Monday, August 10, 2009

Curing America's Health Care

A while ago, I wrote about how America's 'private' health care system currently costs the taxpayer almost as much as running the British National Health Care service - and then charges the consumer even more than that on top!

Well, the fact that American health care costs too much is no longer under debate. Today, Price Waterhouse Coopers' Health Research Institute listed money-wasting problems that cause the American health care industry to pour $1.2 trillion down the drain every year (roughly half of the money spent on medicine.)

What were these financial hemorrhages? Here are some of the worst ones identified by Price Waterhouse Cooper:
  1. Two many tests. Making an informed diagnosis is one thing. Running unnecessary tests is another. Capping malpractice suits and encouraging 'evidence-based' diagnosis could cut the amount of expensive tests performed in half - and save insurance companies billions.
  2. Insurance company bureaucracy. I've already argued that the insurance companies are almost criminal in their bureaucratic incompetence, but the proof is finally here. Doctors report that 40% of their revenue is spent filling in insurance company certification - simply getting the money for the services they've performed. Price Waterhouse Cooper argue that standardized forms and a computerized database system (as touted by President Obama) could shred this waste of time and money - cutting doctor's overheads dramatically and lowering costs for both insurance companies and patients.
  3. Paper prescriptions. It's not just the insurance companies who are behind the times. Many doctors can send 'electronic prescriptions' to a patient's chemist almost instantly, but over $4 billion a year is wasted by doctors who still insist on writing their prescriptions the old fashioned way.
  4. 'Free' medical care for the uninsured. No, I'm not arguing that people without insurance shouldn't receive care. What is causing a problem is them using the Emergency Room as a primary care provider. Illegal immigrants and the uninsured go to the ER for strep throat and other 'regular' health problems, which a GP would normally deal with. A GP visit would cost around $70. A trip to the ER costs $700. At the end of the day, those costs are passed along to the paying customer (i.e. us) if the hospitals or doctors don't get reimbursed.
  5. Over-prescribing antibiotics. It's estimated that prescribing antibiotics for conditions they simply can't treat (like coughs, colds and flu) costs over a billion dollars in wasted medicine and contributes to the development of antibiotic-immune MRSA bacteria, which in turn add an additional $3 billion worth care-associated infections. Doctors need to start practicing the medicine they studied and not give out antibiotics as placebos.
  6. Hospital Bed Churn. It's estimated that $25 billion is spent every year on providing medical care to patients who are discharged from hospital too early. The pressure to get 'em in and churn 'em out inspires doctors and hospitals to discharge patients before they're ready - and the added cost of ambulance trips, re-admittance and recovery hurts all of our wallets.
The grand total, Price Waterhouse Cooper argue, is a whopping $1.2 trillion in wasted expenditure. Just imagine if we slashed that spending.

If you could, you might arguably maintain the current system on taxpayer dollars alone (according to this Economist report.) Alternatively, you could dramatically slash insurance premiums for the majority of us with coverage.

But identifying the waste and actually dealing with it are two starkly different things. One's got to wonder if either party will actually use this information, now that Price Waterhouse Cooper has made it available. I'm skeptical.

The Republican party is currently gunning to maintain the current system - bitterly fighting against any of Obama's suggested health care reforms whilst simultaneously failing to provide any worthwhile alternative suggestions of their own.

Meanwhile, many Democrats are still wound up in fantasies of 'universal health care' and demolishing a private industry which provides almost 20% of the United State's GDP - all for the sake of a government-run system that's been proven not to work in half a dozen other countries.


One Salient Oversight said...

What does "proven not to work" mean?

If you're saying that a complete eradication of private healthcare has been proven to not work, I agree.

If you're saying that universal health care doesn't work in other countries, I disagree.

In Australia, the UK, Western Europe and a whole bunch of other Western nations there exists a "Universal Health Care" system which covers everybody - rich and poor. These systems work. If you've been reading too many assertions from the health care lobby then know that they're wrong. Healthcare in these countries works, and works as good as, if not better than, the US system.

But no nation with universal health care has gotten rid of private health care. For those who wish to pay, top-quality private health care is available to Australians, Brits, Canadians, French and so on. What seems to work best is a mixed health care system whereby choice is given to those who want it and coverage given to those who do not.

The US healthcare figure is around 15% of GDP, and that includes private and public sector. In western nations with universal health care systems, this percentage hovers around 9-10% of GDP and includes large public spending and smaller private spending. Reducing this level of spending would do any economy good. Moreover, it means that the increased taxes on healthcare would be more than balanced out by reducing spending on health care costs.

In the end, what other nations enjoy is not "socialised medicine" since there is and always will be a private sector operating alongside it.

Yesterday I took my son to the doctor. I paid the bill at the end of the consultation, much of which will be refunded by the government. I chose a private provider and the government helped pay for the majority of it.

cheap said...

Now the debate is over of Obama's health care plan.

Roland Hulme said...

OSO wrote: "Healthcare in these countries works, and works as good as, if not better than, the US system."

Actually, I was basing this off my own experiences - remember, I lived with the NHS for the majority of my life. It is a broken system. I know two people who are alive today thanks to being treated abroad, rather than in the UK. The fact that there IS a private health care industry in the UK shows that the system obviously needs improvement (less bureaucracy, more doctors.)

People get confused with 'universal' and 'socialized' medicine, though. I'm all for universal health care - as in, everybody has access to it. Whether it's provided privately, or by the government, matters less to me than the fact that we have it.