Fiscal sickness

By Daniel Holz | August 4, 2009 2:07 pm

We have had a number of lively discussions on CV as of late (e.g., here and here) on the state of health care in the United States. Capitol Hill is at present completely consumed by healthcare reform. All of us interact with caregivers at some level, at some time in our lives, and thus we have a personal stake in the discussion. But why all the fuss about medical care at this particular moment? Are there not much more important issues to discuss? (Gravitational lensing? Dark Matter? Atheism?) Perhaps President Obama can help put it all in perspective:

…the greatest threat to America’s fiscal health is not Social Security, though that’s a significant challenge; it’s not the investments that we’ve made to rescue our economy during this crisis. By a wide margin, the biggest threat to our nation’s balance sheet is the skyrocketing cost of health care. It’s not even close.

Without a doubt, medical care in the United States is in crisis. It is unsustainable as currently conceived, and it is failing its population in important ways. patient as ATM machine (from New Yorker)For “heroic” procedures our hospitals remain among the best in the world, but for day-to-day care our system is lackluster at best. Our life expectancy is considerably below most other industrialized nations: the average American lives five (5!) years less than their Japanese counterpart (Table 1 of the latest WHO report). This should shock and appall all Americans. Five extra years of life is a big deal. I’d be into that.

A couple of months ago the New Yorker had a nice article by Atul Gawande on the problems with medical care in the US. Gawande is a surgeon at Harvard, and I find him to be one of the more interesting and thoughtful commentators on medicine. In this article he explores the community in the US with the highest per capita medical costs. Care to guess which town? McAllen, Texas, in Hidalgo County. Gawande explores how this has come to pass, and highlights many of the fundamental problems facing our health care system along the way. For example, one of the defining characteristics of medical care in McAllen is that patients on average get more care than usual. They are not healthier than average. They just pay more, for more tests, more visits, more procedures:

Americans like to believe that, with most things, more is better. But research suggests that where medicine is concerned it may actually be worse. For example, Rochester, Minnesota, where the Mayo Clinic dominates the scene, has fantastically high levels of technological capability and quality, but its Medicare spending is in the lowest fifteen per cent of the country—$6,688 per enrollee in 2006, which is eight thousand dollars less than the figure for McAllen. Two economists working at Dartmouth, Katherine Baicker and Amitabh Chandra, found that the more money Medicare spent per person in a given state the lower that state’s quality ranking tended to be. In fact, the four states with the highest levels of spending—Louisiana, Texas, California, and Florida—were near the bottom of the national rankings on the quality of patient care.

The condensed version of what is wrong: The incentives in medical care are structured to maximize profit, and not to maximize health. Or even more condensed: Health care is a for-profit business. There are notable exceptions, with the Mayo Clinic, based in Rochester, MN, providing an extreme example. As Gawande touches upon, there is some hope that Mayo could be used as a model for a different sort of health care. But at present Mayo is certainly the exception which proves the rule:

But decades ago Mayo recognized that the first thing it needed to do was eliminate the financial barriers. It pooled all the money the doctors and the hospital system received and began paying everyone a salary, so that the doctors’ goal in patient care couldn’t be increasing their income. Mayo promoted leaders who focussed first on what was best for patients, and then on how to make this financially possible. No one there actually intends to do fewer expensive scans and procedures than is done elsewhere in the country. The aim is to raise quality and to help doctors and other staff members work as a team. But, almost by happenstance, the result has been lower costs. “When doctors put their heads together in a room, when they share expertise, you get more thinking and less testing”

There is no quick fix. And I’m not sure I find Gawande’s suggestions for progress all that compelling. But he does an admirable job of exploring some of the complexity of the problem. The vast majority of us living in this country will interact with the medical establishment at some point in our lives, for better or worse. And there are many reasons to be concerned. I want my five extra years of life.

  • Bjørn Østman

    You’re certainly right that this is the topic of the day. All over people are discussing ObamaCare, and it is getting a lot of bad press. One thing I fail to understand is why [nearly] no one seems to acknowledge that universal health care can be done – all you have to do is look at countries that actually have it. Yes, it is expensive, and it will raise taxes. But include the cost of having your company pay for it, or paying for it yourself, then it can be done cheaper. The word ‘tax’ is a scary, bad word, especially in the US (but really everywhere), but incorporate into that other costs that would then be eliminated, then the total cost will be lower. By putting the right people in charge of health care (i.e. certainly not the insurance companies), money can be saved*, and everyone (perhaps but the richest) will benefit in the long run, financially as well as in terms of health.

    * At least, I find that to be the most plausible outcome.

  • correlation

    all these states, and indeed the town mentioned (mcallen) share a common geographic characteristic….can you guess what it is?

  • Lab Lemming

    I’m sorry, daniel, but I was only able to read half of your blog post due to the gigantic pop-up pfizer ad that covered most of my screen.

  • sgh742

    As a scientist when I see a figure like 5 years in lower life expectancy I try to think of all the possible reasons why that lower number may have come about. I am hesitant to posit a causal link to something without examining it first. Perhaps you have convincing evidence linking medical care and life expectancy and overall health care delivery. It would be appreciated if you’d post it before turning to politics. Otherwise the questions I have before I’d do anything in terms of policy are:

    What other factors might influence life expectancy? (For example, it strikes me that the US has significant populations that came to the country from varying immigration waves and which make the country very diverse in terms of demographics–would that heterogeneity effect the values?)

    Is life expectancy a good measure of overall health quality? (If I can get a hip replacement or a cataract surgery efficiently in country A but have trouble which receiving such things in Country B how does that play in versus an advantage country B may have in life expectancy?)

    How does life expectancy vary amongst income level, race, gender, etc? (Perhaps there should micro targeting of any policy if we see a disproportionately poor level of care for certain groups)

    How much of lower life expectancy can be attributed to the lifestyle of the average Americans? (Based upon obesity rankings and other metrics [including qualitative things like the preference of big macs over baguettes] is it possible that preventative health may be a better focus than massive health outcome reform?)

    As an aside, I’m a little confused by the President’s statement. The biggest problem to our ‘balance sheet’ is the deficits and debt we are incurring because of the gap between spending and revenues. Increasing health care coverage would likely exacerbate such a gap (just like tax cuts, increased military spending, etc would). The idea of health care reform as a Fiscal health issue strikes me as illogical—as a quality of life issue definitely.


    I’m not sure what you’re getting at if you the places you mention are (Louisiana, Texas, California, Florida and McAllen). Off the top of the head the only things I can see is that they all have concentrated urban areas, likely have significant populations of Hispanics, probably have higher percentages of minorities overall, and probably have a higher percentage of immigrants (illegal and legal) than most places.

  • Adam Solomon

    In agreement with the commenter above me. I’d imagine a science blog wouldn’t confuse correlation and causation like this. The Japanese live on average five years longer than we do, therefore health care reform will give everyone five extra years of life?

    For starters, we’re an order of magnitude fatter than the Japanese:

  • Gil

    It is easy for people here to complain about what is wrong with various statistics, but are there equally reasonable statistics indicating that US health care is better? If the current state of affairs is really the best health care in the world, there should be some statistic that demonstrates this, right? And I won’t accept a “I got an MRI for my stubbed toe in less than 30 minutes” as a reasonable statistic.

  • macho

    I thought it was a very interesting article and recommend reading it if you’re interested in this issue. He also compared McAllen to relatively nearby communities, took into account various demographic information (age, race, obesity levels, etc) and measures of outcomes (life expectancy, satisfaction with health care, wait times for treatment, etc) and
    found no signifcant differences — except for the per capita health care costs, which was much lower in the nearby community, and the frequency with which tests and procedures were ordered, which were much higher in McAllen.

    I’ve been very frustrated by much of the debate because I don’t think we’ve
    ever been given a clear picture of exactly how much we’re spending on which components of health care, and therefore I don’t know what to make of the various claims that the answer is x. There are many possibilities that are tossed around — chronic conditions, the litigiousness of our society and corresponding high malpractice insurance costs, the high cost of treating the uninsured in emergency rooms, unreasonable and expensive end-of-life treatments, administrative costs linked to the way insurance claims are processed, unnecessary overuse of expensive testing, too many specialists, … Any (or some combination) or something not listed may be responsible for the incredible growth in health care spending, and our higher rate of spending than other nations with good or better health statistics, but it should be possible to identify what the major problems are. From there we could make rational decisions about how to proceed.

    Some kind of insurance for everyone is important for many reasons; but this may not address the cost issue. And insurance will not necessarily help with some of the health care issues we face on the south side of chicago
    where access is a major problem — local clinics in poor neighborhoods have been closed and the university health center is significantly downsizing many of its basic/general health care functions.

    Does anyone have some good references (with numbers, a pie chart or two) they can point me to?

  • Metre

    I concur with sgh742. I suspect life expectancy has more to do with diet and exercise than with health care. Each of us is responsible for our own health, and practicing a healthful life style is the best thing we can do. It’s not a “cure-all”, but it will reduce your need for healthcare.

  • Gadfly

    Another kudo for sgh742 — I had the same arguement with my brother last night — although he used France as an example — the individual is healthier ergo their healthcare is better. Sorry, bro, but dumb. And while “fixing” healthcare might be a good idea, fixing it so that it costs us another trillion dollars minimum over the next ten years doesn’t look like a good solution from a fiscal viewpoint.
    How about we start by aggressively going after fraud — Medicare fraud alone costs tens of billions of dollars a year — and some kind of tort reform. Those alone would greatly reduce healthcare costs without giving us socialized medicine (and if you think socialized medicine works check out Canada where cancer deaths are 16% higher than here because they won’t pay for cancer drugs, England where chronic pain sufferers are in agony because the governement system won’t pay for pain medication, the list goes on and on).

  • Eric Dennis

    “The condensed version of what is wrong: The incentives in medical care are structured to maximize profit, and not to maximize health.”

    This is a puzzling formulation. Has it occured to you that there may be some relationship between the provision of a service and the profit made by the service-provider? Have you wondered what could it be that shoves a wedge between these two things — and who is the one shoving it?

    Somehow this relationship works just fine in the cotton candy industry, the ball-point pen industry, the laser eye surgery industry, and just about any industry you can think of that doesn’t have half of its expenditures dictated by the government.

    More fundamentally, independent of any economic argument, I’m sure we’d still have basic a disagreement about whether or not the government ought to intervene (rather, increase its current intervention in) the medical industry. My question is: what in the world do you think gives you the right to tax me and spend my money on other people’s medical treatment?

  • Chicagoland

    @ Eric Dennis, who writes “My question is: what in the world do you think gives you the right to tax me and spend my money on other people’s medical treatment?”
    What makes you think that it isn’t ALREADY being spent that way? To continue the southside Chicago discussion, and probably typical for urban areas, we in the county (Cook), are ALL paying for the care of those patients without insurance that are treated at the county hospital. This is no small sum of money (or quantity of people), and made larger when the patient has no medical provider, waits until very sick, and makes that trip to the emergency room. I see it as a cost savings to provide even minimal medical coverage, enabling people to visit a clinic as soon as they feel sick, and get necessary health care BEFORE becoming an expensive hospital statistic.

  • Eric Dennis


    If you believe the world will be made a better place by some people paying for others’ care (or more of their care, or earlier care, or whatever), you’re free to spend as much of your own money on it as you please. I don’t believe it would make the world a better place. As I alluded to above, I believe the dysfunctional nature of our current system is due entirely to this phenomenon, i.e. government forcing people to pay for others’ care through Medicare, Medicaid, mandating hospitals to provide emergency care to people who can’t pay for it, outlawing interstate insurance, distortionary tax policy, etc.

    But forget about economics. What gives you the right to force me to spend my money according to what your bizarre economic theories are telling you is going to make the world a better place? Spend your own damn money on it.

  • Fourteener

    Hey, c’mon. If all Americans would just accumulate wealth at the rate Bill Gates does, or just be healthy, there wouldn’t be any problem, would there? Let’s not blame the profit motive for this faked-up health industry “problem”. The rest of the industrialized world obviously has it wrong–they don’t pay any health insurance CEOs $12 million a year or give them $70 million golden parachutes, no siree. Why should America be so backward? We need our tax monies for Eric Prince and wars on drugs & terra!

  • daisyrose

    For sure : health is wealth – It has always been a truth – stay away from doctors as best you can and you will be healthier and wealthier – once they get ahold of you – you are done for ! Mostly doctors and drug companies just help themselves and the cure is more often worse than ….. You get well or you die !

    Spend more money on good food !!

  • Eric L.

    @ Eric Dennis

    You should probably look up how democracy, or better yet, how a constitutional republic works. The people elect representatives that then pass laws they think the majority of the people they are representing want passed. If the representative passes a bunch of laws the people don’t like, then the people vote for someone else. So, in answer to your question, the thing that gives someone the right to “force” you to spend your money according to their bizarre theories is a simple fact: THAT IS HOW THIS COUNTRY WORKS. The government spends a lot of money on things I don’t agree with, but that comes with the territory of living in this country. If you don’t like it, then get out. (I was kidding with that last line, another aspect of this country is that you are free to complain about it as much as you want without persecution)

  • Patrick Dennis

    15 comments later, and no one has yet produced any evidnce to support the first (implicit) assertion of the column: that differences among the life-expectancies of nations are influenced by their health-care systems. It’s not at all obvious to me. I’d suspect that lifestyle issues that any 12 year-old could recite (if not follow) are far more important.

    Patrick Dennis

  • Eric Dennis

    Eric L.,

    I could answer that what you describe is an a-constitutional republic. Our constitution is one of enumerated powers, whereby congress can only do what the constitution specifically authorizes it to do. Where in the constitution is there anything authorizing congress to create a massive health insurance plan funded by taxes on the citizenry?

    But again, this is irrelevant to my point. I am not asking for a political or historical or legal justification for this power grab. I am asking for a moral one. It is my money. I earned it. Who the hell are you (or 300 million of you) to force me to spend it on other people’s medical care?

  • TB2

    So the poor who have no insurance would also not be afforded paramedic care under your plan, Eric Dennis? Police/Fire/EMT is also done by a government for the public good for everyone, using our collective tax monies. Should we go back to the pre-Franklin (Benjamin) days of individually subscribing to a fire company for protection? Isn’t one point of our particular idea of democracy that we all pitch-in for the public “good”, defined by us through our elected officials. Do you feel the same way about education; that you don’t want to pay to educate someone else’s kid?

  • Phillip Helbig

    I think it is now clear that the real cause of the lack of good health care in the States is that a significant fraction of the citizens think (if one can call it that) similarly to Eric Dennis.

    As Oscar Wilde said, the U.S. is the only country which went from barbarism to decadence without civilisation in-between.

  • Brian

    The United States is the best place in the world to be sick. If you’re rich. And that’s the rub. No one wants to be sick. And few enough people are rich enough for the top-of-the-line healthcare money can buy, when money is no object.

    The opponents of healthcare reform can’t get their philosophical stance right. On the one hand they claim that the various reforms are doomed to fail, because of the incompetence of the gov’mint. On the other hand they claim that the insurance companies are doomed (never phrased that way: it’s always “the gov’mint is gonna take away your wonderful plan!”) because the reforms are so great the insurance companies can’t compete with it.

    Nothing ever changes the core issues. US healthcare is one of the most expensive in the world (THE most expensive, per capita?). It would be worth it if the outcomes were proportionally better, or at least better enough to justify the expense. But they aren’t.

    The US spends approximately 12% of GDP on healthcare. In Canada the figure is 9%. therefore US healthcare is approximately 33% more expensive than Canada’s. The numbers, and the spread in relative costs, are similar throughout the industrialized world.

    In every measure of population health, longevity, satisfaction, the US is at par or worse than the rest of the industrialized world. Only in cost does the US significantly outpace everyone else. It’s even worth noting that the Japanese demographics are significantly older than the US, which should be forcing their costs way up. Their costs are up but do not even compare to US costs.

    Yes, you can often get an MRI faster in the US. However it doesn’t mean the average US patient is healthier or will live longer. For those willing to hear the logic, the reason, the implications are clear. For those who are opposed for ideological reasons, or mindless fear, or have a vested financial interest, no argument works.

  • Mike

    This 2007 WebMD article can explain a lot about the longer Japanese lifespan: .

    It contains little nuggets of information such as: the Japanese obesity rate is 3%, the American obesity rate is 32%. (Brian, consider the effect of obesity on healthcare costs vs the older Japanese demographics.)

    (Brian: “the gov’mint”? Oh pleeeease…)

  • Roger

    I applaud the article here and the discussion that it generated. I also appreciate the article by Atul Gawande “The Cost Conundrum” I hope everyone else commenting here read it.

    What disturbs me is the targeting of the Senators and Representatives that are taking this month to speak to their constiuents. There have been reports in NY Times of conservative groups heckling and preventing presentations by intentional interuption and intimidation. Can we all agree that this is wrong?

    Lets have the discussion, and take the vote.

  • Brian137

    17. Eric Dennis Says:
    August 6th, 2009 at 8:05 am

    “It is my money. I earned it.”

    I am basically sympathetic to your view: I want you to have as much as possible. But I also suspect that the social and economic systems in the United States facilitated your ability to earn that money working in our country. Maybe you could have made just as much money toiling in Tasmania or the Galapagos Islands, but, if that is the case, I think you would be in the minority in that respect. If your view is that you owe nothing in return, perhaps you are correct, but you have not convinced me yet. I, in my own life, am sometimes torn between feeling I owe nothing and acknowledging that I benefit from living in a society. I am sympathetic to your expressed point of view because to a certain extent I share it. You ask us to produce a “moral [reason]” why you should contribute to the health and well-being of your compatriots, but there are so many moral systems that I am not sure which one you want us to use. Are we talking Christian morals, secular humanist morals, …what? I infer that you must have had something in mind when you chose the word “moral.”

  • Roger

    I applaud the article here and the discussion that it generated. I also appreciate the article by Atul Gawande “the Cost Conundrum”, I hope everyone else commenting here read it.

    What disturbs me is the targeting of the Senators and Representatives that are taking this month to speak to their constituents. There have been reports in NY times of conservative groups heckling and preventing presentations of Health Care Reform proposals by intentional interuption and intimidation. Can we all agree that this is wrong?

    Lets have the discussion, and take the vote.

  • Chris W.

    Re Mike’s comment (#21): A rich irony of this is that many of the very people who are most opposed to health reform would turn up their nose at the Japanese diet. “I want my meat, potatoes, fried food, beer, and cigarettes, and if my health falls apart in my fifties, well, that’s none of your damned business.”

    It get’s worse (albeit funnier). From a recent op-ed:

    At a recent town hall meeting, a man stood up and told Representative Bob Inglis to “keep your government hands off my Medicare.” The congressman, a Republican from South Carolina, tried to explain that Medicare is already a government program — but the voter, Mr. Inglis said, “wasn’t having any of it.”

  • sgh742

    This is another problem with writing politically oriented posts on this blog—it descends to the typical partisan demagoguery that one can see at less worthwhile blogs and many of the posters and commentators don’t really add much in terms of substantive research/information to a discussion.

    I suppose my original comment is unfair in that context as there are other places on the internet which are better suited to providing answers to my questions.

  • Phillip Helbig

    “The United States is the best place in the world to be sick. If you’re rich.”

    I agree with the rest of your post, but want to take issue with the quote above.

    That it is better for average folks and especially poor folks to be sick somewhere outside
    of the USA is clear, but even for rich folks I don’t think one can claim that US healthcare
    is the best.

    I contracted (the same type of) cancer in 2004 and 2008 and am not only alive but, as
    far as I know (and it is checked regularly), completely healthy. I underwent chemotherapy
    and stem-cell transplantation at the university hospital in Frankfurt (in Germany, not
    Kentucky). I honestly think there is no better place for cancer treatment. It seems that
    Farrah Fawcett spent some time there as well. Of course, some people, like Fawcett, are
    so ill that they can’t be helped anywhere, but I assume that in her case money was not
    a problem and that she could choose where she wanted to be treated.

  • Brian


    OK, fair comment.

    What I mean to say is twofold. Rich people always have choices, far more choices than those not so advantaged. Critics of the Canadian system like to carp on about it’s tendency towards homogeneity, and wait times and the like. Then they point at the American system and how it doesn’t have those problems. OK, that’s correct as far as it goes.

    However a rich person can get whatever level of healthcare they want. They can hire a doctor as their personal physician for goodness sakes! They can leave the country and go to Frankfurt, or Tel Aviv, or Buenos Aires or anyplace else. The wealthy always have options that (can) place them outside the bounds of any institutionalized system.

    My second point is that the system in the US is rather biased towards those who can pay. The more you can pay, the more choice you can have.

    What does this add up to? We don’t need or want to design a healthcare system for the extremely wealthy. They will acquire healthcare services no matter what. As a matter of public policy it’s important to design a healthcare system for the poor and middle class. Those are the ones who need a “system”.

    That’s the part the industrialized world, excluding the US, has understood and implemented. In Canada, illness is not generally feared as a financially devastating event. Illness is feared because, well, you’re sick and might die. However financial wipeouts are uncommon (note that illness might prevent you from working and force you on to social assistance).

    The healthcare debate in the US often centers around issues that have nothing to do with healthcare. People are grinding political axes, or trying to explain the current situation with bizarre commentary, as though they desperately seek to justify the situation in terms other than what it is. It’s immigrants! It’s fat people! It’s the racial mix of the population!

    Um, no. You think Canada isn’t a nation of immigrants? That there aren’t lots of obese people here? That large minority populations, including visible minorities exist, to the point that the sum of all the minorities are starting to form majorities? The same goes, with minor variations, for Britain, France, Germany, Belgium, and the rest.

    America spends too much on healthcare considering what it gets in return. What Eric Dennis (above) doesn’t understand is that it doesn’t matter “who has the right to spend my money on other people”. The US healthcare system is so expensive and inefficient that Eric is spending far too much money on HIS OWN healthcare. That’s direct costs, direct benefits. The 3rd party subsidization is trivial in comparison.

    Boiled down to the essentials, here’s what healthcare reform opponents don’t want you to know: The US pays champagne & caviar prices for meatloaf outcomes.

    Is that what you want?

  • Brian137

    Perhaps the most interesting part of Daniel’s OP is contained in the linked article by Atul Gawande. Macho is the only commenter who even refers to it (in post #7). Mr. Gawande’s article is a bit long, maybe, but well worth the investment in reading time. Here is a teaser: the article neither supports nor rebuts either side in the current health care debates.

  • Mike

    Chris W. Says:

    “Re Mike’s comment (#21): A rich irony of this is that many of the very people who are most opposed to health reform would turn up their nose at the Japanese diet.” I agree with this. Actually, I think many who favor health reform would turn up their nose at some details of an actual Japanese diet, too. I think it’s obvious members of both groups would respond more favorably to an American equivalent to the Japanese diet. But I think the diet explains Brian’s comment about lower healthcare costs in Japan compared to American healthcare costs despite having a population that lives longer. I don’t think you can ignore a 32% obesity rate for Americans and just blame healthcare costs on inefficiencies within the system.

  • Eric Dennis

    TB2, I don’t have a plan. Why should I? I really don’t care about your medical treatment, and it’s rather presumptuous of you to assume I would. If you’re too poor to afford the insurance or treatment you would like, I suggest you either start making more money or go to your friends. Coming to me with a gun, which is the only reason I’d end up paying into some new “plan,” is not a civilized option.

    Brian137, Good question. The moral purpose of my life is my own long-term happiness. If you grant me that, there can be no justification for expropriating me to pay for other people’s medical care. Only a moral system that calls on me to sacrifice my own happiness for someone or something else — like that of any major religion or of utilitarianism or of radical environmentalism — could justify it. It is, therefore, lamentable that the only major political faction (supposedly) aligned against the gradual government take-over of medicine is one taking Christianity as its moral foundation.

  • Neal J. King

    Eric Dennis,

    Whether or not you care about anyone else’s medical treatment, under the current system, you’re paying for it anyway: a lot of indigent people are treated in emergency rooms (often for reasons that could have been handled much less expensively if treated earlier on), and cannot be successfully billed. The result is that the hospitals treat the emergency room as a “loss center” (as opposed to a profit center) and spread the expense over the rest of the hospital’s operations. Hence $50/pill aspirin.

    Thus, if you use that hospital, you will be paying for the medical expenses of indigent people, either directly or through higher insurance costs.

  • macho

    I don’t know if this thread is still very active, but just in case thought I would pass along a link that at least includes some numbers. Not enough/any detail on how the information was gathered or who/what divides the costs into reasonable vs waste bins to really make me happy, but at least a first pass at where the money is being spent.

    Health Care Waste

  • Brian137

    31. Eric Dennis Says:
    August 10th, 2009 at 8:01 am

    “The…purpose of my life is my own long-term happiness.”

    Pretty much mine also, except I’m concentrating more on the short term. Not to neglect the future, but at least some of the fun has to happen now.

  • pl47

    Here is an intersting article that compares the french and american income tax systems, tuerns out the french pay LESS than the americans but do get FREE health care…

    btw France has the eight highest life expectancy in the world… (source wikipedia)

  • Eric Dennis

    Neal King, Yup, I’m aware of that kind of thing, as well as the existence of Medicare, Medicaid, etc. These harebrained, collectivist “plans” are the source of the cost explosion in the current system. I want less of all that, ultimately zero of it, not more of it.

  • Neal J. King

    36, Eric Dennis:

    The current scheme, which you seem to favor, gives rise to the incentive for the insurance companies to drop anyone who looks like they’re going to be expensive. This means that if you have unfortunate genes, you’ll be a target; if you have an accident or otherwise catch a disease that gives rise to a “pre-existing condition” when you change job, you’ll be a target. The greater the advances of genetic science, the greater the incentive for the insurance companies to pick & choose.

    Medical insurance works best in the context of mutual ignorance. Since that ignorance is going away, the best way to destroy the perverse incentive described above is to just cover everyone at a flat rate.

    As for getting rid of subsidization entirely: Unless you want the US to become a place where people are allowed to die in the street, emergency-room treatment will always be subsidized. So why not save money (if you don’t care about other people’s pain and suffering) and cover basic health-care insurance so the subsidization can be quantitatively reduced?

  • Brian137

    Sgh742, in post #4, suggests some alternative explanations for the apparently low average life expectancy in the U. S. Adam Solomon, in post #5, specifically mentions the high rate of obesity in the U. S., a possible causative factor also mentioned by sgh742. Intrigued by this possibility, I used my TI-83 calculator to make a scatter plot with the obesity rates from the link provided by Adam on the horizontal axis and the average life expectancies linked by Daniel on the vertical axis. I omitted South Korea, because Daniel’s link did not provide data for South Korea. Thus, my scatter plot contained 28 points.

    A tight correlation produces a plot that looks like a darning needle or a rainbow or some other graceful arc. In the absence of much correlation, the plot looks closer to a side view of a bowling ball. My plot of obesity rates versus life expectancy looked like a big, fat bullfrog.
    At the press of a few buttons, the TI-83 produced a linear regression analysis of the data. A key statistic from such an analysis is r^2, the so-called coefficient of determination, a measure of how well the data fit the regression line. The value of r^2 is always between 0 and 1, a value close to 1 indicating a good fit and a value close to 0 indicating a very poor fit, if any. In our case, r^2 = .200. This low value of r^2 confirmed the visual impression that the scatter plot did not suggest a strong correlation between obesity rates and average life expectancy (the plot did not suggest any simple curvilinear relationship either).

    Three data points seemed particularly far removed from the others, lying along the underside of my corpulent bullfrog’s belly. A check of the tables revealed that these were the points corresponding to Mexico, Turkey, and Hungary. A little thought suggested that these countries were probably economically poor. Maybe I should consider them inappropriate outliers and toss them. Google led me to a table of gdp per capita compiled by the International Monetary Fund. Indeed, Mexico at $10.2 thousand; Turkey, at $10.5 thousand; and Hungary, at $15.5 thousand were the three lowest countries in my group in terms of gdp per capita. Before deciding whether to toss them, I made a scatter plot of gdp per capita vs. life expectancy for my 28 countries. Wow! Nice, simple curve.

    My TI-83 offers the options of linear, quadratic, cubic, quartic, log, exp, and power regressions. Log, quadratic, and quartic all produced good values of r^2. I ran quadratic and quartic regressions (the two best in terms of r^2) with the U. S. excluded. Thus, these regressions each included 27 data points. The quadratic regression yielded r^2 = .648 and the quartic one gave r^2 = .775. The IMF table showed a value of $46.9 thousand for the U. S. My quartic regression line estimated a life expectancy of 73.1 years for a country with that value of gdp per capita, while the quartic one yielded an estimate of 73.3.

    I decided to try another plot of obesity rate vs. life expectancy with the outliers from the IMF table excluded. I threw out the lowest six: Mexico ($10.2), Turkey ($10.5), Hungary ($15.5), Slovakia ($17.6), Czech Republic ($21.0), and Portugal ($23.0). Six seemed like a lot of data points to toss, but there was a large gap between Portugal and the next lowest country, New Zealand at $30.2. Two obvious outliers on the high end were Luxembourg ($113.0) and Norway ($94.3), both of which far surpassed third-place Switzerland at $67.3. This left me with 19 data points if I were to exclude the U. S. to form the same sort of estimate obtained in the previous paragraph. A linear regression for these 19 points gave a value r^2 = .198. The scatter plot does not indicate that I could significantly improve the situation by using one of the other regression shapes offered by the TI-83. Apparently, restricting the data to a group of countries that by at least one measure are economic peers of the U. S. still does not indicate a strong correlation between obesity and life expectancy. I tried; I give up.

  • Brian137

    I became verbally sloppy at the end of my last post. My next to last sentence should have said something like, “…does not suggest that rates of obesity obtained from Adam’s link explain the differences in average life expectancy in the link provided by Daniel.”

  • Eric Dennis

    Neal King,

    The function of insurance is not to redistribute wealth but to hedge against uncertain negative events. In the limit of zero uncertainty (for future medical care), there ought to be no insurance at all. A group of private people choosing not to sell you their product (insurance) because you would be a net drain is not “targeting” you anymore than hot girls not dating you because you’re too short is “targeting” you. Are you for compulsory height adjustment surgery on 16 year olds to eliminate the genetic injustice of the existence of tall people?

    Also, what I’m against is not subsidies but forced subsidies. If you’d like to contribute to a charity hospital, no one is stopping you. Somehow the streets were not full of deteriorating corpses in the past, before the advent of large-scale government intervention in medicine.

  • Neal J. King

    40, Eric Dennis:

    You are looking at a mathematical definition of insurance, whereas I am considering the social purpose of insurance.

    The logical implication of taking the mathematical definition as the intent of insurance is, as I mentioned before, that everyone is presented with a health-insurance contract at birth, which for most people will be fairly small, but for a few others (who are genetically disposed to specific illnesses and cancers) will be extremely large. And it will be a “take it or leave it”; and if you leave it, what will happen to you when you become ill? Either: a) You will fall back into the emergency-room situation (which means, as described above, that you’re free-riding, however uncomfortably, on everyone else); or b) We get used to people being left to die in the street. You can explain b) to your children as follows: “That man’s parents made the wrong choice on their outcome probability-distribution function, so he’s being left in the street. Don’t worry, they’ll remove the body eventually.”

    There will be good souls who contribute to the operation of hospitals on charitable grounds, as in India, but there won’t be enough. So it will go back the way emergency rooms are supported today: padded costing for everything in the hospital. You can’t force benefactors to be generous; but hospitals can increase your bill. So it still goes back to a) or b)

    My definition of the intent of health insurance is that risk is spread over a community: Everyone kicks in a reasonable and affordable amount, and everyone is protected against catastrophe. No questions about pre-existing conditions, problems with my back from a car accident, etc. Health insurance is an application in which I believe ignorance actually is bliss; because too much information leads to the very “death panels” that Palin is decrying.

  • Pingback: Dwindling options | Cosmic Variance | Discover Magazine


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