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TMFBent (99.85)

Google and Yahoo do their part to keep healthcare costs rising

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November 12, 2009 – Comments (6) | RELATED TICKERS: GOOG , YHOO

Incredible. One of the main reasons healthcare costs keep heading through the roof is that Doctors are under constantly increasing pressure from their patients to give them drugs they see in ads. “Ask your doctor about Greedoxiacil! The little yellow pill that buys yachts for our CEO!” Since doctors don't have the time to undo the indoctrination the drug companies and advertisers have put over on gullible consumers, they often just roll over.  Insurance companies can do little to fight the effects, because even when they institute co-pays to try to nudge people into taking on lower-cost therapies or generics, the drug-makers distribute coupons to doctors or via other means to nullify the co-pay, making it seem to consumers that the name brand, or the latest thing, costs the same as the alternative. Of course, behind the scenes, the insurance company might be forced to pay 10x as much to cover the expensive drug that the person doesn't likely need. But since that cost is hidden to the consumer, they stupidly assume they don't pay it. Until health insurance is too expensive, because of course, these costs get passed on to consumers through rising premiums. But at that point, there are 7 degrees of separation between the consumer's behavior, the drug companies greed, the doctors' complacency, and the greedy media, including Google and Yahoo! who want a slice of the advertising revenue, never mind that drug advertising is restricted for perfectly sound reasons, and never mind the obvious contribution to the health care problem that threatens to bankrupt the country. Yahoo!, you get a pass because you never claimed to be anything other than evil. But Google, this is just more proof that you don’t walk the walk.

6 Comments – Post Your Own

#1) On November 12, 2009 at 5:19 PM, davejh23 (< 20) wrote:

I think better drugs are a big part of the reason healthcare costs have increased so dramatically.  You would think we would see the opposite, but that's not the case...while drugs can prolong life, they don't necessarily maintain quality of life.  Blood pressure medications alone are extending the life expectancies of many obese Americans by decades...decades full of prescriptions, diabetes supplies, and expensive medical care for other related ailments.  I think Congress has the right idea...discourage research and innovation, ration care, and costs will drop dramatically...along with life expectancies.  I'm joking about this, of course.

Actually, life expectancies are expected to shorten for the next generation due to childhood obesity.  No matter how healthcare is reformed, there needs to be a focus on wellness.  Aging boomers are going to put a massive burden on our healthcare system, and that will be followed by an inactive, and generally unhealthy, generation.  CBO estimates for the cost of healthcare reform are probably a fraction of what actual costs will be. 

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#2) On November 12, 2009 at 9:18 PM, TMFBent (99.85) wrote:

No matter how healthcare is reformed, the primary need is to connect the consumers of healthcare with the actual costs. Drug company advertising, couponing, and other scams routinely con consumers into opting for more expensive drugs that offer little or no real benefit over the competing generics. There's a great story on This American Life about this, where a coupon convinces a guy to opt for a $600 acne medication versus a $100 one, the only difference being once a day dosing versus two. There are similar stories about name-branding and hawking of drugs since gone generic, but coupled with $3 worth of facial towlettes, and marking up the package to hundreds of dollars.

If consumers paid attention to costs, consumption would change. But insurance companies cannot get consumers to do this because the minute they try, they are accused of rationing healthcare. Patients routinely side with their doctors during contract negotiations between providers and insurance companies, because they know their doctors, and they don't know what their insurance companies pay. Later, when the insurance companies crank up the premiums to cover the cost the hospitals and other providers have extracted from them, the consumers blame the insurance companies.

Job one is to get rid of the blinders. No one can expect people to engage in rational economic behavior if they're not given enough information to act rationally.

Sj

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#3) On November 13, 2009 at 2:15 AM, ahobbs (< 20) wrote:

Totally agree.  We've allowed too many hands in the cookie jar for far too long in such a convoluted system.  It's health INSURANCE, people.  Insurance from what? It should be insurance from financial ruin in a major event, IMHO.

People should be taking responsibility for routine visits and medications.  Instead, we have insurance companies stepping in the middle – and I’m sure they don’t do this service for free…

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#4) On November 13, 2009 at 7:04 AM, TMFBent (99.85) wrote:

This again is a spot where the TAL story is very interesting. Health insurance has basically made its own bed (and we've been the co-conspirators). Can I mix any more metaphors in there? Oh, the providers have been fixing the meat pie as well.

Insurance was originally developed as a way to encourage people to consume more health care. The reasoning was that no one went to the doctor back in the day (early 20th c) because it cost a lot of money. But you could talk people into paying a small amount each month with the payoff being those medical visits then didn't sting so much. This increased the consumption of health care, turning us from a population of people who never went to the doctor, to a population that now expects pretty much free medical care, on its own terms, with any efforts to control costs deemed "death panels" or "rationing" or some other alarmist buzzword.

Providers (hospitals were just getting going back in the day) were also enthusiastic about insurance because they only had to take small discounts to their everyday fees, but could make up the difference, and then some, on the increased volume.

What happened over the decades is that no one considered what the end game would be when some therapies to save lives grew so expensive that they would bankrupt even a relatively rich family, while at the same time those therapies became expected, demanded, no matter what the cost.

And here we are. The providers don't like getting squeezed on their take home, because doctors are used to a certain standard of living and esteem, and no one wants a pay cut. Insurance companies want their (thin) profits, so they squeeze providers for whatever they can get (sometimes winning the battle, sometimes losing), and jerk up premiums to cover the insane cost of medical care and pricey therapies.

Consumers don't want to pay up for those premiums, yet when it's their turn at the hospital or pharmacy, they want the most expensive healthcare they can get; they want every expensive test available just so they can feel good; they want the newest, most expensive drug, because after all, it's their life, or their loved one's life, and they don't have to pay the bill.

Our bone-headed legislative solution for now seems to be to avoid all the difficult issues of price control, ignore the reality that health care has to be rationed, has always been rationed, and will continue to be rationed -- just in a horrible way, by disconnecting the consequences from the payers. We'll also, it seems, continue to pretend the problem is insurance companies alone, promise everyone health care coverage without mandating any consequences for those who won't pay and join the insurance pool, and simply try to tax our way out of the uncontrollable costs.

It seems only the U.S. congress could envision a system that keeps most or all of the current system's failings, and adds new ones.

Sj

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#5) On November 13, 2009 at 3:14 PM, ahobbs (< 20) wrote:

Amen -- but unfortunately it's not limited to healthcare.  I'd lump financial institutions and the judicial system in there too, to name a few.  Massive bureaucratic institutions that create layers upon layers of complexity designed to make their products inaccessible to the masses, just so they can make a buck...

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#6) On November 13, 2009 at 6:07 PM, MKArch (99.66) wrote:

Amen brother Seth! The real problem is there is no incentive for doctors not to require a test for which there is a 95% chance you don't need or prescribe a treatment for which there is a 95% chance you don't need. But there is every incentive in the world for the to push these tests and treatments. Nobody is going to thank them for saving money but all hell will break loose if they crap out on the 5%. Yesterday's cutting edge isn't good enough everyone is entitled to todays cutting edge.

The real issue for health care is we have been groomed to expect more than we can pay for. Unfortunately the current solution is have the government guarantee just that. God help the people who eventually get stuck with the bill... Oops that would be me.

 My solution besides the usual tort reform and stream lining regulations. I'd allow the insurance companies to provide a kind of pay as you go system.  For a reasonable premium you agree to pay for services up to some max. amount say $10K or $20K but the insurance company foots the bill and you pay the insurance company back over time at agreed upon terms and the loan is not dischargeable in bankruptcy.  This would encourage responsible behaviour and put the burden of deciding to opt for belts and suspenders back on the patient. How much is belts and suspenders really worth to you?

Mike

 

 

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