Free Markets, Free People


Ezra Klein’s Astonishing New Charts

Or at least they seem to have astonished Klein. Here’s one as an example:

doctorvisit-thumb-454x317
My goodness. As Klein says:

There is a simple explanation for why American health care costs so much more than health care in any other country: because we pay so much more for each unit of care.

Anyone – what’s missing from this rather simplistic explanation?

Cost.

What is the real cost of delivering the expected/desired/demanded health care during a doctor’s visit?  What is the cost per “unit delivered”.  And if it is higher, why is it higher?  Is it higher simply because we’re being gouged as is implied by Klein?  Or is more being delivered per unit and thus justifying the higher cost?  The chart tells us none of that.

What will these various countries pay for during a visit?  And given that, which country’s patients get the most (and best) care for the money?  Again, the chart tells us none of that.

As has been pointed out any number of times, when you remove non-health care related deaths from this country’s life expectancy statistics, we are in better shape than anyone.  In fact, when you get into the later years, survival rates among our elderly are unsurpassed by any system.  That to me would say that we must be delivering something during those visits that the mere “price” doesn’t reflect.

But all folks like Klein ever seem to want to talk about is “price”. This may comes as a surprise to some, but price is determined by cost and competition. It’s not an arbitrary number.  In fact, competition keeps both cost and price (and thus profit) at a reasonable level. That’s how a market works, even one as distorted by government intrusion as our health care system.

There’s also another 800 pound gorilla in the room. Actually the gorilla is the bar on the graph disguised as a $72 fee from Medicare. How  do you think the difference between those paltry fees and the real cost of the visit are recovered? Look left, young man, look left. That big bar of private insurance subsidizes Medicare by absorbing the cost shifting which goes on from Medicare payments which don’t cover cost. Without the ability to do that fewer and fewer doctors would accept or treat Medicare patients. In fact, why do you think they limit them now?  That reality, of course,  isn’t reflected at all in the chart.

Additionally, there is the quality of care – what does a $30 doctor’s visit buy in Canada or the UK in comparison with a $72 Medicare visit in the US? We really have no idea. So how then is such a comparison relevant to anything? I can buy a KIA or I can buy a BMW. Few would argue they have the same cost and certainly not the same value. The quality is entirely different. Yet they’re both cars.  The chart assumes all care is equal. But we know that isn’t true.

In fact, these sorts of apples and road apples comparisons aren’t useful for much more than gulling the masses when pushing an agenda.  Surely, common sense tells us, we can get more for less, right? Of course not.  Most people discover during their lifetime that you do indeed get what you pay for.  And in the field of health care, the differences can be vast.

In terms of a serious argument for government run health care in a free country, the astonishing charts leave a lot more unsaid than said.  Or put another way, they and the argument Klein tries to make with them aren’t worth the powder to blow them to hell.

~McQ

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14 Responses to Ezra Klein’s Astonishing New Charts

  • All the following being assumptions, I would guess those figures from the other countries represent prices set by the government and have little to no bearing on the actual costs of providing the services.

  • Actually, with the explanation, it becomes more clear:

    In other countries, governments set the rates that will be paid for different treatments and drugs, even when private insurers are doing the actual purchasing.

    In other words, price is not allowed to reflect supply and demand.  I would be very interested in seeing a chart that compares the average elapsed time between, say, an injury or complaint and the delivery of the CT Head scan report, for example.  The recent story about the woman who died from the undiagnosed head injury when skiing because the Canadian system didn’t get her the CT scan the American one would is the sort of thing I am thinking about here.  What good is a $125 CT scan over a $900 one, when the $125 one doesn’t report any findings in time to matter?

  • Our family has been hit by medical costs.    Not impossible ones, just enough to put us over from “making it” to “not making it.”
    That said… the REAL question is… did I want those MRI’s at the emergency room or not?    Did I want them to do a *second* MRI when they didn’t find anything or not?    Did I like that the facilities available seemed to exceed demand so that there was not any sort of wait at all for those MRI’s?
    Does it matter that in the end I just stopped hurting and they never figured out why I felt like the devil’s spawn was trying to rip its way out of my abdomen?
    It sucks to be paying for it… emergency room service being expensive even with insurance… it sucks to be paying for my husband’s kidney stone, too.    But that doesn’t change the fact at all that I would rather get the care I got, even if it was “just to be sure.”

  • Synova-
    Agreed.
    And how much of that “excess” was due to fear of future litigation, should those medical professionals have missed something? Keeping lawyers at bay is costing us a fortune.
    Who is talking about tort reform?

  • Klein is a master at sounding deep while skimming the surface like a flat stone.  Honestly, my two year old understands deeper relationships between things that Klein.  He’s a wordsmith, nothing more.

  • Klein’s chart is even dumber than you think.  It is not just Medicare underpaying, but it is the difference between the health insurers negotiated price and the “walk in” price.  For example, I was considering a high deductible insurance policy.  I learned my doctor charged $100 for an office visit, but he got less than $50 if my insurance paid.
    Klein, as usual, is just too inexperienced to even think in those terms.  He needs a lot more seasoning before he will be useful.
    Rick

    • Bingo.

      Although I will say that there is one aspect that is messed up with current insurance schemes.  The insurance pricing has screwed those who do not qualify for an insurance negotiated price.  Doctors use to be allowed to make exceptions for those not on insurance, but that was stopped years ago.   Not a big deal if you’re talking a 10-15% markup but these days you’re talking 100%+ markup as the doctors and ins companies play the pricing game back and forth.

  • “Cost” in the medical care industry is a bit of a dirty little secret.  Talk to a doctor or nurse who works in the ER, or just practices in a hospital.  They will tell you stories of patients who use the ER as their primary care doctor because they don’t have to pay for it.  They will tell you about running scads of tests on patients even when they know what is (or isn’t) wrong “just to be sure” (and protect themselves from malpractice vultures).  They will tell you about getting shafted by Medicare / Medicaid, being paid a fraction of their normal fees.  They will also tell you about being unable to collect a dime from ER patients.

    Somebody has to make up the difference, else the doctors and hospitals go out of business and we’re all up a creek.

    The other component of the secret cost is due to insurance co-pays.  They are wonderful if you have good insurance (i.e. low co-pays); they really depress how much you pay directly to the doctor.  However, they also lead to some people rushing to the doctor when they aren’t really sick, and they also remove any incentive for doctors to actually compete for business.

    It’s a very distorted market.

    It would be of some interest to do a similar chart as Klein’s for other things that Americans buy.  Do people in Spain, for example, pay more or less for food?  A car?  A house?  Gasoline?  If there are differences, what is their cause?

    But I don’t expect Klein or any other lib to dig too deep into the numbers.  Logic and math are not libs’ strong suits.  They require thought, and it’s MUCH easier just to “feel” the right answer.

  • I just posted this on the WaPo web site.  Not that it will do any good at all (except I feel a touch better):

    right away. That free time, though, is not “free” as in no cost. He still has all his fixed expenses.
    As far as MRI’s and the like, If someone needs a PET scan, an MRI, and a CAT scan, to confirm or reject a cancer diagnosis, he can get that in a week. Try doing that in Canada. Again, there is a cost for high availability.
    I would just ask Klein what it would be worth to him to get immediate test if he were to get a preliminary diagnosis of cancer or whether he would be fine with waiting a few months.
    The problem with the Klein’s of this country is they seem to believe we can cut the costs in half and get the same level of service. No, we can’t.
    As a mere child, Klein does not really think in terms of getting a dread diagnosis. Give him about 35 years and if we have not trashed our health care system, he will see the wisdom and benefits of doing what we do.
    Rick

  • Somehow, the first art got lost:

    Klein is just so young and so inexperienced. He needs a lot more seasoning. For example, my doctor charges $100 for a “walk in”, but he gets less that $50 from the negotiated fee with my health insurer.
    My doctor also leaves free time in his schedule for people who need to see him right away. That free time, though, is not “free” as in no cost. He still has all his fixed expenses.
    As far as MRI’s and the like, If someone needs a PET scan, an MRI, and a CAT scan, to confirm or reject a cancer diagnosis, he can get that in a week. Try doing that in Canada. Again, there is a cost for high availability.
    I would just ask Klein what it would be worth to him to get immediate test if he were to get a preliminary diagnosis of cancer or whether he would be fine with waiting a few months.
    The problem with the Klein’s of this country is they seem to believe we can cut the costs in half and get the same level of service. No, we can’t.
    As a mere child, Klein does not really think in terms of getting a dread diagnosis. Give him about 35 years and if we have not trashed our health care system, he will see the wisdom and benefits of doing what we do.
    Rick

  • In Taiwan, the walk in charge is US$ 5.00. That is FIVE DOLLARS.
    However, the employer who pays for your national healthcare pays US$ 25.00 per visit that is not seen by the consumer.
    Taiwan has lower wages, poorer office facilities, so that could explain some of its cheapness, but, what often happens is a doctor will see you for a very short period of time – 5 minutes or less, and some doctors/dentists make sure a procedure takes many, many visits to finish. So, in a real life example, a Taiwanese dentist made a filling procedure require 2 visits per month over 6 months (12 visits.) I took this patient to my dentist in the US in the middle of this, and he said the procedure was already done and should have been done on the first visit, with maybe one follow-up. But the Taiwanese dentist wants to get paid 12 times instead of twice.
    I will forgo mentioning that the dentist left cotton swabs inside the teeth that required another full 6 months of treatment to “fix” at another dentist’s office. (no malpractice law.)

  • Technically speaking there might be other factors involved in the cost of healthcare in the USA.
    For instance, in other nations it seems to be easier and less expensive to obtain any sort of medical degree and license. therefore a higher ratio of providers per population.
    Why is that? should medical schools be required to increase their size? should more money be made available in the way of financial aid to people who choose that profession?
    And of course the other major factor is torts.

  • You are spot on with the cost argument — to get that $72 dollars from Medicare, most physicians have about $70-75 in expenses to cover. The reason for those high expenses are legion: malpractice insurance; the need to hire extra employees and services to cover countless and growing government mandates and regulations, not to mention dealing with the insurance and government payment maze; the cost of benefits (including health insurance) for employees; the overpricing of medical supplies and medications by the health care product and pharmaceutical industries (some of this also due to litigation risk). In socialized medicine systems, you have no employees (and you likely are an employee of the government yourself), and so what you are seeing in the small payment figures from other countries is net income, in the US, gross income.

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