The US Healthcare Mass Debate

[Joe]

$27 billion is peanuts in the context of total healthcare spending. The US spent $2.9 trillion in 2013. Here's a breakout.

Bloomberg says our total research is $158 billion, and poo poo's the idea:

The numbers just don’t add up. Total U.S. biomedical research spending was only about $158 billion in 2015. Suppose, just for the sake of argument, that Canada, Germany, the U.K. and all the other countries where health care is dramatically cheaper than in the U.S. copied every last bit of U.S. R&D for free and didn’t do any of their own research. Even in that extreme case, they would only be saving $158 billion, which is a much smaller amount than what the rest of the developed world currently spends on health overall. So mooching off of the U.S. can’t explain the big gap between them and the U.S.

It sure looks like there's more to it than that.

And, in the first paragraph the author you linked said he was full of shit.....

The economics of health care is a devilishly complicated subject. Between the complexity of the market, the degree of regulation and the unusual nature of the things being sold, the topic is so vast that any single economist is practically incapable of grasping the whole picture. That’s why I’m skeptical of arguments that rely strongly on economic theory. Unlike the market for oranges or blue jeans, health care defies simple theoretical analysis. Debates between advocates of government-centered and free-market systems tend, out of necessity, to focus on only a few points and leave much of the picture unaddressed.

But, I'd be perfectly willing to outlaw medical/drug patents and make medical research 100% open, unpatentable and publicly funded. Research would stagnate, but medical costs would plummet.

I think you missed the point, which is the relative scale of the outlays. Of course the economics of healthcare is complex, but that in no way I can see changes the numbers, or invalidates the author's argument, which isn't based on economic theory. Even if we can share the cost equitably with other nations, it won't make much of a difference in our spending, or theirs.

[Tero]

The part about

But poor countries cant afford them, so then they are cheaply sold / copied by local drug manufacturers. So the US subsidizes the World.

Is also partly wrong. Only China and India copy. Virtually all the rest of the world obeys patent law. The drug is made by the innovator for most of the world and priced such that they make a small profit even at the lowest price. Or sell at cost but never at a loss.

Cheap drugs are made after the patent runs out, legally. The innovator keeps the brand name, the generics sell under the brand name. Many people insist on the Imitrex they always took, thinking sumatriptan is a cheap copy and "does not work as well." Occasionally the generic is made in a pill that does not behave, for instance does not dissolve in the time required.

[Brian Peacock]

'Research costs' is a nebulous term. Sure., paying for labs and equipment, scientists, researchers, development programs, trials etc is costly but the pharmaceutical industry is trans-national - which is to say that they don't have to pay more for that than they need to, it's the nature of their business. But other significant costs in getting drugs to market are the ones associated with meeting the regulatory burdens of the various jurisdictions.

Also, drugs are expensive for the consumer not just because of development and production costs but because of market structure and profit requirements - we can see this in the price hiking of well established drugs which have paid back their development costs many times over - including those in the last portion of their protected patent period and those with particularly complex production requirements. Cost to the consumer is a function of what the market will stand, which is a structural matter, and we all know that maximising returns is the responsibility of every company board. That's why grandma's insulin has tripled in price in the last 5 years and people are smuggling retrovirus medication between jurisdictions.

Against this context the idea that the US drugs market is somehow done down by foreign competition taking advantage of all their hard work and innovation and driving up medical bills doesn't stand up. US drug and medical systems manufacturers are not being taken advantage of. The only people being taken advantage of are the sick - and it's a price the sick, and their governments, are willing to pay (to some extent).

The US spends more per citizen on healthcare than any other developed nation, at around 17-20% of CDP, c.9000 US$ per capita (depending where you look), and yet a significant proportion of the nation have restricted access to healthcare, treatment, and medical services and go without basic coverage for things like dentistry and anti-natal care. By contrast the Dutch spend around 10-12% of GDP c.5000 US$ per capita, and yet nobody goes without cover and everybody gets the access to diagnostic and treatment services they need. Both are insurance-based systems. The problem with US health is not economic, it's structural and, therefore, political.

[Scot Dutchy]

I totally agree Brian. We are an insurance based system and as I have already said this year costs have not gone up. The rate I pay is the max allowed by the annual agreement of the insurers, inspectorate and patients reps. I could find a cheaper one but you are only talking about €10 -15 a month. I also pay for additional cover on top of the basic cover just more for the extra treatment.
There is no private healthcare and everyone has to follow the same process. There is no queue jumping. We dont have A&E as in Britain. A&E is for life threatening accidents. There is a doctor's practice at various hospitals for non life threatening treatment during out of hours. Everything is run by the GP's. You have to see him first before seeing a specialist. The GP arranges the hospital/clinic appointment.

[pErvinalia]

I pay $0 for my healthcare.

[Scot Dutchy]

I pay $0 for my healthcare.

Somebody pays for your healthcare.

[Tero]

The other point I keep making is that volume brings down cost. If you sell x tons in US you get a certain cost per pill. If you sell x tons in US and 2x in Europe and the rest of the world at say 5% profit over manufacture cost, your costs per ton will go down. They of course don’t lower the US price, they just make more per pill or per Rx. There is a cut each time it is sold to thebpharmacy.

[Brian Peacock]

I pay $0 for my healthcare.

But you contributed to the system while you were able to, and at least you haven't gone on the rob or sold a kidney to pay for the treatment you need.

[pErvinalia]

I pay $0 for my healthcare.

Somebody pays for your healthcare.

Yeah. But I pay zero.

[Scot Dutchy]

You are pleased about that? No conscious feelings? Are you on the dole and have no income?

[Forty Two]

You are beefing about something that affects very few people. It is normally only the unemployed that qualify for that benefit. Everybody is required to have health care and the insurance companies cant refuse anyone. This year insurance did not rise and even some companies have reduced the monthly payments because of the healthy financial situation we are in.

I'm not beefing about the Dutch system. Your system is similar to what we had in the US in 2010. The poor can get subsidized healthcare (in the US called Medicaid). Everybody else had to pay, but at the time, the costs per month were similar to what you have there in the Netherlands. It was affordable. Most of the uninsured made more than the median income or were illegal aliens. We could have fixed the "can't afford insurance" problem by raising the level at which Medicaid was afforded to people. Instead, they created the "Affordable" Care Act which made things about 3-4 times more expensive, in order to cover about 11 million people who weren't covered before.

[Tero]

You are beefing about something that affects very few people. It is normally only the unemployed that qualify for that benefit. Everybody is required to have health care and the insurance companies cant refuse anyone. This year insurance did not rise and even some companies have reduced the monthly payments because of the healthy financial situation we are in.

I'm not beefing about the Dutch system. Your system is similar to what we had in the US in 2010. The poor can get subsidized healthcare (in the US called Medicaid). Everybody else had to pay, but at the time, the costs per month were similar to what you have there in the Netherlands. It was affordable. Most of the uninsured made more than the median income or were illegal aliens. We could have fixed the "can't afford insurance" problem by raising the level at which Medicaid was afforded to people. Instead, they created the "Affordable" Care Act which made things about 3-4 times more expensive, in order to cover about 11 million people who weren't covered before.

Good idea. Cover 11 million people.

It's actually the entire system of government that it at fault. if you dump the same system on US or Netherlands, the US will cost more. Same with Finland system vs US system. The Finns allow private clinics beside the public clinics. The major difference there is that if you end up disabled, you don't have to sue someone for X million to take care of you the rest of your life. The disabled are taken care of in a cost effective manner. They live in apartments, they or the state pay rent.

[Forty Two]

42, ”Obamacare caused rates to go up” is, once again, bullcrap:

Except that it doesn’t seem to be true. Health insurance premiums have been rising for decades, almost (though not quite) as stubbornly reliable as an eastern sunrise. And it turns out that these increases actually slowed after the Affordable Care Act became law in 2010. That’s according to data collected by the U.S. Department of Health and Human Services, which tracks a range of topics around spending on health care in its Medical Expenditure Panel Survey. The survey tracks the health insurance offered by private firms big and small, and in all cases, the average rate of premium growth from the time the law passed in 2010 through 2015 was actually lower than from 2004 to 2010. And premium growth was lowest for firms with fewer than 50 employees.

https://www.forbes.com/sites/robbmandel ... 6577e43a01

They go up because they never go down. Only state run healhcare and stopping frivolous suing would bring it down.

You signed the document that said ”this could kill you”, so no lawsuites should be filed after that.

My personal experience is that rates tripled, and my coverage is worse, with a higher deductible. If you call any of the major insurance providers, and I have called them all, every year for the last four years, and priced competitively, they all went up. I had long discussions with reps from Blue Cross and Aetna about the rates, and two years ago they were telling me that they would have never thought the rates for insurance would be as high as they had become - two years ago. They're much higher now than two years ago.

https://www.forbes.com/sites/theapothec ... tantially/ and https://www.brookings.edu/wp-content/up ... walski.pdf

[Tero]

This is because everything goes up, without regulation.

Corporations that have a semimonopoly can charge whatever for health, internet, cell phone etc services. At least we have an option not to buy cell phones.

Obamacare did not regulate prices. They just added more subsidy.

[Forty Two]

You are beefing about something that affects very few people. It is normally only the unemployed that qualify for that benefit. Everybody is required to have health care and the insurance companies cant refuse anyone. This year insurance did not rise and even some companies have reduced the monthly payments because of the healthy financial situation we are in.

I'm not beefing about the Dutch system. Your system is similar to what we had in the US in 2010. The poor can get subsidized healthcare (in the US called Medicaid). Everybody else had to pay, but at the time, the costs per month were similar to what you have there in the Netherlands. It was affordable. Most of the uninsured made more than the median income or were illegal aliens. We could have fixed the "can't afford insurance" problem by raising the level at which Medicaid was afforded to people. Instead, they created the "Affordable" Care Act which made things about 3-4 times more expensive, in order to cover about 11 million people who weren't covered before.

Good idea. Cover 11 million people.

It's actually the entire system of government that it at fault. if you dump the same system on US or Netherlands, the US will cost more. Same with Finland system vs US system. The Finns allow private clinics beside the public clinics. The major difference there is that if you end up disabled, you don't have to sue someone for X million to take care of you the rest of your life. The disabled are taken care of in a cost effective manner. They live in apartments, they or the state pay rent.

Obamacare didn't have anything to do with paying for the living expenses of disabled people. We're talking health insurance, which is completely different. Did you have some idea that Obamacare took care of disabled people?

If you wanted to cover 11 million people, all you had to do was to raise the eligibility threshold for Medicaid. But, as we know, the purpose of Obamacare was not to cover needy people. It was to upend the system, and make single payer socialized medicine inevitable. The strategy worked perfectly. That's where we will have to go.