Here's another one from David Cay Johnston, this time on the outrageous inefficiency of U.S. hospitals:
American hospitals spend a huge and growing share of their revenue on overhead, a study published today in Health Affairs shows. Getting those costs down should be a national priority.U.S. hospitals on average spend 25.3 cents out of each dollar of revenue on overhead, with for-profit hospitals spending 27 percent and nonprofits a bit below the average.By contrast, the Netherlands and England, which have the next highest overhead costs, spend 19.8 percent and 15.5 percent, respectively. Both are moving toward market-based financial models, so, as with the U.S., overhead costs are likely to rise.[...] The new study helps explain why for every $1 the 33 other countries with advanced economies spend per person on universal health care, the United States spends $2.64 — and yet more than one-fifth of Americans have no or poor health insurance. A significant reason the U.S. health care system is so expensive and inefficient turns out to be those annoying co-pays.
Here's one suggestion: eliminate co-pays. Here's why:
In economics “rational” is a term of art. It means groups of people consistently making choices that maximize their benefits and minimize their costs.By this definition, the promotion of co-pays by employers and insurers fails the rationality test. Why? Because co-pays discourage people, especially those with meager incomes, from seeing doctors and obtaining medications. That reduces immediate spending on doctor visits and drugs but not total costs over the longer term. Instead, when people who are squeezed financially do not pick up their medications, thus avoiding the co-pay, they later will need more intensive and costly care, which drives up total costs for health care as well as increasing human misery and shortening lives.When co-pays discourage getting drugs and visiting doctors, which results in more costly medical problems later, the system is irrational. When those payments eat up as much as or even more than they bring in, the system is more so.Here is a suggestion: Get rid of co-pays. Instead let’s just add a prominent line on paycheck stubs that reads, “Your health care is paid separately, and it cost X dollars this pay period.” That would help make the American economy more efficient and more humane.
By David Cay Johnston
September 8, 2014 | Aljazeera
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