By Loyd Eskildson

Almost everybody already knows that American health care costs about double that of other developed nations, that about 45 million Americans lack health insurance, and that health care costs are the leading cause of bankruptcy in America. Thus, Washington's efforts at 'reforming' health care by expanding insurance coverage and banning the insurance industry from not covering those with pre-existing conditions, etc. Little discussion, however, has addressed the question of "Why does American health care cost so much?" Do doctors provide too much treatment (possibly to avoid malpractice lawsuits), are we too fat, too indolent, and/or too old? Do we have too many high-tech gadgets? Is it our administrative overhead costs, insurance company profits, . . .?
 
How can we solve our health care problem if we don't even understand the causes?
 
Comparing what insurance companies pay for health care vs. uninsured citizens paying posted prices provides a major clue. My personal experience has been that insurance companies pay much, much less than the uninsured - so much less, in fact, that many Americans wouldn't even bother thinking about health insurance if they could just pay those insurance company rates. Maybe health care high 'costs' are simply a means to artificially create demand for health insurance?
 
But there's another possible explanation as well. Again, my own observations tell me there's an enormous amount of 'non-value added' expense in health care associated with staff sitting around idle, walking back and forth, looking for data, calling each other, etc. Maybe we just need Toyota engineers to redesign our hospitals (they've already directly or indirectly drastically simplified most of our factory and warehouse operations)?
 
Then along comes Ezra Klein in his 11/02/09 blog on the Washington Post in which he provides charts supplied by Kaiser Permanente CEO George Halvorson showing that "American health care costs so much more than health care in any other country because we pay so much more for each unit of care.  As Halvorson explained, if you leave everything else the same -- the volume of procedures, the days we spend in the hospital, the number of surgeries we need -- but plug in the prices Canadians pay, our health-care spending falls by about 50 percent!" So it's the doctors and hospitals that are the problem!" See these charts, originated from the International Federation of Health Plans.
 
Personally, I think it may be all of the above. Regardless, it's time to stop redesigning health care and instead go back to first determining exactly what is causing the problem we're trying to fix.

Loyd Eskildson is retired from a life of computer programming, teaching economics and finance, education and health care administration, and cross-country truck driving.  He's now a reviewer for Basil & Spice.

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