Comments on: Health spending fallacy http://keithhennessey.com/2009/03/27/health-spending-fallacy/ Your guide to American economic policy Wed, 17 Mar 2010 19:57:44 -0400 http://wordpress.org/?v=abc hourly 1 By: ESR http://keithhennessey.com/2009/03/27/health-spending-fallacy/comment-page-1/#comment-69 ESR Wed, 01 Apr 2009 03:48:18 +0000 http://keithhennessey.com/?p=1115#comment-69 All mistakes in health care are due to presumptive logic; woe to the physician who presumes - but doesn't check it out. Even the best, most experienced, physicians know that a lab panel is needed when assessing a new patient or when re-assessing a chronic patient on certain medications, etc. Most tests will be negative; they are still needed. Wellness programs are wonderful, but the "free will" granted by our creator is also evidenced in health / wellness choices. And if every one is covered then what would be the "punishment" for those who choose life styles that make them sick? Finally, health care rationing will follow any decision by Obama to socialize health care. If you think you will live to over age 65-70 then you might like to ponder what it feel like to be excluded from certain health care - for serious problems - "because of age".<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('69','ESR'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('69','ESR','All mistakes in health care are due to presumptive logic; woe to the physician who presumes - but doesn't check it out. Even the best, most experienced, physicians know that a lab panel is needed when assessing a new patient or when re-assessing a chronic patient on certain medications, etc. Most tests will be negative; they are still needed.\nWellness programs are wonderful, but the "free will" granted by our creator is also evidenced in health \/ wellness choices. And if every one is covered then what would be the "punishment" for those who choose life styles that make them sick? Finally, health care rationing will follow any decision by Obama to socialize health care. If you think you will live to over age 65-70 then you might like to ponder what it feel like to be excluded from certain health care - for serious problems - "because of age".'); return false;">Quote</a></div> All mistakes in health care are due to presumptive logic; woe to the physician who presumes – but doesn't check it out. Even the best, most experienced, physicians know that a lab panel is needed when assessing a new patient or when re-assessing a chronic patient on certain medications, etc. Most tests will be negative; they are still needed.
Wellness programs are wonderful, but the "free will" granted by our creator is also evidenced in health / wellness choices. And if every one is covered then what would be the "punishment" for those who choose life styles that make them sick? Finally, health care rationing will follow any decision by Obama to socialize health care. If you think you will live to over age 65-70 then you might like to ponder what it feel like to be excluded from certain health care – for serious problems – "because of age".
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]]> By: ESR http://keithhennessey.com/2009/03/27/health-spending-fallacy/comment-page-1/#comment-68 ESR Wed, 01 Apr 2009 03:47:45 +0000 http://keithhennessey.com/?p=1115#comment-68 A good medical history takes perhaps 15-20 minutes, sometimes longer. 1:1 questioning is far more likely to give the physician the best information and insights as to what is going on with the patient. No carrier will pay for that much physician time. IT or EMR systems have never been shown to reliably improve the history or decision-making process.<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('68','ESR'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('68','ESR','A good medical history takes perhaps 15-20 minutes, sometimes longer. 1:1 questioning is far more likely to give the physician the best information and insights as to what is going on with the patient. No carrier will pay for that much physician time. IT or EMR systems have never been shown to reliably improve the history or decision-making process.'); return false;">Quote</a></div> A good medical history takes perhaps 15-20 minutes, sometimes longer. 1:1 questioning is far more likely to give the physician the best information and insights as to what is going on with the patient. No carrier will pay for that much physician time. IT or EMR systems have never been shown to reliably improve the history or decision-making process.
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]]> By: Wal-health http://keithhennessey.com/2009/03/27/health-spending-fallacy/comment-page-1/#comment-67 Wal-health Wed, 01 Apr 2009 02:40:37 +0000 http://keithhennessey.com/?p=1115#comment-67 [...] Just imagine what Walgreen & Wal-mart could do if they competed with each other, Target, and a h... in healthcare IT, preventative care and outcome measurement. [...]<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('67','Wal-health'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('67','Wal-health','[...] Just imagine what Walgreen & Wal-mart could do if they competed with each other, Target, and a h... in healthcare IT, preventative care and outcome measurement. [...]'); return false;">Quote</a></div> [...] Just imagine what Walgreen & Wal-mart could do if they competed with each other, Target, and a h… in healthcare IT, preventative care and outcome measurement. [...]
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]]> By: JohnLeppardIV http://keithhennessey.com/2009/03/27/health-spending-fallacy/comment-page-1/#comment-66 JohnLeppardIV Tue, 31 Mar 2009 19:07:16 +0000 http://keithhennessey.com/?p=1115#comment-66 Mr. Huffaker, I believe you miss the broader point here. Government health programs have a direct and fundamental impact on the cost of health care for society as a whole. Given the nature of government policy over the last 60 years or so, the public and "private" markets in health care are inextricably linked. You simply cannot address one without addressing the other. It would be like putting out the fire in the living room and assuming that the one in the kitchen would go out as well. Prior to 1965 (advent of the Medicare and Medicaid programs), US health care spending, as a percentage of GDP, never rose above 6%, we are now approaching the 17% mark. The Medicare program alone is responsible for more than half of this growth. For a more thorough study of the correllation between government health programs and cost increases I'd encourage you to check out the work of MIT's Amy Finkelstein, specifically "The Aggregate Effects of Health Insurance: Evidence From the Foundation of Medicare." Furthermore, most research, including that of the CBO, suggests that the cost saving possibilities of things such as health IT, preventative care and the like pale in comparison to the vast sums being discussed to "expand coverage." They are a pipe dream: increasing spending with the expectation of phantom savings. What the Obama program would produce instead would be expanded entitlement benefits stacked on top of an already insolvent system. THIS, would be like throwing gasoline on both fires and hoping for a miracle.<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('66','JohnLeppardIV'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('66','JohnLeppardIV','Mr. Huffaker, I believe you miss the broader point here. Government health programs have a direct and fundamental impact on the cost of health care for society as a whole. Given the nature of government policy over the last 60 years or so, the public and "private" markets in health care are inextricably linked. You simply cannot address one without addressing the other. It would be like putting out the fire in the living room and assuming that the one in the kitchen would go out as well. Prior to 1965 (advent of the Medicare and Medicaid programs), US health care spending, as a percentage of GDP, never rose above 6%, we are now approaching the 17% mark. The Medicare program alone is responsible for more than half of this growth. For a more thorough study of the correllation between government health programs and cost increases I'd encourage you to check out the work of MIT's Amy Finkelstein, specifically "The Aggregate Effects of Health Insurance: Evidence From the Foundation of Medicare." Furthermore, most research, including that of the CBO, suggests that the cost saving possibilities of things such as health IT, preventative care and the like pale in comparison to the vast sums being discussed to "expand coverage." They are a pipe dream: increasing spending with the expectation of phantom savings. What the Obama program would produce instead would be expanded entitlement benefits stacked on top of an already insolvent system. THIS, would be like throwing gasoline on both fires and hoping for a miracle.'); return false;">Quote</a></div> Mr. Huffaker, I believe you miss the broader point here. Government health programs have a direct and fundamental impact on the cost of health care for society as a whole. Given the nature of government policy over the last 60 years or so, the public and "private" markets in health care are inextricably linked. You simply cannot address one without addressing the other. It would be like putting out the fire in the living room and assuming that the one in the kitchen would go out as well. Prior to 1965 (advent of the Medicare and Medicaid programs), US health care spending, as a percentage of GDP, never rose above 6%, we are now approaching the 17% mark. The Medicare program alone is responsible for more than half of this growth. For a more thorough study of the correllation between government health programs and cost increases I'd encourage you to check out the work of MIT's Amy Finkelstein, specifically "The Aggregate Effects of Health Insurance: Evidence From the Foundation of Medicare." Furthermore, most research, including that of the CBO, suggests that the cost saving possibilities of things such as health IT, preventative care and the like pale in comparison to the vast sums being discussed to "expand coverage." They are a pipe dream: increasing spending with the expectation of phantom savings. What the Obama program would produce instead would be expanded entitlement benefits stacked on top of an already insolvent system. THIS, would be like throwing gasoline on both fires and hoping for a miracle.
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]]> By: Alex C. http://keithhennessey.com/2009/03/27/health-spending-fallacy/comment-page-1/#comment-65 Alex C. Tue, 31 Mar 2009 18:04:42 +0000 http://keithhennessey.com/?p=1115#comment-65 Stan, While you were the regional director for preventative services, did you have any exposure to people using CAM (complimentary and alternative medicine) as preventative medicine. My understanding is that diagnostic tests in modern allopathic medicine are unnecessarily expensive, especially from a diagnostic perspective. Many diseases can be proxied by easily observable measures such as BMI, eating/exercise/smoking/drinking habits, blood pressure, etc. The downside with these easy measures is that it requires the patient to do all of the work, instead of some fancy pharmaceutical. Have you seen any health plan groups that include diet / exercise incentives as preventative medicine?<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('65','Alex C.'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('65','Alex C.','Stan,\n\nWhile you were the regional director for preventative services, did you have any exposure to people using CAM (complimentary and alternative medicine) as preventative medicine. My understanding is that diagnostic tests in modern allopathic medicine are unnecessarily expensive, especially from a diagnostic perspective. Many diseases can be proxied by easily observable measures such as BMI, eating\/exercise\/smoking\/drinking habits, blood pressure, etc. The downside with these easy measures is that it requires the patient to do all of the work, instead of some fancy pharmaceutical.\n\nHave you seen any health plan groups that include diet \/ exercise incentives as preventative medicine?'); return false;">Quote</a></div> Stan,

While you were the regional director for preventative services, did you have any exposure to people using CAM (complimentary and alternative medicine) as preventative medicine. My understanding is that diagnostic tests in modern allopathic medicine are unnecessarily expensive, especially from a diagnostic perspective. Many diseases can be proxied by easily observable measures such as BMI, eating/exercise/smoking/drinking habits, blood pressure, etc. The downside with these easy measures is that it requires the patient to do all of the work, instead of some fancy pharmaceutical.

Have you seen any health plan groups that include diet / exercise incentives as preventative medicine?

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]]> By: GreatHairGuy http://keithhennessey.com/2009/03/27/health-spending-fallacy/comment-page-1/#comment-64 GreatHairGuy Tue, 31 Mar 2009 16:48:30 +0000 http://keithhennessey.com/?p=1115#comment-64 Don't forget the cost of 'defensive medicine'.<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('64','GreatHairGuy'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('64','GreatHairGuy','Don't forget the cost of 'defensive medicine'.'); return false;">Quote</a></div> Don't forget the cost of 'defensive medicine'.
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]]> By: Stan T. http://keithhennessey.com/2009/03/27/health-spending-fallacy/comment-page-1/#comment-63 Stan T. Tue, 31 Mar 2009 08:25:10 +0000 http://keithhennessey.com/?p=1115#comment-63 Candidates (and presidents now) have been re-discovering the "savings" in preventive care for some time. It's been a while since I dealt with this as regional director for preventive services for one of our largest prepaid group health plans, but the economics came down to: 1. You save money on tobacco cessation programs and immunization; and on aspirin for heart disease prevention 2. You reduce deaths or improve quality of life through early detection of disease, but at a cost that--for many interventions--is (was 15 years ago) on the order of $35,000 per year of life saved. That, as I recall, was an estimate for the 'savings' from doing mammography for breast cancer. 3. For primary prevention (e.g. statins for prevention of the first heart attack) you need to treat a lot of people to prevent one event; it's in the same ballpark as early detection of breast cancer, but NOT a money saver FOR THE HEALTH CARE SYSTEM. 4. Some very expensive procedures (e.g. heart transplant) are relatively inexpensive per year of life saved compared with less aggressive therapy, and compared with things like blood pressure control to prevent strokes. Again, my recollection may be faulty and my data old, but I think that in general these still apply. Bottom line: you do NOT save money for the health care system through preventive measures.<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('63','Stan T.'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('63','Stan T.','Candidates (and presidents now) have been re-discovering the "savings" in preventive care for some time. It's been a while since I dealt with this as regional director for preventive services for one of our largest prepaid group health plans, but the economics came down to:\n1. You save money on tobacco cessation programs and immunization; and on aspirin for heart disease prevention\n2. You reduce deaths or improve quality of life through early detection of disease, but at a cost that--for many interventions--is (was 15 years ago) on the order of $35,000 per year of life saved. That, as I recall, was an estimate for the 'savings' from doing mammography for breast cancer.\n3. For primary prevention (e.g. statins for prevention of the first heart attack) you need to treat a lot of people to prevent one event; it's in the same ballpark as early detection of breast cancer, but NOT a money saver FOR THE HEALTH CARE SYSTEM.\n4. Some very expensive procedures (e.g. heart transplant) are relatively inexpensive per year of life saved compared with less aggressive therapy, and compared with things like blood pressure control to prevent strokes.\n\nAgain, my recollection may be faulty and my data old, but I think that in general these still apply.\n\nBottom line: you do NOT save money for the health care system through preventive measures.'); return false;">Quote</a></div> Candidates (and presidents now) have been re-discovering the "savings" in preventive care for some time. It's been a while since I dealt with this as regional director for preventive services for one of our largest prepaid group health plans, but the economics came down to:
1. You save money on tobacco cessation programs and immunization; and on aspirin for heart disease prevention
2. You reduce deaths or improve quality of life through early detection of disease, but at a cost that–for many interventions–is (was 15 years ago) on the order of $35,000 per year of life saved. That, as I recall, was an estimate for the 'savings' from doing mammography for breast cancer.
3. For primary prevention (e.g. statins for prevention of the first heart attack) you need to treat a lot of people to prevent one event; it's in the same ballpark as early detection of breast cancer, but NOT a money saver FOR THE HEALTH CARE SYSTEM.
4. Some very expensive procedures (e.g. heart transplant) are relatively inexpensive per year of life saved compared with less aggressive therapy, and compared with things like blood pressure control to prevent strokes.

Again, my recollection may be faulty and my data old, but I think that in general these still apply.

Bottom line: you do NOT save money for the health care system through preventive measures.

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]]> By: caveat bettor http://keithhennessey.com/2009/03/27/health-spending-fallacy/comment-page-1/#comment-62 caveat bettor Mon, 30 Mar 2009 20:13:37 +0000 http://keithhennessey.com/?p=1115#comment-62 Any government subsidy results in significant inflation, correct? Does Stigler's capture and public choice theory mesh with the subsidies (healthcare, education, corn, sugar ...) and inflation in our economy? I think so. If that holds true, then this plan will actually increase costs, even if the aging population demographic reverses.<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('62','caveat bettor'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('62','caveat bettor','Any government subsidy results in significant inflation, correct? Does Stigler's capture and public choice theory mesh with the subsidies (healthcare, education, corn, sugar ...) and inflation in our economy? I think so. If that holds true, then this plan will actually increase costs, even if the aging population demographic reverses.'); return false;">Quote</a></div> Any government subsidy results in significant inflation, correct? Does Stigler's capture and public choice theory mesh with the subsidies (healthcare, education, corn, sugar …) and inflation in our economy? I think so. If that holds true, then this plan will actually increase costs, even if the aging population demographic reverses.
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]]> By: Alex C. http://keithhennessey.com/2009/03/27/health-spending-fallacy/comment-page-1/#comment-61 Alex C. Mon, 30 Mar 2009 15:45:03 +0000 http://keithhennessey.com/?p=1115#comment-61 I believe the answer lies in a second point you make in point 3, "Medical expenditures tend to be highly concentrated in a relatively small proportion of the population". The real question people need to ask is if we change healthcare inventives, what will happen to this 20% of the population that causes 80% of healthcare costs? Will this healthcare "elite" spend more or spend less? As I said above, overall I still think you are right in challenging Obama's healthcare budget. However, I would like to see some more quantitative evidence before I believe that changing healthcare incentives through increased coverage and IT investment will cause a net increase in healthcare costs.<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('61','Alex C.'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('61','Alex C.','I believe the answer lies in a second point you make in point 3, "Medical expenditures tend to be highly concentrated in a relatively small proportion of the population". The real question people need to ask is if we change healthcare inventives, what will happen to this 20% of the population that causes 80% of healthcare costs? Will this healthcare "elite" spend more or spend less?\n\nAs I said above, overall I still think you are right in challenging Obama's healthcare budget. However, I would like to see some more quantitative evidence before I believe that changing healthcare incentives through increased coverage and IT investment will cause a net increase in healthcare costs.'); return false;">Quote</a></div> I believe the answer lies in a second point you make in point 3, "Medical expenditures tend to be highly concentrated in a relatively small proportion of the population". The real question people need to ask is if we change healthcare inventives, what will happen to this 20% of the population that causes 80% of healthcare costs? Will this healthcare "elite" spend more or spend less?

As I said above, overall I still think you are right in challenging Obama's healthcare budget. However, I would like to see some more quantitative evidence before I believe that changing healthcare incentives through increased coverage and IT investment will cause a net increase in healthcare costs.

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]]> By: Alex C. http://keithhennessey.com/2009/03/27/health-spending-fallacy/comment-page-1/#comment-60 Alex C. Mon, 30 Mar 2009 15:44:43 +0000 http://keithhennessey.com/?p=1115#comment-60 In point 1 you put forth a basic economic tenent - if you reduce the price of a good, you will increase the demand / consumption. With most goods, this is true but with healthcare it is a little more complicated. It is unclear if increased consumption of healthcare upfront leads to a net negative, neutral, or positive healthcare spending outcome in the long run. By this I mean, if you get more "tests / check-ups" today will that lead to a greater or lesser net spending on healthcare. In point 1 you qualitatively assume that it will be greater. This belief is confirmed in point 3, with the specific example of preventative care. My question to you is where is the empirical evidence? How do you know that the net result of lowering the cost of healthcare to consumers will be increased overall healthcare cost? See next post for Part IV. (Sorry for all the posts. Please change the comment software you use when you have a chance.)<div class="comment-remix-meta"><a href="#" class="replyto" onclick="replyto('60','Alex C.'); return false;">Reply</a> - <a href="#" class="quote" onclick="quote('60','Alex C.','In point 1 you put forth a basic economic tenent - if you reduce the price of a good, you will increase the demand \/ consumption. With most goods, this is true but with healthcare it is a little more complicated. It is unclear if increased consumption of healthcare upfront leads to a net negative, neutral, or positive healthcare spending outcome in the long run. By this I mean, if you get more "tests \/ check-ups" today will that lead to a greater or lesser net spending on healthcare. In point 1 you qualitatively assume that it will be greater. This belief is confirmed in point 3, with the specific example of preventative care. My question to you is where is the empirical evidence? How do you know that the net result of lowering the cost of healthcare to consumers will be increased overall healthcare cost?\n\nSee next post for Part IV. (Sorry for all the posts. Please change the comment software you use when you have a chance.)'); return false;">Quote</a></div> In point 1 you put forth a basic economic tenent – if you reduce the price of a good, you will increase the demand / consumption. With most goods, this is true but with healthcare it is a little more complicated. It is unclear if increased consumption of healthcare upfront leads to a net negative, neutral, or positive healthcare spending outcome in the long run. By this I mean, if you get more "tests / check-ups" today will that lead to a greater or lesser net spending on healthcare. In point 1 you qualitatively assume that it will be greater. This belief is confirmed in point 3, with the specific example of preventative care. My question to you is where is the empirical evidence? How do you know that the net result of lowering the cost of healthcare to consumers will be increased overall healthcare cost?

See next post for Part IV. (Sorry for all the posts. Please change the comment software you use when you have a chance.)

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