Why does the U.S. spend so much on health care?

Hopefully, there is a GQ answer to this question. I am told that the U.S. spends much more proportionally than other industrialized nations on health care with little extra to show for it. First of all, is this proposition true and second, why do we spend so much more?

Please keep this GQ.

Thanks,
Rob

Yes, the US spends far more per capita on health care than any other country.

Cite-1
Cite-2

Here is a (lengthy) New Yorker article on the whys of why health care is expensive that I thought was pretty good:

Probably the only part that is strictly GQ is that the US does spend more on health care.

At least some can probably be blamed on medical malpractice and a cover-your-ass mentality. Newsweek cited a statistic saying that Americans use 4 times more MRIs than Germans and pay 2 times as much for each one.

A lot of people in the medical field point to overhead for billing, since each insurance company and state program have their own rates, codes, reimbursement policies, etc.

I think even more has to do with the disconnect between cost and consumer. Employers pay insurance companies who pay doctors. Nowhere in that does the employee/consumer have any real incentive to control costs. In some countries, the government steps in as the one with an incentive to control costs, but that hasn’t been the case in the US. As long as medical care looks “free” to the consumer, demand will always be out of sync with supply and costs will rise. (Perfect example of this: A prescription of naproxen or ibuprofen is more expensive than the same amount of medication sold over the counter. The prescription pills have a higher dosage per pill, but you could always take 5 100 mg OTC pills to equal 1 500 mg prescription pill.)

Because American doctors like to drive Porsches, and Porsches ain’t cheap.

Health care is paid for by a number of insurance companies (and the government) with incompatible forms and incompatible rules. Most if not all doctors and dentists offices have at least one full time employee handling insurance issues. This is clearly significant overhead which would not be required in a single payer system.

Offices and hospitals are for profit and competitive. If you do not have an MRI machine you are at a competitive advantage. If you do have an MRI machine, you need to generate enough usage, paid for by insurance, to pay it off.

This cite indicates that while a cap on malpractice awards may save money for doctors, it does not reduce insurance premiums much or save much money for consumers. We can predict that if malpractice fears were the cause of overuse of equipment, we’d see a reduction in states with caps - but given the large number of states with the caps, I doubt this has a big impact. I’d like to see a study comparing the influence of lawsuits versus management interested in paying off the equipment on the use of this stuff.

Here’s a quick run-down
http://www.prospect.org/csnc/blogs/ezraklein_archive?month=02&year=2007&base_name=why_does_american_health_care

The US spends about 17% of its GDP on healthcare (excellent graph here), whereas most other developed nations spend about 10%. Despite this, the US has fewer doctors and nurses per capita than most other developed countries and its healthcare system was ranked 37th in the last UN report.

I don’t think there’s any one reason for this, it’s extremely complicated. I don’t know enough myself to explain why.

If you’re seriously suggesting (in a GQ thread) that high salaries for doctors, due to their expensive tastes, is a significant reason for the high U.S. health care costs, I’d like to see a cite or two to back the assertion up.

I just finished reading that and it was an excellent article. Did the recent legislation speak to that at all?

Thanks,
Rob

I honestly have no idea if this is a real factor, but it wouldnt take a very high percentage of “try to save em / fix em at any cost, regardless of the likelyhood of success” to increase the overall cost dramatically.

A million dollar failed (or poorly justified) hail mary here and there adds up quickly.

And, on the other end of the spectrum, the common? lack of cheap, easy, and very cost effective preventative health care doesnt do the overall budget/costs any favors either.

because the doctors and the nurses are paid exorbitantly large salaries.

The fact that most Americans are overweight or obese doesn’t help matters.

I think there are a lot of reasons. Let me name a few factual ones.

Many hospitals in the US are for profit. This was much less true than when I was growing up.

Many, if not most, insurance companies are for profit. I have the impression that when Blue Cross and later Blue Shield came into existence they were non-profits.

I think an awful lot of money is spent on accounting. When my mother-in-law died in a Florida hospital, my wife received an itemized statement from the hospital that went on for pages. Every single aspirin (at $5 a pop), every time a nurse looked in, every doctor call, was itemized. It is not the statement that costs, but there must be a lot of time and energy gone into every provider entering this into the system. When I was hospitalized for six days here in Montreal, I walked out of the hospital never having seen statement. The hospital gets and annual budget from the province based on the number of patients seen and it is up to the hospital–non profit of course–to provide care.

Doctors order many times as many tests as doctors elsewhere. In part, this is due to malpractice suits and in part to the fact that many doctors buy expensive equipment and have to amortize it.

And doctors, especially surgeons and a few other specialists do very well.

I think there is no one single cause, just a whole bunch of causes that add up. That’s why getting those costs under control will be a major undertaking, especially with each group having their own lobbyists. For example, it is well known that under the American pharmacare, the government is forbidden to negotiate prices, but must pay whatever the drug companies ask. I have pharmacare from the Quebec government and I saw that when I turned 65 and had to leave the private plan from employer, the costs of individual drugs went down, usually by about 40%. Obviously the province has undertaken serious negotiation with big Pharma.

Do you have any evidence, studies, articles, anything that suggests the high health care costs in the US are directly as a result of doctors and nurses being paid well? Or is this a gut feeling that you are propounding and unnecessarily muddying the waters of a GQ thread? I would think that health care professional salaries play some small role in the overall picture, but not to the extent that your naked assertion implies.

Many doctors have ancillary practices to ensure more income. For example, a group of doctors may go in together to buy some new MRI equipment and start a clinic around it. Then they refer as many of their patients as possible to get MRIs. They charge for the MRIs whatever the insurance companies will pay, plus maybe a bit on top of that.

Also, many Americans are uninsured or under insured, and then treat Emergency Rooms as walk in clinics. Many of those never pay for this treatment - an ER generally can’t turn you down for lack of coverage - and those costs then get rolled into other hospital costs.

Many hospitals in the US are private, and have little to no motivation to provide affordable care. Since your private insurance pays for the high charges, and “dammit, I’ve paid out my premiums for years, I’ll damn well get my money’s worth”. Since the insured isn’t charged directly, there’s less incentive to shop on price. And the cryptic hospital billing systems make it difficult to know how you’re getting hosed, plus insurance is covering it anyway, so what the hell?

Cost of medical school (and college in general) can be very expensive in the USA, so those costs get, eventually, passed back to the health care consumer.

Many procedures are semi-elective, and the doctor will steer you toward the one least likely to get him sued. It’s more and more common for women to be coached toward a C-section, for example, if the pregnancy has any perceived risks, even though they are much more expensive than a natural birth - because insurance will cover it. I recall seeing some time back that C-sections rate positively correlated with highly insured patients - if the doctor doesn’t think he’ll get paid he is less likely to recommend the procedure.

The list goes on and on.

Not only is is thought of as “free”, but many who are insured by their employer never know what it really costs.

With the new bill, starting 2011 your W-2 form will list what you and your employer pay for your family health insurance. Hopefully that will at least make people aware of how much their “free” health insurance actually costs.

Has anyone else read Whack-a-mole’s article?

Rob

[Moderating]

This is GQ. Let’s keep the responses to this thread factual. I also note that professional jabs are against forum rules. If you are going to allege that US health costs are purely due to the high pay of medical personnel, be prepared to back it up with facts.

Colibri
General Questions Moderator

And to add to that request: how about statistics that show how much US doctors and nurses are paid in comparison to countries with lower health care costs?

if a visit to the doctor or dentist in their private office where there are no “tests” of any kind done costs $100 or $200, is that because the of for-profit hospitals? Or because of accounting? The only thing that is apparently being spent is the time of the doctor/dentist or nurse. So if they charge that much, where does the money go?

I agree that this may be slightly off-topic. More of an answer to “why does your, as the patient, medical procedures cost so much” than to “why does America as a whole spend so much”. After all, maybe America as a whole pays a huge tribute to the Lizard People or pours money into a huge rathole of another kind, and so even if patients themselves don’t directly notice it, the spending on that dwarfs the salary issue.