Why is medical care so expensive?

I just submitted this as a letter to the editor for the Wall Street Journal. Feel free to cross post. We need to change the discussion.

-t

A journal (1) article published in 2002, estimated the total health care costs in this country to be just over 1 Trillion dollars a year. Dividing that by 300 Million people we come up with $3,333 per person, per year or $277 a month. 20% of health care costs are for ICU care, which typically make up 1% of the beds in an average hospital. Daily ICU costs range from $2,000 - $3,000 per day in the US. (1996 figure).

In contrast, lets take a look at costs as outlined in a 1991 book called “Care of the Critically Ill Patient; In the Tropics and Sub-Tropics”. Chapter 10, starts out with a cartoon titled Intensive or expensive care? On one side is a village hospital, and on the other is a big sign declaring: “Site Reserved For New EXPENSIVE CARE UNIT”. The book breaks down ICU beds into 3 levels:

Level 1 Care: $40-50 per patient, per day, with most of the cost due to infusions and drugs.
Level 2 Care: $100 per patient, per day.
Level 3 Care: $500-1,000 per patient, per day.

Compare those numbers to the US cost of $2,000 - $3,000 a day!

Here's a breakdown of what is included in each level:

Level 1 – basic monitoring of the pulse, blood pressure, respiration, temperature, consciousness level and urine output. The patient can be turned, infusions are supervised, nasogastric feeding given, and intubated patients suctioned.

Level 2 – provides mechanical ventilation and cardiac monitoring in addition to what is in level 1.

A 10 bed ICU with 5 level 1 beds and 5 level 2 beds cost $76 per patient, similar in cost to a night in an international hotel.

Level 3 – was considered inappropriate in other than teaching institutions and central referral hospitals. It adds facilities for total parental nutrition, haemodialysis, cardiac pacing, Swan-Gane catheters and CT scanning.

A Congressional Representative on the House floor gave the example that prior to the early 1960's, you could get 9 months of prenatal office visits and have the child delivered for $60. Today, that same care will cost you between $3,000 and $12,000 depending on if you use a midwife or a OB/GYN.

At one of the town hall meetings, a doctor in the audience related that he used to be able to do WBC counts (White Blood Cell) in his office for $12 a test and get results quickly. Medicaid and Medicare came out with new regulations preventing him from doing that, so now he has to send all tests out. This test now costs $70 and he has to wait 3 days to get the results.

Prior to the FDA getting involved with drug approval, it took 2-3 years between invention and market. There really were no safety or quality problems and drugs were cheap. Today it can take up to 12 years to get a drug approved and the cost of that process has skyrocketed. A fact drug companies use to justify very high drug prices. Americans pay more for pharmaceuticals than anyone else in the world.

Medicare was predicted in 1967, by the House Ways and Means Committee to cost $12 Billion in 1990. instead it cost $110 Billion. Now it costs $440 Billion and we are being told that putting the government in charge of all healthcare will reduce costs. Drugs are a major cost, but PHARMA struck a deal with the administration to give a discount on them for 10 years. This “discount” turns out to be 2.77% of what is spend on drugs per year. Practically unnoticeable.

Reducing the number of tests is brought up, yet this is due to the practice of defensive medicine as too many in this country consider any encounter with the medical profession as a chance to win the lottery. In many other countries you can purchase just about any drug over the counter, there are few to no regulations, no lawyers looking to sue the practitioner and no insurance companies. Care is often provided by people with lower levels of training and people are grateful that someone is trying to help them - not looking to "get rich quick". Health care in these places is inexpensive. Yet, medical tort reform, the number one item identified by the medical community for high costs, is not even being considered for discussion.

Why isn't anyone asking why medical care is so expensive in this country? The current debate is about how to pay for expensive medical care. We should be looking for ways to reduce the cost of medical care to a level where routine things could be covered out of pocket, and insurance used only for catastrophic situations. This is how things used to be.

The current discussion is an exercise in misdirection. It doesn't matter if we get the public option or not, as a government committee will decide what care will be available and what not. The insurance companies will be forced to conform to the coverage plans this committee comes up with and we will be forced to buy it. This bill will result in more taxes, more government control of your life and less access to health care. Don't be fooled. Point out that the emperor has no clothes and do so often. Start a real discussion about why health care is so expensive.

(1)Luce, J. and Rubenfeld, G., “Can Health Care Costs Be Reduced by Limiting Intensive Care at the End of Life?”, Am. J. Respir. Crit. Care Med., Volume 165, Number 6, March 2002, 750-754