Thursday, August 20, 2009

A 50% increase in American health care professionals--overnight

In an article ostensibly on rationing, blogger and economist Mark Thoma provides a rudimentary set of equations to summarize where health care costs come from. The gist of his opinion is that critics of health care reform claim the only way we achieve universal coverage and/or cost savings is by reducing quality. He's of the belief that the experiences of other nations suggest there's enough waste in our system that we can cut costs and expand coverage without sacrificing quality of care. I would have to agree with him.

A couple months back the Economist did a number of articles on health care in America. Of particular interest to me was a graph comparing costs among different developed nations (see full article). Obviously the US was way out in front, but what I found interesting was Switzerland came in second, spending roughly 30% more per person than the average of other developed nations--spending over $4k per person while the OECD average is about $3k. Switzerland is one of the only countries besides the US that uses private insurers to pay for health care. Seems like remarkable confirmation of the oft-cited statistic that private insurers add about 30% to the cost of health care through their overhead. If we just eliminate this 30% of health care spending that gets wasted, we'd have plenty of money to cover everybody.

Furthermore, I've worked with lots of doctors in my line of work, and the general consensus is they spend anywhere from a quarter to half their time dealing with insurer billing issues. Again, eliminating private insurers would immediately solve the problem of shortage of health care workers as we would see an effective 50% increase in health care workers overnight.

I've mentioned it in a previous post (here), but it's worth repeating. The legal duty of corporations is to make money for shareholders. A corporation can not carry out its legal duties if it pays for treatment that costs more than the customer is statistically expected to provide in future revenue. We already have a system where a corporate accountant is doing a cost/benefit analysis on every significant procedure you need and determining whether to pay for it based on profitability. That's how we're rationing health care now. I have yet to see any proposal mentioned in the health care debate that's any scarier than that.


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