Yesterday’s New York Times has an excellent article, “The $2.7 Trillion Medical Bill”, which uses a detailed analysis of the cost of colonoscopies to show why American healthcare is so expensive. In the U.S. an insurance company pays about $3500 – $4000 for a colonoscopy compared with the cost for the procedure in Europe of between $400 – $800. Also the price can vary enormously, from as little as $665 (in Utah) to as much as $8577 (in New York City). There are all sorts of reasons for this huge variation in cost, for example, whether or not an anesthesiologist is used as well as a gastroenterologist, and whether the procedure is performed in a surgical center rather than in a doctor’s office.
The basic problem, of course, is that in the U.S. nobody is sufficiently responsible for the bottom line. The patient isn’t responsible because the bill is paid by the insurance company. The insurance company negotiates with healthcare providers but the insurance premium is paid by the patient’s employer. If the insurance company has to pay too much in claims one year, then it just raises insurance premiums for the following year.
The problem is getting so serious that it will soon have to be dealt with in a comprehensive way. There are essentially two different ways to proceed. One is to have a single payer system like most of Europe and Canada. Healthcare would be tightly controlled by the federal government which would set prices and ration care. The cost of healthcare would be controlled but we’d be giving up a great deal of personal freedom in return. Basically it would amount to expanding Medicare into a rigidly prescribed national healthcare system.
The alternative is to adopt a new payment system which makes each of us directly responsible for the cost of our own healthcare. The best way to accomplish this is to remove the tax exemption from employer provided health insurance. Health insurance could still be provided by an employer but it would be considered a part of total salary and be taxed as such. Then the employee, as well as any self-employed person, would have a direct personal stake in setting up an efficient health insurance plan to keep the cost of healthcare under control.
Americans put great emphasis on personal freedom and responsibility and I believe that most of us would prefer this latter free market approach to healthcare rather than a single payer system like what most of the rest of the world has!
