Ed Note: It’s a complex subject but I think we’re all aware that health care prices are gobbling up a larger share of GDP (and our pocketbooks) year by year. The major issue isn’t that the utilization of services or use of technology is greater in our country – it’s the price of almost everything from a band-aid to an MRI; from an aspirin to a chemo injection; from an aid to an administrator; from an intern to a professor. In the unregulated but not really competitive health care “system” the efforts for cost control continue to be quite weak. This article in the NYT discusses this.

“Why did American health care costs start skyrocketing compared with those of other advanced nations starting in the early 1980s?

At the same time this was happening, American longevity gains were failing to keep up with peer countries. In addressing these twin mysteries in a recent article, experts suggested two main reasons: The United States didn’t impose the same types of government cost controls on health care that other nations did, and we invested less in social programs that also promote health.

Many readers have since commented that it had to do with the Reagan-era zeitgeist, or increasing obesity. In the intervening weeks, I have spoken with many more health care experts — about their ideas as well as those of readers — and several, while believing the article essentially covered the answers, offered intriguing new observations.

The 1980s divergence in health costs, some readers and experts observed, coincided with a broad push toward deregulation.

Gary Gaumer, an associate professor at Simmons College School of Business, pointed to changes in how hospitals and doctors were paid. Before the early 1980s, payments by Medicare and other insurers were tied to costs. If it cost a hospital, say, $5,000 for a patient’s surgery, that’s what the hospital was paid, plus a bit more for reasonable profit.

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