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

[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.