How much medical care does society owe Americans that they could not otherwise afford? It’s not a philosophical question, such as how many angels can dance on the head of a pin. This question plays out every day. For instance, I have an Obamacare plan with premiums of more than $7,000 a year with a deductible that’s more than $8,000. Basically, I pay premiums for coverage that affords me very little benefit and the premiums are probably triple what they should be so that a few enrollees can get more medical care than without my subsidy. I probably pay a health care subsidy of $3,000 to $5,000 annually towards other peoples’ health care in addition to the income taxes I pay separately that goes for Medicare, Medicaid charity care.
The fastest growing area of drug expenditures are for specialty drugs. Specialty drug is the name given to any drug that costs more than $18,000 a year, but some drugs costs far more. The most expensive drug is a hemophilia drug that costs $3.5 million for a one-time dose. The top five most expensive drugs cost more than $2 million for a one-time dose. There are four more drugs that cost just over $1 million annually. Indeed, about half of all prescription drug spending is on hyper-expensive medications that few people need.
Before Obamacare health plans could stop paying after, say, $500,000 in a given year or lifetime spending of $1 million or more. The Affordable Care Act put a stop to annual caps and lifetime caps on benefits. That is essentially why we now have drugs that cost $1 million a year or $3.5 million for a single dose. The fact that insured patients do not face a hard budget constraint when it comes to expensive medical procedures is partly what is driving excessive medical spending. It’s not just the fact that patients are able to consume medical care they otherwise could not afford. It’s also that they are not price sensitive, demanding expensive care that offers very few benefits because they bear little of the cost. Price sensitivity is especially low in life and death matters.
Life-support machines can keep patients alive in a vegetative state. In some cases these machines keep patients technically alive for months or even years. The Wall Street Journal wrote about ECMO machines, that oxygenates blood and removes carbon dioxide, performing the work of lungs.
After Covid-19 ravaged the 51-year-old’s lungs in July 2021, doctors at a hospital in Phoenix used a machine known as an ECMO to keep him alive. His condition got worse. The next month, a doctor brought up how badly he was doing to prepare his wife for the possibility that continuing ECMO treatment might become futile.
The machines are often used as a bridge when heart-lung transplant patients need time to recover. There are times, however, when patients are unlikely to recover yet the machines keep them alive. That raises an ethical question: how much is too much and when it is time to let go. More from WSJ:
The machines are meant as a bridge out of crisis, to recovery or a transplant. But some patients have lived on them for more than 600 days. And some patients deteriorate past a point where they could live without the machines. Doctors then have to make ethically and emotionally difficult decisions on when to withdraw ECMO support. In some cases, they work with family members and patients to select a date.
Some patients on ECMO machines are alert, conscious and may even be able to converse with family members. Does that mean hospitals have a duty to house patients for years on ECMO machines? What about skilled nursing facilities: should nursing homes be required to buy these machines and keep people alive tethered to a machine? If so, who is going to pay?
“What is so different with ECMO is that you can be living in a way you might find acceptable. And we say it has to end,” said Dr. Daniela Lamas, a pulmonary and critical-care specialist at Brigham and Women’s Hospital in Boston. “That is wild. Who decides what kind of life has quality?”
About 90% of people have health status that is good, very good or excellent. The remainder have health status that is fair (8%) or poor (2%). Data shows that 20% of the population accounts for 80% of health expenditures, while 5% of the population accounts for about half of medical spending in any given year. By its very nature, the vast majority of health insurance premiums (and Medicare spending) is on a small segment of the population.
The United States spends nearly 20% of gross domestic product (GDP) on health care. Should we spend more? We could spend our entire GPD on health care in useful ways but that would leave nothing for housing, transportation, entertainment, food or clothing. In the coming years should Americans adapt to dorm-style housing, with communal bathrooms; and trade private car ownership for public transportation so that more of our GDP can go for extreme medical care? It’s an important question. At some point Americans will have to decide how much of their standard of living they are willing to sacrifice for more expensive medical care, much of which won’t benefit them.
“At some point Americans will have to decide how much of their standard of living they are willing to sacrifice for more expensive medical care, much of which won’t benefit them.”
Which implies that health care must be rationed by some means, or otherwise intelligently allocated, so that the greatest needs are met first. Which also means that other needs will go unmet. About the most compelling argument I’ve heard against that point of view is that “A nation that can put a man on the noon surely has the resources to provide health care for its citizens. Which of course is not very compelling at all. It implies that health care has first call on every dollar of government resources which is impractical, legislatively and otherwise
Reminds me of this, from George Bernard Shaw in about 1910, in the preface to his play “the Doctor’s Dilemma” –
“In legislation and social organization, proceed on the principle that invalids, meaning persons who cannot keep themselves alive by their own activities, cannot, beyond reason, expect to be kept alive by the activity of others.
. . . The theory that every individual alive is of infinite value is legislatively impracticable.”
Dr David Owens, then head of the British NHS, said in 1975 “The health service is a rationed service. There will never be a government or a country that has enough resources to meet all the demands any nation will make on a national health service.”
All one needs do to see the truth in these statements is to study your own municipal budget to see the shrinking numbers of police, fire, public works and other essential town services. Yet overall taxes have gone up. Find out where the difference is being spent. You should not be surprised at what you find.
More than 100 years since Shaw’s observation, and nearly 50 years since Dr Owens’, politicians and the general public still believe the fallacy that infinite output can be achieved with limited input (e.g. perpetual motion) if only enough money is spent to achieve it. Madness.
Economics is the study of the allocation of scarce resources. All finite resources are rationed including health care. In most areas of life, prices are used to ration goods and services. In health care we used insurance companies to ration services and try to inhibit them when consumers complain. An example is the weight-loss drug, Wegovy. Health plans are doing their best to avoid paying $1,000 a month for every enrollee who is 30 pounds overweight. By contrast, Novo Nordisk is doing everything it can do to make Wegovy a drug that every health plan has to cover. If consumers had to pay out of pocket for Wegovy, the price would fall to a fraction of the current price.
I like the questions that Devon is posing, and I like the observations added by John F.
I would add one note of skepticism and one historical observation…
1. I would be cautious about assuming that life-extending care is the main driver of USA health costs.
Even if life-extending care was successfully rationed, (no small order), we would still be spending billions on knee replacements, cataract surgery, Parkinson’s, and a long list of treatments that are not new and are not considered aggressive.
I suspect that our undramatic spending on the normal features of old age may be more than our spending on specialty drugs. I am just not sure.
2. When it comes to keeping patients alive at great cost, remember the huge uproar over Terry Shaivo. When some doctors (and her spouse, I think) proposed pulling the plug after she was vegetative for 15 years, a whole lot of people (including conservatives) fought against that. Americans are absolutists about these matters.
I don’t know Bob, Devon is complaining that he is spending money on health insurance and because he and his babe are healthy they are not getting their money back. I don’t think Devon considers that insurance is to pay for an unforeseen illness, claim, or expense. I guess maybe what Devon wants to do is run expensive cat scans while he is healthy to help him emotionally.
Devon isn’t bitching how much auto insurance costs and he isn’t getting his money back. That sounds like something a hick would say instead of some Ph.D. healthcare policy wonk. It helps people understand just how lost Devon is. Normal W-2 employee mentality.
Also Devon, In 2010 our Individual Medical (IM) Lifetime maximum was $8 million and everybody was multiple million. You are repeating Liberal LIES because you have NEVER sold in the real world. I have my eagle eye on you!
Ron, health insurance is not an investment I want to profit from. I hope to look back on December 31st of each year and wish I’d not bothered to buy health insurance that year. If I were not afraid of an unforeseen illness and the crazy list prices in health care, I’d probably take my chances.
One complaint is that I’m charged far, far higher than my actual health risk due to public policy that prefers to redistribute income using a convoluted, inefficient mechanism. My other complaint is that same public policy (ACA) chooses to finance research and care for rare diseases using the same poorly designed mechanism, backed up with no budget constraints.
I think that Devon does have a legitimate beef about his premiums being too high.
Before the ACA, healthy persons under age 65 paid relatively low premiums. I administered plans in 2008 for 60-year olds that had premiums of $500 a month with a $250 deductible.
But only if you were healthy. The ACA swept away all forms of underwriting for individual coverage. Healthy people were hit with huge premium increases…..and people like Devon are still paying the price.
Jonathan Gruber said that he felt no sympathy for people who before had “won the genetic lottery” and now had lost their low premiums. Gruber is a ninny, of course, but in my opinion the real point is this:
Going to guaranteed issue costs a lot of money. This cost should be borne by generally higher taxes, and NOT by slamming healthy people with higher premiums.
Of course Republicans would reject higher taxes, so Gruber and his pals tried to sneak by and still get their reforms, using premium increases.
Gruber basically admitted he designed Obamacare is such a way that people would support it against their own self-interest due to ignorance. His take on the role of genetics is equally elitist. The late Victor Fuchs wrote about the difference between the health status of people in Utah and Nevada. The former has a lot of residents who are Mormon, while the latter includes Sin City. It’s not just genetics that determines medical needs as people age (although a recent study did find for very old people you need good genes).