Executive Summary
The Economic Crisis of the American Health System

Since the beginning of time, mankind has been driven to solve health problems. Our desire to cure disease, eliminate pain and live longer has lead to a continuous trend of innovation. That progress continues today allowing us to treat a huge number of medical conditions that previously could not be addressed. It's no wonder that our society has more demand for healthcare.

However, technological progress is only part of the reason that medical costs are so out of control in the United States. We have an insurance system that stimulates over use of medical care. Patients and physicians have little incentive to consider cost as a factor of the medical service option. Our tort system encourages defensive medicine policies, yet the patients and medical providers have little incentive to control these uses. By mandating specific medical coverage, state laws have made health insurance unaffordable to patients that might otherwise procure a lower cost plan. Government regulations add excessively to the cost of drugs and medical administration. As a result we have an economy where the medical industry has risen to more than 14% of the US Gross Domestic Product.

As the growth of the health care industry continues with no end in sight, considerable pressures are placed on other sectors of our economy. Both public and private sector employers are experiencing budget problems due to the large increases in the cost of health insurance. More of our private citizens are finding that they must go without any form of health insurance. Medicaid under reimburses medical providers at a continuing larger rate. Without a reduction in this growth in medical costs, the US economy is in jeopardy of being ruined.

As solutions to the medical crises are considered, this paper analyzes the different groups affecting how health care is used. The patient, health care provider, insurance company, entity paying for health insurance, courts, and government regulating agencies all interact in a way that complicates the way we use and pay for health care. The result is that we spend substantially more money than we should for the services we receive.

Finally, this report identifies waste and recommends solutions that reduce inefficient use of our health care resources. Patients need more accountability for the costs they incur as opposed to the current insurance program that stimulates overuse of health care. We must introduce more competition among providers to encourage cost improvements. Major tort reform must occur. Issues affecting defensive medicine must be publicized and corrected. State laws regulating insurance must be bypassed to allow affordable health insurance for the uninsured. Government regulation of drugs should not limit competition in a way that unnecessarily adds to the cost of health care. Self-help should be promoted to make society aware of the vast treatments available that do not require a physician or prescription drug.

No other country in the world is experiencing out of control healthcare costs to the degree of the United States. The complicated payment and regulation system has eliminated competition and caused the US healthcare crises. Simplifying this system and returning to common sense will go a long way towards correcting this crisis.

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