The truth about health care in the U.S.

  • Despite the emphasis on prescription drug costs they still only account for $. 11 of every health care dollar spent.
  • Even if ALL prescription drugs were free our health care costs will still be growing rapidly.
  • DTC advertising does not lead to patients asking for and getting “unnecessary drugs”.
  • Physicians are just as responsible for the opiod crisis.

People don’t have the time to fact check the media when they attack our health care system so I decided to share some truths with you.  Here ya go:

1neGrowth in prescription spending has slowed again in 2016, after increasing rapidly in 2014 and 2015.  In 2016, per capita retail prescription drug spending grew at a slow rate (0.6%), particularly in comparison to the previous two years when new specialty drugs came on the market. In 2015, pharmaceutical spending grew 8.1% on a per capita basis and in 2014 these costs had grown 11.5%. Looking ahead, CMS projections suggests growth in per capita drug spending will be moderate through 2026.

2wo: Pharma industry’s return on R&D investment fell sharply. The world’s 12 biggest drug companies are making a return of just 3.2 per cent on their research and development spending this year — down from 10.1 per cent in 2010, according to Deloitte’s annual survey of pharma R&D investment.  At the same time the average cost of bringing a drug to market has soared to a record $2bn from $1.5bn in 2016 and $1.2bn in 2010, when the professional services firm launched its pharma survey.

3hree: Trump’s plan to cut drug prices will not work.  The president’s plan, which he called the “most sweeping action in history to lower the price of prescription drugs”, lacks potency.  The price of drugs are going to remain at what the market will bear. Put another way, prices would continue to be largely set by pharma companies.

4our: More than 75 percent of health care expenditures are attributable to diseases that are largely preventable .The medical care costs of obesity in the United States are high. In 2008 dollars, these costs were estimated to be $147 billion.  In addition the single most important risk factor for type 2 diabetes is obesity, noted Dr. Patrick H. Conway of Blue Cross Blue Shield of North Carolina. Diabetes was the condition with the greatest increase in spending, rising by $64.4 billion between 1996 and 2013.

5ive: More than 4 out of 10 cancer cases among adults in the United States and almost half of all cancer-related deaths are associated with potentially modifiable risk factors, an American Cancer Society study indicates.  “An estimated 42% of all cancer cases and nearly one-half of all cancer deaths in the United States in 2014 were attributable to evaluated risk factors, many of which could have been mitigated by effective preventive strategies.

6ixNew research shows that for a substantial fraction of Americans, a trip to the hospital can mean a permanent reduction in income. Some people bounce right back, but many never work as much again. On average, people in their 50s who are admitted to the hospital will experience a 20 percent drop in income that persists for years. Overall, income losses dwarfed the direct costs of medical care.

7even: Price and the variety and complexity of services is the largest driver of health care spending increases. In fact, more than half of the total spending increase was due to price and intensity increases, which contributed $583.5 billion to the $933.5 billion total increase.

8ight: Spending on ambulatory care, which includes ER and outpatient hospital services, also played a role in increased overall costs. Annual spending on ambulatory care swelled from $381.5 billion in 1996 to $706.4 billion in 2013. This increase, about $324 billion, was higher than any of the other five types of care analyzed.

9ine: As the drug industry has come back down to earth, the returns of the 46 middlemen  have soared. Fifteen years ago they accounted for a fifth of industry profits; now their share is 41%. Health-insurance companies generate abnormally high returns, but so do the wholesalers, the benefit managers and the pharmacies. In total middlemen capture $126 of excess profits a year per American, or about two-thirds of the whole industry’s excess profits. Express Scripts earns billions while having less than $1bn of physical plants and no disclosed investment in R&D. This year the combined profits of three wholesalers that few outsiders have heard of are expected to exceed those of Starbucks.

10en: The New York Times’ editorial board is right when it notes that direct-to-consumer (DTC) pharmaceutical advertising helps “educate and inform patients about drugs their doctors might not mention, encourage discussions between doctors and patients, and can help patients take more responsibility for their own health care.

11even: A more recent survey of patients by Prevention Magazine in 2012 found that 71 percent of people agree that DTC advertisements “allow people to be more involved with their health care” and 75 percent believe that DTC ads are useful because they “tell people about new treatments.” Prevention’s survey also found that 76 percent of Americans talked to their physicians about a condition after seeing a DTC ad and among those who discussed a specific medicine that was advertised with their physician, only 20 percent received the prescription of the advertised medicine. 

If you really want to learn about what’s driving health care costs then don’t rely on media headlines.  Dig deeper to understand the real issues that are increasing our costs.

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