What makes US health care so expensive? Hard numbers, no easy answer.

http://theincidentaleconomist.com/what-makes-the-us-health-care-system-so-expensive-introduction/

by yummyfajitas • 16 years ago

71 120 16 years ago

SamAtt2• 16 years ago

It's an interesting read and worth bookmarking if you can't get through right now (the page was going in and out as I read it).

It's kind of depressing though in that his point boils down to neither side's solution being all that effective at solving the problem. Moreover his meta point seems to be that it's too complicated a problem for politicians to solve based on their need to boil things down to a sound bite solution.

roc2• 16 years ago

Politicians don't solve based on the sound bytes. They win power with sound bites. There's no shortage of evidence of sound bites being blissfully ignored, by politicians of any stripe, moments after an election victory.

Politicians 'solve' based on lobbying efforts. And that's why they can't fix anything. Lobbying favors the entrenched and they like things nice and wasteful and anti-competitive.

pyre5• 16 years ago

Politicians love competition. If there is a bidding war between rival lobbyists, that's a good thing... for the politician.

mootothemax• 16 years ago

I'd heard arguments that compared the UK's NHS spending to that of the US, and after doing a couple of searches after reading this article, I found quite a nice infographic here:

http://www.visualeconomics.com/healthcare-costs-around-the-w...

Seems that this article matches up against the data in the infographic at least.

galactus• 16 years ago

Interesting. I have lived both in France and in Canada and I find the french health system so much better that I find it hard to believe both countries spend almost the same per capita.

narrator• 16 years ago

There are many different aspects as to why health care is so expensive in the US. I never really hear about doctor's salaries being mentioned as a cause. I was browsing glassdoor.com a few nights ago. The professions making more than 300k a year as salaried employees were almost all medical specialists. I really doubt any other country pays their doctors that well.

sachinag2• 16 years ago

sigh

The articles go into this - yes, the salaries are higher than expected, but they're a relatively small part of the problem. It's that we consume more care than any other country, and by a lot. We have to find a way to reduce demand. That's the problem.

cookiecaper• 16 years ago

I don't think you can pinpoint that and say "That's the problem". As this thread and article demonstrate, there are plenty of things that all work together to make medicine as astronomically expensive as it currently is. They are all valid and it isn't simply going to go away if we reduce demand. The price may fall to try to drive demand back up, but the medical care received will still be relatively expensive. And it's not like we can just tell people who are sick to sit around and hope not to die. I think there are fewer hypochondriacs than is often represented; most people don't go to the doctor unless they need some medical attention.

old-gregg4• 16 years ago

sigh

No it's not. The salaries are in fact the only reason we have this problem, so that's the key to the solution. And no, we don't consume "more care" than any other country (Japanese do way more).

InclinedPlane• 16 years ago

Frankly, if I can trade dollars for increased health or increased life-span I'm going to do it, and be happy to do it even if it means giving up other luxuries (which are worthless without health and life anyway). That's not the problem. The problem is inefficiencies in the system (due to byzantine regulation and taxation, perverse incentives, etc.)

shrnky• 16 years ago

The reason we don't have a solution thus far is the fundamental disagreement between those who want a total government solution(public option/healthcare) and those that want a complete free enterprise solution.

The idea of the government deciding who lives and dies creeps me out. If you are democrat remember power is cyclical and one day a republican may be deciding whether you or your loved ones live or die.

I don't have the perfect answer, but I know it's not either extreme.

rubyrescue• 16 years ago

I don't want to make this a huge political debate but i want to address the point that 'X deciding who lives and dies', where X=government. Currently we're just solving for a different value of X.

Certainly people are deciding who lives and dies; life-saving care is denied specifically by insurers, and implicitly by the fact that many don't have any means to pay for care.

That's not an argument for or against single payer or full govt-run healthcare (though i am for that - i just don't have time to get that into the discussion)...

yummyfajitas5• 16 years ago

Actually, I'm curious - do you have much evidence that insurers are deciding who lives or dies? I haven't even seen compelling evidence that having insurance at all (let alone variations within insurance) will determine whether you live or die.

jasonlotito5• 16 years ago

> the government deciding who lives and dies creeps me out

How is that any different than Acme Insurance deciding who lives and dies? And as far as the government is concerned, it's your fellow Americans deciding.

jdminhbg2• 16 years ago

It's different because you can alternatively decide to patronize Beta Insurance.

Don't take that as an argument that insurance is perfect, just as a response to your question about how it's different -- the reason people are more concerned when it's the government making decisions is that there's no recourse.

dhume• 16 years ago

A public option is not a total government solution.

loewenskind• 16 years ago

>those that want a complete free enterprise solution

Those that want a "complete free enterprise solution" don't understand how the market works and should be ignored (Hint: Market elasticity). What should be done is looking at what is done in all other developed countries and try to create the best system from that (not all of them have "free" healthcare, but none of them are ignorant enough to try a "complete free enterprise solution").

todayiamme2• 16 years ago

You know this might be the perfect opportunity to make history. let me explain. The thing that struck me the most about the post was that there was no one thing to blame and there was no one way to fix this. That's the thing.We are looking at the problem from the human frame of reference.

If someone can make a data analysis program that takes ALL of the data generated everyday and crunches it together for every conceivable variable and then uses machine learning to find common cost patterns vs. time and policy (the time and date of execution of policies and their direct impact can thus be judged). Then we might as well have magic in our hands.

This is hard data that no one can argue against (some will still manage...). If we can make something like this might as well be the first time in history that policy has been made using AI as a crutch. I hope that it won't be the last.

yummyfajitas5• 16 years ago

The problem is not that we can't find the answer, but that we don't want to. We have the technology to determine the effectiveness of many policy choices, and we've had it for a while - it's called a randomized trial (basically a great big A/B test).

We choose not to use it - it gave us results we didn't like the last time we did.

http://www.overcomingbias.com/2010/03/knowing-too-much.html

http://www.overcomingbias.com/2010/04/too-much-debate.html

todayiamme2• 16 years ago

Than you for teaching me something so important. If you're right, and I know that you are, it explains a lot of things that baffled me as well as why people choose what the choose. Sometimes the best solution isn't the best solution.

Thank you.

jan_g2• 16 years ago

I may be completely off the mark, but I think that the cost of research may be hidden somewhere in all those huge numbers . US is making breakthroughs all the time in drugs, medical machinery/equipment, IT in medicine, disease discovery & prevention, etc. For example, HPV vaccine came from the US (I know about this, because my daughter will be vaccinated when she reaches teenage period).

Much of the rest of the world is piggybacking on US. That's my opinion. I am from Europe.

travisp• 16 years ago

I think there may be some truth to this. Even when the developing company is European, they often rely on the American market to fund much of the research.

toddh• 16 years ago

About 60% of new drugs come from the US. And there are only a couple of new molecules discovered every year, mostly it's just about repurposing existing drugs because this much cheaper. More money goes to marketing. So, that's not it.

jan_g2• 16 years ago

Concerning drugs. I was thinking in broader terms, not just the cost of scientists' salaries and laboratiry equipment, but also cost of clinical trials, approval process under various countries' regulators, marketing.

yummyfajitas5• 16 years ago

More money goes to marketing only in the accounting sense. Drug companies give away lots of free samples which they list on their balance sheet sheet at retail price (for tax purposes).

Incidentally, a "drug" isn't the same thing as a "molecule". A drug is a molecule, together with efficacy tests, manufacturing process, delivery system, safety tests, distribution protocols and educational ("marketing") material. A molecule is barely more than a drug idea.

[edit: just a thought, this is probably a form of price discrimination as well. According to a few uninsured people I know, doctors tend to give the free samples to people who can't afford the medicine. ]

WillyF• 16 years ago

It's interesting that you mention the HPV vaccine. It's extremely expensive, although that's not entirely based on the research costs.

"Gardasil took more than 20 years to develop, is complex to manufacture, and must be constantly refrigerated, but that’s not why it’s so expensive. Instead, Merck calculated the price based on the money the vaccine will save the entire health-care system—and the CDC approved the price, as it does with other vaccines."

http://discovermagazine.com/2007/jun/hpv

_delirium• 16 years ago

The private-sector research costs in that case were also mainly the commercialization/manufacturing research, not the basic R&D. Still significant, but Merck didn't discover the vaccine or do the basic science; that was done by a group of several universities working with the National Cancer Center.

philwelch7• 16 years ago

So the price is based on the value more than the cost. As the patent expires or competitors develop their HPV vaccines the price will fall.

SamAtt2• 16 years ago

I don't think it's hidden at all. He says in the Drugs section...

"The problem is that our drugs, on the whole, cost about 50% more. For name brand pharmaceuticals, we pay about 77% more. Why? Some will say that it’s because we’re wealthier and need to subsidize for the rest of the world. But even if we paid more based on our relative wealth, it would come to about a 30% premium, not the 77% we do pay."

So the problem is obvious. The issue is how to fix it. We in the U.S. can either enforce our own price controls which will break the system or we can force U.S. companies to charge more to other countries and take the chance of denying medicine to sick people because foreign governments won't accept the higher prices.

Not an attractive choice no matter how you slice it.

chopsueyar• 16 years ago

Okay, I understand how it would be possible (not agreeing) to "enforce our own price controls", but how can the U.S force it's companies to charge more to other countries?

If we placed an export tariff on these pharmaceuticals, I fail to see how that could decrease pharmaceutical prices in the US.

Japanese car companies moved production here, why couldn't big pharma do the same?

I don't see two options.

MoreTuple• 16 years ago

Or we can tell companies to charge amicably across the board else they risk losing patents on drugs sold to Americans at grossly inflated rates. A drug patent should give a company the right to sell/license the drug, not the right to gouge people with it.

Clearly this lacks details, but the concept would work after the first few nullified patents.

nerme3• 16 years ago

This is true, but it only accounts for a very small slice of the over-spending pie. This is outlined throughout the series of blog posts. I recommended reading all of the posts in the series, it is well worth it.

known2• 16 years ago

I think Govt should pay diagnosis fees and patients will pay for medication.

old-gregg4• 16 years ago

You addressing the wrong side of the problem. The issue isn't WHO's paying, the issue is why so much? Have you seen some of the bills that folks without insurance are getting? Nearly every sort of surgery, no matter how trivial, wipes out most people's savings plus some.

known2• 16 years ago

I agree. If we decouple diagnosis with medication, the patient will have the option to choose medication based on his savings. For e.g http://en.wikipedia.org/wiki/Coronary_artery_bypass_surgery is done for $1000 in India. Check http://en.wikipedia.org/wiki/Medical_tourism

matrix• 16 years ago

Good article, but I'm concerned the premises of the article have been skewed by misleading graphs. The initial graph of GDP to medical expenditure is reasonably convincing, the graphs later in the article much less so. I could be wrong about this, but it feels a little like the data selection and curve fitting have been selected to supported the hypothesis rather than the other way around (something that could easily happen accidentally).

On a tangential note - that pie chart he uses in each section is an unintentionally good example of what not to do when displaying data. I have to confess, I don't really understand it.

nerme3• 16 years ago

What is his hypothesis? He doesn't seem to have any sort of agenda other than saying that it is a complex issue that can't be solved by a political one-liner like "tort reform" or "fixing big pharma".

listic• 16 years ago

Can anyone please advice a good resource to read on how US health care and health insurance system works? From a foreigner or extraterrestrial perspective, preferably.

I dream of there being the site where I can read on different aspects of life in various countries, such as education, health care, etc. all described from a neutral point of view. But I'm afraid that such thing may not exist yet due to little demand. I mean, how many people are thinking "hmm, which of those 250+ countries should I choose for living?"

old-gregg4• 16 years ago

If you are really interested, I highly recommend listening to this podcast episode: http://www.thisamericanlife.org/radio-archives/episode/391/m...

They explain in detail how our system works, explain the origins/history of it, and also explain WHY it is so expensive. It's not a mystery, really, especially for anyone who is involved.

TL;TR: it's expensive because "medical professionals" are greedy: they do unnecessary procedures, hire and keep unnecessary bloated staff and, of course, they overcharge for everything. The probability of you being diagnosed with X goes up as the number of doctors specializing in X in your area increases (listen the podcast for source), that's because the assholes just can't stomach saying "there is nothing wrong with you" and letting profits fall. Besides, you can simply look around: there is no reason for doctors to be millionaires and drug sales reps to own aircraft. The system is expensive because capitalism in healthcare is nonsense: you get greedy assholes milking "customers" who are unconscious, scared or in pain.

What's annoying is that doctors enjoy the unexplained immunity from public anger. It's always the "evil" insurance companies and "big pharma", or government regulators, who are to blame, while its not uncommon for American doctors to make million+ dollars a year delivering results that are no better of their French counterparts. I invite you to a typical cancer clinic in the US, you'll face devastated people who are dying, and who are getting ass-raped by handreds of thousands of dollars of medical bills on top of having an insurance. Those poor folks are sitting in lavish doctor's offices furnished with the most expensive hardwood flooring money can buy, surrounded by mind blowing numbers of "support staff" who have nothing to do with medicine, yet they too need to get paid. For anyone who's ever been to one, question of "why our heathcare so expensive" has an obvious, straight, screaming in your face answer.

My personal solution is radical, simple and effective: ban drug commercials, introduce fixed salaries for doctors, and if someone's unhappy - GTFO, plus open visas for Indian/French/Canadian doctors who'll be more than happy to take their place. Yes, government is grossly inefficient, I know, but NOTHING can be worse that this mess we're in. The amount of money extorted from the public by "medical professionals" is just insane. I've worked for a semi-military contractor that was selling to the government, wasn't rosy, but not nearly as outrageous that this quasi-market monster of a healthcare we have.

old-gregg4• 16 years ago

Nice. And all those downvotes are telling me that nothing will change for the better. There are simply too many smart and educated professionals who, not surprisingly, get outraged by the idea that charging money for healthcare is unethical and refuse the believe that capitalism just can't work in every facet of the society. (hey, why not switch to a private army then?)

randallsquared• 16 years ago

"It's because those dirty, rotten scoundrels are greedy" isn't a sufficient explanation of why a sector is expensive. Greed drives prices down in at least some markets (food and computers, to pick two very different kinds of markets), so the question is why greed isn't making healthcare better, cheaper, and more widely available in the way that it has made groceries better, cheaper, and more widely available.

Someone• 16 years ago

I mostly agree with you, but you are forgetting the other side of the coin: the combination of patients that expect perfection and an out-of-control claims culture. Exaggerating: if a doctor explains that some thing (s)he can do has a 90% chance of relative success, at least 10% of patients will sue for malpractice (the unlucky 10% plus some that complain that the procedure didn't 100% work out as expected). Even if they do not get awarded compensations, the legal costs of this must be payed by someone.

lionhearted• 16 years ago

I did a lot of looking into this. Here's some points pasted in from an old comment of mine that was popular -

Some reasons American medicine is very expensive:

1. Health insurance, but not treatment, is fully tax deductible. So if you buy your own penicillin, it's with after tax money, but if your insurance company buys it, it's pre-tax money. That's one of the reasons that health insurance is so widespred in America even for routine medicine like antibiotics and checkups. That's a major contributing factor in why the administrative costs are so high.

2. There's a shortage of doctors in America, and qualified doctors from other countries are not allowed to practice medicine in the United States. So there's good doctors from Canada, England, Japan, wherever that'd love to practice in the USA, but can't. This artificially inflates doctor's wages by restricting supply.

3. American doctors are typically required to get an undergraduate degree, medical degree, and do a below market, crazy hours residency in order to be able to practice medicine. That's 8-10 years of study and below market working to practice medicine. Now, medicine is very important and needs to be done right, but I don't believe for a second that a focused apprenceship couldn't teach a very specific kind of medicine - say arithscopic surgery - in just 2-4 years under a highly trained doctor, but this isn't an option.

4. The Food and Drug Administration requires new drugs to be proven not only for safety, but also efficacy. That's an incredibly high and expensive burden to meet - that means that drugs need to be proven to work to a certain standard, instead of just not harm. This adds years of development time and millions of dollars in cost to the new drug development cycle.

Those are all legislated reasons that increase the cost of medical insurance, doctors, and drugs. They'd be fairly easy to remove -

1. All medical and health expenses can be written off taxes regardless of insurance. Employees can choose to convert som of their wages to a medical or health plan tax free to both the employer and employee. (Currently, under most circumstances, only employer-provided health insurance can is tax free)

2. Allow any doctor in a country with reasonably competent medical standards to practice in the United States.

3. Require that doctors be able to demonstrate that they can practice their area of medicine capably. Be flexible in how they demonstrate that. Note: This will incur high opposition from medical schools and current doctors who are currently enjoying the wage premium and had to go through the very long, difficult, and expensive system.

4. Change the drug standard from "safety and efficacy" to only safety. Drugs will come to market much faster and cheaper. There's plenty of people and organizations that will test proven safe drugs for efficacy for free or nominal cost once drugs hit market, and efficacy will get understood with time. Put this way - a proven safe but questionably effective treatment against heart disease being held off the market for five years and costing much more to get to market is not a good thing. If it's certainly safe, then let people make the decisions with their physicians, instead of having the FDA take such a strong gatekeeping stance.

Technology has progressed such that we don't need government protection from ourselves as much any more. The current set of legislation has greatly increased the costs of doctors and medicine. Regardless of political position, and regardless of stance on other health issues, addressing these four points will make the medical system fairer, more effective, and and less expensive with relative ease.

Admittedly, there's some powerful entrenched interests that are winning in the current arrangement, and will oppose these simple improvements.

bryanlarsen• 16 years ago

Re #2: Most new Canadian doctors get their American certification as a "warm up test" for the Canadian test, since the American test is similar, but easier than the Canadian test.

RK• 16 years ago

I find this a little hard to believe, because American licensing and board exams are expensive and usually are taken over the course of many years.

For example, the licensing exam (USMLE) has 4 parts, one of which involves travel to the US for an in-person oral exam.

Edit: It looks like Canada might be accepting USMLE as equivalent to their exam. In that case it would make since to only take the US exams, allowing you to be potentially licensed in both countries.

gjm11• 16 years ago

On #4: surely in practice the choice is often going to be not "drug A or nothing?" but "drug A or drug B?" where drug B is an established standard treatment. In that situation, choosing drug A does harm if the drug isn't effective, even if the drug itself is perfectly safe.

alextgordon• 16 years ago

Yes, and in fact it would be bad for the drug companies bottom line, so I doubt they'd go for it in the first place.

It would essentially create two groups of drugs. The pre-legislation guaranteed effective drugs and the post-legislation unguaranteed drugs.

As you point out, the unguaranteed drugs would kill people, through inaction. No doctor wants to risk killing their patient, so if at all possible they'll go for the safe pre-legislation alternative.

This would greatly hurt sales of new drugs, which is the last thing drug companies want to do.

TheEzEzz• 16 years ago

Likely a doctor would prescribe the standard treatment first (assuming it has a decent track record), and only resort to the new, unproven alternative if the standard didn't work. Or, the standard might have undesirable side effects and the patient themself would opt for the unproven alternative.

philwelch7• 16 years ago

A partial solution to #1 came about during the Bush administration--"Health Savings Accounts", which are bound to your normal health insurance but work as a regular savings account. You put pre-tax money into them, keep a balance from year to year (the older MSA expired every year and you lost your money) and you can even take your money out of the HSA, just by paying taxes on it.

It didn't catch on, largely because people are used to having relatively comprehensive health insurance from their employers. Until you break the employment/insurance bundling nothing else will budge. And no one who has a job with health insurance wants to break the bundling.

matwood2• 16 years ago

I would love to have an HSA that is completely portable that I could drop some tax free money in each month and save up for when I need to get healthcare (like when I had ACL reconstruction).

IMHO, the fact that Obamacare did not expand on HSAs shows affordability is less important than control.

fr0sty• 16 years ago

An additional problem with an FSA (you can only get an HSA if you have a high-deductable policy) is that the list of acceptable expeditures is limited and the funds expire every year.

I would love to have some tax-free healthcare money to spend, but I cannot guarantee that I will need penicillin, surgery, etc. this year.

I don't want to consign $5,000 to an account with a significant chance that I will simply have to forfeit the money at year's end.

Dove• 16 years ago

It didn't catch on

HSA enrollment has been rising by about 2 million people per year for the last few years, and is now at about 10 million people [1]. I'd say it's catching on.

I cannot recommend the HSA/High Deductible combination highly enough, especially for primary care. The difference between seeing an overworked doctor who is paid by insurance and an independent doctor who is paid by you? Night and day.

For anyone in Seattle, I strongly recommend http://www.qliance.com/ for primary care. Monthly fees for unlimited primary care, probably lower than your phone bill. They're cheap and indescribably excellent. (I don't work for them. I'm not associated with them in any way beyond being an extremely happy customer.)

[1] http://www.ahipresearch.org/pdfs/hsa2010.pdf

tokenadult• 16 years ago

2. There's a shortage of doctors in America, and qualified doctors from other countries are not allowed to practice medicine in the United States.

Are you sure about this? What do international comparisons say about physicians per capita in countries around the world?

It's conventional supply-and-demand economics to suppose that if there were more doctors, each doctor would make less money overall, and thus the services of each doctor would be cheaper for patients. But actually the economist Martin Feldstein, who conducted a study of the issue in the 1960s based on data from Britain and the United States (with two rather different systems of providing medical care to citizens), found out that generally doctors refer business to other doctors. So that as the number of doctors goes up in a society, the use of doctors' services per patient goes up, and thus overall societal spending on medical care goes up, as does spending per patient. What figures do you have about what is actually happening in different countries, and which countries currently have the best supply of comparable medical personnel?

acgourley2• 16 years ago

It's been shown that in the US when you add more doctors into the system the amount of treatment and procedures done scales up. There is an incentive for a doctors office to stay busy, after all.

Alex3917• 16 years ago

"There's plenty of people and organizations that will test proven safe drugs for efficacy for free or nominal cost once drugs hit market, and efficacy will get understood with time."

So if testing the efficacy of new drugs costs only a nominal amount of money, how would eliminating this requirement save us enough money to make it worthwhile? Also, if anything the market shows us that no one is willing to test the efficacy of drugs except for the drug companies. How many non-profit pharmaceutical companies are there, other than MAPS?

philwelch7• 16 years ago

Parallel efficacy testing across a market is cheap. Efficacy testing under a central federal agency is expensive.

zeynel1• 16 years ago

"Technology has progressed such that we don't need government protection from ourselves as much any more."

Well said. Government agencies pretend to protect the individual but in fact they are bound by the strong insurance industry lobby.

DannoHung• 16 years ago

Your reasoning for point 4 is horrendous and terrible. You are advocating for the return of snakeoil. There are already problems with homeopathic remedies and "magnets" and all this other crap that gives people false hope and leads them to avoid making medically difficult choices while lining the pockets of shysters.

philwelch7• 16 years ago

Seems like snake oil is a problem either way. FDA testing for efficacy before approving prescription drugs is a totally different ball of fur--unless you expect legitimate physicians to write prescriptions for snake oil?

pyre5• 16 years ago

But what is the cost of trying to legislate these people away?

anamax6• 16 years ago

> 1. Health insurance, but not treatment, is fully tax deductible. So if you buy your own penicillin, it's with after tax money, but if your insurance company buys it, it's pre-tax money. That's one of the reasons that health insurance is so widespred in America even for routine medicine like antibiotics and checkups. That's a major contributing factor in why the administrative costs are so high.

That's not completely true - someone else mentioned Health Savings Accounts.

There are also flex spending accounts, which are tax deductible. However, you only get to change the Flex Spending amount once a year or when you change jobs, get married, divorced, or have children (and possibly a couple of other events). That's okay for chronic problems and other things that you can plan for, but not so good for unexpected events.

Under previous law, there was no legal limit on flex spending accounts. Obama care limits them to $4k.

camiller2• 16 years ago

>Under previous law, there was no legal limit on flex spending accounts. Obama care limits them to $4k.

Maybe in that last sentence your confusing HSA with FSA? Under previous law there was/is a $5,000 limit on Flex accounts. As far as I know that limit is not changing (I'll find out for sure in December when renewal time comes around) however Obama care will no longer let you use a Flex account to buy over the counter medicine like ibuprofen without a prescription (starting Jan 1, 2011), band-aids are still OK.

Edit: Upon further research I can definitely say with certainty that I have no idea what the hell will happen next year. I've spent the last thirty min trying to trace through http://docs.house.gov/energycommerce/ppacacon.pdf and the US Code to figure out what the changes to FSA's are and am getting nowhere. wikipedia suggests that the limit will actually drop to $2,500 in 2013 rather than the $4,000 next year suggested by anamax. I'm going to have to spend a lot more time on this.

bballant2• 16 years ago

For point # 3, it's actually even worse than that. These days, the best doctors also do a fellowship after residency. It's slightly less ridiculous than a residency, but it's another 2-4 years of being underpaid tacked on to the previous 10.

My buddy, who is nearly finished with his cardiology fellowship, is nearly 300k in debt at this point. On the other hand, that dude has already saved some lives and I'd trust him w/ mine in a <dorky pun>heartbeat</dorky pun>.

tomwalker• 16 years ago

As a doctor in England that has seen the American system, there are a lot of interesting points.

I agree with number 3 on specialisation; a doctor should first "learn how to learn" then specialise. If they change their mind, they can easily relearn. Most stay with one thing, with many becoming ultra specialists ie. knee surgeons.

Locke1689• 16 years ago

Wouldn't that mean that you disagree with lionhearted? The undergraduate and medical school degrees are supposed to give general, not specialized knowledge. Residency is the specialized section.

bballant2• 16 years ago

Another quick comment about doctors and pay (because I had this conversation the other day w/ a young doctor). Doctors are incentivized to prescribe costly tests. They get paid more w/ every test/procedure, and tests also serve to cover their asses. Patients also, often, demand the testing.

Those who are against tort reform often use some statistics showing that tort fees only account for a tiny percentage of health costs, but they miss a deeper relationship between the fear of being sued (most doctors get sued at some point in their career) and the defensive, expensive, care doctors give.

arn• 16 years ago

"[Doctors] get paid more w/ every test/procedure."

This is not generally true. As a physician, I don't get paid any more if I send people to get labs, XRays, MRIs, or any random expensive test.

The exceptions to this are if as a small business owner, I happen to also own the X-Ray machine, or lab. Or, if you personally perform a procedure (like a surgeon), then the procedure does get you paid more, but you generally get referred to the surgeon when you have a problem.

I agree the other incentives do exist though. "Cover your ass" and "patient demands". But those are an issue with malpractice liability and patient education perhaps.

patfla• 16 years ago

Among the reasons (first list): #s 2 and 3 are ways in which the AMA restricts supply in the US. The AMA may claim 'quality' (and who can gainsay claims of quality in health care) but one suspects that restricting supply and keeping salaries high is an at least equally valid (note the round about elocution) reason.

Claims that something is 'complicated' can be used to obscure and it seems to me to that one very clear source of problems in health care is the AMA. On the other hand, the AMA represents pretty much all doctors in the US and if they're earning above market salaries you can bet that most of them would strongly defend that. "They spent so many years in med school"; "they have so much student debt"; and "health care is unimpeachably a matter of quality" - right?

Financial markets are 'complicated' and that's why we can't do anything about those either.

jbarham• 16 years ago

> Allow any doctor in a country with reasonably competent medical standards to practice in the United States.

The malpractice lawyers will love this one.

But put another way, is there any country that claims it has a surplus of doctors? I'm skeptical of claims that there is a "shortage of doctors" in the US and other developed countries when you compare rates to third world countries. FWIW Canada has long claimed it has a shortage of doctors too. In practice that means there's a shortage of doctors in rural Manitoba and Saskatchewan which is why such a high proportion of doctors in Saskatchewan are from South Africa.

I don't think there is so much a shortage of doctors as a lack of nurse practitioners etc. who have the legal authority to treat the medically trivial ailments (e.g., coughs, colds) that most of the time is why we go see a doctor.

Since the medical profession is self governing, it is a cartel and therefore it is in the interests of doctors to control supply to keep prices high.

nerme3• 16 years ago

The biggest point that he is making is that there are a LOT of areas where the US is overspending on health care. Which, if the effectiveness of this health care was in line with the increase spending, it would be alright. Unfortunately, it isn't, so there is a lot of waste.

We are spending money on the wrong things and it is a systematic and cultural problem.

Anecdotally, I tend to see a lot of people in the US go to the doctor "just to play it safe". X-rays for a sore knee, antibiotics used for a mild sinus infection, blood work done because they're not sleeping well at night... we spend a lot of money with the idea in our heads that the medical industry can and will cure all of our ailments.

protomyth• 16 years ago

How many new drugs on the market will not generate a lawsuit? What is the average amount of time that a patent will last after the drug is approved for sale?

russell3• 16 years ago

Here's my problem with it: 60+% (by eyeball) of the costs are not categorized, so there is no real guidance for reform.

Outpatient care is quite high, but part of that is because hospital visits are shorter in the US and many in-hospital procedures are actually done in clinics. A lot of people, especially the poor, go to emergency rooms for routine stuff, because they can get free treatment. But I think the US is way overbuilt in expensive diagnostic equipment. I live in a county of 250K people and there are at least 5 imaging centers that I know of.

Edit: San Luis Obispo is a rural county. The largest city is only about 50K people. This kind of over building is not limited to huge metropolitan areas.

ahi• 16 years ago

I think capital expenditures is the start of why costs are so high. It is difficult to find a hospital these days that isn't currently renovating or expanding. Hospitals can spend however much they want because they have no pressure on their prices. The insurers don't care how much they are paying so long as it's comparable to other insurers. They can just pass along the increases to employers/individuals who are required to buy. The only pressure healthcare providers have comes from Medicare and Medicaid and whatever they lose there they can just shift to the private insurers.

rbranson• 16 years ago

Ah yes, our "free market" health care system.

jcl• 16 years ago

When you say 60% is not categorized, are you referring to the green slice in his chart? That's the amount he thinks the U.S. should be spending given its wealth and what other countries spend. He is intentionally only categorizing the parts that he thinks exceed other countries' expenditures.

(See the last paragraph of the conclusion.)

russell3• 16 years ago

Thank you for pointing that out. tltrbc (to long to read between compiles. And why too long? Coding in a Java framework.)

Which goes back to my original question: What are these "extra expenses".

kscaldef3• 16 years ago

That 60% is the "expected" costs. The categorization is just for the "extra" costs.

barrkel• 16 years ago

Does anyone know how to disable the mobile view on this site on Android? It clips the images, in particular.

WalterBright• 16 years ago

This article http://www.theatlantic.com/magazine/archive/2009/09/how-amer... lays out the reasons in a convincing manner. Very illuminating is the article pointing out that Lasik eye surgery is decreasing in cost, and why, while other health care costs are soaring.

zach• 16 years ago

WOW. Thanks for sharing that article. I'm sorry I missed it when it came out. An article full of novel insights and heartfelt interest in the subject. And I used to work for the company the author headed ten years ago!

Highly recommended, and I'd point out that it's highly relevant the the meme du jour, which is that if you're not paying, you don't have the privileges associated with being a customer. Employer-purchased health insurance and bureaucratic health care programs have robbed patients of their power to be customers, and it's something I was never clued into before.

VladRussian2• 16 years ago

So much debate around simple thing. A private enterprise (including medicine) is driven by profit motive, that means decreasing cost (bottom line, quality) and increasing margin (price).

In a free market, quality decrease and price increase is balanced by competition. Once competition is severely limited and the minimal quality is enforced through things like FDA - the sky is the limit for the price.

jdavid• 16 years ago

a few points

* that does not look like a best fit line, more like a curve

* maybe the curve should slope up more at the end?

* if the curve slopes up more at the end, maybe as you spend more you reach an asymptote. it would make sense if being the best at something requires more than a linear energy increase than being 2nd or 3rd best at something.

* doesn't John Nash's work explain this?

kcy• 16 years ago

Interesting article (http://healthpolicyandreform.nejm.org/?p=12706) in the New England Journal of Medicine about a county in Colorado that was featured in a New Yorker article (http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_...). This NEJM article describes some of the reasons poeple think this community has been able to keep costs low but maintain high quality care.

What makes US health care so expensive? Hard numbers, no easy answer.

Related Stories