Government Accounts for 44% of all Health Care Spending

[Toro]

Since healthcare has become a topic of high interest as of late, it is important to have as many facts as possible before we come to a good conclusion.

These figures a bit old but things have not changed much in the past five years. It should be noted that the government at all levels is the single largest payer of health services, with the government accounting for 44% of all expenditures.

http://www.cdc.gov/nchs/data/hus/hus05.pdf#page=380

Private health insurance is 36%. Out of pocket expenditures - what people pay themselves - is 16%, and all other private expenditures - primarily charity - is 4%.

50 years ago, over half of all payments came from out of pocket. Now, $1 out of $6 is actually paid for by individuals.

Thus, the government already is a large player in health services.

 

[Oddball]

O.K....So gubmint has become a larger and larger payer in the marketplace, and costs have only gone up??

Now, absent rationing, how is a total takeover supposed to bring costs down, again??

 

[Toro]

Government healthcare would not stop prices from rising. The main reason why healthcare costs are rising is because the marginal cost of extending life is disproportionally high. However, a large part of a doctor's or hospital's resources goes to dealing with many different insurance companies, more so in the US than anywhere else, I believe. Economies of scale will lower the growth rate somewhat, all else being equal. Of course, its never all else being equal.

 

[Oddball]

When the primary player in said economy of scale involves an entity that pays no economic penalty for inefficiency or ineptitude (guess who), then the model is of dubious merit, at best.

 

[Toro]

It depends.

Most countries are generally happy with their government-subsidized healthcare and pay far less than America.

http://www.kff.org/insurance/snapshot/chcm010307oth.cfm

There are a number of reasons for this, of course, but generally, the healthcare system has to respond to political pressure if people are unhappy with the system because they will vote the politicians out if they don't respond.

 

[Oddball]

A lot of what Americans pay is because we still can.

Take out the elective procedures, and I'll bet you a dollar to a dog biscuit that the "most expensive health care in the world" rhetoric is exposed for the bullshit that it is.

 

[Toro]

Elective procedures are part of it, but only part. The paperwork is huge. The number one reason why Canadian doctors in America go back to Canada is because of the amount of time and resources they have to spend on back office nonsense dealing with insurance companies. Another reason is the 15% ROE that healthcare insurers have to earn.

But a big part is also that much of the cutting edge research in healthcare is capitalized in the US first, and once developed to scale, is purchased in larger quantities outside of the country. For example, when Avastin first came out, treatments cost $20,000, which medical insurance outside the US would not pay. But these early-stage treatments are critical to establishing a market so that economies of scale can lower the cost of the product. Once Avastin established a market and Genentech grew more profitable, they were able to lower the cost for Avastin. When costs are lowered, countries outside the US started purchasing the drug in greater scale. Thus, the rest of the world benefits from the US's ability to absorb the costs of early-stage development, and there is a transfer of wealth from the US to other countries.

 

[Oddball]

Uh-huh....And what percentage of those costs are involved in the exorbitant expenses it takes to pass FDA muster??

 

[Toro]

The cost of developing a new drug is something like $300-$400 million.

But you have to weigh that against potential lawsuits without the FDA. Lawsuits have risen into the billions of dollars for drugs that have passed the rigorous process of FDA approval. There would be multiple times more without the FDA, and probably hundreds of billions more in claims against drug companies.

 

[dilloduck]

It depends.

Most countries are generally happy with their government-subsidized healthcare and pay far less than America.

Snapshots: Health Care Spending in the United States and OECD Countries - Kaiser Family Foundation

There are a number of reasons for this, of course, but generally, the healthcare system has to respond to political pressure if people are unhappy with the system because they will vote the politicians out if they don't respond.

There are countries that can actually get rid of shitty politicians ?????

You're pulling my leg right ?

 

[Oddball]

The cost of developing a new drug is something like $300-$400 million.

But you have to weigh that against potential lawsuits without the FDA. Lawsuits have risen into the billions of dollars for drugs that have passed the rigorous process of FDA approval. There would be multiple times more without the FDA, and probably hundreds of billions more in claims against drug companies.

It's in excess of $500 million...And that doesn't even count new equipment or procedures.

Saying what "might" happen in the absence of the FDA is a red herring and totally unprovable. Moreover, FDA approval didn't stop the makers of Vioxx or Fen-phen from getting sued.

 

[Toro]

There are countries that can actually get rid of shitty politicians ?????

You're pulling my leg right ?

And your experience as a voter in countries where the government is the primary source of healthcare is what?

 

[Toro]

It's in excess of $500 million...And that doesn't even count new equipment or procedures.

Saying what "might" happen in the absence of the FDA is a red herring and totally unprovable.

No more unprovable than the drug companies would flood us with all these cheap and wonderful drugs without the FDA.

 

[dilloduck]

There are countries that can actually get rid of shitty politicians ?????

You're pulling my leg right ?

And your experience as a voter in countries where the government is the primary source of healthcare is what?

Zero-- I've only tried to vote out shitty politicians in America. It doesn't work here.

 

[Oddball]

[\
No more unprovable than the drug companies would flood us with all these cheap and wonderful drugs without the FDA.

That's quite a leap...When did I ever imply that??

 

[oreo]

After freddie/fannie--social security/medicare--all government programs--all screwed up by the government.

And there are people who still trust the government with the management of their health care?

Three times bitten--20 times shy--Not me--the government has proven time & time again how incompetent they are at manageing anything.

 

[auditor0007]

O.K....So gubmint has become a larger and larger payer in the marketplace, and costs have only gone up??

Now, absent rationing, how is a total takeover supposed to bring costs down, again??

Of course costs are going up and Medicare is eating up a larger percentage of healthcare costs than ever before. The reasons are obvious and have nothing to do with Medicare itself costing too much.

In 1970, the average lifespan in the US was 70.8 years. Today it is over 77.8 years. That is seven more years per retiree needing medical care, for every sick retiree in this country. Secondly, not only are there more retirees than ever before, but they are becoming a much larger percentage of the overall population.

The biggest problem with Medicare, as well as SS, is not the programs themselves, but the simple fact that people are collecting from them for much longer than was ever expected or planned for. When these programs were instituted, people retired at age 65. On average, they only burdened the system for a little over five years. Today, people still retire at age 65, but now they are recipients of the system for a bit over twelve years. That is a huge difference, and one of the easiest solutions is to work it so employers are willing to retain older employees longer and making people eligible for these benefits at a later age.

 

[auditor0007]

Elective procedures are part of it, but only part. The paperwork is huge. The number one reason why Canadian doctors in America go back to Canada is because of the amount of time and resources they have to spend on back office nonsense dealing with insurance companies. Another reason is the 15% ROE that healthcare insurers have to earn.

But a big part is also that much of the cutting edge research in healthcare is capitalized in the US first, and once developed to scale, is purchased in larger quantities outside of the country. For example, when Avastin first came out, treatments cost $20,000, which medical insurance outside the US would not pay. But these early-stage treatments are critical to establishing a market so that economies of scale can lower the cost of the product. Once Avastin established a market and Genentech grew more profitable, they were able to lower the cost for Avastin. When costs are lowered, countries outside the US started purchasing the drug in greater scale. Thus, the rest of the world benefits from the US's ability to absorb the costs of early-stage development, and there is a transfer of wealth from the US to other countries.

This has been my biggest beef with our Federal Government and the pharmaceutical companies. We have been and continue to subsidize the rest of the world when it comes to drugs, and we're just fine with that, but then we bitch about the high cost of those drugs. The same way we subsidize the rest of the world with our outrageous military spending, we do the same with the drug companies.

 

[KittenKoder]

 

[Political Junky]

Uh-huh....And what percentage of those costs are involved in the exorbitant expenses it takes to pass FDA muster??

Would you choose to eliminate the FDA?