Cost: News and Commentary

Taxes: U.S. Versus Other Countries

Bruce Bartlett of The New York Times Economix blog reports that when compared to members of the Organization for Economic Cooperation and Development, the United States pays significantly less in taxes as a percentage of GDP. But when the amount that Americans pay out of pocket for health care is added to their total tax expenditures, the U.S. creeps much closer to what other developed nations spend on taxes and health care as a percentage of GDP. Bartlett asserts that Europeans are simply paying for their health care premiums in the form of taxes, while Americans pay out of pocket or in the form of lower wages from their employers.

Medicare Payment Imbalance

A report from the Institute of Medicine (IOM) recommends major changes in Medicare’s regional distribution of payments. Medicare bases its payments to doctors and hospitals on different geographic locations and estimates of how costly they are. But these estimates are flawed for a variety of reasons, the IOM found, among them that the designated regions are so broad that they are economically diverse. This is the first of two reports by the IOM to help Medicare improve the fairness of its payment system.

Medicaid Cuts

Healthcare Economist predicts the worst is yet to come for Medicaid. Despite rising enrollment in recent years, state spending on Medicaid has dropped 13.2% over the past three years. Federal financial support authorized by the American Recovery and Reinvestment Act of 2009 is set to expire on June 30th, and yet the new health reform law requires expanded Medicaid coverage and spending starting in 2014. With these changes, the federal government will struggle to expand services, maintain quality, and slow the growth of health care spending. It will need to control costs by reducing utilization of services deemed to be either unnecessary or not cost effective, such as MRI for minor injury.

Making Doctors Cost-Conscious

The fundamental cause of uncontrollable inflation in U.S. health care costs is the disconnect between “the true consumers of health care dollars,” the doctors ordering the tests and treatments, and “the ones that pay up,” writes Ian Metzler, a Harvard medical student, in The Health Care Blog. Studies have shown that simply including price tags on laboratory tests and radiological imaging does not influence physician behavior, so Metzler calls for “a culture shift in how medicine is practiced and future generations of doctors are trained” if we wish to hold down increasing costs in health care.

Health Savings Accounts: Mixed Results

A recent RAND study found that people with health savings accounts consume less care and spend an average of 14% less on health care costs. Results also showed “concerning reductions in use of preventive care.” Participants who shifted to high-deductible plans cut back on services like childhood immunizations and cancer screenings. Some researchers speculate that the participants might not have understood that their high-deductible plans waived the need to pay a deductible when receiving such care.

Written by Brittany Rush, a visiting scholar at The Hastings Center; Michael Gallinari, an intern; and Ross White, a research assistant.

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One Comment

  1. Rueben Liske says:

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