Why America spends so freakin' much on health care
A new study by researchers at the agency that runs Medicare estimates that health spending will hit $4 trillion by 2016, eating up 20% of the economy. (Here's the link; and here's the subscription-required WSJ story on the report.) By that time the government will be paying close to 50% of the nation's health care bill. If that sounds shocking, consider that the government already pays about 45% of health care costs--or maybe as much as 60% if you count various tax subsidies and some other spending, according to calculations by med-school professors Steffie Woolhandler and David Himmelstein. Who says we don't have nationalized health care?

These are big numbers, and it's not easy to keep them in perspective. Is 20% a lot? Is it something we, as a nation, can afford?

Here are some important things to keep in mind:

--It's not surprising, in and of itself, that we spend a lot on health care--or that we'll spend more in the future. As the economy grows, we get to have more choices about where we'll spend our money. And on the list of worthwhile things to spend extra money on, health care is pretty high up there. A few years back, University of Michigan economist Richard Hirth calculated that if health spending grew one percentage point faster than the economy over the long-run, it would be a whopping 38% of GDP by 2075. But we'd still have more to spend on everything else than we did in 2000.

--That doesn't mean there isn't a problem. We already spend much more on health care, as a percentage of GDP, than any other developed economy. But unlike nearly all those other countries, we haven't managed to guarantee access to care to every citizen, or even to every citizen with a full-time job. And there's pretty good evidence that lots of the health care we buy is a waste of money. I'm feeling lazy, so I'll just cut-and-paste from the 2003 article of mine which I'm shamelessly recycling for this post.
"Across hospitals that are very similar in quality, people can be treated in very different ways," explains Dr. Elliott Fisher, a lanky 51-year-old Dartmouth professor who also works part time as an internist in the veterans' hospital in White River Junction, Vt. "You can get the same technical care, the same discrete treatments. The same chemo, the same careful monitoring of blood tests," he says. "But in one setting you'll get twice as much care -- more physician visits and more specialists involved in your care."

I visited Fisher this summer at Dartmouth's Center for Evaluative Clinical Sciences, which during the past 14 years has been studying the weird regional variations in how doctors in the U.S. decide what care their patients need. For example, even after adjusting for obvious demographic differences, annual Medicare reimbursements in 1996 added up to $8,414 per enrollee in Miami vs. just $3,431 in Minneapolis. Earlier this year, Fisher and a team of five researchers produced a study that suggests Minnesotans might actually get the better care....

Intuitively, you'd guess that you would be better off getting sick in a high-spending city. But you probably wouldn't -- not, at least, if you are on Medicare and have a heart attack, colon cancer or a broken hip, the three conditions the researchers studied. It turns out that, after adjusting for health and socioeconomic status, patients in all three groups have a higher risk of dying within five years in the places that spend more money.

What's going on? As Fisher admits, this study can't show what high-spending areas are doing wrong. But it supports the notion that doctors base many decisions on factors other than strict medical need.

And that's not only because they're paid more for doing more. When they're making what Fisher calls "gray area" decisions -- "Well, you have a headache, so should you get the MRI today or see how you feel tomorrow?" -- it's often easier for them to book that test or call in specialists if they're available. And in places like Miami, they usually are.

--One man's "waste" in another man's salary. Or, as Canadian health economist Robert Evans puts it, "cost control is always income control." Every politician with a health care plan claims he or she can hold back costs just by cutting back wasteful spending. That's fine. But you should be skeptical of any reform plan that relies too much on technical fixes to uncover some hidden pile of free money. Every one of those fixes will require a confrontation with powerful economic interests. A realistic plan will lay out exactly which stakeholders in the health care system--doctors, insurers, hospitals, employers, taxpayers and, oh yeah, patients--will bear the cost of change.
Posted by Pat Regnier 4:24 PM 59 Comments comment | Add a Comment

A look back in time shows that people didn't start having trouble paying for medical expenses in great numbers until Medicare/Medicaid came along. The negotiated lower prices they pay forces the medical industry to recoup losses elsewhere. Then private insurance decided they were due discounts too. That meant the only place left to collect was from the poor who had bad health insurance plans or no health insurance. Today they are charged more for the same services a wealthy person with insurance receives simply because there is no large organization arguing for lower prices on their behalf.
Posted By C.L. Bloomington, IL : 5:24 PM  

Key problem is a private health insurance cartel which �earns� money by denying services. Fully nationalized health care could cover more people for same spending.
Posted By Dem, AZ : 5:30 PM  

As a libertarian, I have just one thing to add to this article. As the article notes, soon 10% of the GDP is the government spending money on healthcare for the small portion of constituents which these programs benefit, more money in the governmental system does not equate to better care, yet the media wants us to believe that we should let the government provide universal healthcare? What an excellent idea (note the obvious sarcasm)!
Posted By Mary, Portland, Maine : 5:32 PM  

I only pay doctor a visit once in a year or none. Whenever I am ill, I will try to stay out of any medicine until it's out of control. Whenever a doctor wants
to check this or test that, I will
tell him which one is really needed. If everybody treat their body the way as I do, the whole nation will be fine. The philosophy is to let your own body to adjust first before you get her treated.
Posted By Ling, Cincinnati/State : 5:48 PM  

RISK!!!!

Health services costs are driven by clinical and channel risks. Want lower cost? Diminish risks!!!

Want a more effective system? Hire an MBA, NOT a sociologist...
Posted By tj Oregon : 5:55 PM  

Under the current system the vast majority of providers and consumers have no disincentive to spending money. As a physician not only does ordering every available test appease hypervigilant patients, it reduces to some degree my malpractice liability AND increases the rate at which I can bill.
Posted By robert, jackson ms : 6:12 PM  

How much of the health care cost is on administration? I big chunk of the cost is to support hundreds of thousands of employees and hundreds if not thousands of high paid managers. Of course there are many super high paid CEO's, CFO's, CTO's, COO's .... We paid too much to middle men.
Posted By Steve, Alta Loma, California : 6:26 PM  

Fortunately, you are dead wrong. There is "free money" available in our health-care system. A single payer system, or Medicare for all, will save 20% of total health care cost just by eliminating the administration cost waste in our current multiple insurance company system. All it takes is the political will.
Posted By Phil Malter, Annapolis, Maryland : 6:38 PM  

I agreed with the above post. People tend to sue so easily in the US that clinicians often feel obligated to order way more tests than medically necessary to protect themselves.

Another cost is administrative cost to handle all the different insurance claims/forms from various different companies.
Posted By ntp, ca : 6:43 PM  

the whole industry is a pot of jambalaya...the best thing the govt could do is regulate the industry to require insurance companies and doctors work together so the patient doesnt constantly feel ripped off by high premiums and high bills
Posted By richard buffalo ny : 6:53 PM  

The whole system is in need of a big overhaul.. Unless we control the unnecessary expediture associated with malpractice insurance/ Extreme compensation for the healthcare providers/professionals , it will be hard to control this ..
Posted By Azeem, Austin,TX : 7:04 PM  

Why is it so expensive?
- Too much bureaucracy.
- We do not practice evidence based medicine- everyone feels they are entitiled to a "test" or "treatment" when those tests and treatments often times have shown NO BENEFIT in studies.
- Medical malpractice
I could go on and on but I have to go see some patients..........
Posted By Dr. Landis, Gibsonia, PA : 7:23 PM  

Also consider that cost increases in healthcare are demand driven. In words, demand for increasing technology of healthcare and demand for medical services outstrips supply. National healthcare sounds great, but when politicians like Hilary Clinton talk about providing healthcare to all Americans, they need to tell the truth. "I'm going to provide healthcare for all, and then I'm going to send you (the taxpayer) the bill". It works both ways, when George Bush says I'm going to cut your taxes, that sounds great, but unless he and congress reduce spending by the same amount, taxes in the future must rise to match the deficit.
Posted By Td, Chicago, IL : 7:25 PM  

It is because you Americans are obese, lazy and into drugs and alcohol.
Posted By Misohatchi, Osaka : 7:35 PM  

A tremendous amount of money could be saved if everyone took care of their health in this country and made it a priority. Far more money than you can imagine by just changing the current system!
Posted By Trent, Denver,CO : 7:45 PM  

Until the cartels that exist in the U.S. health care system are destroyed, no real competition will exist. Real competition will drive prices down. If we want to be truly "Free Market" and global about it, we should allow foreign doctors to come in on "medical visas" and offer services competitively.
Posted By Brandon W, Ann Arbor, MI : 8:02 PM  

How much out of pocket money does the average american spend for a visit? $0-$50 for copay. The rest is payed for by insurance. Does health insurance cover only medical emergencies, maternity etc... or does it cover a hypochondriacs visit to the Dr office for a simple sneaze as well? Is there any wonder why health care is so high? WE only care about what WE spend not what another company will pay for us. Maybe healthcare cost will go down if Insurance covers only emergencies like it should and WE pay for our own routine non-emergency hypochondriac visits.
And you people think socializing healthcare will fix everything. Wake up people! This isn't a communist country! The consumer have the power to drive the market not the F&#&* government!
Posted By Julie McPherson, Birmingham, AL : 8:17 PM  

If car insurance was like health insurance, oil changes would cost $250.

All health insurance is, is a fee schedule.

How about this, pay for your own preventive care.

Get a catastrophic policy.

Or how about a policy that doesn't include all this extra stuff? Why should a health care policy for a single male include OB/GYN or a non-drug user drug counseling???
Posted By Andy Wilmington, NC : 8:18 PM  

Solution: Increase minimum retirement age to 75. That increases GDP without increasing health care costs. In fact, health care costs would likely decline due to a more active population. And thinking about that, you know at least half the current expenditures on health care can be eliminated in 10 years if we all just started exercising, if the smokers quit, those having risky sex just stopped, etc, etc, etc
Posted By Bob F, Chicago : 8:29 PM  

I am not hearing anything about the unhealthy lifestyle of we Americans. We don't walk and eat processed food. Our food supply is tainted.
Posted By Jon- Las Vegas, NV : 8:41 PM  

Screw healthcare. You're gonna die anyway. The only difference is how much you spend to get there.
Posted By Steve, Warwick, RI : 9:15 PM  

Having not read all comments, this topic may already have come up:
It is imperative that America GETS OFF ITS BUTT about getting this nation FIT! Japan 25 years ago was a model of fitness by comparison, and our obesity and dietary status is a HUGE culprit in America's slide into economic-motivated pathology.
Corporations and investors are getting wealthy off of the culture of food choices and the requisite REPAIR of the condition by medical means--all of which is a terrible example of what capitalism can also create.
If there is a profit in letting a country get fat and metabolically unstable...it will happen. Our oh so wise corporate execs can enjoy the breeze on their yachts, likely oblivious to their part in this mess by chasing a quick buck.
Any food that can sit on a shelf for 6 months or a year...hmmm.. HIGHER PROFITS! "Hey can't you make it last a little longer so we make even more money???"
Looking back to simpler times offers the solution, by the way. That was a HINT!

Just a thought. The system is broke, and doesn't reflect the potential this ONCE and no longer great nation HAD.
But Twinkies taste so GOOD! Of course we should sell them! Who cares if the Trans-fats will create arterial blockage? Just get a cardiologist and surgical team to fix it! At a profit of course...
Posted By Gary G, Memphis, TN : 9:16 PM  

The United States spends about twice as much money (as a percentage of GDP) as other developed nations like Canada, UK, Germany, Japan, etc. The bottom line is that Americans life expectancy is the same or actually lower as the citizens of those other countries. All those other countries have significant government controls in place. I love 'Free Market' thinking, but are we actually paying that much more because of the Free Market? Are there ANY examples in the world that show that the Free Market applied to Healthcare reduces costs? If not let's get some governmeent controls and slash the cost in halve (I do not care about your political affiliation, I can use the money for other stuff).
Posted By Andre de Rooij, Winter Park FL : 9:17 PM  

The health care system is as bloated as it is because of government involvement. Additional government involvement will do three things; drive up costs, lower quality, and force doctors to live in other countries or not pursue medical degrees all together.

If we want our system to get better we have a number of things to do. One, right now employers control the healthcare system. An employer can get a tax incentive for buying policy X. As an individual I do not get a tax incentive for buying policy X. This cuts out free market controls on health care and forces people to stay in jobs they don't like. Two, Americans are disgustingly obese which drives up costs. As a very fit person that exercises everyday I have no incentive whatsoever to buy insurance. I do not want to pay for someother fatty's self-made problems. The day we have national health care is the day I stop paying American taxes. I am educated and very mobile - I have worked the last 6 out of 8 years outside the U.S. already. Three, we need to raise our retirement age. An increase of just a few years will realize incredible savings relieving costs associated withmedicare and social security. The original retirement age also was approximately the same as the life expectancy in the U.S.

The government and American laziness when it comes to health issues is the problem. Nationalized healthcare is a recipe for disaster.
Posted By Hoke Appleton Wisconsin : 9:19 PM  

Most Americans are addicted to legal or illegal drugs. To me there is not much difference between the two. The way to better health is better diets, exercise, and natural remedies. I haven't been to am M.D. in thirty years, and I am healthier for it.
Posted By Tore, Acworth Ga. : 9:19 PM  

I buy insurance on my own for: auto, home, travel, flood, etc. There is no tax rebate for these. Why does not the Govt. get out and tell every one " you are on your own". Are we waiting until the medical bill inches towards 90% of GDP?
Posted By Rajen Narayan, Plano ,TX : 9:24 PM  

like anything it is a combination.
IMO if these things were to be done we would really be looking at a less complicated problem:

1. Americans are fat and lazy compared to the rest of the developed world. To make it worse the fat and lazy are the poor and uneducated that can't pay for their own healthcare. Look at obesity rates and income/education levels. Pretty dead on. We need a comprehensive program to improve our diets and encourage exercise.

2. Tort reform. Yes, people hate to hear about it but the fact is this does have more than a negligable effect on the cost of health care. Malpractice premiums and fear of getting sued are costing us more money.

3. Prescription drug prices. This is certainly a related issue. I am a strong believer in free markets but Americans are getting screwed. We are the only developed nation that doesn't negotiate prices with the drug companies. Don't believe the 'it's the U.S. that pays for the R and D. That is just an oversimplification. Look at the profits of Big Pharm.

4. Insurance Companies: They are screwing both us and the doctors. Look to #2. I know they do but the fact of the matter is they are continuing to rake in the dough at the expense of us. I still believe there is a market based solution to this. It will be interesting to see if MASS. and other states' proposals work out.
Posted By Justin, Baltimore, MD : 9:50 PM  

Everyone is missing the point. Just having insurance drives the cost of insurance up.. the idea that people need insurance or the us have universal insurance is a crock.. insurance should be for the worst case.. ie you get hit by a truck.. if consumers didnt have insurance then the cost of the service would be based on what the average customer could pay not the cost a group of polciy holders could pay. the idea of insurance was a great idea in thoguht but not in reality... its a ploy..
Posted By James Haltiwanger Greenville SC : 9:52 PM  

Numberous Studies have suggested that up to 1/3 of tests and consultations with specialists ordered by doctors are a direct result of medical malpractice fear. Many providers order tests and evaluations and treatments motivated entirely or partially due to the fear of being sued.

Why do we accept our health plans to increase premiums and decrease coverage while raking in record multi million dollar profits each quarter?
Posted By Sue, Philadelphia, PA : 9:59 PM  

I liked Dr Landis post from Gibsonia, PA : 7:23 PM. It is true that US physicians earn 2X more than other western countries, and our pharma costs much more, but the consumer is not held accountable for their behavior (overwieght, no exercise, smoking by 20% of the population etc, etc)and this is 25-30% of the total spending. Administrative costs could be reduced with federal regulations on standardization of procedures. Evidenced Based Medicine could be standardized. State based mandatory benefits are not market supported, which adds to the cost. Let's get serious, moving to universal coverage with the current system (patient gets everything under the sun whenever they want or whenever the physician prescribes), will create huge additional costs. That solution will then result in rationalized, and a two tier market (like Canada - where province budgets didtate how much care is available and wealthy Canadians have care on demand). It will take a public-private partnership to solve this situation.
Posted By Roger, Mpls, MN : 10:02 PM  

Cost of salary and non-salary expense such as technology is increasing, but hospital reimbursement is decreasing. To complicate matters, complicated manage care contracts and goverment requirements contribute to administrative costs and shift focus away from clinical care. To cover expenses, hospitals and health systems negotiate higher reimbursement rate with insurance companies, who in turn raise premiums or deductibles, or cut benefits. This shifts the additional burden of responsibility to all patients, who are typically unable to pay. Consequently, this patient responsibility ends up as a bad debt expense on the income statement, and the cycle starts all over again....
Posted By Smarty Jones, West Chester, PA : 10:04 PM  

As much as I enjoy my "great" heathcare plan, even I have come to realize that it's time for National Health Care. Let's look at Canada and then I would start with a small State such as Vermont or Rhode Island and see how it goes. As part of the agreement with those States, guarentee that permanent residents of those States would not lose any health care that they currently have. After 3 years let's take a look. After 5 years let's move on to bigger States and after 10 years it goes permanent Nationwide. However, if this plan were to work, it could only cover legal resdents of the USA - all others pay - and pay big.
Posted By Joe, Rochester, NY : 10:16 PM  

One simple recommedation: employers could lower their healthcare costs by giving employees a 30 minute paid break if they participate in an exercise program. I believe the net costs will be positive for the employer who wants long term healthy employees, and maybe even start a consciousness about healthy living.
Posted By b. colman, zanesville, oh : 10:21 PM  

Here is an idea get rid of the 600 dollar hammers. Hello I can give you a shot for free. 400 by the time you leave an emergency room.

Mark
norealitytv.com
Posted By Mark, Plano, Tx : 10:24 PM  

Let us not forget the litigation industry's tax on the healthcare system. Health care practitioners and institutions have a big gun to their heads and cannot possibly implement rational approaches to diagnoses and treatment. Place caps on the litigation industry's take and healthcare costs will come down!
Posted By DVaughn, Nashville, TN : 10:27 PM  

Look at Europe and Canada's state controlled system. Everyone can walk into a hospital and get free care and it costs government less because there are no middle men making profits in the system. It may mean higher taxes, but in the typical middle class family will spend more on health insurance than their additiona tax,
Posted By Detroit, Michigan : 10:30 PM  

Other than by a more fit and responsible lifestyle, health costs could be lowered by doing two things:

1. Require all employers to have at least two separate insurance plans, or, heck, require health insurance companies to sell directly to consumers. It is the same way with homeowner's and auto insurance. I don't see any problem with the costs in those areas. By having to deal with consumers, you create competition. Competition drives down prices.

2. If you create competition, the price decrease has to go somewhere. Most likely it will go to doctors, but that only worsens the problem because the cost will be passed on to those who don't have insurance. Well, that's why you need TORT REFORM. Reduce malpractice damages and you reduce risk, which in turn reduces unnecessary tests and consultations.

If you do the above two things, it will cut out a lot of the cost glut in the system now and help all healthcare to be more affordable.
Posted By Dewey, Nashville, TN : 11:04 PM  

The healthcare system is based on everyone ripping each other off and the public getting screwed. What is needed is a reasonable rate for tests and procedures rather than ridiculously overiinflated prices for EVERYTHING. $250 for some doctor to step in your hospital room for 3 minutes, and things like that is just absurd.
Posted By Gina, Tampa FL : 11:39 PM  

I am a middle class, self-employed individual. I feel screwed whether or not we have nationalized health care. I am carrying the weight of the poor AND the rich on my back now. At least nationalized health care would let me carry my own weight too.
Posted By Ke, Wilmington, NC : 11:57 PM  

It is cultural people! Part of the problem for spiraling health costs is that this culture does not understand that being obese, over-worked, stressed-out, vacation starved, and obsessed with shopping, is killing many people. This, at the expensive of living with less, eating less, exercising more, learning more, and traveling more, will land millions of people in the hospital needlessly. Look at the Spanish, the French, the Portuguese, the Finnish etc; they are thin, outdoorsy, social, and live to live - not to work. They do not die stressed out over getting ahead, paying bills, mortgages, cars, and credit cards. Statistically, and compared to the USA, they rarely go to the hospital.

I think diabetes illustrates this point tremendously. Years ago when people were thinner, diabetes only affected a minority off people, now it is commonplace. California is even creating clinics that cater to diabetics only -- that should scare us all!

This culture of pervasive ill health combined with an inept health care bureaucracy is truly an embarrassment. Can no one in this country connect the dots?
Posted By Sonya Seattle WA : 12:02 AM  

The problem with our medical system is the rampant elitism among doctors, who have created a system in which it takes over 200,000 dollars and 4-8 years of living hell to become a doctor. It's called hazing. Once they complete it, they then feel they deserve ridiculous sums of money and prestige and can force new doctors to have to do the same. Because of this medical elite, people feel alienated from the health of their own bodies.
Posted By Myles Goodman, Houston TX : 12:50 AM  

the real solution is looking at sick time. Most American workers have little to no sick time. So, if they get sick or their children get sick, what do they have to do? They have to get back to work NOW! And, this leads to them going to the doctor for such nonsense as colds and flus. If their children get sick, they go to the doctor and beg for antibiotics because they feel their kids can go back to school sooner. If American's got a guarantee of 12 sick days a year that would roll over if unused, you would see a major reduction in healthcare costs. Another area is the rise in quackery science, such as chiropractic and acupuncture, which is psuedoscientific nonsense.
Posted By Randy San Jose California : 1:26 AM  

As intelligent as this country is, why can't we solve this problem? The same reason why we can't solve other problems. It effects the people in power. You mean to tell me we can't figure out how to solve problems that have been going on for decades. At least we could see what works in other countries similar to ours and do it. But that would be too easy. It's time to take back our country from the corporate lobbyiest, special interest groups, and dishonest politicians who care only about themselves, and start voting together based on the issues
rather then the labels that keep us divided.Voterpowerusa.com is the answer.
Posted By Voterman, SF, CA : 2:53 AM  

Freaking health care costs- few of many reasons
people attitude of suing over everything with no personal responsibility. No physician really want to risk or face malpractice claim by a drug taking junkie, when it is easy to get a CT scan or MRI or billion other million other tests easily.
Large amount of money is psent in the last few days of a person's life. Everyone has to think for the quality of life we or our loved ones will have and not merely extending the number of years we survive more. Pity to see so many for example anoxic encephalopathy patients after cardiopulmonary arrests getting prolongation of suffering by hooking them to ventilators, dialysis machines and life sustaining medications.
Lack of attitude towards prevention of diseases. Many blame their genes for obesity than their poor life style choices.
USA spends far more money than any other country for adminstrative costs, I think about 35%.
Pharmaceuticals mint billions of money.
Posted By praveen, Philadelphia, PA : 3:02 AM  

The health care process is very complicated indeed and so are the costs and therefore the solution(s). One area of health care cost that is largely ignored is "last illness". The outcome for the patient is death -- a bad outcome. Depending on how long the last illness process takes it costs the health care system anywhere from 15 to 30% of the total cost of the health care bill for that patient (and therefore as a corollary for the health care system). As we enter a different era where more individuals are asked to participate more and more in the sharing the cost of their own health care expenditures should we begin thinking about asking (tyically) elderly patients and their health care providers to begin thinking more critically about realistic expectations and intended consequences of sometimes heroic interventions that in many cases have an anticipated poor outcome? One way to curtail excessive and unecessary expenditures on the last 90 days of an insured life would be to cease public funding for the last 90 days of the patient and promote the concept that the estate of the patient and/or an insurance product would cover for "last illness". There are hard questions with difficult and complicated issues. Obviously this is politically charged. Historically the health care culture in the US is to deploy maximal medical care even for the terminally ill. No one wishes to give up or admit the inevitable. But the associated extreme cost to society of maximally treating a last illness state will continue to weigh on our national priorities. Like it or not the reality of the situation is that the US is maxmizing its economic priorities on the advanced elderly paying more and more for those last 90 days while at the same time paying less and less for economic development, education, immunization research, energy security etc. I am not suggesting that we ignore the elderly -- far from it. But we need to begin looking more critically at our health care system and begin asking the difficult questions on where we obtain the best possible benefit to society by allocating our limited resources on different subsets of the demographics. Additionally, more and more people aged 65 to 75 are living healthier and more active lives. If we raise the age of eligibility for entitlement benefits (something which is akin to political suicide) so something like the age of 72 then much of the budgetary worries and stress is relieved substantially -- more poeple contribute to the funds for a longer interval of time and much less is taken out... Of course most people do not want to forcefully work beyond the currently established age of retirement and feel entitled to full benefits for the of their lives... The culture of entitlment will in one fashion or another eventually succumb to economic reality. The issue is should we begin the process of appropriately manage this transition or should we "race to the bottom" whereby a crisis forces painful and difficult change?

Everyone wants someone else to fix their own problems. People endlessly complain about the high cost of this or that but gladly receive their stock dividends from successful and profitable businesses. In a capitalistic society you cannot have all winners and no losers. Someone has to pay for all this. When someone retires at the age of 65 and dies 30 years later these years are not as productive to the economy (in general) as the preceeding 30 years when the individual was actively working and contributing. Who should be responsible for these unproductive years? With so many advances in health care and yet more advances to come people can be repaired and fixed in many ways to keep going. Who is to pay for all of this? The government? The individual? Fundamentally we need to re-think our system and sooner rather than later.
Posted By Steve Orr, Findlay Ohio : 4:11 AM  

The main issue that I see is that the consumer doesn't know exactly what they are buying. If you go into a store to purchase something, the price is right in front of you. However, when you go to a doctor for a visit, you only see the co-pay amount. Is that your cost? Why no. The doctor bills the insurance company for a higher amount, but realizes that the insurance company is going to discount it. Is the consumer paying for it? Why yes. That's the amount deducted from your check each week as a medical insurance premium. Get all of the funny math and funny economics out of the system and people can be better consumers.
Posted By Ted, Liberty, SC : 6:09 AM  

The burgeoning expense of medical care is driven by the insulation of the consumer from the true costs. If insurance paid for purchase of a car, how many consumers would choose a Toyota Corolla over a Lexus? In other countries, the government pays for medical care but then strictly regulates what is available.
Unfortunately, there is no easy solution.
Posted By Dr. Mark, Morristown, NJ : 7:05 AM  

Some excellent points I'd like to address:
Ke, Wilmington, NC : 11:57 PM says that as "a middle class, self-employed individual" he "feels screwed". This is the place most small businesses find themselves in, and it is one of the reasons for a decline in broad-based entrepreneurialism in the United States. Entrepreneurialism is what made this country so economically great, and it is the only thing that will turn around the decline of the middle class now. We have to do something; a nationalized single-payer health system would take the burden off of employers, levelling the playing field for entrepreneurial small businesses to compete.

In a research paper I wrote 4 years ago, I found that the U.S. health care insurance had overhead costs of 16-26% (the low end being non-profits). That means 16-26 cents of every dollar spent on health care in the U.S. goes solely to administrative overhead of our existing insurance system. In countries with single-payer nationalized insurance, the overhead was 3-6%. Those countries with the single-payer systems also had the highest rated health care systems according to various U.N. and other health agencies. The U.S. ranked near the bottom. The over-use problem that some of those countries have could be mitigated by having higher co-pays with subsidization available to the poor.

Myles Goodman, Houston TX : 12:50 AM writes that "[t]he problem with our medical system is the rampant elitism among doctors, who have created a system in which it takes over 200,000 dollars and 4-8 years of living hell to become a doctor." This is true and it unnecessarily restricts competition in the profession. Do people really need an M.D. to diagnose a bad cold or take care of a cut? No. Opening up first-tier care to Physician's Assistants and/or R.N.'s would increase competition overnight and cut prices for everyone, whether we kept the private insurance system or moved to a single-payer system.

And finally, Sonya Seattle WA : 12:02 AM writes, "Part of the problem for spiralling health costs is that this culture does not understand that being obese, over-worked, stressed-out, vacation starved, and obsessed with shopping, is killing many people." I would recommend reading her whole post; she makes several more good points. Jon- Las Vegas, NV : 8:41 PM touches on this as well, writing "I am not hearing anything about the unhealthy lifestyle of we Americans. We don't walk and eat processed food. Our food supply is tainted." Our fast-food culture of processed foods and high-stress is pushing our health care costs up. We over-farm land on huge corporate farms, and nutrient levels - even in fresh vegetables - are declining as a result. The processed foods have most nutrients stripped out. We eat more calories than any other nation on earth, but we are literally starving ourselves when it comes to nutrients. Add in high-stress, high-pressure lifestyles.... We are killing ourselves.
Posted By Brandon W, Ann Arbor, MI : 8:54 AM  

The real reason health care is too expensive is caused by daily pollution. The tons of heavy metals spewed into the air from autos and power plants is having an expotential effct on our immune systems thus making cancer the number one killer of Americans. That puts a terrible burden on a fragile health care system which makes the excessive demand vey costly.

The money put into research should go to lobby groups that would fight for clean air! Of course the oil kingdom elitist would fight back viciously but now they are unchallanged!
Posted By Ernest Paviour, Victor, NY : 7:32 PM  

Prices are ultimately driven by supply and demand. There are a lot of other secondary factors in there, no doubt, but our problem is people want a lot of care and there is a limited supply of it. One thing that I would like to see discussed is the abolition of the FDA in its current form - there is a need for regulation of the industry, but as someone who has worked in the medical device industry for a long time, on balance that agency is not helping the American consumer obtain health care at a reasonable cost. Also, there is an obvious shortage of health care practitioners in many places and we need to find a way to open that profession up to more people. Also, we are a nation of fat, unhealthy people. People, start taking responsibility for your own health!
Posted By one eye roy, fairbanks, ak : 2:25 PM  

Because doctors can get away with charging $500 to give an injection. Consumers don't care because they pay the co-pay of $20 and the insurance companies pay the balance. But in reality we all pay one way or another with higher insurance premiums and others being denied coverage. Prices for services, tests, and procedures are never published upfront, so comsumers cannot shop around for them. I know that you can't shop by price with healthcare, but having prices published upfront gives consumers a way to compare services.
Posted By KW, Old Bridge, NJ : 2:45 PM  

Consider this....approximately 50% of health care costs are spent providing care in the last 6 months of life.

America needs to have a realistic conversation with itself about death (dying is just as natural as being born...at least it used to be) and rationing health care.
Posted By C, Philadelphia PA : 4:46 PM  

I have'nt had a chance to go through the other comments posted, but would like to point out a few things, Great Britain and in India, 2 countries that are not going through convulsions on healthcare costs, it usually takes a lot less time to train a doctor. Since they don't put a doctor through 4 years of college before med school. Restricting supply is something that the medical industry has done consciously.
Posted By Pradyot, New york New york : 6:50 PM  

The problem with the notion that you can't cut costs without cutting either quality of care or the income of care providers is that it ignores administrative costs. The reason American health care is so expensive is the oversized amounts taken out of the health care dollar by insurance companies, sales people, actuaries, company benefit analysts etc.
Posted By Ross Williams, Grand Rapids Minnesota : 1:47 PM  

Based on the prediction of the cost of
the health care delivery system, why is healthcare not non profit? Drugs,
hospital charges, all types of medical
equipment, physician charges etc would be greatly reduced so the citizens of the U. S. would continue to have affordable coverage. I don't hear anyone talking about the cost of Iraq
war which would fund a lot of medical
research for this country and maybe our
complete health system would be much
better than at present
Posted By Marion Combs Louisville,Ky. : 11:07 AM  

Doctors seldom contribute to these blogs because they work 24/7. My husband is a physician, an ob/gyn who is about to quit practicing because he is tired of low reimbursements, higher expenses, med malpractice, and the whole health care mess. I wil tell you about his one and only lawsuit in 27 years from a 300 lb Medicaid patient who sued for lack of consortium... but most vitally, I have to report something I just learned but never knew: the insurance industry is exempt from anti-trust law. I never knew that. It is my opinion as his office administrator that the crux of the problem in today's American health care system lies with the for-profit insurance industry as much as it does the federal government. They are making money hand over mega fist... administrative costs and salaries blown way out of proportion. They own whole buildings in Ct. They are insulting physicians with "reimbursements" that do not even begin to cover the cost of educating a physician or running a medical practice. Though both are qualified, caring people, neither of our children chose medical careers because the return on investment is no longer there. We will feel the pain in about 20 years when our generation tosses in the practice vtowel and we will have a severe shortage of physicians in this country. I am almost at the point of supporting a government system to put the insurers out of business. Before we do this, I wish we would try what we should have done back in 1997: stronger federal control of the health insurance industry.
Posted By Anonymous : 12:46 PM  

10 years ago, my wife and I paid $349.00 each month for health insurance. I've just received my renewal notice. $3,310.00 per month. Blue Cross and Blue Shield merged with Wellpoint and the CEO was awarded $42,000,000.00 ($42 Million) for his "efforts". I wonder what he pays for his health insurance?
Posted By Anonymous, Carmel, IN : 11:24 AM  

its time to enact the Soylent Green remedy to feed the world and give those that are tired of the fight,a humane way to pass into that good night....there are not enough checks and balances in the US government.there is too much money coming in to account for it all...like that Katrina fiasco...we should divide the USA into smaller countries similar to Europe and quit sending our tax dollars into "one big kitty" cause mismanagement is replete
let those living in California..etc.. tax their own citizens and let them account for their own road repairs and hospital care
the money wasted by letting Uncle Sam dole it out could save us all
the 500 plus billion on this war we're losing badly could help a lot of people here
America needs to allow even more immigration here..300 milion isnt enough..we need to double or triple it so we all suffer on a even scale and then nobody will want to be here
I hope to see in the near future,more inflation,more crime,higher costs for everything,more smog,more unwed mothers,other sicknesses we can all buy pills for to string us along,more guns on the streets,homegrown and imported bombers self detonating themselves in our public squares and public stonings of anyone that makes images or speaks against some imaginary god created from the bronze age and at least twice the number of Walmarts we have now!
lets open the borders and let them all in,mankind must perish!
Posted By Hugh Jass Prescott AZ : 1:59 AM  

There are two ways that you can control the total spending on anything, including health care.

1. Reduce the supply, and the unit cost increases assuming the demand remains constant. Hope that the unit cost increases so much that the masses can not afford it. Therefore, the total spent may decrease.
2. Reduce the demand while the supply stays constant, than the unit price decreases and the total cost decreases. But how do you reduce the demand for something the masses want?

Let's try the socialist way. Control the price. That way supply is eventually reduced, and the masses can not get what they want. Total spent decreases. Excellent!Excellent!Let's try this on other things.

By the way, free market means free to choose, not free of cost. Those Americans who have died in the foreign wars would probably tell you this.
Posted By Bruce, Baton Rouge, Louisiana : 4:54 PM  

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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: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. 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 2014 and/or its affiliates.