Three Ways to Cut Healthcare

January 15th, 2012Healthcare Cost0 comments

One thing is clear: healthcare costs have spiraled out of our ability to control them. Secondarily, this problem has no sign of changing in the near future. US spent on 10 percent of its GDP on healthcare only twenty years ago. In 2008, those numbers rose to 16 percent. The costs are going up because the actual costs of healthcare are rising, because there are more elderly who utilize healthcare out there and because health insurance costs are going out of style.

In the US, the most recent changes in healthcare have been focusing on the idea that everyone should get healthcare and no citizen should go without. What it doesn’t address very well is the idea that the cost of the healthcare everyone should get should be cheaper. One of the biggest problems in healthcare in the US is that it is essentially a for-profit operation and making money is one of the main ideas behind the business. The margin or return for administration, profit and marketing is about 20 percent of the total take. This compares to between 3-5 percent in European countries which have healthcare systems superior to the US. People in general don’t have to reach into their wallet to pay for healthcare so they really don’t understand the costs of such care.

While there are many ideas out there for curbing healthcare costs, the following three have been suggested because they are simple, achievable and can change the way healthcare is dealt out without going through too much trouble.

It was suggested that the first way to limit healthcare costs is to put a cap of five percent on the margin made by healthcare organizations. In addition it was also suggested that all insurance companies should also have a cap on the profit they can make. After all, why should shareholders actually get a benefit from the illnesses of others.

Another option is to bring patients into the process of making decisions about healthcare consumption. If cuts are necessary, it should be the patients who make those decisions. It allows consumers (the patient) to shop for their personal healthcare. Consumers can shop for the cheapest MRI scanner or the cheapest colonoscopy. This drives costs down and increased competition between doctors who have their own incentives to lower costs of their services. In this way, both doctors and patients have a say in how healthcare dollars are spent and who gets the money spent on healthcare dollars.

Finally, there should be no advertisement for prescription drugs and devices used exclusively for doctors. There is no reason patients should be advertised to on drugs that have to be prescribed by the doctor in the first place. In most countries, advertising prescription medications to the public is considered illegal.

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