The Liberal Order

Is Health Care "Insurance" Really Insurance?

John Cochrane has an excellent op-ed in the Wall Street Journal. It's regarding the mandate that all employer-provided health care insurance covers prescription contraceptives, but Cochrane does an outstanding job of explaining why health care coverage for foreseen expenses is a bad bet, including this great example.

The minute pills are "free," under insurance, the incentive for drug companies to come up with cheaper versions vanishes. So does their incentive to develop safer, more convenient, male- centered or nonprescription birth control. And by making pills free but not condoms, the government may inadvertently be contributing to an increase in sexually transmitted diseases.

 

So Who's Consuming All That Health Care?

Specifically, in 2009, just 1 percent of the non-institutionalized population accounted for 21.8 percent of all U.S. health spending. And just 5 percent accounted for half the total spending.

Meanwhile, the bottom half of the population accounted for a mere 2.9 percent of total health spending in 2009.

So just who are those high spenders? Sick people, obviously.

But in looking at who remained in that top spending tier in both 2008 and 2009, researchers found that the high spenders were more likely to be:

• Elderly,
• Female,
• White and
• Covered by public health insurance.

Story here. Is it any surprise that when government pays for your health care you tend to consume a lot of health care? Here's a previous post on just this. 

World Toilet Day?

More than 40% of the world's population does not have access to a toilet. These 2.6 billion people, most living in low- and middle-income countries in Asia and Africa, face the daily challenge of finding a bush, train track or empty lot where they can urinate and defecate in relative privacy.

Story here. Here's the accompanying picture.

Notice the "Where would you hide?"

At least she's behind a "rock or something."

An Undeserved Stereotype

The quintessential drug addict in the United States is the black teenager strung out on crack in a low-income housing project in some city. This stereotype is false (and unfair).

"There is certainly still a myth out there that black kids are more likely to have problems with drugs than white kids, and this documents as clearly as any study we're aware of that the rate of ... substance-related disorders among African American youths is significantly lower ," said Dr. Dan Blazer of the Duke's Department of Psychiatry, a senior author of the study.

This is not the first study to find these same results. 

Health Care Spending On the Elderly

Amitai Etzioni argues that we ought to do a better job of accepting the inevitable in the last stages of life, especially with age, and encourage palliative care in the last few days, weeks, months, or even years. 

We should learn to accept death more readily; we should stop aggressive interventions when there is little hope; we should provide dying people with palliative care to make their passing less painful and less traumatic. Such a case may not just be that of an elderly person succumbing to a terminal illness -- it can be that of a preemie born too early to survive, a youngster following a car wreck, a worker following a tragic accident. We should learn from the Eskimos -- they long ago stopped abandoning their elderly just because they got "too" old.

He's right. Per capita spending on health care in the U.S. is consistent with other developed countries until people hit their mid-60s, then it skyrockets. But Etzioni's recommendation falls on deaf ears as long as someone else picks up the tab. 

A Tragic Irony

A bareheaded motorcyclist participating in a ride to protest mandatory helmet laws was killed when he was thrown over the handlebars in Onondaga, New York.

Story here. Further down the story:

State police say evidence at the scene plus information from the attending medical expert indicated Contos would have survived had he been wearing a helmet as required by state law.

And then this:

Another New Yorker who has been a motorcyclist for over 50 years, Joseph Costantini, said, "I would never ride without a helmet -- even in a state that says you don't have to. I understand where the protesters are coming from because ultimately it's a matter of choice.

How Efficient are Medicare and Medicaid?

But Medicare and Medicaid couldn't agree on which one would pay for an aide to bathe him and help him use the toilet, nor on whether he qualified for such services at all, he says. As each program tried pushing him to the other, Mr. Maceyra remained at a live-in rehabilitation center for six months after his shoulder healed, at government cost.

Federal officials and health-care professionals say it isn't uncommon for Medicare and Medicaid to try to dump patient costs on one another, which can raise the total cost for everyone. A recent federal report said the dual system's incentive structure contributes to hundreds of thousands of annual hospitalizations that could be avoided.

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The federal government foots the bill for Medicare, and splits it with states for Medicaid, picking up 57% of the tab on average.

From the beginning, small numbers of Americans qualified for both programs. Their numbers have grown—up 30% in a decade. Meanwhile, the programs have added services, including overlapping ones such as in-home health assistance.

Health officials did little to ensure the programs cooperated well. "The best metaphor I can think of here is a dysfunctional joint-custody arrangement," said Lisa Clemans-Cope, who researches the issue at the Urban Institute, a social-policy think tank.

A report last year by the Medicare Payment Advisory Commission, an independent congressional agency, concluded that a slew of conflicting incentives between Medicare and Medicaid leads health-care providers to avoid costs they are responsible for rather than coordinate care.

The problem is evident in nursing homes, which can have a financial incentive to send people back to hospitals because of payment arrangements.

When a Medicare patient goes from a hospital to a nursing home, Medicare pays the nursing home at an average rate of $422 a day for 100 days.

After that, if the patient is a dual eligible, the nursing home is paid by Medicaid. It reimburses at just $172 a day, on average.

The result is an incentive for the nursing home to send the patient back to the hospital, because if the patient later returns, the higher daily rate will start again.

That setup helps fuel many expensive but avoidable hospital readmissions each year, according to research commissioned by the Centers for Medicare and Medicaid Services.

People eligible for both programs had 958,837 hospital admissions in 2005, the report last year said. It added that 382,846 of these, about 40%, were potentially avoidable either because the condition might have been prevented or because it might have been treated in a lower-level-care setting. 

Story here. It's not a wonder so few people have enough saved for retirement; they know they'll be taken care of using other people's money.

 

 

 

Happy Father's Day! & The Tragedy of the Welfare State

For instance, 40% of fathers with less than a high school diploma live away from kids compared with 7% of dads with college degrees who live apart from their children, according to the study.

"The differences are equally large for the race differences and income differences," Livingston said.

The study found that 21% of white fathers live away from their children. For African-Americans, it's more than double, 44%. For Hispanics, 35% live away from their children.

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"From the very start, low-income families, middle-income families and high-income families are becoming more and more divergent in both their form and the way they function as families. It's not because people don't share the same values so much, but the kind of start and resources that parents can bring to bear has become a pressing issue in American society."

Story here. 

Two happier notes:

But of the fathers living apart from their children, black dads were the most involved in their kids' lives.

and

"On the one hand, fathers who live with their kids seem to be far more actively involved with their kids than they were 50 years ago," says Gretchen Livingston, the lead author of the Pew study.

"But at the same time, the share of dads living apart from their children has more than doubled" since 1960.

Now, roughly one out of every four fathers lives separately from a child, meaning 20.3 million children don't have a dad in their house.

All right, those last two sentences aren't happier moments of the story, but the first says a lot. One main thing to consider is that prior to the 1950s, and certainly before 1900, the probability of your child dying before age five was very high.¹ Consequently, you didn't spend a lot of time attaching emotionally with your kids - they may soon die. (And this tragic death rate is certainly still true in large parts of the developing world.) Modern medicine has since changed the severity of child mortality, so the chance you'll see your child(ren) survive into adulthood is so great that the benefits of bonding with your child(ren) exceed the costs of doing so.

 

 

 

1) Child mortality in the United States has declined dramatically over the past century. The mortality rate for children aged 1-4 years declined from 1,418.8 deaths per 100,000 population in 1907 to 28.6 in 2007. The mortality rate for children aged 5-14 years declined from 307.5 in 1907 to 15.3 in 2007. In 1900-1902, 90.2% of U.S. children aged 1 year survived to age 15, compared to 99.7% of children in 2007. See here.

 

What Americans Take For Granted

Derreck Kayongo collects used soap from hotels in the U.S. and reprocesses them for use in third-world countries like Uganda and Haiti. Consider something as simple and relatively cheap for U.S. residents as soap. The tradeoff of buying soap is a lot less in this country relative to the many people living in a developing country.

Each year, more than 2 million children die from diarrheal illness -- the approximate population of San Antonio, Texas. According to the World Health Organization, these deaths occur almost exclusively among toddlers living in low-income countries.

"The issue is not the availability of soap. The issue is cost," Kayongo said. "Make $1 a day, and soap costs 25 cents. I'm not a good mathematician, but I'm telling you I'm not going to spend that 25 cents on a bar of soap. I'm going to buy sugar. I'm going to buy medicine. I'm going to do all the things I think are keeping me alive.

 

Medicare, Healthcare Spending and the Elderly

At age 94, Zsa Zsa Gabor is living out the last few months, if not days, of her life, apparently in agony. In the meantime, she has accessed quite a bit of healthcare during the past few years. Although I certainly emphathize with her and her family, she also provides a good example of what's wrong with our current healthcare system in the United States.

As the debate about state and federal budget debt and deficits heats up, and proposals to deal with the problem by reducing Medicare and Medicaid expenditures, as well as overall healthcare consumption, are demagogued, we must keep in mind how much of our healthcare expenditures are consumed by people in the last few months of life. Pain management is one thing; staving off the inevitable is another.

From Dr. Amy Tateur comes this graph by Paul Fishbeck of Carnegie Mellon University. Notice that per capita spending on health care in the U.S. is nearly identical to what is spent in Europe up to age 60; it then take off disproportionately. 

Read the account of Ms. Gabor's current existence. Confined to a wheelchair since an automobile accident in 2001, a hip replacement surgery in 2010 and a her leg recently amputated, she is currently fed through a tube inserted into her stomach (which is the cause of her recent emergency visit to the hospital), a stroke or two and at least one serious infection that resulted in her hospitalization. What quality of life can there be for Ms. Gabor? And, assuming at least some of her expenditures are paid for through Medicare, should we be paying for this? It's certainly a boon to the health care lobby, the family and the patient's quality of life be damned. UPDATE: I do not, however, find fault with Ms. Gabor's use of health care as long as she's paying for it herself, or through a previously contracted insurance policy. 

As baby boomers continue aging into the age 65-plus category, health care expenditures will grow even more, with much of that paid for through both Medicare (for the elderly) and Medicaid (for the poor, inlcuding the indigent elderly). This is the entitlement spending that is projected to overwhelm state and federal budgets. (See the graph by the GAO below.)

Obviously not sustainable, nor is it feasible, today's politicians still have little incentive to take the high road and begin fixing the problem. Without substantial change, however, future generations face serious reductions in their standard of living.