MIT: Technology Has Not Helped To Lower US Health Care Costs (On The Contrary)

on October 31 2013 10:12 AM
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Peter Merrill of Key West, Fla., receives prosthetic training for his left leg from physical therapist Cheryl Amodie Stoney at Jackson Memorial Hospital in Miami Sept. 30, 2013. Patients like Merrill pay more for health care than counterparts in other high-income countries. Reuters

If the high cost of medical treatment in the U.S. continues on its current trajectory, health care spending will make up a third of the U.S. economy and devour 30 percent of the federal budget by the year 2038.

And with five of the seven top lobbying groups in Washington, D.C., run by health care providers, insurance companies and drug companies, the idea that the country is anywhere near solving the issue of America’s obscenely high medical bills is a pipe dream.

Cost in USA The U.S. is exceptional, at least when it comes to how much it charges its own people for life-preserving medical care.  MIT Technology Review

Whether the Affordable Care Act (aka Obamacare) puts a check on the alarming rise in the cost of treatment, it’s going to take years to bring costs back from the $2.6 trillion spent in 2010, which was nearly double the $1.3 trillion spent a decade earlier and 259 percent more than what Americans spent in 1990.

The issue looms so large that tackling it is the country’s “challenge of the 21st century,” said Jonathan Gruber, an MIT economist leading a health care group at the National Bureau of Economic Research, in a new report that says technology is a mixed blessing: It has contributed to the rise of expenses but could be used to lower them if used in the right way.

USA vs Other countries The Outlier: The U.S. stand alone among highly developed economies in both the per-capita cost of health treatment and life expectancy. In other words, Americans spend more than everyone else on health care and yet Americans live shorter lives than citizens in other highly developed economies.  MIT Technology Review

Moore’s Law predicts that every two years the cost of computing will fall by half,” writes Antonio Regalado, senior business editor of MIT Technology Review, in the 19-page report. “But in American hospitals and doctors' offices, a very different law holds sway: Every 13 years, spending on health care doubles.”

rising costs As U.S. health care costs rise faster (by far) than any other cost of living in the U.S., 43 percent of that sum is simply hospitals and doctors simply charging more for their services. The rest comes from increased use of health services.  MIT Technology Review

The new law aims to boost health coverage and lower costs by increasing the number of insured Americans, by imposing outcomes-based rather than fee-based measures for Medicare, and by digitizing medical records to streamline administrative costs. Whether these efforts will be enough has yet to be seen, but one thing is clear: Americans simply can't keep paying so much for health care.

Spending on the sickest Half of all patients consume only 2.9 percent of this health spending.  MIT Technology Review

Read the full report here.

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