS/HIV infected people – a largely preventable disease. Also enormously expensive to treat with drugs – the monthly costs are often in the high hundreds, even thousands. Is anyone going to tell these people to eat less, exercise more, drop a few hundred lbs? Or use condoms or abstinence?

      And those what of the mentally ill using psych drugs. Many of them have no hope of ever being productive. Are we going to cut them off from treatment. And what about the kiddies getting all the crap this nutty system shoves down their throats. Sorry, kid, no red OR blue pill for you – get your act together and quit being disruptive.

      What’s more preventable than pregnancy?

      I see no possible way to reliably control demand for healthcare services without rationing.

      If the discussion/debate/proposed legislation does not include tort reform and methods for increasing supply and decreasing demand then it is NOT about controlling costs. It’s about something else.

    40. Knucklehead Says:

      BTW, increasing the supply of health care providers means building more training facilities (medical and tech schools) and/or importing doctors and nurses and such from other places. Building and staffing schools is not inexpensive and would almost certainly need to happen on the taxpayer’s dime.

    41. Rob McMillin Says:

      With Obamacare, that will change. The walls of the financial compartments will crumble. All medical spending for everyone will come out of one big financial pot.

      Can somebody show me where in H.R. 676 it actually says this? There are far too many blank, unproved assertions flying around masquerading as “fact” that simply aren’t true. (Not that I’m saying this isn’t, but I don’t see anyone actually bothering to cite chapter and verse to convince me that this isn’t just some Republican talking point.)

    42. Shannon Love Says:

      Can somebody show me where in H.R. 676 it actually says this?

      Why should anyone have to show you? The bill is online. Look up the finance section yourself. H.R. 676 Section 211.c.1

      (1) INGENERAL.—There are appropriated to
      the USNHC Trust Fund amounts sufficient to carry
      out this Act from the following sources:
      (A) Existing sources of Federal Govern-
      ment revenues for health care.
      (B) Increasing personal income taxes on
      the top 5 percent income earners.
      (C) Instituting a modest and progressive
      excise tax on payroll and self-employment in-
      come.
      (D) Instituting a small tax on stock and
      bond transactions.

      So taxes on investment and job creation, taxes on upper income people (honest we promise never anyone else), a progressive i.e. non-flat payroll tax and general revenues.

      Health care funding for the middle-class will be lumped in with health care funding for everyone else but the rich. Health care spending will compete with all other government financial needs both on the tax and on the spending side.

    43. veryretired Says:

      There is a scene in the movie “Dr Zhivago” that occurs during the time that Zhivago is the medical officer for a group of red partisans. The commander of the partisans and the political officer are discussing what to do with him, and the political officer says, “As the military conflict winds down, everyone will be judged politically, regardless of their military record.”

      What that means, of course, is how loyal and faithful to party doctrine you were matters more than your military skill and bravery.

      I am not trying to compare the current administration to Soviet Russia, I think that rhetoric is badly overblown. The broader point from the example, however, does apply.

      One of the reasons that limited government is better than expansive government is that there are certain issues that should be decided non-politically.

      Economic decisions should be made based on economic principles, not political ones. Educational issues should be decided on what is best for students academically and developmentally, not what is politically correct. Legal issues should be decided based on the law, not political considerations, i.e., see the GM bankruptcy travesty.

      Medical issues should be decided medically, by doctors and patients, with their families, not by anonymous bureaucrats or unelected commissions set up by some vaguely worded legislation.

      The 20th century was a labratory experiment in real life of several different forms of very powerful government structures, from authoritarian to full blown totalitarianism. Contrary to the starry-eyed predictions of the statists and collectivists, the more powerful the government in its control of the daily lives of its citizens, the worse things turned out for the common man and woman.

      The archives have been opened, the walls have fallen, there is no possibility of any intellectually honest contention that the many repressive regimes of the past were better, or even half as good, as the liberal democratically structured states based on the Westminster/Constitutional model of limited state power and expansive individual liberties and rights.

      For the proponents of these various state run medical schemes now percolating through the legislature to claim that they would be more economical, or more responsive, or more conducive to future medical innovation than a privately controlled system is to deny not only the documented history of failure in past attempts at such a system with several other sectors of national economies around the world, and in the US, but also to deny the very clear examples of waste, inefficiency, and substandard care to be found in the current state run systems of Medicare, Medicaid, and Veterans’ medical benefits and hospitals.

      To those proponents I say—you are the blind, demanding that the rest of us close our eyes and follow you, even when we can see you walking, nay running, directly towards the cliff.

    44. HelenW Says:

      The elderly themselves will choose to spend money on their grandchildren rather than themselves.

      Very good thinking, Shannon. I love the word “decompartmentalization” because it always spells danger.

      However, the entire point of socialized medicine is taking choice away from the client. Whatever their dispositions–and I question their trans-generational generosity–the elderly will certainly have less choice.

      The much darker and more likely scenario is that career politicians would make more healthcare choices for all of us. Are these scoundrels motivated by the favor of their newborn constituents? Not likely. Look what they’ve done to disenfranchise 18 year olds.

      Politicians do not share commercial advertisers’ fixation with youth. Contrarily, they like to push ever more societal resources into gratuities for their very best voters. Thus, an American version of socialized medicine will likely produce a spike in infant mortality to compliment the last months of life for the survivors.

      Decompartmentalization kills.

      Best regards, Helly

    45. david foster Says:

      veryretired…from dr Zhivago…”everyone will be judged politically, regardless of their military record”

      Stalin, of course, executed very large numbers of military officers for political deviations, shortly before WWII. Some of these were undoubtedly officers with much experience and great talent, who could have been very useful. How many Russians died unnecessarily in WWII because of these political judgments? The number could well be in the millions.

      Obama/Pelosi/Reid intend to politicize every aspect of our national life. Healthcare and energy are just the beginning.

    46. veryretired Says:

      David Foster—Gen Zhukov, the hero of Moscow and the march to Berlin, was tried and severely disciplined after WW2 by Stalin because he was too popular and powerful amongst the members of the military, not to mention the public.

      As was often the case, his “disloyalty” consisted of his being perceived by Stalin as a potential threat.

      But, as I said, I do not compare this regime with the Soviet monstrosity. Their fledgling collectivist programs are another step in the direction of a corporate state, yes, but not in that league at all.

      I just think it is fascinating to watch the same people who were convinced that previous administrations were monitoring their phone calls and mail and library books, etc., by illegally employing the CIA, FBI, and NSA to watch their every move, suddenly become so enthusiastic about turning their entire medical history, and the responsibility for future determinations of possible medical care, over to the same threatening state which so recently planned, they claimed repeatedly, to put them in concentration camps or void the elections of 2008.

      Once the state has all this power and information, do they honestly believe that only friendly regimes will ever have access to it? The unbelieveable naivete’ of it all is simply astounding.

    47. Micajah Says:

      “The elderly themselves will choose to spend money on their grandchildren rather than themselves.”

      Maybe–if they are given the chance to make the decision themselves.

      Imagine a system in which the older folks (like yours truly) are given this choice: Spend gobs on you or give a big chunk of what we would have spent on you to someone of your choosing.

      If it’s just a nonspecific “someone else” that would benefit from the money the older guy chooses not to have spent on him, it’s not the same.

      When the spending you forgo for yourself goes to someone else that you can’t pick, don’t you have the “commons problem”? It’s every man for himself, since giving up anything doesn’t benefit you or someone you want to receive the benefit.

    48. methinks Says:

      Shanon,

      Well done (as always). Mark Levin is reading your post on his radio show as I write this. Just thought you would want to know.

    49. newrouter Says:

      you made the mark levin show hour 3 8/13/09

    50. Richard Says:

      What is ironic (and kinda funny), is that under the Obama/Demonrat plan, the traditional Demonrat voters would be the first to be sacrificed. The elderly, minorities, and those who traditionally look to governmet for their salvation will be determined to be too much of a burden on the Obama Health Care System. They will be killing off their own voter base!

    51. Mitch Says:

      It looks like today’s Wall Street Journal pretty much reiterated what you said: Obama’s Senior Moment. I guess the really shovel-ready project was the road to hell.