Thursday, August 13, 2009

Another View on Controlling Health Care Costs

The American Thinker article How to 'bend the curve down' in healthcare costs, August 11, 2009, is another interesting look at the causes of the increases in health care costs.

The first point made is that the July 26 letter from the Congressional Budget Office which says,

"The net effect of the coverage specifications, which affect both spending and revenues would add an estimated $1,042 billion to cumulative deficits (over the 2010-2019 period).... The net cost of the coverage provisions would be growing at a rate of more than 8 percent per year in nominal terms between 2017 and 2019; we would anticipate a similar trend in the subsequent decade."

effectively sets aside the administration's claim -- "that we can simply increase the number of individuals covered by government insurance and decrease the growth rate of healthcare spending over time".

Simply put, providing complete medical care coverage to more people than currently have access to such care raises costs. Duh! I wish I could have figured that out on my own. Right!

They say, "Douglas Elmendorf, the director of the CBO has stated:

"Spending on health care has generally grown much faster than the economy as a whole, and that trend has continued for decades. In part, that growth reflects the improving capabilities of medical care -- which can confer tremendous benefits by extending and improving lives. Studies attribute the bulk of cost growth to the development of new treatments and other medical technologies."

This tracks the results of a comprehensive study cited in the article.

They also say, "Countries that utilize forms of socialized healthcare spend less than the United States because they ration care, to some degree or another, by restricting what services patients can have access to through a variety of mechanisms."

They also document that the U.S. leads the world in "disease specific outcomes" as a result of our access to advanced technology, despite the claims that we lag behind other countries in health services.

They support, "Expanding access for individual's to purchase health insurance outside their state would lead to a significant decrease in the number of uninsured individuals and increase quality and transparency in the medical marketplace. While not all individuals would be able to purchase plans that provide the same level of benefits, the goal should be for all individuals to have plans that cover major and unavoidable medical expenses. "

"The last piece of the equation to decrease healthcare inflation in a meaningful way is to pursue aggressive tort reform to decrease defensive medicine practices. Democratic lawmakers will avoid this issue at all costs because they are indebted to the trial lawyers who are among their largest contributors. . . . .

Defensive medicine is medical practice based on fear of legal liability rather than on patients' best interests. It has been driven to absurd levels in America by the threat of frivolous lawsuits which cost physicians and hospitals so much to contend that they end up settling in many cases where they have not acted negligibly just to save money. This has resulted in ballooning medical expenditures.

The Massachusetts Medical Society found that 83% of physicians surveyed reported practicing defensive medicine. One quarter of all CT scans, MRIs, Ultrasounds and specialty referrals were ordered for defensive reasons. This number is astounding, and if we extrapolate it to total healthcare spending we're looking at close to $ 500 billion annually! A more conservative estimate from The Pacific Research Institute puts the costs of defensive medicine at more than $ 200 billion annually.

Tort reform should focus on caps on damages and abolition of punitive or exemplary damages as well as restrictions on contingent and conditional fees. Although historically prohibited by common law, the USA now allows lawyers' fees to depend on the outcomes of their cases. Empirical research suggests that restrictions on contingent fees generally lead to the elimination of the weakest claims."

From this article, it appears that access to insurance policies from across state lines might be a good idea, as well as limiting medical malpractice suits.


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