Column: Systematic changes necessary for health care
Published Oct. 26, 2007
Health care reform remains a tricky and contentious issue in this election cycle. The basic problem is simple: How do we maximize the value we receive from the money spent on health care, especially with a focus on ensuring that those who most need health care receive it?
There are other systemic problems that are more politically tractable. For instance, a 2003 comparison between the American and Canadian health care system came up with huge differentials in administrative costs, consuming up to 31 percent of funds in America, almost double the Canadian figure of 16.7 percent.
Overhead costs followed the same trend, with private American insurers spending 11.7 percent of revenue versus 1.3 percent by the Canadian single-payer system.
Those uninformed souls who choose to point fingers at Canada and advocate that the U.S. replicate its system might look at the details first and ask why so much money is wasted before fitting the facts to a particular ideological viewpoint.
Here's money that could be spent making the system vastly more effective through the greater use of computerized recordkeeping or preventative medicine, prevention of medical errors, etc.
Speaking of preventative medicine, it seems politically intractable to legislate personal behavior, but there has to be some kind of incentive compatible scheme that is not an undue governmental influence on personal choice that could be taken to limit the growing American waistline.
Consider that heart disease and diabetes are some of the biggest factors contributing to mortality and that they both exhibit strong linkages to obesity.
Cardiovascular disease is perhaps the most expensive common disease to treat, with costs averaging about $25,000 per patient in the months following a heart attack.
A simple cost-benefit analysis should suggest that we should be more than happy to spend up to an equivalent amount preventing this costly condition.
And don't forget about fraud prevention. My own anecdotal experience with the health care system has exposed me to stories of greed within the medical profession itself. For example, in some cases it is more profitable to operate twice to fix a problem than it is to deal with the problem in one operation without any compelling medical reason.
Those kinds of allegations, of course, are sometimes difficult to prove in individual cases, but it is certainly possible to establish statistical patterns of behavior and curtail medical waste.
And I don't mean to suggest without proof that any particular group of medical professionals exhibits systemic corruption, but the incentive structures the health care industry operates under need to be re-evaluated.
The economist Robin Hanson of George Mason University said the consensus from well controlled studies is that there exist only weak aggregate relationships between variations in medical spending, specifically those caused by variations in culture and price, and medical outcomes, the implication being that spending more money to cover more procedures for more people will produce negligible benefits at best, assuming no systemic changes are made.
avtty5@mizzou.edu