The current debate on health care has revealed the fact that it comprises 16% of our economy. Regardless of where one stands on this debate, this statistic alone should concern us. Our annual GDP is about $14.2 trillion, and we spend about $2.3 trillion every year on health care. Of this, 31% goes to hospital care, 21% goes to physician services, 10% to pharmaceuticals (5 billion prescriptions), 8% to nursing homes, 7% to administrative costs, and 23% to all other categories (diagnostic laboratory services, pharmacies, medical device manufacturers, etc.)
The primary problem with health care is that costs are too high. Congress should be concentrating on costs instead of universal coverage, a single-payer option, etc. We pay too much for the care (and the outcome) that we get. Some have estimated that we’re overspending by at least $710 billion per year, or 31%.
One aspect of costs that is rarely mention is the principal of supply-and-demand. Consider how many Americans have the following diseases:
– Obesity – 102 million
– Heart Disease – 81 million (451,000 deaths)
– Arthritis – 46 million
– Diabetes – 24 million (75,000 deaths)
– Asthma – 21 million
– Cancer – 11 million (559,000 deaths)
These are only the top six diseases, yet the total number of Americans with any of these diseases (285 million) almost equals the total population of the country. Considering that there are thousands of diseases, a conservative estimate would say that, on average, every man, woman, and child in America has two to three diseases.
Given the advancements in medicine and technology over the years, this statistic sounds quite alarming. Below are some possibilities for this number being so high:
– Advancements in the early detection of diseases
– Our lack of knowledge as to what causes certain diseases such as cancer
– Our neglect of what we do know about the causes (obesity, smoking, etc.)
According to the statistics above, on average, each of us Americans gets about 16 prescriptions per year. If half of these are short-term prescriptions, and half of them are on-going 90-day prescriptions, then, at any point in time, each of us is taking about three prescription medications. This is in addition to many over-the-counter medications. Adding the cost of these medications to our doctor visits, tests, surgeries, etc., we spend about $7,500 per person on our health care every year.
One of the best ways to drive health care costs down would be to decrease the demand for health care, and perhaps the best way of doing this would be to address the issue of neglect / prevention. Obviously, many diseases are not (yet) preventable, but we could make a serious dent in the demand for health care if we (as individuals) were better at controlling the demand for the treatment of preventable diseases by taking better care of ourselves.
We also need to decrease the many tests, screenings, and unnecessary procedures / surgeries. This is more difficult, and it would require a joint effort between providers and patients. Concerning providers, tort reform would result in providers being able to provide more common sense in recommending tests and procedures (instead of just recommending a whole suites of tests only to avoid potential lawsuits). Likewise, patients should apply more common sense to their response to their doctor’s recommendations. As patients, we need to be willing to spend some time educating ourselves on diseases and tests, and then help our providers to make better decisions. After all, who knows our own health better than ourselves?
Tort reform…there is none of that in the current “health care plan”.
One page of real tort reform in the health care bill would do more to drive down costs than the other 2000 pages combined.
Sure, there are other problems too, but tort reform would be a logical place to start.