I think this is far too facile. It's like saying half your taxes go to government waste. I mean sure, OK, but how do you get rid of government waste? So far no one has been able to do it. So this is really an unwillingness to engage in the problem, which is absolutely endemic in the current discourse.
The key problem is that 20% of our GDP goes to healthcare, and similarly 20% of our population is employed in healthcare provision. This isn't just people sitting around doing nothing. It's nurses, doctors, administrators, etc. If you want to reduce healthcare costs in half, so that it is only 10% of GDP, then expect to throw 10% of the population out of work. That will include nurses, doctors, EMT personnel as well as administrators. Sure, you can try to shift that and fire a bit more administrators than nurses, but you will soon discover that's about as easy as eliminating government waste.
This inability to address the core issue arisies from people approaching these difficult problems in administration and systems science from a facile moral point of view. "it's wrong!" they say, to be given a big bill for a snake bite. Well, OK, it's wrong. But that same attitude will tell you "it's wrong" to fire a hard working nurse, or to reduce the pay of a doctor, etc. So now you are left with boogeymen like greedy insurance companies and fat cat CEOs. This is like the person who insists on a tax cut funded by reducing government waste. It's not a serious proposal. And what we have in the US healthcare debate is two sides, the first side is just lying and obfuscating (that is the side opposed to reform) and the second side is so bound in the chain of moralizing that they are unable to make any serious proposals. They can only go after the fat cats, and not the nurses. Thus their proposals will never work.
Same thing for education -- you need to fire most of the university staff and reduce the pay or fire many of the teachers. Same thing for all the difficult problems in life where we complain that things cost too much. It is not shadowy fat cats that are causing these problems, it is too many people employed in the provision of services who are earning too much. Ordinary professionals. The biggest problems of modern life are that professionals have too much power and are extracting too much from the society as a whole. Whether it is hospital workers or government workers or teachers, the issues of skyrocketing costs and bureaucratic bloat are very similar across these areas, and they cannot be solved by getting rid of shadowy fat cats or employees that "do nothing".
But that's the problem with your argument. Of course people have done it, nearly every developed country has.
> If you want to reduce healthcare costs in half, so that it is only 10% of GDP, then expect to throw 10% of the population out of work. That will include nurses, doctors, EMT personnel as well as administrators.
No, it won't. I'm talking about eliminating the positions that would only exist because of the private insurance system. Which is a massive amount of dead weight loss.
It's not remotely hard to understand conceptually, I mean EVERY dollar that's devoted to arguing over insurance bills is completely wasted. As are all the dollars spent on insurance advertising and marketing, and so on. Every dollar paid back to health care companies as dividends, or used for stock buybacks.
That's a lot of dollars.
Every time this argument comes up people in the US start talking about it like "Oh yeah? Sure but what's YOUR solution then smart guy? Stumped you didn't I?"
Um, no. My solution is the NHS. Like you can go there and look at it I swear it's a real thing, they have buildings and everything, just book a flight to London and see for yourself. Or, in US terms, Medicare for all, which is also a real understandable thing that exists, except for the "for all" part.
The NHS/UK isn't cheaper (just) because of insurance related dead weight though- they also just pay everyone less.
The US Government estiamtes the total adminstration and health insurance expenditure cost $288B in 2019. Total health consumption was $3.69T. Thats about 7.5% of total health spending. Even if you assume a 2 or 3x multiplier to the effect of eliminating insurance companies you STILL don't get US healthcare spending on a GDP basis in line with international norms.
Insurance companies are awful, but they alone are not the cause of American's health care spening problems.
To believe that administrative overhead would significantly reduce healthcare costs is just obviously false. We spend 20% of GDP on healthcare and UK spends 10%.
Total spend is employees * average salary per employee.
Let's take a look:
* For doctors, there are roughly the same number, ~2.8 per 1000, but US doctors earn three times as much as UK doctors[1]. 294K/year US versus 66K/year (UK).
* The US has twice as many nurses[2] per 1000 people (17.4 per 1000) as the UK does (9.8 per 1000), and the US pays its nurses much more. The US pays 77K/year for an RN and 112K/year for an PN and 181K/year average salary for a nurse anasthesologist[3]. Nurses in the UK earn about 1/3 less, a total average of 33K/year[4]
* The US has 315K pharmacists (not assistants) or roughly 1 per 1000, whereas the UK has 43K or .65 per 1000. US pharmacists make average of 140K/year[7]. UK pharmacists make an average salary of 58K per year[8].
* The US has 23,200 microbiologists (earning 69K/year). The UK has 490 (earning 52K/yr)
* The US has 40 MRI machines per million. The UK has 6.
* Now let's generally talk about staffing. The US employs 20 million healthcare workers with a payroll of 1 Trillion (2018)[5] an average wage of 70K (and median wage of 42K/year). This is occupational data from BLS (https://www.bls.gov/ooh/healthcare/home.htm), so you can't complain about insurance employees at hospitals being included.
The UK has 1.3 Million[5] in both hospitals and clinics counting both NHS and Independents, with an average salary of 24.7K/year.
That means, relative to population, that the US employs 60 per 100,000 healthcare employees while the UK employs 20 per 1000. We have triple the number of healthcare workers and our health care workers earn double what the do in the UK.
Now let's talk about this enormous waste in insurance that will make healthcare affordable if only we got rid of it. Total insurance overhead in the US is 7% of healthcare expenditures[8]. So if we reduced it to zero, we would pay 7% less. Whoppee.
Thinking that you can keep paying doctors and nurses triple and have so many more staff and keep their high wages but merely with insurance reforms reduce healthcare spending by half is so wrong I am amazed I even need to say it. It's a terrible, misleading, evasive non-answer.
What we need to cut are salaries and employment. If you don't acknowledge that, then you are not a serious participant in this discussion because you are refusing to acknowledge that this problem has tough trade offs. You are not going to solve it by "cutting waste".
And this is important, because our problem, as a nation, is the general problem of professional guilds extracting too much from the rest of society. We have this problem with higher education, with finance, with healthcare. A large chunk of our professional middle class is employed by these sectors, and their well-being would be threatened if we significantly cut their wages and employment. It is not evil insurance companies, it is not shadowy billionaires, but our neighbors down the street -- the nurses, the college professors, and the X-ray technicians -- who are the ones blocking meaningful reform. And until we are willing to face that and recognize what must be done, then we will not get affordable healthcare. The incurable diseases of the modern west are all due to the professional classes extracting too much. It is not due to excessive "waste".
> The US has 40 MRI machines per million. The UK has 6.
Funny story - these days most DI (diagnostic imaging) machines (CT, fMRI, PET) are owned by doctors or consortiums of doctors.
They are money printing machines.
Doctors, and manufacturers know this. Manufacturers will find you doctors you can partner up with to buy DI assets, and get set up. You can pay off a CT machine in a couple of months, even high end fMRI in under a year. The manufacturer will finance. They'll even help you write CON applications (Certificate of Need, a nice little thing that hospitals lobbied for to reduce competition - if a new hospital wants to open up in an area it has to demonstrate that the existing community healthcare needs are being underserved. And the existing hospital gets input into the process). A nice little imaging production line.
Interestingly, though perhaps unsurprisingly, doctors who own an interest in imaging equipment tend to refer their patients to it at a rate approaching 2 standard deviations higher (comparing specialties like-for-like).
> What we need to cut are salaries and employment. If you don't acknowledge that, then you are not a serious participant in this discussion because you are refusing to acknowledge that this problem has tough trade offs. You are not going to solve it by "cutting waste".
Yes I agree. Take the windfall profit motive out of the system and you’ll see quite a bit of change. Paying doctors less sounds like a great plan.
But we can start with the truly staggering amount of deadweight loss. Do you actually interact with the US health care system? Is it really that hard to understand just how much energy is wasted fucking around with just the billing component alone?
The problem with eliminating "waste" is the bang for the buck. It would take massive restructuring to cut the 7% administration in half. But then you've only saved 3.5%!
So when addressing a problem, you start with the first order stuff, and then go to the second order stuff, and you do this in terms of impact, not in terms of conceptual clarity.
Cut nurses and doctors, medical staff wages in half, and you save 40%.
The real point here is that you can't have affordable healthcare if nurses are earning 6 figures.
That's why nurses in the UK earn 40K/year. It's the price of affordable healthcare.
That's the core trade off between affordable healthcare and US style healthcare.
But all of a sudden now we do not have the same moral clarity as we did when we were only talking about "waste".
So let's have that debate right now - the real healthcare debate, not the fake healthcare debate -- and stop pretending this is a problem that can be solved with waste while allowing nurses to keep their 6 figure salaries.
It is what we call cheap moralism to decry how unfair high healthcare costs are in the US and then avoid raising any of the tough issues of what would happen to people whose livelihoods depend on those costs being so high.
But is it substantially lower percent wise in single payer systems like the NHS? Assuming the 7% figure is correct that does not seem like an excessive amount and event cutting it by half would only result in a marginal decrease in prices.
The key problem is that 20% of our GDP goes to healthcare, and similarly 20% of our population is employed in healthcare provision. This isn't just people sitting around doing nothing. It's nurses, doctors, administrators, etc. If you want to reduce healthcare costs in half, so that it is only 10% of GDP, then expect to throw 10% of the population out of work. That will include nurses, doctors, EMT personnel as well as administrators. Sure, you can try to shift that and fire a bit more administrators than nurses, but you will soon discover that's about as easy as eliminating government waste.
This inability to address the core issue arisies from people approaching these difficult problems in administration and systems science from a facile moral point of view. "it's wrong!" they say, to be given a big bill for a snake bite. Well, OK, it's wrong. But that same attitude will tell you "it's wrong" to fire a hard working nurse, or to reduce the pay of a doctor, etc. So now you are left with boogeymen like greedy insurance companies and fat cat CEOs. This is like the person who insists on a tax cut funded by reducing government waste. It's not a serious proposal. And what we have in the US healthcare debate is two sides, the first side is just lying and obfuscating (that is the side opposed to reform) and the second side is so bound in the chain of moralizing that they are unable to make any serious proposals. They can only go after the fat cats, and not the nurses. Thus their proposals will never work.
Same thing for education -- you need to fire most of the university staff and reduce the pay or fire many of the teachers. Same thing for all the difficult problems in life where we complain that things cost too much. It is not shadowy fat cats that are causing these problems, it is too many people employed in the provision of services who are earning too much. Ordinary professionals. The biggest problems of modern life are that professionals have too much power and are extracting too much from the society as a whole. Whether it is hospital workers or government workers or teachers, the issues of skyrocketing costs and bureaucratic bloat are very similar across these areas, and they cannot be solved by getting rid of shadowy fat cats or employees that "do nothing".