The nature of bloated health care spending!


David Brooks socks docs: In this morning’s New York Times, David Brooks voices approval of the Romney/Ryan Medicare plan.

The Romney/Ryan Medicare plan is one of the many proposals which have played almost no role in the press coverage of this campaign. Basically, we don’t really have press coverage of White House campaigns any more.

We have columns about dogs and reports about polls. After that, our journalists pray for gaffes.

That said, Kevin Drum bats Brooks’ presentation aside in this instant post. His headline is this: “The Conspiracy of Silence About Mitt Romney's Medicare Plan.”

Truth to tell, you could pretty much write that headline about every proposal, policy area or substantive topic in this election. When it comes to the press corps’ role in this campaign, your headline would likely be right.

(Within recent memory, this isn’t the way our White House campaigns have been covered.)

For ourselves, we don’t understand the Medicare proposal well enough to evaluate what Drum says. We’ll assume that Drum is right. For ourselves, we were struck by a paragraph Brooks casually tosses aside.

This strikes us as a remarkable portrait. Brooks doesn’t bat an eye:
BROOKS (10/9/12): The history of Medicare is strewed with efforts to control costs by controlling prices. The results are terrible. Providers just increase the number of services, redefine the classification of services or find other ways to get their money back. A study by the Congressional Budget Office found that, between 1997 and 2005, Medicare payments for individual treatments fell by 5 percent, but the total spent on these services skyrocketed by 35 percent. Doctors made up in volume what they lost in reimbursement levels.
Forget about the best way to control future Medicare costs. Just think about the practices Brooks describes in that passage.

Basically, isn’t Brooks describing a scam? In the picture he paints, “providers” know how much money they want to obtain. In order to obtain that amount of money, they find ways to provide a series of “services,” apparently whether the services in question are needed or not.

This country spends two to three times as much, per person, on health care as other developed countries. We assume that Brooks is describing the process by which “providers” bring that massive amount of spending into the world.

As he performs this service, Brooks doesn’t bat an eye. “Nothing to look at,” he seems to say. He doesn’t show the slightest sign of thinking he’s limning a scam.

We don’t mean this as a criticism of Brooks. He is arguing a different point—poorly, if Drum is right. But massive amounts of over-spending virtually define American health care.

Doesn’t that passage define a scam—a scam which creates this level of looting? If Gordon Gekko were a provider, wouldn't he provide his health care services in precisely this way?


  1. This sort of scam is a natural bi-product of "free" medical care, whether paid for by the government or by insurance.

    I'm on Medicare + supplemental insurance. I do think that a couple of my doctors may be bringing me back more often than necessary. However, I'm not complaining, because the extra visits cost me little or nothing.

    If I paid my own doctor bills, I wouldn't stand for this practice.

    P.S. IMHO the bigger problem with cutting provider fees is that eventually you get only lower quality providers. That's what happened to Medicaid. Medical care under this program is so poor that at least one study showed that people covered by Medicaid had worse health results than people with no medical coverage at all.

    1. But would you or your survivors sue your doctors if a treatable condition went undiagnosed and you died from it all because you wouldn't stand for the practice of extra tests?

    2. Without Medicare + supplemental insurance, I would bet that you wouldn't be seeing the doctor much at all.

      No one holds a gun to your head and says you have to go back and see your doctor; if you think he's bringing you back more than necessary, and you feel so strongly about not "wasting" services, then don't go. Of course, I realize that conflicts with the imperative to take full advantage of anything the suckers are foolish enough to offer without rigid means-testing.

      I'm glad to see you support Obamacare, though; because controlling needless procedures is one of the functions of the so-called "death panels."

    3. "This sort of scam is a natural bi-product of "free" medical care, whether paid for by the government or by insurance."

      Then why does care cost more here in the US where we have much of that "free" medical care than they do in the rest of the civilized world, where they have more of it?

      If you're right, shouldn't it be the rest of the world that's got ridiculously over-expensive medical costs?

      Why isn't your logic borne out by the facts of the real world?

    4. the US where we have much *less* of that "free" medical care...

    5. David in Cal,

      I suppose that "one study [which] showed that people covered by Medicaid had worse health results than people with no medical coverage at all" is the same study that shows the people with the finest private health care insurance are more likely to be victims of medical treatment error than the uninsured. Phillip Longman discusses this paradox in his talk at the link below. Crafty of you to just cite the results for Medicaid patients from this study.

      Meanwhile the U.S. has the most market based of all medical systems in the developed world and it has the highest financial cost being borne by any society. The problem with American health care generally is that it has been infected with a corrupt value system which shamelessly celebrates greed and the pursuit of windfall profits above all else by those protected from the free market by patents and a de facto guild system, by those protected from globalization and antitrust regulation, and by libertarian and neo-liberal cheerleaders.

      Meanwhile, back in actual civilization and speaking of Paul Gastris, as Bob S. did in a recent post, and another individual whose name pops up around here from time to time, i.e., Jack Welch, here's a view of what we should want for our broken, all too privatized American health care system:


    6. [5:36] ...The origins of this book actually begin one day in about 19- 2004 when the editors of Fortune magazine summoned me to New York for what turned out to be a sumptuous lunch and a very difficult assignment. In their glass towers up there on 6th Ave. they had come up with this story idea and it was rather clever. They said, "Well, you know- we would like you to go out and find, whoever it might be, who is the Jack Welch of health care." Jack Welch being, at the time, of course, the storied CEO of General Electric, who had been on Fortune's cover, basically, every other issue throughout the 1990s.

      [6:26] And so I listened to that and I thought that would be a good assignment. Part of it was just intellectual, at the time it was all ready clear that the American health care system was out of control in its cost, but part of it was personal, too, because I had lost my wife, Robin, a few years before to breast cancer and what I had seen of the American health care system or, at least, one little prestigious corner of it during her diagnosis and demise had caused me to really be quite radicalized about health care delivery.

      [7:15] Robin was treated at the Lombardi Cancer Center, it's over here as part of the Georgetown University Hospital system. We were very grateful at the time that we had access to this world class facility. I remember, particularly, Robin saying to me how grateful she was that she had not taken my advice to try and save money by enrolling in [an] HMO.

      [7:44] And we were further encouraged every time we went into this facility to see this giant blow-up of a U.S. News and World Report cover of their annual hospital rankings which put Lombardi at the top of cancer treatment - not the very top, but among the top - cancer treatment facilities and, since I worked for U.S. News at the time and had respect for the people who did those rankings, that was quite reassuring.

      [8:14] But as time went by I began to be more and more bothered by the little things like, why was it that every time we came in her paper files seemed to be scattered all over the facility; the x-ray was over here, the lab result was over there. In one particularly difficult moment we started a consultation with her team of oncologists in an examining room. And the conversation started off on what we thought was a very promising note, they began talking about Robin's prospects for reconstructive surgery. She was, at that time, undergoing chemo-therapy and, obviously, if you're going to be talking about reconstructive surgery for her lumpectomy then that would imply that you had a great deal of confidence that the cancer was in remission.

      So we talked about that for maybe twenty minutes and eventually I began to notice this one resident, sort of tentatively, raise her hand and say, "Guys, did anybody remember to look at that liver scan that we did last week?"

      [9:37] They all kind of looked at each other and looked at us and said, "Be right back." And so, about forty-five minutes later this grim faced oncologist returned with the news that the cancer had spread to her liver and, such was his clinical prowess, he was able to predict that she would die within seventeen days and she did, indeed, die exactly within seventeen days.

      [10:10] So now I never blamed her doctors for her death, but it became very clear to me that they were operating under a system that was highly disorganized and prone to medical error. It's sort of as if you showed up at an airline gate and the person there told you, "Well, we're not quite sure where the plane is that your loved one is on; and we can't really say whether it passed its last inspection; and, by the way, no we don't have a passenger manifest."


    7. [10:51] And so I set off on this assignment with a great deal of passion and one of the first things I did was to go up to Cambridge to visit Donald Berwick - who, some of you might know, has just been appointed by the Obama administration to head up the Centers for Medicare and Medicaid Services, it's a wonderful appointment - at the time he was all ready kind of the guru of the then still nascent health care quality and safety movement in the United States. So I went up and essentially sat on his knee for a whole day saying, "You know what, they gave me this assignment: who is the Jack Welch of health care?"

      [11:36] And, in so many words, and I heard this again and again from other people who were similarly engaged in the quest for health care quality, they kept suggesting to me, "Well, actually, this government bureaucrat. It's this guy named Ken Kizer who, kind of, in the early, in the late 1990s, mid to late 1990s, came in under the radar as a Clinton appointee to the Veterans Health Administration and took that organization by the throat and turned it around and turned it into the best care anywhere." And I thought to myself, "Come on," you know, "give me a break."

      [12:18] I'd actually written a book about ten years before in which I had proposed that, in the context of general entitlement reform, that veterans just be given vouchers because the VA is so obviously broken and busted, and this was opinion that was shared across the ideological spectrum at the time.

      So I was not inclined to believe this at all, but I began looking at this peer reviewed literature that [Washington Monthly editor-in-chief] Paul [Glastris] referred to [just now] and that Berwick and others pointed me to. I read all of this stuff about, well 'kay on all these different metrics of quality, you know, rates of medical error, patient satisfaction, adherence to protocols of evidence based care, cost per patient, kept doing all these studies of all these health care systems and time and again here's the VA on top. So that just basically started smoke coming out of my ears.

      [13:18] And I went back to Fortune magazine and said, "Well, I don't know if you want me to continue reporting this story because I think I know who the Jack Welch of health care is and he's this government bureaucrat." And they said, "Arrg. Just forget it. Here's a $2000 kill fee, it's been nice doing business with you," --you know-- "check in later." Then I remembered there's this guy named Paul Glastris who's receptive to crazy ideas...

  2. "Basically, isn’t Brooks describing a scam? In the picture he paints, “providers” know how much money they want to obtain. In order to obtain that amount of money, they find ways to provide a series of “services,” apparently whether the services in question are needed or not."

    I wouldn't call it a "scam" so much as a "racket" or "corruption." "Scam" to me implies that people are paying for services that are substandard or nonexistent; but the services are in fact mostly being provided, and I'm sure they're done competently for the most part. What's happening instead is that services are being provided needlessly and at artificially inflated prices, ultimately due to the profit incentive to insurance companies to raise their premiums. Insurance companies raise their premiums to increase profits, which creates a larger pool of available cash to pay for more and more expensive procedures, which in turn leads to premiums being increased again to maintain profit margins, which results in an upward cost spiral until equilibrium is reached at the point where people cannot afford to pay the premiums. And since with Medicare the premiums are paid by the government (i.e. taxpayers, who don't have the option of not paying their taxes), there is virtually no limit to how high costs can ultimately go despite any notional "caps."

    But to get back to Brooks, his thesis is that whatever its faults, the Romney/Ryan plan is the best idea on the table for getting health care costs under control because the status quo (ante Obamacare) is demonstrably unsustainable and the Democratic plans are pre-doomed to failure because big government always fails at everything; therefore Romney/Ryan is all that is left. It may work, it may not (and Brooks doesn't tell us what should be done if it doesn't work), but it's the only viable alternative Brooks sees.

    In short, Brooks is just being willfully ignorant again. Nothing to see here.

  3. DinC

    "I'm on Medicare + supplemental insurance. I do think that a couple of my doctors may be bringing me back more often than necessary. However, I'm not complaining, because the extra visits cost me little or nothing."

    "If I paid my own doctor bills, I wouldn't stand for this practice."

    You are such a good little citizen, David. It's OK with you if doctors rip off the taxpayer, but God forbid they rip you off personally.

    They are ripping you off, David. You just can't see it.

    1. Real example: I had minor surgery (which was successful.) Unfortunately, one aspect of the surgery had to be redone by a hospital procedure under anesthesia. The problem may have been bad luck or it may have been caused by a particular error made by the doctor's assistant. I don't know enough to say what the cause was.

      Even if there was a medical error, the effect was too minor to justify a malpractice suit. I experienced a couple of weeks of extra discomfort and incurred bills from doctor, anesthesiologist, and hospital. I considred asking the doctor to at least waive his fee for the second procedure, but didn't do so.

      One reason I did nothing is that the process of paying was so automatic. My bills were automatically paid by Medicare and insurance. Eventually I was billed for a very small charge for the deductible.

      If there had been no insurance, I would have received the doctor's full bill for the second procedure. At that time, I might have complained and asked him to waive that charge.

    2. Had this occurred in a European country, there would have been an investigation as to the cause.
      The methods would have been changed or the doctors or technicians retrained to prevent a recurrence.

      Here, the mistake is ignored, and covered up unless the patient suffers horrendously, consults a lawyer, and settles out of court for a ton of money.

      If the person responsible is a technician, they will be allowed to go to another state and get a similar job, with no black marks on their employment history.

      If the mistake was made by a physician, there MIGHT be an inquiry by his peers, but God forbid anyone take away his livelihood, even if this doctor has a history of fuck-ups.

      Since Uncle Sugar is paying, let's just forget about it.

      By the way, a couple of doctors bringing you back more times than necessary suddenly becomes an isolated incident.

      Are you rewriting your personal history?

      By the way, the same thing happened to my wife (before we met), and being a woman, she was basically told by the hospital that she was lucky she didn't have to pay to fix the doctor's incompetence .

  4. Maybe someone should check the CBO report:

    From the conclusion:

    "In explaining changes in spending, however, the behavioral response accounts for only
    a small fraction of that change—1.4 percentage points of the 34.5 percent increase in

    Behaviorial response is what Brooks is describes:

    "Doctors made up in volume what they lost in reimbursement levels"

    So Brooks is not stating the facts/ study conclusion correctly (as should be expected for a Nytimes op-ed columnist).

    I am somewhat disappointed that the Howler analysts didn't check the facts either.

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