Seems to me we are looking at this backwards. I spent my career in IT working with large software systems. When systems become obsolete or the cost of maintaining them becomes unsustainable you replace them with new systems with modern technology designed to meet current user requirements. Cost savings are realized by the value proposition of the transformation, requiring effective change management in order to be realized.
Our healthcare system was designed sixty years ago. Its scope has expanded exponentially while modern technology has innovated to accomplish things beyond belief when the system was designed. Why do we insist on reforming a clusterfuck of a system when it makes more sense to start over transition to a new system? Ditto for the air traffic control system, by the way. We seem to like to let planes crash into helicopters for no reason rather than doing the hard work required for implementing modern processes and technology.
You mention Medicaid and crime. A compelling paper showing that Medicaid eligibility as a child reduces the probability of ending up in prison as an adult is "The Impact of Youth Medicaid Eligibility on Adult Incarceration" by Arenberg, Neller, Stripling: https://www.aeaweb.org/articles?id=10.1257/app.20200785 (ungated). Its an important direct effect---and another tally in the column of how Medicaid pays for itself over the longer run.
"In 1990, Congress passed legislation that increased Medicaid eligibility for individuals born after September 30, 1983. We show that Black children born just after the cutoff are 5 percent less likely to be incarcerated by age 28, driven primarily by a decrease in incarcerations connected to financially motivated offenses. Children of other races, who experienced almost no gain in Medicaid coverage as a result of the policy, demonstrate no such decline. We find that reduced incarceration in adulthood substantially offsets the initial costs of expanding eligibility."
One of the things missed in cutting healthcare waste is the maxim: 'One man's waste is another man's income'. Whoever finds their ox gored is going to howl ceaselessly. There is always a group that will howl to stop the cuts, whether it be drug companies, hospitals, or primary care docs. I don't blame them, but someone has to take the hit, and it isn't easy to decide who.
>no mention of QALYs or other extant measurement systems
More substantively, that Oregon experiment is a bit more complicated than you're portraying it, and there's been a number of other trials with the same basic design that also had muddier results. The first one that comes to mind for me is the RAND trial, actually, popularized by Robin Hanson years ago as evidence that healthcare should be "cut in half": https://www.astralcodexten.com/p/contra-hanson-on-medical-effectiveness
There's probably a pithy paradox name or something, but I think the preponderance of evidence is clear that a) you could significantly reduce healthcare expenses on the margin without much impact on aggregate health/life expectancy/etc; and b) identifying *which* parts to cut is largely a series of painful tradeoffs, surrounded by a whole thicket of politically dicey special interests and fuzzy moral intuitions. Never challenge a cost-benefit analysis when lives are on the line, and all that. (I do think the idea of "much spending on health is to send a costly social signal that one is doing the appropriate amount of caring for others" is interesting, but kind of intractable as a policy matter...that's more of a bottom-up cultural mores change. Americans' particular fascination with youth worship and the denial of age/death doesn't do us any favours.)
If you ask a ChatGPT, “What are the top medical advances since 1965?” It brings back a pretty amazing list of accomplishments. Yet, we still are trying to pay for these services with a system designed 60 years ago. Seems to me we need to blow up Medicare and Medicaid and replace it with a more efficient and cost effective one designed for the needs of the public in 2025.
Not, but we are definitely on the path towards it. To get off that path there will need to be some combination of tax increases AND benefit cuts to entitlements.
SS and Medicare we need to raise the retirement age and index it to life expectancy.
Also we need to stop heroic end of life care on tax payer dime. If the patient actually wants to drop several hundred grand to painfully extend their life a couple of months (and they usually don't) fine. But the tax payer shouldn't be.
Resources are limited.
Also, we should be spending a LOT more money on anti-aging research. The one thing that might actually mean we don't have to make hard choices. Right now only .05% of the research budget is going to anti-aging. We spend all this money treating diseases AFTER we get them instead of trying to make it so we don't get them in the first place.
Create jobs for people in their 60s. Make them accommodating to a semi retired lifestyle. Maybe even pay partial benefits up to 70. Just expecting people to work in their 60s isn’t going to happen. Same with Medicare, attach a good insurance plan to this work too.
“ SS and Medicare we need to raise the retirement age and index it to life expectancy.”
Just because medical science can keep people alive longer doesn’t mean they can work longer. As far as I know lifespan has outpaced healthspan for some time.
Every time "efficiency" comes up, I will forever post that efficiency is a process you pursue to something you are already accomplishing. And it is a red herring in any other discussion.
That is, any discussion about trying to bring efficiency to a system is about as helpful as discussions that you should run faster to win a race. To a useless degree, this is certainly true. The question is how.
And with spending, if you don't build a system where you are comparing the ROI of different expenditures, then you are blindly cutting spend in a vain hope that you will strike gold.
Making "efficiency" the goal, though, is ludicrous. You don't pursue efficient solutions, you pursue solutions and optimize on working ones to make them efficient. Any other effort is akin to telling an artist that they cannot make prototype works. After all, every prototype is wasted effort in the path to a final product. And if you try to cut resources to working solutions without an eye to what they were accomplishing, you are likely to kill more than you are to increase efficiency.
I'm starting to think schools should focus more classes on basic gardening. A mental model of pruning trees is more effective than whatever mental model is leading many of the cuts we're seeing.
Matt writes: "We also know that Medicaid is an extremely thrifty program that provides services at lower per unit prices than Medicare (and much lower than private health insurance)."
This is a key point. Medicaid is price-controlled at the state level, in one way or another. In Oregon, its providers are part of regional "coordinated care organizations," which are subject to global budgeting caps to keep costs under control. An additional advantage of this approach is that it creates incentives for far-sighted and expansive management of a broad population over time (rather than keeping a kid healthy via preventive care at one clinic only to have the benefit accrue to another provider, for example, or allowing Medicaid funds to be used for air conditioners in the summer, as is the case here now).
Medicare, of course, is also price-controlled, mostly based on the procedures, which is not as effective. Providers can upcode their procedures to draw down more funding. But the Medicare Advantage program aggregates populations and uses the global budgeting approach. For a non-profit Advantage provider like Kaiser, with which I obtain my Medicare Advantage coverage, my premiums have come down over the past three years, benefits have expanded and coordination of care across many specialties has been a huge time-saver. For me, this approach is much more convenient and effective than shopping around for individual providers as I'd have to do under traditional Medicare.
My take-aways from my experience and observations here in Oregon are that coordination and integration of care across large populations and light-touch price controls (global budgeting rather than per-procedure price setting) are the best approaches to both improving outcomes and controlling costs. Contrast these approaches with the silo-ed structures of employer-based health care groups and it's clear why we need expanded public options to bring these benefits to working families whose plans are not only often less efficient but are burdened with cost-shifting from the price-controlled populations in Medicaid and Medicare.
In the abstract, I can see that money saved on nurses might be spent on something more important and valuable, like rockets. But practically, wouldn’t all these doctors mind getting less money because they know they could get a side gig manufacturing rockets? This is a bit different from sinking money into pieces of steel that we don’t want to use in a war. (Which mighty democracy would Secretary Hegseth's “warfighting” military fight anytime soon anyway?)
"A third of Medicaid spending goes to long-term support services for the elderly and disabled... there’s a risk of DOGE or Republicans looking at something like that and deciding that, as a category, they don’t think it’s very “efficient” to be spending all this money on long-term support for the elderly and disabled. After all, if you were forced to cut something, it would probably make more sense to cut this than maternal care."
OK, so let's dig into this and ask ourselves, what it means that long-term support for the elderly and disabled is inefficient, with the Republican assumption that anything "inefficient" is bad and has to go.
Elder care, even with the current level of support, is already hella stressful and hard. There were multiple articles about this in the NYT. Now, let's say Elon's merry band of DOGE bros cuts off all Medicaid funding to elderly/disabled care in the name of "efficiency."
What do these people expect to happen?
1. A relative (usually a female relative - daughter, granddaughter) has to quit her job/drop out of college and care for the elderly person full-time. What does this do to the daughter's career, marriage, children, ability to save for her own retirement? Don't care! What if the elderly person is childless/estranged from their family? Tough sh*t, which takes us to option 2:
2. Useless eaters are useless, and should be put on an ice floe. A single overdose of a strong painkiller is much, much more cost-efficient than months or years of paying for someone's care! If we don't want to get our hands dirty, we can let nature take its course and leave the old geezers to die naturally of hypothermia/dehydration/wandering around outside until they're hit by a car.
I'm deliberately using brutal language here, because I want to make it clear that these are our options, at least until option 3 (invent biomedical technology that magically makes people stay in perfect health until the age of 100, when they die peacefully and painlessly in their sleep) becomes available.
Hard agree! I'd be in favor of more $$$ for the NIA (National Institute of Aging, part of the NIH) for anti-aging research.
I'm going to sleep soon, otherwise I would treat you to a long and nerdy comment on the FOXO pathway, first discovered in roundworms (C. elegans), which, when mutated, leads to dramatic increases in lifespan. Scientists have been trying to see if the findings can be applied to humans, thus far without success (although we have the FOXO pathway too). It's a hard problem!
> But I find it striking that none of them really seem interested in running this “what if you just didn’t get routine health care” experiment on their own kids.
Was the Oregon study about kids?
Throwing random bucks at maternity care and children's health is going to have more bang for the buck than Medicare simply because of the age question. Whoever has "paying for childhood vaccinations" on their books is automatically the winner for efficient health care spending.
The old RAND study that found no change in results made a big exception for optical care. Giving people glasses pays off! It doesn't look like the Oregon studied addressed that from searching for "opt" in the papers I could find.
I am sitting at Kaiser Permente now to get some labs. These people do good work. Their set up and structure and processes are the best. Everyone should have this healthcare.
"My 10-year-old child has, fortunately, never had any major health problems."
Heyyyy, anecdote time!
One day, when I was ten years old, I felt a weird pain in my abdomen. It wasn't even that bad, but I mentioned it to my mom. Her instinct/Spidey Sense told her something was up, and she took me to the emergency room, even though I thought she was overreacting.
The nurse at the ER palpated my abdomen, said to my mom "Oh my God, her appendix is about to burst, WHY DID YOU WAIT SO LONG TO BRING HER IN" and wheeled me into the OR asap. (Apparently I'm built in a weird way such that even severe inflammation of the appendix caused me only mild discomfort?)
Without that, I would have died at the age of ten, probably very painfully.
This is the thing about medical care: you don't need it, until you do.
The thing that I find most hypocritical about this is that republicans are essentially saying "we KNOW that there is lots of criminal fraud in the Medicaid program, so we are going to defund the Medicaid programs by that amount. That will result in the fraud being eliminated without having any negative impact on beneficiaries, services, or providers."
When progressives (stupidly, IMHO) proposed the exact same thing ("we know that there is a lot of bad policing going on, so we're going to defund the police to eliminate the bad behavior and this will result in less crime") everyone on the right (correctly) pointed out how absurd the claim was. Now they're turning around and making an identical claim in the health care space.
To be clear, I'm aware that they're doing this because they're full of crap and lying. But the hypocrisy is especially galling to me.
I think of excess health care spending as consisting of procedures with high costs and low benefits. *On average,* an MRI for back pain is not cost effective. Neither is a routine colonoscopy screening for colon cancer. Of course, your aunt Millie had these procedures and they saved her life, so we cannot say that the benefit is zero. To reduce spending on high cost, low benefit procedures you either need to have the government and/or insurance not pay for them, which gets people howling. Have a nice day.
Seems to me we are looking at this backwards. I spent my career in IT working with large software systems. When systems become obsolete or the cost of maintaining them becomes unsustainable you replace them with new systems with modern technology designed to meet current user requirements. Cost savings are realized by the value proposition of the transformation, requiring effective change management in order to be realized.
Our healthcare system was designed sixty years ago. Its scope has expanded exponentially while modern technology has innovated to accomplish things beyond belief when the system was designed. Why do we insist on reforming a clusterfuck of a system when it makes more sense to start over transition to a new system? Ditto for the air traffic control system, by the way. We seem to like to let planes crash into helicopters for no reason rather than doing the hard work required for implementing modern processes and technology.
You mention Medicaid and crime. A compelling paper showing that Medicaid eligibility as a child reduces the probability of ending up in prison as an adult is "The Impact of Youth Medicaid Eligibility on Adult Incarceration" by Arenberg, Neller, Stripling: https://www.aeaweb.org/articles?id=10.1257/app.20200785 (ungated). Its an important direct effect---and another tally in the column of how Medicaid pays for itself over the longer run.
"In 1990, Congress passed legislation that increased Medicaid eligibility for individuals born after September 30, 1983. We show that Black children born just after the cutoff are 5 percent less likely to be incarcerated by age 28, driven primarily by a decrease in incarcerations connected to financially motivated offenses. Children of other races, who experienced almost no gain in Medicaid coverage as a result of the policy, demonstrate no such decline. We find that reduced incarceration in adulthood substantially offsets the initial costs of expanding eligibility."
One of the things missed in cutting healthcare waste is the maxim: 'One man's waste is another man's income'. Whoever finds their ox gored is going to howl ceaselessly. There is always a group that will howl to stop the cuts, whether it be drug companies, hospitals, or primary care docs. I don't blame them, but someone has to take the hit, and it isn't easy to decide who.
Fairly easy to say Republicans should take the hit
>write post about healthcare spending efficiency
>no mention of QALYs or other extant measurement systems
More substantively, that Oregon experiment is a bit more complicated than you're portraying it, and there's been a number of other trials with the same basic design that also had muddier results. The first one that comes to mind for me is the RAND trial, actually, popularized by Robin Hanson years ago as evidence that healthcare should be "cut in half": https://www.astralcodexten.com/p/contra-hanson-on-medical-effectiveness
There's probably a pithy paradox name or something, but I think the preponderance of evidence is clear that a) you could significantly reduce healthcare expenses on the margin without much impact on aggregate health/life expectancy/etc; and b) identifying *which* parts to cut is largely a series of painful tradeoffs, surrounded by a whole thicket of politically dicey special interests and fuzzy moral intuitions. Never challenge a cost-benefit analysis when lives are on the line, and all that. (I do think the idea of "much spending on health is to send a costly social signal that one is doing the appropriate amount of caring for others" is interesting, but kind of intractable as a policy matter...that's more of a bottom-up cultural mores change. Americans' particular fascination with youth worship and the denial of age/death doesn't do us any favours.)
If you ask a ChatGPT, “What are the top medical advances since 1965?” It brings back a pretty amazing list of accomplishments. Yet, we still are trying to pay for these services with a system designed 60 years ago. Seems to me we need to blow up Medicare and Medicaid and replace it with a more efficient and cost effective one designed for the needs of the public in 2025.
And what system would that be? The devil, as they say, is in the details.
"We are not on the verge of bankruptcy."
Not, but we are definitely on the path towards it. To get off that path there will need to be some combination of tax increases AND benefit cuts to entitlements.
SS and Medicare we need to raise the retirement age and index it to life expectancy.
Also we need to stop heroic end of life care on tax payer dime. If the patient actually wants to drop several hundred grand to painfully extend their life a couple of months (and they usually don't) fine. But the tax payer shouldn't be.
Resources are limited.
Also, we should be spending a LOT more money on anti-aging research. The one thing that might actually mean we don't have to make hard choices. Right now only .05% of the research budget is going to anti-aging. We spend all this money treating diseases AFTER we get them instead of trying to make it so we don't get them in the first place.
Create jobs for people in their 60s. Make them accommodating to a semi retired lifestyle. Maybe even pay partial benefits up to 70. Just expecting people to work in their 60s isn’t going to happen. Same with Medicare, attach a good insurance plan to this work too.
“ SS and Medicare we need to raise the retirement age and index it to life expectancy.”
Just because medical science can keep people alive longer doesn’t mean they can work longer. As far as I know lifespan has outpaced healthspan for some time.
Which is another example of us putting money into the wrong thing. We spend all this money to extend lifespan instead of healthspan.
We don’t do that at all. We spend a ton on healthspan.
Especially true for physically demanding jobs. Most people who call for a later retirement age have laptop jobs.
Every time "efficiency" comes up, I will forever post that efficiency is a process you pursue to something you are already accomplishing. And it is a red herring in any other discussion.
That is, any discussion about trying to bring efficiency to a system is about as helpful as discussions that you should run faster to win a race. To a useless degree, this is certainly true. The question is how.
And with spending, if you don't build a system where you are comparing the ROI of different expenditures, then you are blindly cutting spend in a vain hope that you will strike gold.
Making "efficiency" the goal, though, is ludicrous. You don't pursue efficient solutions, you pursue solutions and optimize on working ones to make them efficient. Any other effort is akin to telling an artist that they cannot make prototype works. After all, every prototype is wasted effort in the path to a final product. And if you try to cut resources to working solutions without an eye to what they were accomplishing, you are likely to kill more than you are to increase efficiency.
I'm starting to think schools should focus more classes on basic gardening. A mental model of pruning trees is more effective than whatever mental model is leading many of the cuts we're seeing.
Matt writes: "We also know that Medicaid is an extremely thrifty program that provides services at lower per unit prices than Medicare (and much lower than private health insurance)."
This is a key point. Medicaid is price-controlled at the state level, in one way or another. In Oregon, its providers are part of regional "coordinated care organizations," which are subject to global budgeting caps to keep costs under control. An additional advantage of this approach is that it creates incentives for far-sighted and expansive management of a broad population over time (rather than keeping a kid healthy via preventive care at one clinic only to have the benefit accrue to another provider, for example, or allowing Medicaid funds to be used for air conditioners in the summer, as is the case here now).
Medicare, of course, is also price-controlled, mostly based on the procedures, which is not as effective. Providers can upcode their procedures to draw down more funding. But the Medicare Advantage program aggregates populations and uses the global budgeting approach. For a non-profit Advantage provider like Kaiser, with which I obtain my Medicare Advantage coverage, my premiums have come down over the past three years, benefits have expanded and coordination of care across many specialties has been a huge time-saver. For me, this approach is much more convenient and effective than shopping around for individual providers as I'd have to do under traditional Medicare.
My take-aways from my experience and observations here in Oregon are that coordination and integration of care across large populations and light-touch price controls (global budgeting rather than per-procedure price setting) are the best approaches to both improving outcomes and controlling costs. Contrast these approaches with the silo-ed structures of employer-based health care groups and it's clear why we need expanded public options to bring these benefits to working families whose plans are not only often less efficient but are burdened with cost-shifting from the price-controlled populations in Medicaid and Medicare.
In the abstract, I can see that money saved on nurses might be spent on something more important and valuable, like rockets. But practically, wouldn’t all these doctors mind getting less money because they know they could get a side gig manufacturing rockets? This is a bit different from sinking money into pieces of steel that we don’t want to use in a war. (Which mighty democracy would Secretary Hegseth's “warfighting” military fight anytime soon anyway?)
"A third of Medicaid spending goes to long-term support services for the elderly and disabled... there’s a risk of DOGE or Republicans looking at something like that and deciding that, as a category, they don’t think it’s very “efficient” to be spending all this money on long-term support for the elderly and disabled. After all, if you were forced to cut something, it would probably make more sense to cut this than maternal care."
OK, so let's dig into this and ask ourselves, what it means that long-term support for the elderly and disabled is inefficient, with the Republican assumption that anything "inefficient" is bad and has to go.
Elder care, even with the current level of support, is already hella stressful and hard. There were multiple articles about this in the NYT. Now, let's say Elon's merry band of DOGE bros cuts off all Medicaid funding to elderly/disabled care in the name of "efficiency."
What do these people expect to happen?
1. A relative (usually a female relative - daughter, granddaughter) has to quit her job/drop out of college and care for the elderly person full-time. What does this do to the daughter's career, marriage, children, ability to save for her own retirement? Don't care! What if the elderly person is childless/estranged from their family? Tough sh*t, which takes us to option 2:
2. Useless eaters are useless, and should be put on an ice floe. A single overdose of a strong painkiller is much, much more cost-efficient than months or years of paying for someone's care! If we don't want to get our hands dirty, we can let nature take its course and leave the old geezers to die naturally of hypothermia/dehydration/wandering around outside until they're hit by a car.
I'm deliberately using brutal language here, because I want to make it clear that these are our options, at least until option 3 (invent biomedical technology that magically makes people stay in perfect health until the age of 100, when they die peacefully and painlessly in their sleep) becomes available.
We should really be spending more money on option 3 or 4. Anti-aging research to drastically increase healthspans.
We only spend .05% of Research on anti-aging research. That's crazy. Instead we wait for people to get sick then treat them
Same with how new antibiotics companies all fail bc the math doesn’t pencil out
Hard agree! I'd be in favor of more $$$ for the NIA (National Institute of Aging, part of the NIH) for anti-aging research.
I'm going to sleep soon, otherwise I would treat you to a long and nerdy comment on the FOXO pathway, first discovered in roundworms (C. elegans), which, when mutated, leads to dramatic increases in lifespan. Scientists have been trying to see if the findings can be applied to humans, thus far without success (although we have the FOXO pathway too). It's a hard problem!
Yes I've been eagerly following the work of Dr David Sinclar and others. I'm particularly excited about the Yamanaka factors and cell reprogramming!
Hey, fellow science nerd! It's cool to find someone in the comments who knows about Yamanaka factors!
> But I find it striking that none of them really seem interested in running this “what if you just didn’t get routine health care” experiment on their own kids.
Was the Oregon study about kids?
Throwing random bucks at maternity care and children's health is going to have more bang for the buck than Medicare simply because of the age question. Whoever has "paying for childhood vaccinations" on their books is automatically the winner for efficient health care spending.
The old RAND study that found no change in results made a big exception for optical care. Giving people glasses pays off! It doesn't look like the Oregon studied addressed that from searching for "opt" in the papers I could find.
I am sitting at Kaiser Permente now to get some labs. These people do good work. Their set up and structure and processes are the best. Everyone should have this healthcare.
KP is great except for the fact that they used centralized scheduling. I would like to be able to call my doctor's office directly, thank you.
I can contact my doctor directly via a chat on the website.
"My 10-year-old child has, fortunately, never had any major health problems."
Heyyyy, anecdote time!
One day, when I was ten years old, I felt a weird pain in my abdomen. It wasn't even that bad, but I mentioned it to my mom. Her instinct/Spidey Sense told her something was up, and she took me to the emergency room, even though I thought she was overreacting.
The nurse at the ER palpated my abdomen, said to my mom "Oh my God, her appendix is about to burst, WHY DID YOU WAIT SO LONG TO BRING HER IN" and wheeled me into the OR asap. (Apparently I'm built in a weird way such that even severe inflammation of the appendix caused me only mild discomfort?)
Without that, I would have died at the age of ten, probably very painfully.
This is the thing about medical care: you don't need it, until you do.
The thing that I find most hypocritical about this is that republicans are essentially saying "we KNOW that there is lots of criminal fraud in the Medicaid program, so we are going to defund the Medicaid programs by that amount. That will result in the fraud being eliminated without having any negative impact on beneficiaries, services, or providers."
When progressives (stupidly, IMHO) proposed the exact same thing ("we know that there is a lot of bad policing going on, so we're going to defund the police to eliminate the bad behavior and this will result in less crime") everyone on the right (correctly) pointed out how absurd the claim was. Now they're turning around and making an identical claim in the health care space.
To be clear, I'm aware that they're doing this because they're full of crap and lying. But the hypocrisy is especially galling to me.
This seems to assume the object of DOGE is not just to kill off the poors, especially the Black and Brown ones. Get real!
I think of excess health care spending as consisting of procedures with high costs and low benefits. *On average,* an MRI for back pain is not cost effective. Neither is a routine colonoscopy screening for colon cancer. Of course, your aunt Millie had these procedures and they saved her life, so we cannot say that the benefit is zero. To reduce spending on high cost, low benefit procedures you either need to have the government and/or insurance not pay for them, which gets people howling. Have a nice day.