Why does medical care in the United States cost so much? Why do prescription drugs cost so much?
Joseph R. Antos, the William H. Taylor scholar in heath care and retirement policy at the conservative American Enterprise Institute:
Health care is expensive because of the pervasive entitlement attitude held by literally everyone in the system: patients, providers, suppliers, insurers. Government insurance (Medicare, Medicaid, veterans, Department of Defense) covers 87 million; tax breaks subsidize 176 million in employer coverage; insurers and other third-party payers take care of the bills for 85 percent of Americans.
This virtually guarantees payment to the medical community, who are the gatekeepers to health care. There is little awareness of the full cost or value of medical treatment on the part of consumers or providers, and little opportunity for individuals to choose their own coverage or make informed decisions with their doctors about treatment.
The health bill will add another entitlement to existing ones, providing large subsidies to millions of additional people without addressing the cost drivers except in demonstration projects that might pan out in a decade. Even the Medicare cuts are speculative, since they depend on future Congresses going along with decisions made this year. Taxes, which pay for about half of the reform, do not reduce health spending—they enable more spending.
Jacob S. Hacker, the Stanley B. Resor professor of political science at Yale University and a liberal proponent of a government-run health insurance plan.
A common lament is that we don’t know how to control costs. That’s false. Other nations with broad health programs have a much better track record than we do, and even the Medicare program has controlled costs better than the private sector. These experiences suggest that a big reason health care in America is so expensive is that there’s too little countervailing power in the markets for health insurance and health services.
Insurers, pharmaceutical companies, device manufacturers, doctors and hospitals are all able to drive up prices with limited pushback. On the one side, insurers have virtual monopoly power in many markets. Without serious competition for their business, they often have little incentive to contain costs. On the other side, providers of health care services have enormous market power in many local markets. Without insurers jawboning them to bring down rates and improve efficiency, they continue to charge too much and operate without proper economy.
Unfortunately, the proposed legislation does not do enough to strengthen competition and rein in costs. The public health insurance option was the best means of bringing countervailing power to bear. In its absence, the hope is that regulations on insurers will encourage them to focus on keeping down the underlying cost of care, rather than shifting costs onto consumers or avoiding costlier patients. But the legislation lacks strong enough incentives for insurers to behave differently and strong enough tools for government officials to respond if, as I fear, costs continue to rise more or less unabated.
Both of these well intentioned gentlemen miss the point completely. The fewer intermediaries between the medical professional and the patient . . . the better. Better health care and transparency in pricing.
I get some of my medications from a compounding pharmacist from UNC School of Pharmacy. He mixes the compound, hands it to me, I pay the compounding pharmacist out of pocket and then file a claim with my health insurance company.
Sure, we don’t need compounding scientist for every drug. But why on Earth do we need HMOs, insurance companies and Medco (the federal government’s Medicare Part D administrator) to negotiate with pharmacies, medical facilities for the price of the medicines? Why don’t we all pay the true, real cost of the medicine? Then, our insurance pays and we never know the cost of the product.
As a patient, my primary relationship should be with my physician.
As a financially responsible patient, I purchase insurance in the event I have a catastrophic illness (I have cancer and tibial osteomyelitis). But, as a cancer patient, I should know what the true cost is of every drug, test, scan, procedure. The true cost – not what insurance will pay or my co-pay. I take care of myself and know that some procedures, drugs have more risks than benefits.
Unless I have all of the relevant information in front of me (including the true, actual cost of the medical cost or service) then I am just feeding off the medical system like a cow at the trough. And, unnecessary use of scarce medical resources (ie managed care, ObamaCare plan) has overburdened the medical system, created incentives for insurance companies, “big pharm,” hospitalists to distort the true cost of health care costs.
Lack of transparency in costs cannot survive in a capitalist market. Sooner or later, the real people catch on. We start getting that our doctor seems to have more of a relationship with BCBS than us (the patient).
It must stop. It will stop.
A great first step would be for doctors to determine the actual costs of their services, create a prototype plan using a lean business model and implement the plan in a few counties that cannot afford its state Medicaid system. And that is RHR_Chat’s plan. We are in the brain-storming/planning stages. Exciting. Doctors will actually have control over the planning.
Florida is doing this with HMOs. We’d like to do it with just medical professionals. Join us.