Archive for the ‘Sane voices’ Category

Costs of medical services still out of control– and some ideas for improvement

book coverIt’s pretty well-known that medical care is absorbing an increasing proportion of GDP, and putting many Americans into financial (and, in many cases, medical) distress.  One source of the problem is poverty– people whose incomes are too low to afford decent housing, food etc. are unlikely to have much left over to pay for medical treatments.  And another cause might be an aging population who demand advanced treatments to further extend their lives.  Both important issues, but this post focuses on another, probably more important one: The medical system is full of rentiers and other thieves, who, pretending to improve health or efficiency, impose tolls or promote unnecessary treatment, resulting in higher and rising costs.  That’s the book Marty Makary (MD) has written.

Using a conversational style, well-organized, packed with personal anecdotes, Makary, a cancer surgeon at Johns Hopkins, works his way thru some of the reasons medical care costs so much.  Sources are meticulously cited in endnotes.  I think his findings can be pretty well summarized:

  • Some medical professionals offer screenings and other promotions to entice folks to get treatment they really don’t need.
  • Hospital charges are, not quite random, but pretty much void of any relationship to actual costs or what other customers pay for the same service.
  • Some hospitals take advantage of their quasi-monopoly status to charge excessive prices, and aggressively sue customers who don’t pay promptly.  On the other hand, at least a few hospitals in similar circumstances find they can prosper while charging more reasonable prices.
  • Air ambulance (and, to some extent, surface ambulances) have been largely taken over by private equity firms, and impose excessive (mostly unregulated) charges on people who are in no position to bargain.
  • Some doctors are outliers in terms of types of birth delivery and various surgeries, meaning that they perform invasive and/or expensive procedures at a much higher rate than the norm.  This may be because they’re selfish and inconsiderate, or maybe they just haven’t thought about it and, when shown the data, mend their ways.
  • The opioid problem, as reported elsewhere, is partly due to some doctors prescribing more pills than really necessary.
  • Overtreatment is a problem; often a more conservative approach is more effective (as well as less expensive).
  • A few organizations have managed to rethink how medical care is provided, giving more autonomy to practitioners as well as more support to patients. Also, a few payers (meaning, typically, employers who pay for insurance) are managing to learn the charges imposed by various providers, and incentivizing their insureds to choose less costly providers.
  • “Health insurance,” which is really a care financing arrangement and not insurance in the conventional sense, is an even sleazier business than I thought, and insurance brokers are incentivized to maximize costs.
  • Pharmacy benefit managers may have seemed like a good idea at one time, but basically are toll collectors between the payer and the drug provider.  Similarly, “group purchasing organizations” charge a toll on hospital purchases of equipment and supplies.  In both cases it’s rarely possible to get accurate data on who is paying who how much for what.
  • Then there’s the “wellness” industry. Of course sensible diets and some exercise are good things, but “wellness” seems to have evolved to divert attention from the main causes of escalating costs.

The book concludes with a few recommendations, mostly for providers and legislators, but also for consumers, who are encouraged shop around, and ask for prices before agreeing to treatment.

A few important concepts are missed.

  • The scandal of “Certificate of Need” laws, which protect hospital monopolies and still exist in several backward states, isn’t mentioned.
  • While the cost of drugs receives attention, no mention is made of the patent games by which the U S Government enables drug manufacturers to extend protection, and collect rents, far beyond the statutory period.
  • Little attention is given to the history of medical care in America, including lodge practice and the role of wealthy foundations in choosing how medicine developed.

Finally, I hope the next edition will avoid doubling the populations of Missouri and Wisconsin (page 79).

 

“Chicago’s growth spurt” part of expanding Gaffney trove

Michigan Avenue around 1912.

As Polly Cleveland continues her project posting Mason Gaffney’s works, we find “Chicago’s Growth Spurt, 1890-1900.”  It’s not very long, and worth reading today as a contrast to our current stagnation. Most importantly, Gaffney deduces circumstantial evidence that during the era of growth, land values were significantly taxed.  As he notes in conclusion, “More research into Chicago’s political history is needed.”

The whole trove contains dozens of working papers, class notes, and publications, in Gaffney’s concise and understandable style.  (You’ll find it linked here as well as above; depending on your screen size and magnification you might need to scroll over to the right to see it.)

 

New ideas on taxation, and why most of us usually don’t know about them

Photo of Dilbert model by Jon Stefansson via Flickr (cc)

Six weeks without a post, OMG! Not because I had nothing to say, but perhaps too much to organize into something readable. Or maybe I’ve just found it too difficult to locate suitable images to go with the posts.  Well, forget that, it’s time to get back to blogging.

And it was nearly six weeks ago that Miles Kimball blogged about some great ideas expressed by Dilbert creator Scott Adams for improving taxation of the “rich.” Adams’ piece was published in WSJ, I can’t figure out which date, I don’t know how long the public link will last and I can’t actually figure out the title of the article.  Adams’ point, if I understand it correctly, is those who pay the greatest amount of taxes would more willing to do so, if given suitable nonmonetary incentives.  He suggests maybe the top 100 taxpayers should be invited to a celebratory dinner at the White House, where they’ll be praised for their contributions to America.  (I wonder whether richest-men Warren Buffett and Bill Gates would qualify for this event.  More likely a bunch of wealthy heirs and heiresses who got poor tax advice).  Another idea is that top taxpayers should get certificates allowing them to violate certain regulations, such as parking in handicapped spaces or using carpool lanes alone. (Of course, the very wealthy wouldn’t worry much about the fines such actions would impose if unauthorized). Or, suggests Adams, maybe the top taxpayers should each get two votes (which would make no difference in election results compared to the influence the wealthy can already buy).

More important, I think, is Adams’ point that, if you can’t think of a good idea, it’s best to think of some bad ideas and offer them for criticism. It’s a technique I have used with fair success (my role being to offer the bad idea).

But the main lesson we can draw from Adams essay is that,if your idea regards public policy, then no matter how good (or bad but creative) it is, nobody powerful will pay attention to it until it’s expressed by somebody who is already influential. Thank you, Scott Adams.

 

Taiwan monitors land value

Shin Kong Life Tower

photo of Shin Kong Life Tower from Wikimedia

Much like Korea, Japan, and other advanced countries, Taiwan has a land value tax which requires it to monitor land value regularly.  And they do, apparently pretty well, as indicated by this report that 2011 land values average 8.65% over the previous year. The land value tax could be one of the reasons Taiwan seems to be more prosperous than most countries, but that isn’t my point.

My point is that assessing land value is not exceedingly difficult, if one has competent and reasonably honest assessors.  The most valuable land in Taiwan is reportedly under the Shin Kong Life Tower, NT$1.21 million per square meter (about $4,000 per square foot, a figure probably never seen in Chicago).

Thanks to the Facebook LVT group for the link.

Occupying Chicago

My only excuse for not posting since last month is that I’ve been diverted with other projects, including the new hgchicago site. The bad news is that it’s still not all there.  The good news is that it’s WordPress-based and that the new version of Firefox, 7.0.1, no longer freezes my OS.  Never did solve the Opera vs. WordPress problem, but now I’m back to Firefox for most things.

Chicago is no longer a media center, but still important enough to have Occupy action. I stopped by Jackson/LaSalle this afternoon, there were a few hundred people with signs and a good attitude.

Some occupiers

 

More occupiers

Occupiers

 

I saw no "media" of the type that has satellite trucks and excessively attractive newsreaders, but Distract Chicago was there.

Well-put

The scheduled teach-instarted nearly on time, with St. Xavier Professor Aisha

Teach-In

Karim speaking about Marx’s Communist Manifesto.  Unfortunately, the acoustic conditions and the speaker’s accent prevented me from a full understanding of her case.

It looks from the previews like WordPress might be doing some things to my images, but I’ll wait to see the actual post.

Iceland’s example

Of course we should not have bailed out the financial sector.  Fred Foldvary gives a concise summary of what happened when Iceland refused to do so.

And since no fundamental change has taken place, I suspect Americans will have an opportunity to use this lesson when an attempt is made to extort a second bailout.

Lambert’s Law of Rent

“All rents tend toward fraud”

Lambert has proposed this as “Lambert’s Law,” but since there appears to already be a “Lambert’s Law” in the field of physics, we could name this one “Lambert’s Law of Rent.”  Based on, tho not directly derived from, the Law of Rent.

Lambert goes on to assert that “a parasitic class of rent-seekers has paralyzed and hollowed out the economy,” which sounds correct to me.  Lambert’s post (which actually is not about economic rent) is here.

The logical conclusion, of course, is that public policy should seek to collect for the benefit of the community those rents that cannot be eliminated.

Gaffney Interview

Mason Gaffney, author of After the Crash, interviewed by Kevin Press (part 1 and part 2).  Also available as a pdf.  Book was reviewed earlier  here.

Big Enough to Break Up

This is so sensible that I can’t imagine it will pass.

We urge the immediate enactment of the Too Big to Fail, Too Big to Exist Act, which directs the treasury secretary to compile a list of those financial institutions that are too big to fail in the next 90 days, and to break up these banks and insurance companies a year after the legislation is signed into law

You can sign Sen. Bernie Sanders’ petition for it.

Via Barry Ritholz.

Charity and money

Searching (of course) for something else, I found myself looking at Tom Johnson’s account of the recovery from the Johnstown Flood of 1889.  Initially, the community organized for its own relief, everyone was assigned a job and there was no quibbling over money.  But after a time…

To meet the problem of a community with no money was not easy, but we were presently confronted with the graver problem of a community with too much money. The greatly exaggerated reports of the loss of property and of human lives, the first press dispatches placing the number of the latter at ten thousand, brought a correspondingly great volume of relief. (more…)