The always insightful Robert Samuelson has a column today on health care costs in the United States. A recent study by the folks at the McKinsey Global Institute Samuelson cites bursts the bubble on some common misconceptions about where the runaway costs for US heath care come from. Is it the high administrative costs associated with our system? Nope. Well then it must be the high cost of emergency room care, especially that associated with the uninsured for whom the emergency room is the venue of choice? Nope. Not that either.
Where do the costs come from? Americans receive more costly medical services than do other peoples, and they pay more for them. Adjusting for population differences, the number of CT Scans in the US was 72% higher than in Germany. In 2005, one study reported that the number of knee and hip replacements in the US had increased 70% in five years.
The key graph: "We have a health-care system that reflects our national values. It's highly individualistic, entrepreneurial and suspicious of centralized supervision. In practice, Medicare and private insurers impose few effective controls on doctors' and patients' choices. That's the way most Americans want it. Patients understandably desire the most advanced surgeries, diagnostic tests and drugs. Doctors want the freedom to prescribe."
But don't expect this to change any time soon. Writes Samuelson, "There is no major constituency for controlling spending. Because most patients don't pay medical bills directly, they have little interest in using less care or shopping for lower-priced services. Providers (doctors, hospitals, drug companies) have no interest in limiting care. What others call "health costs" are their incomes -- wages, salaries, profits." Which means, that until Americans are forced to pay more out of their own pockets for their health care (out of pocket spending for health care in 1960 was about half--in 2005, 13%), there will be no effective mechanism for controlling cost.
You get what you pay for. We here in the US (at least the 85% of us with health insurance) get a fantastic system, especially when compared to the rest of the world.