Arnold Kling  

James Surowiecki on Medical Tourism

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The Psychology of Theft... Cowen on College Subsidies...

He writes,


In addition to exporting patients, we could import doctors. Politically speaking, of course, this all seems improbable, because the medical industry is a powerful lobby and uninterested in competition. But the reality is that, unless we find some other way to rein in health-care costs, the logic of free trade in medicine is going to become harder to resist.

Pointer from Mark Thoma.

Surowiecki seems shocked to find that there is rent-seeking in health care policy. In fact, it is possible to view all of health care policy in such terms.

Food stamps are nominally an anti-poverty program; they also can be viewed as an agricultural income program.

Similarly, health insurance is nominally about health care; but it also can be viewed as a doctor income program. Almost ten years ago, I wrote this [looks like that link is broken. The new one is here]:


An equivalent plan for restaurant meals would be that instead of paying for your meal, you would pay an annual premium to "Blue Eats," which would in turn reimburse restaurants for their costs, plus a profit margin. Every individual member of "Blue Eats" would have an incentive to eat out a lot and order the most expensive items on the menu, because the cost is shared among all of the members of "Blue Eats."

It was inevitable that the Blue Cross model would be supported by and adopted as government policy. The economic absurdity of it would never last in a free market. But as rent-seeking it works really well.

Somewhat related: John Goodman on the role of health insurance in inflating health care costs. But, of course, if my view is correct, the whole point of what we call health insurance. I am not saying that health insurance (meaning catastrophic insurance) is undesirable. I am saying, and I have said many times that what we call health insurance has little to do with insurance.


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COMMENTS (11 to date)
GD writes:

"we could import doctors"

We do. Lots of them. Every year. For example in the 2011 Match (the process whereby medical school graduates and training programs 'choose' each other) approx. 4900/26000 (19%) of spots were filled by non-US graduates. This doesn't include the myriad of foreign physicians who obtain training in the US through processes outside the Match or who come here fully trained and enter into practice.

That's a problem, not a solution. Medical expenditures are significantly supply-side driven. More doctors doesn't equal less expenditures on care (even when rates for individual visits/procedures declining).

And plenty of (typically leftist/liberal)commentators (http://www.nytimes.com/2012/03/11/magazine/america-is-stealing-foreign-doctors.html?pagewanted=all)are speaking out against The West recruiting bright medical minds from far afield, even going so far as to suggest criminilizing what they call 'theft' of the world's doctors. Which is ironic, given that people of the same political bent are the ones demanding more care at lower cost.

Your point of health insurance being a guaranteed income program is an important one, but isn't quite accurate in identifying who benefits most from the whole insurance scheme. He who controls the purse stings...the system is immensely profitable for insurers, much less so for individual physicians. The insurance companies make BILLIONS annually, with thousands of top executives at the myriad of insurance companies making millions. Here's just one one example (http://ctwatchdog.com/health/102-million-payout-to-united-healthcare-ceo-draws-outrage), with many more easily found with a minimum of searching. If you think physician pay is the major driver of medical expenditures, you don't know much about where most healthcare dollars go.

Reimbursement for physician servies comprises approximately 20% of Medicare expenditures (http://www.kff.org/medicare/upload/7305_03.pdf) and a lesser amount of total healthcare expenditures
(http://stanleyfeldmdmace.typepad.com/repairing_the_healthcare_/2011/11/where-is-the-healthcare-money-going.html). And, that's money out of which physicians pay their office staffs, malpractice, etc, with overhead generally on the order of 50%. So, physician individual income comprises only a small fraction of health expenditures.

Even if you removed physician pay ENTIRELY from US health-care expenditures, you'd be left with an unsustainable system. I know plenty of drug reps, hardware reps, insurance execs, hostpial admins, etc that make much, much more annually than the majority of physicians. The white-coats are convenient bad guys, but as with most industries, it's the unknown figures behind that curtains that are truly reaping the bountiful harvest.

I completely agree with you that health insurance (not true, catastrophic insurance, but the 'prepayment' monstrosity we have today...typically funded by someone other than the beneficiary) has everything to do with distributing money is only nominally about health care. If more people understood that, and comprehended the vast resources siphoned off by various parties, the health-care finance 'debate' would be entirely different.

John Goodman writes:

Arnold, you are right. It's not real insurance.

Paul Harris writes:

This is a great example of actual free market healthcare in action. Check it out.

Paul Harris writes:

The link I tried to attach is: surgerycenterok.com

Ash writes:

Arnold,

It appears that your link to the article in which you discuss "Blue Eats" is broken.

DThinker writes:

Comparison of medical care to eating out is not apt. Most people do not find going to the doctor to be poked and prodded to be pleasurable while they do tend to find going out to eat pleasurable.

I have never heard of a situation where people have a day off with nothing to do and in order to entertain themselves, they say: why don't we spend this day going to the doctor to get a bunch of medical tests and biopsies just for fun! Yeah!!!

In contrast, they will go out to eat in that same situation.

Arnold Kling writes:

Ash,
Holy cow. It looks like all my old TCSdaily columns are lost. What a disaster.

Slugger writes:

I don't quite understand why medical tourism is not more common. Medicare does not have good dental and vision benefits. My parents used to go to Munich every year or two for these services. They paid cash and saved enough to pay for the fare and a bit of Alp vacation as well as having genuine German craftsmanship for their dentures and glasses. I know a woman who was quoted a $40 000 price for a gastric bypass for obesity. She went to Colombia and had it for $10 000. I might be a bit nervous about going outside of Western Europe personally, but people who have gone overseas report good results.
Are there any scientific studies on safety, effectiveness, and cost of this tourism?

DK writes:

Re: importing doctors.

1. It's not nearly equivalent to medical tourism, for the simple reason of different living and business expenses in different countries.

2. We do import many doctors! Foreigners that graduated from medical schools in their home countries have HUGE advantage over locals - no need to pay back those big med. school loans. (You just pass board and do residence). Take a look at the internal medicine residents here:
http://www.stjoesannarbor.org/currentresidents
(No cherry picking, I swear; I just happened to know one guy there).

Mark Little writes:

My preferred analogy for health care 'insurance' is not "Blue Eats" but to ask, what if government mandated auto insurance coverage in the same style as for health care?

Let us hope the politicians never decide to buy our votes by granting us the benefit of requiring all auto insurance policies to cover oil changes, tires, and gasoline.

Floccina writes:

A better analogy than Blue Eats might Blue Legal insurance. If you ever need legal help they pick up bill. Bad hair cut, need to sue the barber covered. Dispute with a neighbor and need to sue covered. Caught driving under the influence, covered.

It is not perfect and we already get insurance for some things that covers legal expenses.

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