U.S. medical costs tops in world

[HenryTo]

A very, very interesting article on the costs of healthcare in the United States. Note that I am not going to comment on this - but this is a must-read, I believe.
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U.S. medical costs tops in world
Study: Malpractice, defensive medicine play tiny roles
By Kristen Gerencher, MarketWatch
Last Update: 7:18 PM ET July 12, 2005

SAN FRANCISCO (MarketWatch) -- Americans pay more for health care per person than citizens anywhere else in the world, doling out half again as much in medical expenses each year as the second-highest-cost country, according to a new study.

And contrary to popular belief and political rhetoric, malpractice lawsuits have little impact on those high costs in this country. Nor does the fact that people elsewhere end up on waiting lists for care that is in short supply do anything to hold costs down, according to the study published in the July/August edition of Health Affairs.

U.S. citizens paid $5,267 per person for health care in 2002, the study found, 53% more than any other industrialized country and $1,821 more than Switzerland, the nation with the second highest per-capita spending.

"What we said three years ago and still reiterate is, it's prices, stupid," said Dr. Gerard Anderson, lead author of the report and a professor at the Johns Hopkins Bloomberg School of Public Health.

"We pay for drugs, hospital stays and doctor visits 2 to 2 1/2 times as much as other countries pay."

While medical malpractice is a problem, its costs account for less than 1% of spending. And defensive medicine, where doctors run tests or do procedures to lower their chances of being sued, makes up no more than 9% of total spending, the study of spending in 30 nations found.

"The finding that litigation and waiting lists do not explain most of the higher U.S. health spending is perhaps not surprising considering previous research showing that the prices of care, not the amount of care delivered, are the primary difference between the United States and other countries," the authors wrote.

In 2001, the average malpractice award in the U.S. was $265,100. That was lower than Canada's $309,417 and the United Kingdom's $411,171 but higher than Australia's average payment per settlement or judgment of $97,014. All four nations had malpractice payments that represented less than 0.5% of total health spending.

But Canada, Australia and the U.K. are getting more litigious, and at a faster rate, Anderson said. Australia's average annual total malpractice payments from 1997 to 2001 increased by 28%, Canada's grew 20% and the U.K. rose 10% compared with a 5% increase for the U.S, the study said.

The presence of waiting lists for medical services didn't appear to account for much of the difference in spending either.

Spending in 12 countries with waiting lists for elective surgery was $2,366 per person compared with $2,696 per person in seven nations, not including the U.S., that said they didn't have substantial waits -

Medical services that require waiting lists comprise only 3% of U.S. health spending.

Drug costs and hospital stays

Americans also pay twice as much for prescription drugs than other countries that benefit from collective bargaining, Anderson said.

"They have a more uniform approach where all the insurers or all the purchasers of care get together and negotiate with the hospitals, with the pharmaceutical industry or the physicians," he said. "They have one block that's the negotiator whereas in the U.S. every insurance company is negotiating individually. It's not as powerful a negotiation."

Despite a widespread belief that Americans make frequent use of some of the best medical care in the world, they see doctors less often and spend 20% fewer days in the hospital than most other countries, Anderson said.

Americans checked in for 4.8 hospital days on average in 2003, down from 5 days in 1999 and 7.3 days in 1980, according to the Centers for Disease Control and Prevention.

"Our whole policy focus for the past 10, 15 years has been trying to reduce encounters, especially hospitalizations," Anderson said. "Why we're still focused as a country on reducing hospital days makes no sense to me."

Doctors' economic expectations after attending medical school also are vastly different in the U.S. compared with other nations because they begin their careers with a much bigger financial burden.

"In virtually no other country do you leave with an average $100,000 of debt," Anderson said. "In most other countries the debt a medical student has is either zero or very small."

"It's both a real difference and a perceived difference," he said. "A doctor feels like he or she is entitled to a very high salary because of this debt, but the reality is doctors make anywhere from $150,000 to $200,000 on average.... In no other country do they make more than $100,000."

Economic impact

Most industrialized countries saw their health spending increase more quickly than their total economic activity. Health spending rose to 14.6% of gross domestic product in the U.S. in 2002 from 13% in 1992 even as analysts credited managed care and cost sharing with holding it down, according to the study.

The gain of 1.6 percentage points was twice the median increase of other developed nations during that time.

Only two other countries spent more than 10% of their GDP on health care in 2002: Switzerland spent 11.2% and Germany spent 10.9% on medical expenditures.


Kristen Gerencher is a reporter for MarketWatch in San Francisco.

[rffrydr]

Moving past debate; getting traction:

http://media.bloomberg.com/bb/avfile/News/Surveillance/ve1n1JJUms5o.mp3
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Happy families don't have kids--

http://www.latimes.com/business/la-fi-insure21-2008oct21,0,6869686.story

This marks the beginning of a new age in medical insurance--an age born of, and destined to die in, the gene. As science allows coverage to be more "selective" and statistics allow its application more widely spread a point will be reachd where only the healthy will have insurance--and probably most of those "grandfathered" in.

Now that we're confortable with govt.-owned banks "global healthcare" should go down easy. The "market mechanism" will have driven risk asunder, and have taken itself down with it.

This raises an interesting question of what suicide and survival of the fittest have in common?
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Medical Tourism: in this (last?) respect the world indeed is getting flatter.


http://www.economist.com/business/displaystory.cfm?story_id=11919622
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

A healthcare bull:

http://financialsense.com/Market/cpuplava/2008/0109.html

Dangerous position in an election year where democrats call the shots.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Any of the "homeowner" bears on the US economy would do well to come to terms with the claims in this article.

http://www.businessweek.com/magazine/content/06_39/b4002001.htm

Ironic that, Mauldin, foremost among them, is also so preoccupied with healthcare.





ps. Don't know how much Patriot Act and Sarbanes has to do with it but those small-town general practice doctors are disappearing over Visa issues. Maybe this is one piece of charity Bill Gates can take on directly.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

What does the man-in-the-white coat actually do?

http://www.businessweek.com/mediacenter/podcasts/cover_stories/covercast_05_18_06.htm

You WILL be surprised.
_________________
Today is the Tomorrow you worried about Yesterday!

[vin]

Henry,

I hate to be a pessimist, but I must be a realist. The healthcare issue is a much larger conundrum than the other sectors you mention. If I'm not mistaken, next to defense, it is the second largest slice of our economic pie (prior to the Bush administration it was the largest). Wise shopping in this field is difficult to be had. Even for physicians it is a challenge to discern where one gets the most bang for their buck. Factors such as life expectancy and quality of life probe deeper into one's psyche than deciding on an auto or airfare.

The problem has two heads as it is a problem of an aging population as well. It's no secret that some predict an all out market crash when the baby boomers start cashing in their chips. This will be magnified significantly by the rising cost of care by those who will be needing it most and are the majority of the (voting) population. The political pressure to increase federal healthcare benefits will be immense. How this generation plays its remaining economic hand, in my opinion, will determine the future of the country.

V.

[probtrader]

A privatized health care system can't be efficient because, different than other forms of insurance where the amount of risk is unknown (and thus more or less equal for all subscribers), in health care is not. All forms of insurance rely on the principle that a number of small gains will offset a large loss. This is assuming the insurer accumulates enough gains, of course. But how does that work if we all know our risk?

If I am sick, I will buy more insurance because I know I'll need it and this will have an impact on the average premium. The person who knows is healthy will see the premium rise and will drop out of insurance (he's not forced to subscribe after all) or will look for the lowest possible premium somewhere else. This in turn will have an impact on the average premium, which in turn... You see the scenario taking place. The basic principle of uncertainity that governs any other form of insurance doesn't work for an individual own health. And of course, drug and health care companies won't complain.

Sometimes in society you need some of those tools that in trading we call hedging. The other one in my mind is education. Nope, I'm not into politics.

[rffrydr]

At least until this week with UPS.

The family doc is alive and well. He's in Goleta, Weed Heights, Yreka, Gardnerville--and dollars-to-donuts he's Indian (and I don't mean tomahawk). The more things stay the same, the more things change!
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Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Vin,

The problem you discuss with the U.S. medical industry is not unique. It extends to nearly all aspects of American businesses - including cable, telephone, airlines, auto manufacturing (and service), etc.

Consumers are being stretched to the limit. On one end from their employers in order to cut down on costs and on the other hand as consumers for the same reason. But change is in the air - as I expect many U.S. consumers are now in search of their own voices and should succeed in the not-so-far future. As I mentioned before, the U.S. economy has gone from a manufacturing economy to a service economy, and in the early 21st century, is starting to transform into a "deep support" economy. Look at the huge successes that were achieved by companies that were able to provide just a little more support, such as UPS, FDX, DELL, etc.

Henry

[vin]

It's a matter of value. The value of medical care in the USA stinks. Medical training costs too much and doctors get paid too much. Medications cost too much. I remember when we used to chuckle when Canadians came across the border to get their bypass surgery- now we see busloads of seniors going the other direction on medication buying holidays. A huge amount of money is spent on getting imcremental (and often questionable) benefits especially on drugs. Many times generic drugs are just as or nearly as effective but see little use.

It's a big business in a country where big business rules. It ain't clean and it ain't pretty. Doctors toss around their patients as bargaining chips in contract negotiations. Companies and insurance companies force patients to change doctors and entire medical regimens on a whim to save (or make) a buck. Every angle to squeeze a penny from the sick and suffering is fair game and exploited to the hilt. There are many wonderful docs out there but the rat race is too fast and too powerful for compassion to matter. There are plenty of docs that have morphed into rats as well.

Marketing costs often rival or vastly outweigh R&D. When I used to practice medicine I received nearly 20 journals at home that I never subscribed to, all chock full of slick top dollar ads.

I know a guy who works for a well known cardiac device company. He started out as a rep and grew up a tough city neighborhood. He used to threaten his competition with bodily harm. He's now a big wig at the company. The word mafia comes to mind.

The family doc is nearly extinct. He/she cares too much and doesn't generate enough money. Corruption and waste inhabit every level and the patients are stuck with a huge bill. Relatively speaking, the care is fine but it stinks to get a Civic when you paid for the Ferrari.

[rffrydr]

Until little more than a century ago, the only aims of medical care were the cure of disease and the relief of human suffering. But the definition of "human suffering" has gradually changed. We now find ourselves faced with the reality that it is no longer sufficient to prevent or treat sickness of the body or mind, but that physicians are expected to address increasing attention—and society's dollars—to the millions who are dissatisfied with what nature and their own DNA have given them. Whether for rhinoplasty, botox injections, or a prescription for sex hormones, thousands of men and women daily make their way to doctors' offices, intent on improving themselves. Not sick in any usual definition of the word, such discontented people would like to be better than they are, better than merely well. Even "better" may not be enough.
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Today is the Tomorrow you worried about Yesterday!

[pete richardson]

Have a look at the gross profit margin %'s for the major
drug companies...The operating leverage on a pill
processing line is enormous...But, unlike other chemical
companies, products are often patent and price protected.
Back in the days of my youth, we called this " a license to
steal"...Note also that US drugs are priced up to counter
downpricing in countries with socialized medicine such as
the UK and Canada.

PR