Costs

Ewe Reinhardt’s “blog” at NY Times has a series on costs. The U.S. healthcare non system’s costs are significantly higher than other industrialized countries. This is graphically indicated in the blog with a graph showing the relationship of expenditure/capita to GDP/person in various countries. We are at $6700/person/year and way off the curve.

Reinhart believes the U.S. costs are higher because of the following:

“1. higher prices for the same health care goods and services than are paid in other countries for the same goods and services;” Medicynic: We don’t negotiate and allow patent holders to charge whatever they wish for their advances. Patent reform should be part of the mix of healthcare reform.

“2. significantly higher administrative overhead costs than are incurred in other countries with simpler health-insurance systems;” Medicynic: It’s estimated to be 31% of health care costs. 33% to 100% higher than other industrialized countries.

“3. more widespread use of high-cost, high-tech equipment and procedures than are used in other countries;” Medicynic: “Build/buy it and they will come.” Organizations that make an investment in equipment want it used and will “encourage” providers to do so. Often the new approaches offer limited or no improvement over the older technology.

“4. higher treatment costs triggered by our uniquely American tort laws, which in the context of medicine can lead to “defensive medicine” – that is, the application of tests and procedures mainly as a defense against possible malpractice litigation, rather than as a clinical imperative.” Medicynic; You need to look beyond the actual litigation and settlements. Defensive medicine is a major cost center in our non-system.

We need reform but unless the system aggressively attacks our cost issues we will be simply shuffling cards.

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