By: Lolly Leger
Group Health, Inc
Group Health, Inc
The health care debates over the past year were largely irrelevant to what’s happening in the health care marketplace.
Congress couldn’t repeal the Affordable Care Act so they made some changes to weaken it.
These changes do nothing to address the most significant trends that are evolving across the system.
The U.S. spends more on health care than other countries.
In the U. S. health care consumes 17.8 per cent of gross domestic product, to 10 comparable nations where the expenditure is 11.5 percent.
Despite spending much less, the other countries provide health insurance to their entire populations and have outcomes equal to or better than ours.
The researchers found that this inefficiency gap is primarily driven by two characteristics of the US system:
1.the high cost of pharmaceuticals 2.inordinate administrative expenses.
The annual per capita pharmaceutical expenditure in the US is $1,443 as compared to an average of $749 in the 10 other countries.
U.S. administrative costs consume 8 percent of total spending as compared to a range of 1 to 3 percent elsewhere.
Health insurers such as United Health and retailers such as CVS have enormous revenue and impressive profits.
Profit margins show that there are many situations where between a third and a half of every dollar spent on a prescription drug falls to the bottom line of the of the company that made it.
This profit derives in large part from the enormous difference in drug prices in the US versus other countries where such prices are more effectively controlled.
The revenue and profitability of these corporations support the proposition that high pharmaceutical prices and insurance-related administrative costs account for much of the extraordinary expense of our system.
That effect will continue. Not surprisingly, the big health care companies are developing new strategies to enhance their businesses and drive their profits going forward.
The term now heard often among health care giants is “vertical integration,” which means combining upstream suppliers with downstream buyers to control the flow of business.
If this strategy persists, health care delivery will evolve significantly although it is unlikely to become less expensive.
The most prominent current example of vertical integration is the planned $68 billion acquisition of Aetna by CVS.
United has aggressively acquired physician practices in recent years.
If this course continues, the health care system will evolve quickly, giving fewer and larger companies even more market leverage.
Integration of this kind benefits the large corporations that initiate it but there is no evidence it will lead to lower costs, improved access, or enhanced quality.
Corporate buyers of health Insurance should have their agent shop around for the best deal.
There are programs available that will significantly reduce premium cost for healthy groups.
