we pay more for a variety of reasons. for example, we aren't rationed, like happens in single-payer countries. we have third-party-payments, like they do, but we have our insurance industry keep paying, whereas the governments in those nations have an ability to just say "no screw you." we also consume more healthcare. two surgeries usually costs more than one or none. currently we have the worst of both worlds - socialized costs with privatized benefits, and it encourages massive overconsumption with no price pressure.
how to cut costs? well, the point here is to distinguish between
costs and
expenditures.
costs change with the prices of insuring and providing healthcare are altered.
expenditures change when the money coming out of the government alters. now, the two are obviously connected - the lower the costs, the easier to lower the expenditures; but not solid.
the current system of ours, where we each compete to try to get the most healthcare for someone else's money, only leaves us all losing. costs and expenditures rise dramatically each year. there are, however, a few worthy counterexamples; and it is instructive to take note of what they are doing correctly:
Indiana offered HSA's, which have patients save money in tax-free accounts (where it grows and remains theirs forever and ever unless theys pend it) matched with high deductible plans to it's employees. Employees began to respond to price signals, and medical costs per patient were reduced by 33% and expenditures to the state were reduced by 11%.
Safeway has instituted a program that gave financial incentives to people who engaged in healthy behavior by allowing price signals in the
insurance side of the market to work (Indiana worked on the medical side), and saw it's per-captia health care costs remain flat from 2005-2009; when most companies saw theirs jump by 38%.
Whole Foods instituted HSA's, and let's the employees choose what they want the company to fund. This institutes price pressure on the medical side (WF covers the high-deductible plan 100%), and their CEO points out that as a result Whole Foods' per-capita costs are much lower than typical insurance programs, while maintaining employee satisfaction.
Medicare Part D utilized market pressure on the insurance side, and saw expenditures come in at 40%
UNDER expenditures - the only such government program in history to do so.
Wendy's instituted HSA's, and saw the number of their employees who got preventative and annual checkup care climb even as they saw claims decrease by 14% (in one year).
Wal-Mart's low cost clinics and prescriptions save us oodles of cash. Wal-Mart reports that "half of their clinic patients report that they are uninsured" and that "if it were not for [Wal-Marts'] clinics they would haven't gotten care - or they would have gone to an emergency room". Walmart - reducing costs
and expenditures.
all of these utilize the markets to lower costs
and expenditures; and they are just the begining. Not using insurance to pay for every procedure, checkup, etc. reduces administrative costs, which in turn reduces medical costs - and as HSA's catch on (assuming that Obamacare - which criminalizes them - is repealed) we will see the positive effects of that on costs and expenditures as well.
Dr Robert Berry runs a practice called PATMOS (payment at time of service). he doesn't take insurance at all - but simply posts the prices of his services. By removing the cost of dealing with mutliple insurance agencies, medicare, and medicaid, the prices he is able to list are one half to
ONE THIRD of standard. That's huge.
what do all these programs have in common?
They use market price pressure. People start to make better informed, and more conscious decisions once they are compensated for doing so.
current democrat plan is to reduce market pressure and cut straight
expenditures, while taking steps that have historically increased prices. The idea is to have the IPAB decide when your care is no longer cost-effective to the government, and cut you off.
current republican plan is to increase market pressure to reduce both costs and expenditures, and do so in a way that lets seniors decide what is or isn't cost-effective. The idea is to put into place some of the strategies outlined above.
