Aaron Carroll is correct. You need to see this chart often if you are going to discuss health care. The very large majority of our health care spending is done by few people. Their spending will top any reasonable deductible that most people can afford. When beset with the kind of malady that really drives health care costs in our system, things like cancer, major heart disease or trauma, patients are not going to think about costs (for most people), but where they will get treatment. For the kinds of things that people usually talk about when advocate for higher deductibles, things like routine doctor visits, we are down on the left side of our curve.
My good Steve,
I thought John Goodman’s response to Carroll was a good one.
To one who does not automatically accept such a situation as normal for human society nor automatically accept the assumptions (product supply, pricing, &c) underpinning it, though, this resembles nothing so much as the sort of graph one might expect from the economics of cocaine addiction, with the addicts as the patients – a minority consuming multiple ounces per day – the providers as the dealers, and the pricing perfectly natural for the respective equivalent cartel structures.
Speaking of cartel structures, economist Thayer Watkins has an interesting chart showing how subsidizing prices in a cartelized industry like medicine (and, now, higher education as well) only serves to drive prices higher in an infinite spiral requiring even more subsidization – hence the affinity the health care and insurance industries have for the ACA and even more promising single payer beyond that, and hence the affinity institutions of higher learning have for nationalized funding of their services as well.
H. M. Stuart
Alexandria
Goodman’s comment is irrelevant for the most part. We dont really expect the same patients to keep getting cancer, you can only have so many heart valves replaced or so much bowel removed. The problem remains that for any given year, spending is mostly done by a small group of people. Those people will exceed any reasonable deductible. The new people who get cancer the next year will face the same problem.
If it were the same group every year, it might actually be easier to work with. They would know the system and how to make decisions. You could set up incentives to make them interested in saving costs.
Steve
My good Steve,
Because Goodman is correct, that is, that there is a constantly changing group of patients, a less misrepresentative method of describing this phenomenon would be to say that 1%, 5%, &c of pricey procedures consistently account for the bulk of health care spending – not some particular profligate patients.
In addition, procedures can also be pushed even higher up the pricey curve by larding them with elements which generate billable revenue all out of proportion to their function: I have already recounted my own single encounter with the anesthesiologist’s nurse who generated an additional $700 for her anesthesiologist boss involved in my procedure merely by donning disposable gown and cap and spritzing my throat three times with a topical anesthetic, something the anesthesiologist himself was apparently unable to do when he was sitting on the bedside five minutes earlier chatting with me non-sterilely. This extra candy from babies was acquired during a cardiac procedure, but in an outpatient facility I walked in and out of the same day. I simply cannot be the one person in America that sort of revenue harvesting is uniquely carried out on.
So, in light of Goodman’s observation, the more honest and accurate way of portraying this situation is that those procedural opportunities to make the biggest money in medicine (and this obviously includes the entire supply-consumption chains of hospitaling, equipment, pharmaceuticals, &c), disproportionate to the per cent of the population served, lie on the far right side of the graph: this is where the medical specialties, their revenue boosting, featherbedding staff, and the highest profit materiel they utilize go to graze.
And, so, per Watkins, the more money that is made there, the even more more money that can be made there. No wonder so few fools follow our good Janice into primary care. The big money is to be made inveigling one’s interests into a procedural stream on the right hand side of the curve.
H. M. Stuart
Alexandria
” a less misrepresentative method of describing this phenomenon would be to say that 1%, 5%, &c of pricey procedures consistently account for the bulk of health care spending – not some particular profligate patients.”
Nope. The procedures change. CABG surgery, eg, has greatly decreased in frequency. So, as I noted, Goodman is correct about an irrelevant detail. While chronic diseases do put people on the right side of the curve, it is the patients needing the costly therapies that drive our costs.
“So, in light of Goodman’s observation, the more honest and accurate way of portraying this situation is that those procedural opportunities to make the biggest money in medicine”
And so everything I have written suggests we should work on those costs. What I have specifically advocated for is freezing payments for specialists while maintaining increases for PCPs. I also advocate for cost effectiveness research and Value based insurance.
Steve
“For the kinds of things that people usually talk about when advocate for higher deductibles, things like routine doctor visits, we are down on the left side of our curve.”
A few of those things, of course, you don’t actually want patients to be cost conscious about (I’m thinking vaccinations, here, where herd immunity depends on as many people as possible getting vaccinated). On the other hand, cost consciousness about things like custom made orthotics doesn’t hurt (I have a pair of these for my hiking boots only – if they were cheaper, I’d have gotten them for my dress shoes as well).
“We dont really expect the same patients to keep getting cancer”
If I keep getting cancer, I want a word with the One in Charge :-).
Sure, have people be more cost conscious about orthotics, but that is the kind of stuff people think of when the complain insurance covering routine care. That is the kind of spending that is not really driving total spending up. It is a very small part of our spending. You are also correct about things like immunizations. We know that when we have high deductibles, people will often not spend on treatments that let them avoid costlier care in the future.
Steve