Where Are the Savings in Health Care Reform?

One of the problems with the health-care debate is that it is, as President Obama implicitly acknowledged the other day, about health insurance, not about health care. If one is interested in reducing the cost of health care, there is very little in the current debate, or in the legislation before Congress, that actually addresses that issue. The reasons that we aren't going to reduce the cost of health care very much involve problems with challenging our trust in our doctors, and problems with accepting higher risks of bad outcomes.

If you ask why health care costs are so high, you'll get all sorts of answers, some of them, to fall into Aristotelian parlance, about efficient causes, some about material causes, some about formal causes, and some, I suppose, even about final causes. I'm going to look at efficient causes, and I'm going to look at some comparative data. There are a number of studies that have shown that costs per person vary from state to state, as well as within states. Here is one example from 2001 http://www.ppinys.org/reports/jtf/2001/Table%2042.htm. At that time, the Medicaid costs per person served in the United States were $4,307. But that concealed a variance from Tennessee at $2,075, to New York at $8,961. According to recent reports, the two most expensive cities in the country for medical care are Miami, Florida, and McAllen, Texas. (Here's an article from the New Yorker about McAllen - http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande.)

Now, how do we get to the cost of something? The usual way is the number of items purchased, multiplied by the price of each item. If you buy six bags of mulch at $4.00 per bag, your cost of mulch is $24.00 (plus tax). In the health care area, the cost per item doesn't vary all that much from place to place, partly because the government and the insurance carriers set some limits on how much they'll pay for given procedures. So, McAllen is more expensive than other places because the doctors there order more procedures, more tests, more prescriptions for their patients than doctors elsewhere. So, the reason that some states have higher costs than other, and perhaps the reason that the U.S. as a whole has health care costs much higher than other countries, is that doctors order too many tests, too many procedures, and too many prescriptions.

If the cost of health care is highly variable, and if one of the major factors driving it up is that doctors prescribe more tests and procedures than are really needed, the obvious solution is to drive down the cost of health care by eliminating all of those extra charges. That is what HMOs were supposed to do, and that is why HMOs are hated and derided across the country. The problem here is very simple: your doctor makes money by prescribing these things. If your doctor refers you to a surgeon for gall bladder surgery, he gets a referral fee, and the surgeon gets a nice fee for himself. Not for everything, but for many of the things doctors order, the doctor has a financial interest the product. Just think about that for a minute - your doctor makes money by selling you medical services.

So, we can't really expect doctors to slash their own incomes by reducing the numbers of procedures they prescribe, no matter how many studies we do and guidelines we issue. What is needed is a third party to decide whether every test or procedure ordered by the doctor is really necessary, and to refuse the order if it isn't. Such a person is the insurance company spoken of with disgust, the government bureaucrat the AMA warns you against, but that is the only way to reduce costs, as long as doctors make their money by prescribing things. As I mentioned above, one problem with this approach is that it implies that your doctor may be ordering you to have tests or procedures you don't really need, and that may put you at risk, in order to keep up the payments on his mansion. Most people, I believe, don't even want to think about this possibility, because if they can't trust their doctor's advice they have bigger problems than meeting their insurance premiums.

The other option, of course, is to stop the fee for service system altogether. Stop paying doctors like auto mechanics, and they'll stop acting like auto mechanics, who will, as Click and Clack say, estimate the cost of your auto repairs according to the size of their boat payment.

This little essay just scratches the surface of this issue. Let me say one more thing: The current debate about reforming health care will do one thing, and one thing only. By increasing the number of people with some form of insurance, it will drive up the cost of health services by increasing the effective demand for them. So we're looking at massive tax increases or trillion-dollar deficits as far as the eye can see, unless we get real reform. And that kind of reform is not on the table yet.

Commentary's Books: January 2009

Commentary doesn't have a "bestsellers list," like the one in Foreign Affairs. They do have reviews of five or six books in every issue, and some of their articles are centered on some new book or books of interest.

The January 2009 issue of Commentary had the following reviews:

In the Shadow of the Oval Office: Profiles of the National Security Advisers and the Presidents They Served - from JFK to George W. Bush. Ivo H. Daalder and I. M. Destler. Simon & Schuster. 372 pp. $27.00. Reviewed by Daniel Casse.

Iron Fists: Branding the 20th-century Totalitarian State. Steven Heller. Phaidon. 224 pp. $90.00. Reviewed by Michael J. Lewis.

Real Education: Four Simple Truths for Bringing America's Schools Back to Reality. Charles Murray. Crown Forum. 224 pp. $24.95. Reviewed by Wilfred M. McClay.

A Manifesto for Media Freedom. Brian C. Anderson and Adam D. Thierer. Encounter. 200 pp. $21.95. Reviewed by David L. Lange.

Maimonides: The Life and World of One of Civilization's Greatest Minds. Joel L. Kraemer. Doubleday. 640 pp. $35.00. Reviewed by David C. Flatto.

In addition to the book reviews, there was this review article, which should be of interest to fantasy and science fiction fans.

Algis Valiunas, "No to Poe," pages 42-45 in Commentary, January 2009. This article was inspired by Poe: A Life Cut Short, by Peter Ackroyd. Doubleday. 224 pages. $21.95.

There was also "In the Ruins of Vilna," by Michael Kimmage, about Vilna (or Vilnius), Lithuania, invoking From That Place and time: A Memoir, 1938-1947, by Lucy S. Dawidowicz. Introduction by Nancy Sinkoff. Rutgers, 376 pp., $24.95 (paper).

Foreign Affairs Bestsellers - December/November 2008

1. Hot, Flat, and Crowded: Why We Need a Green Revolution – and How It Can Renew America. Thomas L. Friedman. Farrar, Straus & Giroux, $27.95. [New Listing]
2. The War Within: A Secret White House History, 2006-2008. Bob Woodward. Simon & Schuster, $32.00. [New Listing]
3. The Way of the World: A Story of Truth and Hope in an Age of Extremism. Ron Suskind. Harper, $27.95. [New Listing]
4. The Dark Side: The Inside Story of How the War on Terror Turned Into a War on American Ideals. Jane Mayer. Doubleday, $27.50. [New Listing]
5. The Post-American World. Fareed Zakaria. Norton, $25.95. [Previous rank: 1]
6. The Limits of Power: The End of American Exceptionalism. Andrew C. Bacevich. Metropolitan Books, $24.00. [New Listing]
7. The Strongest Tribe: War, Politics, and the Endgame in Iraq. Bing West. Random House, $28.00. [New Listing]
8. One Minute to Midnight: Kennedy, Krushchev, and Castro on the Brink of Nuclear War. Michael Dobbs. Knopf, $28.95. [Previous rank: 5]
9. Descent Into Chaos: The United States and the Failure of Nation Building in Pakistan, Afghanistan, and Central Asia. Ahmed Rashid. Viking, $27.95 [Previous rank: 7]
10. Counselor: A Life at the Edge of History. Ted Sorensen. Harper, $27.95. [Previous rank: 2]
11. A Path Out of the Desert: A Grand Strategy for America in the Middle East. Kenneth M. Pollack. Random House, $30.00. [New Listing]
12. America and the World: Conversations on the Future of American Foreign Policy. Zbigniew Brzezinski and Brent Scowcroft with David Ignatius. Basic Books, $27.50. [New Listing]
13. Spycraft: The Secret History of the CIA’s Spytechs, From Communism to al-Qaeda. Richard Wallace and H. Keith Melton with Henry Robert Schlesinger. Dutton, $29.95. [Previous rank: 8]
14. Kingmakers: The Invention of the Modern Middle East. Karl E. Meyer and Shareen Blair Brysac. Norton, $27.95. [New Listing]
15. Tell Me How This Ends: General David Petraeus and the Search for a Way Out of Iraq. Linda Robinson. PublicAffairs, $27.95. [New Listing]

I was shocked - shocked! - to realize that I had not posted one of these bestseller lists from Foreign Affairs magazine since March. I've been reading more books than periodicals lately, and I've been very busy. No excuses, just a fact.

I should note that, partly because this list is somewhat elderly, I have had the opportunity to read two of the books on the list: The War Within, by Bob Woodward, and The Dark Side, by Jane Meyer. I posted a review of The War Within to this blog some time ago. I have not reviewed The Dark Side here, although I read it some time ago. The Way of the World, by Ron Suskind, is in the stack of books I am planning to read. I hope you can find something in this list that you will think worth reading.

Treason!

It's bad enough when right-wing-nuts like Anne Coulter casually accuse a majority of the country of treason. Now Paul Krugman, Nobel laureate in economics, and a man who ought to know better, has accused the Congressmen who voted against the Democrats' climate-change bill of treason to the planet.

A copy was posted at this blog.

There is a response from the right, and this one involves some attempt at humor, or at least irony.

Treason is a strong word, and such accusations should be reserved for solemn occasions. Mr. Krugman has overdone it this time, and his critics are right to take him to task for it. Unfortunately, he has given them one more excuse to ignore the reality of climate change and its consequences.

Comments on the Palin Resignation

Here's one comment, from a conservative source, on Governor Palin's resignation: http://pajamasmedia.com/eddriscoll/2009/07/03/gov-palin-resigning-in-weeks/

Here's another: http://pajamasmedia.com/blog/palin-resignation-shocks-political-world/. I liked this woman's comment: "The timing of this announcement is very odd for someone who is trying to execute a strategy to get into the White House in 2013. Not only is this a “Friday afternoon news dump,” but it is the mother of all Friday afternoons. Because many people are taking today off and left their homes yesterday for the beach, the lake, the camp, or the hiking trail, we’re well into a three-day weekend for many. If the governor wanted widespread publicity for this unorthodox move, she could not have picked a worse time."

And here's one from Philip Rucker of the Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2009/07/04/AR2009070402761.html?wpisrc=newsletter

Jazz Shaw characterizes Palin's move as "political suicide." http://pajamasmedia.com/blog/palin-commits-political-suicide/

Ce n'est pas une femme serieuse.

Sarah Palin resigned as governor of Alaska, a job with an electoral base smaller than than that of any number of counties in the United States. I don't know if Ms. Palin is going to run for higher office, try to make a fortune from book deals and speaking engagements, or sit at home and learn to knit booties. What I do know is that she had demonstrated, once again, that she is not a serious person.

In the French world, about the worst thing you can say about a person is "Ce n'est pas un homme serieux." This is especially true for politicians and the leaders of large enterprises.

Being a serious person doesn't mean keeping a gloomy look on one's face or speaking in somber tones. It means thinking before one speaks. It means considering various possibilities and the perceptions of various groups. It means understanding that actions, and words, have consequences. It also means living up to one's responsibilities. A serious person doesn't make promises he can't keep, and she tries like hell to keep the promises she has made.

Sarah Palin presented herself to the people of Alaska as a candidate for a four-year term as the governor of their state. She has quit with 18 months to go. This is not the act of a serious person.

Denver's in the Green

The accompanying article might have been more timely if I had posted it here as soon as it appeared in Slate, but I don't think it's a really time-sensitive piece.

For those interested in the environment, in the "green economy," or in how technology is affected the employment picture, this is interesting stuff.