The healthcare system in US is very complex. It is a known
fact that it spends more on healthcare than all other countries in the world.
Efforts of the government to bring down this expenditure are showing almost
negligent results. What is more, spending within America varies dramatically
from one region to the other. Why is there such disparity in America’s prices
and those of other rich countries? A new report from America’s Institute of
Medicine (IOM) helps find the reasons behind the increase in the health
expenditure in US.
A major perplexing factor is the geographic variation in
spending. The Centres for Medicare and Medicare Services (CMS) sets a price for
Medicare services, adjusted for various regional input costs. In contrast,
private insurers negotiate payment rates with hospitals. The IOM reports that
price mark-ups account for 70% of the variation in commercial spending.
The fee-for-service system, in which a doctor is paid more
for each service he provides, is the leading problem for both Medicare and
private insurers. As a doctor gets fee depending on the service rendered, he
keeps finding reasons to provide more care and charge as much as possible.
Hope is now fixed on the Affordable Care Act or “Obamacare”.
CMS is working towards making a shift from the fee-for-service system. However,
it is a slow process. In the meantime, it would be really helpful if the people
and the insurers took the effort to find the details about charges in different
hospitals. The need of the hour is more transparency.
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