NY Times on Why Healthcare Costs are so High

By D. Cupples |  We've been talking about skyrocketing healthcare costs for years, as though the costs have a mind of their own and simply keep growing like cancer cells. Oddly, U.S. healthcare costs are higher than those of any other developed nation in the world. Yesterday, a New York Times editorial stated:

"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." (NY times)

Why is it hard to "root out" major causes?  It seems pretty obvious.  Every link in the private-healthcare chain understandably wants to make money: insurance companies, HMOs, drug makers, equipment makers, labs ....  Given their incentive to keep raising prices, why would we expect healthcare costs to ever come down?

 

Quaint ideas about supply, demand and competition look good on paper but don't help much, because healthcare is a necessity -- not a luxury that people can put off for months or years.  There are only so many hospitals, doctors, labs drug makers....  The more a healthcare business charges for a given service, the more the more similar can charge.  They don't even have to collude to keep healthcare costs high: they just have to follow their natural drive to make profits.

The NY Times editorial does mention profits but doesn't give much space to that topic:

"We [Americans] 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."

One thing that the NY Times editorial doesn't cover: healthcare-contractor fraud, which is related to the profit motive.  Fraud and over-billing drive up how much the U.S. Government pays for healthcare goods and services, which is a sizable chunk of our nation's overall healthcare costs.  All sorts of companies seem to routinely pad their bills to the government or commit outright fraud:  hospitals, doctors, pharmacies, labs.... (for specific examples, click here).

Overall, the NY Times editorial makes a good point: if numerous factors in our healthcare system are tweaked, then we might see a decline in costs.  But the editorial doesn't zero in on the root cause of our healthcare-cost crisis.

Memeorandum has a blogger roundup: JustOneMinute, Outside The Beltway, The Glittering Eye, Don Surber and Sweetness & Light

Related BN-Politics' Posts:

* Death By Hospital: Consumers Union Wants Congress to Act

* Judge Says 3 Drug Companies Engaged in Unfair & Deceptive Pricing

* Contractor Fraud: Driving up Healthcare Costs

* Why Drug Prices are So High (GAO & Other Sources)

* Private Insurers Milking Medicare (i.e., Seniors & Taxpayers)

* Insurance Companies Get Away with Overbilling Medicare

* Healthcare Outrages

* Woman of Mass Discussion: My Health Insurance Blues

* FDA's Latest Pharma-Friendly Sins

Comments

[billkav]

You go, Deb. It's so easy to say the causes are elusive and complex, as the Times does. Yeah, maybe they are, but the elephant in the kitchen is the profit motive being applied to our health. Thanks for cutting to the chase.

[tokyo ex-pat]

I live in Japan where it's nationalized healthcare. Everyone is covered. You are either covered by your employer or by you city government. I think we pay about $300-$400 a month for a family of five. Dental care is also included. If we go to the doctor, the kids and I pay 30%, my husband 20%. I usually pay the pediatrician about $12 for a first visit and around $8 for any follow up visits. I hardly ever have prescriptions over $10. In my city, all children are free up to age 6 when they start elementary school. Much to like, you think?

I can go to any doctor I want. Generally there are no appointments. It's walk in, first come-first serve. But you get seen within a reasonable time usually. Still, if one doctor appears busy, there's generally another nearby you can try out.

I don't worry that if my husband loses his job that we'll lose our insurance. I don't worry that we can't get in unless we make an appointment weeks in advance. I really don't understand the pushback to universal healthcare. The US has so many systems around the world to look at, compare and get it right. All the country needs is the will and the right leader.

[PharmaFraud]

The NYT article is the typical sort of nonsensical information constantly fed to us by Marketing Executives and Academic Scholars. The author sites various unqualified sources and vague studies so that every conceivable, but mostly irrelavant, variable is considered in the discussion. The message, as always, is that the cost structure within the healthcare system is far too complex for any mortal to understand; let alone fix.

How dare you suggest that the altruistic companies charged with delivering to us the best health care in the world are defrauding the government and taxpayers!

What will you suggest next; maybe you think some of the Pharma middlemen are unneccesary? Don't you dare suggest that one single fee, rebate, discount, or kickback earned by the Manufacturer, Primary wholesaler, Repackager, Secondary wholesaler, GPO, PBM, and Drug Store be reduced or discarded. And whatever you do, don't even think about eliminating any one of these vital middlemen who each get a peice of the action on every pill we buy.

Although every $1 spent by the government to go after healthcare fraud returns $15 in overpayments made by government programs; don't think about using that money to get back even more of Big Pharma's ill-gotten booty.

Yes Deb, you and I know there are simple solutions that would drastically reduce the billions of dollars in fraud, waste, and abuse within our healthcare system, but that's not the American way. After all, Big Pharma pays good money to ensure their Politicians keep the Pharma Industry vital and profitable for all the wonderful humanitarian companies involved.

[D. Cupples]

Tokyo Expat, wow. You're lucky. Thanks for sharing that.

[D. Cupples]

PharmaFraud, I have hope. Seriously. The more people write about these issues, the more likely the issues will (one day) hit the mainstream.