Organization: Penn State University
Date: Tue, 15 Sep 1992 19:32:22 EDT
From: <DGS4@psuvm.psu.edu>
Newsgroups: alt.politics.clinton
Subject: Re: Helping business, health care costs
Distribution: alt.politics.clinton
 <1992Sep14.164955.831@sma2.rain.com> <92258.195810DGS4@psuvm.psu.edu>
 <1992Sep15.174051.23667@CSD-NewsHost.Stanford.EDU>

In article <1992Sep15.174051.23667@CSD-NewsHost.Stanford.EDU>,
andy@SAIL.Stanford.EDU (Andy Freeman) says:
>
>In article <92258.195810DGS4@psuvm.psu.edu> <DGS4@psuvm.psu.edu> writes:
>>In article <1992Sep14.164955.831@sma2.rain.com>, fred@sma2.rain.com (Fred
>Brooks) says:
>>>In article <1992Sep14.113746.1@vxdesy.desy.de> forbush@vxdesy.desy.de
>writes:
>>>>As far as the German health care system goes, I think that it
>>>>offers more at a cheaper rate than the US. My wife had
>>>>a baby in Germany for $1000.00. I can't believe that anyone in the
>>>>US could do that.
>>>
>>>My health cost is $25 per month with my company Kaiser Health Plan. The
>>>total cost for the birth of my last child was $7.50.
>>
>>That's very relevant.  Compare the total costs in the German system to the
>>out-of-pocket price for a well-insured American.  Do you really think it
>>only cost the hospital $7.50 to deliver?  I'll lay you money the total
>>cost of the delivery was at least twice the German rate.
>
>I'm looking forward to hearing why Kaiser must be more expensive than
>the German system, as Kaiser actually is a single-payer system.  Its
>facilities are dedicated to its customers, so there's no inherent
>overhead beyond checking the "is this one of our customers" card at
>the door.  Shea insists that overhead is a significant part of any
>difference, yet insists that a no-overhead US provider doesn't have
>significantly lower costs.

Administrative costs in the U.S. involve both the relationship between
the payor and provider and the payor and the insured.  Kaiser has
relationships with multiple employer plans, must risk-rate those
plans to compete, etc., etc.  You seem to have a very bizarre
definition of a single-payer system.


>Kaiser collects a flat sum, just like a govt-run single-payer system
>would, and provides care without worrying about consumption by
>specific individuals.  It keeps track of overall usage, so that it can
>allocate resources and accurately set the flat rate, but every system
>has to do that.  (Kaiser pays its personnel a salary, so there's the
>only "is he pulling his weight" accounting for employees.)

Of course, in order to compete, it has to offer a different product,
trading lower costs for less choice of physicians.


>In other words, it has all of the properties that Shea insists are
>necessary for significant savings in overhead.  Shea insists that
>overhead is significant, but then asserts that a system with those
>properties doesn't have the cost advantage he insisted it would.
>Hmm.  Is it that Kaiser isn't a govt office?

Since you really seem to take much more pleasure in creating my thoughts
on the net than I do, I've decided to turn the job over to you.  Feel free to
continue to put any words you want in my mouth after these final ones from me.
The average normal delivery in the U.S. is $4,500.  That's why I suggested
that Kaiser was only "at least two times" higher.  They will definitely
have significant administrative savings (and do).  Unfortunately, in the
U.S. system, the reduced administrative costs are coupled with an
entireley different product, insurance with choice restrictions.  Canada
has shown us an alternative way of getting the same administrative savings
without restricting choice of physicians.  That's why I prefer that
system.   Finis!

Dennis G. Shea, Penn State
<<DISCLAIMER>>
Ain't nobody's bizness but my own. I'll be happy to accept all
the credit for anything I've written.  It's funny, however, how
employers only acknowledge the profitable ideas.
Xref: sparky alt.politics.clinton:5484 alt.news-media:1318 alt.rush-limbaugh:4868