The Unhappy Marriage of Economics and Health Care

[eridani]

http://www.healthcare-now.org/the-unhappy-marriage-of-economics-and-health-care

America’s health care system is collapsing, and we can blame the Economics profession. Most economists approach health care in the wrong way, viewing it as a commodity like shoes or the laptop on which I write. Instead, health care is an idiosyncratic commodity, subject to uncertainty and “asymmetric information” leading to destructive behavior. Trying to force health care into a box, treating it like other commodities, economists have promoted cost sharing, market competition, and insurance oversight of health care providers that have inflated the administrative burden while denying ever more Americans access.

Health care spending has been rising throughout the world as aging and more affluent populations spend on their health. Nowhere, however, has the cost of health care risen as fast as in the United States where costs soared because of rising administrative expense. Compared with other affluent countries in the Organization for Economic Cooperation and Development (the OECD), the United States spends over twice as much per person as is spent elsewhere. Before 1971 when Canada enacted its Medicare program, a single-payer government funded health care system, Canada spent a higher share of its national income on health care than did the United States; since then, however, while Canada has controlled costs, spending has soared in the United States so that we now spend over $3000 more per person. That is $12,000 for a family of four that is not available for travel, education, housing, or food.

Elsewhere, increases in health care spending have been associated with improvements in the provision of health care and, therefore, go with increasing life expectancy. In the United States, however, spending has increased because of rising administrative costs and increases in the price of prescription drugs and, therefore, has yielded relatively few benefits in improvements in care. Comparing changes in health-care spending and life expectancy between 1971 and 2008, other affluent OECD members gained a year of life expectancy for every $453 in spending; in the United States, however, life expectancy has increased less and spending has risen sharply more so that each year of increased life expectancy has cost over twice as much as in these other countries. Health care spending in the United States has increased by $1283 for every additional year of life expectancy; had our spending per year of added life increased at only the rate of other countries we would be spending over $4500 less per person, $18,000 saved for the average family of four. Most of the difference in relative expenditures, most of the growing waste in spending in the United States, is due to increasing administrative costs in the provision of private health insurance and in the billing and insurance operations within doctors’ offices and in hospitals. The average physician in the United States now spends four-times as much interacting with insurance companies as does the average physician in Ontario, Canada, over $80,000 per physician compared with a little over $20,000 in Ontario. Prescription drug prices and administrative expenses have been the fastest rising costs in the United States health care system; from 1980 to 2005, administrative costs rose by 1300% while drug prices rose by nearly 2000%. There are now 2.5 million administrative support personnel in the American health care system; more than the number of nurses, and five times the number of physicians. We now have more health-care managers than physicians and surgeons.

[xchrom]

1. du rec. nt

[Demeter]

5. +10 to the tenth n/t

[Wounded Bear]

2. I've long been of the opinion that critical services....

should not be at the whim of economic forces and profit motives. It should be, not just heavily regulated, but completely socialized.

It simply will not improve financially until the profit motive is removed.

[Egalitarian Thug]

9. Health Care, Education, and Justice are the three modern necessities and should be socialized. n/t

[Cosmocat]

3. It makes me want to rip my hair out

when people in this country talk about health care.

The simple, common sense answer is single payer, but the discussions is about trying to do more of what does not work.

[HiPointDem]

4. kr

[Demeter]

6. Blame accountants, not economists

The Corporate Bean Counters and their cheapskate CEOs.

[liberalhistorian]

10. You can also include the AMA in that.

The AMA has been a champion of the for-profit money-uber-alles model of health care from the beginning, and against any measures and legislation that attempted to change that or even any pro-patient measures, no matter how insignificant. AMA opposition was the reason why it took over thirty years for Medicare and Medicaid to be enacted and implemented; they were first proposed in the 1930's. Only when the AMA and even non-member docs realized that they would actually make MORE money with such programs, because more people would be able to afford their services (particularly the elderly, who were often shut out of medical care at that time due to both insurers' reluctance to cover anyone over fifty and lack of their own resources), did they finally drop their opposition and work with congress to pass and implement it on their terms.

They were even against social security disability, despite seeing many patients who couldn't work and who desperately needed it. They are the major stumbling block to any kind of national single-payer system, despite the fact that they'd actually make a lot more money since a quarter of their income would not have to be spent in billing and collection paperwork. There was an AMA representative on a major cable news/talk show awhile back, bitching about how the economy was affecting their profession since too many people couldn't afford medical care and were putting off seeing doctors. His concern wasn't people who were suffering over lack of needed care, however. His only concern was that it was putting a dent in physician profits. I wanted to scream at the tv that that wouldn't be the case if his organization weren't so opposed to any measure that would help people be able to pay for their services, that THEY were the ones to blame. They never quite seem to get that, though. Maybe that's why more and more doctors are either dropping their membership or no longer joining it in the first place.

[HughBeaumont]

7. Health is a human right not subject to making a buck.

End of sentence.

[JEB]

8. Now this is a scandal

worthy of attention.