Is the American healthcare system really so broken?

Originally posted by no1marauder
I have a rather simple question:

Why don't people do what you are saying NOW? How come they chose to purchase health insurance rather than socking the money that it costs into the bank just in case they need it?

Once you figure that out you'll understand why such a plan is unrealistic.

I'm not saying people should rely on savings for all of their healthcare costs. It makes sense to buy coverage for catastrophic costs.

As for why people don't do this. Because for decades everyone's used to a system where they get whatever their employer gives them, and everyone just expects that someone ELSE will pay for their healthcare.

And this is a big reason why healthcare costs are so high.

When someone ELSE is paying for your dinner, you don't pay a lot of attention to how much everything on the menu costs and have no problem ordering the $25 filet mignon. But if YOU are paying for dinner, the prices become a lot more important. You might choose to get the baked ziti for $8 instead and leave the restaurant just as happy. The same thing applies to healthcare services.

Originally posted by Melanerpes
I'm not saying people should rely on savings for all of their healthcare costs. It makes sense to buy coverage for catastrophic costs.

As for why people don't do this. Because for decades everyone's used to a system where they get whatever their employer gives them, and everyone just expects that someone ELSE will pay for their healthcare.

And this stead and leave the restaurant just as happy. The same thing applies to healthcare services.

That's ridiculous. There are a lot of reasons why health care costs are high, but your analogy is inappropriate and off the mark. People aren't going to pick the "ziti" if it increases the chance that they'll be dead. People want the best health care not because "someone else is paying" but because the consequences of not receiving the best possible care are potentially so serious.

You need to re-think your position as it is based on some rather fundamental misconceptions. In virtually every industrialized country, "someone else" pays for health care (at least from the consumer's immediate perspective) but their costs are far lower than the US'. So your argument, while facially plausible, fails when it hits reality.

Here's one of the major reason US health care costs are so high:

One thing Americans do buy with this extra spending is an administrative overhead load that is huge by international standards. The McKinsey Global Institute estimated that excess spending on “health administration and insurance” accounted for as much as 21 percent of the estimated total excess spending ($477 billion in 2003). Brought forward, that 21 percent of excess spending on administration would amount to about $120 billion in 2006 and about $150 billion in 2008. It would have been more than enough to finance universal health insurance this year.
The McKinsey team estimated that about 85 percent of this excess administrative overhead can be attributed to the highly complex private health insurance system in the United States. Product design, underwriting and marketing account for about two-thirds of that total.

http://economix.blogs.nytimes.com/2008/11/21/why-does-us-health-care-cost-so-much-part-ii-indefensible-administrative-costs/

Originally posted by no1marauder
That's ridiculous. There are a lot of reasons why health care costs are high, but your analogy is inappropriate and off the mark. People aren't going to pick the "ziti" if it increases the chance that they'll be dead. People want the best health care not because "someone else is paying" but because the consequences of not receiving the best possible care than the US'. So your argument, while facially plausible, fails when it hits reality.

Obviously, people aren't going to choose care that is inadequate -- that would be like ordering dogfood from the menu. No one would do that regardless of the price. There are plenty of regulations in place and information available that can ensure that all of the options are competent.

But the really BIG reason why healthcare costs so much is that everyone thinks they need to get the VERY BEST healthcare no matter what the situation. The problem is that by definition, 99% of healthcare providers are not among the top 1%. There's no way the supply of VERY BEST can keep up with the demand - so healthcare costs keep skyrocketing towards infinity.

Suppose you injured your shoulder and needed surgery to fix it. If you're a major league pitcher, it might make sense to see Dr. James Andrews. It would make sense to pay him a lot of money to do the surgery. If you're an average person, it makes more sense to see a more ordinary surgeon and spend a lot less money. The latter surgery might mean that you'll lose a few mph off your fastball, but if you don't play baseball who cares?

Now what happens if everyone insists on only getting the very best? People like Andrews would end up wasting a lot of time doing surgeries on people who don't really need Andrews' expertise -- and it makes it a LOT harder for the athletes who would actually benefit from Andrews.

The same idea applies elsewhere. Most healthcare conditions respond very well to treatments that aren't "The Best". And if you have a condition that doesn't require "The Best", it's not ideal for you to be taking up a hospital bed that could be used by someone who really does need "The Best"

Originally posted by no1marauder
Here's one of the major reason US health care costs are so high:

One thing Americans do buy with this extra spending is an administrative overhead load that is huge by international standards. The McKinsey Global Institute estimated that excess spending on “health administration and insurance” accounted for as much as 21 percent of the est ...[text shortened]... .com/2008/11/21/why-does-us-health-care-cost-so-much-part-ii-indefensible-administrative-costs/

http://www.kaiseredu.org/topics_im.asp?imID=1&parentID=61&id=358

total expenditures on healthcare in the US surpassed $2200 Bill in 2007 - representing 16.2% of the GDP

so according to your numbers, about $120 Bill of this is due to excessive administration by insurance companies. So if we eliminated ALL of this, the total amount spent on healthcare would drop by 5% - from $2200 to $2080. This would still means we'd be spending about 15% of the GDP on healthcare. So whatever it is that's causing healthcare costs in the US to be so high, you can't just blame it all on the insurance companies.

The only real way to get healthcare costs under control is for there to be some sort of rationing - whether the rationer is the government, an insurance company, or the individual receiving the care. In a single-payer system, the government does the rationing, and is the government really better at rationing than an insurance company? If you're chronically ill or in a catastrophic situation, you have no choice but to rely on someone else to pay for it - but otherwise, the individual should be the one controlling the rationing process.