Via Brad DeLong, one of Peter Orszag's health care slides is a scatterplot of state per patient Medicare spending and state Medicare quality:
As you can see, we're having some serious problems with getting good value for our money in health care spending. The standard account of this, that I have no reason to disbelieve, is that geographical areas with a high supply of health care services -- especially specialist MDs -- wind up recommending to patients a lot of useless or even harmful additional treatments. And this occurs at the same time as restrictions on the supply of general practitioners and on the permitted scope of activities by non-doctors (nurse-practitioners, etc.) artificially raises the cost of the sort of very basic health care that really would be useful to people.
Long story short, substantial progress on the health care costs problem will probably require the crushing of the doctor's lobby. Reforming to the method of financing health care can shift the fiscal burden off financially struggling people in a helpful way in the short- or medium-term but absent some kind of doctor-crushing initiative to change the system of health care delivery the fiscal burden will soon enough drown whoever's tasked with the responsibility of paying for it.
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