Cato is shocked, shocked! To find wait times for care in the US.

The NYT reports on the differing wait times between high-cost cosmetic procedures in dermatology, and low-cost potentially life-saving screenings for melanoma and other skin cancers.

Patients seeking an appointment with a dermatologist to ask about a potentially cancerous mole have to wait substantially longer than those seeking Botox for wrinkles, says a study published online today by The Journal of the American Academy of Dermatology.

Researchers reported that dermatologists in 12 cities offered a typical wait of eight days for a cosmetic patient wanting Botox to smooth wrinkles, compared to a typical wait of 26 days for a patient requesting evaluation of a changing mole, a possible indicator of skin cancer.
...
Dr. Michael J. Franzblau, a dermatologist in San Francisco, said doctors typically charged $400 to $600 for a Botox antiwrinkle treatment, for which patients pay upfront because insurance does not cover it.

Meanwhile, doctors have to wait for health insurance to reimburse them for mole examinations, for which they receive an average of $50 to $75, Dr. Franzblau said.

What's then great is to see the "market solves all problems" types at Cato try to wrap their heads around this astonishing instance in which the market doesn't provide good for all and cute dancing little elves.

With regard to Medicaid, it's easy to see what's interfering with the price mechanism: Medicaid prices are set by state governments, and so they don't change to eliminate shortages (i.e., waits) the way market prices might. The same is largely true of private coverage: those prices are set by insurers, who mostly just track the prices that the federal government sets through the Medicare program
...
But then why would there still be shortages for patients who come with cash in hand? The price mechanism seems to be working for cash-paying Botox patients, but not for cash-paying ambulatory clinic patients. One possibility is that there might be spillover effects that affect cash-payers in markets dominated by third-party payment and rigid prices. But then wouldn't we see cash-only ambulatory clinics emerge to capture those customers? If not, that suggested supply constraints to Peter and me.

Oh yeah, it must be the influence of medicare to blame! If it weren't for the bad influence of those dirty socialists the private insurers would be reimbursing preventative care with gold dubloons!

Or, maybe, just maybe, the market doesn't provide goods equally between between socioeconomic strata. Maybe, just maybe, people who can afford 600 dollar botox injections receive faster more prompt care than the average schmo looking to figure out what some growth is. Maybe this is a sign that the profit-motive in medicine leads to shortages of care for more important needs and poorer patients as the profitable low-hanging fruit will always be more appealing than dealing with insurance companies and the average peons off the street who may not be able to pay their medical bills.

Cato can blame "markets dominated by third-party payment and rigid prices", and there is some truth to that, but the bigger problem is that fighting with insurance companies for reimbursement with their "mommy may I" and 10% routine rejection policies is a hassle. It's just easier to take rich people who want botox injected into their face than practice the routine preventative care that is critical for keeping healthcare costs down. It's a sign that our medical priorities are screwed up, the private insurance based system is not providing adequate care, and the right type of medicine is being discouraged. It's also ironic that as much as Cato complains about wait times in Canada (wait times for "emergency" cataract surgery - oh noes!), they aren't nearly as quick to judge a market systems critical flaws as those of a socialized one.

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If not, that suggested supply constraints to Peter and me.

But the inline link in that quote goes off to enumerate the costs of HealthCare regulation, not to the frobulation of the numbers attending medical and pharmacy schools.

We wouldn't want to have a glut of doctors and pharmacists down the line, because a mind is a terrible thing to waste (on poor people).

Come on down, H-1Bs and L-1s...

Correct me if I'm wrong, but aren't nearly all moles benign and nearly all cancerous ones not life threatening? I'm not exactly defending the wait discrepancy, but it isn't like this is breast or lung or prostate screening, cancers that kill lots of people, and that two-week difference could mean life-or-death. Personally, I don't think Cato needs to rationalize it, and you're getting pretty hyperbolic about their reaction (it's ok, hyperbole is fun).

Melanoma is actually a pretty serious cancer killer, although it is slow going. It is unlikely that one month will make a difference in survival. What I'm making fun of is more of a tendency of Cato to go after foreign countries for waiting lists - and suggesting things like cataract surgeries are "emergencies" (quick doctor - if we don't operate she'll be blind in 2 years!), while ignoring similar problems in our system.

Just because we have private care doesn't mean we don't have rationing, it's just for different reasons and a lot less transparent. One of the reasons we know about the socialized systems performance is that they spend a great deal of time tracking health metrics - electronic records help. However, there are not similar elements in the US healthcare infrastructure, very little electronic medical records etc, and then when someone does take a look at things like wait times it turns out we have similar problems - we're just ignoring it!

Then Cato is shocked to find a problem and a market imbalance that would make us anything like those dirty socialists. The fact is, every system rations, every system has delays, especially if you're poor, especially if you have to fight for approval for treatments, especially, if you have a crummy insurance company. The difference is our system is completely non-transparent, and we don't know how bad the problem is, whereas at least the socialists are tracking things and confronting them.

Don't get me started . . . Oops, too late. In the past few months a friend 1) suffered a detached retina which required immediate surgery. Her insurance company (her employer changed providers this year) is refusing to pay several thousand dollars of the hospital charges because the few hours that ensued between her examination by the surgeon and the actual operation made it a "scheduled," i.e. non-emergency, surgery, and the hospital was not part of their network, though the surgeon was. 2) Has just discovered that her primary-care physician is part of said company's "network," but the hospital at which he practices is not.

I cannot imagine that a single-payer system could be worse.

The real problem is with the insurance companies. The only two fields of uninsured medicine, cosmetic and corrective eye surgery, are also the only two fields that have had steady decreased in cost and increased in safety.
There is a market element to it, when people pay out of pocket they search around for better deals and doctors with better records.

Insurance charges people fees, just to ruin their ability to make effective cost profit analysis, only to then turn around and try to use every excuse possible to not pay for the very services they claim to provide. If you took the money that you would pay insurance from the age of 20 and put it in a brokerage account, by the time you reach the age where you would (on average) start having serious medical problems it would be more than enough to cover it (I know that most people refuse to save money, but I'm just saying its possible.)

In addition hospitals charge and spend money much more frivolously when they know that a third party will pick up 90% of the check. I think that if people were able to take their business elsewhere, like in a truly competitive market, then hospitals would find ways to cut costs and provide more efficient healthcare.

The business side of medicine does have a drawback though, emergencies. People don't have time to shop around when bleeding profusely. But even these people would still receive the benefits of a cheaper and more efficient healthcare thanks to free market prices. Emergencies are the exceptions though, most surgeries and procedures are planned and customers have plenty of time to look around.

But even in this scenario, the poor would be at a disadvantage. So just have medicare cover a percentage of the costs of non-cosmetic medical procedures. The closer you are to poverty, the closer the government gets to paying the full cost. On the plus side these people would also receive the more effective healthcare, and the government would be paying less money since, the free market keeps things competitive.

Thats just my opinion though.

By random guy (not verified) on 30 Aug 2007 #permalink

Mark,

It's a pity. No one pays with gold doubloons anymore...

random guy,

You miss the point of insurance. Just like buying insurance for a house that burns down, you don't buy it because you expect your house to burn down when you're 60, you buy it just in case it burns down. Though you expect you won't need serious healthcare until you're a geezer, truth is, it's an odds game. And do you want to live in a society where you are saving for healthcare, and then need a liver transplant when you're 25? What ? Haven't saved up enough in your healthcare account? Too bad...

Random guy, I'd like to see some evidence of that statement (The only two fields of uninsured medicine, cosmetic and corrective eye surgery, are also the only two fields that have had steady decreased in cost and increased in safety.).

Well, what you've quoted are the thoughts of two people who think the market mechanism works, trying to see why it's not working. Your own explanation doesn't really address their mental model, and it looks more worthy of italics.

I mean, let's look at what they're saying without pointing out that they're from Cato.

With regard to Medicaid, it's easy to see what's interfering with the price mechanism: Medicaid prices are set by state governments, and so they don't change to eliminate shortages (i.e., waits) the way market prices might. The same is largely true of private coverage: those prices are set by insurers, who mostly just track the prices that the federal government sets through the Medicare program

I don't think anyone really disputes this. Wait times are the result of having prices set by a mechanism other than the market. This could be, for instance, true need. So it turns out that in a socialized system people might have free access to any sort of medical treatment, but would need to wait two months for a Botox injection while they would get their mole checked out within five days.

But then why would there still be shortages for patients who come with cash in hand?

This is a perfectly valid question, regardless of what you think the ideal system would be. It's a matter of understanding what's going on. If there is a market mechanism, it should work.

The price mechanism seems to be working for cash-paying Botox patients, but not for cash-paying ambulatory clinic patients. One possibility is that there might be spillover effects that affect cash-payers in markets dominated by third-party payment and rigid prices. But then wouldn't we see cash-only ambulatory clinics emerge to capture those customers? If not, that suggested supply constraints to Peter and me.

So, what they're saying is that in markets with lots of insurance and Medicaid patients, *something* makes prices be more rigid, even for the segment of the market that pays cash. Is this true? Maybe, maybe not, it's certainly awfully vacuous. But it could be a good starting point for further research to understand what's going on. Again, this is regardless of what you think the best system is - it's important for the design of any system.

Their reasoning is that you should see "mole-checking" clinics that advertise their shorter waiting times and have no Medicaid/insured patients. Why don't they exist? You, Mark, don't really give an answer to that. Your own reaction is

Or, maybe, just maybe, the market doesn't provide goods equally between between socioeconomic strata. Maybe, just maybe, people who can afford 600 dollar botox injections receive faster more prompt care than the average schmo looking to figure out what some growth is.

This doesn't address their argument at all. Again, don't focus on their Cato-ness. Why aren't there doctors charging $200 to cash-only patients for checking their moles? It probably takes a shorter time than a botox injection. Why assume that only poor patients get their moles checked out? (In fact, it's probably not mostly poor patients, but mostly middle class patients, but that's another story). And I'm sorry, but the shocked rethoric seems to be coming from you more than them.

Maybe this is a sign that the profit-motive in medicine leads to shortages of care for more important needs and poorer patients as the profitable low-hanging fruit will always be more appealing than dealing with insurance companies and the average peons off the street who may not be able to pay their medical bills.

This is exactly in accord with their explanation! They are saying that insurance leads to longer waiting lines than the market. This is totally true. It also leads to people who could not afford a market price to get their moles checked, albeit in a longer time. So they pay, in a different way. But it still doesn't explain why there is no market provision of mole checking.

Now, I don't agree with Cato's ultimate goal. But that doesn't mean that everything they write is obviously wrong and biased. That's a big fallacy that you tend to fall into, with no need since most of your other arguments are generally good.

I'm not interested in addressing their argument because I find it generally vacuous. It's not really the point of the post. The funny thing to me is when the Catoites encounter a problem with the market, and do all these backflips to identify what's going on. It's like they've encountered some fascinating and hard-to-predict problem, when to me it's quite obvious what the problem is, and that it's been in existence all along.

It's like they find a wait time and say, "wow, who could have seen that coming, a wait time in a market system?" Meanwhile, I'm banging my head against the desk, remembering all their arguments against the Canadian system and rationing, and their complete ignorance of all the hidden rationing of the insurance-based system.

Yes you can construct a valid economic explanation for why this happens in our system. I think theirs is a little naive, scapegoats medicare, and ignores the inconvenience of interaction with insurers. But the funnier thing to me is that they are shocked, shocked! That there are wait times in American medicine and that rich people get seen sooner.

Firstly I know that the free market is not a panacea for all economic woes. It can't deal with monopolies or overtly public utilities like roads and power. But I don't think healthcare qualifies as one of these situations. Here you have individuals demanding a specific service that multiple businesses can provide, thats all thats really needed for a competitive market. The problem is that insurance handicaps competition.

factician,

I understand how insurance works, I'm just saying that healthcare is not a usual expenditure for most people until they reach a certain age. Before then you would be considered very unlucky to have one major health problem every decade. Everyone will have some health problems through out their life but most are statistically weighted towards the end of life. Paying into health insurance for 30 years isn't a sound investment plan.

You also completely ignored what I said reguarding medicare. I don't expect most people to pay the full amount of modern medical procedures. But by making the cost more direct and giving people more options outside of what some insurance provider will give, I think economic pressure will be enough to drive prices down and improve quality.

BTW; Why pick liver failure at 25? Why not tonsil removal as an example? I mean barring a hereditary disease anyone with a failing liver at that age has far more problems than health insurance can fix.

Barry,
I can't find the original article where I read that at so for all intensive purposes pretend I never said it. I won't try and back it up if I can't prove it.

But the American Society of Plastic Surgeons has some stats at their website.

http://www.plasticsurgery.org/media/statistics/index.cfm

From what I saw, adjusting for inflation, the price of generic plastic surgery procedures either have stayed the same or increased only slightly. As far as safety goes I googled several articles on the rising number of lawsuits but nothing on the actual safety of procedures. The former was mostly attributed to an increase in the overall number of people who are getting plastic surgery over the last decade. Corrective eye surgery seemed to have similar problems.

I know this wasn't the point I made earlier, but still its some interesting stuff.

By random guy (not verified) on 31 Aug 2007 #permalink

The problem is that insurance handicaps competition.

Hmm... how come Western nations with full insurance (eg, commie-pinko universal health care) pay less per capita than the US?

Universal health care isn't the same thing as insurance. My whole point is that insurance increase the price of health care beyond what it would be under a more competitive system.

Universal health care gets around that problem by just eliminating competition altogether (except for those rich enough to pay for HC through taxes AND privately out of pocket). Everything gets set by the government and the quality of your health care depends on whichever political party is in control at the time.

Many countries that currently have universal HC have had it since modern medicine came along. I believe England has had it since 1909. In the US health insurance has been around just as long as modern medicine. These are the only two systems that have been tried in large industrial nations.

I'm simply suggesting that are more options for paying for health care than just UHC and corporate health insurance. It may work better or worse than other systems, but until something else is tried we're stuck with a choice between these two basic systems. Both of which disenfranchise large groups of people in each country that they exist in.

I think that its messed up that this completely false dichotomy has been drawn up so that people only pick the choice that best serves their political or personal interests. Nobody seems to care that both systems essentially suck, and immediately shoot down any attempt at fixing either one as being automatically for the other system.

By random guy (not verified) on 02 Sep 2007 #permalink