Back to High and Rising US Health Care Costs
I recall in one of the health threads a few months back discussing why US health care costs are so high and keep rising. Nobody in the public discourse at the time, or now, seem to be looking for and addressing the cause of the rise. Indeed the big idea floated by conservatives in congress was to simply cut and cap what could be paid out for Medicare and Medicaid. Paraphrasing myself here, that may solve the government's budget probelm, but it doesn't at all adress the real problem we all face: the very high and ever rising cost of health care. So I asked the community here what that cause was and iirc the only one who floated a suggestion was Loki which was that increasing medical technology was the driver of increasing cost. This morning NPR had a blurb about a study published in the Journal of Health Affairs that concludes a big reason we pay so much in the US is higher doctor fees.
The Journal article, which I have not read, is here: http://content.healthaffairs.org/con.../1647.abstract
For your convenience, here's the abstract:
We have previously talked about our Fee For Service payment system in the US as a source of our higher costs, but not in the context of the fees themselves being unreasonably high. In the previous discussions, it was about incentives to order unneccessary tests and procedures. The more a doctor orders up, the more the doctor gets paid, so the incentive is backwards. Here in this study we add to the discussion that, independant of expenses, the fees themselves are much higher than comparable fees in other industrialized nations. So a move from fee for service to a salary pay structure would likely have an even higher cost reduction effect, going beyond reduction of waste but also reducing excessive charges.Abstract
Higher health care prices in the United States are a key reason that the nation’s health spending is so much higher than that of other countries. Our study compared physicians’ fees paid by public and private payers for primary care office visits and hip replacements in Australia, Canada, France, Germany, the United Kingdom, and the United States. We also compared physicians’ incomes net of practice expenses, differences in financing the cost of medical education, and the relative contribution of payments per physician and of physician supply in the countries’ national spending on physician services. Public and private payers paid somewhat higher fees to US primary care physicians for office visits (27 percent more for public, 70 percent more for private) and much higher fees to orthopedic physicians for hip replacements (70 percent more for public, 120 percent more for private) than public and private payers paid these physicians’ counterparts in other countries. US primary care and orthopedic physicians also earned higher incomes ($186,582 and $442,450, respectively) than their foreign counterparts. We conclude that the higher fees, rather than factors such as higher practice costs, volume of services, or tuition expenses, were the main drivers of higher US spending, particularly in orthopedics.
Are there other ways to 'right size' the fees we pay doctors? Maybe there ought to be legislated caps on fees based on benchmarking what is commonly paid in a variety of other countries. I am already imagining the response from TWF's majority cadre of conservative free marketeers. But is there a free market means to address this particular problem (assuming you accept it is a problem)? How do you use the fact that doctors get paid a lot less in other countries, independant of costs remember, as a means to drive down unreasonably high pay in the US?
I recall that prior to the Medicare Drug Perscription legislation, many people were crossing the border to Canada - or mail ordering via internet Pharmacies - to get around the unreasonably high price of drugs in the US. That looked a lot like market based competition, and the Bush Administration squashed it at the request of US pharmacies. Is the AMA, or whatever other medical doctor professional association, that powerful too? Is this a route to reducing our excessive health care costs or just another non-starter? With all the influence our system of government lets private entities, especially wealthy private entities, exercise on policy, how can something like our health care cost problem ever be fixed?
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Originally Posted by Lebanese Dragon
Wish I could read the paper. 
Getting rid of "middle men" has long been known as a way to reduce costs. Just ask Sam Walton. You can try to call them compliance costs, but they're really just added and superfluous transfer fees. Doesn't matter if we're talking about Walmart t-shirts or dermatologist mole removal. Whenever there are "middle men" using intermediary steps, a new cost will incur. Wholesale vs Retail. 
Sam Walton was the classic NON middle man. He had his own truckers, trucking company, and distribution centers. If he didn't like prices paid for name brands like Coke or Pepsi, he started his own generic brand. If Coke or Pepsi balked at that, they knew not to make a fuss because of Walmart's aggregate national sales power. Even if Cokes or Pepsis sold at one cent over production costs, it would still bring them millions of profits. That's why Walmart thrived and grew---wholesale prices at retail convenience.
Noted.