A lot of discussion of health care costs, and in America they are uniquely high. Let's talk about why. There's been little of that, except for the old whipping horse of malpractice costs.
First, it's important to understand how uniquely high American health care spending is. Americans spend roughly double per capita on health care than the citizens of other next highest nations. Just over half that spending comes from government spending. If you do the math that means we are already paying in taxes about what the people in the next highest paying countries with "socialized medicine" do, plus we are also paying about that much more in health insurance premiums and out of pocket health care costs.
The deleterious effects of these high costs permeate through our economy. High insurance premiums paid by employers are built into the production of goods and services making our products less cost competitive in a global market. A stunning 62% of all personal bankruptcies are linked to medical costs. Families and businesses are destroyed by high health care costs.
Economists often blame our high costs on the claim that the assumption underlying a free market economy (that you would have learned in Econ 101) do not apply to health care. Consumers are not knowledgeable of market options, are not price sensitive, are not willing to substitute less expensive alternatives to maximize utility, there is not ease of entrance and exit to the market, and so forth. However, that does not explain why America's health costs are so uniquely high compared to the rest of the world. The lack of free market assumptions apply in other countries as well (though perhaps one answer is that those countries have recognized that and more thoroughly abandoned free market principles in providing health care).
Here are at least some reasons I suggest as to why our costs are uniquely high compared to the rest of the world. The reasons are not in any particular order so don't assume that those listed first are higher contributors.
1. Cost Shifting. Our administrative costs are much higher than those of the rest of the world. One reason is that our non-universal insurance system creates additional costs and inefficiencies as costs for providing care to the uninsured are shifted to those who are insured. As others have noted here, the uninsured get care. The costs of that care are generally shifted to the insured. That creates inefficiencies that drive up overall costs.
2. Higher Costs for Treating the Uninsured. This differs from #1 as I am not referring to administrative inefficiencies, rather I am attempting to capture the concept that in many cases the uninsured are rationed out of primary care that results later in far more expensive critical care. Here's an example of what I am talking about:
http://www.network54.com/Forum/594658/thread/1246536973/Healthcare+Rationing I would add that this example reflects not only additional health care costs (transferred to all of us) but also other additional potential costs we may all pay, such as the state having to take care of this woman's children and the reduced likely potential of those motherless kids in contributing to society.
3. A sicker society requiring more care. This kind of relates to #2 above. While the uninsured get care in case of severe injury or critical illness, they generally don't get primary care for mild problems. This can result in them carrying around diseases that get transmitted to the rest of us. While we may be insured, we (or our family members) can catch a communicable disease from someone who is not. Because those people defer the kind of routine care for small problems that would send the rest of us to a physician they pass on their illness to others, increasing costs for us all and decreasing the health for some.
4. Profit. The big money here is not in health care provider profit, the majority of hospitals in this country are not-for-profit community and religious order hospitals. The real profit margins here are again on the administrative and financing side for insurance companies, which generally are for profit. Billions in health care costs are simply to profit shareholders in insurance companies. Some of the uniquely American costs here don't even appear as profit but are reflected in multimillon dollar salaries for health insurance company executives.
5. Provider Pay. The simple truth is that America generally pays its doctors more than other countries do, particularly some doctors. I know of docs (mostly orthopedic surgeons) who only work six months a year because they can make over a million dollars in that time and relax the rest of the year. We also generally pay auxiliary staff more, the nurses, administrators and so forth. While other countries generally pay their doctors well, they don't pay them as well as we do.
"A man never drinks anything that a plant lives in" --DBone (A Real Man).
http://vimeo.com/4938173
