Why We Need Reform

This is from the McKinsey Global Institute: (FYI ESAW is Expected Spending According to Wealth)

They observe:

  • Provision of health services is highly profitable, both patients and provider lack value consciousness
  • We spend $650 Billion, yes Billion, more than we should.
  • Our drug costs area 50% higher on average, 77% higher for branded drugs, 35% for biologics. Interestingly our costs for generics are 11% lower.
  • Administrative costs are driven by the multi-payor system that lacks standardization and has high marketing, underwriting and claims costs.

McKinsey concludes that our (non) system provides “incentives optimized for suppliers of healthcare products and services. Supplier actions are perfectly rational in response to incentives.” Our excess spending results in no extension of life and that the “lack of objective value coupled with continued growth at current rates is likely unsustainable.”

Medicynical Note: McKinsey recommends a realignment of incentives, addressing the issues of supply, demand and intermediation (whatever that is) and withstanding the reactions of existing stakeholders.

In other works out current system is not sustainable we need reform.


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