Health Care IV

I think that this is going to take four blogs.

Finally, if everyone agrees that we need to control the market by limiting the number of doctors and limiting who can build equipment and who can make drugs then we need to artificially control the price that can be charged by doctors, equipment manufacturers and drug companies.

This can be done in many different ways. The way that I found works well is by having the government offer guidelines to the standard price charged for any medical procedure. The doctors and health care workers do not have to charge this price, but they need to state on the bill how much their price compares to the government standard. When you file your claim, the insurance company can decide what the limit is, say 200% of the standard price. Also, doctors and health care workers agree to treat a percentage of their clients under the government price guidelines. This is the price they pay for operating under the government’s market protection. People can still pay more than the government price for superb care from outstanding physicians, but they also know how much more they are paying. If they feel like they are not getting their moneys worth they know that there are places they can go to get cheaper health care. The cost to the government would be less than it is today because they are currently paying catastrophic health care for uninsured people. The system still has capitalistic incentives, but it controls the cost through psychological and social means.

There are many other ways to do this, but unless we figure out how to control the cost while continuing to protect the market the prices will just keep going up.

Health Care III

I think that this is going to take more than three blogs.

So, maybe the cost of doctors isn’t the main cost of Health Care. In fact, the cost of medication and procedures tends to be the major cost of health care. Once again, regulation in the health care industry has effected the cost of the industry. By licensing and certifying equipment we limit who can manufacture and sell the equipment. The FDA approval of drugs limits who can manufacture and sell drugs and what they can be used for. The AMA certifies procedures, which limits which procedures can be done and who may do the procedures. So, if we want to lower the cost of health care we can lower these restrictions which will allow more people to offer the health care we need.

If you think that we need these protections then you need to realize that we need to pay for these protections. The cost is in the artificial control of these markets by regulations.

Health Care II

I think that this is going to take more than two blogs.

So, now we know that Health Care economics doesn’t work the same as ECON 101 supply and demand. This is because Health Care demand remains the same regardless of the price. People are sick and if they raise the price it isn’t going to make people well. It may make them go away – by dying. However, in a western society leaving people to die without health care is not a responsible option.

What can be done with our current health care system to limit the damage of supply and demand economics?

Since the major issue is that there is no downward pressure on prices. People need health care and the wealthy people will pay whatever it takes to make them better. It’s not like they can buy a doctor and they don’t need to buy another.

One way to do this is to increase the production of doctors. If medical schools had open enrollment and admitted as many people as wanted to attend medical school then more doctors would be on the market and the price doctors charge would go down. Unfortunately, the AMA has a lock on the number of medical schools and the number of doctors produced every year. This control over the production of doctors keeps the price of health care above what it should be.

Perhaps the reason for limiting the number of doctors produced isn’t a function of the number of students available, but instead it is a way to protect the society from less intelligent doctors. I would argue that protecting the society would be better served by allowing more doctors into the market and let their performance sort them out.

Health Care I

I think that this is going to take more than one blog.

First, let’s look at economics. Everyone knows that the law of supply and demand dictates economics. Products that have high demand are offered at a high price. Of course this means that the latest high tech gadget gets to charge a high price because there are so few on the market. Once the product is out there for a while manufacturing starts to pump out more and more products, in order to reap the profits. Of course everyone owns the new gadget and he or she don’t want to buy a new one. The price then comes down to attract the lower income people and the process continues by lowering the price and making more products.

This seems like a very nice economic model and many products fit this model. So, let’s fit health care into this model and see what the capitalistic US society does for us. In health care, we also have supply and demand. Doctors and hospitals supply health care and sick people demand it. So, when a new procedure comes out the doctors can charge a premium and the rich sick people who can afford it will pay the price for it. The poor sick people would like the same procedure, but they can’t afford it so they don’t get it. Some people who have insurance can get the procedure because their insurance will pay for it. In manufacturing the company will produce as many gadgets as possible to make a large profit, but in health care doctors can not just do more procedures to make the demand go down. In health care there are a set number of sick people that need one particular procedure. This means that no matter what the health care provider charges the people either get the treatment or they stay sick. This means that people will beg borrow and steal to pay for health care, because they don’t want to be sick. It also means that there is no incentive for health care providers to lower prices, only raise them.

If you read this and think that this is a very cynical view of health care then read this short story from my personal experience.

Back in the early 1980s I worked on the development of the Magnetic Resonance Imaging (MRI) procedure now used in almost every hospital. When I worked on it we called it Nuclear Magnetic Resonance, but the doctors didn’t want to use the word nuclear. When we were trying to sell our system we would have doctors and hospital board members come in and listen to our spiel. Sometimes we would have large groups and have presentations with questions and answers afterward. One of the more shocking questions were:

“Could we get the image out in black and white? Our doctors wouldn’t know how to deal with a color image.” To this question we said, of course you can, but the color image contains more information and could show subtle differences in water density. To this they said, “Our doctors wouldn’t know how to deal with this additional information, we would prefer to have the black and white image so that it can be read like and X-ray.”

Now, and MRI image deals with water density and an X-ray deals with the ability of body materials to absorb radiation. The images are very similar, but they do have subtle differences. Why a doctor wouldn’t be willing to understand the differences and be able to use the difference to his advantage was stunning. But as I learned later doctors are not encouraged to understand procedures because if they did they could be subject to malpractice suits. This of course means that US doctors will soon rank lower on the world scale of being able to use new procedures or develop them on their own.

But, the most shocking statement I heard was:

“So, you are telling me that this (MRI imaging device) can give us more information than standard X-rays and it is cheaper to operate. So, we can raise the price because it gives more information but it costs less – so we will make more money.”

And this statement has come true. It is much less costly to operate an MRI device and it gives more information and the hospitals charge 20 times more for the procedure.

Evolution

Evolution

Evolution is name used to describe the fact that successive generations of animals or plants survive because they are adapted to their environment. This is at work today just as it has been for the last 3.5 billion years. So, as we know, some people are sensitive to air pollution, resulting in them acquiring asthma. So, if children and babies acquire asthma because of bad air pollution and this results in them dying this results in less air pollution sensitive humans in the total population. Of course, people living in areas with clean air would not come down with asthma and the probability of them dying from asthma would be much smaller.

Evolution happens over thousands of years in most cases, although sudden evolution happens when an environment has a sudden change. For example, after an asteroid strikes the earth the dust kicked up into the air blocks the sun and temperatures fall. Some creatures and plants can survive the new conditions, while others can not. The plants and animals that evolve are the ones in which some of the young can survive because they have genetic advantage.

So, I was contemplating the evolution of the human brain. I thought back to the pre-agrarian human culture. People would gather nuts and fruits and save them and eat them until the next hunting and gathering expedition. Of course early storage techniques were not the best and early humans surely would have discovered alcohol along the way. Surely someone of these early humans being desperate for food would have eaten some of the spoiled food and discovered the effects. If these early humans were like many of us they would have craved more of the special juice. Adults would not have withheld the juice from pregnant women or children, because they wouldn’t have known the possible problems and the scientific studies that would one day tell us about. So, many children may have died from alcohol poisoning. Those with the lowest tolerance would be worse off. But, the issue of brain damage would also be relevant. Many children and even young adults would have been rendered incapable to raise families – only the strongest brains could survive. Strongest brain may actually mean biggest or smartest. A brain that could deal with alcohol and brain damage would be most likely to pass it’s genes down to the next generation. Over the years people many have gradually become smarter. When people didn’t drink alcohol they may have even been smart enough to invent better ways to make alcohol.

So, this brings me back to modernity. How will the human brain evolve over the next thousand generations? My hypothesis is that the human species will divide into two species. There will be a smart species – even smarter than anyone alive today. And, there will be a species that will be as smart as they are today. Well, those who currently drink alcohol and survive to pass their genes down to their children will select for the smarter children. Those who do not drink alcohol will only pass the same genes down to the next generation.

Everyone knows that Fundamentalist Christians and Muslims do not drink alcohol, so they will evolve into the group that doesn’t progress. Everyone else who drinks liberally will contribute to the further evolution of the human brain.

So drink up and salute Darwin.