2008 May 04 Sunday
Costs For Medically Insured Going Up Fast
Even those with medical insurance are feeling pinched by rising medical costs (unless you just don't get sick).
Since the recession of 2001, the employee’s average cost of an annual health care premium for family coverage has nearly doubled — to $3,300, up from $1,800 — while incomes have come nowhere close to keeping up. Factor in other out-of-pocket medical costs, and the portion of the average American household’s income that goes toward health care has risen about 12 percent, according to the consulting and accounting firm Deloitte, and is now approaching one-fifth of the average household’s spending.
In a recent survey by Deloitte’s health research center, only 7 percent of people said they felt financially prepared for their future health care needs.
My own take on it is that you have to get rich in order to be able to handle a severe future health problem. The more you can save up the better.
An interesting graph of consumer spending on food, housing, medical care, and clothing from 1929 till today shows that medical care now surpasses each of those other 3 categories in percentage of consumer income spent on it. Clothing and shoes have declined from over 10% to 3.6%. Food has declined from 30% in the 1950s to 13.1%. Housing is now at 14.4%. But medical care has risen from a few percent to 16.6%, surpassing the other 3 categories.
Part of this change is due to more treatments becoming available. The article relays the anecdote of a guy spending $400 per month on drugs for congestive heart failure. Well, those drugs didn't exist 40-50-60 years ago. You just got various maladies, suffered without treatment, and died.
Another change: declining costs for food and clothing freed up money to spend on other things even as incomes rose. People spend more on medical care because they have the money to spend.
The desire on the part of everyone to get the best health care possible is probably the strongest force pushing for a bigger welfare state today. Demographic trends in the US seem likely to intensify that push as a growing lower class of lower IQ people can't earn enough to pay for the time of much higher IQ medical services providers. Taxes end up as the tool by which the lower IQ folks get the buying power to get time from higher IQ people.
One of the reasons I expect US economic growth to slow stems from a growing use of taxes to shift more higher IQ people into service provider jobs for lower IQ people. People who provide services are not available to do research, product design, factory design, product development, and other work that creates new sources of wealth. This is probably one of the reasons why Smart Fraction Theory (and its refinement) seems to work.
We need to automate the provision of medical services so that higher IQ people spend less time delivering services and more time developing new products and services.
Update: The amount American consumers spend on energy is now about half what they spend on food. Consumers are going to have to trade off. Eat meat or drive a big car and go on long trips?
In the past three months, average consumer spending on energy came to $663 billion, or 6.5 percent of total consumer spending, according to Moody's Economy.com. A year ago, it represented 5.8 percent and in 2002, it was 4.1 percent of their spending. "If gasoline breaks through $4 a gallon by Memorial Day, that would mean spending on gasoline would have risen by $100 billion since the beginning of the year, or roughly the size of the tax rebate checks going out," says Mr. Zandi. "The rebate checks are going to pay for filling up our tank."
How will people weigh medical spending versus gasoline? Gasoline seems easier to cut back on. Get a smaller car. Take fewer optional driving trips
As bad as medical costs have gotten my guess is that energy costs will grow more rapidly.
With the price shock of 2007-08, spending on energy as a share of wage income has shot up above 6%, topping the 1974-75 and 1990-91 shocks to be the worst since the 1980-81 runup. Comparing the additional cost of energy to income growth (especially sluggish in recent years), the current shock is far worse than any of the three prior ones, Mr. Carson says.
We also need the lower IQ people to stop reproducing. What about isolating them in their parent's homes such as the hikikomori in Japan? It is like a prison and welfare state by another name.
I also see another incentive for taxing the wealthy: since their money is being used to support low IQ people, they might try to reconstruct society to discourage low IQ people to stop reproducing. They now think they are somewhat immune to them since some of them live in enclaves.
*** "One of the reasons I expect US economic growth to slow stems from a growing use of taxes to shift more higher IQ people into service provider jobs for lower IQ people. People who provide services are not available to do research, product design, factory design, product development, and other work that creates new sources of wealth." ***
In other words, the wealth of a society depends not just on how many high IQ people you have, but on many of those high IQ people are using their talents to produce things for sale in other markets rather than in our own.
It is not enough to have a flurry of economic activity going on - that activity has to be properly directed to creating goods for foreign markets. The mass immigration coming across our border, most of it of the low IQ variety, has created economic vibrancy, but only in the form of providing services to other Americans - new homes, restaurant service, cheaper hotel rooms, lawncare, etc. None of that is worth much in trade. That is why the US trade deficit has soared along with mass immigration.
The production does not have to be sold to a foreign market. Selling to a sufficiently large domestic market works just as well.
What doesn't work over the long term is buying from a foreign market without selling to any markets.
As for automating medical services, its interesting to see that two socialized medicine systems we have now (the VA and the military) are ahead of the rest of the country. The VA has spent a fortune on IT that has helped make the delivery of health care dramatically more cost-effective while raising the quality of care. Best Care Anywhere
As for the military, because the lack of a doctor draft has meant a chronic shortage of doctors and nurses, the military services have pushed many nursing duties onto enlisted personnel trained as medics (or corpsmen, as the Navy calls them). The most highly trained medics (such as Independent Duty Corpsmen) are able to replace doctors on remote bases or ships. The military is able to do this at a much lower cost than if they had to increase salaries to "market price" and they seem to do a good job maintaining a high quality of care. What's their secret? Instead of putting a doctor everywhere to diagnose and treat common ailments like, say, sinusitis, they have doctors write out protocols for the independent duty medics to follow. Like a teacher following a Direct Instruction lesson plan, its just a matter of reading the script...
126.96.36.199. IMMEDIATE ACTION
188.8.131.52.1. Administer pseudoephedrine hydrochloride (Sudafed®), 30 mg. 1-2 tablets P.O. q.i.d.
184.108.40.206.2. Instill 2 drops of oxymetazoline hydrochloride (Afrin®) nasal solution into each nostril b.i.d. Do not use more than 3 days.
220.127.116.11.3. Administer analgesics, as required, for relief of pain, acetaminophen, (Tylenol®) 650-mg P.O. q 4 to 6 hours.
18.104.22.168.4. CONTACT PHYSICIAN PRECEPTOR
22.214.171.124.5. Administer antimicrobial therapy:
126.96.36.199.5.1. If patient is NOT allergic to penicillin, give amoxicillin 500-mg P.O. t.i.d. for 10 days OR
188.8.131.52.5.2. If patient IS allergic to penicillin, give trimethoprim and sulfisoxazole (Septra®), 1 D.S. tablet P.O. b.i.d. for 10 days.
From The Air Force Independent Duty Medical Technician Medical and Dental Treatment Protocols
By allowing medics (or in the civilian world, Nurse Practitioners, Physician Assistants and, in Alaska, Dental Therapists) focus on the straightforward medical or dental issues, the few doctors available can focus on the tough cases.
There is no "market price" for the medical services in US. Simply because there's no free market - the health care is so heavily regulated that it could just as well be socialist.
Pharmas enjoy monopoly profits due to patent laws and their cozy-cozy relationship with FDA (which kills any nascent competition by erecting unsurmountable barriers to entry). AMA and mandatory licensing requirements effectively restrict supply of doctors (which drives prices up, economy 101), and establishes very high plank for qualifications (which means that highly qualified (and thus highly expensive -- need to pay off these med school loans!) doctors waste time on trivial conditions which in less fascist countries require only a trip to a pharmacy for an off-the-shelf drug). Hospitals run huge expenses on regulation compliance (mountains of documentation) and on providing service to illegals and other welfare freeloaders. Mandatory employer-based insurance makes it impossible for most people to tailor insurance to their particular needs - "one size fits all" is a rule - making it terribly inefficient. Finally, the regulations effectively prohibiting doctors to charge less for non-insurance paid visits eliminate ability to provide care to low-income people (other than mandated emergency care, and in some cases as charity).
And, no, automation won't help much; it is already regulated nearly out of existence (I have a friend who is a founder of a medical information and automated diagnosis company - he can't talk for a minute about his work without cursing the bureaucracy).