An insurance industry CEO explains why American health care costs so much
On Friday, I sat down with Kaiser Permanente CEO George Halvorson to talk about health-care reform. The conversation was long and ranging and will take a while to transcribe. But before we really got into the weeds, Halvorson handed me an astonishing packet of charts. The material was put together by the International Federation of Health Plans, which is pretty much what it sounds like: an association of insurance plans in different countries. But it showed something I've never seen before, at least not at this level of detail: prices.
The packet's 36 pages are mostly graphs showing the average prices paid in different countries for different procedures, diagnostics and drugs. There is a thudding consistency to the pages: a series of crude bars, with the block representing the prices paid by American health-insurance plans looming over the others like a New York skyscraper that got lost in downtown Des Moines.
There is a simple explanation for why American health care costs so much more than health care in any other country: because we pay so much more for each unit of care. As Halvorson explained, and academics and consultancies have repeatedly confirmed, if you leave everything else the same -- the volume of procedures, the days we spend in the hospital, the number of surgeries we need -- but plug in the prices Canadians pay, our health-care spending falls by about 50 percent.
In other countries, governments set the rates that will be paid for different treatments and drugs, even when private insurers are doing the actual purchasing. In our country, the government doesn't set those rates for private insurers, which is why the prices paid by Medicare, as you'll see on some of these graphs, are much lower than those paid by private insurers. You'll also notice that the bit showing American prices is separated into blue and yellow: That shows the spread between the average price (the top of the blue) and the 90th percentile (the top of the yellow). Other countries don't have nearly that much variation, again because their pricing is standard.
The health-care reform debate has done a good job avoiding the subject of prices. The argument over the Medicare-attached public plan was, in a way that most people didn't understand, an argument about prices, but it quickly became an argument about a public option without a pricing dimension, and never really looked back. The administration has been very interested in the finding that some states are better at providing cost-effective care than other states, but not in the finding that some countries are better at purchasing care than other countries. "A health-care debate in this country that isn't aware of the price differential is not an informed debate," says Halvorson. By that measure, we have not had a very informed debate. But download this pack of charts (pdf), and you'll be a bit more informed.
Medicare/single-payer is the only way to reduce exorbitant, RIP-OFF US health care costs.
Congress must give US govt the power to negotiate DOWN prescription drug prices, a power that the Repugs made ILLEGAL!
Congress must also require the public insurance to pay for medical treatments overseas, providing REAL price compe ion to the US health gangsters.
amazing.
But why do American insurance companies pay so much more? Who sets the prices? I mean, we've all heard about the $6 aspirin at the hospital, but the hospital wouldn't be able to charge that price if the insurance company didn't pay it.
Do they charge that much to make up for the losses incurred from treating people who don't pay?
And we get such good outcomes for such high prices
The New York Times
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November 4, 2009
Premature Births Behind Higher Infant Death Rates in U.S., Report Says.
By DENISE GRADY
High rates of premature birth are the main reason the United States has higher infant mortality than do many other rich countries, government researchers reported Tuesday in their first detailed analysis of a longstanding problem.
In Sweden, for instance, only 6.3 percent of births were premature, compared with 12.4 percent in the United States in 2005 — the latest year for which international rankings are available.
Infant mortality also differed markedly: for every 1,000 births in the United States, 6.9 infants died before they turned 1, compared with only 2.4 in Sweden. Twenty-nine other countries also had lower rates.
If America could match Sweden’s prematurity rate, the new report said, “nearly 8,000 infant deaths would be averted each year, and the U.S. infant mortality rate would be one-third lower.”
Dr. Alan R. Fleischman, medical director of the March of Dimes, said the new report was “an indictment of the U.S. health care system” and the poor job it had done in taking care of women and children.
Infant mortality is widely used as a way to gauge the health of a nation, and the relatively high rates in the United States have long dismayed health officials.
The high rates of prematurity in the United States have various causes. The smallest, earliest and most fragile babies are often born to poor and minority women who lack health care and social support. The highest rates of infant mortality occur in non-Hispanic black, American Indian, Alaska Native and Puerto Rican women.
When it comes to prematurity, fertility treatments — drugs that stimulate ovulation, and procedures that implant more than one embryo in the uterus — also play a role, by raising the odds of twins or higher multiples, which have an increased risk of being born too soon.
Another factor is the increasing use of Caesarean sections and labor-inducing drugs to deliver babies early, said Marian F. MacDorman, a statistician at the National Center for Health Statistics and an author of the report.
“I don’t think there are doctors doing preterm Caesarean sections or inductions without some indications, but there sort of has been this shift in the culture,” Dr. MacDorman said. “Fifteen or 20 years ago, if a woman had high blood pressure or diabetes, she would be put in the hospital and they would try to wait it out. It was called expectant management. Now I think there’s more of a tendency to take the baby out early if there’s any question at all.”
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and it's not only poor people who have preemies.
and it's not only poor people who need Cesareans.
Because they're overbilled. Doctors already know thay're only going to get paid 2/3 of what they file on the claim, so they charge up 1/3 more to compensate. And you end up with this inflated system. The one that ends up suffering the most is the uninsured, because when they have to pay out of pocket, they have to pay a completely inflated price.
health insurance is a volume business, the more they pay out, for the same target profit, the more they pocket.
and their health insurance companies know your employer will skim off your salary and ship it right to the insurance companies (no need for individual billing and bill collection).
eg, would you rather sell used Fords at 15% profit, or sell the same quan y new Maybachs at 15% profit.
I wonder what the average USA price would be if you removed the cost of liability insurance.
Remember, in these single payer government run healthcare systems, lawsuits are very limited.
Not as much as you think.
According to the latest numbers from the CBO, you can substract 2%.
http://www.dayontorts.com/tort-refor...-lawsuits.html
CBO numbers are wrong too often. That is not anything to trust.
unless they support your position.
I don't think I ever used CBO numbers to support my position. I use OMB numbers.
Yes, we should trust the baseless you make up.
So what does the OMB numbers say?
The OMB doesn't predict numbers they don't have enough data on, even then their numbers are often off too. The OMB data I use is generally reconciled numbers after the balance sheets are closed.
There was no surplus during the Clinton era. The OMB numbers prove that.
So you have no data to base your belief on?
I sense a trend in many of the threads today.
We're talking about Medical Liability Insurance expense as a percentage of total cost of care. What's the OMB number for that?
I have to think you know since you keep on claiming that liability is the major cause for the high cost of care...
I don't think they even run such numbers. My point with the OMB and CBO was simply that CBO numbers are almost never close, and almost always much higher than predicted. Probably at least 95% of the time you look at a CBO number for predicted costs in legislation, then when reconcilled in an OMB report, the OMB reports the cost at 50% higher, or more. CBO numbers are used to sell legislation, not to give accurate results.
It really isn't liability as much as it is lost wages and time of the doctors and employees tied up un lawsuis.
And you arrived at the 95% and 50% numbers how?
Really? How much is lost?It really isn't liability as much as it is lost wages and time of the doctors and employees tied up un lawsuis.
As Benjamin Disraeli once said..."There are three kinds of lies: lies, damned lies, and statistics."
WC has "principles" that he just can't reason/do ent his way to, so he keeps spouting his pristine, fantasy principles. aka Repug "faith based" fantasy world. Don't need no fricking facts, we got The Faith.
You can see from the OP what price controls do for you (Medicare is right in line with global pricing. That said, the price paid by private industry is probably getting some of that cost shift. Pelosi's "robust public option" would have brought that model to play for many more people (Medicare + 5%) - but could then have docs not join up, because their reimbursement would be so much lower - OR it could attract so many more patients, that doctors would have to join up, or not have any patients - chicken and egg, and I honestly don't know what would happen.
I do know that whether or not someone's doctor is in a specific insurance company's plan has a HUGE affect on their choice of plans - many people will pay considerably more to get their docs in their plan.
Why are the prices SO much higher here? Have you seen the cars doctors drive, and the houses they live in? Hospitals and labs here upgrade equipment quite often when it becomes available - "CT Scan" from a 15 year old machine is not the same as one from a new, state of the art model. MRI's even more so.
You want to control healthcare costs - significantly? "Health Insurance Reform" is NOT going to do it - Manny's post bears that out. Price controls are about the only way - but there will be consequences (we ought to be having a frank, open discussion about those costs and consequences, but that isn't how politics is played - that short Reich soundbite from Berkely about the "honest politician" pretty much nailed it)
Regardless of the real reasons...the bottom line is it's sickening. The majority few is reaping huge benefits while only providing equal and in some cases less effective care.
This is where I would be a proponent of government regulation. But still not a proponent of government control.
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