Nobody in the US public discourse seems interested in identifying and/ or addressing the underlying causes of high and rising health care costs. The Big Idea recently floated in the House of Representatives was to simply cut and cap what could be paid out for Medicare and Medicaid. That might help the government’s deficit problem but it does not at all address the real problem, very high and ever rising costs of everyone’s health care. This morning NPR had a quick blurb about a study published in the Journal of Health Affairs that concludes a big underlying cause is high doctor fees.
The Journal article is here: http://content.healthaffairs.org/content/30/9/1647.abstract
For your convenience, here’s the abstract:
Abstract
Higher health care prices in the United States are a key reason that the nation’s health spending is so much higher than that of other countries. Our study compared physicians’ fees paid by public and private payers for primary care office visits and hip replacements in Australia, Canada, France, Germany, the United Kingdom, and the United States. We also compared physicians’ incomes net of practice expenses, differences in financing the cost of medical education, and the relative contribution of payments per physician and of physician supply in the countries’ national spending on physician services. Public and private payers paid somewhat higher fees to US primary care physicians for office visits (27 percent more for public, 70 percent more for private) and much higher fees to orthopedic physicians for hip replacements (70 percent more for public, 120 percent more for private) than public and private payers paid these physicians’ counterparts in other countries. US primary care and orthopedic physicians also earned higher incomes ($186,582 and $442,450, respectively) than their foreign counterparts. We conclude that the higher fees, rather than factors such as higher practice costs, volume of services, or tuition expenses, were the main drivers of higher US spending, particularly in orthopedics.
The US medical system’s fee for service payment method has been pointed to before as a cost driver because it incentivizes doctors to order unnecessary tests and procedures. The more a doctor orders up, the more the doctor gets paid, so the incentive is backwards for cost control. This study adds the dimension that, independent of expenses, the fees themselves are much higher than comparable fees in other industrialized nations. So a move from fee for service to a salary pay structure not only has a waste reduction potential, but would also right-size excessive doctor fees.
Are there other ways to address this problem, like legislated caps on fees based on benchmarking identical procedures in other industrialized countries? Workable or not, I can hardly imagine a situation in which Congress would even consider price caps on procedures. But is there a free market way to address this problem? How is it possible to introduce competition based downward cost pressures when the competition is in foreign countries?
Worse, recall that before the Medicare Drug prescription legislation, many people were crossing the border to Canada (or mail-ordering via internet pharmacies) to get around the high US drug prices. That looked a lot like market based competition, and the Bush Administration squashed it at the request of US pharmacy lobbies. Certainly the AMA and the like would respond similarly to any attempt to change the status quo of doctor fees, so is this just another non-starter? In my opinion, scrapping fee for service in favor of fixed salaries is one good way to attack a big part of the health care cost problem in the US. But with all the influence our political system lets private entities, especially wealthy private entities, exercise on policy, how can a problem like this ever be addressed?