Driving health care costs

Excerpts from a Washington Post article.

We see our institutional decline in the persistence of a health-care system that continues to cost twice as much as in other countries while delivering some of the worst health outcomes in the industrialized world. The reasons are not seriously in dispute: (1) too much care that is unnecessary and too little of the kind that keeps people healthy, and (2) corporate profits and medical salaries that are higher than necessary to attract talent and incentivize investment and innovation.

For decades, opposition from special-interest groups prevented anything from being done. When it finally was — Obamacare — most of those same interests used everything within their power to make sure even this modest reform would not succeed.

Economists Anne Case and Angus Deaton recently calculated the direct cost of all this overspending at about $1 trillion a year, or $8,000 for every household in the country. The indirect costs, in terms of lost output due to preventable death and illness and lost sales on global markets because of excessive labor costs, surely add hundreds of billions more.

Yes, there is unnecessary health care, up to 25% by some estimates, but try and tell that to the average person or the politician who wants to make health care free with no financial incentive to give a hoot what health care costs.

Corporate profits and medical salaries? Questionable. Presumably the profits part refers to pharma and insurance. However, prescriptions are only about 10% of all spending and insurance profits are not health care, but a small portion of premiums.

Not sure what medical salaries are referred to, but most doctors are not overpaid and even high salaries for executives in the field are still a small part of all costs.

The key is unnecessary care, our health status and life styles.

That crack at worst health outcomes is misleading. That is true in limited areas, but it also reflects factors beyond our health care system, our obesity rates being one.

3 comments

  1. “Too little that keeps people healthy”. As an overweight, out of shape guy myself, there is no question that unless I “shape-up” soon, my medical expenses are likely to be higher than they need to be. 95+% of Americans have within their own hands the tools with which they can fashion their own medical expense / health destinies. That includes me.
    As you know, 50+% of all medical spend is incurred by only 5% of Americans, 85+% of all medical spend is incurred on that 5% and another 15% or so of Americans.
    Some other facts to consider:
    The median (middle person) annual out-of-pocket medical expense was $264 (2016 study).
    And, out of pocket spending has declined from 34% of all medical expenditures (1970) to only 10% (2016).

    So, medical insurance and benefits cover a much, much larger percentage of the cost, insulating Americans from truly significant expense.

    That these idiots and Bernie want to increase the coverage, and reduce the financial commitment, means that the demand for services will explode – I mean, it’s free right?
    .

    So, friends, if you are one of those in the other 80% – you are someone whose health coverage should only cost about 15% – 20% of current rates – that would be something like $100/month for single coverag

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  2. According to an AHIP report in June 2017
    “Prescription Drugs Are Largest Single Expense Of Consumer Premium Dollars”. I realize the article states “10% of all spending” but for years it has represented well over 20% of the premium charged. We used to see the split at the time of renewals with actual premium reflected for health care and separate premium for Rx. No longer available. If Rx is only 10% of spending why does it raise the premium 20% or more? Rates have not gone done or even plateaued since 2017.

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