Controlling rising costs
July 03, 2013
Regarding your recent editorial on the alarmingly high cost of childbirth in the United States as compared to other industrialized countries, a few more observations can be added about the continuing high cost of health care in the United States that these childbirth costs exemplify.
First, most other countries put their hospitals on a “global budget,” which means that hospitals are paid monthly or quarterly for their operating costs from a pool of all the money collected for health care (from taxes or premiums). This is somewhat like the way police departments or other public goods are budgeted. This is certainly preferable to having hospitals charge for each and every bandage or pill. In the case of childbirth, this is especially apt. As you point out in your editorial, charges for childbirth that used to be part of a general hospital fee are now all separated out; as every aspect of a procedure is now billed, this has led to spiraling price increases. A global budget process for each hospital would change this.
Second, while some people blame overutilization of services for our high costs, this is a straw man that needs to be put to rest. In Europe, with much lower costs per capita (and longer life expectancies), utilization rates are actually higher than in the United States.
Finally, what every country in Europe has that we do not have is a system of universal insurance or publicly financed health care that guarantees access to everyone and also includes price controls. This is the same in Canada, Taiwan and Japan as well. By collecting and then pooling funds (usually through taxes) the price for each service can be regulated, since there is only one “payer.” This has helped keep medical inflation under control in these other countries.
A single-payer system would not only create universal access to care, it would also help control our high health care costs. It would eliminate the excess paperwork created by our current patchwork system with insurance companies in the middle. It would also control prices. With one principal payer, providers would not be able to shift costs, with ever-rising prices the inevitable result. Finally, such a system makes budgeting easier, so that much of what goes on in hospitals could be paid for by a fixed global budget, just as we pay for other public services.
Hopefully, we are on the road to implementing such a system in Vermont. Ultimately, this is also the only solution to quality universal care that is economically sustainable.