Leonhardt on Health Care
If David is right, then the question is: What institution will we trust to say "no" to medical procedures that don't pass a cost-benefit test?
The administrative costs of our patchwork bureaucracy eat up about 25 percent of health spending, which is why would-be reformers have long focused on these costs. But they aren’t the main story. Even in Europe’s single-payer systems, administrative costs account for about 15 percent of health spending, once everything is included, according to the Lewin Group, a consulting firm....
So something beside administrative costs is at work here, and it involves a basic cultural difference. Americans seem to be less willing to take no for an answer and more willing to try almost anything, no matter how expensive or how slim the odds, to prolong life. (The United States is also a fatter, more diverse country with wider income disparity, which gives our medical system a harder task.)
There are enormous benefits to the American refusal to go gently into that good night. It has made us obsessed with medical advances and turned this country into the world’s research laboratory. If you followed this year’s Nobel Prize announcements, you may have noticed that every scientific prize went to an American. Even hernia surgery, which has been around for 5,000 years, is now based in significant part on American methods, notes Raymond C. Read, a retired surgeon who has studied its history. Some of our spending, in short, goes to support medical care in other countries.
But much of it is simply wasteful. Expensive procedures — like some Alzheimer’s treatments, some knee surgeries and many body scans — are often no more effective than basic ones, according to research. Yet doctors can keep on getting reimbursed for the expensive ones. “Basically, anything that doesn’t kill patients is paid for by Medicare and insurance companies,” said Jonathan Skinner, a health care researcher at Dartmouth College.