Costs

It's widely reported that we in the United States spend more per capita on health care than any other country. This is assumed to be a bad thing, and to the extent that we get less for our money, that's probably true. I suspect that it's also true but not as newsworthy that we spend more per capita on cars and houses than any other country. It's possible that one reason we spend more on each of these things is because we can and we choose to - we are a very wealthy country.

However, there appears to be some data that suggest that our costs are higher for other reasons. Certainly, the rate of increase in health care costs is not sustainable.

So where is that money spent, and how do our spending patterns differ from other countries? Hard data is difficult to come by, but there are a few areas worth looking into.

Probably the biggest driver in increased health care costs is the availability of newer technology. This is not a bad thing, but an MRI scan costs much more than a CT scan, which in turn costs more than an x-ray. In each case the extra cost provides some benefit, but there isn't any consistent mechanism to decide whether the benefits outweigh the costs.

The technology issue overlaps another cost driver - that of malpractice insurance costs and the practice of defensive medicine. This is an area where US practice is vastly different than any other country. In addition to the direct cost of malpractice insurance - over $100,000 per doctor per year in some fields such as obstetrics - virtually every doctor practices defensive medicine. This generally involves ordering tests that have little or no medical benefit.

In years gone by, if you bumped your head you'd probably wait and see if any disturbing symptoms developed before seeing a doctor. If you saw a doctor, they'd be unlikely to order any additional tests unless there was evidence of something troubling, and that extra test would likely be an x-ray.

Now, the doctor is much more likely to order an MRI just to be safe, especially if the patient asks for it. Not only does that generate revenue for the practice, it reassures the patient, costs the patient little or nothing, and protects the doctor from the possibility of future lawsuits. Not ordering the most complete and comprehensive test would look really bad to a jury if some future neurological problem ever surfaced. In this way, the availability of expensive technology and the fear of lawsuits combine to affect costs far more than either would on its own. No one involved in the decision has any incentive at all to do anything other than perform the test.

Any attempt to address the cost of health care must address these issues.