Rising Health Care Costs – A Sign Of Progress!
In the United States we spend more per capita on health care than any other country in the world. We spent $7,421 per capita as compared to about $3,500 countries with universal national health care systems such as France and Germany. In fact, according to the latest data, we spent $2.2 trillion in 2007 on health care, or 16.2% of our Gross Domestic Product (GDP). Even more worrisome is that expenditures continue to rise at an alarming rate of 6% annually.
There is however, another side of the American health care story, one that is rarely discussed but one that has added dramatically to health care costs. In the past 25 years we have turned deadly diseases such as AIDS and many cancers into chronic illnesses. Death is cheap and prevents health care cost from spiraling upward. Twenty-five years ago a diagnosis of AIDS meant death within 6 to 12 months. Today, we have every expectation that a newly diagnosed AIDS patient will live more than twenty-five years. The same is true for many cancers. It is expensive to keep these chronically ill patients alive and functioning normally but most would agree it is worth the extra cost.
As we develop new and admittedly costly procedures and therapies to transform these and other deadly diseases to manageable chronic illnesses, health care costs will continue to rise. But what is the alternative - Don’t invest billions in research and development and stand up and shout, “Stop The World I Want To Get Off - It’s too expensive”? For those who view the world only through an accountants “green shades” - May I remind them that by saving these lives and allowing our fellow citizens to function normally, they will become productive tax paying contributors to society.
There is also the mistaken belief that preventative care by primary care physicians will save the system hundreds of billions of dollars - If the prevention strategies we employ are just platitudes - Eat better, lose weight, exercise more, stop smoking - then they will cost very little and they will save money by keeping people healthy. But we don’t need a healthcare system for that - A public service advertising campaign will probably be more effective. If prevention requires medical intervention however, it will cost a lot of money. Medical prevention is a great thing but it requires extensive and often costly screening to find risk factors such as hypertension, elevated cholesterol genetic predisposition to certain cancers etc.
In an essay in a recent edition of the Wall Street Journal Dr. Abraham Verghese explained - “Discovering high cholesterol in a person who is feeling well, is really just discovering a risk factor and not a disease; it predicts that you have a greater chance of having a heart attack than someone with a normal cholesterol. Now you can reduce the probability of a heart attack by swallowing a statin, and it will make good sense for you personally….. But if you are treating a population, keep in mind that you may have to treat several hundred people to prevent one heart attack. Using a statin costs about $150,000 for every year of life it saves in men, and even more in women since their risk of heart attack is lower.”
The more that preventative medicine is applied to increasingly large populations for an expanding list of preventable diseases, the greater the current cost to the system. Saving money on a heart attack that does not occur 20 years from now will not pay for the necessary prevention that will allow Americans to live longer and healthier lives. We have to pay for it today.
In addition, adding more patients to the system will require that we increase the numbers of health care professionals. This is both desirable and expensive. If we make the reasonable assumption that American physicians currently work a full day; who is going to treat this new influx of patients. While it may overstate the case to say that these patients are not receiving any healthcare, it is instructive to calculate how many physicians would be needed to treat 46 million additional patients. In the U.S. we have approximately 3.0 physicians per 1,000 people thus, if we extrapolate we would need an additional 138,000 physicians to treat this population.
We are already behind the curve; there were 15,242 medical school seniors in 2008 to fill approximately 22,000 residencies. Not surprisingly, roughly 4,650 were filled with foreign graduates, some of whom were Americans who had studied abroad. The balance was filled with graduates of osteopathic schools. The medical-colleges association has called for a 30% increase in enrollment by 2015 as compared with 2002 primarily by expanding existing schools and opening new campuses. This goal may be unachievable. Thus, in the future, larger numbers of foreign medical school graduates will be needed to meet our needs since, expansion of medical education is unlikely keep pace with the increased need for physicians. For example, the medical-college association estimates that if physician supply and use patterns stay the same, the United States will experience a shortage of 124,000 full-time physicians by 2025. Universal healthcare will further increase the need for physicians.
A recent study published in the New England Journal of Medicine estimated that 23% of medical school graduates begin their professional life with $200,000 or more of debt from pre-med and medical school loans. In addition, a substantial number have over $100,000 in debt by the time they graduate. At what point is it uneconomical to become a U.S. physician knowing that government is dedicated to reducing its expenses by limiting the income a physician can earn?
Medical students in Europe and elsewhere, where national health programs are virtually universal do not pay to attend medical school, the government who in a very real sense limits the ability of these future doctors to earn a living, has made a implicit bargain with the students; education is free but the government reserves the right to determine your level of compensation throughout your professional career. At the moment, the American medical student is asked to go into hock for $200,000 or more while their ability to control their level of compensation once they graduate may be determined by government bureaucrats. Americans are likely to perceive such a system as inherently unfair, and may insist that government pay for medical education, like the rest of the Western world. Has Congress calculated the potential cost? Will they increase the quota for foreign trained physicians to enter the U.S. to help alleviate the shortage?
There are however, actions that can be taken to reduce unnecessary cost. Elimination of the cost of defensive medicine is a crucial step in a “real” healthcare reform effort. Defensive medicine occurs when doctors order tests, procedures, or visits, or avoid high-risk patients or procedures, primarily to reduce their exposure to malpractice liability. The cost to Americans is difficult to calculate because it is divided between inappropriate behavior and the more insidious and costly subversion of the whole health care system.
Several studies give us at least a sense of the magnitude of the easily identifiable problem of inappropriate behavior. Conservative estimates put its cost at more than $100 billion annually. According to one study of more than 900 physicians by the Massachusetts Medical Society and UConn Health Center researcher Robert Aseltine Jr., about 83 percent of physicians reported practicing defensive medicine, with an average of between 18 percent and 28 percent of tests, procedures, referrals, and consultations and 13 percent of hospitalizations ordered for defensive reasons.
It is instructive to look at a common example of the more insidious systemic problems that our overzealous malpractice system creates. Since the 1960s, hysterectomy has been one of the most frequently performed inpatient surgical procedures in the United States, with an estimated 33% of women undergoing a hysterectomy by 60 years of age. The medical/legal “rationale” for this excessive number of hysterectomies is that it prevents cancer and prolongs the life of women.
There is a relatively easy way to calculate how many of these procedures are medically unnecessary. In Western Europe, for example, only about 10%-12% of women under 60 have undergone a hysterectomy. Yet European women do not have a higher incidence of reproductive cancer and they actually have a longer life expectancy than American women. Conclusion, two-thirds of all hysterectomies performed in the United States are unnecessary.
For lack of a better phase I will call this ubiquitous problem the “Legal Hysterectomy” procedure. What gynecologist in the U.S. will cease performing questionable hysterectomies, knowing that in the unlikely event the patient develops a reproductive cancer or just excessive menstrual bleeding a lawsuit is a virtually certainty? Therein lies the problem. Every medical specialty has its own “Legal Hysterectomy” procedures and combined they not only waste unconscionable sums of healthcare dollars but subvert the medical system itself.
America needs special health courts aimed not at stopping lawsuits but at delivering fair, predicable and reliable decisions. A special court would provide expedited proceedings with knowledgeable staff that would work to settle claims quickly. Trials would be conducted before a judge who is advised by a neutral expert, with written rulings on standards of care.
When all is said and done the key to health care reform is spending more money on real care and less on wasteful side shows.
[...] The rest is here: Rising Health Care Costs – A Sign Of Progress! [...]
July 21st, 2009 at 5:21 am
Somebody should print this article out for Obama and tape his eye lids open and strap him to a chair to force him to read it.
July 21st, 2009 at 5:31 pm
The author claims that advances in medicine are somewhat proportional to cost and mention AIDS and other conditions as mastered by the United States. This argument is a falacy.
The first heart transplant took place in South Africa, the HIV virus was first identified in France, and the first face transplants have taken place in France and China. American drug companies may still have an edge in new patents but the gap is narrowing.
If we have to cite a general cause for the high cost of American medicine, it is the laissez-faire philosophy promoted by conservatives, drug, and insurance companies. Any patent-protected drug costs 10 times as much in the US as it does in Canada. The generic drug industry was bitterly opposed by drug manufacturers who used scare tactics as ruthlessly then as the opponents of health care reform use them today.
Insurance companies take the lion’s share of the health care money. They are nothin but greedy middle men. The starting point of health care reform is the creation of a universal tax-financed public health system.
July 22nd, 2009 at 4:58 am
Thank you, William!
July 22nd, 2009 at 5:31 am
While Andrea makes the occasional good point in her post, the high cost of healthcare is less due to the hands-off philosophy than the regulatory environment, the propensity of Americans to use tort to sooth their hurt feelings and our desire to get a pill for whatever ails us. We are, at least in some regards a nation of hypochondriacs, unwilling to deal with minor illnesses, aches and pains. Further, how many of us have a “dog in the fight”? We never see the real cost of our own healthcare. Obamacare never addresses any of those issues. Since, IMHO those are the underlying problems with cost, the only other way to control them is through artificially rationing care. Unless the underlying causes of high healthcare costs are addressed (and there is no political will to do so), Obamacare will be a disaster.
July 24th, 2009 at 2:41 am
As a moderate libertarian I have to say I have grown to loath the healthcare debate. All solutions seem to lead to new government departments, higher taxes, more spending and since federal programs are rarely fully funded…. more state/national debt. We are curing net tax consumers by laying heaver tax burdens on net tax producers. How long before the producers begin putting real effort into avoiding the demands of consumers who cannot pay with their own money up front instead of through a system that socializes costs. Many Doctors are also accepting patients who come in with money, shunning anybody trying to use medicare or the like. Personally I cannot blame those who are productive from refusing to associate with any system that forces them to pay for the net tax consumers bills.
My prediction is this. Either ways will be found to make healthcare cheaper with technology or productive citizens/better doctors will move to states with good conditions but without a any type of socialized medical system.
August 1st, 2009 at 3:41 pm
See several virtues in the post:
1- no prolixity
2- rich content
3- it looks helpful for me
Much thanks! great post here. worth my time to read here. Thanks for sharing .
Roy
August 6th, 2009 at 11:40 am
New to this blog, but find it an interesting debate forum. I’ll be a lawyer in a couple months and have been around the legal field for a long time. I’ve worked in health law (among other legal fields) and agree 100% with the sentiment that med mal claims, insurance, etc. are one of the (if not the most) greatest financial strains on the healthcare system. I do find your suggestion of a separate legal realm for health claims interesting. However, it is also less practical than a total overhaul of our health delivery systems. Unlike healthcare, our legal system is rooted in the Constitution. Switching from a common law system to a civil law system nationally (one in which we take from the parties the right to proffer their own medical experts and provide for a neutral court expert, such as what Germany does) may well require Constitutional changes.
However, it may not, and there is reason to believe it wouldn’t. We essentially have three legal systems in the U.S.: criminal, civil, and administrative. The former 2 are very similar in most respects. Administrative law, however, is generally regulated only by the APA (except, unfortunately, immigration law) and the federal government is afforded great leeway (specifically, so-called “Chevron” deference) in how it regulates admin law fields (such as EEOC claims). And so it is possible that health law could be moved into a more admin law realm, whereby special courts and rules would be possible.
I give that background to note what may be an unfortunate side effect for many of the libertarians on this blog. To move health law, incl. medical malpractice suits, into an administrative law system to allow for neutral court experts, arbitrators, etc., we would likely need a nat’l healthcare department. That means more gov’t and would take away one of the fields (health, police power, education) generally reserved for the States. For that reason more than the sticky transitions such a legal change would require, I’d prefer further self-regulation of the legal field (as the American Bar Assoc. has attempted to do rein in malpractice claims) to gov’t imposed changes.
Thanks for the post!
August 17th, 2009 at 9:23 am
Great points mate. As always, an enjoyable read.
And to Andrea, one problem hun. Universal Health Care would be controlled by the government. Why give them something more to control when they fail miserably in the other sectors that they have already stuck their nose in. The local DMV is a great example of government inefficiency. Long Lines, crabby government employees who treat you like a product on the assembly line, and loud angry noises in every direction. Yep, that’s exactly what I want to see at my local doctor’s office.
August 26th, 2009 at 5:14 pm
The Obama rhetoric claims that they have identified ways to reduce cost tremedously in US health care system.
Hmmm…well OK then do that FIRST? Why is there a need to create a new beauracracy. When government steps in …costs rise, simple stuff. Why not create the savings FIRST????
answer: Because this is not about health care, its about expanding government control.
August 26th, 2009 at 8:21 pm