Tuesday, May 15, 2007

To Your Poor (And Costly) Health

I see myself like Larry Birkhead emerging from that Bermuda courtroom after DNA test results on Anna Nicole Smith's daughter are confirmed and saying, "I hate to say I told you so, but..."

Except that the tidings here are glum, and elicit groans, not cheers. I'm talking about the "breaking news" from Reuters that the US pays the most (twice as much) for receiving the worst healthcare among the group of peer countries. The study is by the Commonwealth Fund that compares the US with Australia, Britain, Canada and Germany (wonder why they left out France that is rated the best in many studies.)


The Birkhead analogy is that I've been saying and writing about this for over two years, and my last update comparing the US to all the other (OECD) first world countries is here:

Going beyond this Commonwealth study I listed and quantified the contributions of the seven underlying causes for high US costs. Either way the broad insight is that if we can "just" copy the policies and health systems of these countries we can slash our annual healthcare bill by half without compromising quality. Imagine what the resultant trillion dollar savings can be used for. Controlling the deficit, making our businesses more competitive internationally, more resources to support our troops, giving out more no-bid contracts to Halliburton, launching wars against Iran and North Korea... (okay, okay, I'm just kidding about the later ones - sort of.)

Then of course there are the additional implications for my favorite subject - medical tourism. I wonder how long the mainstream Americans will continue buying the line of the US hospitals, "You get what you pay for."


PM said...

I found the Reuters article to be too cursory. It also does not get into the causes or the fixes, like your article does.

Sandip Madan said...

Thanks, PM, I appreciate it. :-)

kenrod said...

The Reuters article says that 45 million Americans are uninsured. But that is by choice rather than an epidemic problem because they would rather buy their Harley motor cycles etc. Another reason is that insurance is obtained through work, and more and more people are becoming self employed or independent contractors. We have to address the issue of portability so that when people leave a job they can take their coverage along with them. The Reuters article did talk about how countries universal coverage have lower costs. But what about their taxes which indirectly go to subsidize their behemoth systems? And when was the last time Canada or the Europeans come up with a cure for a major disease? Louis Pasteur? All the medical breakthoughs are in the US.

But part of the issue you raise is true because the US spends a hugh portion of the healthcare dollar on the latter stages of life. The Medicare beneficiaries, typically over 65 years old, suddenly gets this zero deductible plan with rich drug benefits. They pay $91 for the Part B premiums. All the while the rest of the younger population usually have higher deductible plans, which means they don't go for their checkup. I think the solution is to "means test" Medicare beneficiaries and to raise their deductibles. Sorry Aunty Jane.

Sandip Madan said...

Kenrod, you make many great points. About drug innovations, there are now plenty outside the US. Of the world's top 5 drug firms, three are non-US. See
Moreover, why should we assume that government price negotiations or lower US drug prices would significantly change the picture? The Silicon Valley or giants like Google, Microsoft or Yahoo! are not in the US because of higher prices here.

Healthcare prices in other first world countries are half those in the US, and that has little to do with who pays, the tax payer or private entities.

Good point about deductibles, though the patient may not care about costs once the deductible is paid. So co-pays may make a patient more value-conscious.