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Link of the Day: The High Cost of High-Cost Health Care

10 June 2009

Continuing the discussion from yesterday’s broader post about U.S. health care, here’s a great report from The New Yorker on one of the biggest reasons health care costs are spiraling out of control: unnecessary, excessive and expensive tests and surgeries ordered by doctors. The story looks at the small, poor town of McAllen, Texas, which amazingly has the second-highest Medicare costs in the nation–almost entirely due to lazy, greedy doctors who send patients presenting with the sniffles in for 27 CAT scans apiece (only a slight exaggeration).

As frustrating as this might sound given how health care costs are slowly ripping the country’s financial future apart, it also means there’s a lot of fat that can be cut when the U.S. finally introduces public health care options for all. Money quote:

To make matters worse, Fisher found that patients in high-cost areas were actually less likely to receive low-cost preventive services, such as flu and pneumonia vaccines, faced longer waits at doctor and emergency-room visits, and were less likely to have a primary-care physician. They got more of the stuff that cost more, but not more of what they needed.

In an odd way, this news is reassuring. Universal coverage won’t be feasible unless we can control costs. Policymakers have worried that doing so would require rationing, which the public would never go along with. So the idea that there’s plenty of fat in the system is proving deeply attractive. “Nearly thirty per cent of Medicare’s costs could be saved without negatively affecting health outcomes if spending in high- and medium-cost areas could be reduced to the level in low-cost areas,” Peter Orszag, the President’s budget director, has stated.

Actually, here’s an even better quote, one that really underscores the dilemma we’re dealing with here:

Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks. Here’s how this whole debate goes. Advocates of a public option say government financing would save the most money by having leaner administrative costs and forcing doctors and hospitals to take lower payments than they get from private insurance. Opponents say doctors would skimp, quit, or game the system, and make us wait in line for our care; they maintain that private insurers are better at policing doctors. No, the skeptics say: all insurance companies do is reject applicants who need health care and stall on paying their bills. Then we have the economists who say that the people who should pay the doctors are the ones who use them. Have consumers pay with their own dollars, make sure that they have some “skin in the game,” and then they’ll get the care they deserve. These arguments miss the main issue. When it comes to making care better and cheaper, changing who pays the doctor will make no more difference than changing who pays the electrician. The lesson of the high-quality, low-cost communities is that someone has to be accountable for the totality of care. Otherwise, you get a system that has no brakes.

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