Cleaning Up From The Old Blog

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Posted on : 2/17/2010 09:18:00 PM | By : Dann | In : ,

One of my last serious entries over at the old blog had to do with the recent news of Canadian Premier Danny Williams coming to the U.S. to have heart surgery.  It went a little something like this:


Over at Glenn Reynolds' place, he's talking about the news that Premier Danny Williams of Canada is visiting the U.S. for the purpose of having heart surgery. One of Glenn's Canadian readers writes:


I’m a Canadian in Australia, and a great fan of your blog.

The premier heading south is not new. The Canadian political elite has long headed to the US for medical services while - with straight faces - extolling the virtues of socialized medicine for everyone else. And US hospitals are always used to back up a system in Canada that can’t meet demand.

It prompts the question: If the US adopts Obamacare, how will the Canadian health care system survive?


Given that the U.S. currently produces a disproportionate number of medical innovations and given that the proposed health care "reforms" currently in Congress will kill those innovations, it isn't just our friends to the north that will suffer if those reforms get passed. It will be the whole world.

One of the more frustrating aspects of watching the health care reform debates is seeing that none of the Democrats and damned few Republicans seem to recognize that a very large part of the health care cost problem is that the rest of the world isn't paying its fair share of the research and development costs of new medical technologies, pharmaceuticals, etc. Profit is a good thing. Sadly, education regarding economics has fallen into disrepute.


Shortly thereafter, the impending Haloscan implosion was announced.  So the doors closed there and opened here.  Unfortunately, the timing was bad as my frequent interlocutor, Ruth, stopped by to leave the following bon mot.


This post looks to me like two different -- and barely connected -- posts. The issue of whether the rest of the world is paying its fair share for our innovations doesn't have a lot to do with a Big Shot in any other country choosing a surgeon in the US. Patients, especially those in the Upper Crust, do sometimes go international to see someone particularly renowned in a delicate procedure.

If that US surgeon to whom the Premier is going is here because he moved his practice to the US from Canada it might say something about the merits of the two systems. Maybe. Did he? I didn't research it that far. But it doesn't say anything about delivery of your basic care in which knowledge and competence, but not rare SuperDoctor skills are needed. Which is most of it.

I'd be a lot more interested in the issue of "fair share" payment for US innovations. When i've said "fair prices!" elsewhere various people have asked who determines what's fair. And how.


I really dislike letting something like that go without a fair response.  And here we go.....

First off, I understand about the "barely connected" thing.  Part of that perception is the result of my taking a few shortcuts.  I assumed things about my readers that I probably shouldn't assume.

Here in Michigan, we are used to news stories about Canadians visiting our fair state to take advantage of the speedy and generally high quality level of care provided south of the border.  Hospitals located within an hour or two the border are known to have included serving Canadians as part of their business plan.  Such is the number of our northerly neighbors making their way south to resolve heath issues.

As Ruth suggested, there are many other reasons why a Canadian might come to the U.S. for medical services.  But the smart money is that they can't get what they want in the time frame they desire.

I assumed that my readers were familiar with those issues.

Good, Fast, Cheap; pick any two.

That is the rule for any good or service.  You can have a crappy product right away for little expense.  You can have an excellent product for little expense, but you will have to wait.   Of course, you can also have an excellent product right away, but it is going to cost an arm and a leg to get it.

Health care is not immune to this dynamic.  After watching and reading stories about Canadian health care, it is my opinion that they have decided to sacrifice speed....and some quality....in order to lower expenses enough that they can offer "universal" coverage to every Canadian.

Canada isn't alone.  Most of Europe has made the same choice with varying results.

Speed is not a simple measurement of service.  It is also the measure of the progress towards new treatments and technologies.

New technology is always expensive.  Consider the PC, flat screen TVs, cell phones, washing machines, refrigerators, or any other modern convenience.  When they were first introduced, it was always the affluent that could afford the latest and greatest products.  Eventually, mass manufacturing, further technological developments, and the experiences of early customers caused the price to drop until almost anyone with a job could afford to acquire some level of technological advancement.

The same holds true for medical technology.  The United States currently leads the world in the area of medical technology.  That isn't because we are such brilliant people.  It isn't because we have any unique natural resources that give us a medical advantage.

We lead the world in the area of medical technology because innovators are largely free to innovate, and health care customers are largely free to purchase those innovations, and those activities are largely governed by the actual costs involved rather than based on an arbitrary value imposed by a government body.

As is the case with any other product or service, early adopters pay more than those that buy in later on.  Some new technologies work better than expected.  Others don't really pan out or are replaced by later developing technology.  That process of figuring out what works and what doesn't is expensive.  And we are paying those development expenses on behalf of the rest of the world.

When countries limit reimbursements based on production costs, they automagically exclude themselves from paying for the cost of developing new medical technologies.  Those countries with a free market for health care are left with the responsibility of paying those R&D costs.

Back to our friend, Canadian Premier Danny Williams, and others like him.  What happens to those people if we enact a health care reform that dramatically slows medical innovation?  What happens to those people in Europe waiting for the next generation drug from some serious condition when research slows to a crawl?  Do they have to suddenly make do with what they have right now?  Do they have to live with months long delays where they formerly had the ability to be treated in a few weeks by traveling to the U.S.?  What happens if that next step in life saving medical technology doesn't take place within their lifetime?

How will the changes that we make today affect future generations?  Is it possible that the march of progress could be slowed to the point where a real cure for cancer might never be found?  How many people will continue to suffer and die as the result of slowing...or halting...the march of progress?

As we continue to consider the options with respect to health care reform, I believe that we have to keep in mind that some reforms will lead to less health care for everyone; now and in the future.  Sensible reforms that expand health insurance coverage are certainly worth pursuing.  Those reforms that hobble the technological engines of medical progress, and thereby cause everyone to have a lower standard of care, are not.

I don't have a quick definition for fair.  And having rambled on for so long, I'm not sure I can come up with a good one.  Here is one attempt at it.

Take the private cost of development, plus a small percent for profit.  Divide that by the number of people that will need the medical widget, pill, treatment, etc. over patent period.  The result is the fair distribution of cost across the people that will make the most of new product, service, etc.

Excluding large number of patients from the above is exceedingly unfair to those that are left footing the bill for the cost of development.  Excluding all patients will result in a dramatic reduction in the amount of money that is spent researching new solutions to old problems.

I'll close by admitting that I was having a bit of fun at Mr. Williams' expense.  More seriously, shouldn't politicians have an obligation to live under the rules as their fellow citizens?

One of the more frustrating aspects of the proposals for a "public option" to provide health care is that only the poor would be subject to it.  Our Congress critters get insurance by purchasing it in the same manner as all other federal employees.  Wouldn't we be better served by enabling individuals and businesses to buy into that federal insurance pool and get coverage that is identical to our Congress critters?  Isn't that a better option than creating an insurance ghetto for ordinary citizens while leaving our public servants with much better coverage?

Were I Canadian, I would be absolutely furious that Mr. Williams exempted himself from the problems that plague their health care system.  As a leader, he had an obligation to accept whatever his country had to offer.

[OK...this really is the end.  I'm terribly disappointed.  I ran the above through MSWord to use the grammar checker.  It said the above was written at the 10th grade level.  I usually do better.  Sigh]

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Comments (2)

I have to decide whether to address single points, or to make a hugely long response, only take days to do it.

There's a single point that seems to me like it's a linchpin for all the other arguments for profit/capitalism in medicine. You wrote :

"New technology is always expensive. Consider the PC, flat screen TVs, cell phones, washing machines, refrigerators, or any other modern convenience. When they were first introduced, it was always the affluent that could afford the latest and greatest products. Eventually, mass manufacturing, further technological developments, and the experiences of early customers caused the price to drop until almost anyone with a job could afford to acquire some level of technological advancement.

"The same holds true for medical technology."


But no, Dann it doesn't.

This is one, if not THE, foundation of the country's entire division on the issue, i honestly think.

Consumers have power in choosing among many offerings, or refusing those luxury commodities, in a way that they don't have regarding health care. They do NOT have the time or the variety of choices, and they for sure do not have the ability to do without a scan or surgery until it's a basic middle-class expense, which is a major factor in bringing down the prices of iPods and HDTV.

In my long ago post, i gave my personal example : a cat scan that cost 900 in 2002 and 4000 in 2006.

I do not have choices. To travel an hour to other providers in order to pay 3500 instead of 4000 is an insignificant "choice" for people with small businesses or service-sector jobs.

This is long enough for now, but i applaud your effort to come up with a fair pricing formula. I have to add that that "cost of development" needs to be seriously looked at and the layers of pointy-haired administrators sent to the block. An enormous percentage of US business consists of yammering, frequent-flying, paper-generating simians who are worth less than nothing, and who are welcome to take profit from HDTV's but not from the sick and hurting.

I'm sure we'll keep going around about this, and i'll be happy to agree with you on a couple things you probably think but don't cover in this post (tort reform - YES.) But enough for now.

Hi Ruth,

As always, thanks for your thoughts.

I'd like to focus for a moment on the areas where we agree.

For example, I think we both want people to have access to the medical care they need to live. One of the reasons why I ping on nationalized health care systems is because they ration care in ways that are unhealthy for individuals. I've read several stories about Canadians that had to wait long enough to see a specialist for treatment that their relatively minor medical conditions actually became life threatening due to the delay. I know of outright denials of treatment in several European countries at various times over the last 20 years.

Heck, I've got a half-Canuck lady friend who's family in Canada provides a steady stream of stories about delays in providing health care services. Services that you and I would wait only days....and in some cases hours....to receive.

I believe that your concerns stem from the same sort of motivation. I'm pretty critical of the FDA approval process for similar reasons. I share your desire that people should be able to access the medical care they need with as few barriers to treatment as possible.

I also agree that pricing for medical services is out of whack. Your MRI story is only one of many that show that there is a pricing disconnect in health care.

Quite a few years ago, one of our progeny experienced a pretty severe laceration on his hand. The ER insisted that a specialist be called in to perform surgery as they didn't know if any tendons had been damaged.

It looked to me like they could have stitched him up in the ER, but what do I know.

The specialist was the only plastic surgeon in our area. When his bill arrived, it was for over $10,000. BCBS said that the reasonable and customary charge for that service was roughly $3,000. The doctor eventually caved and accepted the BCBS charge.

Parenthetically, the same doctor is currently under investigation for allegedly providing BCBS with incorrect procedure codes in order to receive a higher payment for his services.

Out of whack pricing for medical services and goods is one very big reason why I enthusiastically support the expanded use of medical savings accounts. Only when the patient is re-connected with the cost of service will we start to see some measure of effective cost containment in the medical arena.

I agree that we have a single issue that seems to divide people. I respectfully disagree with your interpretation of that issue.

In my opinion, some people recognize that the laws of economics [quality/speed/price - pick two] are as applicable to medicine as they are to other areas of the economy regardless of how much we may dislike the logical result of that fact. Progress occurs because of profit.

Others believe that there is something unique about medicine that makes it immune to those laws of economics just because they want it to be that way.

In any case, I think there are areas of where there is broad agreement where we could achieve some measure of progress. The real pity is that so few people are interested in that objective.