The cost of healthcare in America

David Brooks tackles the issue and the prospects for real reform in his column today, noting:

There is a great deal of talk about the need to restrain costs. There’s discussion about interesting though speculative ideas to bend the cost curve. There are a series of frantic efforts designed to reduce the immediate federal price tag. Some senators and advisers suggest cutting back on universal coverage. Others have come up with a bunch of little cuts in hopes of getting closer to the trillion-dollar tab. The administration has ambitious plans to slash Medicare spending.

But there is almost nothing that gets to the core of the problem. Under the leading approaches, health care providers would still have powerful incentives to provide more and more services and use more expensive technology.

Atul Gawande explores the issue in considerably more depth in "The Cost Conundrum;" I highly recommend taking the time to read it. The article focuses on McAllen, Texas, which has the highest healthcare spending in the United States:

Americans like to believe that, with most things, more is better. But research suggests that where medicine is concerned it may actually be worse. For example, Rochester, Minnesota, where the Mayo Clinic dominates the scene, has fantastically high levels of technological capability and quality, but its Medicare spending is in the lowest fifteen per cent of the country—$6,688 per enrollee in 2006, which is eight thousand dollars less than the figure for McAllen. Two economists working at Dartmouth, Katherine Baicker and Amitabh Chandra, found that the more money Medicare spent per person in a given state the lower that state’s quality ranking tended to be. In fact, the four states with the highest levels of spending—Louisiana, Texas, California, and Florida—were near the bottom of the national rankings on the quality of patient care....

Complications can arise from hospital stays, medications, procedures, and tests, and when these things are of marginal value the harm can be greater than the benefits.

Until we begin to accept that more medical care is not necessarily better medical care, we're never going to reform our healthcare system in a way that lowers costs, broadens coverage, and improves lives. The incentives are pathological now: order more tests, perform more procedures, make more money. The connection between good medical practice and improving patient health has been broken. I'm not sure when or why this occurred, but I'd place a bet on an overreliance on technology and hypermarketing of the "latest and greatest" to doctors.

And we've lost all perspective on end-of-life care: we've grown accustomed to keeping patients alive at any cost but without any regard for their quality of life. (Previous post on that topic here.)