Health Care Danger Signs

A well reasoned perspective on health insurance, health care, and medical care is provided as follows:

What is Health Insurance? – Arnold Kling

Let me offer two choices:

(a) Health insurance is the collective provision of all health care.
(b) Health insurance is the sharing of extreme risk in health care spending.

In my view, (a) represents what most people think of as good health insurance. For example, I have a friend who says her health insurance is great because she can get new eyeglasses every year for everyone in her family for a co-payment of only $10.

We have never observed (b). (b) would mean something where you only make a claim when your expenses are going to run into the tens of thousands of dollars. Claims would be rare and large, as in fire insurance. Premiums would be low, as in fire insurance….

Peter Orszag (now Obama’s had of Office of Management and Budget), Jason Furman (an Obama adviser), and Shannon Brownlee (author of the book Overtreated) are among those who acknowledge that much of our health care spending (a standard estimate is about 30 percent) goes for medical procedures that are not cost-effective.

The foregoing are among those on the left who believe that government-run health care can save money. But if you believe that government can save significant money on health care, then by the same token you have to believe either:

(i) our current mix of medical services is optimal, and we could deliver it much more cheaply;
(ii) our current mix of medical services is far from optimal, with too many cost-ineffective services provided.

Most people who can do arithmetic realize that (i) is not the answer. The standard bogeymen of drug industry profits and insurance company overhead are not big enough to make a major difference. Moreover, the evidence for (ii) is broad and overwhelming.

The bottom line is that what we think of as health insurance is not going to survive if we are going to get control of health care costs. Either health insurance is going to become very intrusive about our choices of medical services (the top-down, government option, under the guise of “health care quality”), or we are going to see much higher deductibles and co-payments (the bottom-up option).

I fully agree with this analysis. But I also think it leaves out one of the scariest problems. I’ve read else where that the large majority of costs in health care are due to diseases and often times preventable diseases. If health insurance/care/etc. is going to be federally funded and the government is going to be responsible for health care costs then a true discussion of controlling health/medical care includes controling the activities that lead to bad health (our sex lives, the substances (cigs, alcohol, drugs) we consume or abuse, our diet, our physical levels of activity, etc.).

A discussion of government controling costs while providing the right health care sounds very scary to me. (Even if the current system could be improved.)

Who will be responsible for paying for the smoker that sits around and watches TV all day while eating (cheap) Big Macs?

UPDATE:

From TheHill.com

What is surprising for many to learn is the degree to which the rapid growth in chronic illnesses such as diabetes, heart disease, cancer and arthritis, and related conditions such as obesity, are driving cost increases — and the implications this has for our national economy.

Today, nearly half of Americans suffer from one or more chronic diseases, and treatment of chronically ill Americans accounts for more than 75 percent of our nation’s healthcare spending. In Medicare and Medicaid, spending rates on the chronically ill are even higher: 96 percent and 83 percent of total spending, respectively.

TheHill.com article ends with a good point. But I ask one can only lead a horse to water, how do you incentivize somebody already on the “welfare” dollar to “get healthy” so their health care cost will lower?

UPDATE:

This post also seems to support my main concern about government intervention opening the door to oppression.

From MedScape.com

However, nearly two-thirds of the rise in health care spending is linked to a rise in treated disease prevalence (for example, diabetes) and innovations in medical treatment. Health behavior such as overconsumption of food, lack of exercise, smoking, and stress accounts for approximately 40-50 percent of morbidity and mortality Thus, a reliance solely on the consumer-driven model is not likely to solve the problem, since it would do little to address the key factors that underlie the rise in health care spending. Indeed, missing from the list of solutions for slow-ing health spending growth are public health and preventive interventions at the population level that target the rise in treated disease prevalence. Moreover, given the important role that medical innovations have assumed in expanding treatment, options for discouraging the diffusion of high-cost/low-benefit technologies also need exploration. To date, U.S. cost containment policy has focused too narrowly on demand-side interventions such as changing the design of insurance benefits and increasing cost sharing.