Health Cost

http://www.techcentralstation.com/032105B.html
The Myth of Massive Health Care Waste
By Arnold Kling
Published
03/21/2005

Arnold again produces an excellent exposition. It does not matter that the Author disagrees with his basic premise:

only 1/3 of U.S. health care spending is for people 65 and older. Thus, as a percentage of overall U.S. health care spending, spending on the last year of life amounts to about 7 percent

even if we emptied the nursing homes and spent nothing on patients in the last year of life, this would still reduce our health care spending as a proportion of GDP by only 1 percentage point, which would keep it several percentage points above the level in other countries. Contrary to myth, the magnitude of what the United States spends on patients in the last year of life is not a factor in our excessive spending relative to other developed countries

total profits of pharmaceutical companies are about one-half of one percent of GDP. In the short run, stringent price regulation could reduce health care spending by perhaps one or two tenths of one percent of GDP. The long run effects of reducing the incentive to develop pharmaceuticals could be adverse, because pharmaceuticals often substitute for more expensive therapies

Physicians are paid more than twice as much in the United States as in other developed countries. Because physician services are about one fourth of all health care spending, we could eliminate one eighth of our health care spending by reducing doctor salaries to the levels of other countries.

The essay is well work the effort to read, and presents links to materials well worth reviewing. It can hold another interpretation though. The Author will now present a Counterpoint(by the way, the Author considers Arnold Kling as a good friend, and he is one of the best Bloggers on the Net):
=====================
One-third of American health care is spent on Seniors over 65 years. It remains true that the numbers of Seniors have increased, due to the fact more of them reach Age 65. Arnold's contention states they reach this Age in greater numbers because of the more-extensive health care provided. The Author can contend that Seniors reaching Age 65 are only about 55% as healthy as before introduction of Medicare and Medicaid, when ratio comparisons are made to the health dollars spent to get them to this Age.

Is there overuse of diagnostic procedures? One evaluation of diagnostic use comes in percentage find of adverse health discoveries. American diagnostic procedures find less than 20% frequency of adverse health discoveries by this Author's own estimate, and he could guess a frequency rate less than 5%, but really possesses no sound statistical data. He needs an effective Study provided by some medical economist. Such a low percentage of frequency discoveries, though, would clearly outline use of diagnostic procedures without definable symtoms suggesting their usage.

Pharmaceutical companies(prefer Drug companies, the Author always has to check Spelling) Profits are only a slight percentage of GDP, it is true, but Wages, Salaries, Bonuses, and Benefits remain much higher within Drug companies compared to corresponding personnel in industries outside the Health Care Sector. Most medical economic estimates of Drug Patents suggest Cosmetic Patents, which do not really provide greater health benefits, are extremely high in percentage number with much higher Pricing structure, though Production Cost structure has not changed substantially.

Are Physicians paid too much? Life-Threatening events make up only a small fraction of their treatment schedules--probably less than 20%. Corrective surgeries and procedures probably make up about another 20%. Their remaining treatment schedules are consumed with Diagnosis and Treatment of illnesses. One methodology of evaluation is comparison of Workdays lost to illness against other Countries, or against previous medical practice(common use pre-1965). Another measure is Follow-Up Patient Visits in comparison with past performance or other Countries. American Physicians today tend to show up badly in these comparisons.

Waste in Health Care is a extreme Expense, and could significantly reduce Medical Costs if eliminated by strict Control procedures; this would mean true supervision of medical practice by Others, not Doctors. Sorry Arnold, but the Author disagrees. lgl