It is an election year and inevitably health care will be a central debate topic. The Ryan Plan vs. the Obama plan all address Medicare cost. Of course the direction of the Presidential debate will be greatly altered by the expected June Supreme Court decision. Although debating how to reduce the cost of Medicare is important there are many other factors that influence the rising cost in U.S. health care.
The United States health care system is heavily regulated and subsidized by the government. The medical industry (doctors, pharmaceutical companies, hospitals, and insurance companies) all respond to economic incentives that don’t always correlate with best patient outcomes. These economic incentives are based on treatment of the patient and not necessarily prevention of disease. Healthy patients do not = money. Doctors and hospital get paid when they earn money from office visits and when treatment occurs. Thus more office visits and more tests ordered = more money. This is not to suggest that doctors and hospitals arbitrarily order tests to make money, but the system is set up in a way that money is generated from unhealthy patients.
However there are other factors that affect the rising prices in health care in America.
-Insurance companies- due to antitrust exemptions a small pool of insurance companies dominate the market, thus limiting competition and consumer choice. Premiums were up 131% from 1999-2009 and inflation increased only 28% for the same period. Rising Insurance Executive Pay, for example in 2009 executives at 5 for-profit health insurance companies were paid
-Increase demand for health care
-Medicare and Medicaid account for 1/3 of all healthcare spending- paid for by government
-Emergency Room visits- cost as much as 6 times and as an urgent care facility. For those that are uninsured, the hospital absorbs the cost and thus passed along to the public
-The Cost of Innovation/Precision- hospitals do not have to pay for the new device they do not use, but the manufacturer throws away the defect or unused device will pass along cost
-Duplicated efforts doctors may not have updated medical files so may end up treating something already diagnosed and recommend more tests and write more prescriptions- lack of electronic records
-Malpractice rates grown more than 10% annually- passed on to patients- 10 cents of every bill from doctor is to cover their malpractice insurance
Obesity- cost the U.S an extra $147 billion per year and affects 2/3rds of the U.S. population
The consumer has little incentive to care about the cost of health care because most people have insurance which the employer or government absorbs most of the cost. Furthermore, there is limited data and access for consumers to information on how much procedures cost and tests. If we want to promote healthy patients and not have a system that prospers on unhealthy patients then we need to empower consumers to understand the factors that influence the cost of health care.
