What makes the US Health Care System so expensive

[jducoeur]

Thanks to mindways for the pointer to this fascinating blog series on the topic of health care, and the real (or at least, apparent) reasons why it is expensive.

It's a bit long -- ten modest-length blog posts, each on the separate topic -- but well worth reading. The underlying principle is that, in almost every other developed country, there is a roughly consistent ratio of medical spending to GDP; based on that, we would expect the US to spend more on health care than everybody else, since we're richer. But in fact, we spend *vastly* more than that curve would indicate -- we're way out of line, and don't appear to get better health care as a result. (The series is very much from an economics POV, but avoids complex jargon: it's pretty easy to understand his points.)

Rather than go after a single easy bogeyman, the series goes into serious, principled detail: it examines where the money is actually going, and how much extra the US is paying compared to other countries in that respect. Towards the end, he spends a post knocking down the usual easy culprits, arguing that they mostly don't appear to be primary contributors to the problem. (Indeed, it's impossible to miss the way that politics is distorting the argument, when you compare his numbers to what gets hyped in the media.) Overall, he eschews easy answers -- indeed, the main point of the series is that the entire system is pretty well screwed up, and there likely is no single easy answer to the problem. The result is an implicit call for serious root-and-branch reform that re-examines the way we do business -- he doesn't say that in quite as many words, but he really doesn't have to.

Refreshing stuff, even if the conclusions are a bit depressing. This area of policy is so dominated by people promoting dogmatic arguments and snake-oil fixes (some of which, I'll admit, I've tended to buy into) that it's rather bracing to see an examination that is driven as strictly as possible by what the actual numbers seem to say. You can validly argue with the interpretation of some of the details -- in particular, I think it's worth deeper examination of how some of the parts interact -- but it at least provides a good basis for that argument...

Comments

[tpau]

hav enot had a chance to look yet, does he go into pharmaceuticals as well?

[jducoeur]

He does, and basically concludes that it's a significant contributing factor, but by no means the be-all and end-all that it's often made out to be...

[tpau]

hmm, i mostly care if he proposes a solution to the fact that hte US bears the brunt of paying for hte RnD, since the places with subsidized pharmaceuticals do not.

[jducoeur]

He's actually not trying to propose solutions: the focus of the series is to clearly state where the *problems* really are, so that the discussion of solutions will be better-informed.

(He does go briefly into this topic; IIRC, he concludes that, while this is an issue, it's not a gigantic one...)

[jducoeur]

Here's the page on pharma. The biggest underline point is that the entire R&D budget is less than $50 billion, so that can't explain more than a bit of the ~$1 *trillion* of "too expensive" in our health care system.

That said, I think you can make a case that there are subtle effects here: that Big Pharma is essentially using R&D as a Big Lie to justify prices that are far out of line. That is, they are *claiming* that we are subsidizing the rest of the world more than we really are, when in fact it's more pure price-gouging than anything else. This seems to be a common meme I'm picking out here -- in several areas, our actual *prices* are far greater than the *costs* used to justify them. The implication there is that there's a political/marketing problem that is far greater than the real economic one in some areas...

[baron-steffan.livejournal.com]

Please. They can't get away with that argument any more, that we're the stars and gods of tech, "subsidizing" the rest of the world with our difficult, innovative, and vastly expensive pioneering work. That's so 1970. A butt-ton of drugs on the shelves were developed outside of the US, and are manufactured outside of the US, ultimately being "marketed under license" from companies in places like Japan and Luxembourg and Singapore and Slovenia.

[baron-steffan.livejournal.com]

Hey boys and girls! Wanna get really angry? Read this little pile of bovine dung by our friends at Colcrys.

http://www.colcrys.com/patients-home.htm

The bottom line here is this. Colchicine's been on the market forever, since before the FDA. Because of that, it was grandfathered and never went through the current "safe and effective" New Drug Approval process. Well, somebody decided to do that and can now claim "the only FDA-approved colchicine". Colcrys *is* colchicine, nothing less, and most importantly, nothing more. Not a fancy new formulation or a long-acting tablet, none of that. But the fact that it exists immediately changes all the "generic colchicine" into "unapproved colchicine".

So what, you ask?

Thirty colchicine will set you back less than $25 in my pharmacy. Thirty Colcrys tablets will cost you about $220. Yeah, that's right. Because it costs us almost 10 times more. And all those generics are no longer manufactured, and as of 12/30/10 can not be marketed or dispensed. Do you really think this has a bloody thing to do with safety or quality? No. This is a blatant example of gaming the regulatory system, and the patient, as usual, is the pigeon.

Have fun, gout sufferers. Your government has your back.

[tpau]

the FDA, for all its uses and regulations and safety... is often the reason drugs cost a fuckton of money. it is just too freaken expensive to get fda approval. sigh

[baron-steffan.livejournal.com]

That's entirely true, but my point in posting this was that life in colchicine-land was just fine, thenk-yew, without the trumped-up "concerns" in the blatantly spin-doctored press releases. Colcrys is colchicine, pure and simple, and now you get to spend about ten times as much for it as you did before. Yes, the approval process is expensive, but do you really suppose that entirely accounts for the price increase? No, it doesn't. It can't possibly. The price is what it is because it CAN BE. Yes, they were aided and abetted by an "initiative" at FDA to get grandfathered drugs through the Process (so expect a lot more of this crap in the near future). But the bottom line is that if you need colchicine, you now have to have to go to Colcrys to get it, and they get to charge whatever the hell they want. So they do. That's their motivation, not any concern for the public safety, which was not in danger and has not been improved one iota by this. And anyone who buys into their press releases probably still believes that cigarettes are good for asthma.

[tpau]

well, nicotene is supposed to be a bronchodialator :P but i see your point

[meiczyslaw.livejournal.com]

Interesting. I'd come to some of the same conclusions, but hadn't put them all together as comprehensively as Carroll does. Unfortunately, I think he unintentionally obscures root causes in the way he divides his topics.

One is that the U.S. demands redundancy. You can see it best in his Outpatient Care topic, but it also shows up in Inpatient Care, and in Health Care Workers (both directly, in number of nurses required; and indirectly, from the increased demand for personnel).

The other is market distortions due to the choices of private insurers and the government. It's seen most clearly in Areas of Underspending, but you can also see it in Inpatient and Outpatient Care.

The market distortions could be removed by decentralizing pricing (i.e., get rid of "managed care" altogether), but I think the redundancy is tougher nut to crack. We're asking our hospitals to be able to provide the same quality of care, whether it's located in Boston or Shungnak.