Succinct Two Pages on Why American Health Care Costs So Much

Victor Fuchs has summarized the difficult problems in controlling health care costs in two pithy (if ill-titled) pages in this week's Journal of the American Medical Association (JAMA). (Harvard link) (Non-Harvard Link) He points out that cost shifting (like mandating rating health insurance by health status) might make insurance less costly for the sick - but would also make health insurance more costly for those enjoying good health. This cost shifting might be good in terms of equity, but it could also lead to some healthy people dropping out of the health insurance system altogether.

Fuchs' eight root causes for our high health care costs compared to other 'developed' countries:

1) High administrative costs

2) More specialists and fewer primary care physicians

3) More "stand-by" capacity

4) Open-ended funding (no overall budget for health care)

5) Malpractice

6) Less social support for the poor

7) Higher drug prices

8) Higher physician incomes

I can't say I agree with these 100% (I would have listed fee-for-service payment system separately, as well as the lack of integration of the health care delivery system. ) Many economists also list first-dollar coverage, but Fuchs does not and I agree - since most developed countries have much lower patient cost-sharing than the US.

It's rare to read two pages that say so much.