Robert J. Samuelson–How NOT to control health spending

[What about]…the government’s Medicare savings? CMS actuaries offered three estimates for a three-year period: $170 million, $510 million and $960 million (the higher the estimate, the less likely it was to occur). Even the highest figure is only five-one-hundredths of 1 percent of the $1.842 trillion of Medicare’s estimated spending from 2012 to 2014. If CMS modifies its rules to make ACOs more attractive to hospitals and doctors, they would probably keep more of the savings ”” and Medicare less.

It’s a good bet that what’s true of ACOs also applies to other cost-cutting ideas from the Obama administration, such as “bundled payments” and “comparative effectiveness research.” The concepts seem smart, but they’re likely to suffer from micromanagement. They create jobs for lawyers and health-care “experts.” They sound impressive in speeches and op-ed pieces. But they don’t much “bend the cost curve,” and they mislead the public by suggesting that health spending is being controlled. It isn’t.

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Posted in * Culture-Watch, * Economics, Politics, --The 2009 American Health Care Reform Debate, Consumer/consumer spending, Corporations/Corporate Life, Economy, Health & Medicine, Politics in General, The U.S. Government

9 comments on “Robert J. Samuelson–How NOT to control health spending

  1. robroy says:

    Good article. Not only is cost containment being overhyped, Obamacare raids Medicare from these phony “cost savings” to pay for increased spending of increased Medicaid rolls and the insurance cooperatives.

    You really have to be addled to believe Obama on Obamacare.

  2. Capt. Father Warren says:

    Sigh………there is this almost religous fervor that medicine is different economically than every other piece of commerce in the world. That medicine is the ONE economic entity that does not bow to the Altar of supply vs demand. If you stimulate demand (Medicare, Medicaid, SCHIP, Obamacare) without increasing supply, prices will go up.

    If you stimulate demand by unleashing the free market capitalists on the ~$2.4T we spend annually on healthcare, competition will drive prices down as the supply of services balloons.

    One can imagine that as the competitive battles intensify, large providers (eg, Wal Mart?) would offer basic services at cost in order to lure people to higher levels of service where better profit margins await.

    It happens over and over everyday in a plethora of industries. But as long as we persist in the myth that healthcare is “different, and immune to economic forces”, we will have, what we have.

  3. In Texas says:

    Actually, many Walmarts are already offering basic healthcare services via PA staffed mini-clinics right in the store. My family has used them many times when you know you have something you need to see a doctor for, but really don’t need the full exam – like sinus infections and the like. The clinics list the prices for various services – shots, basic physicals for sports, exams, etc. Also open some evening and weekend hours.

  4. robroy says:

    In Texas: my sort of objection to “doc-in-the-boxes” is that they are a little to quick to reach for the prescription pad.

    Most acute sinus infections don’t need antibiotics. Acute bronchitis doesn’t either. Antibiotics are very iffy for ear infections or non-strep tonsillitis.

    Patients need to go to the doctor with the attitude that they don’t want antibiotics and that the provider needs to convince them otherwise. Unfortunately, there a lot of patients who have the opposite attitude, objecting if they [i]don’t[/i] get an abx Rx.

  5. Capt. Father Warren says:

    We have had Walgreens and even some banks offering flu shots. Let the market place go and it will sort out the good and the bad. Shopping websites will spring up with prices and ads and customer reviews. Why already, the laser vision correction market has gone down this route with technology increasing, supply increasing, and prices have dropped dramatically.

    A market this huge will attract many big players with deep pockets who can bring transformative technology to the market and can afford to wait many years for the payback to come in, all the while battling for market share. In 20 years time it could be as revolutionary as the computer market was.

  6. Capt. Father Warren says:

    Of course Washington, AARP, and the AMA will fight this with everything they have, because that means they will no longer be the power brokers, and they can’t stand that…….

  7. Bookworm(God keep Snarkster) says:

    “In Texas: my sort of objection to “doc-in-the-boxes” is that they are a little to quick to reach for the prescription pad. ”

    Either that, or they refer everything, so why go there anyway?

  8. robroy says:

    Captain (#5) the experience in the Lasik market is not really transferable to open heart surgery or cardiac catheterizations.

  9. Capt. Father Warren says:

    [i]experience in the Lasik market is not really transferable to open heart surgery or cardiac catheterizations[/i]

    You don’t state why this is so, but I will accept your premise for the moment.

    Nor can Goodyear Tire Centers do complete engine rebuilds; but GTC’s can handle ~95% of the car problems people drive in with. If we apply the same [i]type[/i] of thinking to the medical world, then the mass market clinics and strip mall clinics will handle ~95% of the health needs of >80% of the people: specialists will exist for the special stuff as always. This is how we will achieve a major shift in the demand vs supply curve. My contention is that this will only happen through free market capitalism, not massive central planning in Washington.