What Atul Gawande Got Wrong about U.S. Health Care Spending
bostonreview.net
What Atul Gawande Got Wrong about U.S. Health Care Spending
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Re: What Atul Gawande Got Wrong about U.S. Health Care Spending
#2tldr: health care spending is high because prices are high
That seems obvious in general, but should be extra obvious to anyone who has ever received a bill from anything in the US health system.
Re: What Atul Gawande Got Wrong about U.S. Health Care Spending
#3tldr: health care spending is high because prices are high That seems obvious in general, but should be extra obvious to anyone who has ever received a bill from anything in the US health system.
AFAICT, every part of the health care system is abnormally expensive in the US. Basically every article that says "The healthcare system in the US is expensive because of X" is partially right. X is part of what's driving costs up.
Re: What Atul Gawande Got Wrong about U.S. Health Care Spending
#4tldr: health care spending is high because prices are high That seems obvious in general, but should be extra obvious to anyone who has ever received a bill from anything in the US health system.
When demand is inelastic, and you have no price controls, this is the result.
Re: What Atul Gawande Got Wrong about U.S. Health Care Spending
#5tldr: health care spending is high because prices are high That seems obvious in general, but should be extra obvious to anyone who has ever received a bill from anything in the US health system.
AFAICT, every part of the health care system is abnormally expensive in the US. Basically every article that says "The healthcare system in the US is expensive because of X" is partially right. X is part of what's driving costs up.
It’s a common strategy when people point out that one area in US health care is too expensive/inefficient to immediately counter by saying “but area Y is even worse”. That way nothing ever gets done because there is not a single factor that’s messing up the system. In reality pretty much all sectors are f....ed and need reform. You can choose randomly any sector and start improving and get good results.
Re: What Atul Gawande Got Wrong about U.S. Health Care Spending
#6tldr: health care spending is high because prices are high That seems obvious in general, but should be extra obvious to anyone who has ever received a bill from anything in the US health system.
When you are designing a service, you can optimize for median latency or tail latency. Sometimes when you optimize for tail latency, median latency gets worse.
It is similar to the health care systems. The US system is awesome at doing really crazy life saving stuff. For example US is probably the best in keeping premature babies alive. In addition it has a ton of resources. If you want an MRI scan, you can get one in the US pretty quickly and easily. Also, the profits in the US subsidize worldwide drug development. This is why, if you look where all the really rich rulers decide to go for surgery or other complicated care, it is the US.
Canada and other countries optimize for the median case and rely on the US for their outliers. Look at the instances of Canadians coming to the US for surgery or MRI scans because they cannot get them in Canada in a timely manner.
Re: What Atul Gawande Got Wrong about U.S. Health Care Spending
#7a) This article purports to answer the question of why medical care costs so much, collectively. Its answer: 'prices'. But it does basically nothing to interrogate why prices are high, despite claiming to at several points.
b) One extraordinarily simple thing we could do to deflate medical costs in this country that would have essentially zero negative effects would be to create a market in kidneys. Medicare currently spends 90k per patient per year on dialysis. Allowing people to sell a spare kidney would completely and totally solve this problem, essentially overnight. Everyone currently on dialysis would get a transplant, and the costs would go to zero. 7% of Medicare's budget would evaporate instantly, and the numbers would probably be similar for private insurers.
Re: What Atul Gawande Got Wrong about U.S. Health Care Spending
#830% of US healthcare spend goes to hospitals, and 20% to physicians (many of whom are employed by hospitals even if they are outpatient clinics -- the % of physicians employed by hospitals in the US is at an all time high)
Hospital consolidation has been increasing the last few decades. Many hospitals are regional monopolies and have a ton of leverage in negotiations with insurers. Insurance companies put the squeeze on smaller providers, increasing pressure on them to sell to big hospitals. After buying a smaller hospital or clinic, the hospital system can bill insurance companies at the hospital systems' much higher negotiated rate -- for the exact same care (at least this is what i heard from several execs at big hospital systems).
My first job out of college was an investment banking analyst and our most profitable clients were hospital systems (HCA, Community Health, Tenet Healthcare, etc). They were so profitable that their profit margins were 20-30% even after writing off 30% of their revenues as uncollectible (this was before the Affordable Care Act).
These hospital systems were major targets of private equity buyouts. A buyout fund would buy a big hospital system, finance the deal with a ton of debt, then buy more hospitals and clinics and roll them up into the bigger system. They made so much cash that they could pay down huge amounts of debt quickly so the private equity groups made tons of money. Many non-profit hospital systems engage in similar aggressive behavior
Re: What Atul Gawande Got Wrong about U.S. Health Care Spending
#9tldr: health care spending is high because prices are high That seems obvious in general, but should be extra obvious to anyone who has ever received a bill from anything in the US health system.
When demand is inelastic, and you have no price controls, this is the result.
That's not really true, though. Prices are set by the intersection of supply and demand. Oil demand is relatively inelastic, for instance, but the price is quite reasonable because there is tremendous competition in supply.
Prices are high in healthcare in part due to inelastic demand, but much moreso due to supply constriction. For just one, particularly egregious example of this:
https://en.wikipedia.org/wiki/Certificate_of_need
If you want to open a new hospital in many states in the US, you need to acquire this "Certificate of Need". Who approves this certificate? Other hospitals in the area. It's as though Google required the permission of Yahoo to form a new search engine.
Re: What Atul Gawande Got Wrong about U.S. Health Care Spending
#10tldr: health care spending is high because prices are high That seems obvious in general, but should be extra obvious to anyone who has ever received a bill from anything in the US health system.
When you are designing a service, you can optimize for median latency or tail latency. Sometimes when you optimize for tail latency, median latency gets worse. It is similar to the health care systems. The US system is awesome at doing really crazy life saving stuff. For example US is probably the best in keeping premature babies alive. In addition it has a ton of resources. If you want an MRI scan, you can get one i…
I do not believe that this is accurate, in my opinion this assertion requires some documentation. I looked up the survival rate of premature babies and the neonatal mortality rate (28 days after birth) is higher in the US than in Canada.[0] I'm having trouble finding numbers on other procedures, in my opinion it may be because because the US is falling behind on them as well.
[0]: https://www.healthsystemtracker.org/chart-collection/infant-...