Some thoughts on soaring healthcare costs

In a previous post, I discussed how the soaring cost of healthcare in the US is the biggest reason for the long-term fiscal problems that the country faces. The Wall Street Journal has a front page story today that gives a perfect illustration of what is wrong with the system.

Outside of heart attacks, doctors are often too quick to use a common $20,000 procedure to treat patients suffering from coronary artery disease, a new study suggests.

About 600,000 angioplasty procedures, which almost always involve placement of a tiny metal tube called a stent, are done in the U.S. each year. Roughly 70% of these procedures are performed on patients suffering symptoms of a heart attack and aren’t medically controversial. But the remainder are done on stable patients who are suffering mild symptoms or no symptoms at all…

The results, published in the Journal of the American Medical Association Tuesday, come amid rising concern about the overuse of big ticket medical technology. Such concerns are rising not only in cardiology, but in other major specialties as state and federal governments and health insurers seek to contain health-care costs.

Thanks to millions of unnecessary procedures like this performed every year (plus more. does every kid really need braces?), massive administrative inefficiencies (my doctor and dentist’s office still aren’t computerized and have paper records), and higher costs associated with the risk of malpractice lawsuits, the US spends twice as much on healthcare as Australia. You can see from the chart below (see here for more OECD data) that its healthcare costs tower over every other OECD country. And amazingly, the US manages to spend this much while leaving around 50 million people uninsured.

Furthermore, and this is the frightening part, US healthcare costs are rising faster than anywhere else.

This is obviously a completely unsustainable state of affairs. The US problem partly reflects huge inefficiencies in the way the healthcare system is set up over here, which I won’t get into today.

But as Q Continuum noted in his recent post, this is a problem afflicting all modern welfare states, particularly as our populations get older. Ultimately, we are going to have to make some tough choices in order to get the growth in healthcare spending under control. A few quick thoughts and questions to ponder, perhaps for further debate in the comments:

  • Around 80% of healthcare costs are said to be caused by five fairly predictable behavioural issues: smoking, alcohol, poor diet, too much stress, and insufficient exercise. Should insurers be allowed to charge higher premiums to individuals who make some of these lifestyle choices? Should the state have to foot the bill for the treatment of modern diseases like obesity and diabetes (type 2) that in some cases result from poor lifestyle choices?
  • How can we incentivise doctors to look at dietary changes and other alternative treatments rather than prescribing expensive drugs for every single affliction?
  • 27 million Americans are said to be on antidepressant drugs, which are rapidly replacing traditional therapy as treatment for depression, anxiety, etc. Is this a healthy trend?

Please note that I am not making light of any of the illnesses mentioned above. I just think these are a few issues worth thinking about.

Enough for today.

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  1. A somewhat draconian, but interesting solution is to match your Medicare Levy percentage to passing an annual test from your GP.

    If you don’t smoke, drink less than 5 standard drinks a week, are within your BMI, you pay zero Medicare Levy.

    Add 1% to your levy for every “bad” read above those factors, so the fat, smoking, lazy, alcoholics pay 5% (or more).

    Also allow the private health insurers to use the same metrics.


    1. it would increase GP workload – BS, because a nurse can do the tests and you should be seeing your doctor once a year for a checkup anyway.

    2. it discriminates against the fat, lazy smoking alcoholics. User pays for everything else in the public system, why not health care, particularly when you abuse yourself in the process?

    3. it gives the “big nasty” health insurers carte blanche to up the premiums. No it doesnt – it allows them to measure and manage risk properly and encourages their customers to get healthy. Note it would be restricted to those above five conditions – all of them are down to behaviour, not genetic luck.

    So they aren’t discriminating based on your background, but based on what you do to keep yourself healthy.

    What do you think RA?

    • This is the kind of solution I had in mind when I posed the question. I don’t think it’s that draconian, since as you say it would be restricted to conditions that result from lifestyle choices. At the end of the day, I think insurers should be allowed to charge premiums based on these lifestyle risks.

      I’ve been reading a book called “Change or Die” — a bit of pop behavioural psychology — where they give the example of people who have heart bypass surgery. After a bypass, apparently patients are told that if they don’t change their behaviour and stop smoking, drinking, overeating, etc, the pain will come back and there is a good chance they will die.

      They did a study and two years later, 90% of the patients hadn’t made any of the recommended changes to their lifestyle, even though they had been told this could kill them. If they’re still alive at this point, they and up having to get further surgery, which obviously costs a fortune.

      And Medicare, or the insurance company has to foot the bill. There is something profoundly wrong with this system.

    • Part of your measurement criteria is based on answers submitted by the respondants, and as you pointed out with ‘risk profile assessment’s in your SF piece, it will not capture accurate information.

      “If you don’t smoke,”

      Many will falsify this. Best to capture this at the POS of cigarettes

      “drink less than 5 standard drinks a week,”

      Virtually all with falsify this, again best to capture at the POS of alcohol.

      “are within your BMI,”

      Not a good measure at all. Mike Tyson in 1986 has a >28 BMI when he was one of the fittest people in the world.

      However with a fitness element, IMO it is best to have your levy automatically applied, then with a sufficient cholesterol, blood pressure, etc test, a really healthy reading can then qualify some sort of rebate

      But ideologically, I feel somewhat averse to fracturing risk premiums into discriminatory, disaggregated markets.

      I comment on this in relation to various insurances. There is the facility for baby boomers to join car insurance that excludes young people for the perceived risk, thus excluding them and cheapening the premiums. In turn I wll hear a whole bunch of smug boomers eulogising their generation about better conduct.

      But in the same aspect young people can’t exclude oler people from their health insurances, it’s legislated.

      We can all fantasise about pursuing discriminatory schemes for the purpose of cheaper premiums, but for me the reality is there is nothing special about chronology.

      Being young is a condition we will all have (or had), being old is a condition we will all have (or do have).

      Part of risk management is to spread the cost over as aide a possible time frame.

      In the case of young, reckless drivers, the premiums are paid over a life time, with the value of claims most likely to be front loaded. The reverse for heatlh claims.

      Now in terms of health, I see it more of a right ideological claim that it being ‘free’ is unsustainable. Ultimately I can’t reconcile the logic in it.

      For the price of ‘free’ heatlh care, and the supply-demand equation, you can either hypothesise that being free, it causes a wave of hypochondria (i.e. excess demand), or it legitimately serves all health concerns (the real demand level).

      If the latter, and therefore imposing a cost burden reduces demand, you’re saying that you’re willing to see people suffer prolonged health complaints because they can’t access health care because of cost. I feel that is a bit inhumane.

      If the marginal levels of legimate demand have increased, then we impose the cost on those activities, as I said before, at the POS of unhealthy food, cigarettes, etc, or dangerous activity, such as registration fees.

      However, this is another area where I feel the retirement age needs to be lifted as to boost national income

      • You make some good points here. I for one would not like to live in a world without any government involvement in healthcare, where private insurers were unregulated and allowed to segregate markets by risk and charge premiums however they wanted.

        In such a world, how would an AIDS sufferer get coverage, for example? And what happens to people who were simply unlucky in the genetic lottery?

        So I think you can go too far with this stuff. But charging lower premiums for people who exercise more, etc. That would seem to be a no brainer.

        • “But charging lower premiums for people who exercise more, etc. That would seem to be a no brainer.”

          An ideal sentiment, but how can it be applied practically?

          A “Y/N” binary quesion on your health insurance/medicare surcharge/tax return ?

          A squadron of health inspectors handing out merit certificates to joggers?

          • How about a voucher for reduced premiums if you complete a 5k plus fun run in less than half an hour once a year.

          • There are already plenty of examples (at least here in the US) of health insurers who offer rebates to customers who maintain a gym membership for x number of months, etc.

      • Not sure how you’d measure these things at POS.

        I’d be pretty uncomfortable if I had to produce a medical history swipe card every time I ordered another glass of wine at dinner.

        • How to extract costs at a point of sale?

          It’s a levy?

          We pretty much do it with cigarettes at this point in time.

        • Also how do you differentiate between the good drinker (i.e less than 5-7 drinks a week) and the bad? Is it just tough luck? Alcholol in moderation is better for you than none at all (contrary to the opinion of the real draconian wowsers)

          Why should I be penalised for buying one or two bottles of wine a week, or eating a steak, whilst someone who buys 6 slabs of beer and eats Macca’s everday has their public health insurance subsidised by me?

          And then if I want private health, I have to pay for the public health system (which I don’t use) too?

          • “Also how do you differentiate between the good drinker (i.e less than 5-7 drinks a week) and the bad? Is it just tough luck? Alcholol in moderation is better for you than none at all (contrary to the opinion of the real draconian wowsers)”

            You don’t differentiate. The same way you can’t differentiate between someone filling in a “Y/N” form dishonestly because they want to see their medicare surcharge reduced.

            Levies at he point of sale are much more fair.

            “Why should I be penalised for buying one or two bottles of wine a week, or eating a steak, whilst someone who buys 6 slabs of beer and eats Macca’s everday has their public health insurance subsidised by me?”

            You won’t be penalised in comparison, they slab drining, maccas eating slob will pay much more than you.

            You’ll be penalised in comparison to the tee-totaller. It won’t be much of a penalty, and I can’t see a method of increasing the fairiness any more.

            “And then if I want private health, I have to pay for the public health system (which I don’t use) too?”

            You do know that many private procedures access medicare for part payments right?

          • Blood tests, tape measurements and standing on a scale dont lie Rusty.

            You cant be seriously comparing a fixed POS tax system with a tick and flick form? This is not Greece.

            “Fair” is an interesting word – in other words, not penalised as much. Cut off one finger instead of four basically is fair?

            Or not as much price inflation…

          • “Blood tests, tape measurements and standing on a scale dont lie Rusty. ”

            Which I have endorsed as a rebate method.

            However, you have stated as part of your methodology the following;

            “If you don’t smoke, drink less than 5 standard drinks a week, are within your BMI, you pay zero Medicare Levy.”

            The first two will be qualitative assessments based on the honesty of the person, unless you want the invasiveness of blood tests, which I can’t say I agree with.

            So the only way you capture ‘do not smoke” is not to apply extra costs to a person actually buying cigarettes, with is efficiently captured at POS.

            With alcohol, well for a person paying for drinks 1 through to 4 may feel aggreived, but I am comfortable with the level of equitable treatment, if not equal treatment.

            To try and capture the true level of consumption, compliance would exceed the benefit of the activity, and that’s where my decription of ‘fair’ comes into it.

          • How do you even define the good drinker, let alone measure it? 5-7 drinks per week may be OK if it’s one every night (though some people would say that’s too much/little), but what about if they are all in one night? Who decides these things?

            I agree with the theory of trying to encourage healthy behaviour but I think it’s impossible to accurately define (much less measure) such a thing.

            On that basis, I agree with Rusty Penny that the levies at the POS are the only practical way of charging for bad behaviour.

      • Excellent reasoning here, and I think the comparison to car insurance is very apt.

        Something else that I get out of this comment is that, in Australia at least, it’s important to look at the overall funding for healthcare, and not just at the medicare levy. Cigarette taxes also go to funding healthcare, and more “sin” taxes could also improve healthcare funding without affecting those that look after themselves a bit better.

    • The only problems I have with are the metrics to be employed, to measure the behaviour (the behaviour itself is easy to define).

      I’m a contrarian by nature, so I think the use of BMI/grain-heavy, low fat diets and “regular” exercise, as pushed by government is wrong. But thats for another discussion.

      The implementation would be nearly impossible due to the democratic process -but then again, we just got through plain packaging on cigarettes…..

  2. Basically, yes, insurers should be allowed to underwrite and charge different premiums based on lifestyle so long as that is actuarially supportable. If you can do so in life insurance you should also do so in health insurance.

    It’ll encourage people to live a healthier lifestyle, which as you point out is a key for keeping a lid on health care costs.

    I also think premiums should be payable from superannuation, just as life insurance (though without group insurance arrangements, which suffer from irrational pricing due to scale). The more people are encouraged to hold private health cover the better.

    • I would support the notion that health insurance should be paid for in superannuation, particularly if government’s remove the health care rebate.

      Given your health determines the quality of your retirement, it does pass the Sole Purpose test.

    • Actually, we couldn’t allow insurers to charge the appropriate premium for poor lifestyle as many high-risk patients would end up relying on the public system. Unfortunately I think you’d need to have a poor lifestyle levy which is mandatory irrespective of whether you have private insurance, then for privately insured people it would be passed to their insurer.

  3. Actually smokers,alcoholics etc lower health insurance premiums because they have much shorter life expectancy.Ideally smokers work for 40 years,pay tax and then die on the day of their retirement.
    From a cost perspective,what we do not want are folk who never work and have non life threatening illnesses.

    • Lower taxes on cigarettes if they are more toxic.

      If guaranteed to kill a smoker before they are 50, then halve the tax.

    • So you are attaching zero value to the contribution that people make once they retire?

  4. I have it on good authority (from a well-research medical friend and nurse) that a very high proportion of the average persons lifetime healthcare costs are expended in the last few months of their life. I can’t recall the exact figure, but she believes if palliative care was embraced more (as opposed to expensive, painful treatments that may extend ones life) then healthcare costs would drop considerably.
    Of course, I have never faced a terminal illness so it may not be human nature to roll over and accept defeat when spending another 100k would get you 3 more months with your family.

    • Thats correct Q, the vast majority of health care costs are spent in extending one’s life span at the end of your life.

      To embrace palliative care i think that you would need to put forward arguments for quality of life over quantity and hope that people embrace that. However thats easily said when you are healthy and it goes against human nature; every single person i know who has been diagnosed with a terminal illness has fought for every second they have left.

      IMO the way to combat those costs is to educate people on the effectiveness of early diagnosis of cancers and similar diseases so you have a fighting chance of a real extension to life.

      I havent done any research into whether that creates real savings or simply delays the inevitable and adds to cost, so its just an opinion.

      Its such a tricky area.

      • Yeah the elephant in the room is the government waste on just about every other program.

        Look at boat people – tens of billions of dollars spent finding and detaining them. Who gives a shit – either send them away or buy them all a house. Either option would be 10x cheaper than what we’re doing now.

        I think the public reaction would (rightfully) be very much against cutting medical expenditure in palliative care. We’re not yet at the woeful situation the yanks are in with expenditure.

        One GFC later and 10x the amount cut would be spent bailing out some stupid bank.

        There are plenty of other efficiencies to be made before we have to make this choice, which should be near last on the list of programs to cut in the budget. Once it is inevitable, then it must be done. But not so the government can have some spare change to throw at some other meaningless policy…

  5. I agree with letting insurance companies charge premiums based on risk i.e. paitent health. If I am charged more to inure my car in Inala than Ascot, how can the same principle not apply to insuring someone’s health? More risk should equal higher premiums. Otherwise it’s not insurance, it’s subsidisation.

    • Ok, so I live in a “fat” suburb, so my levy goes up? Going to open up all sorts of socio-economic issues, not to mention opportunities for stand-up comedy.

      Best advice I ever got from my doctor – “You’re lazy. Start swimming 3 times a week. I don’t want to see you again until then.” Unfortunately there’s not enough of those types around.

      • i dont think Q is advocating using post code as a factor, just using it as an example within car insurance for risk rating.

        You can easily put together a questionnaire to determine if someone is “standard” or sub-standard health. Life insurers do it every day.

        it’d be even better if you could age rate as well, but i doubt that’d get through.

  6. they still don’t see the problem:

    It is not that doctors are often too quick to use a common $20,000 procedure to treat patients suffering from coronary artery disease. The problem is that common procedure which costs $20,000 in USA; and $2000 or $5000 in majority of other developed countries.

    Normal birth (with no complications) may cost $20k in USA. So somebody is arguing that doctors are too quick to use this common procedure (normal birth) or there should not be births at all?

    USA health care (it is not a system) is easy to fix: remove all the wasted money, only half the profit made on human suffering and medical malpractice costs and total cost of health care will go down by half.

    To do this USA will need to create health care system instead of monopoly run and corrupt “free market” care.

    Wastes in USA health care are extraordinary. Here are just few examples that I encountered during just few short interactions with it:

    – Pure fee-for-service payment model that gives an incentive for doctors and hospitals to use unnecessary and more expensive treatments and incentive actually not to heal the patient but rather to perform as many treatments and in “ideal scenario” develop chronic condition that will become “regular customer”.
    – Fear from liability is forcing doctors to prescribe MRI, CT and other expensive diagnostic methods even if there is minimal chance of real need.
    – over-prescription of overpriced medicaments (almost half of the total world prescription drug revenue comes from USA alone)
    – Administrative costs that are almost 20% of total cost of health care
    – Two 50” LCD TV’s in a 40sqm designer furniture single hospital room

  7. It is seldom acknowledged that comparing the costs of health care in the USA, with the costs elsewhere, is NOT a fair, “apples for apples” comparison. This blog thread is a good exception.
    It is much fairer to compare the costs of “private health care” and “public health care” in a country that has both. Even so, public health care systems seldom run “cost accounting” systems that enable a fair comparison to be made. It has been found in New Zealand, that some operations in public hospitals cost the taxpayer substantially more than the same operation is charged out at in private hospitals.

  8. The first major difference between the mostly-private US health care system, and public systems in other countries, is in the actual “quantity” of healthcare delivered. Private insurers in the USA are simply not allowed to leave customers “hanging” with conditions of ANY kind “untreated”. “Public” systems are notorious for simply not providing any treatment at all for numerous conditions that are not life-threatening. Many of these conditions, such as rheumatism, involve private insurers in the USA in heavy ongoing expenses.
    Legal adventurism has resulted in insurers in the USA having to cover some of the most ridiculous “conditions” – having to pay for hair restoration treatment, for example.
    The US Private system actually “carries” substantial bad debt writeoffs because there are laws against determining “ability to pay” and withholding treatment on that basis. The number of uninsured people in the USA is a main argument advanced by advocates of socialised health systems, yet many of these people actually could afford health insurance. Many of the people who get emergency care without ever paying for it, are people in this category, and more disturbing, many are illegal immigrants.
    Malpractice Insurance costs are exorbitant, a legacy of the habit of exorbitant “settlements” being sought and granted by adventurous lawyers, judges, and juries. Note that the definition of “malpractice” in court cases involving the Private sector, is many, many times more demanding than what is ever expected of, let alone delivered by, Public sector health care anywhere in the world. Juries in the USA are highly unpredictable and sometimes seem to regard it as their duty to provide Lotto-win type settlements to unfortunate victims of medical misadventure who would not be able to obtain a fraction of the same compensation anywhere else in the world. If there is anything about the USA’s Health System that should be avoided by other countries, and that should be reformed in the USA, it is this. But note that politically, as a rule, “Public Health Care” is never obliged to bear the same penalty burden in the case of malpractice, as is “Private”.
    Of course “malpractice insurance” for doctors is a prohibitive expense. As is “defensive medicine”; the ordering of expensive tests and full ranges of tests that no “public” system in the world would do.

    • PhilBest – Have you ever lived in the US and dealt with private insurance companies? I suspect not, because your statement that private insurers in the US never “leave customers hanging” is not true.

      It is very common for insurers here to deny coverage for certain procedures that patients thought they were covered for (claiming that there are exclusions in the fine print), or even to discriminate against patients for having “preexisting conditions” that were not revealed when coverage started. The big insurers employ armies of lawyers and bureaucrats whose sole purpose is to fight such claims and deny coverage, which is one of the reasons administrative costs are so high.

      • Yes, and public systems don’t have to fight you, you can’t fight them; they just leave millions of people with non-life-threatening conditions, hanging. “You can cope”, the doctor will tell you. Because the State would be bankrupt if they had to treat you – like courts and Acts of Congress in the USA force health insurers to.

        My own experience with “public” systems lead me to be VERY sceptical about them. In fact, I regard them as “THE” successful insurance scam of all time in the whole world. No private operator would get away with what public health systems do.

        • You are clearly coming at this with a very strong ideological bias. Are you suggesting that there should be no government involvement at all in healthcare and that it should be entirely left to the free market? If so, I would suggest that this is a very naive view.

  9. One of the reasons tort law surrounding health provision in the USA, never gets reformed, is that lawyers are now a sizeable political constituency. The USA is said to have more than twice as many lawyers per head of population than the “next highest” country, and several times the international average.
    Interestingly, the Australian Quadrant Magazine, discussing the situation with numbers of Doctors in Australia, made the comment that there is a flow of trained doctors around the world, OUT of the poorest countries and into the wealthiest, with the USA at the apex. India trains doctors who move to Australia, and Australian doctors move to the USA. At the root of this, is a shortage of doctor training in the USA itself. This is at least partly because Law is a so much more attractive profession in the USA. Also apparently the “US Medical Association” (a kind of Doctors Union) controls the training of doctors and keeps the numbers low.
    It has been noted that the USA has several times as many MRI and CT scanners per 100,000 people as any other country – these scans are routine for Americans, but rare for others under their nations public health systems.
    A very serious implication for elderly people is that under most “public” health systems, health procedures are rationed more severely for elderly people under the rationale that they will not have as many years left to live anyway, or will not have a high enough quality of life, to justify the expenditure of public money. Analyses of the cost of health care under private health insurance for the over-65 age group in the USA, show that this is a very disproportionate part of the total cost, which would be much lower if health insurance companies were allowed to adopt the same ethics regarding the elderly, as governments routinely do.

    Another point is that almost all the world’s expensive new drugs are developed in the USA. Private insurance companies are inevitably required to fund the use of these drugs by their clients while public health systems all over the world refuse to do so, sticking with older, cheaper alternatives, or simply declining to treat a condition that had been incurable previously. Apart from the moral implications to this argument, the development of such drugs and other treatments would be much slowed without the resulting business from private health insurance clients in the USA; not to have this would be disadvantageous for the whole world, not just the USA.

    A related issue, and one of the most glaringly obvious, is that Private insurers in the USA are mandated to provide free regular medical checkups to discover and treat health problems as early as possible. No “Public” system in the world does this. It might be argued that free checkups reduce costs in the long term by early discovery of serious health problems. This is not the case; the reason that free public health systems do NOT provide free checkups, is because the cost is very much greater than simply letting people get unwell.

    • First of all largest share more than one third of total funding for expensive prescription drug research is paid directly by public funds in USA – National Institutes of Health, state and local governments. Pharmaceutical companies are nominally providing one third of total funding although large part of that money indirectly comes from public funds and tax breaks.

      Second of all, in public run systems all checkups are free, preventive ones as well as any other and as many times as patient feels need to have one. On the other hand in USA private insurers in USA provide just one limited check-up in a year or six months period. There is nothing more expensive than let people get unwell and USA doctors and hospitals have incentive to do that because of fee-per-service system. If patient comes early and gets healed quickly with simple drug USA doctors and hospitals will lose a customer. If he gets very sick he will need long and expensive treatment that will bring lots of money to hospitals and doctors.

      • In what public systems in the world, does every citizen actually GET their free annual medical checkup? I suggest this “provision” wouldn’t last long if everybody exercised their “right”.

    • Fine comments, as always Phil. I read an article a few years ago, that there were more qualified doctors not practising medicine than those who were in the USA. Bureaucracy creep? Bubble chasing, Wall street envy, etc.?

      Also apparently the “US Medical Association” (a kind of Doctors Union) controls the training of doctors and keeps the numbers low. Similar here in Aus for specialists.

      There was an article (Aust) quite some time ago about a young lass, who was near the top in Med school. Went into practice etc. Had all of the requirements to be a top specialist but was overlooked. Trumped by nepotism and cronyism within the “Colleges”. The painters and doctors closed shop union in Aust.

      If you want to observe a totally mismanaged and bureaucratised health system, look at QLD.

      I personally believe that out the curve, all people who have assets, either super or home ownership/equity should pay for their own medical costs that are not covered by insurance. No free lunches if you got the means.

      Most boomers I know still live in the past. They believe that they can leave their heirs everything and that the govmint will pick up the tab for medical expenses post retirement.

      The boomers think that they will have a long life. Totally false. The older people of today are from a far sturdier stock both physically and mentally. They are repairable. Fat, drunk and stupidly delusional will be in many instances irreparable compared to their expectations.

      They will be victims of unconventional delusional economics, just like their asset bases.

      I prefer the “Errol Flynn” Model.

      • Alex Heyworth

        Haha, the Painters and Doctors Union. I remember when Patrick Cook used to write about them in his Not The News column for the National Times.

        The Costigan Royal Commission, those were the days.

        • Required reading in our household when growing up – the P&D, the Goanna, investigative journalism long lost. Brian Toohey, Wendy Bacon. Ohhhhh, the pleasure of a decent read.

    • PhilBest — Once again, where are you getting your information from? I have lived here for 5 years and have never encountered a private health insurer that is mandated to provide free regular medical checkups…

      • OK, there is “no such thing as a free lunch”. They are built into the cost of the policy. Whereas the public systems everywhere rely on most people NOT going for a “free checkup” most of the time. Do you know of any public system in the world that sends you a reminder once a year, to come and get your free checkup?

  10. Another interesting point that has been made recently, is that the “amenities for patients” such as meals, lounges and entertainment paid for under private systems are akin to those of a 5 star hotel, while of course those paid for by governments are somewhat more utilitarian.
    The longstanding treatment in the US, of taxation write-downs for employer-provided health insurance, results in the insured individual only bearing around 14% of the true COST of his own “health care”. This tends to incentivise the individual to maximise that “health care”, while increasing systemwide expense extremely disproportionately. But because there is no equivalent tax break for health insurance you buy yourself, this tends to result in people being temporarily not covered.
    Another point to remember is that Private hospitals and clinics and so on in the USA, pay property taxes (known as local “rates” in some countries) as well as sales taxes and taxes on profits. Public systems advantage through not having these costs, is significant. It is strange that “health” can be considered as so important by politicians and yet not be made a tax-free activity when it is run by the private sector; and this is not even on the table for discussion when the need for cost-reducing reform is so hyped. As with tort reform, ideology trumps practicality.
    It is not at all remarkable that the cost of “healthcare” is so high in the USA. What is remarkable is that it is not even higher, given all these political impositions on the Private sector. Every study of the actual cost of any given medical procedures under different countries Public health systems, tends to indicate that the cost of that particular procedure is at least as high in the Public system as it is in the USA’s Private system, which is the world’s most expensive for the reasons outlined above. Differences of cost in the aggregate, do not at all relate to efficiencies in the Public systems, but to the vast difference in amount of care provided.
    Entrenched political interests of course strenuously resist any sort of cost accountability in “Public” systems in other nations, so that the idea of pricing for any given operation is simply unthinkable; there is simply no cost accounting structure in place to determine such things. It is a measure of the grip that petty leftwing political thinking has over the minds of citizens in some nations, that any sort of “voucher” system or the use of the Private sector by the government, to clear waiting lists for operations at considerable cost savings compared to throwing yet more money at the Public system, is electoral poison. The resistance that Americans have to Universal Public Health care, shows a much higher level of intelligence on their part. And yet, Americans have allowed an unsustainable situation to develop in their excellent Private health system, thanks to the adventurism of leftwing politicians and courts against it. This is the problem that urgently needs to be addressed in the USA. Americans need to be able to buy low-cost insurance coverage that will provide the holder with care similar to that provided by the “public” system in Canada or Britain or Australia. And it should be tax deductible to all, not just as a fringe benefit.
    Every country with Universal Public Health care in fact need to learn from the inherent efficiencies of Private systems and also learn to avoid the USA’s mistakes regarding the political and judicial inflation of costs.

  11. In Japan, health insurance companies will charge a company more in premium if any of their employees are over weight. So at checkup time every year, employees who are ‘overweight’ have to lose weight, or they’re fired. It’s somewhat draconian, but it works.

  12. First of all, to the initial posters; If you don’t like subsidising medical expenses of the general population while you are fit and well you can always leave the country. I won’t miss you.

    The problem with this simple approach is that it is not simple. What if i become overweight due to a heart problem or serious injury? What if i have one of various genetic conditions, that cause side issues that fit the criterions raised. Should a Down syndrome adult be denied health care because they are overweight?

    More disturbingly what if i Smoke/Drink/insert vice here, because it is legal?

    Why should I pay medical bills for a road cyclist who trains everyday on busy city roads, its so obviously dangerous.

    Why I should i subsidize knee reconstructions for amateur football players.

    Should females pay more insurance/levies because they may need access to childbirth services?

    Should we increase premiums for HIV+ people (and thus increase the spread of the disease)

    There are a million fatuous divisive arguments to be made.

    Personal health is your responsibility, public health is much harder.

    The simple way is pooled universal health care, society as a while decides whats acceptable and whats not. Do you wish to be a part of this society?

    Or do you want to live in a hole counting the money, the money that others have permitted you to have. You think you ‘earned’ this money and that its yours. It isn’t yours, and you didn’t earn it (US is a good example). The societal system rewards you with this money for contributing. If the societal system decides you don’t deserve this they will take it away, no matter how smart, hard working or ‘deserving’ you are.

    What makes your property rights more important than access to health care? (have a war of natural disaster if you find this one hard to answer)

    Have a though for those in society who are currently thought of as dumb, lazy and undeserving. It can be any of us at any stage…depends where the wind blows.

    If we had no government involvement in our lives, we’d spend most of our time getting shot, stabbed and sold. Sounds great!!

    Their endith the rant!

    • James – I agree with pretty much everything you say here. The point of this post was to stimulate some debate, which it has! But a couple of points:

      Pooled universal healthcare is fine, but with the rate at which healthcare costs are rising we are going to have to make some tough decisions. Ultimately, there has to be some kind of “rationing” of healthcare services — whether this is done by bureaucrats deciding what procedures a government is willing to pay for, or whether is is done by price rationing in the private sector.

      Part of my point was that the current system in most countries doesn’t do enough to nudge people in the direction of making more healthy lifestyle decisions. There are ways to do this without throwing Granny under the bus or discriminating against people who are simply unlucky.

      • RA, no disagreement at all on the basis point of the posting, the point i was making (with its high nonsense of unjust unreasonableness..];-), was that these hard decisions should not exist at the insurance premium end and contribution end of individual participants as put forward by initial replies to the post. Most of the rising costs of health care are easily dealt with by simply deciding how much is to be spent on a country basis. The key involvement of the Bureaucrats is that they really can say that procedure X is too expensive, private industry then finds ways to make it cheaper until, yes, it is cost effective. This idea was picked on in the states as the ‘Obama death boards’ or similar i remember.
        Is it better to increase health premiums for nicotine addicts, or to increase the cost/ban cigarettes? Don’
        t let the Healthcare system be the easy way out of hard decisions.

        • Unfortunately the politics of this are very difficult. As you say, when Obama quite reasonably suggested things like comparative effectiveness studies in order to reduce costs, the likes of Sarah Palin accused him of wanting to set up “death panels.” It’s very difficult to have a rational debate.

  13. Public health care should be aimed at coping with life threatening issues and those who are unable to obtain for themselves (ie children, those who cannot afford cover etc). Beyond that- a co-payment should be expected. I don’t have a problem paying 50% of the cost to see a dr (which given the current medicare rebate is about what it is). I ensures that it is cheap enough that I am willing to go when feeling ill (thus helping society stay healthier as a whole) but limits overuse.
    Long term, non life threatening conditions and pallative care are two of the biggest drains on the system, and we will need to have consideration for them over the next decade. If we don’t, the consequences are going to be messy. I understand the killing of elderly parents by elderly children is on the increase in Japan- they just can’t face being the daily carer for their parents until they themselves are in their 80s.
    What really makes me cranky is the private cover rort- most people take it out to avoid the levy, which means there is no real incentive for funds to offer any form of competetive cover. The only place in the system that does is the eyeglass- sector- most eyewear places manage to ensure that private cover covers the total expense. Strange that (no, not really), that competition between eyewear stores and a lack of attachment to the practising doctor would drive real benefits.
    Every time I visit my dentist (who is not a “preferred provider” for my health fund) i get annoyed by the pathetic level of cover.

  14. A government cannot use purely objective measures to determine whether a person should pay more for health care (as a private health fund would). If it was that easy, it would have been done already. A persons health is often related to factors outside of their control e.g. education, employment, socioeconomic standing, ethnic background etc. It would be unfair to subject everyone to an oversimplified test (and it would be oversimplified) that penalises people for being poor, overworked, naturally stocky, etc. Many of these issues are the governments fault e.g. rising cost of healthy fresh food and lowering cost of junk food. Heath is relative to so many complex factors that it would be inconceivable to design a “fair” test. At most, the government could mandate penalties for specific cases such as regular smokers or heavy drinkers. But I reckon the cost of putting in testing regimes would defeat the purpose, unless the purpose was to eradicate smoking and drinking. Better to just tax at the source. It’s proven that the more cigarettes cost, the less likely people are to start smoking, and the more likely they will try to quit.

    My 2 cents…