Quote:I see a few problems that increase costs above other countries in the U.S. system. Initially, we do not have price transparency. Some other posters have referred to this. We also have market fragmentation and isolation which is part of what I think jj was talking about earlier. I don’t care whether the model is Bismarck, Beveridge, or NHI, regulation prevents the sort of abuses that are endemic to the U.S. system. Our tests can cost more, our procedures can cost more, and the consumer has no way of getting apples to apples information. Other countries limit costs through using the purchasing power of the government, even if the insurance companies are private (Bismarck model).

 

Second, administrative costs are out of control. Other countries have administrative costs in the 2-5% range. I believe that is about what Medicare runs. But our private insurance sucks up much more of our ‘health care’ dollars. Those administrative costs run at about 17% trending up to 20%. They are dead dollar expenditures that do not improve quality of care at all.

 

Part of the challenge with Health insurers is lack of true competition.  If there are only 5-10 options in a given state for an HR department to choose from then its hard to find a deal that far outside the mean average.  We need to incentivize capital moving into the arena of insuring the risk of health care. 


 

Third, even outside of the ridiculous charges that can be tacked on by hospitals, or the shell games that insurance companies can play, costs are more because it is a simple fact that our doctors make more than those of most other countries. Part of this can be explained by the high cost of medical school, part by malpractice, but not all.

 

The high cost of Medical school is not just a line item.  It's a deterrent for intellectual capital.  The people that eventually make it through undergrad, med school, and residency could generally be considered Geniuses.  It requires the highest level of STEM aptitude and a work ethic that transcends most people.  If you were someone in the top 5% in Math and you had a choice between half a million dollars in student debt and an additional 10 years of education or getting your series 7 heading to wall street, making as much money as you can and never having to buy mal practice insurance which one would you choose.  The underlying scarcity of Medical Talent is the true driver of a lot of the costs in Medicine today. 


 

I think that part of this can be traced to k-12 education.  There is very little deviation between the path of a student in 2017 as 1917.  The top students may get to calc 1 upon graduating from high school.  In the 12 years that they are part of the traditional school system we will waste roughly 3 years of time on vacations, and a lot more telling them which bathroom to use and studying aspects of literature and the like that will not develop anything resembling a marketable skill let alone advance their natural aptitude for STEM.  We need to have a system by which the advanced students in our society are put on the fast track to absorb as much as they can while they are in k-12 so that we can mitigate the cost of under and post graduate education to make medicine more attractive. 


 

 

But speaking of malpractice, there is a certain amount of waste that is due to defensive medicine. Some other countries are a bit tighter on the types of suits that are allowed, and perhaps some type of relieve could be found from doing this.

I also believe that more discussion needs to be focused on end of life care and on incentivizing good preventative care. However, the first two issues especially are the ones that I see as providing the bulk of the problem. Any solution that fails to resolve those is doomed to failure.

 

Tort reform could theoretically help. 

 

Also, its important to remember that in most cases regulation INCREASES COST efficiency and innovation generally DECREASES COST.  As an example, one of the challenges mentioned in this thread has been the inordinate cost of some medications.  We have already talked about the fact that Drug companies base their business models on belonging to a network of customers that don't really see a bill.  They don't have to compete solely on a cost basis or produce a product that the average person can afford.  This is also compounded by the fact that it takes 10 years in some cases and tens of millions of dollars for the FDA to approve a new Drug. To make matters worse, the current incentive for domestic pharma companies to traverse this maze is a market insulated from foreign competition!!!  Safety is great, I am not advocating that we just let some kid with gasoline and a pacifier sell drugs to kids.  I am stating that the inordinate cost of bringing a new drug to market creates an artificial truncation of supply and thus limitless inflation in the marketplace.  That's why you see companies being sold as soon as a drug is approved and the new owners jacking up the price 900%.

 

We need to simplify and streamline the process by which drugs are brought to market and if scarcity exists in a sector of the pharmaceutical  industry we should allow foreign drug makers to directly compete in our markets, in addition, we should have open deals with countries that inherently share our commitment to drug safety and similar standards so that they can sell their drugs in our markets to bring down overall cost to the consumer. 

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