Government And The Cost Of Dental Care

UntitledIn July 2015, former Enron board member, New York Times columnist, and champion of ever more government control of health care, Professor Paul Krugman, wrote a disturbing blog entry:

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.

Krugman goes on to insist dentistry is a consumer-driven market: Insurance is far less prevalent in dentistry than in medicine, and most dental care is routine and preventive. Yet, he points out, costs of dental care have risen at the same rate as those of other health care, not at the rate of other consumer goods and services.

With respect to prices (an important factor in cost, but not to be confused with cost), Professor Krugman is not quite right. In the Consumer Price Index, the price of going to a dentist rose 2.8 percent in the twelve months to August 2016, versus 4.3 percent for going to a doctor. The price of services other than medical services rose 2.8 percent, so dentistry does not seem out of line. On the other hand, the price of seeing “other medical professionals” rose only 1.3 percent, and prices for all items less medical care rose just 0.7 percent, so it certainly looks like something might be going on in dentistry that needs reform.

What Professor Krugman missed was the supply side of dentistry, not the demand side. “Other medical professionals” includes professions like physical therapist, which some describe as “midlevel.” Dentists’ state licensing boards, however, have excluded midlevel practitioners who can provide some services at lower cost.

The Pew Charitable Trust have researched and advocated for solving this with dental therapists:

… midlevel providers similar to physician assistants in medicine—[who] deliver preventive and routine restorative care, such as filling cavities, placing temporary crowns, and extracting badly diseased or loose teeth. As states grapple with provider shortages, especially to serve vulnerable populations, a handful have acted to allow dentists to hire these practitioners, and many others are exploring the option.

So, price competition in dentistry is not due to a lack of government controlling demand, but of government having limited the supply of less expensive options. Hopefully, that is changing.

Comments (15)

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  1. Ron Greiner says:

    Dental insurance did not come up in last night’s debate but Obamacare did. Hillary said, “If I’m elected President – families will save $2,500 a year on health insurance! Also, you will be able to get your doctor back even if you are deplorable.”

    Anderson asked Trump: “Do you assault women?”

    Trump: “Nobody has more respect for women than I do. Nobody. No one. Moving on a married woman is a sign of respect. I’m what every parent hopes their daughter marries. All women respect me.”

    Hillary made Iran great again – vote Trump

  2. Lee Benham says:

    Hillary understands the problems with the System just as much as the NCPA. Apparently they both agree that the American people are just to stupid to be told what is really causing the problem which is Employer Based Benefits.

    Here are some of her transcripts of paid speeches
    .
    Clinton Said The US Seems “To Be Wedded To” Employer-Based Health Insurance, “It Would Be Very Difficult To Get A Consensus Politically” To Change That. “So we have made a decision built on an old World War II program that was using health benefits as a way of keeping people in the workforce and being competitive, linked to employment. That is very costly, and we also moved over time from what used to be non-profit insurance companies to mostly for-profit insurance companies today. People are entitled to make a profit, but that drives up costs, and we you know we have that built into this 18, 20 percent GDP. So we made decisions and we seem to be wedded to those decisions. So it would be very difficult to get a consensus politically that would dramatically change. I mean, if you look at the Affordable Care Act, it starts with an employer-based system. Most people who have in the private sector insurance won’t see much change, depending upon, you know, what the pricing structure does. But their basic policies will remain as they are.” [Hillary Clinton remarks to ECGR Grand Rapids, 6/17/13]

    Hillary Clinton: “Businesses Pay Taxes” On Health Care Even In Single-Payer Systems, “So Businesses Also Have A Direct Interest In Getting The Cost Of Health Care To Be Lower.” “So employers in the United States have a very direct stake in trying to assure that their employees and their employees’ families are healthier, because they end up bearing part of the cost burden when that is not the case. We just had a very widely reported incident of an executive of a major American company, you know, complaining that two babies born with serious health problems had each cost the company a million dollars. Well, there has to be a recognition that maybe some kinds of health problems cannot be avoided. They’re genetic, they’re congenital, they’re accidental, they’re infectious, but some kinds of health problems, particularly what we’re talking about, the chronic disease load can be mitigated against. And so businesses have that direct opportunity, but even in other countries where you don’t have an employer-based system but a single-payer system, businesses pay taxes. So businesses also have a direct interest in getting the cost of health care to be lower.” [Hillary Clinton Remarks for the Novo Nordisk Diabetes Conference, 2/14/14]

    Clinton Said Her Goal In The 90s Was To Create A Universal Health Care System Around The Employer-Based System, Which The Affordable Care Act Achieved. “And so we were trying to build a universal system around the employer-based system. And indeed now with President Obama’s legislative success in getting the Affordable Care Act passed that is what we’ve done. We still have primarily an employer-based system, but we now have people able to get subsidized insurance. So we have health insurance companies playing a major role in the provision of healthcare, both to the employed whose employers provide health insurance, and to those who are working but on their own are not able to afford it and their employers either don’t provide it, or don’t provide it at an affordable price.” [Hillary Clinton Remarks for tinePublic – Saskatoon, Canada, 1/21/14]

    Clinton Cited President Johnson’s Success In Establishing Medicare And Medicaid And Said She Wanted To See The U.S. Have Universal Health Care Like In Canada. “You know, on healthcare we are the prisoner of our past. The way we got to develop any kind of medical insurance program was during World War II when companies facing shortages of workers began to offer healthcare benefits as an inducement for employment. So from the early 1940s healthcare was seen as a privilege connected to employment. And after the war when soldiers came back and went back into the market there was a lot of competition, because the economy was so heated up. So that model continued. And then of course our large labor unions bargained for healthcare with the employers that their members worked for. So from the early 1940s until the early 1960s we did not have any Medicare, or our program for the poor called Medicaid until President Johnson was able to get both passed in 1965. So the employer model continued as the primary means by which working people got health insurance. People over 65 were eligible for Medicare. Medicaid, which was a partnership, a funding partnership between the federal government and state governments, provided some, but by no means all poor people with access to healthcare. So what we’ve been struggling with certainly Harry Truman, then Johnson was successful on Medicare and Medicaid, but didn’t touch the employer based system, then actually Richard Nixon made a proposal that didn’t go anywhere, but was quite far reaching. Then with my husband’s administration we worked very hard to come up with a system, but we were very much constricted by the political realities that if you had your insurance from your employer you were reluctant to try anything else. And so we were trying to build a universal system around the employer-based system. And indeed now with President Obama’s legislative success in getting the Affordable Care Act passed that is what we’ve done. We still have primarily an employer-based system, but we now have people able to get subsidized insurance. So we have health insurance companies playing a major role in the provision of healthcare, both to the employed whose employers provide health insurance, and to those who are working but on their own are not able to afford it and their employers either don’t provide it, or don’t provide it at an affordable price. We are still struggling. We’ve made a lot of progress. Ten million Americans now have insurance who didn’t have it before the Affordable Care Act, and that is a great step forward. (Applause.) And what we’re going to have to continue to do is monitor what the costs are and watch closely to see whether employers drop more people from insurance so that they go into what we call the health exchange system. So we’re really just at the beginning. But we do have Medicare for people over 65. And you couldn’t, I don’t think, take it away if you tried, because people are very satisfied with it, but we also have a lot of political and financial resistance to expanding that system to more people. So we’re in a learning period as we move forward with the implementation of the Affordable Care Act. And I’m hoping that whatever the shortfalls or the glitches have been, which in a big piece of legislation you’re going to have, those will be remedied and we can really take a hard look at what’s succeeding, fix what isn’t, and keep moving forward to get to affordable universal healthcare coverage like you have here in Canada. [Clinton Speech For tinePublic – Saskatoon, CA, 1/21/15]

    • Ron Greiner says:

      Clinton Said – “The US Seems “To Be Wedded To” Employer-Based Health Insurance, “It Would Be Very Difficult To Get A Consensus Politically” To Change That.”

      The good news is we don’t need a consensus to kill employer-based health insurance. It is going to happen no matter what reform comes next.

      The average Obamacare rate increase in 2017 is 24%.

  3. Ron Greiner says:

    Back to debate coverage — Audience Question: Obamacare made things more expensive, not less. How will you bring healthcare costs down?

    Trump: Well—

    Anderson: No Hillary’s supposed to go first here.

    Clinton: No it’s fine I’d rather go second.

    Trump: No it’s fine you go first.

    Clinton: No you.

    Trump: No you.

    Clinton: No you.

    Trump: No you.

    Clinton: No you.

    Trump: No you.

    Clinton: Obamacare is good.

    Trump: Obamacare is a disaster.

    Anderson: Hillary, your husband Bill also said Obamacare is a disaster.

    Clinton: No he didn’t.

    Trump: Bernie Sanders says Hillary has bad judgment.

    Anderson: Let’s move on.

  4. Barry Carol says:

    At least with dentistry, it’s a breeze to find out what services and procedures cost before the work is done. I only had dental insurance for about 15% of my working life and even Medicare doesn’t cover the routine stuff. It hasn’t been a problem to find out what things cost ahead of time and costs for the routine services haven’t increased much more than general inflation over the last 40 years.

    By contrast, I was in a NYC hospital for several days in 1976. A semi-private room was $150 per day back then ($75 in the suburbs around here). Now it’s north of $2,000 in NYC. If it just kept pace with the CPI, it would be about $600 ($300 in the suburbs). Dental care is far more affordable than healthcare both then and now, especially now.

  5. Bart I says:

    Are they comparing prices for like services then and now, or simply overall costs? I would expect total costs to rise simply because there is more stuff available to spend money on. How would a mouth full of implants stack up against a set of dentures?

  6. Lee Benham says:

    I have never read a Dental Insurance plan that shouldn’t have had the word Charmin written across the top of it, biggest waste of money ever! However at least it is insurance written in the free market. Unlike Health Insurance that is subsidized and costing tax payers nearly $660 Billion a year. Dental Insurance is an actual Insurance market. health insurance is not an Insurance market.

  7. Bob Hertz says:

    My agency markets 4 different dental plans, and every single one of them has an annual limit of how much the carrier will pay for patient care. The limits range from $500 to $2,000.

    In other words, this insurance is tremendously different from open-ended health insurance. That keeps the cost of dental insurance down, which is good. But I think we have apples and oranges here.

  8. John Fembup says:

    “this insurance is tremendously different from open-ended health insurance.”

    Yes, true; but the difference in insurance does not explain the difference in cost.

    There is no dental treatment that costs a million dollars. There is none that will cost $300,000 a year to the earlier to occur of forever on the patient’s death. There are good reasons why filling a cavity or placing a crown does not cost $75,000. If that is what you mean by “apples and oranges” I suppose I agree with you. But differences in insurance neither cause these things, nor explain them.

    I think one must first look at the differing requirements of delivering necessary care. I think those differences are the principal drivers of cost and the design of insurance. If the objective is to reduce the cost of insurance, I think one must first try to figure out if there is a way to deliver the care at lesser cost. Tinkering with insurance itself does not address, and therefore cannot solve that problem – even if it might help a little at the margin.

    • Barry Carol says:

      Even the term “necessary care” needs further discussion. To the extent that necessary care means adhering to the standard of care as developed by the specialty societies and perceived by most doctors in the U.S., it probably incorporates more testing than doctors in other countries might do because our medical litigation environment is more litigious than theirs and doctors need to do more to protect themselves from potential lawsuits. This defensive medicine phenomenon even when adhering to our more thorough standard of care criteria can easily account for 15% of healthcare costs. More aggressive, marginally useful and even futile care at the end of life could account for another 10% of costs easily.

  9. […] October’s Producer Price Index was flat. However, prices for most health goods and services grew slowly, if at all. Seven of the 15 price indices for health goods and services declined. The major exception was prices for dental care, which increased 1.5 percent. Dental care is dominated neither by government nor private insurance, so dental price increases are not explained by NCPA’s usual theory of health inflation. I addressed dental price increases in a previous article. […]