Did you know that 1 percent of hospital patients account for nearly a quarter of all medical expenses? This graph is a sobering glance at the real problems facing our health care industry. It’s the 80-20 rule come to life:
The worst part is that these problems don’t have an easy answer. They won’t be remedied by a single-payer system, or an extension of Medicare, or by health-savings accounts. This problem was created by expensive technology. If you want to stay biologically alive, to eek out an existence full of tubes and comas and dialysis, modern medicine can probably keep your vital organs ticking. This is an astonishing feat of technology – death can be postponed for months, even years, at a time – but this sort of ICU purgatory costs money. This graph shows us just how much money it costs. As Paul Krugman and Robin Wells noted in an influential essay:
“New medical technology” is the major factor in rising spending: we spend more on medicine because there’s more that medicine can do. In medical care, “technological advances have generally raised costs rather than lowered them”: although new technology surely produces cost savings in medicine, as elsewhere, the additional spending that takes place as a result of the expansion of medical possibilities outweighs those savings.
In response to new medical technology, the system spends even more on insiders. But it compensates for higher spending on insiders, in part, by consigning more people to outsider status–robbing Peter of basic care in order to pay for Paul’s state-of-the-art treatment. Thus we have the cruel paradox that medical progress is bad for many Americans’ health.
So what should we do? At this point, it seems like our current health-care system, built upon a pillar of employee health insurance, has to implode before any politician will dare propose real reform. Unfortunately, that reality is fast approaching in the rear-view mirror. Young, healthy people are opting out of the health-insurance system, simply because insurance has gotten way oo expensive. They don’t want to pay hundreds of dollars a month to subsidize somebody else’s heart-lung machine, especially if they’re not even able to visit a doctor. But insurance companies need healthy people to make money. When young people start to opt out of the system, then insurers have to raise premiums again, which cause more people to opt out of the system. Eventually, the health insurers will be left with a core audience of the chronically ill, who they will then procede to reject, because they are chronically ill. It’s a gigantic mess, one that takes up 16 percent of our GDP.
So even if we can cut costs by doing away with the paperwork generated by insurance claims, we still have the problem of expensive end-of-life medical technology. If we can find a way to fix this problem – and I’m all in favor or redefining brain death, so that it’s easier to pull the plug (in other words, Terri Schiavo shouldn’t have been kept alive for years and years) – then a few of our other health care problems, like runaway insurance premiums, will seem less intracatable.
[Hat Tip: Ezra]