So -- Why does healthcare cost so damn much? (warning: novel-length post)

#1

milohimself

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#1
Big question. Most of us try and narrow it down to one or two chief factors. As with many things in life, to do that is really ignoring the cause of the problem and latching on to one or two things you really disagree with. Let's see what the deal really is...

Since the sharp rise in technological health care innovation in the 90's, the cost of healthcare has gone up at roughly 4-4.5 times the rate of the consumer price index.

First -- What's killing people?

All the way back in 1900, the leading cause of death could be broken down as such:

1900 (life expectancy at 47.5 years, mainly due to high infant mortality)
Pneumonia - 11.7%
Tuberculosis - 11.3%
Diarrhea - 8.3%
Heart disease - 8.0%
Stroke - 8.0%
Liver disease - 5.1%
Injuries - 4.2%
Cancer - 3.7%
Senility - 2.9%
Diphtheria - 2.3%

2009 (life expectancy: 78.3 years)
Heart disease - 34.1%
Cancer - 30.2%
Stroke - 7.5%
Emphysema - 6.7%
Injuries - 6.4%
Alzheimer's - 3.9%
Diabetes - 3.9%
Pneumonia/flu - 3.1%
Kidney disease - 2.4%
Sepsis - 1.8%

So, what do you notice? In 1900, and up to the 50's really, lifestyle diseases and age diseases weren't really complicit in killing all that many people to how things are now. As of a couple years ago, the amount of us making it through birth and on to a late age is astoundingly higher than even in our grandparents generation. It's pretty incredible, really, but consider the treatment required to deal with today's leading killers.

Today, some of the leading causes of death are heart disease, cancer, stroke, chronic respiratory diseases, unintentional injuries and diabetes. These are the listed causes of death, but what are the actual causes of most of these? Tobacco use, poor diet*, lack of activity*, alcohol consumption, microbial agents, toxic agents, motor vehicle accidents, firearms, sexual behaviors and illicit drug use (* these two are estimated to have been the primary cause in 35% of all deaths in 2008)

Let's focus in on diet and exercise. That's a lot of deaths, but is it spread out evenly across the country? Not really:

us+life+expectancy+map.bmp


I love southern cooking as much as the next guy, but let's not kid ourselves about how it is for your health. Clearly, this relates to obesity trends.

z213067204.jpg


And how does this relate to health? Nine of the ten states in the south are in the top ten in terms of obesity in the US. All ten states in the south are the top ten states for per capita cases of diabetes and hypertension (obesity-related issues were related to 9.1% of all medical spending the US in 2009)

And what else are we talking about with obesity? In my estimation, soda is the biggest deal we're looking at these days. Soda consumption has gone up 300% in the last 20 years. More than 75 gallons of soda are consumed for every man, woman and child per year.

Picture4.png


That's a lot. Right now, the average American consumes 165 lbs of simple sugars per year. How does that compare to diets of the past?

1910 - 4lbs/year
1986 - 127lbs/year
2005 - 148lbs/year

Why was it such a big deal when supersized meals were facing legislation? Among all fast food restaurants, sizing up usually costs about $0.67 per meal. In turn for that 17% increase in price, you get 73% more calories (the empty ones, at that).

This is how everything adds up:

Obesity rates:
33% among American adults
17% among European adults

The health impact of that is that the average American adult is 50% more likely to experience unhealthy high blood pressure or diabetes in their life, and twice as likely to develop heart disease or arthritis.

So, what's the cost impact of all this?

Average US annual medical bills:
Obese patient: $4,871
Healthy weight patient: $3,442

And who pays for all of this? Insurance companies and public health care options. Much more often than not, this cost in put on all of us.

And how do we stack up?

bodybuilding_vs_obesity_a.jpg


Why does this happen?

There have been literally volumes written on this, but the reality is that for most of us, the unhealthy option is far, far easier than the healthy one. For instance, my drive to work is almost 2 miles on the dime through Portland's central east side. On my way to work, I pass two Popeye's Chickens, two McDonald's, two Burger Kings, a Taco Bell, a Wendy's, a Burgerville, two drive thru Starbucks and ONE grocery store. Anything wrong with this picture?

Personal responsibility is at the core of the issue here, but to those of you that believe the issue ends there, I will point out to you the proliferation of fast food, soda and fry consumption and obesity in this country. That's fine if you believe it ends there, but all you'll end up doing is riding this wave of medical costs, whether or not you're making good decisions for yourself.

The other thing that goes overlooked is what people think about this:

When asked about the contributing factors in a KFF poll, only 29% of respondents cited unhealthy lifestyle choices as a major contributing factor i.e. "It's not my fault, it's all those other culprits."

44% of respondents said they shouldn't bear any part of responsibility for their healthcare.

And the best one of all...

90% of respondents described their diet as healthy. :crazy:

Let's take a look at the end result. Remember that obesity map?

z213067204.jpg


Compare that with the life expectancy map:

us+life+expectancy+map.bmp


What other areas of health care does this touch on?

So, as most of us know (some don't accept it) the vast majority of the civilized world considers two outcomes when looking at the level of social development for a country: Life expectancy and infant mortality. If you don't choose to believe it, that's a discussion for another thread, but just roll with me for a bit here.

Utilization of health care during child birth -- cesarean deliveries:
15% of all surgeries performed in the US
32% of all US hospital childbirths in 2007, up 50% over the prior 10 years
10% of all cesarean births are done upon mother's request with no necessary medical reason
Yet, according to a study of six million US hospital births, the mortality rate among voluntary c-section was 1.77/k, and only 0.62/k. Women are nearly three times more likely to lose their child during c-section, yet more and more are voluntarily opting for it. Why?

And our health does have a direct cause on premature birth rates.

Preterm births:
US: 12.3%
Vermont (best state in US): 9.5%
Canada: 8.2%
Europe: 6.2%

What are the direct, traceable, scientifically indicated causes of premature birth? Income level, lack of prenatal care (no insurance, poor education), obesity, diabetes, high blood pressure, fertility clinics, multiple embryos

What are the results of preterm births?
Brain damage, intellectual disabilities, blindness, hearing loss, etc.

These all amount up to unnecessary, avoidable additional cost to our healthcare system through utilization.

When is enough enough?

I touched on in vitro fertilization earlier. The practice is how 'octomom', for instance, gave birth to all 14 of her kids. She recently told Oprah she's starting to regret her decision to have all those kids. Ya think?! If she wasn't able to get appearance fees for $100,000, or appearances on Oprah, etc., she'd be on the government tit. She raises all her kids full time and still has to employ three nannies and spend $1,000 a month in groceries.

This all points, however, to excessive in vitro practices, and the bottom line is that it costs all of us money to prop it up. It's a wonderful practice, don't get me wrong, to give a women the ability to bear children who couldn't do so otherwise, but there are some piss poor ethics behind this, on part of doctors and patients for selfish reasons.

Next, technological development.

Tech development has done some great things. For instance, Providence St Vincent here in Portland has one of five particular MRI machines in north America and IIRC the only one on the west coast, which allows for an MRI to be performed in the middle of brain surgery, which is incredibly helpful. That machine costs $5,000,000.

There's other great stuff, like the Heart Pump II, which is used while somebody waits for an available heart transplant. It provides a 58% survival rate over the course of two years. Pretty widely used device. How much does it cost? $125,000: $80k for the pump, $45k for the surgery.

But is technology always the new answer? Consider the CT scan:

In terms of radiation exposure:

1 head CT scan = 30 chest x-rays
1 chest CT scan = 119 chest x-rays
1 abdomen CT scan = 234 chest x-rays

The CT scan, while saving thousands of lives, has also been a major cause in the doubling of average radiation exposure since 1980. The CT scan has been an estimated cause of 29,000 new cases of cancer and 14,500 deaths per year. Getting two CT scans gives one the same amount of radiation as if they stood two miles away from ground zero at Hiroshima. Yet since 1990, the proliferation of CT scans has gone up astronomically.

New technology has its uses, but sometimes, like this one, it comes with an extreme amount of cost, both monetary and otherwise.

Yes, lawyers are in on this party too.

It is currently estimated that 30-40% of all health care provided in the US is unnecessary, either by the approach of the patient being 'worried well' (overtreated), or the physician practicing 'defensive medicine.' A 2010 USA Today poll of 600 cardiologists revealed that nearly a quarter have ordered invasive heart operations only because they feared lawsuits. Think about the excessive costs with that.

Then, there's an extreme when over utilization becomes out of control. I've got a newspaper clipping around (can't find it) that found nine different people in Austin making nearly 3,000 trips to the ER over the span of just a year, at a cost of nearly $3million which was of course picked up by charity, the hospital, insurance and Medicaid. Eight of the nine people were found to have serious drug addiction issues. ER visits have gone up incredibly because of drug abuse; Rx drug abuse kills two people every hour, and sends 40 people to the ER every hour of every day.

So there's good news and some not so good news. Our ability to treat all these lifestyle diseases has gone up tremendously recently. For instance, the death rate from heart disease has gone down 50% since 1990. However, the cases still keep piling up. One of my favorite old sayings is that an ounce of prevention is worth a pound of cure, yet many people in the US view their own health like a credit card.

Discussion of this topic without mentioning 'death panels' is impossible. I know this is a common talking point among pro-privatized health proponents when talking about the ills of socialized healthcare in the UK.

O noez! Not everybody can get the care they need when they need it? Answer is: NO. This has absolutely nothing to do with which type of system you prefer, it has to do with the fact that no healthcare system will allow every single person to get every single procedure they want without imposing huge costs on the system. Remember that baby in Texas that was essentially born with no brain? The doctors said no way the kid was gonna live more than a few months without extensive and MASSIVELY expensive cost, yet the baby is cared for. Is incurring hundreds of thousands of dollars of cost to get a few extra weeks, maybe months, of life with no improved quality of life worth it? But more importantly, can we pay for something like that every time?

A friend of mine had that issue recently, his aunt had a terminal diagnosis of breast cancer and another, I forget which. They told them if they purchased a very amount of expensive care, they could increase her prognosis from six months to twelve, with no improved quality of life, she would be bed-ridden. They were faced with clearing out their family savings to do this.

Again, I'm not making this a RTL issue, I'm asking: Can we afford to keep every single person alive for as long as possible every single time a terminal diagnosis is given?

Prescription drugs

This one's a doozy. There's a couple things to look at.

Firstly, the US is the only developed country on Earth which does not have price controls for pharmaceuticals. On average, you'd pay fifty cents on the dollar for the same drugs you get here. The VA is the only organization in the US which is allowed to do this. Secondly, due to other factors, such as the US being only one of two developed nations on Earth which doesn't outlaw direct to consumer pharmaceutical advertisements, makes the retail cost of drugs not correlated to development costs.

I don't have the exact numbers in front of me, but when you spend $100 on a drug, $22 goes to profit margins (an extremely high rate) and $13 or $16 goes to marketing costs. More yet goes to highly paid reps and salespeople. Drug company execs have been on record saying they'd love to cut these costs, but the US drug industry is essentially an oligarchy, and to be the first to give up market voice or profit margins would be to run yourself out of business.

There's something that's not often discussed here, though: Generic counterparts. Nearly 80% of all drugs available in the US have a generic counterpart, yet due to a combination of marketing and old wives tales, many still think the name brand drugs are better than the generics. Still, these generic drugs, without the cost of R&D, can produce the drugs at such a cheaper price that drug companies often pay generic manufacturers to delay release of a drug past patent expiration. FDA and congress estimate this practice costs the American consumer 3.5billion per year.

The marketing machine doesn't stop there, unfortunately. Another common occurrence to happen lately is development of a new drug without any significant new areas of disease being covered; there is little or no R&D costs associated, but they can be heavily marketed and purchased because of marketing influence. This is wasteful spending.

So, to review, why is health care so damn expensive?
- Poor personal health habits
- Aging baby boomers
- Technological innovations
- The uninsured
- Increased/irresponsible utilization
- Prescription drugs
- Resistance to any reform


Reform... Hmmm...

We're not looking at a socialist system here. What we've got on the table at the moment is a system of complete participation, like they have in Switzerland. When you add the uninsured, nearly all of whom are above the poverty line (if they weren't, they'd be on Medicaid) into the insurance pool, costs go down for everyone. The people who need healthcare most are typically those least able to be able to pay for it, while the people who need it least are most able to pay for it. If a large portion of people are voluntarily uncovered by insurance, it drives up costs for the rest of us.

But as I mentioned it comes down to personal responsibility and choices. But individual choices are made within social contexts. Some serious rethinking needs to be done so we can get more people in a place to be making smarter decisions with their health.
 
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#2
tl;dr

Just kidding, Milo. Great read. It's a complicated issue. That's, uh, evident.

Most aspects of American culture are conducive to being fat. Millions of Americans are glued to their desks and smartphones for hours each day. It is much easier to eat unhealthy food for low cost of this to eat a healthy and wholesome meal. There seems to be a correlation between obesity rates and poverty rates, and that backs up the fact that cheap food is generally unhealthy.

The problem is the most Americans probably aren't even willing to try to lead a healthier lifestyle due to the effort involved in learning and practicing a healthier lifestyle.
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The problem is the most Americans probably aren't even willing to try to lead a healthier lifestyle due to the effort involved in learning and practicing a healthier lifestyle.
Posted via VolNation Mobile

It's not a problem.

They eat their fat asses to death and the world moves on.
 
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We're not looking at a socialist system here. What we've got on the table at the moment is a system of complete participation, like they have in Switzerland. When you add the uninsured, nearly all of whom are above the poverty line (if they weren't, they'd be on Medicaid) into the insurance pool, costs go down for everyone. The people who need healthcare most are typically those least able to be able to pay for it, while the people who need it least are most able to pay for it. If a large portion of people are voluntarily uncovered by insurance, it drives up costs for the rest of us.

Responses to this will be interesting.

It makes sense to me, but in all honesty, I'm not sure what the solution is. It is almost a question of universal coverage vs. quality of coverage.
 
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I saw an interview with the Chancellor of Switzerland discussing what was happening. They were actually undergoing a similar set of problems as us; they had a relatively high rate of uninsured, rising costs, a fairly powerful pharmaceutical industry and relatively poor outcomes. Their problems began to spiral out of control before they implemented compulsory health insurance for all their citizens. Additionally, health insurance firms were barred from making profits on basic levels of healthcare (though they can offer plans with various bells and whistles and profit off those). Price controls were implemented for drug costs.

So now everybody is covered, medical care is about as good and as expedient as it is in the US. The downside is doctors aren't paid quite as well and pharmaceutical development has slowed some. These are the trade-offs you get.
 
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Responses to this will be interesting.

It makes sense to me, but in all honesty, I'm not sure what the solution is. It is almost a question of universal coverage vs. quality of coverage.

There are really three sides to it, and it's a balancing act. There's no perfect system, but what we have is a system that is much more imbalanced than other countries. The three factors for most people are quality, cost and access. The quality in the US ranks very highly, but we have fairly poor access for most and very poor overall cost.

IMO reducing cost is going to make it easier to broaden the availability of healthcare to people. It includes correcting a lot of what I listed... And I'm not even talking about government involvement. I think this sort of thing works much better at a community level. Even down to voting with your wallet and such.
 
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I like Norway's system of universal coverage with the option to opt-out and buy your own insurance. I also wouldn't mind paying a 48% income tax (for healthcare and an abundance of other things), either.
 
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Nice write up.

Lifestyles have gotten faster, so people eat more fast food. Foods you buy out are normally high in sodium, sugars and about every additive imaginable. It's not healthy.

Technology has helped people live easier lives. Less active people means more overweight people. They just plain set around too much playing with smart phones and playstations. People back in the early 1900 through the 50, 60's didn't have these things and spent more time outside and doing more things that would be considered exercise.

The huge spike in heart disease and cancer is alarming. It's also not really surprising since people eat poorly and don't get enough exercise.

We need to reform health care no doubt, a totally government controlled health care system is scary to me. I'll just point to some of their other flops for my reasons. Reeling in the pharmaceutical companies that everyone is in bed with (because they pay them off) would be a nice start. They really dictate a whole lot of the high cost. I live next door to a elderly couple, they pay about 700 dollars a month just for medicine, that's ridiculous.
 
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I have a problem with this post, not so much with the post, but the data. It seems to me that everytime they go and do these test, they go to poor neighborhoods so they can pretty much swing any kind of data in their favor.(not a fact/my opinion) Did you guys get tested for any of the data that is shown above?
 
#13
#13
I have a problem with this post, not so much with the post, but the data. It seems to me that everytime they go and do these test, they go to poor neighborhoods so they can pretty much swing any kind of data in their favor.(not a fact/my opinion) Did you guys get tested for any of the data that is shown above?

Well the poor neighborhoods are on the rise since the middle class is basically disappearing. Health care is really just one part of a whole bunch of stuff facing the nation that isn't good. We have problems across the board and the real question is how did we arrive at this point? That probably deserves its own thread if there isn't one already.
 
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Nice write up.

Lifestyles have gotten faster, so people eat more fast food. Foods you buy out are normally high in sodium, sugars and about every additive imaginable. It's not healthy.

Technology has helped people live easier lives. Less active people means more overweight people. They just plain set around too much playing with smart phones and playstations. People back in the early 1900 through the 50, 60's didn't have these things and spent more time outside and doing more things that would be considered exercise.

The huge spike in heart disease and cancer is alarming. It's also not really surprising since people eat poorly and don't get enough exercise.

We need to reform health care no doubt, a totally government controlled health care system is scary to me. I'll just point to some of their other flops for my reasons. Reeling in the pharmaceutical companies that everyone is in bed with (because they pay them off) would be a nice start. They really dictate a whole lot of the high cost. I live next door to a elderly couple, they pay about 700 dollars a month just for medicine, that's ridiculous.

This. My injections cost $2,500/month for 12 shots. My insurance does cover the vast majority though. I did have to have my lawyer contact the insurance provider 2 years ago. They all of a sudden said that they would not cover the injections anymore after I had been receiving them for 5 years and they were working. They approved me indefinitely after he raked them over the coals, but it is ridiculous that it took a threat from a lawyer for them to provide what I pay them to cover. This is only a beta interferon, not some super secret formula. My dosage is only 44 micrograms/dose. This stuff is must be one of the most expensive substances on earth. That's roughly $5/ microg, $208/shot, and that's 3 times/wk ($625/wk). The medicine was not developed by the company, so they have no development costs to factor in. It's rape of the patient and insurance companies pure and simple.
 
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This. My injections cost $2,500/month for 12 shots. My insurance does cover the vast majority though. I did have to have my lawyer contact the insurance provider 2 years ago. They all of a sudden said that they would not cover the injections anymore after I had been receiving them for 5 years and they were working. They approved me indefinitely after he raked them over the coals, but it is ridiculous that it took a threat from a lawyer for them to provide what I pay them to cover. This is only a beta interferon, not some super secret formula. My dosage is only 44 micrograms/dose. This stuff is must be one of the most expensive substances on earth. That's roughly $5/ mg, $208/shot, and that's 3 times/wk ($625/wk). The medicine was not developed by the company, so they have no development costs to factor in. It's rape of the patient and insurance companies pure and simple.

and what if there was no incentive to have ever developed the medicine in the first place?
 
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and what if there was no incentive to have ever developed the medicine in the first place?

It was developed 25-30 years ago. The costs have be recouped long ago. Like I said THIS COMPANY HAD ZERO DEVELOPMENT COSTS.
 
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which is not my point (and you still don't know what they buy the drug for). What if there was no incentive to develop drugs like that?
 
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which is not my point (and you still don't know what they buy the drug for). What if there was no incentive to develop drugs like that?

I am not sure what you are advocating.

I am not arguing against a profit incentive. I am arguing against gross price gouging.
 
#21
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not sure what you expect me to explain



then tell the women to just take progesterone like my wife has been doing. I can assure you it's much less than $1500

Explain the jump from $10-$20/ dose to $1500/dose when it is the exact same drug. Looks like we will agree to disagree. If you like getting taken to the cleaners, that's fine. I don't and will voice my concerns and fight. That's a cop out to say "just change drugs" when what you are taking is working. Might as well say "just don't get sick".
 
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I am not arguing against a profit incentive.

no but the OP is

I am arguing against gross price gouging.

what is their margin on this drug?

I touched on in vitro fertilization earlier. The practice is how 'octomom', for instance, gave birth to all 14 of her kids

no it was the improper use of the procedure that allowed her to have all those kids. Rail on the docs and not the procedure itself. It is a very good, but crazy expensive, procedure for those who can't conceive children naturally.
 
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#23
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Explain the jump from $10-$20/ dose to $1500/dose when it is the exact same drug. Looks like we will agree to disagree. If you like getting taken to the cleaners, that's fine. I don't and will voice my concerns and fight. That's a cop out to say "just change drugs" when what you are taking is working. Might as well say "just don't get sick".

the drug in the article is a synthetic version of an already available drug. Don't want to buy it then use the other version.

I can assure you I am not getting taken to the cleaners as I have progesterone sitting in my fridge at this moment (of course it's not mine :)).
 
#24
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no but the OP is



what is their margin on this drug?



no it was the improper use of the procedure that allowed her to have all those kids. It is a very good procedure for those who can't conceive children naturally.
Why does it cost so much?




Price of Preterm Labor Drug Skyrockets Now That It Is FDA Approved | Redline Pharmacy Solutions


According to KV Pharmaceuticals investor relations briefing documents, Makena will be sold in 5 dose vials at approximately $7,500/vial ($1,500 per dose). The company has also reported that the product has a gross profit margin of 97.5%. Pharmaceutical manufacturers are responsible for setting the price of drugs sold. The FDA does not establish a price for drugs in the US. The price decision was entirely up to KV Pharmaceuticals.


Do you deem a 97.5% profit margin acceptable or gouging?
 

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