|With Health Care, US Learns That You Don't Always Get What You Pay For|
|Subject||Health Care Spending Doesn't Provide a Corresponding Level of Benefits|
|Topic||Economic Analysis, Supply and Demand; Elasticity, Utility and Consumer Choice|
Costs, Health Care, Insurance, Prices
Recent studies demonstrate that while U.S. citizens spend far more than any other country's citizens on health care services - about 14% of GDP compared to 8% for other developed nations - U.S. consumers receive fewer services and lower quality health care in some health concerns.
While the U.S. ranked first among OECD nations for breast cancer survival rates, it was at the bottom of the list for the number of successful kidney transplants. Life expectancy and infant mortality rates are much better in countries other than in the US; more doctors per 1,000 people serve in other OECD nations than in the U.S. (3.1 versus 2.7), and people in other OECD nations have access to more hospital beds per 1,000 people--3.9 versus 2.9 in the U.S.
Researchers argue that high administrative costs of doctors, hospitals and insurance companies in the U.S. create part of the disparity. Further, U.S. hospitals and care providers have significantly greater bargaining power than do consumers and insurance companies. Consequently, prices increase for a vast number of services. Researchers also argue that costs rise because of the high level of technology used in procedures and services. But is the high technology worth the price?
A Harvard health economist argues that by and large, technology does
pay for itself. New procedures in areas like heart disease and low-weight
births provide benefits that more than make up for the costs. Some areas,
however, still require improvement. For example, research finds that Medicare
spending could be cut by 20% without affecting quality of care. Many health
economists argue for a pay-for-performance system for care providers.
Hospitals with greater survival rates, for example, would receive higher
payments. This way, providers would encourage needed tests, discourage
unnecessary ones, and reward doctors for improving quality of life.
(Updated August, 2004)
|Source||Jeff Madrick. "Studies Look at Health Care in the U.S." The New York Times. 8 July 2004.|
Return to the Economic Analysis, Supply
and Demand; Elasticity, Utility
and Consumer Choice Index
©1998-2004 South-Western. All Rights Reserved webmaster | DISCLAIMER