The Awfulness of U.S. Healthcare

Good new issue out of the Journal of Economic Perspectives, much of it about healthcare economics. I'm particularly fond of this paper which really pile-drives into your skull the awfulness of U.S. healthcare, given its cost:

Is American Health Care Uniquely Inefficient?
Authors: Garber, Alan M.; Skinner, Jonathan

The U.S. health system has been described as the most competitive, heterogeneous, inefficient, fragmented, and advanced system of care in the world. In this paper, we consider two questions: First, is the U.S. healthcare system productively efficient relative to other wealthy countries, in the sense of producing better health for a given bundle of hospital beds, physicians, nurses, and other factor inputs? Second, is the United States allocatively efficient relative to other countries, in the sense of providing highly valued care to consumers?

For both questions, the answer is most likely no. Although no country can claim to have eliminated inefficiency, the United States has high administrative costs, fragmented care, and stands out with regard to heterogeneity in treatment because of race, income, and geography. The U.S. healthcare system is also more likely to pay for diagnostic tests, treatments, and other forms of care before effectiveness is established and with little consideration of the value they provide.

In short, the U.S. approach to healthcare is sort of like that of an over-monied drunk to alcohol: We drink too much, generally go straight for the most expensive booze, and stubbornly try to justify the lousy taste the vomitous morning after.

Comments

[Dan Jacome:]

from a stock point of view, ATHN has had a great 2 days as Obamas presence on TV has so many wondering exactly how far his plan to drive $50B into the health IT area will go.....

2008 Nov 25 12:21 PM

[bigmoney:]

politicians like to throw around 40 million uninsured, or something like that, scaring people with the stats. However, I wonder how much of that number is related to a) illegal immigrants b) single mom culture. The latter involving divorces, knock-ups, shackups, etc. where a family that would normally be supported by an employed husband with health insurance is then fragmented. This is especially glaring in ghetto / matriarchy type environments where the women are the "rugged individualists" and the men drift.

In addition, we have other issues, such as large influxes of illegal immigrants. And soon to be a large wave of aging baby boomers with essentially unlimited demands for medical care.

For some folks, they want their headache diagnosed with MRI / CAT-scan. I don't know if this is patient pull, or doctor push. In the latter case, doctors may push the most expensive diagnosis, in order to hedge lawsuit risk. If one in a thousand bad headaches is a tumor, then that one patient can sue for millions if denied a CAT-scan. So all one thousand "need" a CAT scan.

2008 Nov 25 01:06 PM

[bosun.j:]

USA spends 12% of GDP on health care. USA has 40 million uninsured.

All other western countries spend 6% GDP on health care. Universal coverage!

Rah rah rah, sis boom bah, we're number ONE!

2008 Nov 25 01:49 PM

[Dan Jacome:]

it is actually 47M uninsured by most standards and most of the uninsured are not knock up moms, a large part include young people who feel they do not need insurance.

and its 16.4% of GDP, not 12%..overall, the US spends 2x as much on HC than other comparable countries, thats a $1T savings opp as noted by Medco CEO Dave Snow last week in NY

2008 Nov 25 02:14 PM

[Steve in TN:]

Until we eliminate the lawyers from aiming at physicians with huge malpractice cases the cost to the American public will remain high.

2008 Nov 25 03:28 PM

[Rokjok777:]

I moved from the US to Australia and can now see a health care system that works for everyone. I think the answer is "single payer". Doctors here do not have an army of people in the back room, figuring out which insurer and which program to pay how much, which form, etc etc. There is no wait to see one; and the quality of care is excellent. I would not hesitate to treat any serious disease here. It's a wonder, and even better, it doesn't cost me anything.

2008 Nov 25 03:32 PM

[john s. gordon:]

a lot of procedures/diagnostics are done in the category of defensive medicine, i.e. the hospital or practitioner doesn't want to be sued later. this plus fragmented billing (4 separate bills for one hospital visit) really drives up costs w/o any benefit to the patient.
> jack

2008 Nov 26 08:48 AM

[svkoho:]

One of the comments had health care at 12%. It's over 16% and we may have 50 million uninsured within the next 3 to 6 months. I am a doctor(MD) ready to retire and I can tell you the system is rotten. My colleagues are frozen with fear that their incomes will collapse under a single payer. It will or I should say it should. I have concluded that single payer offers by far the best bang for the buck if our country could take the time to set up a good program. There are many good national health insurance models. Pick one. Canada is decent as is Germany and France, and Switzerland might be a better match for our country. We OR based surgical specialties are vastly overpaid, as are most hospital administrators, insurance executives, big pharma and medical equipment makers. It's a long list. Someone is going to have to tell them that the party is over and they will fight like cornered cougars to preserve high 6 and 7 figure incomes. The older wealthier ones will retire and the younger ones will try to stick it out on one or 200 K a year. With what is happening in the greater economy, not many will feel much sympathy for us...and they shouldn't. It's a corrupt greedy business and I am glad to be leaving it. The comment on malpractice being an important part of the issue is ludicrous.

2008 Nov 27 10:00 PM

[Dan Jacome:]

not surprised to see an MD here telling us how rotten it all is - most PCPs and specialists would agree! Medicare and esp Medciaid are reimbursing doctors less and less, so there is no incentive for doctor to really provide thorough care to anyone, the new model is "churn and burn" them and this lack of incentive, combined with the power MCOs/PPOs have in cherry picking who they will insure, are some of the more dire problems in our health care system. We need not only technology, lower costs, better access - we need better QUALITY. And thats only going to happen if you give the average physician a reason to provide "real care" to the patient...

2008 Nov 28 02:00 PM