Off-topic: Government healthcare proposals

On Nov 11, 6:38 pm, "Bill" wrote: On hospital billing departments and medical bill collection agencies:

I know this may sound argumentative, but I have the impression from reading articles over the last few years that since (1) time is money and (2) billers (hospital billing departments or collection agencies) know that the nominal fee listed on a bill is purposely bogus (being way more than the usual insurance company contracted fee for one), they reduce what they are trying to collect from the uninsured almost instantly.

For non-medical bill collections, what you say makes sense.

Sorry, I do not want to argue. I am trying to emphasize the importance of people with medical bills calling the billing source and asking for a reduced bill from the get-go. It might remove a lot of stress.

I do not know whether it is unfair, because I remain uncertain whether the uninsured or the insured end up paying more for the same procedures, averaging over each group. My rough impression is that the insured end up paying more, on average. Hospitals etc. milk the insurance companies to the best of their ability.

One point that should be studied is why so many other industrialized nations are able to provide universal coverage for their citizens at considerably less cost than in the USA. It would seem reasonable to learn from what those nations are doing right. If one corporation discovered that a competitor was building better mousetraps for half the cost, wouldn't that company look closely at the other's methods and then re-design their own product?

I agree completely. It is amazing how quickly that happens in industry and how slowly, if ever, in government. We are not trying to solve a problem that has never been solved.

It is the same situation as the poor U.S. performance in education compared to other industrialized nations. When so many others have found a way to do better and their solutions are an open book it should not be too difficult to improve our system.

That depends.

For example, many other countries have lower prescription drug costs than the US does. What magic, better solution do they have? Why, capping the cost by government fiat. In other words, they are parasitically free-riding off countries without such caps -- primarily the US. And sure, the US could slap price controls on drugs as well, but then I hope we're all happy with fewer new drugs, becoming available more slowly.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Most single payer national health plans, consider Canada as an example, are importing virtually all of the prescription drugs used in the country. The Canadian government has no way to impose price controls on U.S. and European pharmaceutical manufacturers. The vendors are free to not sell to Canada unless the Canadian government meets their price.

Why are ethical pharmaceuticals so much cheaper in Canada than in the U.S.? Because there is a single buyer that buys in very large volume and that negotiates vigorously and skillfully for the best deal they can get. Why do the drug companies agree to sell to Canada at low prices? Because they can charge anything they want in the U.S. where, with the exception of the VA, there is essentially no competitive purchasing at all. That means they have no problem recovering there R&D costs plus a substantial profit here and countries like Canada are viewed as incremental revenue. As long as they can sell to Canada at a price that exceeds the direct cost of manufacturing they drug company is realizes more total revenue by selling to Canada at a low price than by not selling at all.

I wonder why no one in the U.S. government understands this? Maybe there is no one in this country who has passed economics 101. Or, maybe, out system of government has allowed the pharmaceutical industry to purchase a suggicient number of congressment and senators who are willing to close their eys and ignore the elephant stanting in the kitchen. Naw. It couldn't be that.

Maybe what is needed is a "public option" in the pharmaceutical research business, that is, a central government funded and operated reserch laboratory to develop and make available new drugs. A nation that can do things so quickly in the space program and get to the moon before anybody else should be able to do some needed pharmaceutical research in record time.

1) The cost of the R&D still has to be paid. 2) When congress must make a choice between funding drug research and funding something that will buy votes in the next election which do you think they will choose? 3) If you are unsure about the answert to 2 look at the National Institutes of Health and see how well it is funded.

Yes, that is true. So I guess the problem is getting people to realize that finding new drugs for the sake of people's health has the same urgency as getting to the moon or fighting a war somewhere (and to vote accordingly). Certainly there has been government funding of many kinds of medical research. It seems to me that investigation and development of specific drugs to better combat illeness is not something that should be left entirely to the research labs of corporations with an eye on profits.

I don't disagree with that at all. The point of my questions was that I think your suggestion to let the government do it all may be a bit simplistic. In the U.S. today drug research is done by the government, private enterprise and universities. I think we need a major effort to understand how to direct the applied research to provide the most benefit (as opposed to applied research by drug companies whose goal is to generate the most revenue) while at the same time ensuring that basic research gets enough funding to keep the pipline full.

The space program is a great example of our ability as a nation to apply existing knowledge to a acomplish a specific goal. Another example, that is more impressive in some ways is the Manhattan Project. Those two examples alone are convincing evidence that if we can decide what we want to accomplish we can do it.

Why not enact tort reform / medical malpractice reform, first? See if that doesn't lower costs by 50% and increase supply and quality of medical services?

What most frightens me is the Command Economy aspect of these "healthcare reform" proposals. I submit that our thoughts, our integrity, our morals, and even our taste, are all deteriorating. It is not all "government". When we stop thinking clearly, talking freely, when we stop protesting genuine wrongs, when we become afraid of life and of each other, when we stop seeing a happiness to pursue and a reasonable means to achieve it, then we die as free people and become a nation of dependent psychology. Capitalism and free market economies work best - not perfect, but best.

I say we return to a free market medical services sector. > Bill Woessner wrote:

Why not enact tort reform / medical malpractice reform, first? See if that doesn't lower costs by 50% and increase supply and quality of medical services?

What most frightens me is the Command Economy aspect of these "healthcare reform" proposals. I submit that our thoughts, our integrity, our morals and even taste, are all deteriorating. It is not all "government". When we stop thinking clearly, talking freely, when we stop protesting genuine wrongs, when we become afraid of life and of each other, when we stop seeing a happiness to pursue and a reasonable means to achieve it, then we die as free people and become a nation of dependent psychology.

I say we return to a free market medical services sector. I feel very sorry for the poor guy who cannot afford a house in Montecito, I really do. It would extend his life by five years at least. Me, I can't afford one either, but as long as I live in a free country, I'm not unhappy. Taking away the free country I live in, by bits and pieces, that's killing me. It really is.

Why not enact tort reform / medical malpractice reform, first? See if that doesn't lower costs by 50% and increase supply and quality of medical services?

What most frightens me is the Command Economy aspect of these "healthcare reform" proposals. I submit that our thoughts, our integrity, our morals and even taste, are all deteriorating. It is not all "government". When we stop thinking clearly, talking freely, when we stop protesting genuine wrongs, when we become afraid of life and of each other, when we stop seeing a happiness to pursue and a reasonable means to achieve it, then we die as free people and become a nation of dependent psychology.

I say we return to a free market medical services sector. I feel very sorry for the poor guy who cannot afford a house in Montecito, I really do. It would extend his life by five years at least. Me, I can't afford one either, but as long as I live in a free country, I'm not unhappy. Taking away the free country I live in, by bits and pieces, that's killing me. It really is.

6% of the U.S. workforce are lawyers. 45% of the members of congress are lawyers. Perhaps that is a clue.

Then wouldn't the amount they write off as bad debt be exactly matching the amount they "wrote on" to their AR in the first place? How does doing the hokey poky change taxable income?

Xho

I am not an accountant but I believe the transactions would be:

Debit Accounts Receivable Credit Sales at the time of the sale.

Debit Bad Dept Expense Credit Accounts Receivable at the time of the writeoff.

This leaves a credit in Sales and an offsetting debit in Bad Dept Expense so the net effect on income is zero. This assumes that the business does not maintain a reserve for bad debts.

Err um, change Dept to Debt as appropriate.:(

Correct me if I'm wrong, but I believe a significant amount of pharmaceutical research is already funded by the government. I suspect it's probably as much as 50%. There was some discussion a while ago about shortening drug patents proportional to how much public funding went in to developing the drug. Seemed like a reasonable thing to do.

I think this points to a deeper issue with the pharmaceutical industry. It's not a competitive industry in the usual sense. It takes millions of dollars and years of R&D to develop a single pharmaceutical product. The probability of failure is tremendous. This situation doesn't exactly promote innovative startups that provide healthy competition.

--Bill

If you narrowly limit it to "research" (i.e. finding the magic molecule), you might be right (though I doubt it). But there's a lot more expense in bringing the drug to market than "research". Clinical trials, figuring out how to mass produce it, etc. comes out of the company's budget, not the government's.

Sounds like a great way to stop new drugs from being developed.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Actually, the House bill goes much farther than not enacting tort reform. The House bill actually punishes states which enact tort reform. There was an opinion piece on CNN.com last week about this:

Personally, I don't think tort reform would save a whole lot of money. The CBO says malpractice reform would save $54 billion over 10 years (and that's 10 times more than previously estimated):

Assuming medical spending is $3 trillion per year, that's about 0.2% of total spending. Don't get me wrong, I'm completely in favor of it. I think our culture of "sue first, ask questions later" is absurd. I just don't think tort reform is the magic bullet.

But your point is well-taken. If there's money for the taking, why not take it? They say we can cut $500 billion from Medicare over the next decade without reducing services. Great, let's do it! And how about today's report of $98 billion in improper payments in FY 2009:

It seems to me the goal here is not to save money; it's to buy votes. But I guess that's always been the goal.

--Bill

FWIW I did a little quick research and found that, according to a 2001 CRS report the pharmaceutical industry spent $22.4 billion on R&D in the U.S. in 2000. R&D in this case includes all of the costs of developing a drug through and including stage III clinical trials. This was a 10% increase from 1999 to 2000 so the figure today is probably around $30 billion.

Essentially all of the federally funded drug research not done by NIH itself is funded by NIH grants. The 2010 NIH budget is just over $30 billion and a bit over 50%, or roughly $16 billion is devoted to research grants. Thus it appears that total drug R&D expenditures are about $46 billion with the federal government providing just over one third. If you add the cost of in-house research at NIH the federal contribution will be a bit higher.

Although it can vary widely a rough estimate of the R&D cost for a new drug, according to the 2001 CRS report, is $500 million and the total time is roughly 15 years. That first pill is indeed expensive.