But why does health care cost so much more per capita in America? Is it because of a higher percentage of “diseased” patients in the population? Or are the higher health care costs buried somewhere in more expensive treatments or profits to medical professionals and pharmaceutical companies? In “Taking the Measure of Health Care in America,” NPR reporter Joe Neel writes,
”Economists point to profits and administrative costs as the main drivers of health care costs in the United States. Overall, health care is not nearly as lucrative in Europe as it is here, because of more intensive regulation of the various health care sectors in Europe.
Another difference behind the lower costs is that care is less intensive in other countries. A headache doesn't always necessitate a CT scan in Europe, as it seems to in America.”
According to Joe Neel, NPR's research indicates that higher costs in America are also due to higher expectations for treatment and he writes,
”The five countries examined have fewer MRIs, fewer expensive heart procedures — less of the high-tech medicine that keeps costs so high in America. And with fewer machines comes less of a financial incentive to keep them running at a profit.
"People [in the U.S.] routinely expect to become millionaires in health care. That is much less common in Germany," Princeton economist Uwe Reinhardt says. "Everything in Germany is more modest in scale, more modest in expectations."”
An article from the NY Times in November 2007 on “The High Cost of Health Care,” highlights the reason for America's higher health care costs in greater detail.
”Contrary to popular beliefs, this is not a problem driven mainly by the aging of the baby boom generation, or the high cost of prescription drugs, or medical malpractice litigation that spawns defensive medicine. Those issues often dominate political discourse, but they have played relatively minor roles in driving up medical spending in this country and abroad. The major causes are much more deep-seated and far harder to root out.
Almost all economists would agree that the main driver of high medical spending here is our wealth. We are richer than other countries and so willing to spend more. But authoritative analyses have found that we spend well above what mere wealth would predict.”
This is mostly because we pay hospitals and doctors more than most other countries do. We rely more on costly specialists, who overuse advanced technologies, like CT scans and M.R.I. machines, and who resort to costly surgical or medical procedures a lot more than doctors in other countries do. Perverse insurance incentives entice doctors and patients to use expensive medical services more than is warranted. And our fragmented array of insurers and providers eats up a lot of money in administrative costs, marketing expenses and profits that do not afflict government-run systems abroad.
The article also lists several possible remedies such as increased research regarding which treatments would work best for each patient so that less time and money is wasted on unnecessary (and often harmful) treatments, increased utilization of information technologies, more effort spent on preventative care, Medicare-negotiated drug prices, and less pay to providers. Of particular interest to me was the following excerpt, which underscores the necessity of increased pervasiveness of evidence-based medicine in medical practice.
”The sad truth is that less than half of all medical care in the United States is supported by good evidence that it works, according to estimates cited by the Congressional Budget Office. If doctors had better information on which treatments work best for which patients, and whether the benefits were commensurate with the costs, needless treatment could be junked, the savings could be substantial, and patient care would surely improve. It could take a decade, or several, to conduct comparative-effectiveness studies, modify relevant laws, and change doctors’ behavior.”
And what about a single-payer system in which the federal government pays for all health care costs and negotiates all prices to its satisfaction? The article does a good job of reminding us that “a single-payer system is no panacea for the cost problem — witness Medicare’s own cost troubles — and the approach has limited political support.”
Clearly, the health care dilemma in America requires multiple solutions. In a later post, we'll take a look at how each of our presidential candidates has promised to address the state of the American health care system.
But for now some questions ....
1) How do we know that these claims that American health care is more expensive are true? Someone clearly had the data here regarding costs of specialists, overuse of technologies, number of CT scans and MRI machines, etc. What exactly does the data tell us? Who has the data and is it accessible?
2) Economists are cited as specialists regarding the drivers of high medical spending in the US. Exactly which economists are these? What exactly did they say? Are there economists who disagree? If so, about what do they disagree?
It's true that not all of us can be experts on health care but it's also dangerous to assume that the experts are always correct – or perhaps more importantly, that their work is always being interpreted in the appropriate context. I want to make it clear that the reporters here did their job in reporting the situations to us. But I ask the questions because the onus is on us, as consumers of the reporting, to think carefully about the validity of the claims in the reports and their implications on public policy.
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