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A tale of two covariates: Why OWID and company are wrong about US healthcare

randomcriticalanalysis.com

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Re: A tale of two covariates: Why OWID and company are wrong about US healthcare

#41

Post by rgbrenner »

atomic_rabbit wrote: post #33

The blog Random Critical Analysis has made a good argument that Americans spend so much on healthcare simply because Americans spend so much on everything. Healthcare isn't exceptional in this regard. If you replace the usual GDP per capita measure of income by a measure of actual individual consumption, the US lies right on the trend line, just with higher healthcare spending and higher overall consumption than ever…

The US healthcare system is not a free market. The pricing system--critical to any free market--is broken when it comes to healthcare. Customers are unable to shop on price (even for non-emergency care).. but also the AMA limits the number of doctors; and hospitals require a certificate of need (giving competitors a veto over new businesses), for example.

It isn't just that we spend more... if that was the only issue, then everything would be fine because we would be obtaining what we paid for.

But since it's not an efficient free market... the fact that we spend more only increases the urgency that we reform the system... since those inefficiencies become so huge in a system that accounts for such a big portion of GDP.

So while RCA's analysis might be perfectly correct... unless he also proves that the healthcare market is at least as efficient as a free market system... then we still need to reform it.

Re: A tale of two covariates: Why OWID and company are wrong about US healthcare

#42

Post by smt88 »

rayiner wrote: post #10
hdlothia wrote: post #6

Earlier quoted context omitted.

Can you explain the conclusion of this article to me? I don't fully understand what he is trying to say.what are the implications? That the only improvement we can make on the american healthcare system is to fight obesity better?

There are two points to the article. 1) Healthcare spending has rapidly diminishing returns, not only comparing the US to Europe, but comparing countries within Europe (such as the Netherlands versus Spain). 2) The lower life expectancy in the US can be explained mostly by higher obesity. US states with similar obesity to European countries have similar life expectancy.

Re: #2, my understanding from friends at the CDC is that lower life expectancy is due to lower incomes (meaning food, medicine, and doctor visits are unaffordable even with health insurance), suicides, and the opioid crisis.

Suicides and obesity can also be caused by low income and drug abuse, so it sounds like the author may be seeing causation where correlation is more accurate.

Re: A tale of two covariates: Why OWID and company are wrong about US healthcare

#43

Post by analog31 »

hdlothia wrote: post #6
jedharris wrote: post #2

Very long and well argued review of sources of excess mortality in developed countries. Bottom line: Obesity! and other non-medical factors like automobiles. Big implications about how we should spend money to increase life expectancy.

Can you explain the conclusion of this article to me? I don't fully understand what he is trying to say.what are the implications? That the only improvement we can make on the american healthcare system is to fight obesity better?

I'm not sure the article addressed it, but it appears that we could improve the US healthcare system by making it cheaper without losing quality, simply by letting another country run it for us. If there's no gain from spending more, then there should be no loss from spending less, assuming that we get to restructure the system accordingly.

Re: A tale of two covariates: Why OWID and company are wrong about US healthcare

#44

Post by rcafdm »

cma wrote: post #40
rcafdm wrote: post #39

Earlier quoted context omitted.

You absolutely can in real terms. https://randomcriticalanalysis.com/2019/12/03/no-means-no-th... Also while I agree that 100% of a GDP is a reasonable approximation of an upper limit in practice, that's not necessarily strictly true either. GDP measures domestic production, not the income available to residents. The income available to residents can certainly be much less than GDP (e.g., Ireland, Luxembourg, etc), s…

Since healthcare is priced into every salary, I'd expect at least some big portion to come through on non-imported goods (though if it was 2X it wouldn't on its own bring every other thing to 2X).

I’m not sure what you’re getting at. Obviously, healthcare must be paid for somehow and it’s a fair assumption workers bear most of the incidence. However, the role of real incomes and relative prices are generally under appreciated here.ie. It’s not so much that health benefits are something extra as part of total remuneration (ultimately a reflection of rising productivity elsewhere which frees up spending to be allocated to health and other services)

Re: A tale of two covariates: Why OWID and company are wrong about US healthcare

#45

Post by nradov »

rgbrenner wrote: post #41
atomic_rabbit wrote: post #33

The blog Random Critical Analysis has made a good argument that Americans spend so much on healthcare simply because Americans spend so much on everything. Healthcare isn't exceptional in this regard. If you replace the usual GDP per capita measure of income by a measure of actual individual consumption, the US lies right on the trend line, just with higher healthcare spending and higher overall consumption than ever…

The US healthcare system is not a free market. The pricing system--critical to any free market--is broken when it comes to healthcare. Customers are unable to shop on price (even for non-emergency care).. but also the AMA limits the number of doctors; and hospitals require a certificate of need (giving competitors a veto over new businesses), for example. It isn't just that we spend more... if that was the only issue…

Please stop posting misinformation about the AMA. It does not limit the number of doctors. The actual bottleneck is in residency slots, and the AMA is actually advocating to increase funding there.

https://www.ama-assn.org/press-center/press-releases/ama-fun...

Most patients are able to shop on price. The majority of insurers now provide web sites where their members can obtain estimates of out-of-pocket expenses for common treatments at network providers. There are still some gaps and room for improvement but most people are able to do price comparisons for non-emergency care if they want to.

Re: A tale of two covariates: Why OWID and company are wrong about US healthcare

#46

Post by nradov »

jedharris wrote: post #2

Very long and well argued review of sources of excess mortality in developed countries. Bottom line: Obesity! and other non-medical factors like automobiles. Big implications about how we should spend money to increase life expectancy.

Yes we are well into diminishing returns for medical interventions. Many of us are digging our graves with our teeth. While the USA seems particularly bad in that regard other wealthy, industrialized countries are on the same general trend line and will eventually face similar problems.

Re: A tale of two covariates: Why OWID and company are wrong about US healthcare

#47

Post by nradov »

hackeraccount wrote: post #30
rayiner wrote: post #10

Earlier quoted context omitted.

There are two points to the article. 1) Healthcare spending has rapidly diminishing returns, not only comparing the US to Europe, but comparing countries within Europe (such as the Netherlands versus Spain). 2) The lower life expectancy in the US can be explained mostly by higher obesity. US states with similar obesity to European countries have similar life expectancy.

I haven't looked at the numbers. Barely read the article. I bet he's wrong though. I would think it'd be a love affair with firearms (Fuck Yeah. ) and a lot of driving. Every time I read about weight the dangers of an extra 10 lbs. seem to be pretty ambiguous. Though I'm totally going to drop that 10 lbs. I only had 2 donuts today.

An extra 10 lbs isn't the issue here. The average American man is now 23 lbs overweight.

Re: A tale of two covariates: Why OWID and company are wrong about US healthcare

#48

Post by yellowstuff »

rgbrenner wrote: post #41
atomic_rabbit wrote: post #33

The blog Random Critical Analysis has made a good argument that Americans spend so much on healthcare simply because Americans spend so much on everything. Healthcare isn't exceptional in this regard. If you replace the usual GDP per capita measure of income by a measure of actual individual consumption, the US lies right on the trend line, just with higher healthcare spending and higher overall consumption than ever…

The US healthcare system is not a free market. The pricing system--critical to any free market--is broken when it comes to healthcare. Customers are unable to shop on price (even for non-emergency care).. but also the AMA limits the number of doctors; and hospitals require a certificate of need (giving competitors a veto over new businesses), for example. It isn't just that we spend more... if that was the only issue…

A post from RCA's blog a year ago addresses that more directly:

https://randomcriticalanalysis.com/2018/11/19/why-everything...

He argues very convincingly that high income leads to high health care spending very directly. Not only is the US not an outlier in terms of inefficiency, but he can't find any compelling examples of countries significantly improving on health care spending predicted by actual household income. (Other countries have better health outcomes, but not significantly less spending relative to income.) So while common sense indicates that there's lots of room to reform the system, analysis of data from around the world indicates that no one's been able to do much to avoid spending roughly a fixed percent of actual income on health care.

> The most successful cost containment regime in the OECD was probably the UK (NHS), which was perhaps an accident of history. They rationed particularly aggressively and managed to hold costs substantially below what we would expect for a country of its wealth for a few more years than usual.

> However, people (voters) ultimately wouldn’t stand for it, so this rationing effort was radically reduced (budgets expanded). Today they are much closer to expected spending levels.

Re: A tale of two covariates: Why OWID and company are wrong about US healthcare

#49

Post by jorblumesea »

rcafdm wrote: post #22
jorblumesea wrote: post #19

Earlier quoted context omitted.

> socialized healthcare system with the same spending is unlikely to provide any improvements in life expectancy. That's probably not true, because as the author pointed out, Obesity is considered an "external factor" but many countries with socialized medicine have programs to tackle these issues. Americans lack "preventive maintenance" programs that are a given in Europe. I think we all agree throwing money at the…

US also has "programs" and generally spends more on preventative medicine. Further, actual medical evidence suggests medicine doesn't have good treatments for obesity (getting people to lose much weight and keep it off), save the surgical inventions (which aren't used often enough to explain much). It's also clear that obesity rates are rising throughout the developed world despite rising spending. https://i1.wp.com/…

> US also has "programs" and generally spends more on preventative medicine.

These programs are often implemented by insurers with already healthy populations, such as large corporations. Hardly the populations that medicare supports. It's not surprising that Microsoft has good support for smoking cessation (and spends lots of $$$), but a mother of two working multiple jobs has no such access or funding.

> Further, actual medical evidence suggests medicine doesn't have good treatments for obesity

Depends on how you define "medicine". Are societal programs like healthy school lunches and subsidized healthy meals part of public health plans? Europe would agree, the US would disagree. Part of the issue is the US scope of interest isn't holistic.

Re: A tale of two covariates: Why OWID and company are wrong about US healthcare

#50

Post by scythe »

atomic_rabbit wrote: post #33

The blog Random Critical Analysis has made a good argument that Americans spend so much on healthcare simply because Americans spend so much on everything. Healthcare isn't exceptional in this regard. If you replace the usual GDP per capita measure of income by a measure of actual individual consumption, the US lies right on the trend line, just with higher healthcare spending and higher overall consumption than ever…

I think he hasn’t sufficiently explained the curvature in this graph:

https://i2.wp.com/randomcriticalanalysis.com/wp-content/uplo...

Drawing that curved line is crucial for making the US appear to be on-trend. If you simply use a linear correlation — which seems more reasonable from first principles — you reproduce the US as an outlier, albeit with a slightly smaller z-score. We do see a good fit on the log-log plot (but anything fits a log-log plot) but there remains at least the open question of why the proportion of healthcare expenditures should increase with absolute household disposable income. Even if this is a global trend, it is still clearly not a sustainable one.

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