Drops in the Bucket: How Far-Along Are We Really Toward Reducing Heathcare Spending?

Obamacare has just made it all worse!

– diseases often don’t act predictably, and neither do patients.

Freakonomics » Drops in the Bucket: How Far-Along Are We Really Toward Reducing Heathcare Spending?

FREAKONOMICS
11/07/2011 excerpt

Two weeks ago, Emanuel pointed out that even though the U.S. outspends every other country on healthcare ($2.6 trillion a year; the equivalent of France’s entire GDP), we’re nowhere near the healthiest country. This week, he debunks ideas from the Left and Right about how to fix soaring costs. Emanuel starts by noting that healthcare spending “typically increases by about $100 billion per year.” He sets a modest goal of cutting 1 percent of total spending, which comes to $26 billion a year; then does something politicians rarely do in stump speeches: he runs the numbers.

First up, rallying cries from the Left: Could the solution be reigning in profits of greedy insurance companies?

[I]t turns out that the combined profits of the country’s five largest for-profit health insurance companies — United, WellPoint, Aetna, Humana and Cigna — were $11.7 billion, only 0.5 percent of total health care spending. Even confiscating every penny of those profits would add up to less than half of the cost-saving threshold.

Even if you quibble with Emanuel’s numbers, the idea that each of the “magic bullet” solutions is only a drop in the bucket shows how hard it is to fix a complex system with actors whoseincentives don’t always align. And let’s not forget that healthcare is more complicated than most systems – diseases often don’t act predictably, and neither do patients. Emanuel will offer some of his ideas in his column next week (he’s obviously been thinking about these issues for awhile), but can you think of a precedent for the kind of reform we’re talking about here?

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