Out of Pocket Medical Expenses
John Ford, a loyal reader who is an MD, submitted an op-ed to JAMA recently on the shortgage of primary care physicians. He received this comment from one reviewer:
If [the author of the op-ed] is suggesting that patients should pay more of their health care “out of pocket” I must object strenuously. Americans already spend a very substantial portion of their income for out of pocket medical expenditures. A 1995 Medicare survey indicated that Medicare beneficiaries spent 19% of their total income on out of pocket medical expenditures. No suggestion to “resurrect primary care” should come at the expense of the patient. (emphasis added)
The last sentence sums up a key part of the health care debate. Advocates of government subsidy do not want patients to bear the costs of their health care decisions. Opponents of subsidy believe the only way to restrain expenditure is for patients to bear at least some of these costs. Both views are consistent with the objectives of their proponents. The advocates of subsidy care mainly about redistribution. The opponents care mainly about efficiency.
By the way, check out this graph from John. It is easy to understand why health care expenditure is growing; fewer and fewer patients face meaningful incentives to economize.
Categories: My Blog
dfvazan
“The opponents [of gov't subsidy] care mainly about efficiency.” To this I would add that we also care about indivdual choice, real cost containment, quality of life and medical innovation.
One of biggest contributors to the explosion of insurance premiums is growth of the third-party payer. This has occurred regardless of the source: public or private; and framing the debate as pro-private insurance vs. pro-gov’t insurance is specious. Rather the argument has always been between the rights individuals and the power of corporatists.
Jess Austin
For those who can’t easily read ppt, here is the graph in a more convenient form.
bob
Any chance we could see that same graph in real dollar? I have a feeling that paying 55% of your healthcare expenses in 1960 is still less than paying 13% in 2010. But I could be wrong.
Adnan
Bob,
I was literally wondering the same thing when I saw the graph, buuuut I did some of my own mathing on the same data, and this is what I got:
http://spreadsheets.google.com/pub?key=tTLW2ITceT7JD9zVQe4pyuQ&single=true&gid=0&output=html
% of GDP and % of GDP per capita are equivalent here, so basically, it shows that we’ve been paying less (in real terms) over time. Doc’s got a point.
Adnan
And by less, I mean less in terms of out-of-pocket costs.
The opposite is most definitely true for total healthcare expenditures.
dfvazan
Whether the real dollar cost of out-of-pocket expense has modestly grown or sky rocketed, I regularly see the effect of insulating the patient from the true cost of healthcare.
New technology has produced a variety of diagnostic tests in the field of ophthalmology. If someone walks into my office with optic nerves suspicious for glaucoma, I can immediately order at least three tests, which I can repeat every six months, to help diagnosis and treat. If they are insured it is virtually guaranteed the patient will agree to the tests (they are immune to the cost anyway). If they are self-paying or have a high-deductible health savings account, we have a discussion about the value of the tests and the alternatives. If we choose to do the tests we will usually charge the patient a reduced fee.
I imagine this is happening in every field of medicine to various degrees. Cost consciousness and competition would provide a powerful incentive to actually “bend the cost curve down.” And it wouldn’t require a new entitlement system.
Anne Zuber
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Yours,
A.Zuber
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