What Drives High US Healthcare Costs? Price or Utilization?

[haha]

Studies say price.

The US Health Care Rip-Off - The Finance Buff

 

[jug]

If you use a doctor who is on the up and up, he will order tests according to need and keep not only your health in mind, but your wallet.

However, as I've experienced with older family members and possibly myself, being new to the city I live in, it almost seems the tests are being ordered to "utilize" the expensive equiptment in the clinic. Also, the US due to the legal system seems to practice more "cover your ass" medicine, driving the cost up.

Take into account the amount of paperwork, billing, and ancilliary services for billing, the myriad of insurers, the huge profit motive in insurance industry, then you can understand where our money goes.

When you have many different insurers offering a variety of plans, you do not have the economy of scale in a more standardized system.

This whole arguement about choice of health care is ridiculous when you take into account that all of us despite what we may believe are subject to the same ills. Just because you may bike 10 miles a day, eat your veggies, get good sleep does not preclude you from coming down with heart disease, cancer and other pleasantries.

We are not cars, as we age we become more susceptable to illness and in reality the best risk pool is a very large and diversified population.

So I guess the great expenditures per capita is for profit, tests not needed, rip offs and paperwork, not necessarily quality.

jug

 

[Frugality_of_Apathy]

Medicaid and Medicare.

Those are the reason for our high cost of healthcare.

The patients don't care how much of the doctors time they take up or how many tests need to be run or what they cost. They aren't paying for it and there are lots of hypochondriacs wasting time and resources. The doctors don't deal with the cost of anything they do, that's all administration. The administration tries to get as much money as they can from insurance companies and medicare/medicaid. Insurance companies aggressively try to take less responsibility or drive down costs, but the government isn't dealing with their own money so they don't really negotiate. The hospitals take what they can from the government and then use this price to say that's their standard price and stonewall insurance companies' bargaining.

Right now we have the worst possible mixture of capitalism and socialism. Either the government needs to get out of it all together and let the market drive down cost or take over completely and destroy our innovation. There used to be such a thing as charity hospitals, but now with the government mandating that all hospitals need to help anyone regardless of if they can pay, they have to push that cost onto responsible citizens.

 

[haha]

Medicaid and Medicare.

Those are the reason for our high cost of healthcare.

At least you are only 180 degrees wrong.

Ha

 

[HFWR]

My "plan negotiated" rates are half or less of the "stumbled in off the street with no insurance" rates...

 

[Texas Proud]

My "plan negotiated" rates are half or less of the "stumbled in off the street with no insurance" rates...

My plan negotiated are a lot less... my wife just had foot surgery...

Hospital bill over $10,000... reduced to the plan amount it was $2,000.

Dr. bill... over $4,000 reduced to the plan amount it was $800.


Now, a regular Dr. visit was about $75... reduced to $63.. we pay $50 so the insurance company pays a whopping $13..

 

[Frugality_of_Apathy]

My plan negotiated are a lot less... my wife just had foot surgery...

Hospital bill over $10,000... reduced to the plan amount it was $2,000.

Dr. bill... over $4,000 reduced to the plan amount it was $800.


Now, a regular Dr. visit was about $75... reduced to $63.. we pay $50 so the insurance company pays a whopping $13..

If the insurance company can get the cost of the hospital visit at $2,000 why does average joe off the street have to pay $10,000?

 

[Midpack]

Studies say price.

The US Health Care Rip-Off - The Finance Buff

Boy that was simple, prices are just too high! Should be simple for Obama to fix, wonder why no one has fixed this simple problem before?

If you're really interested, spend an hour or two watching these (especially the first, excellent insight IMO)

news + public affairs player: video (Sick Around the World)

FRONTLINE: sick around america: watch the full program | PBS

they've both been referenced/recommended here before.

 

[haha]

Boy that was simple, prices are just too high! Should be simple for Obama to fix, wonder why no one has fixed this simple problem before?

If you're really interested, spend an hour or two watching these (especially the first, excellent insight IMO)

news + public affairs player: video (Sick Around the World)

FRONTLINE: sick around america: watch the full program | PBS

they've both been referenced/recommended here before.

Your sarcasm is cute, but beside the point. Just because we know the cause does not make it easy to fix. I bet you could name at least 5 very strong blocs that would powerfully influence any congresspersons who go too close to a Medicare type plan for all.

"Uwe Reinhardt and colleagues simply conclude “it’s the prices, stupid.” In another paper the same authors attribute higher prices to higher provider wages, lower consumer purchasing power (single payer systems in other nations can negotiate lower prices), greater supply constraints, higher administrative costs, and consumer demand for care at any cost."

Uwe Reinhardt is James Madison Professor of Political Economy at Princeton University, and has spent the major part of his long career studying and publishing on healthcare economics. http://en.wikipedia.org/wiki/Uwe_Reinhardt

The sole reason that we don't have a system that is both better and cheaper is that our politicos are afraid of stepping on the toes of those who slop their trough.

Ha

 

[Midpack]

Your sarcasm is cute, but beside the point. Just because we know the cause does not make it easy to fix. I bet you could name at least 5 very strong blocs that would powerfully influence any congresspersons who go to close to a Medicare type plan for all.

Ha

The target of my "sarcasm" was the link you provided, it's a ridiculously oversimplified unsubtantiated opinion. Most people seem to love to find an easy target to blame (our present economic circumstances illustrate this). There are many causes, and even the price issue has many causes. I'd encourage you to view the two videos FWIW...

 

[haha]

The target of my "sarcasm" was the link you provided, it's a ridiculously oversimplified unsubtantiated opinion. Most people seem to love to find an easy target to blame (our present economic circumstances illustrate this). There are many causes, and even the price issue has many causes. I'd encourage you to view the two videos FWIW...

Everything you say in this post is shown to be false by a careful reading of the link, and a perusal of some of the links from it. As to your link, I don’t get my analyses from TV shows.

Ha

 

[Urchina]

I think our high health care costs are, in large part, due to the fact that we ignore preventive care (like routine physicals for kids under age 18) but are happy to pony up for congestive heart failure treatment for 70-year-olds. I don't think we should quit helping 70-year-olds live healthy lives, but I DO think that in this case, monies spent on the young, identifying and addressing health problems that could be easily treatable early on, could save us billions.

Most other developed nations do this to some extent, through socialized medicine and a sound focus on maternal, child and adolescent health.

 

[dex]

Studies say price.

The quesion isn't if it is price or consumption but the component costs. An this is one reason why comparing % of GDP spent on health care is meaningless.

A true comparison versus other nations would be the different price components.

E.g.
real estate costs
transaction costs - accounting
delinquency rates
personnel costs
Insurance fees

Only when that is done can we understand the differences and make an informed decision.

This is nothing different than trying to understand retirement budgets for a person living in NYC or Roswell, NM.

 

[Gone4Good]

. . . and consumer demand for care at any cost."

I'd wager this accounts for the lion's share of our cost problem. I don't see how you can hope to control costs when the primary consumer is mostly, or entirely, shielded from the cost of his consumption. Imagine if automobile purchases were similarly insured by a third party payer. Nobody would drive an inexpensive car. Inexpensive car's wouldn't exist. And we'd all be shocked, shocked at how expensive cars were.

 

[walkinwood]

Why are so many determined to deny that the cost of healthcare services & supplies is higher in the US than other developed countries? The OP's link clearly points to that as the main reason - and for that excess price, we get worse results! Our doctors charge too much, our hospitals charge too much, our pharmaceutical companies charge us too much, and our insurance industry is too fragmented to have any real buying power & very little motivation to exert it. That is our problem!

A lot of posters on this thread point to over-use of services as the problem, but the research shows that we, in the US, do not use as much medical services as people in other developed countries. Our population is also much younger, and we have tons of people who have no access to medical care at all!

My personal opinion is that we should get employers out of the business of purchasing healthcare for their employees. It is not the core competence of businesses to do so & they have not been successful is forcing insurance companies to hold down medical costs.

 

[Gone4Good]

A lot of posters on this thread point to over-use of services as the problem . . .

I don't know if over-use is the problem. After all, I don't use medical care unless I need it. I do, however, think separating the person who uses a service from the person who pays for that service is a huge problem. I know of no other product or service on the planet that people buy without having the slightest idea of what it costs beforehand. But with medical care it happens every day. Without a price signal there is no reason for consumers to shop for a better deal and no reason for suppliers to offer lower cost options. And if suppliers don't have a reason to offer low priced products, lower priced products simply won't exist . . . Ta-Da . . . the US health care system.

 

[haha]

I don't know if over-use is the problem. After all, I don't use medical care unless I need it. I do, however, think separating the person who uses a service from the person who pays for that service is a huge problem. I know of no other product or service on the planet that people buy without having the slightest idea of what it costs beforehand. But with medical care it happens every day. Without a price signal there is no reason for consumers to shop for a better deal and no reason for suppliers to offer lower cost options. And if suppliers don't have a reason to offer low priced products, lower priced products simply won't exist . . . Ta-Da . . . the US health care system.

This is an interesting theory but quite obviously falsified by a quick look at the evidence. All European health systems have lower costs than the US system. All European countries separate the payer from the user of health services. No European countries have worse health than the US.

Q.E.D.

Ha

 

[dex]

Why are so many determined to deny that the cost of healthcare services & supplies is higher in the US than other developed countries? The OP's link clearly points to that as the main reason - and for that excess price, we get worse results! .

The question isn't if US Health care costs as a percent of GDP is higher or not - the question is why.
From the article:
"Switzerland at 11.6% (source). In 2009 the US will spend an estimated 17.6% of GDP on health care (source). "

Comparisons should be made "apples to apples"
Some of the questions are in my original post.
Others differences are:
War costs - USA several over the past 50 years - Switz -0
Automobile ownership and travel - USA high - Switz ? (much lower I would guess)
Work related - USA heavier weighted to mfg.(higher accidents) than the Switz

So when you consider the items in my first post plus such items as the above the comparison is meaningless until it is normalized for the differences.

Unless we know the cost breakdown it isn't possible to know the main driver of USA health costs.

PS - the Switz altitude might also be a factor - the healthiest state in the USA is Colorado - also at a high altitude.

 

[FinanceDude]

Studies say price.

The US Health Care Rip-Off - The Finance Buff

The RIDICULOUS cost of medical school. Most docs start their practice a few hundred thousand in debt.......

 

[FinanceDude]

I think our high health care costs are, in large part, due to the fact that we ignore preventive care (like routine physicals for kids under age 18) but are happy to pony up for congestive heart failure treatment for 70-year-olds. I don't think we should quit helping 70-year-olds live healthy lives, but I DO think that in this case, monies spent on the young, identifying and addressing health problems that could be easily treatable early on, could save us billions.

Most other developed nations do this to some extent, through socialized medicine and a sound focus on maternal, child and adolescent health.

My doctor, in a candid moment, admitted to me that the system is set up to do wonderful things once you are SICK, but is woefully inadequate in helping folks AVOID chronic problems.......

 

[Midpack]

This is an interesting theory but quite obviously falsified by a quick look at the evidence. All European health systems have lower costs than the US system. All European countries separate the payer from the user of health services. No European countries have worse health than the US.

Q.E.D.

Ha

Except costs for every procedure, hospital costs, even Doctors pay in developed countries with universal care are set/regulated by their governments down to the greatest detail, Great Britain, Germany, Switzerland, Japan & Taiwan for example - not comparable to the US. And our administrative costs are 2 to 3 times greater than theirs (about 6% for Taiwan vs 15-16% for the US). See the Sick Around the World link above, it's compelling...

 

[kumquat]

As an outsider from the land of socialized medicine, looking in, I've always blamed your legal system:

• baby isn't perfect, sue the OBG
• grampa dies of heart attack, sue the hospital ER
• broken arm heals funny, sue the guy who set it

One reason I think this is that about 1980, an oncologist friend moved from here in the the unexplored hinterlands to Miami. He told me his US malpractice insurance premium would be higher than his gross (from a public clinic) here. His comment, "and my patients are expected to die".

Are there any stats on legal actions against doctors, US vs. other countries? They might be interesting.

 

[Gone4Good]

This is an interesting theory but quite obviously falsified by a quick look at the evidence. All European health systems have lower costs than the US system. All European countries separate the payer from the user of health services. No European countries have worse health than the US.

Q.E.D.

Ha

Yes, except all European health systems use some form of price controls and / or rationing that isn't present in our system. So you're kind of comparing apples and oranges.

BTW, I'm not arguing that one system is better or worse, just offering an observation as to why prices in the U.S. are higher than elsewhere. One way or another you have to equilibrate supply and demand. A free market with transparent pricing and adequate competition is one way. Price controls and rationing is another. But what we have in the U.S. is a free market without transparent pricing. I don't think a market can work that way.

 

[Gone4Good]

No European countries have worse health than the US.

Has anyone seen a study that tries to adjust for lifestyle differences in these health comparisons? I'm guessing American's carry around an extra 30 lbs of belly fat on average versus their European counterparts.

So how much of the health disparity is due to the fact that our health care system blows and how much is do to the fact that we are fat and lazy?

 

[haha]

Has anyone seen a study that tries to adjust for lifestyle differences in these health comparisons? I'm guessing American's carry around an extra 30 lbs of belly fat on average versus their European counterparts.

So how much of the health disparity is due to the fact that our health care system blows and how much is do to the fact that we are fat and lazy?

Americans have more gym memberships than any other people. Americans smoke less than most other countries. I know we are not lazy; fat I don't know. Where I live I see darn few fat people but I read that there are a lot of them around.

Ha