One thing we can all agree on is that Americans spend too much on medical care. When a brief visit to the emergency room can cost several thousand dollars or a course of a new cancer drug runs $100,000, there can be no doubt that costs are out of control. Many people do not think they're footing these bills, because some 85 percent have insurance. But they are, really, by sacrificing income that could be used for other needs like school tuition in exchange for a bloated employer benefit. Putting it starkly, Americans now spend more on healthcare each year than on food.
I was expecting that last week's highly touted health summit and the president's own new health reform package would tackle this reality. I was hopeful that he would wow us by delivering on his earlier promise to reduce spending on healthcare by $2,500 per family. But that promise has clearly been forgotten. Instead, the president offered health reform that is largely a rehash of the Senate's trillion-dollar bill—except that the Obama version would tax even more and spend more to fatten Medicaid to quiet angry governors and protect from excise taxes expensive Cadillac health plans (ranging up to $27,500) favored by unions.
America's sky-high healthcare spending must be brought down to earth, not soar further. I'm convinced that this can be done. How? If our opaque and often secretive health-payment system were made transparent, the ground would be laid for consumers to find better premiums and prices for their families. One way to do this would be through open, fair, and guaranteed access, for any citizen, to competing insurers anywhere in the country. These steps could easily get all providers of healthcare products and services to reduce—yes, reduce—their prices by, say, 5 to 10 percent for starters. Any company or any family knows how to do this in times of belt tightening. This move would also free up resources to help subsidize affordable care for those who lack it.
What convinces me that breaking the healthcare cost curve is doable is not the rhetoric of the summit but rather the mounds of data on health spending that show it's not profligate overuse of hospitals and drugs or neglect of preventive care that accounts for higher medical costs here than in other countries. Yes, Americans' care is often more intensive and specialist driven (and to my mind, often better). But the real problem is that our prices are vastly inflated over what they can and should be. In a report comparing U.S. health spending with that in other developed countries, the Congressional Research Service showed that for virtually every medical service or product, Americans pay more. The same coronary bypass operation, abdominal aneurysm repair, or hip surgery will cost twice as much in the United States as in Canada. Americans pay the highest prices in the world for pharmaceuticals, averaging $878 per person per year versus $461 in Europe. That is a big reason that America spends more than 16 percent of its gross domestic product on healthcare, compared with Europe's average of 9 percent. There is a lot of room for lowering prices.
[One big problem: The true prices charged are often a secret.]
America's prosperity and rising GDP have enabled us to ignore the cost of health benefits mostly obscured in pay stubs. But the recession, the jobless rate, and the threat of expanded government intrusion in the health system force a largely unexplored question: Why can't America offer healthcare to its citizens that's both better and cheaper, as it has with everything from computers and telecommunications to food and clothing? An obvious answer is that contrary to what is often said, there is no free market in medicine where prices are known and where patients can shop around for what's best for them at the best price.
That's too bad, since Americans are good shoppers if given the chance and the financial incentive. We've seen this time and time again when patients pay for care themselves. Elderly Americans are the ones who tipped most of the country off to the excessive cost of prescription drugs when, despite government disapproval, they boarded buses to buy their drugs cheaper in Canada. Americans also manage to pay the lowest prices in the world, by far, for over-the-counter drugs, whose prices are known. Efficient walk-in clinics run by nurse practitioners with reasonable published prices are gaining traction among consumers. And prices for cosmetic surgery and LASIK procedures that patients pay for themselves have fallen even as the technology has gotten better.
Right now, there are no good incentives for this to happen for medicine covered by insurance. But if prices were driven down by transparency and technological development aimed at affordability, then the fact that U.S. medicine is state of the art and technology rich could remain a focus of great pride instead of criticism. Though not often said these days, American medicine is still the best in the world, driven by major investments in medical research and incredible innovation. (As the old saw goes, "Everywhere else in the world death is inevitable, but in America it's only an option.")
Whether it is in the emergency room or an intensive care unit or on the general medical floor, American patients have readier access than do patients elsewhere to specialists who use more technology (a good thing only if it's used properly, of course). An American patient with a heart attack is more likely to have his coronaries fixed by surgery or angioplasty and risky heart rhythms managed with a pacemaker and internal defibrillator. This kind of care is not reserved for the Clintons or the Cheneys but is there for all patients, with or without insurance. And contrary to what is often believed, the United States has long been prevention oriented, spending four times what other nations do on warding off disease and detecting it early. America has among the lowest rates of smoking and alcohol abuse. And our efforts to aggressively screen for cancer have resulted in among the best cancer survival rates in the world. For breast cancer, we're No. 1.
Whether for prevention or therapy, it's inbred here that doctors do whatever is needed to save a life. They are trained not to give up, within reason, and not to say categorically that this man is too old or this woman too feeble to justify the cost of care. We recognize that circumstances differ, and such decisions are made up close and personal and not as a matter of state.
We have our problems, too. And that some Americans are lacking affordable health insurance is one of them that must be addressed. Bringing down, not just slowing down, bloated healthcare prices is part of that solution. It would be historic, for every family in America.