The book makes a simple claim:
The health care issue is almost entirely explained by the increase in premium medicine, where premium medicine is roughly defined by medicine that didn't exist 20 years ago, and which usually gives benefit probabilistically. Therefore most healthcare policy discussions do nothing to solve the real problem.
If you only give people medecine that was available in 1975, we have NO health care funding problem. Except more people die than do right now.
Example: Suppose MRI saves 2% of the people who get one, and does nothing for the other 98%. Should we give MRIs? They're awfully expensive.
Also, there are competing technologies that are better and more expensive, or less good but cheaper. Should we use them instead?
If you don't accept this is the problem ...roughly, you haven't read Dr. Kling's book...and you're wrong.
Since Kling is right, the only way we can address the nominal problem of cost is by doing less medicine. All the other claims about administrative cost, etc. are bogus.
How do you get less medicine? Economist answer: make sure that the people paying are the same people picking the services. This is either single-payer or individual payer, but our current vision of insurance (Kling calls it insulation) is about the worst possible world for cost containment.
Gratuitous statistic: US is among the highest percentage of health care not paid by self. Repeating...places like UK have more % $ spent by private citizens than USA does.
Issue 2: Innovation.
Simply: Single Payer systems suck for innovation. This has been true in every industry anyone has ever seen, and we have no reason to believe it won't be true for medicine. If you go single payer, you kill substantial innovation. Since USA provides most of the innovation for the world in health care, and most other countries piggy-back off US health choices after US tests them for cost-effectiveness...this massively decreases worldwide health innovation. This is a bad thing.
Issue 3: Most health care spending doesn't work
Robin Hanson says: we spend health $ to demonstrate caring, not because it's effective use of $. Kind of expensive signalling, but that's psychology. Regardless, something like 1/2 of all $ spent on Healthcare has no measureable effect.
Summary: Effectively all health care cost increases are becuase of new treatments. "Insurance" is atrocious as a cost containment approach. Single payer is atrocious at innovation. And it's even more complicated because most health spending doesn't work and it's not obvious that anyone actually cares (as opposed to says they care). Only thing with a snowball's chance in hell of solving the real problems (cost growth + innovation) is individual payer, no insulation with catastrophic coverage + low income safety net.
Feel free to explain I'm wrong....after you've read the book.
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2 comments:
Good comments. I agree with your conclusion--mostly.
When I read the book, I was impressed as you are. However, there was one point the Kling completely omitted and which I think is a major contributor to the f.u. state of health care (and which you've mentioned elsewhere).
Health care "insurance" premiums are taxable to neither employees/beneficiaries or employers. I think this is a huge factor in introducing government-sponsored supply/demand/price/choice distortion into the health care market, and I was very surprised that Kling didn't address it.
2 responses.
1. I think Kling doesn't talk much about the government intrusion into "insurance" subsidies because it's largely tangential to what his book is about. He argues that health care cost growth is about premium medicine. He also argues that insurance is a bad way to constrain costs. But he doesn't go about trying to solve the problem. Just to lay out the problem.
2. He does talk mildly about it. When discussing solutions (Ch. 6 or 7), he suggests capping the deductability of health insurance, and making it so that past $6000 of benefit, the remaining amount is taxable.
Thus he is certainly aware of the issue. But he, unlike a less-informed me, thinks it's a side issue.
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