Why are healthcare costs so high?

[Atreus21]

No healthcare overhaul is valid unless it correctly diagnoses and addresses this problem.

My theory: Government. Medicare, that is.

http://mediatrackers.org/national/2013/10/01/8-charts-explain-explosive-growth-u-s-health-care-costs

This theory has some backing by the National Bureau of Economic Research.

http://www.nber.org/digest/apr06/w11609.html

In The Aggregate Effects of Health Insurance: Evidence from the Introduction of Medicare (NBER Working Paper No. 11619), NBER researcher Amy Finkelstein challenges the belief that the spread of health insurance played only a small role in contributing to the dramatic rise in health care spending over the last half century. In a related study prepared with colleague Robin McKnight (NBER Working Paper No. 11609), Finkelstein asks: What Did Medicare Do (And Was It Worth It)?

At an annual cost of $260 billion, Medicare is one of the largest health insurance programs in the world. Providing nearly universal health insurance to the elderly as well as many disabled, Medicare accounts for about 17 percent of U.S. health expenditures, one-eighth of the federal budget, and 2 percent of gross domestic production. Medicare's introduction in 1965 was, and remains to date, the single largest change in health insurance coverage in U.S. history.

Finkelstein estimates that the introduction of Medicare was associated with a 23 percent increase in total hospital expenditures (for all ages) between 1965 and 1970, with even larger effects if her analysis is extended through 1975. Extrapolating from these estimates, Finkelstein speculates that the overall spread of health insurance between 1950 and 1990 may be able to explain at least 40 percent of that period's dramatic rise in real per capita health spending.

This conclusion differs markedly from the conventional thinking among economists that the spread of health insurance can explain only a small portion of the rise in health spending. This belief is based on the results of the

Rand Health Insurance Experiment (HIE), one of the largest randomized, individual-level social experiments ever conducted in the United States. The HIE compared the spending of individuals randomly assigned to different health insurance plans. Based on these comparisons, the estimated impact of health insurance on hospital spending was at least five times smaller than Finkelstein's estimates of the impact of Medicare on hospital spending.

Finkelstein suggests that the reason for the apparent discrepancy is that market-wide changes in health insurance - such as the introduction of Medicare - may alter the nature and practice of medical care in ways that experiments affecting the health insurance of isolated individuals will not. As a result, the impact on health spending of market-wide changes in health insurance may be disproportionately larger than what the estimates from individuals' changes in health insurance would suggest. For example, unlike an isolated individual's change in health insurance, market wide changes in health insurance may increase market demand for health care enough to make it worthwhile for hospitals to incur the fixed cost of adopting a new technology. Consistent with this, Finkelstein presents suggestive evidence that the introduction of Medicare was associated with faster adoption of then-new cardiac technologies.

I'm no expert. Eskimospy's going to come in here quoting 27 studies that explicitly refute everything I just said, but it's my theory anyway.

 

[highland145]

I have 2 NPR segments on the cost issue if you want me to look them back up.


http://forums.anandtech.com/showthread.php?t=2055997

 

[blastingcap]

 

[Strk]

It's not just one problem. We have many failures in our system. Health insurance, malpractice insurance, medical education, drug/medical equipment companies, education costs are just a few things.

 

[dullard]

Hidden pricing. End of story.

1) Most of it is highly government subsidized (through the affordable care act, medicare, tax deductions, etc) so you never can see the full price. Subsidies lead to overconsumption.

2) Customers aren't seeing the full cost since it is often subsidized by the employer. Give most families a $10,000 raise and eliminate their health care from their employer and I guarantee few of them would choose the $10,000 health insurance plan option.

3) The main decisions aren't made by you or your doctor (or even your family). They are made by your HR department and the insurance company. This applies to both coverage and to prices.

4) You can't get a price list no matter how hard you try. The same thing (medical service or prescription drug) can vary by 10x just by crossing the street. But you'll never know since you can't see the price until after you are stuck with the bill.

 

[MongGrel]

Because the whole system is borked to begin with.

The governor in my state, Rick Scott, should be in prison for all the shady medical associated bullshit he has puled over the years.

He actually was up on charges for it at one time, and still got into office.

Instead, people here have re elected ole Skeletor several times.

People just don't look at facts, and vote wrong more or less.

 

[Atreus21]

Hidden pricing. End of story.

1) Most of it is highly government subsidized (through the affordable care act, medicare, tax deductions, etc) so you never can see the full price. Subsidies lead to overconsumption.

2) Customers aren't seeing the full cost since it is often subsidized by the employer. Give most families a $10,000 raise and eliminate their health care from their employer and I guarantee few of them would choose the $10,000 health insurance plan option.

3) The main decisions aren't made by you or your doctor (or even your family). They are made by your HR department and the insurance company. This applies to both coverage and to prices.

4) You can't get a price list no matter how hard you try. The same thing (medical service or prescription drug) can vary by 10x just by crossing the street. But you'll never know since you can't see the price until after you are stuck with the bill.

On the fundamentals I agree.

 

[WhipperSnapper]

Why are health insurance company executives and hospital executives paid so much? Why is so much money spent on billing and insurance-related issues? Why is so much money spent on medical advertising? Why are we paying more for prescription drugs than people in other nations? Why do businesses spend so much money on health care benefit-related HR issues?

Could it be that...those evil socialist systems in Europe are just more danged efficient than our semi-free market system? Not only are they spending a smaller percentage of GDP on health care, but they also have 100% coverage!

 

[mizzou]

either way, we spend the money regardless it is taxed or OOP. Obviously medicare recipients pay for it less, but keep in mind they do pay a lion share in local taxes.

We have so many more advancements now and requirements, being a physician is much more complicated then it used to be.

 

[Nograts]

either way, we spend the money regardless it is taxed or OOP. Obviously medicare recipients pay for it less, but keep in mind they do pay a lion share in local taxes.

We have so many more advancements now and requirements, being a physician is much more complicated then it used to be.

Along with not only medical training there is the technology training for a lot of machines used. Then the cost of the actual machine. Plus time.

Just adds up over a lot of things, if I were a doctor who spent .5 mil on an education and years getting it, then opened a practice where I spend tons of hours, and then bought a .5 million dollar machine, I am going to charge quite a bit for my time. It's only right, and makes sense in my mind.

Pretty broad generalization but that's the way I like to think of it at least.

 

[theeedude]

Trying to apply "free market" to a utility.

 

[Slew Foot]

Health care is kinda like education. The customer is pretty much insulated from the bill so costs are free to rise at will, and largely go into the hands of useless middlemen.

 

[WhipperSnapper]

Just adds up over a lot of things, if I were a doctor who spent .5 mil on an education and years getting it, then opened a practice where I spend tons of hours, and then bought a .5 million dollar machine, I am going to charge quite a bit for my time. It's only right, and makes sense in my mind.

The way we train medical professionals is another huge problem. We need to reduce the amount of time and expense it takes to produce a competent physician and increase the number of doctors and nurse practitioners (primary care doctor-lites) being produced. Maybe we could shave 2 years off of undergraduate studies, for example, or just have people enter medical school right out of high school with students taking one or two years of basic science first instead of having to slug through four years of undergrad.

 

[RickBean]

Healthcare costs so high because it's very expensive to build strategy!
healthcare costs so high because somebody spend much more money on military!
healthcare costs so high because...

 

[realibrad]

Why are health insurance company executives and hospital executives paid so much? Why is so much money spent on billing and insurance-related issues? Why is so much money spent on medical advertising? Why are we paying more for prescription drugs than people in other nations? Why do businesses spend so much money on health care benefit-related HR issues?

Could it be that...those evil socialist systems in Europe are just more danged efficient than our semi-free market system? Not only are they spending a smaller percentage of GDP on health care, but they also have 100% coverage!

If you look at the systems in Europe, you will see a very different way in which they do healthcare. The US system does far more little things, and expensive things that the socialized systems do not. We see the health outcomes are not really improved by this, but they are much more expensive.

The reason for this is because we have socialized much of the costs, so that the individual cost is very low. The incentive is such that if a person wants to see or do something extra, that would cost more, then the cost of that choice is spread out over the group. So, if I want to see a specialist over a general practitioner, then the group picks up most of the costs. There is usually slight increase in copay for the individual, but not the total costs.

The reason for this is supposed to be that you dont want to give the disincentive to the person when seeing a specialist if they need it. The problem with that model is that people will always want to get the best for their money.

Once you make people pay for their choices, you get reduced costs, but possibly reduced service. Trade-offs...they are a bitch.

 

[waggy]

interesting. except that is not a picture of Americans.

 

[xeemzor]

I'll just leave this here. We need for people to become educated healthcare consumers before we can solve the problem.

 

[trenchfoot]

In my mind, the simple reason healthcare costs are so high is that the for-profit health care industries got big and powerful enough to keep it that way.

In our American way of life, we will allow this to happen because we don't care enough to change things in a way that mostly benefits the majority. We allow the select few to wrest control from the majority and we allow these things to happen as if we simply can't do anything about it when we can, but we don't as a purposely disparaged and divided "collective", because we have been conditioned not to challenge those self-appointed "authorities" who have seen fit to brand those that do as rabble rousing unionist communists and traitors of, what these select few have decided to brand it "the real American way of life".

 

[realibrad]

In my mind, the simple reason healthcare costs are so high is that the for-profit health care industries got big and powerful enough to keep it that way.

In our American way of life, we will allow this to happen because we don't care enough to change things in a way that mostly benefits the majority. We allow the select few to wrest control from the majority and we allow these things to happen as if we simply can't do anything about it when we can, but we don't as a purposely disparaged and divided "collective", because we have been conditioned not to challenge those self-appointed "authorities" who have seen fit to brand those that do as rabble rousing unionist communists and traitors of, what these select few have decided to brand it "the real American way of life".

That should stay in your mind, because it is wrong.

 

[OverVolt]

..

 

[maddogchen]

Administrative costs have risen a lot in the past few years in the health care industry. I believe thats one of the biggest reasons why.

 

[cbrunny]

Healthcare costs are high because you have fucking shareholders!

 

[unokitty]

No healthcare overhaul is valid unless it correctly diagnoses and addresses this problem.

I'm no expert. Eskimospy's going to come in here quoting 27 studies that explicitly refute everything I just said, but it's my theory anyway.

Think it might have something to do with the amount of money that Health Care gives to politicians?

Uno

 

[maddogchen]

4) You can't get a price list no matter how hard you try. The same thing (medical service or prescription drug) can vary by 10x just by crossing the street. But you'll never know since you can't see the price until after you are stuck with the bill.

Actually I've seen a lot of movement now in resolving that. Around my area, some places now put costs of routine procedures online for you to look at.

Here's one I found online
http://info.kaiserpermanente.org/info_assets/estimating_your_cost/PDFs/scal_fees.pdf

 

[Angry Irishman]

its Obama's fault.....:awe: