Health care: Who is looting us, the people?

SATURDAY, DECEMBER 3, 2011

Even Samuelson fails to explain: On Thursday, we complimented Robert Samuelson for this column about the cost of health care.

In his column, Samuelson cited the latest data from the OECD. For us Americans, several major policy problems are wrapped up in these remarkable figures about health care spending:

Per person spending on health care, 2009 (or nearest year):
United States: $7960
Canada: $4363
Germany: $4218
France: $3978
United Kingdom: $3487
Australia: $3445
OECD average: $3233
Italy: $3137
Spain: $3067
Japan: $2878

Good grief! Why do we spend $8000 per person for health care when other major developed nations spend so much less? As Samuelson notes, our health care outcomes are no better than theirs!

Why do we spend so much more? Whatever the answer may be, other major policy problems are tangled up in those remarkable data. Two examples:

The ongoing debt/deficit problem: As Samuelson notes, health care accounts for 27 percent of all federal spending. This leads to the point Dean Baker made in praising Samuelson’s column: “The long-term deficit problem is primarily health care, health care, and health care.” What would happen to our future deficit problem if health care spending in this country matched that in other developed nations? Baker often makes this truly remarkable point:

“If we paid the same amount per person for our health care as people in other wealthy countries, we would be looking at long-term budget surpluses rather than deficits.”

Amazing! Our excessive health care spending accounts for those annual deficits!

Stagnating wages: As analysts often note, the rising cost of health care also accounts, in large part, for our stagnating wages. Employers are forced to pay more and more for their employees’ health care. This keeps employers from being able to increase employees’ wages.

Simple story: Our remarkable health care spending is all tangled up with other problems. This raises a basic question: Where is all that money going? Why do we spend twice as much on health care as comparable nations? Twice as much, sometimes more?

Where is all that money going? As a general matter, major news orgs have long refused to address that seminal question. (We repeatedly noted this group silence during 2009.) Samuelson went much farther than most. But even so, a major problem still lurks in his two-part “explanation:”

SAMUELSON (11/27/11): What propels U.S. health spending upward? The OECD’s answer comes in two parts: steep prices and abundant provision of some expensive services. In 2007, an appendectomy cost $7,962 in the United States, $5,004 in Canada and $2,943 in Germany. A coronary angioplasty cost $14,378 in the United States, compared with $9,296 in Sweden and $7,027 in France. A knee replacement was $14,946 in the United States, $12,424 in France and $9,910 in Canada. Knee replacements in the United States were almost twice as common per 100,000 population as in the rest of the OECD. So were MRI exams and angioplasties.

This is a devastating portrait. At times, the U.S. health care system delivers the worst of both worlds: pay more, get less. Unfortunately, the message isn’t new. America’s fragmented and overspecialized health system maximizes returns to providers—doctors, hospitals, drug companies—but not to society. Fee-for-service reimbursement allows providers to reconcile their ethical duty (more care for patients) and economic self-interest (higher incomes). The more they do, the more they earn. Restraints are few, because patients and providers both resist limits on their choices. Government regulators and private insurers are too weak to control costs.

Why do we spend so much more? Samuelson gives two answers. First, we provide more services than other nations. Second, those services tend to cost much more in this country.

According to Samuelson, an angioplasty costs $14,000 over here. It costs half as much in France.

This topic is simply never discussed by our big mainstream news orgs. Samuelson went much farther than journalists typically do. That said, he’s still largely begging the question in this informative passage. He says that basic procedures cost much more in this country—but he doesn’t say why!

Why does that angioplasty cost twice as much in this country? Where's all that extra money going? Samuelson makes no attempt to say—and he’s providing a much fuller discussion than you normally find in the press!

Our big news orgs have long agreed; they must never discuss this matter. Samuelson goes way over the line—but even he begs the basic question:

Where is all that money going? Why do basic health care procedures cost so much more over here? Let's express ourselves more plainly:

Who is looting us, the people? When will someone explain?