health care costs (was Soviet and US Economy)

JayHecht at JayHecht at
Tue Jul 21 07:37:35 PDT 1998

In a message dated 98-07-20 12:41:37 EDT, you write:

<< And I believe that 21% figure does

not account for the enormous bureaucratic costs imposed on doctors and

hospitals by byzantine collection procedures, i.e., doctor secretaries

and hospital bureaucrats are counted as "health care spending". >>

Medicare expense ratios are much lower. The key to operating profitability in the insurance business is, increasingly, to lower the "loss ratio" losses/premiums, which relies on getting a positively-selected (i.e healthy) exposure base. Hospitals are trying to behave as HMOs, and believe they will be able to cut the middle-people (i.e the Oxfords of the world) out. Given what I know about the NYC situation, it is totally unclear to me how any of these institutions are going to pull this off.

Like the RRs from about 1890-1950, the hospitals are saddled with tremendous fixed-costs (i.e. rolling stock = beds) that there pricing structure (e.g. DRG and other capitation schemes) precludes them from recouping. In the short term, hospitals are trying to reduce the labor content in all services (from surgery to bedplans), however, as the lawsuits mount, this strategy will prove to be too costly and limited. There are rumblings from doctors for a single- payer system, and it will be interesting to see how the AMA finesses this one!



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