The main issue is physician compensation. In the US, we pay physicians 2x over any other country. Too much IMHO. If we cut compensation by 50%, a lot of things would come into line. For that, we need single payer.

Wow, how much is the Atlantic paying Matt?

It's kind of pathetic to see how Social Security is once again predictably trotted out as the wingnut's bogeyman, but if Republicans think they can run on that Third Rail of politics in 2008, it's their funeral.

there are many more things we could do to bring down health care costs, as poed lib points out. this report does the best job of breaking it all down:

http://www.mckinsey.com/mgi/rp/healthcare/accounting_cost_healthcare.asp

Agreed that Medicare is a much more thorny problem, mostly due to rising medical costs, but if 2% of GDP is such a minor matter, why don't we just effect a cut in Social Security benefits amounting to 2% of GDP? We can start by mostly taking it out the hide of wealthy retirees.

To my understanding, there was a Social Security surplus some time ago but Congress appropriated it and spent it on other stuff. I don't understand, especially with the deficit-spending Republicans, why we can't just make Congress pay it back.

There needs to be public information ads shot to educate people about this recurring distraction.

I'm thinking of a spot with Samuel L. Jackson explaining: "When someone tells you that Social Security will be a financial catastrophe for the country, you need to understand that person is a lying motherfucker."

HEALTHCARE FOR PROFIT,That's the problem.Dr Frist and family want to make 20-30% profit for investers, To make matters worse they want to make 20-30% more each year,They know people will go without food to pay for heathcare.The Fix, Non Profit healthcare.Doctors don't make as much as one would think,The put in eight to ten years of learning before they start making money.Dr Frist and family are the problem.

Amanda:The reason Congress can't pay it back is because Haliburton is not going to give it back.

Does anyone read Robert Samuelson any more? He reminds me of a really boring uncle who, at the Thanksgiving gathering, drones on and on about some incredibly uninteresting topic. And it isn't just the subject matter—it's the monotonous, lecturing delivery. Just looking at his mug on the Washington Post Opinions page put me to sleep!

@ JohnJohn: Then can we get it back from Ted Stevens or Duke Cunningham?

For profit health care is a really serious problem. Until 1970 or so, all BCBS plans were non-profit. Then the wall street assholes figured out that if they bribed the trustees with huge bonuses the trustees would vote to make the plans for-profit. This happened over and over with BCBS plans, and also the same with hospitals. The trustees terribly abused the public trust, and enriched themselves massively at the cost of the great public good accumulated in these plans.

Health care should be set to be non-profit, at all levels.

And it isn't just the subject matter—it's the monotonous, lecturing delivery.

Don't you understand? That boring, tedious prose style is supposed to remind us that economics is a Very Serious Subject and Samuelson is a Very Serious Person -- unlike that dirty fucking hippie Paul Krugman.

Well if you liberal hippies would stop smoking pot, eating Vegan "food" and dropping acid every day health care costs would drop dramatically; then we could afford to bomb Iran.
There, that saved egbert from having to post today.

Kevin, of course, is right about social security.

To control health care costs, you need to control health care prices. That means not allowing specialists and drug companies to charge as much money as they currently do, and also eliminating insurance companies.

My family talked to a surgeon for under two minutes, and he billed for $360. Our insurance paid 90%, so we didn't make a fuss, but our economy can't fork over hundreds of dollars every time a specialist opens his eyes.

As far as social security being the third rail, that only happens when you propose solutions. Republicans are not going to lose any votes by saying that they will reform social security to make it better. They only will lose votes if they say how they are going to make it 'better', but they already know not to go that far. Ditto for tax reform, medicare reform, farm subsidy reform, etc.

The main problem with physician compensation is not that it is high (which on average it is), but that they are paid for piece work, which provides an incentive to proscribe more expensive drugs and procedures. They should be salaried, like most professionals.

“To my understanding, there was a Social Security surplus some time ago but Congress appropriated it and spent it on other stuff. I don't understand, especially with the deficit-spending Republicans, why we can't just make Congress pay it back.”

The Social Security trust fund (a.k.a the surplus) is full government bonds, which are used to finance the general fund deficit. It’s sort of like taking your life savings and putting it under your pillow. Then take it out and spend it, and put a I.O.U. to yourself under the pillow instead.

Does everyone understand the LAW?

The law states that all of the services provided to people who are not working (i.e. retired) must be provided by people who are working.

That is THE LAW.

Now we can get a bunch of robots or machines to do some of the work but it doesn't change the fundimental LAW.

So, if I am the only person working and Bill Gates and Kevin Drum are the only retired people then I can charge whatever I want. It doesn't really matter how much money Bill Gates has since he will be at my mercy if he needs to rely on me for services.

In short, society can not save for retirement.

If one standardizes for IQ and educational inputs, physician compensation is lower than compensation would be had those individuals gone into law or business. The Mckinsey report does not take this into account nor does it mention that labor compensation for everybody (docs, nurses, etc.) is not that significant a cost of the health care system percentage-wise (under 18%). A pay cut would have severely damaging effects on the quality of new doctors in addition to not getting us that much bang for the buck...

There is a problem however with how doctors are compensated. Due to it being procedure-based along with the litigation risk resulting in insanely test-oriented protocols, doctors almost always have an incentive, personal and legal, to order more health care. Thus, more docs lead to more health care costs-a positive feedback loop that should be broken.

Explain again, Kevin, how rising medical costs do not impact the cost of medicare?

I lost this point.

There is a problem with social security and it is not the demographics or the "shortfall" in 2042 or thereabouts. It is that the Republicans have spent the surplus that the baby boomers paid in to finance their retirement. As a result the Republican deficit spending of the last 7 years does not look as bad as it really has been. The problem is that in 2018 or thereabouts there will be no surplus and the trustees of social security will have to call upon the federal government to pay back the money it "borrowed" from social security. There are only two ways to do that: raise taxes or borrow more money from China. Of course the rich will say that they are already taxed too much and because they control the politicians, that means higher taxes on the middle and lower classes which will hurt the economy. If China lends more money it will justifiably want higher interest rates given the risk of default which will drive up interest rates for everybody putting a damper on the economy.The solution is to eliminate deficits and reduce the national debt but that would require recognition that "deficits do matter", spending restraint (including wars of convenience) and higher taxes on the rich now--which I will believe when I see it. Kevin is right that social security is much easier than medicare, but there is a real problem albeit one caused by the Republicans the avarice of the rich.

POed Liberal is 110 percent right. Of course, med schools charge high fees based on how much docs, especially specialists, get paid.

DC1974:"Then can we get it back from Ted Stevens or Duke Cunningham?"

At least San Diego didn't rename its international airport to honor Cunningham.

Law? I'm a lawyer. Doctors make too much money:-)

"Only 2% of GDP" is double what SS is costing now, and the paying population will be smaller. How are working Americans going to react when they see their SS tax double? When they realize that it doesn't mean that their eventual benefits will double; that instead their benefits, adjusted for inflation, won't be as large as current beneficiaries; and that their taxes are paying for loafing retirees. It's not realistic to expect Congress to act on something that isn't going to bite for another ten years or so, but when it does bite the SS/Medicare crisis will, in fact, be a crisis. You read it here first! Sort of.

The biggest problem is the runaway inflation in medical costs - driven by overconsolidation in the Pharmaceutical and Hospital conglomerate industries, and an abusive Intellectual Property regime (too easy to receive, renew, and recycle drug patents, they last too long, and are overly broad, which stifles competition and innovation).

Other problems include the abusive practices of the Insurance Industry and the protectionist practices (for Doctors, but not other medical professionals) of the AMA - leading to a shortage of qualified doctors (and what used to pass for qualified nurses - that's okay, they just lowered the standards, and replaced the nurses with what used to be called "candy-stripers").

Add all that together, and you have a parasitic industry that is sucking the life out of the entire rest of the economy. In any other industry, the market would respond, because that parasitic industry would be cannibalizing its own food source. However, demand for health care won't relax (the alternative is to get sick and die) - so the abuses continue, and the rotting corpse that is the American Economy begins to bloat from decomposition gasses building up inside - until it ruptures?

I am an engineer with a graduate degree. I put in just as many years of training as M.D.’s, and I can assure you the neither I nor any of me scientist or engineering friends make as much as the average M.D. Not particularly complaining (at least not much), just saying.

It is true the labor compensation is a comparatively small fraction of the total health care cost. The problem is how it gets leveraged in to the total cost. Physicians generate large incomes by prescribing expensive tests and procedures. The incentive is for a physician to recommend a $20,000 procedure just so he/she can take home their cut of a few thousand.

Personally, I don't find doctors to be overpaid, at least in terms of salary. A lot of the fabulously wealthy MDs one sees don't earn their money from fees for service; it comes from business income: profits from younger associates in their practice, ownership of things like labs or MRI machines, and running clinical trials for medical device and pharmaceutical makers.

Meanwhile, a typical GP or Internist churning through patients at a clinic in 15 minutes a piece is earning in the $80 - $100,000 range. You want to cut that in half? I don't know many people who would sign up for 8 years of postgraduate education (4 yrs med school, 2 residency, 2 internship) for the privilege of earning $50,000/year. You could pull down the same amount with some in-demand skills and a 2-year vo-tech degree.

There are a few ways one could bring down the cost of doctors' services: 1) Increase the supply of doctors by exanding medical schools; 2) Barring that, find a way to get people through medical school without asking them to take on $100,000+ in student loan debt; 3) Find some way to lower the costs of professional liability insurance.

Take the example of MDs in risky specialties, like ob-gyns or anesthesiologists: their debt service and insurance premiums easily add up to $5000/month. And that all comes on the heels of over a decade of low to no earnings.

I think a lot of people like to pick on doctors because they're the wealthiest people the average person personally knows. Carping about doctors' salaries is really just a distraction from where the real money is going: to insurance and pharma executives. Former UHG CEO Bill McGuire pulled down $1.6billion in compensation over the course of a decade. Add in what his executive colleagues got and you could add another $1billion to that figure.

Nate Levin: we already have rationing. It's based on one's ability to pay.

If the left were serious about encouraging lifestyle changes there are a few ideas that would show they were serious:

1) A 2% additional sales tax on fast food restaurants - defined as those that demand payment before serving the order.

2) Eliminating soft drinks, snack cakes and chips [the PepsiCo lobby] from food stamp eligibility, maybe the blow to the poor could be softened by replacing these items with soap and paper products.

3) A sin tax on advertising the afore mentioned items, with the proceeds to go to healthcare funding.

@ JohnJohn: Then can we get it back from Ted Stevens or Duke Cunningham?
Posted by: DC1974 on August 1, 2007 at 2:35 PM | PERMALINK

We can't invade Switzerland, and if we did, we wouldn't know which account to tap.

Of course, if we were allowed to waterboard these nice gentlemen, maybe they'd share their numbers with us?

Osama is right, patenting innovation for a generation and allowing infinite pricing needs to change. A "market" approach to patent length that rewards drug manufacturers for reasonable pricing and punishes predatory pricing is one adjustment to make.

Another is to require reasonable pricing if government funded research was involved in the drug's development. This was part of Dole-Bayh in 80's but has never been enforced. Meanwhile new drugs in my area, oncology, have gone from hundreds/month to thousands/months to tens of thousands of dollars/month over the last 25 years. The companies have no interest in the common good and simply gouge consumers because they can.

Lastly there is no culture of efficiency in medicine. It is cost plus across the board. PHARMA passes on the cost of marketing which easily exceeds their expenditures for research and production. Insurers take 30% of spending for their administrative costs. Worldwide the number is in the 15% range or less. Medicare spends under 10% on administration. Is it any wonder that insurance and drug executives make the millions to hundred millions in salary, bonuses and stock options.

Guess who pays!

SocraticGaddfly: "Of course, med schools charge high fees based on how much docs, especially specialists, get paid."

You ought to see what my cousin, a Bay Area pediatrician affiliated with the UC-San Francisco medical center, pays for her malpractice liability insurance policy.

In fact, she privately cites that equity-siphoning cost as her primary reason for retiring fom her practice by the end of this year at the ripe old age of 51. Instead, she's agreed to take a faculty position at San Jose State University, teaching anatomy to prospective medical, nursing and dental students.

Wapiti >'...I'm thinking of a spot with Samuel L. Jackson explaining: "When someone tells you that Social Security will be a financial catastrophe for the country, you need to understand that person is a lying motherfucker.""

Ah yes, truth

The green pill option (remember the The Matrix ?...)

"Laws are like cobwebs, which may catch small flies, but let wasps and hornets break through." - Jonathan Swift

fafner;
If a doctor screws up, a patient dies, the AMA covers for him, and his malpractice insurance pays off the victim.

If you screw up as an engineer - your bridge collapses, hundreds or thousands may die. Any clues as to what happens to such an engineer? Oh wait - that doesn't often happen? I wonder if that's because they're more careful, because they're more concerned about consequences. . .

Actually, osama, and I have a lot of respect for the engineering profession, and less so for doctors, there are a lot more unknown variables in medically treating individual human beings than there are in building bridges. Lemme know when the collapse of a bridge was caused by hard to identify materials inherited from two bridges which reproduced, which then raised a young bridge in an environment which no longer can be observed.

If you want to figure out a way to pay for rising medical costs, especially for the retired, how about a 100% estate tax on all wealth in excess of $50,000, until all Medicare benefits are recovered?

Does anyone have any insight into why Samuelson is so dishonest about these matters?

1) A 2% additional sales tax on fast food restaurants - defined as those that demand payment before serving the order.

Brilliant! There is *no* way for a fast food restaurant to modify their business processes in order to avoid *that*....

Actually I have worked for a number of medical device companies. When a medical doctor screws up the code of silence kicks in, the family is told the outcome was unfortunate, and it is usually harder than hell to establish liability. When a medical device engineer screws up the FDA orders a recall and essentially shuts your company down (the FDA regulates medical device engineers, but not M.D.s). Then some attorney will hit you with a phony class action suit charging you should have known better and not driven the stock price down. This is followed by an eternal discovery phase (endless copying of documents and depositions) till you pay the lawyer a few million to go away.

It’s sort of like taking your life savings and putting it under your pillow. Then take it out and spend it, and put a I.O.U. to yourself under the pillow instead.

It's more like replacing the money with an UOI to yourself, where the "U" is your grandkids.

We really should understand the situation doctors find themselves in before they get bashed too badly. Virtually any board certified specialist will have undergone a very lengthy training period in the United States, exceeding by a factor of 2X most other education regimes around the planet. Most of that time is spent in residency and then further specialization, which often has a fully trained specialist not entering their own practice until they are in their late 30s. I don't know of any other profession which has such a long apprenticeship program. Of course, this does help assure that the fully trained specialist really is equipped and trained to the fullest extent possible.

The question arises: Is this necessary? Foreign nations with national health insurance seem to produce outcomes equal to or better than we're achieving in the US. Are we producing a Mercedes-Benz provider under all circumstances when something a little less glitzy would suffice in more cases? Once the physician is able to hang those initials after their name they can up their fee structure automatically, even if it isn't necessary. If one demands the absolute best under all circumstances, then premium prices will follow.

It seems to me that if the Social Security Trust Fund had been invested in tradable commodities such as minerals, agricultural produces, etc then it WOULD have been easy to redeem it for cash to pay the retiring boomers.

Is this too simplistic? Somebody tell me what's wrong with this.

Somebody tell me what's wrong with this.

Risk.

PrahaPartizan: The question arises: Is this necessary? Foreign nations with national health insurance seem to produce outcomes equal to or better than we're achieving in the US. Are we producing a Mercedes-Benz provider under all circumstances when something a little less glitzy would suffice in more cases?

Good question. A related one is whether all the difficulties in getting an MD and completing residency actually produce appreciably better doctors, or whether they're just a barrier to entry. Note that I'm talking about effect, rather than intent. Other countries have a single 6 year program, rather than undergrad+medical school. What do our doctors learn that theirs don't? Anything useful? Lastly, school is tuition free in most other countries.

Residency is another absurdity. It seems like more of a hazing ritual, or playing hero, than an effective training program. Personally I don't like the idea of the least experienced doctors working with the least sleep. I know that a decent night's sleep improves my performance markedly, and unless MD's aren't human, I'm sure that it's the same with them.

And why are residents paid so poorly (especially the senior ones)? The claims that it costs $X/year to train a resident is suspect. They perform real medical services, and somebody is billing for it.

If (senior) residents were paid better and worked less heroic hours, then they could have a life before completing residency. It would also make it easier for older doctors to switch specialties.

Them and Us: A Capital Tax Plan

(Wall Street firms are expected to pay out a record $23.9 billion in bonuses this year.12/20/06 USA Today)

Place a one one hundreth of one percent Value Added Tax on all capital flows.
'Them' enrich themselves by taking a bite out of America's capital flows at every instance while 'Us', the creator's of this wealth, need Moms and Dads working multiple jobs to eat and provide the capital for this system.
As our capital washes around the globe for economic enterprises, both good and bad, and hedging and currency (and other asset) speculation, there is no reason Us couldn't charge a way tiny `rent' for this resource.
Social Security and Medicaid could thus be amply funded and capitalism would manifestly not miss a heart beat.

Bosco,

Basically what happens now is the SS trust fund is invested in the economy as a whole (the gov dopesn't stuff the money in a mattress they spend it on stuff) The only way the trust fund has problems is if the US economy doesn't grow. All your doing is the same thing only investing in a smaller part of the economy.

Although I can always anticipate the readership's response to a post regarding healthcare, the ignorance on display never ceases to amaze me.

Doctors are the problem? We get paid so much it's breaking the system? It has nothing to do with the record profits of the private insurance companies? Forget about the multi-million dollar salaries of the HMO company CEOS, it's the damn doctors who're ruining it for everyone.

Look, the average doc in this country enters practice $100,000 or so in debt from college and med school. God forbid they try and make a salary that allows them to pay that off and still live the comfortable life one might hope to live after 4 years of college, 4 years of graduate school, and at least 3 years of post-grad training.

For Christ's sake, I'm a doctor who spends his days pining for a single (government) payor system, but reading this drivel makes me sick. Pick your enemies wiser.

Or, you know, pick your enemies in a more wise fashion...Whichever is correct English.

jb -

I am sure you are as frustrated as any of us are. Yet the fact remains, medical doctors in the U.S. earn between $200k and $300k average, about twice what doctors in other western industrialized nations earn. I know there are many dedicated docs that earn less (God bless them), but the fact remains we are short on nurses, short on PA's, short on family practitioners, short on rural physicians, and long on specialists. I am tired of the long hours and high med school costs being used as a justification. We need to push for increased medical school enrollments and more grants to medical students with the proviso they go into family practice and/or a few years of public service, but I don't see the medical profession supporting even the most basic reforms. Even such a basic thing is reforming residency is a real fight. I wouldn't take my car to a mechanic who hasn't slept in two days, why would I want a resident working on me who hasn't.

My model for change is to gradually lower the age at which Medicare kicks in, slowly shifting the employers' medical benefit expense from subsidizing and underwriting the oldest employees to a Medicare tax for all employees, perhaps also increasing the medicare employee contribution for the still working people being covered by Medicare. This predictable schedule would allow insurance companies to shift their business models to that of offering medical management services, supplimental insurance, etc. Currently, Medicare supplemental insurance offers only co-pays for the services covered by Medicare. I believe the legislation should encourage multiple tiers of additional insurance from partial co-pays to additional features such as "experimental" bone marrow transplants, private rooms, covering home health care beyond Medicare's time limits, etc. I'd call this single payer plus. It dosen't kill the insurance industry. It doesn't micro manage the health care providers. It ges the employers off the hook. It gives the consumer choice. What do you think?

Lindata: That's roughly how French and German medical insurance works. Taxes from individuals and businesses support the basics and individuals or businesses can then choose to purchase additional insurance.

fafner1: Last year the average U.S. primary care doc made about $155K, the average U.K. primary care doc made around $175K(1), and docs in other western European countries had similar incomes(2). In terms of purchasing power, the European docs were probably doing somewhat better than their American counterparts and, I believe, actually working slightly fewer hours. Specialist compensation seems to be about the same although there are definitely more specialist in the U.S. Educational and licensing requirements are also just about the same.

I haven't run across anybody -- the AMA, the "medical profession", etc. -- who seems to be interested in decreasing the number of medical school graduates. There was a flurry of new medical schools opening in the 1970s, but not much since then. There have been a few off-shore, for-profit schools opened, including one on-line school in Aruba. The U of Fla and U of CA have each opened a school. CA is kicking around the idea of a second new medical school too. Your state legislature is the place to go to encourage more spending on medical schools (and higher education in general). About 25% of newly licensed physicians each year in the U.S. are trained in foreign schools; predominately India and the Philippines, but also eastern Europe, Africa, and Asia. It's doubtful that the AMA is controlling the access to medical schools in India....

Having actually done a residency, I can assure you that residents work long hours (and then go home and study) and there are a few short nights, but it's not quite as grim as you portray. We were limited to working 6 days and 80 hours per week. Most hospitals are not teaching hospitals and most physicians are not residents. However, just about all physicians work nights, weekends, and holidays from time to time. That's the nature of the business. If you search for articles about residency in the various professional journals, you'll find that "reforming residency" really isn't much of "a fight". There is a lot of interest in improving medical education.

1)http://news.scotsman.com/topics.cfm?tid=510&id=623242006
2)http://www.oecd.org/dataoecd/53/11/38976572.pdf

It's not exactly the doctors who are at fault, nor even the hospitals, for high medical costs. A large part of it is due to the perverse incentives of the current insurance system. Insurance pays not for practicing medicine but for performing procedures. The doctor makes more for giving you a flu shot, even if you are not in a high-risk group, than he does for counseling you to wash your hands and avoid confined exposure to someone sick. The hospital makes more from a CAT scan than from an X-ray, so to pay for that new imager, suddenly every diagnosis needs a CAT scan to confirm it. Same thing with drugs. HMOs get a better discount for the newest wonder drug and can charge a higher copay. Et voila, you find that your old proton-pump inhibitor, which worked fine on your reflux disease, has been replaced in the pharmacopoeia with the latest purple pill.

Eric K, I do not know if you are still reading this, but I disagree with your analysis. The government using social security trust funds to buy bullets for soldiers in Iraq, to pay health benefits for Congress members, to support Cheney's office etc is not an investment in the US economy. The only way it can be considered an investment is that raiding the surplus has tended to reduce interest rates and, of course, made the tax cuts for the rich appear less fiscally irresponsible. Perhaps Al Gore deserved to be mocked for some of the things he said in 2000, but his idea of a "lock box" was not one of them. Bosco is exactly right that diversified investment would have avoided the problem, but that would not have suited Dumbya's giving the rich multiple tax breaks.

Wow, for a second I thought this was a Dean Baker guest post!