Health care costs: the other point of view

Health care delivery in America is not efficient. Hospitals are not efficient and many are still wasteful. Some of the most blatant wastes in hospitals are staffing patterns that developed during the years of cost reports. Spending patterns become the norm, rather than excess, when they continue unabated for years. There are many reasons for cost increases in health care and specifically in hospitals. However, it is difficult to make these reasons add up to the total cost increase. No one has the answers; observation can only be made of what has been occurring and what continues to occur. Whatever the reason for the increase in health care costs, the consumer will bear the burden because of the circular flow of income and expenditures between the business sector and the household sector. Increased health care costs are passed on to the consumer in the form of increased expenditures for household goods and services or taxes. Ford Motor Company President Mr. Peterson says that $1,500 of every new automobile represents employee health care costs. The American consumer created the demand for health care services, and only the consumer can control the demand. One solution would be to let the consumer bear health care costs directly and remove the inefficiencies created by third party insurance carriers. This hypothesizes that the health care consumer is the most efficient shopper for health care services, and that third party insurance carriers are an important source of inefficiency in the health care delivery system. Many other solutions have been proposed by the government and by the insurance and health care industries, but most have only increased the cost of health care. Perhaps some day the health care industry will learn how to control the dynamics of this four-party purchasing decision. Until then, costs will continue to grow dramatically, and the executives of the industries who compete in the two-party purchasing system will wonder why the process is so complicated.