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ACA Fail Fractal
Is Winter Coming for the ACA?
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  • JR

    “What seems to have caught everyone by surprise is just how much demand there is for health care, and just how many medical services enrollees consume.” There are quiet a few people who predicted all along that this would happen. Democrats just chose to ignore them.

  • WigWag

    An overwhelming percentage of health care costs in the United States are related to compensation for health providers; doctors, nurses, nurses assistants, pharmacists, respiratory therapists, physical therapists, occupational therapists, food service providers, hospital administrators, clerical help in doctors offices and a myriad of other jobs.. At the top of the food chain (right after hospital presidents) are physicians, especially physicians who practice various medical specialities. There is simply no way to significantly lower health care costs without dramatically lowering physician compensation. A cut in physician compensation between 20% and 40% would almost single handedly solve the problem.

    Doctors in the United States earn far too much money; they earn much more money than they deserve. A major reason that American physicians earn so much is that the number of doctors is carefully regulated by American medical schools. The physicians lobby also works aggressively to make it difficult, if not impossible for foreign trained physicians to practice in the United States. Doubling the number of physicians graduated by American medical schools, increasing the number of residency spots and changing the entire nature of the residency system and allowing qualified foreign physicians to be licensed here would make all the difference in the world.

    If we don’t find a way to cut physician compensation, nothing will ever get better.

    Public enemy number one when it comes to raising the health care costs that are strangling the American economy are American doctors.

    • Anthony

      Many health care providers have set up shop in America. From a pure business perspective, those businesses are almost all economic successes – winners – not economic losers.” (George Halvorson, Health Care will Not Reform Itself)

    • Kevin

      Probably true (though it goes beyond physicians) but the political struggle to cut thei pay would/will be ferocious.

      The political class is quite keen on bringing in foreign labor to undercut wages if this ear the bottom, not so much to do so for the well-healed

    • Dale Fayda

      Pure bosh! As someone from a medical family – father, two aunts, two cousins and their spouses are doctors, another cousin an RN – I can tell you from close personal experience that doctors are NOT “public enemy number one” of American healthcare. All except my father and one cousin are FOREIGN medical graduates. Many of their friends were also foreign medical graduates. While not easy by any means, it is FAR from impossible for foreign medical graduates to practice in this country. Been to a hospital in NY, LA, SF, Miami or Houston lately?

      My father never made more than $120K a year and he was practicing since the ’70s. That’s “grossly overpaid” to you? He spent his professional life working for various medical groups, because the costs of going into private practice in his specialty (OB/GYN) were prohibitively expensive even back then. I can only imagine what they are now! For a doctor in private practice, it’s a daily struggle for elementary business survival, made continually worse by the ever-encroaching regulatory state and by the continued socialization of our healthcare system. Hence the flood of doctors OUT of private practice and into hospitals and medical corporations, where they make less money, but are better shielded from legal liability and from the avalanche of business killing regulations flowing out of the monstrous idiocy that is American government like a puss-filled tidal wave.

      You listed about a dozen medical professions in your post and only one of them are doctors. Do you really think gutting the doctors’ compensation by, say 40% will make a dent in the overall medical costs? And how, pray tell, would this be accomplished? By decree, a la Obama? By a Supreme Court decision? How would you go about sticking it to the doctors?

      The real enemy is our GOVERNMENT, which has spent over (50) years trying to banish competition from the healthcare market. Even before Obamacare, American healthcare was a half-socialized mess, with single payer (Medicare and Medicaid) and government healthcare (VA) accounting for almost half of it. I shudder to this to think of what percentage the government controls now, directly or indirectly.

      Not only do we need to completely reverse this trend, but also to de-regulate the insurance market and watch the business development departments of every insurance company in the country bend over backwards to create affordable insurance plans for every demographic under the sun.

      Private sector and its attendant competition brings abundance and affordability – witness the costs of elective surgery like Lasik and cosmetic procedures actually going DOWN over the last decade. Government regulation and and control brings only scarcity, inefficiency and waste. Get the government out of healthcare and watch the costs drop.

      • WigWag

        Dale, I do think that reducing physician salaries by 40 percent would make a big dent in health care costs. I agree with you about government regulation, especially in the pharmaceutical industry; it’s disasterous. Another way to bring down health care costs is to disintermediate the American health care system. Just as we don’t need the federal government to become the biggest health insurance company on the planet, private insurance has also passed its use by date. Eliminating the middle man would save tens of billions of dollars. A better system would be subscription based medicine where physicians and patients contract directly.

        We live in a capitalist system; ultimately physician salaries are set by the laws of supply and demand. If the supply of physicians was dramatically increased by significantly enlarging medical school classes and admitting many more foreign trained physicians, the salaries physicians could demand would fall dramatically.

        That would be a very good thing, unless of course you are a doctor.

        • Dale Fayda

          “…ultimately physician salaries are set by the laws of supply and demand…” True enough, so doesn’t it stand to reason that in order for those laws to work, the healthcare market needs to function as optimally free of government interference and crony capitalism as possible? That means substantively reducing the dead hand of government and de-regulating the insurance market, while definitely getting rid of Obamacare with its insurance industry destroying individual and business mandates, would you say? If you’re advocating for “supply & demand” solutions to the problem (inconsequential, in my opinion) of doctors’ salaries, the market conditions for that process to take place need to be in place, right?

          “…admitting many more foreign trained physicians…” From my own family’s experience, I know that there is no lack of foreign trained physicians in this country. In order to practice medicine in this country, they need to pass a pair of national tests (medical and English proficiency) and to go through medical residency at a teaching hospital. While definitely not simple, it is very necessary, in my opinion.

          American medicine is very much different than that of even the other industrialized countries and vastly so from medicine in the Third World. Do you want someone straight from the backwoods of China, Nigeria or the Dominican Republic, with rudimentary command of English, little to no knowledge of the vocabulary, procedures and tools of American medicine trying to treat you and your family? I know I don’t. A medical diploma from Moldova or Syria isn’t worth the paper on which it’s printed in the US, trust me.

          So before you advocate flooding the market with the products of the Third World diploma mills, many of them bought outright, be careful what you ask for.

        • Anthony

          WigWag, permit the interjection. Reading this brings to mind general conception that particular interest trumps general interest, short-term interest trumps long-term interest, and “my primacy” (status) is more important of all. Humanity’s march…

        • NateOgden

          Physicians make up 20 to 25% of spending but are paid 90 to 140% of medicare by private insurance. Hospitals on the other hand are paid 140 to 700% of medicare by private insurance.

          Hospitals account for 50% of dpending when you combine inpatient and outpstient. Outpatient is currently more bloated on reimbursement. Our cost problems start with hospitals! Aggresive self funded plans are paying physicians more to buy their assistance keeping members out of the hospital. The biggest threat right now is hospitals buying up physician practices, partially cause of ACAs accountable care org, and driving referal patterns to create more hospital traffic.

          Throw in hospital consolidation and lack of competition and its a losing battle.

          Rx is also a much lsrger driver of inflation than phydicians, a generic only drug plan, if its even legal, would save you 15 to 20% of your insurance premium right away.

          ACA injected steroids into all the broken parts of the old system. It was the exact wrong rx for every problem.

    • Fat_Man

      “they earn much more money than they deserve”

      You alone, are fairly compensated. More likely, you like everyone else are under compensated.

      My nephew is an anesthesiologist. He completed his residency last year, and this year he is on a fellowship specializing in cardiac surgery. He is paid something like $6,000/mo. He arrives at the hospital at 5:30 am. and prepares himself and the OR for the days patients. He leaves at 8:30 pm (15 hours later) when the last patient is safely up on the wards in the care of the Nurses. Is he fairly compensated?

      One more point. During surgery, he holds your life in his hands. What is fair?

      BTW 75 hs/wk @ $15/hr* (time and a half for overtime) is $5,500/mo.

      *NY state mandatory minimum wage for 18 year old dropouts working at McDonald’s.

      BTW, you are absolutely correct that the professional societies, and the government have combined to restrict the number of doctors well below any reasonable number. The government pays for the residency programs, and limits the number of new residents to about 25,000/yr. Comparisons with other OECD countries suggest we should increase that number by at least 20%.

    • Fat_Man

      “Deductibles Are the Price You Pay for Obamacare” By Megan McArdle
      http://www.bloombergview.com/articles/2015-11-17/deductibles-are-the-price-you-pay-for-obamacare

      “that’s where the money is going, in the end: to people. And not just to greedy, viperous health-care executives. Or to rapacious pharmaceutical firms, whose products constitute just 9.3 percent of total health-care spending in America, much of it on off-patent generics rather than pricey brand-name drugs. With the exception of pharma, which is more like the tech industry than a health-care business, profit margins at insurers and hospital groups are surprisingly modest. Vast oceans of money flow in, yes, but almost all of it flows right back out in the form of payments for wages, facilities and supplies.”

      “It’s not Obamacare’s fault that it didn’t manage to do the impossible: provide cheap, nearly comprehensive health-care coverage without ballooning the deficit. No other reform could have done it either, without tackling provider prices — and no politically feasible reform could have tackled provider prices, because America’s 12 million health-care workers would have been marching on Washington with pitchforks, or at least running tear-jerking ads to great popular effect. To paraphrase G.K. Chesterton, the idea of providing more generous coverage by cracking down on provider prices has not so much been tried and found wanting, as found difficult and left untried, by both conservatives and liberals.”

    • Arkeygeezer

      Public enemy number one for raising automobile prices are auto workers, for raising the price of Big Macs are hamburger flippers, for almost every thing are Lawyers and Hedge fund managers.

      Come on folks, get real!

      • WigWag

        Right, and what saved the American automobile industry was increasing productivity. The same amount of labor was accomplished by fewer workers. Tens of thousands of auto workers lost their jobs and those that remained earned less money. That’s one reason that the price of cars is escalating far more slowly than the price of healthcare.

        We see the same thing in industry after industry. Airline pilots were once handsomely paid; now their pay is in the middle of the middle. That’s why airfares go up so much slower then healthcare costs do.

        Raising productivity in the healthcare sector is very hard. The best way to reduce costs in this sector is to reduce the costs of the inputs. Compensation of physicians needs to be cut dramatically, not by government mandates but by eliminating the barriers to more provider competition.

        Doctors won’t like it; but who cares? Taxi drivers don’t like Uber either. Hoteliers don’t like airbnb.

        If the doctors don’t like it, tough s&$t.

        • Jim__L

          Much as I’d like health care costs to decline in this country, I’m skeptical as to whether reducing the compensation of a particular type of labor is the answer. Would the savings really get passed on the the consumer? Aren’t we in a situation where we need to expand the ability of workers (including doctors) to consume?

          • WigWag

            Jim, if the costs of healthcare are significantly reduced, it will put tens of billions of dollars back in the pockets of American consumers. These consumers will spend, spend, spend; accomplishing exactly what you’ve suggested we need. A major reason that the American middle class is in such trouble today is that nobody gets raises any more. How can companies afford to give their workers raises when the price of employer provided health insurance is going through the roof?

            Higher education costs and health care costs are destroying the middle class. No two groups of professionals have done more to hurt our country than doctors and college professors through their lobbies.

            Doctors and professors are almost singlehandedly bringing down the American middle class. They need to get a taste of their own noxious medicine.

          • Jim__L

            I can’t help but think that at some point we ought to be working to increase the number of good jobs, not reducing them.

    • Shoog1

      wow.

      You could not be more wrong.

      Physician compensation is a small percentage of health care expenditures in this country.

      You may like to think that it drives the health care costs, and it may ‘feel’ that way-(do I detect some class envy here?), but physician compensation in every notable cost evaluation is minimal.

      https://media.licdn.com/mpr/mpr/shrinknp_800_800/AAEAAQAAAAAAAAJ3AAAAJDE5OWRmMGI2LWI1ZDMtNDBjOC04MTg4LWRjY2I4Zjg0ZDVmMA.jpg

      The real driver is administrative and regulatory costs. Your surgeon and internist actually make LESS money than 10 years ago, but ask your question again-why is health care so expensive?
      Reimbursement to physicians is down, and down greatly, yet the costs have continued to increase.

      Physician compensation is actually set with minimal to no influence by ‘the free market’ as you again incorrectly state in your comments. If you were looking for a model that didn’t example free-market influences, one would rightly chose physician compensation.

      Health care is absolutely not a free market system. In the few places where it is truly free-market driven, costs actually DECREASE! (Ex. Cost of Lasik surgery is lower than a few years ago because of lack of regulation and increase in competition, yet the quality is increased!)

      The government could have easily ‘bent the cost curve’ down with 3 easy steps: 1. Immigration reform (You realize your bill is so high because you have to pay for you AND 3 other illegal immigrant’s care, don’t you?) 2. DECREASED regulation on health insurance plans (When the government regulates the insurance market, costs to you go UP. You’ve heard of a little thing called the ‘affordable care act’-right?) 3. Torte reform (recent Florida study shows that those physicians that order more tests and spend more health care dollars get sued LESS than their peers! So the lesson is protect yourself by spending more $$’s!)

      You could not be more wrong.

      • WigWag

        Payments to physicians represent 20 percent of US healthcare expenditures. That’s not a small percentage it’s a large percentage. Half goes into their pockets as compensation and half represents the cost to run their practices. Significant, even brutal cuts in this area would make a huge difference. Bring average physician salaries (it’s an average for many specialties and geographic regions) to around $90,000 a year and it would lower US healthcare costs significantly.

        You are absolutely right; regulatory costs make things much worse as do costs added by the middlemen (third party payers) who add little or nothing of value to the system.
        It is critical to address these problems as well.

        With all due respect, if you think that the doctors lobby doesn’t work overtime to limit the number of physicians, you’re not paying attention. The number of medical school slots is way smaller than it should and the number of foreign doctors practicing in our country is way smaller than it should be. Increase the number of practicing physicians in the United States and watch physician salaries collapse; that would be very, very good.

        Doctors are just a bunch of whining rent-seekers seeking to protect their own place in a failing system. They are little more than your typical greedy special interest.

        They need to be cut down to size to fix America. If they feel it’s all too onerous, let them quit medicine, buy Toyota Camrys and drive for Uber.

  • Jim__L

    I like the “I told you so” song better. 😉

    But I’m glad to see TAI’s article-writers maintaining a higher level of dignity and politeness, rather than giving into the sorts of temptations Internet communication presents.

  • Tyler Durden

    Prices would automatically come down if people had to pay for their healthcare out of their OWN POCKETS! Government and employer payer programs are the problem. Get rid of those, and we would find demand balanced with supply! Demand is artificially HIGH because people don’t have to pay from their own pockets. The middle to upper classes are forced to foot the bill through taxation. The ACA just poured gasoline on that fire. The exact WRONG direction to take. People need to take responsibility to pay for their own care. Our government needs to quit providing healthcare welfare! That would reduce demand. The other course of action is to lighten up on the extremely restrictive laws! Far too many drugs require a doctor’s prescription. A whole LOT of medical conditions or sicknesses don’t require full MD credentials to solve. Allow some 4 yr medical practioner degrees to legally setup shop to treat and prescribe for a less serious subset of health issues, such as strep throat. Force people to take more responsibility for their care, i.e. don’t put all the burden and liability on the practitioner. That liability is a big part of the problem. Tort law needs to be changed. These things would increase the supply of healthcare. Increase supply and lower demand. Economics 101. This doesn’t have to be difficult people! Except for these bleeding heart progressives that think healthcare is a right instead of a privilege. THAT is fundamentally the root of the problem. And it’s killing our country!!!

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