The Tyranny of Expectations–Health Care and it’s Reform

We pay more for care than anywhere else in the world.

Our doctors are among the highest paid in the world

Source: Congressional Research Service (CRS) analysis of Remuneration of Health Professions, OECD Health Data 2006 (October 2006), available at [].
Source: Congressional Research Service (CRS) analysis of Remuneration of Health Professions, OECD Health Data 2006 (October 2006), available at [].

Our medical care, administrative, drugs and medical technology costs are also the highest in the world. This from economix:

One thing Americans do buy with this extra spending is an administrative overhead load that is huge by international standards. The McKinsey Global Institute estimated that excess spending on “health administration and insurance” accounted for as much as 21 percent of the estimated total excess spending ($477 billion in 2003). Brought forward, that 21 percent of excess spending on administration would amount to about $120 billion in 2006 and about $150 billion in 2008. It would have been more than enough to finance universal health insurance this year.

The study used a measure of administrative costs that includes not only the insurer’s costs, but also the costs borne by employers, health-care providers and governments – but not the value of the time patients spent claiming reimbursement. These authors estimated that in 1999, Americans spent $1,059 per capita on administration compared with only $307 in purchasing power parity dollars (PPP $) spent in Canada.

These expenses have to do with expectations:

  • Patients expect care: Price should not be an issue, at least to them. These expenses have been buffered by private insurance, government programs, and to a lesser degree our altruism (mandatory access to ER care in emergencies).
  • Health care providers also have expectations: They went to great expense and time to go through training and many have huge debts to repay. Their expectation is that they earn an excellent living.
  • Medical Insurers expect that they will keep 20% of premiums for their services–contributing to the highest administrative expenses in the world–and million dollar salaries and benefits for their executives
  • Medical suppliers, pharmaceutical companies: Huge international corporations also have high profit expectations. Patent laws provide exclusivity for a generation. Drugs are priced not by their cost of development or manufacture but whatever the market will bear. So those with serious illness pay more–because they have to.
  • Cost Efficiency is an oxymoron in our non-system: When you have a life-threatening illness cost, efficiency and “shopping” for the best deal are not priorities. Unfortunately, efficacy gets lost in the mix and patients and their insurers, (honoring the patient’s desires) pay exorbitant premiums for treatments that often offer very limited benefit.

Medicynical Note: Expectations and money:

It would seem a given in this the wealthiest (I think that still is the case) economy in the world that health care should be accessible and affordable to all. That is certainly the case in other industrialized nations.

Industry has figured out that health care is not cost sensitive. Why be efficient when the system will pay whatever is demanded. Patients are in a bind and buffered by third party payers; doctors earn more by doing more; industry charges cost plus at every level. Our health care system has become the moral equivalent of the Air Force’s $600 toilet multiplied 100 fold. We now spend more for a single drug than the average and median income–amazing.

One would think that with all this spending everyone would have some coverage, but it’s a fact that we have 50 million uninsured and still spend more per capita by a wide margin than anywhere else in the world.

2 responses to “The Tyranny of Expectations–Health Care and it’s Reform

  1. Hi – I put in the search box “October 8, 2009 Patent Reform” but only got an entry from April 9, 2010 on expectations. How can I get back to your excellent entry back then?

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