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Best Healthcare
Healthcare myth: We're in this together
Not everyone really wants lower healthcare costs. Lots of people benefit when you pay more.
October 13, 2003: 11:29 AM EDT
By Pat Regnier, Money Magazine

NEW YORK (Money Magazine) - Fisher's study has an obvious appeal: We don't have to compromise. In theory, we can be cost-efficient, save enough to cover more Americans and actually improve our health. In practice, this won't be easy.

Fisher and his Dartmouth colleagues have a lot of intriguing ideas, like getting more doctors into group practices so they can better coordinate care, and paying more of them salaries instead of on a fee-for-service basis. Meanwhile, med schools and think tanks across the U.S. are setting up "evidence-based medicine" programs to help doctors get better at weighing the costs and benefits of drugs, tests and surgery. All of this could help. But we're kidding ourselves if we think affordable health care for all can come without a fight.

America's healthcare mythology
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Myths of American healthcare
Myth: We spend too much
Myth: More equals better
Myth: We're in this together

"The typical rhetoric is that everyone is struggling against higher costs, that it is an external problem we are collectively fighting against," Evans, the Canadian economist, told me recently. "That's completely wrong." Health-care providers, from your local doctor to the directors of Pfizer, have obvious reasons to want costs to go up. Even for-profit insurers, which pay a lot of the bills, should be agnostic on cost trends, as long as they can negotiate better deals with providers than their competitors do and can command premiums high enough to offset the inflation. In fact, insurers may benefit from rising prices, which make their product all the more essential.

I'll bet former Oxford Health Plans CEO Norman Payson, whose 2002 compensation totaled $76 million, including stock options, isn't losing sleep over that 14 percent figure.

The only people who really should worry about rising costs are the ones who ultimately pay. In single-payer systems like Britain's or Canada's, that's a health minister who has to stick to his budget, and he has an enormous incentive to push back against rising costs.

But in the U.S., where 46 percent of health care is paid for by a hodgepodge of government programs, and the rest of the tab is borne by thousands of employer-based plans, charities and patients paying out of pocket, most payers simply try to dump the burden of higher prices onto one another. Just as insurers respond to higher hospital bills with bigger premiums for employers, companies turn around and ask their employees for higher co-pays. But even that doesn't really dampen demand. "Suppose we had insurance to buy automobiles," jokes Stanford economist Victor Fuchs. "We'd be riding around in Lexuses, even if we had a 20 percent co-pay."

Except, of course, for those of us who cannot afford insurance. And there are 41 million who do not have health insurance and millions more who cannot buy enough of it. The market alone won't fix this--to make a change, Americans will have to resort to politics. We must either share more of the burden as taxpayers or get the government to push harder on providers to make health care cheaper. Or a little of both. But we're a rich country. We should be able to deal everybody in and still end up with more choices and better technology than a patient at Barts would ever dream of. In short, our wealth can buy us more than new hospitals. It also ought to buy us the flexibility to experiment in our public policy. And maybe even the freedom to be generous.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.