Not to mention that it’s been shown several times that malpractice premiums cycle with the stock market and are unaffected by tort reform and award caps.
The one no one’s mentioned yet (or I missed it) is the HUGE amount we spend on administration, due to our lovely free-market system with several thousands of insurance companies. I can’t remember the exact numbers and don’t have time to Google it up again at the moment, but I believe the estimates are that approximately 30% of healthcare dollars are spent on insurance administration. That’s a pretty fair chunk o’ change.
Just for the record, though I find Baker’s argument compelling enough that I tend to think he’s correct, I was fairly astonished by it. Really, I had no idea malpractice was such a trifle, especially considering the purportedly huge amount physicians and institutions spend to defend themselves against it. I could forgive anyone for incredulity, given the conventional wisdom. But if the c.w. is wrong, it’s wrong.
I was somewhat surprised about that as well when I found out.
I don’t have any hard data but I think that redtail23 might be on to something. If I want to go see a doctor, I have to go through my HMO. Any medical expense I incur has to be analysed by someone who then sends it to the billing department of the person I see. I wonder just how efficient the entire system is.
If I get a prescription and take it to the pharmacy, my insurance company may or may not cover it and they may call the doctor and have him prescribe me another one. All of this takes time and people and multiplied over time, these costs can mount up. Factor in what is spent by the pharmaceuticals in R&D costs for that prescription and as has been noted above Kilvert’s Pagan, the marketing costs for that drug, and you’ve shown another area where the costs are going to be high.