American Healthcare is simply overpriced What do we do?

A new study published by Health Affairs (subscription required) described the reasons for the high cost of American health care this way:

"U.S. citizens spent $5,267 per capita for health care in 2002—53 percent more than any other country. Two possible reasons for the differential are supply constraints that create waiting lists in other countries and the level of malpractice litigation and defensive medicine in the United States. Services that typically have queues in other countries account for only 3 percent of U.S. health spending. The cost of defending U.S. malpractice claims is estimated at $6.5 billion in 2001, only 0.46 percent of total health spending. The two most important reasons for higher U.S. spending appear to be higher incomes and higher medical care prices."

NPR reporting from that study points out:

"the United States doesn't have a higher supply of things like hospital beds or MRI scanners. U.S. malpractice payments are only slightly higher, even accounting for the nebulous add-on of defensive medicine. Even waiting lists in countries that ration care only account for about 3 percent of the difference."

So the high cost of our American medical health care is not caused by increasing the supply of services that would otherwise cause waiting lines. Reports in The New Standard, and the New York Times report that malpractice insurance payouts have not increased any more rapidly in the last three decades than has the general rate of health care price inflation.

The obvious conclusion is that the only effect of limiting malpractice insurance payouts is to make insurance companies more profitable. Lawyers hav not been the problem. Putting caps on malpractice payouts has not resulted in lower malpractice insurance premiums, and "unreasonable" malpractice payouts have not been a significant cause of the increase in health care prices.

So what is causing the high prices? The New England Journal of Medicine has reported a study (Aug 21, 2003) that puts a lot of the blame on administration costs caused by our reliance on private health insurers. NEJM concludes that

"The gap between U.S. and Canadian spending on health care administration has grown to $752 per capita. A large sum might be saved in the United States if administrative costs could be trimmed by implementing a Canadian-style health care system."

The San Jose Mercury News just published an AP report (July 10, 2005) by MATT LEINGANG that states that the problem of the cost of rapidly rising health care is causing states to step into the void created by federal inaction.

"COLUMBUS, Ohio - A push for universal health coverage is being rekindled in some states by soaring health care costs and a lack of political support in Washington for federal changes.

Advocates of a single-payer system - where the government would collect taxes and cover everyone, similar to programs in Canada and across Europe - have introduced bills in at least 18 legislatures. Some are symbolic gestures, but heated debate is taking place in California and Vermont.

Opponents in California, where 7 million people are uninsured, argue that it would lead to prohibitively high taxes and bureaucratic nightmares. The bill's author, Sen. Sheila Kuehl, says pooling the state's money is the most efficient and inexpensive way of paying for health care."

Sen. Sheila Kuehl's opponents offer unsupported frightening speculations and occasional anecdotes as support for their opposition. The New England Journal of Medicine study supports Sen. Sheila Kuehl.

How important is this issue? Don't just ask the families who have no health insurance or can't afford the care they need. Look at what is happening to General Motors and Ford. Ask why Toyota chose to place their new assembly plant in Canada rather than in the U.S.

The American employer-provided health care system is simply no longer competitive with a Canada-style single payer system. UAW, GM will work to cut health care costs shows that employers are backing out of the health care business.

It is time to get the small-government conservatives and their allies, the insurance companies, out of the way and let this nation do what every other industrial nation in the world already does. America needs a single payer health care system.