Krugman’s blog, 7/30/15

There was one post yesterday, “Dentists and Skin in the Game:”

Wonkblog has a post inspired by the dentist who paid a lot of money to shoot Cecil the lion, asking why he — and dentists in general — make so much money. Interesting stuff; I’ve never really thought about the economics of dental care.

But once you do focus on that issue, it turns out to have an important implication — namely, that the ruling theory behind conservative notions of health reform is completely wrong.

For many years conservatives have insisted that the problem with health costs is that we don’t treat health care like an ordinary consumer good; people have insurance, which means that they don’t have “skin in the game” that gives them an incentive to watch costs. So what we need is “consumer-driven” health care, in which insurers no longer pay for routine expenses like visits to the doctor’s office, and in which everyone shops around for the best deals.

The usual response has been that this involves going where the money isn’t — that because health costs are dominated by big expenses that must be paid by insurers, there just isn’t much potential savings from increased deductibles, co-pays, etc..

But what if even the underlying premise, that individual choice will hold down costs, is all wrong?

As it turns out, many fewer people have dental insurance than have general medical insurance; even where there is insurance, it typically leaves a lot of skin in the game. But dental costs have risen just as fast as overall health spending, and it may be that the reduced role of insurers actually raises those costs. According to the post,

In the rest of medicine, insurers have an important function in limiting costs and promoting quality. The market power of Medicare and major national insurance companies allows them to insist on better rates for their customers when they negotiate with doctors and hospitals.

“There’s been less presence from all kinds of insurance payers in the dental sector,” explained Andy Snyder, who is in charge of oral health at the nonpartisan National Academy for State Health Policy. “Medicare does not cover routine dental services, and private dental coverage is far less common than private medical coverage. So, the dental industry has faced less of the cost containment and quality improvement pressures that the rest of the health care sector’s experienced over the last couple of decades.”

So more skin in the game is not just useless but actually counterproductive.

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One Response to “Krugman’s blog, 7/30/15”

  1. Beyond the Grave Says:

    Is not the oranges and apples comparison true for dental and medical costs/expenses? Could it be that if more people had dental insurance there’d be more incentive for insurers to play the game? Dental insurance by and large is a secondary consideration where surgery for heart and lungs is primary and implants comes later. The last time I checked there was a year in with dental insurance payments before more coverage was granted say for some bloody procedure instead a cleaning. That may have changed largely due to the wait time was such a negative. The only time consumers are given much less asked to compare and contrast costs to coverage is when the employer offers more than one choice. Or they’re self insured. Of course it’s ridiculous to discuss the largely unpaid by patients the cost of medical clinic out patient surgery. Eighteen thousand for the what? I mean really are those costs actual? No one in the medical field is really an independent operator anymore now are they? Corporations bought out the labs. Doctors couldn’t afford malpractice. The office in the house? U must be joking, right? And where did that come from?Go back to Humana in the 80’s and u have the idea that caught on with the NCNB. M&A. Now how did they come up with the dough? I imagine large investors like funds. So it’s a lot confusing talk to promote the Republican idea of conservative expenses when in fact it’s never been a consumer driven industry. Not until u go back to barter for a pulled teeth. Got a chicken? Sit down in the chair the doctor will be right with u. Those guys are gone.

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