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How to Reduce U.S. Health Care Costs 75%

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PostPosted: Wed Sep 02, 2009 12:00 am    Post subject: How to Reduce U.S. Health Care Costs 75% Reply with quote


Lyle, reducing the cost of health care through deregulation will free-up enough money for taxpayers to afford subsidizing catastrophic health care or pre-existing conditions.


How to reduce medical costs:

1. Limit medical lawsuits and awards, to lower malpractice insurance premiums (which are up to $200,000 a year) and unnecessary medical tests.

2. Lower standards to practice medicine (to increase labor)

3. Allow insurance companies to sell health-care policies across state lines (currently, average health care insurance ranges from a low of $1,254 in Wisconsin to a high of $8,537 in Massachusetts).

4. Allow innovation (example below);

Kaiser Microclinics At 50% of the Cost of a Full-Service Hospital

Two doctors working out of a microclinic at a mall could meet 80% of a typical patient's needs. With a hi-def video conferencing add-on, members could even link to a nearby hospital for a quick consult with a specialist. Patients would still need to travel to a full-size facility for major trauma, surgery, or access to expensive diagnostic equipment, but those are situations that arise infrequently. The per-member cost at a microclinic is roughly half that of a full Kaiser hospital.

The alternative would be a health care system similar to Cuba, which the WHO rated higher than the U.S., although the WHO admitted the U.S. is ranked #1 in the world in both labor (e.g. doctors and nurses) and capital (e.g. hospitals and medical equipment).

By Peter Carbonara
May 1, 2003

Most M.D.s in New Jersey have seen their malpractice rates go up. A few have had their rates go up a lot--notably specialists in areas like obstetrics and neurology. This is a problem for the rest of us, because soaring insurance premiums, on top of rising costs for rent, labor, equipment and everything else, have made it uneconomic for some doctors to practice certain kinds of medicine. Some obstetricians, for instance, particularly those who specialize in high-risk pregnancies, have given up delivering babies. In Pennsylvania, several hospitals have recently closed their trauma clinics or maternity wards because the doctors who practice there couldn't afford insurance.

New Jersey, though, is not the worst place in America to be an obstetrician as far as malpractice insurance is concerned. According to Medical Liability Monitor, a Chicago publication that tracks malpractice rates, an obstetrician in Miami may pay $210,000 a year, the highest rate in the country. In Alabama, an obstetrician can get the same coverage for $36,000. New Jersey is somewhere in the middle, with base rates for obstetricians of about $70,000.

Dr. Hux says he gets about $1,800 for each delivery. "Most of the time, you're just about breaking even," he says. When one patient had triplets following a risky pregnancy, Hux says, "I think I walked out of there with about 50 bucks."

U.S. health care is a luxury good. Standards and quality need to fall to make health care more affordable. Article on one type of standard:

Jeff Jacoby writes in the Boston Globe:

Imagine the sort of car you’d drive if government regulations made it illegal to sell any automobile that didn’t feature 380-horsepower direct-injection V6 engines, computer-controlled electric power steering, eight-speed automatic transmission, four-wheel-drive, automatic climate control, “smart key’’ technology, touch-screen navigation, backup cameras, LED headlights, acoustic glass, surround-sound stereo, and leather seat stitching.

If those were the minimum requirements every car had to meet before it could be sold, would you commute to and from work every day in a Lexus LS 460 or some other luxury vehicle? Well, you might, if the steep price wasn’t an obstacle. But it’s more likely you wouldn’t be driving at all. If the government barred you from buying anything but a high-end car, you’d probably have no choice but to rely on the bus or subway, or to find a job closer to home.

Increase the number of amenities that a product or service must include, and more consumers will be unable to pay for that product or service. That is why one of the simplest strategies for making health insurance more affordable is to reduce the minimum number of benefits that insurers are required to cover.

In every state in the union, legislators and regulators drive up the cost of healthcare by making insurance policies more comprehensive. Rather than allow the free market to determine which medical services health plans will cover, states force consumers to pay for an array of covered benefits they may not need or want.

U.S. Health Care Industry

I stated before, the U.S. health care industry adds to economic growth, not subtracts from it (or consumes the economy). U.S. health care is a high-skilled industry with market power, because foreigners can't compete. Also, I stated before, government can be useful in limiting medical lawsuits and awards, along with lowering standards to practice medicine (to increase labor), which will both reduce prices substantially. Article below:

Americans are being urged to worry about the nation spending 17% of its gross domestic product each year on health care—a higher percentage than any other country. Addressing the American Medical Association in June, Barack Obama said, “Make no mistake: The cost of our health care is a threat to our economy.” But the president is mistaken.

Mr. Obama has said that "the cost of health care has weighed down our economy." No one thinks the 20% of our GDP that's attributable to manufacturing is weighing down the economy, because it's intuitively clear that one person's expenditure on widgets is another person's income. But the same is true of the health-care industry. The $2.4 trillion Americans spend each year for health care doesn't go up in smoke. It's paid to other Americans.

A little-noticed feature of the current recession is the role of the health-care industry as a resilient driver of the general economy. Health-care now accounts for 10.4% of nonfarm employment. Health-care employment grew by 19,600 jobs in July 2009, on a par with the average monthly gain for the first half of 2009, which was down from an average monthly increase of 30,000 in 2008. Remarkably, these gains occurred in a period during which total employment shrank by 6.7 million.

The U.S. health-care economy should be viewed not as a burden but as an engine of growth. Medical and orthopedic equipment exports increased by 65.1% from 2004 through 2008. Pharmaceutical exports were up 74.6%. The unprecedented advances expected to come out of American stem cell, nanotechnology and human genome research—which other countries' constricted health sectors cannot support—will send these already impressive figures skyward.

A study by Deloitte LLP has found that more than 400,000 non-U.S. residents obtained medical care in the U.S. in 2008, and it forecasts an annual increase of 3%. Some 3.5% of inpatient procedures at U.S. hospitals were performed on international patients, many of them escaping from Canada's supposedly superior health system.

Based upon period survival data for 2000-02 from 47 European cancer registries, 5-year survival rates were found to be higher in the U.S. than in a European composite for cancer at all major sites. For men, 47.3% of Europeans survived 5 years, compared to 66.3% of Americans. For women, the contrast was 55.8% vs. 62.9%. The male survival difference was much greater than the female primarily because of the very large difference in survival rates from prostate cancer.

Is the U.S. system inferior to those in other developed countries based on life expectancy and cancer survival rates? Not according to economists Robert L. Ohsfeldt (Texas A&M) and John E. Schneider (University of Iowa):

For unadjusted life expectancy, the U.S. ranks #14 out of 16 countries, but for the adjusted standardized life expectancy the U.S. ranks #1 (adjusted for the effects of premature death resulting from non-health-related fatal injuries).

The U.S. has the best record for five-year survival rates for six different cancers. In some cases the differences are huge: 81.2% in the U.S. for prostate cancer vs. 41% in Denmark and 47.4% in Italy; 61.7% in the U.S. for colon cancer vs. 39.2% in Denmark; 12% in the U.S. for lung cancer vs. 5.6% in Denmark.

Also interesting is the fact that there is often a significant difference between white and black cancer survival rates in the U.S., e.g. prostate cancer - 82.7% for whites vs. 69.2% for blacks. But even in that case, the five-year survival rate for blacks (69.2%) is still higher than for all European countries except Switzerland.

Moreover, a recent article stated health care insurance is viewed in a wrong way. You wouldn't expect your auto insurance to cover oil changes, gasoline, car washes, etc. Yet, that's what people expect from health care insurance.

The real British health care system:

A quarter of a million people are waiting more than 18 weeks for treatment on the NHS, new figures show...for a range of treatments including oral surgery, rheumatology and geriatric medicine. This means that nearly 10% of patients are not being treated within the government's waiting list target.

Civitas, the think tank, blames the monolithic nature of the National Health Service for “putting the patient last”.

It argues that the “customer” of the NHS business model introduced by Tony Blair and continued by Gordon Brown is the health secretary rather than the patient.

State control: staff pay is set centrally, capital expenditure is constrained, IT is a top-down programme and availability of drugs, such as expensive cancer treatments, is centrally determined.

Wall Street Journal -- Allow us to suggest a path to competition that will be a lot easier than erecting the impossible dream of a public option: Let insurance companies sell health-care policies across state lines. Interstate competition made the U.S. one of the world's most efficient, consumer driven markets. But health insurance is a glaring exception.

Affordability would improve if consumers could escape states where each policy is loaded with mandates. "If consumers do not want expensive 'Cadillac' health plans that pay for acupuncture, fertility treatments or hairpieces, they could buy from insurers in a state that does not mandate such benefits," Devon Herrick (senior fellow with the National Center for Policy Analysis) has written.

MP: There's a huge variation in the average annual premium for single health insurance coverage by state (2006-2007). The average health insurance ranges from a low of $1,254 in Wisconsin to a high of $8,537 in Massachusetts. That kind of variation couldn't exist in a competitive market for health insurance. Interstate competition for health insurance would go a long way towards bringing health insurance costs down.

Also, I may add, U.S. financial firms distributed trillions of dollars of excess capital to the masses, to raise actual output towards potential output. Both U.S. financial firms and U.S. households benefited enormously. Obviously, in the U.S., there are too few dollars chasing too many assets and goods (which is the opposite of the 1981-82 severe recession). Export-led economies have been absorbing dollars.
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