Universal Health Care Reform in the United States

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Originally Posted by Brown, Jon Brow

Lets put some economic theory into this. If you have a public option then demand for private health insurance will go down. Usually when demand falls for a product/service the price falls too. So wouldn't private health insurance become cheaper?

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That could be, but I doubt it. Because the price of the treatments will stay the same. So the payments that the insurance company are paying out won't drop much, if at all. Their administrative costs should go down though. But that won't be immediate either. Therefore people will be in the "Public Option" and I'm going to guess that there will be restrictions put in place that will make it hard to extract yourself from that system, once you're in.

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Originally Posted by Mark in Oshawa

the Canadian healthcare system, which has wait times, and which rations care. Americans don't want our model, yet many on Obama's side look at Canada as the way to go.

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At the risk of repeating myself again and again, ALL countries ration healthcare. Canada or other socialised systems do, America does and will do whatever reforms come in. Anyone who thinks a particular system doesn't ration is simply wrong. AFAIA Canada though is unique in banning 'private' healthcare, ie the state is the one and only provider. This doesn't happen anywhere else and therefore Canada isn't a good model for those wanting to see how socialised healthcare systems can and do work.

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Originally Posted by Brown, Jon Brow

Lets put some economic theory into this. If you have a public option then demand for private health insurance will go down. Usually when demand falls for a product/service the price falls too. So wouldn't private health insurance become cheaper?

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Its not that simple. In the UK private healthcare is considerably cheaper than it is in the US because its effectively state subsidised. Private hospitals do not treat emergencies, and if operations go wrong patients are transferred to the NHS for intensive care. Therefore private hospitals don't have to invest in the most expensive parts of healthcare, have lower running costs and can charge less. Also, private healthcare does not need to invest in training staff, the state university system and the NHS do that for them. The private system in the UK is an option to the state funded default option NHS.

In the US, its the private system thats the default and the state funded system that is the 'option' if you're too poor or qualify for medicaid/care. Cutting demand for private care is fine by boosting state services but this may have unforeseen results. Having said that, my belief is that the US health insurers are pretty bloated as they effectively operate in a cartel, all using the same model as each other. A properly executed state funded option as proposed by Obama may well run on considerably less money and may well bring down costs across the board as the private companies have to compete.

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Originally Posted by chuck34

That could be, but I doubt it. Because the price of the treatments will stay the same. So the payments that the insurance company are paying out won't drop much, if at all. Their administrative costs should go down though. But that won't be immediate either. Therefore people will be in the "Public Option" and I'm going to guess that there will be restrictions put in place that will make it hard to extract yourself from that system, once you're in.

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The NHS pays considerably less for its drugs than the US does because it has far greater negotiating power than any individual US healthcare provider. In fact its cut its pharm costs by about 5% per year over the past few years due to an agreement with the pharm companies. It does help that some of the biggest pharm companies are in fact British. If the US government were to negotiate directly with the pharm companies there will be discounts to be had. When companies bid for contracts to supply drugs for 50 million people at a time you'd be surprised how far costs can drop.

Another thing that doesn't help is the fact that pharm companies advertise directly to the consumer in the US, and they also pay off doctors and hospitals to prescribe their medication when far cheaper alternatives would suffice, inflating costs again. This is a serious problem that needs to be looked at and the current reforms don't appear to mention anything about them.

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Originally Posted by Dylan H

The NHS pays considerably less for its drugs than the US does because it has far greater negotiating power than any individual US healthcare provider. In fact its cut its pharm costs by about 5% per year over the past few years due to an agreement with the pharm companies. It does help that some of the biggest pharm companies are in fact British. If the US government were to negotiate directly with the pharm companies there will be discounts to be had. When companies bid for contracts to supply drugs for 50 million people at a time you'd be surprised how far costs can drop.

Another thing that doesn't help is the fact that pharm companies advertise directly to the consumer in the US, and they also pay off doctors and hospitals to prescribe their medication when far cheaper alternatives would suffice, inflating costs again. This is a serious problem that needs to be looked at and the current reforms don't appear to mention anything about them.

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I agree that drug costs should and could come down. However, I don't think the government is the one to do it. I think that if people had more input into their own health choices they would have more insentive to ask for the cheaper drugs. That is why I think getting away from the employer based system and switching to an individual system works better in most cases.

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Originally Posted by chuck34

I agree that drug costs should and could come down. However, I don't think the government is the one to do it. I think that if people had more input into their own health choices they would have more insentive to ask for the cheaper drugs. That is why I think getting away from the employer based system and switching to an individual system works better in most cases.

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What input do you mean? You mean choice or paying more?

That assumes that each and every patient will be educated about the effects of those drugs whether the more expensive one will be of benefit or is even appropriate. In my experience that isn't the case, people often assume newer is better like with cars or computers and demand the latest regardless of its use.

The easy way would be to break the links between the pharm companies and the medical establishment, making it illegal to offer financial incentives to prescribe a particular drug. That way medical staff will prescribe with clinical efficacy in mind only, not what cut they can take home with them.

As for the block negotiations, alternatively the government could negotiate directly with the drug companies allowing for bulk discounts as in the UK, these drugs could then be sold onto the private insurers or hospitals on a no-profit basis. Just like any other business the more you buy at one time the more money you get off.

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Originally Posted by chuck34

Ok went to the link and read most of it, skimed some. It sounds pretty much like what I'm saying. Fixing lawsuits will do a lot to help lowering costs. It won't solve everything, but it will help. So why not do it?

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Oh I agree, like I said, anything that does not include tort reform is incomplete. It's just that some states that have tried "Loser pays" have not had the results they would have hoped for enacting it.

That is one thing though, with 50 states, why not try out all of these ideas in test markets so to speak for a couple of years before they force us into a huge bureaucracy that will never be killed. We can then choose what works, kick out what doesn't and tweak the unintended consequences to get what we as a nation want, whatever that is.

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Originally Posted by Dylan H

What input do you mean? You mean choice or paying more?

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I mean choice between generic or not, or even having the drug. Look at it this way. There's this new drug out there, lets call it Fucitall. Fucitall will make you feel better no matter why you feel like crap. But Fucitall costs $100 a pill. Right now, as a consumer, I don't care because my insurance will pay all but say $20 for the script. So I go to my doctor and tell him that I have symptoms that will be cured by Fucitall. Now if I am paying for my own insurance and have to absorb the increased premiums that come with getting this expensive drug, perhaps I will think twice about asking for it.

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Originally Posted by Dylan H

That assumes that each and every patient will be educated about the effects of those drugs whether the more expensive one will be of benefit or is even appropriate. In my experience that isn't the case, people often assume newer is better like with cars or computers and demand the latest regardless of its use.

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Yes, people are rarely educated on drugs and their benefits. However, I believe this would change if the consumer would have a vested interest in their costs increasing. And thus would be more likely (perhaps not much more) to educate themselves.

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Originally Posted by Dylan H

The easy way would be to break the links between the pharm companies and the medical establishment, making it illegal to offer financial incentives to prescribe a particular drug. That way medical staff will prescribe with clinical efficacy in mind only, not what cut they can take home with them.

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I would agree with that. How do you go about doing that?

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Originally Posted by Dylan H

As for the block negotiations, alternatively the government could negotiate directly with the drug companies allowing for bulk discounts as in the UK, these drugs could then be sold onto the private insurers or hospitals on a no-profit basis. Just like any other business the more you buy at one time the more money you get off.

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That may work in the UK, but I have very little faith in the US government being able to negotiate "good" deals and pass the savings on. Everything our government does is so tied up in red tape and beurocratic BS that I doubt we'd see much savings.

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Originally Posted by Alexamateo

Oh I agree, like I said, anything that does not include tort reform is incomplete. It's just that some states that have tried "Loser pays" have not had the results they would have hoped for enacting it.

That is one thing though, with 50 states, why not try out all of these ideas in test markets so to speak for a couple of years before they force us into a huge bureaucracy that will never be killed. We can then choose what works, kick out what doesn't and tweak the unintended consequences to get what we as a nation want, whatever that is.

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That makes WAAAAAAAY too much sence, it'll never happen. ;-)

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Originally Posted by chuck34

I mean choice between generic or not, or even having the drug. Look at it this way. There's this new drug out there, lets call it Fucitall. Fucitall will make you feel better no matter why you feel like crap. But Fucitall costs $100 a pill. Right now, as a consumer, I don't care because my insurance will pay all but say $20 for the script. So I go to my doctor and tell him that I have symptoms that will be cured by Fucitall. Now if I am paying for my own insurance and have to absorb the increased premiums that come with getting this expensive drug, perhaps I will think twice about asking for it.

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Originally Posted by chuck34

Its never that easy is it. What if you have to remain on fucitall for the rest of your life? What if there are no competitors or generics? Are you going to remain objective when you're ill, or are you simply going to want to do whatever you think will make you better? My experience suggests the latter.

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Originally Posted by chuck34

Yes, people are rarely educated on drugs and their benefits. However, I believe this would change if the consumer would have a vested interest in their costs increasing. And thus would be more likely (perhaps not much more) to educate themselves.

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In theory thats true but in practice people don't make rational decisions when their health is at stake even when knowledgeable. People don't choose a cancer drug using the same thought processes as they do when choosing between a Merc or Beemer. Thats why doctors are advised to see another doctor when they are ill, to retain objectivity that is easily lost when you're ill.

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Originally Posted by chuck34

I would agree with that. How do you go about doing that?

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Simple, transactions between pharm companies and the medical establishment need to be audited and offenders prosecuted. Doctors need to be named and shamed and prosecuted where required.

In the UK its always been illegal (and nearly impossible) for pharm companies to pay off individual doctors or hospitals to prescribe their drugs. All they can do is work out a special discount for individual hospital groups on top of what they've worked out with the NHS.

To get around this drug companies used to do what car companies still do with journos, invite top doctors to a launch event somewhere nice, followed by a weekend of golf or sightseeing. The hope was that those doctors would pressurise the hospital into buying that drug, or perhaps choose that drug over a competitor when prescribing. That was made illegal by limiting the amount of money drug companies could spend on events.

That way, drugs are purely prescribed on clinical grounds. Obviously reality is slightly different but cash incentives to prescribe are unheard of.

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Originally Posted by chuck34

That may work in the UK, but I have very little faith in the US government being able to negotiate "good" deals and pass the savings on. Everything our government does is so tied up in red tape and beurocratic BS that I doubt we'd see much savings.

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And the British government is better? I doubt that very much.