Health Care - So What's Wrong With US having the Highest Costs? Or Should We Narrow O

[JockoJohnson]

Uhh since when? 1960?

Well we spend a lot on research, but as far as introducing ground breaking cures and technology I'll have to disagree.


As far as the OPs concern, that is the case for all forms of insurance. That is the exact purpose of it. Why? It's a social net so that the relatively few that need it aren't without. Some will argue that it is not needed at all, but that is for another debate.

The problem with healthcare costs in America is that everything costs way to damn much. From simple things such as a regular checkup or blood work to more exotic procedures. It all costs way to damn much here. I have some ideas to help solve that problem, but they will never be acted upon.

Again, the relatively few using the most of the current amount of money for a social system has always been the case. Indeed, it is better that the fewer using a social system the better. That is not to say that a social system is not needed at all, but that the relative need for it be as low as possible.

Disagree all you want, but you'll be wrong. Heres a link to wiki, and if you care to, click the footnotes: http://en.wikipedia.org/wiki/Health_care

In terms of pharmaceutical R&D spending, Europe spends a little less that the United States (€22.50bn compared to €27.05bn in 2006) and there is less growth in European R&D spending.[6][7] Pharmaceuticals and other medical devices are the leading high technology exports of Europe and the United States. [7][8] However, the United States dominates the biopharmaceutical field, accounting for the three quarters of the world’s biotechnology revenues and 80% of world R&D spending in biotechnology.


Theres also a link here with external footnote links: http://www.futurepundit.com/archives/003794.html

But the American health care system may be performing better than it seems at first glance. When it comes to medical innovation, the United States is the world leader. In the last 10 years, for instance, 12 Nobel Prizes in medicine have gone to American-born scientists working in the United States, 3 have gone to foreign-born scientists working in the United States, and just 7 have gone to researchers outside the country.

In real terms, spending on American biomedical research has doubled since 1994. By 2003, spending was up to $94.3 billion (there is no comparable number for Europe), with 57 percent of that coming from private industry. The National Institutes of Health’s current annual research budget is $28 billion, All European Union governments, in contrast, spent $3.7 billion in 2000, and since that time, Europe has not narrowed the research and development gap. America spends more on research and development over all and on drugs in particular, even though the United States has a smaller population than the core European Union countries. From 1989 to 2002, four times as much money was invested in private biotechnology companies in America than in Europe.

So who's eating their HumblePie now?

 

[theeedude]

Is it really excessive profits? Aren't the margins for the healthcare industry only 4-5%?

That is just what is left over for the shareholders after excessive salaries.

 

[theeedude]

BTW, healthcare will get addressed not because individuals want it addressed, but because eventually the cost will be such a drag on other businesses, that they will realize that it's endangering their competitiveness and viability unless they reign them in. Then it will be clash of corporate titans. It's not easy to compete with foreign competition when you have to price in huge insurance premiums into your costs and they don't.

 

[Fern]

I think we should concentrate on how much each procedure or drug costs in the US vs Europe. I don't think it's just that we provide too much care to elderly, but that even if we provided same care as Europe, we would still blow them out of the water in terms of cost. There is simply no political will to pass policies that would contain these costs, because these costs are some companies' profits, and they will use all means necessary to protect them.

I've seen info that says we are more expensive per the same procedure. So, yes even if we do provide the same number (per patient) of procedures we'll be more expensive. I can guess this may be because of doctors' salaries, defensive medicine, and malpractice insurance. Of course, for every report that cites one of these as driving up our costs somebody comes along with another report saytingit doesn't.

But OK, let's say we're more expensive per procedure; what I'd like to see is a report showing if we're using more procedures per patient. Do we have two problems? One being we're more expensive, the other being we're over zealous in prescribing procedures. Are we over-treating patients? If so, we're getting hammered twice. I saw an article in Time magazine where the former head of the AMA says we can cut costs 1/3 to 1/2 by reducing unnecessary procedures.

Fern

 

[marincounty]

There would be nothing wrong with the US having the highest medical costs, if our standard of living was also the highest. Wages have been falling in real terms for years, thus making the ever increasing medical costs unsustainable.
I agree that everyone associated with medicine is overpaid, from the janitor up to the doctors and administrators.

 

[Fern]

The OP's post clearly demonstrates a lack of understanding of the problem.

Haha. Really? See below Mr Brainiac.

I agree that the US will always have the highest total HC costs of any nation as long as we remain the most prosperous and this is as it should be, HC is the most important factor in human exsistense and so it only makes since that the most prosperous country will spend the most on healthcare.

The real problems with healthcare that are bringing us to our knees.

1. How healthcare is paid for - the bulk of the financial burden of healthcare for all citizens under our current system falls on the backs of a dwindling and stagnant working middle class(either through increased premiums and or taxes). And the ranks of the "insured" middle class is declining even more rapidly as companies and individuals become unable to afford the ever increasing burden, while the ranks of those on a "free ride" (the elderly abandoned by private ins., businesses that refuse to offer insurance, the young and healthy that don't think they need or should have to pay for insurance, etc..) continues to skyrocket

We're talking about "costs" here. WTH does any of this have to do costs?

The 'cost' is the 'cost', whether you pay it, I pay it, or the middle class pays. 'Who' pays it is a different issue than costs.

2. Too many healthcare dollars are taken as profits - the healthcare industry has become a huge cash cow only rivaled by the oil industry in their ability to produce ever increasing profits. Profiting enormously from the sick and dying is not only acceptable but viewed farvorably in our society. Too many doctors more closely resemble socialites, business moguls and used car dealers than humanitarians, with most of them entering the field of medicine for the promise of wealth rather than a desire to help their fellow man


If we could fix those two issues there would be no crisis in healthcare. How do we do it short of a single payer european style socialized medicine?

For one thing the oil industries profit margin are quite low, lower than just about all other industries. Poor example.

Most hospitals are non-profit. They don't make big big profits, if you've info to the contrary let us see it.

Health insurance companies are said to make about 3% in profit; that's hardly a big profit.

Every time somebody bring up doctors' salaries, somebody else comes along and links a report showing how little they affect our HC costs.

What big profits are you talking about?

Fern

 

[theeedude]

I've seen info that says we are more expensive per the same procedure. So, yes even of do provide the same number (per patient) of procedures we'll be more expensive. I can guess this may be because of doctors' salaries, defensive medicine, and malpractice insurance. Of course, for every report that cites one of these as driving up our costs somebody comes along with another report saytingit doesn't.

But OK, let's say we're more expensive per procedure; what I'd like to see is a report showing if we're using more procedures per patient. Do we two problems? One being we're more expensive, the other being we're over zealous in prescribing procedures. Are we over-treating patients? If so, we're getting hammered twice. I saw an article in Time magazine where the former head of the AMA says we can cut costs 1/3 to 1/2 by reducing unnecessary procedures.

Fern

I am sure we are over treating too. Every incentive is in place for doctors to perform treatments to get paid more. Even if you reform malpractice, doctors get paid per procedure, so obviously they are going to order more procedures to get paid more. I think one way to address it is for companies to go with high deductible plans, with exemptions for preventative care, to give patients incentive to question treatments. Insurance should be for catastrophic medical expenses. Maybe set deductible at 5-10% of income. I know if I was on the hook for the first few grand of my medical expenses, I would think more about if I really need various treatments, and would ask about how much stuff costs and have doctor explain to me why I need it. Because I would rather spend a few grand on a new mountain bike than a CT scan

 

[theeedude]

Haha. Really? See below Mr Brainiac.



We're talking about "costs" here. WTH does any of this have to do costs?

The 'cost' is the 'cost', whether you pay it, I pay it, or the middle class pays. 'Who' pays it is a different issue than costs.



For one thing the oil industries profit margin are quite low, lower than just about all other industries. Poor example.

Most hospitals are non-profit. They don't make big big profits, if you've info to the contrary let us see it.

Health insurance companies are said to make about 3% in profit; that's hardly a big profit.

Every time somebody bring up doctors' salaries, somebody else comes along and links a report showing how little they affect our HC costs.

What big profits are you talking about?

Fern

All these are profits left over for shareholders, it is after all the players have been paid handsomely. If my company pays everything out in salary to myself, I can also say my company didn't make any profit, but in reality I still made a ton of money.

 

[ElFenix]

interesting article regarding the variableness of costs

 

[Fern]

All these are profits left over for shareholders, it is after all the players have been paid handsomely. If my company pays everything out in salary to myself, I can also say my company didn't make any profit, but in reality I still made a ton of money.

I'm not so sure they have the big salaries people claim.

I checked out the big HI companies, inlcuding stock options the top salaries ranged in 2008 from $3M to $24M. That's not all cash, it includes stock options. Most made less than $10M.

I agree that's a lot of money & stock, but pretty low for the Fortune 500.

http://www.healthreformwatch.com/2009/05/20/health-insurance-ceos-total-compensation-in-2008/

Fern

 

[GuitarDaddy]

Haha. Really? See below Mr Brainiac.



We're talking about "costs" here. WTH does any of this have to do costs?

The 'cost' is the 'cost', whether you pay it, I pay it, or the middle class pays. 'Who' pays it is a different issue than costs.

YOU are talking about costs, thats my point. Total cost of healthcare is NOT the issue



For one thing the oil industries profit margin are quite low, lower than just about all other industries. Poor example.

I guess thats why Exxon mobile continually beats their own record for the highest quarterly profits of any company on the planet. Their margins MAY be low but a few % of a gazillion dollars still makes them the most profitable corporation in the world.

Most hospitals are non-profit. They don't make big big profits, if you've info to the contrary let us see it.

Hospital profits aren't a problem, and I didn't say they were, now utilization of space and overhead is a problem with US hospitals that costs us plenty

Health insurance companies are said to make about 3% in profit; that's hardly a big profit.

Yeah right! Aetnea and United Healthcare alone REPORTED billions in profit which is probably only a portion of what they really made. And go to Hoovers and check out executive compensation at these companies. If you just add up the compensation packages for the top 20 execs you get a little over 500mil or an average of 25mil each.

Every time somebody bring up doctors' salaries, somebody else comes along and links a report showing how little they affect our HC costs.

Sorry but "soembody says" or "are said to" doesn't mean squat. As a financial guy, I understand that you can make numbers and statistic to prove any point you want. Just skew an assumption here, overlook a variable there and presto you can produce something that will substantiate about anything.

What big profits are you talking about?

Oh, youre right there is no big money in healthcare, thats why all the doctors and insurance execs drive chevys and live in modest houses. Hell the local lasik surgeon in my area is so poor he only owns an 80ft yacht and one private island. And his house is so small you could probably only fit a tennis court and one olympic pool in his living room.

Fern

Poor guy!

 

[HumblePie]

So who's eating their HumblePie now?

Spending more is not the same thing as ADVANCING more. Two different things. America spends more, but isn't the world leader in advancement of healthcare anymore. Separate issues.

I'm not saying we don't have any, but we aren't the world leader in it. Also, quite a bit that is "developed" in America is done by companies not owned by America either. Which is another thing to consider. Many health care advances are developed FOR America mainly because it is the only country in the world where they can charge and get away with ridiculous costs so far. Why do you think many people have lately started getting their prescriptions from Canada or Mexico here? Same stuff just at a fraction of the cost.

You have to look at the whole picture to understand. The fact that more is "spent" here is meaningless. We are NOT the world leader in health care or advances. We are the world leader in health care spending and charging. That is not debatable.

 

[Fern]

interesting article regarding the variableness of costs

That's the kind of stuff Congress should be working on to improve.

While I think business, including those in HC, should be free to set their prices, we should have that price information made available to us. IMO, that would do more to drive down costs than anything they've come up with yet.

Fern

 

[ElFenix]

That's the kind of stuff Congress should be working on to improve.

While I think business, including those in HC, should be free to set their prices, we should have that price information made available to us. IMO, that would do more to drive down costs than anything they've come up with yet.

Fern

problem is that when you've got a broken arm and are in the ambulance on the way to the ER, you're not likely to be asking for a list of orthopedic surgery costs. and you're even less likely to do it once they've got the x-rays and are prepping you for the OR.

for scheduled outpatient type stuff i completely agree though. of course, then you need to call the hospitals and your insurance to figure out what it'll cost you, the end user.

the whole thing is a mess and every time the .gov steps in to clean it up it seems to get more complicated and less user friendly.

 

[woolfe9999]

That's the kind of stuff Congress should be working on to improve.

While I think business, including those in HC, should be free to set their prices, we should have that price information made available to us. IMO, that would do more to drive down costs than anything they've come up with yet.

Fern

I heard a local radio program recently where they interviewed some exec from Safeway Corporation, the supermarket chain. He was talking about their employee health insurance. They have a self-insured plan, and apparently they do a lot of comparison shopping for their employee's healthcare. They have found widely variable costs, sometimes 8 to 1, for particular procedures like MRI's. He says they keep costs down by doing research on this. Apparently, they also have some lifestyle matrices where their employees are rewarded with lower co-pays if they don't smoke, aren't obese, etc. Sounded like a good idea to me.

- wolf

 

[Fern]

problem is that when you've got a broken arm and are in the ambulance on the way to the ER, you're not likely to be asking for a list of orthopedic surgery costs. and you're even less likely to do it once they've got the x-rays and are prepping you for the OR.

for scheduled outpatient type stuff i completely agree though. of course, then you need to call the hospitals and your insurance to figure out what it'll cost you, the end user.

the whole thing is a mess and every time the .gov steps in to clean it up it seems to get more complicated and less user friendly.

Broken arm? I'd like to be able to use my blackberry and pull up a website on costs.

Yes, I understand in some emergencies you're going where the ambulance takes you etc.

But there are a lot of expensive things that one must wait on and get scheduled for (e.g., heart bypass), knowing prices w/b helpful. In fact, in the list of most expensive procedures only 'trauma' would seem one where the price info wouldn't help.

Fern

 

[theeedude]

I'm not so sure they have the big salaries people claim.

I checked out the big HI companies, inlcuding stock options the top salaries ranged in 2008 from $3M to $24M. That's not all cash, it includes stock options. Most made less than $10M.

I agree that's a lot of money & stock, but pretty low for the Fortune 500.

http://www.healthreformwatch.com/2009/05/20/health-insurance-ceos-total-compensation-in-2008/

Fern

OK, if they payout 80 cents of every dollar they take, in, where does the remaining 20 cents go? That is 25% overhead on health care costs right there. Not counting all the time doctor offices spend on dealing with insurance companies.

 

[Hacp]

Title is supposed to be: Health Care - So What's Wrong With US having the Highest Costs? Or Should We Narrow Our Focus in HC Reform?




http://en.wikipedia.org/wiki/Health_care_in_the_United_States

The fact that 5% of people account for 50% of our HC costs is something I find very significant and has been bothering me for a whle, yet I don't hear much about it in the HC debate. I think it begs two different questions which I'll combine into this one thread because they're based on this single bit of data.

Question #1: Why is it necessaritly a problem?

Unfortunately I can't find it ATM, but I have see data suggesting this is largely due to the elderly, those above 65 and particularly concentrated in those above 80 yrs.

If we're spending a disproportionate amount of HC money, more than Europe etc driving up our high national costs, on extending the lives of the elderely, is that necessarily a problem? Let's put aside the concern about escalating Medicare costs for the moment. Do Americans wanna visit this issue and find ways to reduce these costs even if it a means a shorter life span for Grandma & Grandpa?

Personally I doubt that the great costs from extending life via means of expensive new technology, proceedures and boat-loads of drugs is always worth it. Does the 'quality of life' in those last years justify the cost? Are we prolonging suffering because we Americans, infatuated with youth, are too immature and have an irrational fear of death. Can we not accept that it is inevitable?

I don't see this in the debates/discussions of HC. But if we want to continue by all means or costs possible extending the lives of our elderly I think we must accept a higher HC costs than other nations. And if we want to do that, what's wrong with it? Don't we have that freedom? But we need to recognize it for what it is.

What do you think?

---------------------------


http://www.ahrq.gov/research/ria19/expendria.pdf

Question #2.

If we know that our HC costs are so highly concentrated to so few areas, why are changing the whole syatem for whole population? The lower 50% of the population avccounts for 3% of HC spending? Why the hell are bothering to mess around with their HC?

Why don't we (Congress) focus on either (1) the small population incurring the majority of costs or (2) the 5 conditions most expensive conditions?

Wouldn't it make more sense in terms of cost-cutting (and other reasons) to focus our attention strictly to these? If we wanna go single payor or public option why not limit it marrowly to the 5 conditions? Can the government not subsidize research into these 5 areas to increase efficiency and cut costs?

I think if Congress carved-out reform for these narrow purposes, where the real bang-for-the-buck appears to be, people would be far more accepting of government 'intrusion' into this portion of HC.

What do you think?

Fern

Grandma and grandpa can go die if it means cheaper health care for everyone. What grandma and grandpa are doing by holding on to their last breath is they're making premiums higher for everyone else.

 

[Patranus]

None of the current debate has to do with health care, rather federal control of the health care system.

 

[theeedude]

None of the current debate has to do with health care, rather federal control of the health care system.

So health care system has nothing to do with health care?

 

[Fern]

OK, if they payout 80 cents of every dollar they take, in, where does the remaining 20 cents go? That is 25% overhead on health care costs right there. Not counting all the time doctor offices spend on dealing with insurance companies.

20 cents per 100 = overhead rate of 20%.

See link and scroll down to figure to figure 3:

http://www.bridgespan.org/learningcenter/resourcedetail.aspx?id=252

The average OH rate is 25% for all for-profit business, so it's not bad.

You don't affect overhead much by switching it's form from for-profit to non-profit, or it's owners from shareholders to government.

The only real way to drive down overhead I've heard of is to switch to the type of (single) payer system other countries have. I understand that Hospitals etc get a fix sum annually to operate and there are no individual bills for each procedure or each patient. No bills, no collections, overhead drops drastically. But I don't see that lack of accountability ever happening here.

Fern

 

[theeedude]

20 cents per 100 = overhead rate of 20%.

See link and scroll down to figure to figure 3:

http://www.bridgespan.org/learningcenter/resourcedetail.aspx?id=252

The average OH rate is 25% for all for-profit business, so it's not bad.

You don't affect overhead much by switching it's form from for-profit to non-profit, or it's owners from shareholders to government.

The only real way to drive down overhead I've heard of is to switch to the type of (single) payer system other countries have. I understand that Hospitals etc get a fix sum annually to operate and there are no individual bills for each procedure or each patient. No bills, no collections, overhead drops drastically. But I don't see that lack of accountability ever happening here.

Fern

For every 80 cents spent on actual care, insurance company takes 20 cents. 20/80 = 25%.
Also, insurance company does not provide any actual care for that $20, so their overhead is on top of whatever overhead the actual health care provider has, so if you claim it's 25% for average business, that would make health care overhead closer to 50%.

 

[Fizzorin]

In response to OPs original question, there's nothing wrong with having higher costs than anyone else, in and of itself.

What it boils down to is this:

Life expectancy in the US is the highest it's ever been. The cost/year gained due to healthcare in the US is the lowest it's ever been. What I mean by that is if it cost $100,000 (random number) in treatment to keep a patient alive one year post-myocardial infarction in 1980, it cost $10,000 (random number) in 2009. That means the US system is more efficient in providing care than it has ever been.

What matters, then, is the quantity of care consumed. In the US, while quality and efficiency is improving, quantity is increasing at a faster rate. This is almost entirely due to increasing prescription drug costs for the elderly (due to higher costs/unit and number of units consumed).

This is all publicly available information from the Fed (Medicare/Medicaid costs) and other sources.

 

[Fern]

For every 80 cents spent on actual care, insurance company takes 20 cents. 20/80 = 25%.
Also, insurance company does not provide any actual care for that $20, so their overhead is on top of whatever overhead the actual health care provider has, so if you claim it's 25% for average business, that would make health care overhead closer to 50%.

Overhead is usually calculated on revenue. We accountants (CPA's) do it like this:

Revenue = 100 (100%)

Operating cost (payout) = 80 (80%)

Overhead 20 (20%)

Net Profit 0 (0%)

Or you could say "total costs = 100 (80+20). Overhead = 20% of total costs (20/100)".

Calculating it like this makes no sense: 20/80 = 25% because if you tried the same with operating costs (payouts) you'd get 80/20 = 400%

You really wanna say HI companies payout 400% of their money on claims?

Fern

 

[Fern]

In response to OPs original question, there's nothing wrong with having higher costs than anyone else, in and of itself.

What it boils down to is this:

Life expectancy in the US is the highest it's ever been. The cost/year gained due to healthcare in the US is the lowest it's ever been. What I mean by that is if it cost $100,000 (random number) in treatment to keep a patient alive one year post-myocardial infarction in 1980, it cost $10,000 (random number) in 2009. That means the US system is more efficient in providing care than it has ever been.

What matters, then, is the quantity of care consumed. In the US, while quality and efficiency is improving, quantity is increasing at a faster rate. This is almost entirely due to increasing prescription drug costs for the elderly (due to higher costs/unit and number of units consumed).

This is all publicly available information from the Fed (Medicare/Medicaid costs) and other sources.

Sounds like a great reason for Congress to:

1) allow the importation of drugs (why the heck are subsidizing countries like England France & Germany anyway?), and

2) Look at prescription drug reform. We don't need to be overmedicating people, or IMO letting pharma advertise all over TV to non-medical professionals.

Fern