Health care funding

The CEO of the California Health Care Foundation (an independent philanthropy focused on health care policy issues) gave a speech to the American Health Care Plans trade association a few weeks back. His speech has been making the rounds a bit and it is indeed a good one. What caught my attention was this,

Perhaps at the end of this someone can explain to me why we would insist on paying Aetna 12 bucks so Aetna can pay Medco 10 bucks, so Medco can pay CVS 7 bucks, so CVS can collect a 5 dollar copay per patient, for a drug that the patient could have gone to Costco and paid 4 dollars for. I’m not sure how that is good for society. I understand it’s how we’ve been financing this. But that's different.

This is a great illustration of how screwed up our health care is in this country. There are all of these layers of middle-men between the doctor and the patient. Middle-men that have nothing at all to do with the actual delivery of health care. Middle men who skim off some profit and provide minimal, if any, service. In economic terms it's incredibly inefficient and goes a long way in explaining why we spend 16% of our GDP on health care and our per patient costs are twice that of every other industrialized nation. There are other reasons (over-use of technology is another) but the very inefficient economic model we've let develop around delivery of health care in this country is a significant factor.