Monday, September 21, 2009

Health Care Costs & Cars

I was thinking recently about what are some of the unique drivers of cost in America's health care system. Sure, there's insurance profit margins eating up maybe 10%, there's litigation and insurance against this litigation which eats up less than 5%, and other items that we frequently hear about. But here's an item that's a pretty big driver of health care costs that I've never once heard mentioned: cars.

It occurred to me that car accidents must be a tremendous source of ER visits and expensive procedures. I decided to try and find out just how much cost our car-dependent culture adds to our health care system. OK, this was much harder than I expected. I wound up not being able to find anything that gave an estimate for costs to treat injuries caused by car accidents. The closest I could come was a page by the National Safety Council that gave numbers of traffic fatalities, traffic injuries, and cost of treating all unintentional injuries (whether or not they were caused by cars) in 2005. So I used this information to make some estimates.

First, the basics. About 45,000 people were killed in car accidents and about 2.4 million people were injured by cars. Total visits (cars or not) to the ER amounted to about 28 million at a cost of about $625 billion. were responsible for about 10% of visits to the ER and about 40% of accidental injuries leading to death (about 110,000 people killed from unintentional injuries overall). So car accidents must account for at least 10% of the cost of treating accidental injuries. And experience, combined with the fact about 40% of fatalities from injury are the result of cars, indicates that injuries sustained in car accidents are far more likely to be serious injuries requiring expensive treatment. So let's just assume that the total cost of treating car accident victims comes to roughly midway between 10% and 40% of the cost of treating all injury victims. That would be 25% of $625 Billion. That's over $150 Billion. With rising health care costs and rising population leading to more people on the road, we're probably looking at close to $200 Billion in medical costs for treating car accident victims. (Just FYI, that's considerably more than what we pay to build and maintain roads.)

Of course, all developed countries have cars. But no country uses cars nearly as much as America. I looked up traffic fatality rates by nation and found that Canada is the only major industrialized nation with a traffic fatality rate much more than half of America's (their rate is about 2/3 ours). So if we used cars at the same frequency as other developed nations, our spending on medical care for car accident victims would be roughly cut in half at least. That's $100 Billion. That's 5% of what we spend on health care in this country. That's not enough to solve the health care problems we're facing...but it's not chump change either. And, frankly, I'm not hearing many other proposals offering savings of 5%.

I've made the point over and over again that by simply diverting the funds we're already spending on maintaining highways to building and maintaining a high-speed rail network and efficient transit within cities, we could build an efficient transportation network capable of meeting most people's transportation needs and reducing our dependence on cars (and oil). Turns out yet another of the many, many benefits of this change would be a dramatic reduction in our national health care costs. And, of course, it would save about 20,000 lives every year, too. For a comparison, that's about how many people die from all criminal activity in the entire country on an annual basis.

Why aren't we investing in better transportation??


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