America's Health Care Ills Boil Down To Money

What exactly is so wrong with the American system of health care? It just costs too much.

bandage on a $100 bill i i

hide captionShifting health costs is a Band-Aid.

bandage on a $100 bill

Shifting health costs is a Band-Aid.


Aside from issues of quality and coverage, the price paid per capita for U.S. health care is more than $8,000 compared with about $5,500 in the next most expensive country (probably Switzerland) and the $4,500 paid in other developed countries, writes Stanford health economist Victor Fuchs in the current issue of JAMA.

So no wonder that every plan to overhaul health care aims to reduce costs. But Fuchs warns that some of the proposals might just shift the pain, not cure it.

Take, for instance, a prohibition against insurers charging more to people who are sick. Sure, the sicker folks will see lower prices. But somebody would have to pay. And those somebodies would be everyone else, absent fundamental changes to lower the cost of care.

Fuchs points to some problem areas that are ripe for change. Here are a few:

High costs of administration: Fifty state insurance bureaucracies, hundreds of insurance companies jostling for employers' business and hundreds of thousands of health providers billing individually for services mean costs here are "abnormally high."

Too many specialists: Less than a third of US doctors deliver primary care. The majority are specialists, who charge more and perform more expensive tests and procedure. More primary care docs, a la Canada where half of physicians do that work, would improve access to basic care and lower costs.

Medical malpractice: The US spends a lot on malpractice, directly and through defensive medicine. Legal limits on awards, Fuchs writes, could reduce those costs.

For a humorous but spot-on take of some of the same issues, see Ian Morrison's "If Bernie Madoff Ran Health Care" in the latest issue of Hospitals and Health Networks.

A few of the scary parallels between the biggest-ever Ponzi scheme and our health system:

Health care would grow every year, in good years and bad.

It would be hard to get in.

Poor people would subsidize rich people.

The people on the 19th floor would never know what the people on the 17th floor were doing.

Morrison turns serious in the end, and seems pretty close to Fuchs in concluding that major changes are needed—and soon.

"If something seems too good to be true, it probably is," Morrison writes. "We need to reform the health care system, and we may need to make some hard choices and some sacrifices. After all, we don't want to end up like Bernie and his clients."



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