AEIdeas

The public policy blog of the American Enterprise Institute

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Discussion: (2 comments)

  1. The issue with this kind of article is that it only is looking strictly at economy, which is a bit surprising seeing as more and more individuals have lost their jobs and the economy is in a slump. it isn’t surprising that as a nation, critics are looking at all the needless spending on health care, and the model that just because spending is possible, does not mean it is necessary sustainable or even ideal.

    High spending does not equal smart spending. We have so many insurance companies that each have different billing practices which are required to be perfectly adhered to, otherwise bills are denied. Doctors must hire billing and coders that are up to date on each different company, and send out claims that are billed at a higher rate, because usually insurance companies will either not pay or deny claims, which require rebilling and increasing medical bills. On top of this issue, ICD-10 is being released which will change all the billing codes for procedures which will require more training for each billing and coder and most likely cause new issues as claims are denied constantly. Our doctors should be worried about health and saving lives, not dealing financial billing nightmares that are costly to solve.

    Just two weeks ago, an article by the L.A. times magazine stated that UCLA’s hospital had its contract with Blue Shield suspended as the rising costs of procedures have made billing their insurance company even unsustainable. According to the article, the hospital had been billing the insurance company for part of its medic-aid and medi-cal bills.

    To top it off, high costs associated with health care are creating a barrier where only those who can afford insurance are the ones who get regular and preventative health care. As employers are now opting to stop providing insurance for their employees, forcing individuals to buy privately, or worse yet, go without insurance, many individuals are waiting to get health care until its become a serious problem. Instead of going to the doctor and being treated early on when a diagnosis or ailment may be easier and more inexpensive to fix, people are waiting until they are truly ill, and going to the emergency room instead. Being at the hospital itself, and especially in the emergency room, is a very expensive and many times, unnecessary event if they had only received regular check ups with a primary care doctor. This happens even more often, with those who have no insurance at all, as they can’t afford to have regular check ups, and emergency rooms are not allowed to turn away a sick patient.

    Now, with the money that could be “saved” on health care, would it not be more wise to invest it into better practices of preventative medicine and health in that sense? Could the lower costs of health care provide actual care for not only those who can afford it, but for those who are less fortunate without having to resort to national health care coverage? Could it not be possible that if we were not wastefully spending money in a system that is broken and just saying, “we can so we should” that perhaps we could climb the ranks a little on key factors such as infancy mortality rate, which we are currently 34th place? Behind EVERY 1st world nation almost?

  2. You are correct that “high spending does not equal smart spending.” There are plenty of opportunities to trim excess health spending. But this piece is part of a broader argument that I’ll elaborate on in tomorrow’s book talk that debunks the idea that other nations are doing better than the U.S. is in terms of restraining health spending growth. They are not and in the periods that they “beat” the U.S. in terms of having lower annual growth in inflation-adjusted health spending per capita, the explanation is that their economies were growing more slowly, NOT that they have found a magic bullet to eradicate all the wasteful spending you cite.

    Both here and abroad, “excess” expenditures largely arise from misplaced economic incentives. On average, we have too much front-end third party coverage of expenses (the equivalent of using your homeowner’s insurance to pay for mowing your lawn or auto insurance to pay for gas) and too little catastrophic coverage. Despite our having 50 million uninsured, the U.S. has the 4th lowest share of health spending covered by out-of-pocket payments in the entire world. Thus, it is not surprising that our health spending when correctly analyzed actually falls right in line with that of other countries. Problems of waste and excess are global phenomena not unique to the U.S. Increasing the amount of government control over health care is therefore a misguided solution in my view. This is not an argument against addressing waste and excess: only an argument against expecting greater centralization of health decisionmaking to be an effective approach.

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