Friday, December 18, 2009


I don’t like admitting I’m wrong. But I sometimes (often?) am. And when I am, as much as it pains me, I try to admit it. For instance, when I wrote about healthcare reform, I suggested that tort reform would be a meaningful component of reducing costs. Walter and Alex kindly set me right in the comments. Malpractice insurance is typically between 1% and 3% of a provider’s cost. So even if tort reform eliminated the need for malpractice insurance (it wouldn’t), we’d at best see a 3% reduction in cost. I, and I assume most rational people, would rather pick other fights.

So yesterday when one of my colleagues, let’s call him “Rush,” was going off to the guy sitting next to me about how tort reform was the holy grail of healthcare cost reduction, I calmly got up and engaged in the conversation. I politely explained what I had recently learned about the relative insignificance of tort reform. I would have even walked him through the math if I could have got a word in edgewise between his ranting on about “I don’t care, it’s still crap.”

And when I realized that this was not an argument but rather contradiction and that his only tactic was to call my position crap, I walked away. I never walk away from an argument.

Moments later as he walked back to his office, he paused at my desk and said “it smells like alcohol over here.” I don’t know if he was implying that I must be drunk to think what I think, but that’s the only explanation I can come up with.

But maybe he has a higher degree of certainty than I do that his position is right. Perhaps he knows something that can prove the very simple math involved wrong. Perhaps, as Glen Beck suggests when admonishing his followers to buy Gold, he even prayed on it.

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  1. If i yell louder it makes me right, or use bigger words, or ridiculous insults etc....

    Truth has no place.

  2. i tried to buy some gold, but it was too expensive.

    so i sued my doctor. that was cheaper.

  3. I've heard 10%. Still not a real big deal, but not laughable either. More important is meddling with not a lot of understanding of the consequences. The 55 Medicare thing would have eliminated my retiree insurance.

    Howard Dean may be right...

  4. A thought..
    If I'm thinking about this correctly I believe you are saying that the benefit of tort reform is limited to decreasing malpractice insurance costs.
    What if tort reform led to less "defensive" medicine. What if less procedures and imaging studies were performed to protect the doctor from lawsuits. Let's say as ballpark figure CT and MRI exams cost $1,000 per exam. We could be talking real money.
    Another benefit would be less radiation and procedure risk to patients and less missed work. Not bad side benefits.
    The Healthcare debate is really complex but the above has at least some merit.
    Not sure but worth thinking about.

  5. Ditto Ducker1312. I know it can only be an estimate and would vary widely based on your assumptions, but has anyone tried to put a figure on these secondary effects (fewer cover-your-butt procedures/tests, etc.) of tort reform?

  6. This comment has been removed by the author.

  7. "Tort Reform" is a red herring. It has been implemented in some form in many states yet it has NOT 1) reduced health care costs 2) reduced insurance premuims 3) had any effect on malpractice insurance or 4) changed "defensive medicine".

    I mentioned in that last post that 38 states restrict punitive damage awards and 23 restrict non-economic (pain & suffering) damages but this has had no impact on healthcare costs.

    Of course, what does affect health care costs is that those w/o insurance only go to emergency rooms when their issue is out of control and more costly to treat, which often go unpaid by the patient since they can't afford it (and often file for bankruptcy). So, it is passed along to everyone else in the form of higher insurance costs.

    BTW, I heard gold is a real good investment during these socialistic crazy times. But shhh, don't tell anyone.

  8. i deleted my post, cause it makes sense to me, and that may be the problem, cause i have no idea what i am talking about.

    Which works for me.

    Number Number Number, Citation, Citation Citation.


  9. What does 1-3% of a providers cost mean?

    I am a provider and it costs me way over that. 10 percent of my gross, and 20 percent of my take home pay. It is a lot of money either way, and I would prefer it in my pocket instead of an insurance company's. Not to mention the small business liability insurance, disability insurance, and workmen's comp insurance I need to pay as well.(plus homeowners, car, life, etc...sigh) I hate the whole insurance world.

    That being said. I doubt Tort reform will decrease costs. The only way to do so is with transparent pricing, and forcing consumers to have some skin in the game (big deductibles). Costs only go up when someone else pays. Free up the market a bit with competition between insurance plans. Universal health coverage is guaranteed to raise costs.

    Oh yeah, it would help if the person begging you to save their life had taken the time to help a in advance by not smoking, not being obese, and moving around a little before their emergency came up. But now "it's all up to you doctor."

  10. “Universal health coverage is guaranteed to raise costs.” Yup, that’s why Canada, Australia, the UK, Australia, New Zealand, Japan, Germany, France, Spain, the Netherlands, Switzerland, Italy, Denmark, Sweden, Finland, Ireland, Belgium and Norway all have way higher medical costs than we do.

    Eh? What’s that? They don’t have higher medical costs than we do? They all spend less? And have longer life expectancy? And lower infant mortality? Oh. Never mind.

    “Rush” sounds like a delight.

  11. Next time Rush says you smell like Alcohol. Tell him you just had lunch with a classless ute. My new years resolution is to stop throwing beer at Y fans.

    I know an anesthesiologist and to hear her talk it sounds like almost 50% goes to insurance. The higher deductable is going to happen. My office is pushing hard for it and I am sure I will go that direction in the coming years.

  12. Alex: Perhaps it would have been better stated

    "Universal coverage is guaranteed to increase utilization all else being equal"... ...especially if it comes free or at the expense of some one else. This is human nature, and I see it every day in medicaid patients (with no copay in AZ) who, in general, extremely over-utilize the system while all along having the least healthy lifestyles. (This is a generalization, and there are significant exceptions in this population.)

    Quality care can be provided at lower cost if the entire society buys in to it, and there is rationing, systems efficiency, etc. I am not opposed to "rational" rationing, and in fact, I think it is a necessity for any system with limited resources (such as Health Care). Hopefully we can think of a fair way to do this, but the debates are amazingly emotionally loaded. Rationing currently occurs, but it is entirely irrational and generally unfair.

    Generally the countries you list are more homogenous than ours, and longevity/infant mortality are not necessarily quality measures.

    I see a two tiered system in the future. If you are loaded, get whatever insurance you want. If not, you get the public option which has services ranked in order of bang for the buck. I think the "Oregon Plan" got it right here. There will be waiting, etc, but in general we will be a healthier, more fair nation.

    I like this organization headed by the ex gov of Oregon Kitzhaber. Very thoughtful in their approach.

  13. I love the current health care system where I pay $1000.00 (just my wife and me!!) per month so that my my money can be sent to re-elect Joe Lieberman. My favorite comment was by a co-worker afraid "the gummint" would take over health care and make a mess of it. His health care system? The Feds! (He is a Vet.) Go figure..

  14. Enel, to your point about overutilization, that's why I'm in favor of a high deductible program before the single payer plan kicks in. If the plan covers preventative visits, then you avoid the problem of people avoiding going to the doctor until things get out of hand and more expensive to treat. We also need to offer incentives for healthy lifestyles. Right now I pay the same as the sedentary overweight guy who takes a cocktail of drugs every day to keep his heart from stopping. That's ridiculous.

    I'm not familiar with Kitzhaber, but in general I think there are lots of people with good, workable solutions. The problem is getting them passed given the strength of the insurance lobby.

  15. I suppose I will dive into this.

    I want the government to be as involved as little as possible. Not just in health care, but in everything. In economic terms, health care is simply a product. More competition and fewer regulation means better products at lower prices (The rest of the market demonstrates this all the time: A $2000 bike today is lighter, has better parts, and will last longer than the $4000 bike of 5 years ago).

    Federal law requires insurance companies to cover a lot of nonsense - voluntary procedures like the vasectomy I just scheduled, to name one example - which in turn raises premiums.

    The solution?

    More competition between insurance companies, less government regulation, and portable plans (drop the employer based model/state restrictions). In short, treat health care like what it is: a product, and not some God-given, government granted right.

  16. Enel- Here’s the part of your comment I, er, choke on:

    “…the countries you list are more homogenous than ours, and longevity/infant mortality are not necessarily quality measures.”

    I don’t mean to seem smart-ass, but I’m hard pressed to think of better health-quality measures than people living longer and babies not dying. The “homogeneity” argument I’ve heard before, and it seems strangely circular- that essentially that we shouldn’t “count” significant numbers of (largely minority) citizens with poor economic demographics in our healthcare comparisons with other countries. So we have good healthcare metrics compared to other countries, so long as we don’t count our citizens with bad metrics…? It’s an odd argument- we don’t make it in comparisons of economic productivity or trade or military power or anything else, but somehow it’s presented as an excuse for our poorer overall healthcare performance.

    Grizzly- I’m sorry, but the free-the-market argument breaks down with about 30 seconds of rational thought. There’s a logical, obvious market incentive to build better, cheaper bikes or computers or cars or phones. There’s no logical market incentive to provide health insurance for chronically ill/high-risk persons. (This is the same general flaw with school voucher schemes.)

    If anything, lack of accessible, universal coverage works against free markets and competition. Would-be entrepreneurs with high-risk dependents routinely forgo start-up opportunities for the security of large employer health coverage, and small businesses that do provide health insurance have a natural incentive to discriminate against any prospective employee whom they know is chronically ill/high-risk.

  17. I suppose I am only capable of 25 seconds of rational thought. I working on getting up to that all important 30 second threshold so I can run with the big boys.

  18. Watcher: So you don't think genetics and population behaviors (more Americans smoked per capita in the 50, 60s, etc Americans are more obese, more crack babies to deal with, etc) affect these numbers? Right. Face it, Americans are riddled with bad habits that affect our health.

    The USA is the technologic and innovation leader in health care. We are not the leaders, unfortunately in delivery systems and cost control. High tech expensive care after the fact is never as cost effective as simple healthy living habits, or basic care like immunizations, etc. Ask any Okinawan or Adventist:)

    Like Grizzly, I favor more free markets, and believe health care (and education) is a product with limited resources. Such products can and will be priced accordingly.

    The best compromise I believe is still a two tiered plan that provides basic government services, and if you want more, you pay for it. This will cost society something money wise, but is the compassionate thing to do. And guess what, just like in education, not everyone will be "equal" Those with the money can buy a better education, but everyone gets a minimum.

    I betray my libertarian tendencies here, but I am a softy at heart.

    My fear is that, like the disaster that is government run education, the health care bureaucracy will eventually become this incredibly large, money hungry, poorly performing, administration heavy beast. This is not inevitable (the VA health system is actually quite good), but is the general tendency of government programs, IMO.

    BTW, the current health bill is sadly so filled with pay offs it makes me ill.

  19. My sarcasm above notwithstanding, I'll try and add something of value.

    Watcher: "If anything, lack of accessible, universal coverage works against free markets..."

    Yes and no. It's a good point, but I don't think the lack of universal coverage is the culprit. But rather our weird third party payer system (which is essentially what universal coverage is/will be) that is causing people to idle in a crappy job because it offers benefits, and so on.

    It might be anecdotal, but I don't think Western Europe and Canada are bastions of entrepreneurship because of all the time and money that single payer health care offers.

    Incentive under our current system is curbed. I agree with you. But in a free market environment there will always be incentive to provide a better product at a better price - the product is irrelevant. Health insurance companies will adapt to consumers having more choice, otherwise they will collapse. Other providers (car, home, life, are a good example)

    Enel: "the health care bureaucracy will eventually become this incredibly large, money hungry, poorly performing, administration heavy beast"

    Medicare/Medicaid is already there.

  20. Enel- Oh, I certainly think behaviors affect health. But I don’t get how that’s an argument against healthcare reform, especially reform that includes incentives for healthy lifestyle choices. Not sure about the “genetics” part though. Are you saying our population has poorer genetics than those other countries? And if so, why is that an argument against universal coverage? (BTW, I don’t have smoking statistics from the 50’& 60’s. But in 2003, I can tell you that our smoking rates were lower than the UK, Germany, France, Spain, Italy, Denmark and the Netherlands. My favorite David Sedaris line = “Europe is one big ashtray”. As a frequent European traveler, I agree.)

    All that said, I’m not so sure we’re so far apart in our positions. I want to see a public option plan available for the uncovered/uncoverable. Sounds like you do too(?)

    Grizzly- Car, home and life insurance are all examples where the free market works exactly because those companies are free to decline coverage to high-risk clients. And that’s as it should be- they shouldn’t have to ensure lousy drivers, homeowners who store cans of gasoline in the basement, or people who make repeated suicide attempts. But with healthcare, uncovered people die. A better analogy would be police or fire protection- if you default on your taxes you get in trouble, but it doesn’t mean the cops don’t respond to your 911 call.

  21. Adam, what's not free about our current health insurance market? It's presently set up such that large employers (those paying the most in premium) get the best deals. Which is how free markets work.

    You can't predict the outcome with a sample size of one, but you can with large numbers. Therefore, insurance companies are willing to take large pools of customers knowing the ones that get sick will be offset by those who are healthy and pay way more in premiums than they consume. Individual policies are much more risky because there's no pool of healthy people to offset the cost, so they're priced accordingly.

    The upshot of this is that we all end up paying for those who can't afford insurance, wait until they're near death before going to the ER and racking up huge bills that they'll never pay.

    A universal system that covers preventive care but has a high deductible for all other care would create an incentive for people to get the preventive stuff taken care of but would likewise create a disincentive for people to consume what they don't really need. As for your vasectomy, a good case can be made for covering such a procedure since it's cheaper to provide coverage for five kids rather than eight. Offering incentives for healthy lifestyles would further reward those who choose to eat right and exercise to thin their blood rather than relying on a steady diet of bacon and statins.

  22. People with coverage die also. Health insurance does not prevent death and sickness, contrary to what Brother Harry Reid continues to say...

    If other providers can discriminate on the basis of high risk, why can't health providers?

    The bottom line for me is this: eliminate the third party payment scheme, and remove government mandates on who and what is covered.

    That will inevitably increase availability and reduce costs. It works in every other aspect of the market, it will work with health care.

    Where one company says no, another will say yes.

    (No credit, no problem!)

  23. I hesitate to tell people they're dead wrong, but Adam, you're dead wrong on this:

    "If other providers can discriminate on the basis of high risk, why can't health providers?

    The bottom line for me is this: eliminate the third party payment scheme, and remove government mandates on who and what is covered."

    Providers are presently discriminating on the basis of risk. Those that are highest risk can't get covered. When they get sick, they go to the ER and become a tin cup case. All the rest of us pay more for our coverage to offset the losses of the uninsured. If the government does not mandate who and what is covered, or better yet, provide the coverage, people will go uncovered. They'll wait too long to be treated when they are sick, it will cost more to treat them, they'll never pay the bill, and guess who's left holding the bag?

  24. I'm not dead wrong. I'm not even mostly wrong. Look at MA. They mandated coverage, and the entire system is a disaster.

    The government already requires companies to cover a whole lot of stuff that should not be covered. That is why premiums are high, and that is why people go to the emergency room with the sniffles.

    The answer to too much government is not more government.

    I have a hard time understanding why health care is treated like some "complex" issue. It's a service and a product. Treat it like that, and like every other service and product, competition will bring down costs and increase availability.

    Uncle Sam is not needed. Like everything else he meddles in, it will end in mass of incompetence.

  25. Adam, I agree with you that "Like everything else [Uncle Sam] meddles in, it will end in [a] mass of incompetence."

    That's the frustrating part. Canada, Sweden, the UK, Denmark--hell, even France, if you can imagine--have all got it right. But inevitably we won't. And we'll continue to pay twice as much for mediocre care or worse.

    I have 100% confidence that this is a soluble problem. And I have 100% confidence that our government is incapable of finding any of the various workable solutions."

  26. "I have 100% confidence that this is a soluble problem. And I have 100% confidence that our government is incapable of finding any of the various workable solutions."

    Ha! I am 100% there with you.

    "Democracy is the worst form of government. Except for all the others."

  27. Boy, I hate to jump back into this but the one concept I have a real problem with is that healthcare is simply another product that you can live with or without. It is not.

    Millions simply can not afford health insurance and will not get basic medical treatment and will (and are) suffering (and dying) from ailments that could be treated. In the free marketplace, we have lots of jobs that pay less than $12/hr and can't afford health insurance, but does that mean those employees (and their kids) should suffer and die from diseases, cancer, etc. without treatment?

    Maybe it's just me, but I do think some basic type of medical coverage should be available for those who can't afford it. People are not expendable resources for employers so when they get sick, well, go hire someone else.

    Should those who have more education and better jobs be the only ones with access to medical care?

  28. Must read article:

    Superb understanding and education of the issues. I agree with his final proposals as I suspect most here will.