EDITION 3,  August 2004 (Updated August 2011)


Bruce Sundquist

Previous Editions: Drafts of 11/03 and 12/03, Ed.1 of January 2004, Ed. 2 of March 2004.


Abstract ~
1 ~
Introduction ~
2 ~ Economic Fundamentals - Health Care and the Free Market ~
3 ~ Labor Intensiveness of the U. S. Health Care Industry ~
4 ~
Capital Utilization Efficiency of the U. S. Health Care Industry ~
(4-A) ~  Barriers to Increasing Capital Utilization Efficiency of Large-Scale Technologies ~
(4-B) ~ Achieving Increased Capital Utilization Efficiency of Large-Scale Technologies ~
(4-C) ~ Barriers to Increasing Capital Utilization Efficiency Generally ~
(4-D) ~ Achieving Increased Capital Utilization Efficiency Generally

5 ~ Restoring Prescription Drug Prices to their Free Market Values ~
(5-A) ~
Barriers to Containing Health Care Costs Resulting from Prescription Drug Pricing ~
(5-B) ~ The Current and Projected Magnitude of the Problem ~
(5-C) ~ Overcoming High and Growing Prices of Prescription Drugs
(5-D) ~ A Strategy for Prescription Drug Consumers to reduce their costs of Prescription Drugs

6 ~ End-Of-Life Health Care ~
(6-A) ~
Barriers Provided by Questionable End-of-Life Health Care ~
(6-B) ~ Overcoming Questionable End-of-Life Health Care
(6-C) ~ The Exploding Costs of Alzheimer's Disease

Reference List  ~

Table 2-A ~ Health Care Spending as a Percentage of GDP ~
Table 5-A ~ Average Annual Spending by Elderly Households on Prescription-Drugs by Income Quintiles

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Despite health care's huge and ever increasing bite out of the U.S. GDP, stop-gap, increasingly inefficient, and largely symptomatic measures have characterized the bulk of the nation's response. Transferring costs, rather than containing costs, appears to be the prime motivator in these measures. Eventually the desperation and anger over the failure to adequately address these cost containment problems at both the private and government levels are likely to force serious examinations of the fundamental roots of the problem. This paper is intended as preparation for that eventuality. The two most fundamental causes of the problem are ever-increasing, self-perpetuating, subsidies and impositions of insurers between buyers and sellers. These causes seem impossible to correct. But by addressing the largest (and most rapidly growing) inefficiencies in the health care system, four other fundamental approaches appear to offer significant potentials for major reductions in health care costs of roughly 50%. These approaches also offer significant potentials for improvements in health care quality in addition to collateral benefits. These approaches are:

  1. Decreasing the direct labor component of health care via computerization of its massive, complex information flow/ analysis/ storage system,
  2. Increasing direct capital utilization efficiencies by reducing the influence of the less-than-objective economic analyses, and possibly the social values, that have produced huge and growing direct capital utilization inefficiencies,
  3. Reducing prescription drug prices by any of several systems of pricing that mimic free-market conditions - conditions that the present pricing system lacks, and 
  4. Reducing government support for questionable end-of-life health care borne of less-than-objective medical, personal and religion-based analyses.

Opportunities (1) and (2) have been blocked by the lack of incremental means of achieving these ends. Prescription drug prices are far above their free-market values because of non-addressable influences of subsidies and health insurance. Questionable end-of-life health care is also largely a product of these two influences. Thus carefully designed proxies for free-market conditions offer perhaps the only realistic approach to these two problems.

Chapter 1 ~ INTRODUCTION ~
In 1965, nationwide health expenditures were 6% of the US Gross Domestic Product (GDP). By 1990 they had doubled to 12% and were forecasted to reach 18% by 2000. Fortunately a respite during 1992-1999 kept 2002 expenditures at 15% of GDP (04P1) -- but it is still a $1.55 trillion "industry" in the US (2002 data) (04M3). The Center for Medicare and Medicaid Services stated (2/11/04) that total US health care spending in 2003 was $1.7 trillion - more than $5,800 for every American, and more than 15% of the US GDP. By 2013 spending on healthcare is expected to reach $3.4 trillion/ year and exceed 18% of the GDP. After 2013 baby boomers start reaching retirement age. Far more rapid increases in health care spending can be expected then, according to Dan Crippen, former director of the Congressional Budget Office. Even today hospitals are going after unpaid bills with tough tactics such as placing liens on homes and assessing interest, fines and legal fees. One result is that hospital- and medical bills are now the second leading cause of personal bankruptcy after unemployment 04U1. It seems unlikely that hospital- and medical bills will remain only the second leading cause of personal bankruptcy for much longer.

It seems clear that, over the next decade, the public will come to the realization that the strategy of seeking symptomatic relief in terms of ever-increasing government subsidies for health care is fundamentally flawed. The focus is likely, then, to shift to cost containment, particularly containment strategies that involve little or no degradation in quality of health care. The elimination of inefficiencies is likely to get far more public attention then. The next decade should be seen as a window of opportunity for identifying inefficiencies and for developing well-reasoned strategies for eliminating them. This document was developed with that in mind. 

Some examinations of the fundamentals of the cost-containment problem in recent years have led to some fairly widely held conclusions, e.g.:

** Historically, HMOs developed, not to replace a good health care system by a better one, but to replace a fundamentally flawed insurance-based system by something less flawed. Up until the early 1990s, American health insurers' group health insurance policies incorporated the philosophy that only physicians and their patients should determine the treatment for a particular illness. It was accepted that insurers would simply pay health care providers their "usual, customary and reasonable" fee with few questions asked. This gullibility and naivety was dissipated in part by research during the 1980s in which clinical experts deemed substantial portions of health services delivered to patients to be unnecessary (99R1). Unfortunately, because HMOs do little of their health care in-house, the only way they could eliminate the gullibility/ naivety problem was to institute complex, frustrating and expensive systems of preauthorization and concurrent review of medical treatments.

A New Problem - Rapid Growth in Prescription Drug Prices: The prescription drug industry gained the power to advertise its wares in the mass media in a 1997 FDA advisory. The implication is that doctors themselves are incapable of making informed decisions related to their prescription writing, so they need prodding from their better-informed (i.e. TV-watching) patients. The result -- prescription drugs are now the largest component of growth of US health care costs. It has also made the prescription drug industry the most profitable in the US. Despite the industry's admonition that the money is needed for research and development, marketing expenditures now exceed such R&D expenditures. National spending on prescription drugs has tripled since 1993. Pharmaceutical expenditures as a percentage of US health expenditures fell steadily from 10% to 4.9% during 1960-1980, but then they rose steadily to 9.4% in 2000 [Centers for Medicare and Medicaid Services]. The reason for the greater public outcry now is that, in 1960, total health-care costs were only a fraction of what they are today -- in both constant dollar terms and as a percent of GDP.

The Failure of Symptomatic Relief: Intense, intractable political debates over how best to deal with rising health care costs have been on-going for over a decade. The focus of these debates has been on stopgap measures to treat the symptoms of the problem, and on transferring financial burdens to other people's shoulders, without addressing fundamental issues. This is the perfect environment for assuring long-term failure to contain costs - at least until levels of public outrage increase significantly.

A Focus on Fundamental Problems: Recognizing the near-certain failure of symptomatic, stop-gap inefficient approaches to dealing with health care costs, this document takes a more fundamental approach. An effort is made to understand the fundamental problems of the US health care industry sufficiently well as to propose fundamental fixes that might reduce US health-care costs by on the order of 50% or more. With health-care costs rising at double-digit annual rates, little value is seen in seeking out nickel-and-dime solutions to the cost-containment problem. The industry has evolved into a highly labor- and capital-intensive industry, and this intensiveness grows at a healthy annual rate. So without examining these two basic economic issues it would be pointless to continue. Prescription drug prices and late-life health care also provide promising areas for seeking out large-scale reductions in health care costs, so all four of these key issues are taken up here. Two other major sources of spiraling health-care costs are large, growing, and self-perpetuating subsidies for health care, and the growing imposition of insurers between buyers and sellers of health care. These have been the main factors in raising prices of health care far above that which would have resulted in a purely free-market economy. However the political impossibilities of dealing with these two fundamental issues indicates that these are not potentially fruitful ways of seeking fundamental solutions. So instead, the nature and magnitude of these two problems are outlined in the following "economic fundamentals" portion of this document before examining the four more potentially fruitful approaches.

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Long-standing economic dogma says that Adam Smith's concept of "free-market" pricing of goods and services maximizes "economic efficiency". This is broadly acknowledged to not be true if "non-internalized" externalities (e.g. government or public subsidies) are involved in decision-making by willing buyers or willing sellers in setting upon an arm's length agreed-upon price. All sorts of government subsidies help to pay US buyers' costs of health care. This results in prices paid for health care being far above the prices that would be paid in Adam Smith's hypothetical, efficiency-maximizing, free market. Increasing subsidies - the tendency of virtually all proposed state- and federal health-care legislation - tends to raise prices of health-care even farther above free-market prices and thus to be self-perpetuating and self-defeating. Significant and growing portions of government supports of health care therefore involve significant measures of counter-productivity - increased inefficiency - as ever increasing portions of these subsidies go to the industry instead of the intended beneficiary -- the patient. For historical perspective, in 1960, out-of-pocket payments covered 58% of all health care costs; government subsidies covered 21% of such costs, and health insurance covered the remaining 21%. In 1993, out-of-pocket payments covered only 21% of all health care costs; government subsidies covered 48% while health insurance covered the remaining 31% (Source Book of Health Insurance Data, 1993.) The subsidy-induced inefficiencies in health care systems are worse in other industrialized nations. Average public spending on health care in OECD countries is 72% of total health care spending (vs. 45% in the US) (04P1). In all OECD countries, health spending outpaces GDP growth (04P1). This puts ever-increasing pressure on government budgets. Ultimately it must force some painful reevaluations of basic policies -- and hopefully some careful analyses of health care system inefficiencies.

Abolishing subsidies for health care are considered to be political suicide, so this is not likely to be a fruitful way of approaching problems associated with funding US health-care. Other ways of reducing prices so as to also reduce or eliminate the "suicide" factor need to be examined. This is done below.

Health Insurance Effects: Other reasons cause prices of US health care to be well above prices that would exist in a free-market environment. The most important of these is the trend (see data above) toward increased imposition of health insurance between buyers and sellers of health care. This makes buyers far less unconcerned about prices of health care because they perceive the price to be paid by the insurer, not themselves. Thus they far more readily accept well-above-free-market prices offered by sellers. This is a gross miss-conception for buyers as a group, but is perhaps realistic for buyers as individuals. Some examples illuminate. At one point in the past, Blue Cross -Blue Shield did not cover the treatment of in-grow nails. The price charged then by doctors was about $7. This was a nearly perfect free-market, non-subsidized price reached by arm's length negotiations between willing buyers and willing sellers, both of the same, small, economic size (single individuals) with little likelihood of monopolistic pricing practices. Blue-Cross-Blue Shield later decided to insure the costs of medical treatment of in-grown nails. Within a few years the price paid by this insurer had risen by a factor of about ten. This is not to say that all health-care costs are now a factor of ten above free-market prices, but it is suggestive of the strong effect on free market economics of imposing insurers between buyers and sellers. Other examples of this can be seen in modern-day hospital charges -- $11 for a box of Kleenex, $2.75 for a throw-away plastic sleeve that covers a fever thermometer, $60 for a teddy bear (retail value: $10) for post-surgical patients, $5 for a magic marker to note the location of a surgical insertion, $1 for a Q-tip, $1.75 for a baby aspirin, $18 for a cheap plastic wash basin and pitcher, $56.70 for warming a surgical patient's blanket, $4.25 for a disposable razor, $8 for a bag of ice (2003 data). None of these charges would likely be acceptable to someone paying them out-of-pocket in transactions in a free market environment.

The economics of automotive collision insurance are also dominated by insurance. Repair prices can only be held in check by requiring buyers to obtain at least two bids before insurers will pay, and by pressuring car owners to go only to "approved" repair shops. A campaign by auto manufacturers persuaded many automobile owners to demand original manufacturers' parts. This merely imposed a greater element of monopolistic practices into the price setting process. The campaign succeeded because the automobile owner perceived the extra costs to be paid by the insurer. In a free market, insurance-free environment, repair shops would have offered car-owners two prices - one for original manufacturers' parts and another price for alternative manufacturers' parts. Clearly it becomes extremely difficult for a marketplace to achieve any semblance of efficient, free-market pricing when insurers are imposed in the process. It may be possible to avoid absurd pricing by attempting to mimic free-market conditions with frequently costly procedures. However the marketplace remains far from efficient and free, and prices are invariably above those that would be set in a free market. But once again, the thought of abolishing health insurance is unthinkable unless ways can be found of first reducing prices of health care dramatically. This is unlikely to ever be the case for major surgeries, even under the most ideal of conditions. HMOs are not as bad as other types of health insurance. This is because HMOs can also serve as de facto providers of health care. This is somewhat akin to auto repair shops offering collision repairs for an annual fee instead of on a per-situation basis, with the buyer being obliged to accept whatever the repair shop provides - or find another repair shop offering annual fees. Pricing far closer to free-market pricing can then be achieved because the seller and the insurer are essentially one in the same, and buyers have an incentive to shop around for the repair shop offering the best combination of annual fees and good repair work.

HMOs now commonly go to outside purveyors for medical services, and they (HMOs) use their large economic size (usually a nationwide scale with considerable monopolistic powers) to extract good prices from outside providers who are typically far smaller (usually local-scale) businesses. The modern-day tendency of hospitals to merge into ever-larger single business units is clearly an attempt to negotiate with HMOs on more of an equal-economic-size basis. Thus, although HMOs are fundamentally a step in the right direction, achieving prices as low as those that would be set in a free market remains an elusive goal. This is mainly because HMO strategies have degraded into a large component of monopoly-seeking instead of offering in-house services and quality service for low annual fees. HMOs are also resorting to (or being forced to) setting constraints on medical practices and medications in order to further reduce their costs. Such constraints may reflect very careful determinations of policies of lowest total cost. They may also be aimed at restraining doctors from going overboard in prescribing treatments that they have no alternative incentive to use restraint on. (Also doctors are often less that unbiased, since they may be part owners of CT scans, MRI systems, etc. that they can tell their patients to go to - usually with higher frequencies that when they are not "invested" in the medical decisions they make.)

Even if HMOs provided all medical services in-house they would still not achieve free-market pricing perfectly or be the optimal approach to health care. These would be achieved only if HMOs also took all the risks involved in their decisions. If they did that, they would set maximum lengths of hospital stays etc. at that length which minimizes their total costs. Set too short a stay and the risks of complications impose added financial risks that outweigh the economic benefits of short limits on hospital stays. However HMOs do not accept all the risks inherent in their decisions on medical practice policies. For example, if a very short hospital-stay limit causes the patient to die from complications, the costs of that death are not generally borne by the HMO. Efficiencies of HMOs could be improved somewhat if they also provided life insurance to all their patients as part of their overall offer. But this tends to be a minor problem relative to the tendency of HMOs to not offer all their medical services in-house - the main reason why HMO prices are as far as they are above free-market prices and why fundamental inefficiencies exist in the internal operations of HMOs (see below).

Looking Deeper: The above should be seen, however, as beating around the bush. Health-care subsidies will probably never be eliminated. Buyers and sellers of health care are always going to have some sort of insurer interposed between them - just the fundamental economic theory behind insurance assures this. And if insurance issues are diminished via HMOs, the above-mentioned inefficiencies of HMOs are not able to offer the possibility of health-care cost reductions of on the order of 50% or more. It is time to look even deeper into the fundamentals of the health-care industry to find large, permanent cost reductions. As noted above, the health-care industry is extremely labor-intensive and capital-intensive, so each of these factors needs to be scrutinized. There is really nowhere else to look - other than constraining very-late-in-life eleventh-hour-heroics modes of health care, and finding ways of bringing prescription drug prices down closer to their free-market values. Proposals dealing with labor- and capital intensiveness will have little credibility unless hurdles are identified that have, thus far, prevented the industry from achieving these efficiencies on its own. Proposals must also suggest how the hurdles identified might be overcome. These things are done below.

Cost Categorization: Costs incurred by an industry are often categorized most broadly as labor costs, capital costs and natural resource costs with the latter being generally negligible relative to the other two. Labor costs and capital costs tend to be proportioned about 60:40 for US industry as a whole. However the labor- and capital costs associated with supplies, heating, utilities, depreciation on capital facilities need to be broken out, since these costs probably have little to do with the soaring costs of health care and probably should be considered as fixed. Thus the total costs of health care should probably, for purposes of this analysis, be broken down into direct labor costs, direct capital costs, and indirect labor/ capital/ natural resource costs. This final category is very roughly estimated as 20% of the total mix, suggesting that this total mix should be apportioned as 48% direct labor costs, 32% direct capital costs, and 20% indirect labor/ capital/ natural resource costs. If better data on cost categorization become available, appropriate adjustments to this analysis are easily made. The first two categories will be the focus of this analysis, since the final category appears to have little to do with the issues at hand.

Costs can be usefully categorized in other ways. The list below tabulates some useful health care cost data.

Table 2-A ~ Health Care Spending as a Percentage of GDP (WHO data, OECD data, (04P1) (04W2))



Spending as
Percent of GDP





OECD Countries




U. S.
























U. K.













This issue is now covered in a separate document titled "Computerization of Information Flow/ Analysis/ Storage in the U.S. Health Care System: A Way of Achieving Large-Scale Cost Reductions and Increased Quality of Care" (06S1). This inefficiency is by far the most serious one within the health care industry.

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Section (4-A) ~ Barriers to Increasing Capital Utilization Efficiency of Large-Scale Technologies ~
The health care industry is being changed by large-scale, new technologies for diagnosing and treating health problems. These new technologies frequently cost millions of dollars per copy. There is a tendency for cities and hospitals of all sizes to want one of each -regardless of their ability to justify such technologies on a cost-effective basis. Economic concerns tend to be overruled by egos, politics and pressures from health-care professionals with financial investments in the technology. The less-than-dominant role of objectivity is perhaps due to inefficiencies in the health care system alluded to in the Introduction, and to the consequent dulled enthusiasm for patients to care about the actual costs of health care, given all those subsidies, interposed insurers, and growing hordes of HMO compliance checkers alluded to above - plus some similar problems outlined in Section 6 of this document. These same overruled-objectivity-related problems have also been found to be one of the reasons why the US also has too many hospitals and 40% too many beds (in 1996) (97L1).

Expensive technology is often used only a small fraction of the time due to the deficiency of need for a machine in a given local area. The "rental cost" of such machines (and the expensive buildings and land that they must typically occupy) on a per-patient basis thus becomes a large fraction of the total cost of the overall treatment. Could the use of any given machine be increased, rental costs per patient would fall - possibly enough to increase demand and produce even further reductions in machine rentals. For now, this will be taken as a definition of the main barriers to achievement of increased capital utilization efficiency of large-scale, high-technology and many other large-scale capital assets in the health care industry such as hospitals.

Section (4-B) ~ Achieving Increased Capital Utilization Efficiency of Large-Scale Technologies ~
Systems and procedures are apparently being put into place to constrain ego-dominant-self-interest-based, non-objective decisions about how much large-scale new technology goes into a given locale. But it is not yet clear that such systems are a match for the new large-scale technology coming out constantly, or for the politics of health care, or for the tendency of influential health care industry officials to have financial investments in such machines and therefore to prescribe the use of the new technologies at levels beyond what prudence would dictate. HMOs could flex their monopoly powers and set rental rates they are willing to pay at values that cover the capital costs only if the machines are used for some significant fraction of the time. If usage were smaller, investors would have to be willing to swallow the non-compensated capital costs. If local systems and procedures for constraining ego-self-interest-dominant decisions on machine placement are not up to their task, state- or national-level systems and procedures should be developed to pursue the issues more forcefully.

Another approach would be the creation of larger (national level?) agencies to place constraints on investments in large direct capital health care facilities. Such constraints would take the form of requiring thorough, objective financial analyses of proposed developments. This would favor objective financial analysis replacing ego-, emotion-, and hidden-agenda-based analyses that are the current norm.

A far broader approach would involve tackling the issue of capital utilization efficiency economy-wide. Efforts should be undertaken to increase the role of job-sharing in the US economy in order to greatly increase the utilization efficiency of the huge and growing array of capital facilities in general throughout the US economy - even with allowing for reduced workweeks financed by improvements in capital utilization efficiency. This issue is covered in greater detail below.

Canada's use of high technology lies at the opposite end of the spectrum. Its capital investment in large-scale-high-technology, is at levels significantly less that those of the US. Hospitals, too, operate near full capacity. The result, at least for use of large-scale, high technology, is long waiting lines and delayed health care. But on the other hand, less money is wasted on unnecessary procedures, with systems for optimizing utilization efficiencies and assigning priorities - somewhat equivalent to rationing. One might expect consequences of health care delays, since early detection and treatment are known to reduce total health-care costs. Yet life expectancy in Canada is 79.4 years, vs. 76.8 years in the US. However this is partly explained by obesity being 15% among Canadians, vs. 32% in the US. On the other hand, tens of millions of Americans are uninsured - vs. none in Canada. Canadian health care spending is 9.7% of GDP, vs. 15% in the US (OECD data) (04P1) (See Table 2-A). Some middle ground between Canada and the US would probably be optimal in terms of the trade-offs between capital utilization efficiencies and other considerations (03C1).

Section (4-C) ~ Barriers to Increasing Capital Utilization Efficiency Generally ~
Barriers to increasing capital utilization efficiency are not limited to large-scale, new, high technology. The health care industry also has huge and growing capital investments in more mundane facilities. If the labor intensiveness of health care could be significantly reduced as outlined above, then the size of these capital investments could be significantly reduced -e.g. billing departments and HMO compliance offices being replaced by a computer in far smaller quarters. But the potential exists to go much farther in increasing capital utilization efficiencies if societal and cultural values are examined and changed in response to the changing environment of large, and ever increasing, capital intensiveness of the modern industrial world generally. This smells of sacrifice, but an analysis of the broader issue of capital utilization efficiency in general done by this author some years ago (79S1) suggests that this is not the case. The costs of structural, societal changes required to increase capital utilization efficiency generally could, even two decades ago, be compensated for by financial benefits derived from such increased efficiencies. Increasing capital utilization efficiency also eliminates or reduces numerous other large, vexing, nationwide problems facing modern-day society. These benefits were far smaller when the modern world was far less capital intensive, but the truth and magnitude of the net benefits of increasing capital utilization efficiencies become greater and more apparent as capital intensiveness grows over time. This issue is summarized below, although a larger paper on the subject is available (79S1).

Section (4-D) ~ Achieving Increased Capital Utilization Efficiency Generally ~
If the US GDP is divided into returns on labor and on capital, the division is proportioned about 60:40. (Returns on natural resource sales are minor.) The long-term trend is in the direction of increasing the capital component of the GDP. This is largely how "labor productivity" and living standards increase. One might think then that capital utilization efficiency might be a matter of ever-increasing concern. But this has been the case only to a minimal extent, largely due to conflicts with social, and quality-of-life issues. The most obvious way of increasing capital utilization efficiency is to use capital facilities for a larger fraction of the time. In that way the total value of capital facilities can be reduced, and the costs of capital (interest, dividends, time-dependent (but not use-dependent) depreciation etc.) can be proportioned over a larger volume of output, thereby reducing total costs of goods and services. Capital facilities are usually in production mode for about 40 of the 168 hours in a week, providing at least the potential for a 4-fold increase in capital productivity. But this runs into cultural issues like the 40-hour workweek and the sanctity of weekends. Earlier in this century the workweek dropped steadily, but this trend has now stalled, or even backslid. This is probably out of concerns over the growing costs of inactivity that the resultant capital utilization efficiency decreases entail in capital-intensive economies. Also globalization pressures on labor have increased greatly.

The workweek/ weekend issue would be far less a hindrance to increases in capital utilization if job-sharing were more common. (It is now common in retail trades, some parts of the health-care industry and some others.) If the concept and practice of job-sharing could be developed more fully, the distinction between weekdays and weekends could largely vanish, and huge increases in capital utilization efficiency could be achieved without impinging on quality-of-life issues. In fact, the link between capital utilization efficiency and the length of the workweek could be broken. Capital utilization efficiency could increase even as the workweek decreases. Profits from increased capital utilization efficiency could more than make up for wage decreases implied by reduced workweeks. This was found to be the case in an earlier study by this author (79S1). Collateral benefits extend well beyond that however. Below is a list of a few of these.

The fundamental barrier to increasing capital utilization efficiency in general (economy-wide) is the same as that of achieving computerization of information flow/ analysis/ storage in the health care industry - change cannot be achieved incrementally. It cannot start with a single person, company, region or industry but must evolve from well-planned and organized efforts at a national scale. Otherwise it produces huge inefficiencies part of the way through the transition process (analogous to a proliferation of "interfaces" in the computerization of information flow/ analysis/ storage in the health care industry if it is done poorly, i.e. incrementally and without the other constraints listed in Section (3-B) of Reference (06S1). 

Overcoming the Barrier: A capital-utilization-efficiency crisis does not loom to the same degree as a health-care cost-containment crisis looms. So prospects for a national-level pursuit of increased capital utilization efficiency appear to be farther out on the horizon. Globalization could further increase the likelihood of such a crisis however as the US faces convergence of the developed- and developing world's economies (including wage scales). The US economy will then be desperately seeking out ways of becoming more competitive without seriously degrading wage scales (08S1). Increasing capital utilization efficiency would then be seen as one of the few options available.

Anticipated Cost Savings: Direct capital utilization efficiencies could be roughly doubled (though quadrupling is possible in theory). Assuming that direct capital costs comprise 32% of total health care costs, savings could amount to about 16% of total health care costs. The non-pharmaceutical component of the cost of US health care is about $1530 billion (2003 data) this would suggest health-care costs savings of about $245 billion per year. Some portions of hospitals operate on a 24-hour-per-day basis, so a correction would have to be made to account for this. If the issue were tackled economy-wide, revision of cultural values and customs could produce major increases in capital utilization efficiency generally. Collateral benefits could be achieved that are far greater than those to be anticipated from within the health care industry.

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Section (5-A) ~ Barriers to Containing Health Costs Resulting from Prescription Drug Pricing ~
Prices of prescription drugs are spiraling out of control. Prices are well beyond what would exist under free market conditions (See Section 2 above: "Economic Fundamentals".) No other category of health care costs grows as rapidly, although prescription drugs make up only about 10% of spending on US health care - about the same percent as in 1960, but double the 1980 percentage from a report by economists at the Center for Medicare and Medicaid. The main causes of this appear to be:

Section (5-B) ~ The Current and Projected Magnitude of the Problem ~
A review and analysis (03B1) provides compelling arguments why the business-as-usual approach to the problem (or even the approach of the late-2003 prescription drug legislation) cannot go on much longer without major political consequences. Pharmaceutical expenditures were only 9.4% of US health expenditures in 2000, but this is misleading. The problem is mainly for the elderly, who face far higher costs. Consider the following:

The review and analysis (03B1) makes the following projection of average annual spending by elderly households on prescription-drugs by income quintiles. Dollar figures refer to direct spending on prescription drugs plus indirect spending paid for by private insurance purchased by the household. The bottom two rows express the dollar figures as percentages of after-tax income.

Table 5-A ~ Average Annual Spending by Elderly Households on Prescription Drugs by Income Quintile ~








$ 632

$ 822








$ 6439














Section (5-C) ~ Eliminating High and Growing Prices of Prescription Drugs ~
Eliminating subsidies and insurers from the prescription drug marketplace is impossible politically. Even worse, the higher prescription drug prices go, the greater the political and economic pressures for increasing the roles of subsidies and insurers - a classic instability process that spirals out of control until some extreme event creates a new, more stable environment. Clearly then, achievement of any semblance of free-market pricing is impossible. The only alternative appears to be to create some sort of proxy for a free market in drug prices that mimics, as closely as possible, and as unobtrusively as possible, the behavior of a free market. For example, the automobile collision insurance industry requires customers to seek out two or more bids on repair jobs. This is something that would likely take place under a free market environment. But it would not take place very often in a market heavily influenced by insurers without the development of some sort of free-market proxy. The tendency for the collision insurance industry to also pressure customers to seek repairs only at "approved" repair shops falls into the same category, but that does not necessarily reflect the same degree of departure from free market conditions.

Overcoming Barriers ~ One Possible Proxy for a Free Market: Creating a reasonable proxy for a free market in prescription drugs is difficult. Creating "public utility commissions" similar to those in the utilities industry is easily seen to be unworkable, given the far greater complexity and variety of prescription drug industry products. One possible approach to a free-market proxy is the following. If a free market in prescription drugs did exist, returns on investment of the industry as a whole, would likely be near the upper end of the spectrum of returns on investment of US industry in general, due to the inherent higher-than-normal risks involved in research on, and development of, new drugs. Being at, say, the 85th percentile of the spectrum of returns on investments characterizing US industry would probably seem reasonable to most. (Presently returns on investment of prescription drug companies are the highest in the US - about 18% vs. 3% for US business and industry as a whole.) So one possible proxy could be to, in consultation with the drug industry, pressuring the industry to price drugs at levels that produces that same end result - not for each company or each drug, but for the industry as a whole.

One mechanism by which this might be accomplished is to use the bargaining power that Medicare and Medicaid have, derive from their large size, to influence prescription drug pricing. These agencies could possibly meet the above-mentioned "85th percentile" constraint. Given the growing public anger about drug prices, and the risk that this could boil over into outright price controls on drugs (03M1), the industry might welcome a process guided by free-market-proxy constraints in order to avoid less constrained processes born out of less-than-objective anger. This mechanism offers collateral benefits.

The net result of all this would be the allocation of drug industry capital down channels that benefit the public to a greater degree than present-day capital allocation strategies. Pharmaceutical industry research decisions are already affected by the industry's own assessment of whether it will be able to get the government or private insurers to pay for specific drugs. Also, close to half of all biomedical research is not dependent on the patent system. Instead it is supported either by the National Institutes of Health or other government agencies or foundations, universities, and private charities (03B1).

The obvious rejoinder to the above free-market proxy proposal is that all this borders on price controls and "price controls never work". But this free-market proxy could work, since drug consumers are unlikely to see any reason to seek out "black markets" for prescription drugs - one reason why price controls never work. There are no reasons why drug companies should limit production to create artificial shortages. Such shortages would do them no good. They would continue to have substantial incentives to invest in research, development and manufacturing - incentives far closer to the incentives that would exist under free market conditions - conditions most economists contend to be "optimal" in terms of economic efficiency. There would be the risk that drug companies could try to bury profits in high salaries for corporate officials. But these are sufficiently well known that such efforts would likely draw adverse reactions from Medicare and Medicaid. The industry could also be less cautious in choices of potential new drugs to research and development - bigger capital investments, bigger profits. But to do this they would need to raise capital. Stockholders would see little or no benefit from such practices, and constrain management policy decisions.

Another Proxy for a Free Market - Direct Price Controls: The Japanese have apparently concluded that competition is not realistically possible in the health care industry and have therefore instituted something on the order of a public-utility-commission approach to health-care services. E.g. doctors must charge for services according to rates published in government manuals. Pure price controls have been disastrous in some nations of the former communist block, when prices were arbitrarily set so low that they barely paid for the gas when doctors made (mandatory) house calls. However such policies were clearly not even remotely guided by intents to create a proxy for a free market and to seek drug prices comparable to those that would characterize a free market. Every other industrialized nation has some form of price controls that limit the ability of drug companies to exploit their monopoly (patent) position (03P1). This is almost certainly a significant reason why U.S. consumers pay far more for prescription drugs than do consumers in any other advanced economy (03B1).

Overcoming Barriers Using An Expanded Role for Non-pharmaceutical Company Research: Non-pharmaceutical company research already accounts for just under half of all drug research in the U.S. The National Institutes of Health, other government agencies, foundations, universities and private charities support this research. Existing pharmaceutical companies do some of the research under contract. The question of how drug research is done is important. The costs of materials and manufacturing of drugs, like computer software, tend to represent a small fraction of the prices paid by consumers. Drug prices originate, to a large degree, in the costs of research, development, testing and marketing. A proposal has been made to expand the research component of overall drug research (02B1) to essentially the entire drug research effort in the US. Research results would all enter the public domain. Pharmaceutical companies would then use these research findings in much the same way as generic drug companies do now, i.e. without patent protection. The proposal estimates that such a system could easily reduce overall private spending on drugs by about $200 billion/ year (1.1% of GDP) by 2013. The cost of additional government research expenditures would be almost completely offset by cost-savings on existing government health care programs. Collateral benefits would include reduced mass-marketing expenditures, fewer falsified or misleading research results, less "copycat" research, greater objectivity in doctors' prescription writing and less interference by the drug industry on FDA decision-making (See below).

Other Barrier-Overcoming Options - Limiting Mass-Media Marketing of Prescription Drugs:
Despite the fact that the prescribing of prescription drugs is supposedly the exclusive domain of medical doctors, the prescription drug industry spends billions of dollars annually (since the FDA's 1997 guidelines) in mass-media marketing - all aimed at encouraging ill-informed consumers to influence such decisions. In 2003 the pharmaceutical industry spent nearly $3 billion on direct-to-consumer advertising, up from less than 0.8 billion in 1997 (04L1). Industry people argue (01M1) "one of the primary economic principles underlying all advertising is the value of information". This sounds good, but closer examination suggests otherwise. What information is added to doctors' inventory of information used in issuing prescriptions, and what is the quality of that information relative to information from normal sources such as the FDA? Frequently, mass-media ads do not even tell the consumer what purpose the drug is supposed to serve -consumers are just urged to harass their doctor with questions like "Is Drug X right for me?" A typical mass-media drug ad ends with vague, glib admonitions about side effects. FDA releases on side effects are almost certainly far more detailed, accurate, and of such quality as to contribute significantly to prescription decisions. Mass-media side-effect lists add nothing, other than dilution and distortion. The remainder of mass-marketing ads tends to be fuzzy images of emotionally appealing scenes largely irrelevant to prescription-issuing decisions. The end results are: (1) essentially zero additional information that might add to the average doctor's inventory, (2) a degradation in overall quality of that information pool, and (3) irrational pressures on doctors to subvert their otherwise rational decisions to the satisfying of irrational, ill-informed patient pressures.

Is the Prescription Drug Industry a Net-Negative Influence on Government, the FDA and the Health Care Profession? If this were the case, other ways might be sought out to limit the industry's role to that which it took in the past -- research, development, manufacture and image-related mass-marketing - when prescription drug prices were not a major issue. Returning to such a mode of operations could greatly reduce the industry's costs and enhance the overall quality of prescription decision-making by making decision-making by the FDA and doctors more objective and more likely to consider alternatives to drugs. A November 2003 FrontLine documentary, among numerous other analyses, offers ample evidence of the negative influences of the prescription drug industry on these decision-making processes. Below are some examples.

(1) The prescription drug industry actively pursues legal loopholes (trickery?) to extend patent lives on prescription drugs far beyond the normal legal limit, and beyond the spirit and intent of the US Constitution to limit the duration of patent. This cannot help but increase prescription drug prices.

(2) Prescription drug companies lobby Congress to press for increasingly stringent limits on the time it takes for the FDA to make decisions on new prescription drugs. This might have some justification if the FDA had some innate inability to objectively weigh the costs and benefits of shorter approval times. But it is hard to explain why the FDA should lack objectivity in this area. On the other hand it is easy to explain why the drug industry should be less than objective. The result of this added haste is, too often, bad or worthless drugs being placed on the marketplace, public health problems, and lawsuits (which increase drug prices).

(3) The prescription drug industry lays a heavy hand on FDA deliberations over drug safety and efficacy (See the FrontLine Nov./2003 documentary) For example, the drug industry may often have some hours to present its case in hearings, while scientists with well-researched reservations may be limited to five minutes. In addition, such scientists often get their professional wings clipped by their superiors, limiting their effectiveness and objectivity even further. The result, again, is bad and ineffective drugs being introduced to the marketplace, public health problems and lawsuits. One example: Fen Phen, a diet drug with dangerous side effects. Industry gained approval by promising to sell only to clinically obese people (those at risk of death due to obesity). Then they marketed the drug as a cure-all for anyone with even minor weight problems. Some top-grossing drugs - like Celebrex and Vioxx - are often no more effective than low-cost generics. Economist Alain Enthoven, who has spent three decades advocating measures to inject real competition into health care notes that expensive new drugs should be tested against the best available generics. Instead, they are tested only against placebos (03M1). According to the Food and Drug Administration (FDA), more than 70% of the new drugs approved in the last decade do not constitute qualitative improvements over existing treatments (01F1).

(4) Alan Murray (04M1) describes the Pharmaceutical Research and Manufacturers of America as a "parody of a Washington special interest – opposing any measure that risks putting a dent in corporate earnings, no matter how small, while ignoring public benefits, no matter how large, and fighting ferociously for short-term gains that are likely to be overwhelmed by long term losses. For example, it opposes the Drug Effectiveness Review Project, an effort by Oregon and 11 other states to compare the effectiveness of popular drugs. Recall that winning FDA approval of a drug merely requires showing that it is safe and more effective than a placebo. The Drug Effectiveness Review Project wants simply to give consumers information on how effective a prescription drug is relative to over-the-counter drugs that often cost only a tenth of what their prescription counterparts cost, while often being at least as effective. Arming consumers with such information could go a long way toward reining in the prescription-drug price spiral.

(5) Massive amounts of research (largely non-profit) have been done on effects of things like diet, exercise, and other lifestyle issues on preventing and limiting health problems. The influence of the drug industry (intended or not) is to largely dilute, if not to outrightly subvert or belittle, these alternative ways of increasing public health and longevity - just check out the industry's mass-media campaigns. Reducing objectivity cannot help but increase the total cost of health care. One disturbing example of this involves the HIV/AIDS pandemic in developing nations. The Bush administration has proposed spending $15 billion on HIV/AIDS in developing nations in terms of drug-based treatment that might prolong the lives of a tiny fraction of the victims somewhat, and save an even smaller number of others - to the considerable financial benefit of the drug industry. Yet it is known that "social-content soap operas" (popular on radio and TV in developing nations) in developing nations can reduce the frequency of contacting HIV/AIDS at a cost of 8 cents per victim averted. This is done by weaving life-style issues into the contents of such programming. Such economics suggest that the HIV/AIDS pandemic could be largely wiped out for a tiny fraction of the $15 billion proposed recently for a mainly prescription-drug-based attack on HIV/AIDS.

(6) The drug industry employs huge cadres of highly paid sales people to visit doctors' offices in person to discuss new drugs (e.g. the town of Colorado Springs Colorado has over 70 such people). It seems unlikely that such visits focus on going over recent FDA technical releases on the workings, efficacy and side effects of new drug. More likely the focus is on spin control facilitated by the privacy of doctors' offices.

The Prescription Drug Industry and the Free Market - The Crux of the Debate: The prescription drug market is not even remotely a free market, being heavily influenced by subsidies and health insurance (See Section 2 above). The main result is prices far above what would occur in a free market. Essentially the prescription drug industry has become the recipient of a large share of the subsidies and insurance benefits that were intended for patients - not highly profitable drug companies. Yet the drug industry insists, outright or implicitly, that anything that might reduce drug prices intrudes on free market functioning and therefore degrades the economic efficiencies of the illusory free market in prescription drugs. Were industry views to be more self-consistent, and their respect for free market economics and its efficiencies more sincere, the industry would argue for some rational system (proxy) to lower prices closer to those that a free market would settle on.

One example of the use and abuse of free market concepts in the debate over drug prices is seen in a Pfizer document (02M1). It enumerates how prescription drugs have contributed to reductions in health care costs for numerous diseases. Implied then is the contention that it is perfectly reasonable to charge ever high prices for drugs as the industry's rightful share of these benefits. Lacking are arguments that, if the industry operated in its former mode of research/ development/ and manufacturing (when drug prices were far lower), such health-care benefits would not have been forthcoming. Also lacking is a clear vision of the functioning of a free market. In such a market, as soon as prices rose to values that provided competitive returns on the drug industry's capital investments, competition would develop and limit future prices to those that provide competitive returns on investment. It is only the lack of a free market that could give the industry the far larger shares of the economic benefits that prescription drugs now provide. The Pfizer document also suggests that a human life may be worth $500,000 per year as a means of justifying ever-high drug prices. It is far from clear that a price of this magnitude is the average that a willing buyer (patient) and a willing seller (drug industry) would settle upon in arm's-length negotiations in a free marketplace.

Conclusions: The prescription drug industry clearly has serious and growing problems with objectivity - problems it largely lacked when it operated primarily on a research/ development/ manufacturing mode. This lack of objectivity is costing consumers huge amounts of money and causing them perhaps even greater costs in terms of reduced quality of health care. It would seem then, that limiting the drug industry's role in health care to research, development and manufacturing couldn't help but be beneficial in terms of cost reductions and enhanced health care. It once was that way - it should not be all that hard to return to a system that once worked so well. All that is required is improved FDA guidelines, constrained less by campaign-contribution-influenced legislative meddling in the FDA's operations, to return to previous limits on drug industry use of the mass media. Eliminating public misconceptions about the free market nature of prescription drug markets would help to bring this about. The prescription drug industry has been overplaying its hand in all aspects of the drug marketplace decision-making process. This only hastens the day when Congress has to choose between raising taxes, cutting back on drug benefits for seniors, or hammering drug companies. The choice will then be obvious, and no amount of political power is likely to stand in the way (03M1). Developing free-market proxies could be the best strategy for both sellers and buyers of prescription drugs.

Anticipated Cost Savings: Prescription drugs represent about 10% of total US health care costs. Prescription drug prices are well above their free-market values. Based on the huge rate of price increases over the past decade, it seems clear that prices exceed their free market values by at least 100%. Finding some proxy for a free market would thus save about 5% to total US health care costs. Given a 2003 cost of $1700 billion, this suggests a savings of $85 billion per year.

Section (5-D) ~ A Strategy for Prescription Drug Consumers to reduce their costs of Prescription Drugs: ~ Many people have heard of people traveling to Canada to save money on prescription drugs.  What these people do not know is that they can order prescription drugs from Canada over the Internet.  They simply ask their doctor to fax his prescription to a Canadian company.  Perhaps the best (and largest) Canadian source is Pharmawest Pharmacy.  You can check their prices on their website http://www.northwestpharmacy.com Their toll free fax number for the doctor to use in faxing prescriptions is 1-866-539-5311.  Drugs are usually shipped with no shipping costs to the customer.  The cost of drugs is typically half of what one would pay in the US.  If you are on Medicare “D” you should examine the price you are paying for drugs plus the cost of Medicare “D” insurance and consider the benefits of dropping Medicare “D” insurance (typically about $500/ year and climbing rapidly) and if you fall into the “Donut Hole” it will cost much more. 

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Section (6-A) ~ Barriers Provided by Questionable End-of-Life Health Care ~!
Nearly two-thirds of all health-care dollars spent on us during our lifetimes is spent during the last six months of our lives (mid-1990s data). Much of this "health care" falls into the category of 11th hour heroics poorly supported by objective medical judgment and highly questionable. As a result, much of last few weeks or months of life are too often spent in pain staring at a hospital room ceiling while under heavy sedation and largely immobile in non-familiar, less-than meaningful surroundings. Much of this care is probably not based upon objective analyses of patient welfare, or of the quality of life in its final hours. Nor is it based on the patient's wishes. Studies have shown that most people, when dying, want the comfort and care of being surrounded by family, not the torture of all sorts of tubes in every possible orifice (03L1). Instead, this care appears to be based more upon:

Advances in modern medicine have resulted in increasing numbers of these patients spending their final weeks, months or years in vegetative states. In such cases they derive nothing of substance from this so-called "health care". When government-provided financial support for health care is limited, and/or when health insurance premiums rise to the point where increasingly large fractions of Americans become uninsured, the net result of all this end-of-life health-care non-objectivity is reductions in average life spans and reduced levels of care for patients in situations where that care is far more justifiable on objective grounds. The situation can be addressed to some degree when health-care facilities are essentially rationed, and systems of priorities are instituted (as in Canada) but surely there are better ways. In a recent series of articles in the Wall Street Journal (03L1) has concluded that rationing is already a part of US health care, and that it is here to stay. The inevitable question then becomes whether it is justified to pay millions of dollars to keep a few patients alive if those same dollars could keep hundreds more healthy. Hospitals are now experimenting with ways of achieving "rational" rationing (reallocating money now spent on unnecessary or ineffective care to improvements in quality of care) (03L1).

Medicare spends about one-third of its budget on people who are in the last year of life, and much on that on patients at the very end of life. Aggressive end-of-life care can lead to a more painful process of dying, researchers have found, and greater shock and grief for the family members left behind (09R1).

Section (6-B) ~ Eliminating Questionable End-of-Life Health Care ~
The state of Oregon, in the early 1990s, raised the issue of rationing health care dollars in an attempt to address this sort of seeming waste of taxpayers' funds allocated to health care. Oregon's rules dealt hardly at all with late-in-life care issues, but more on providing health care to the poor and to children at the expense of those who are childless and single. Thus it seems fair to conclude that these rules were poorly conceived in terms of allocating health care dollars efficiently or even-handedly. However they did shed much public discourse on the broader issue of health care rationing and priorities. This improves the prospects of addressing late-in-life care issues in the future. Elsewhere, policies are being developed and invoked permitting withdrawal of life-support when a person is pronounced "brain-dead", even though the heart is still functioning. This has produced intense controversy at times when there are still living cells at the stem of the brain, resulting in the patient moving fingers or opening an eye on occasion.

The approaches of rationed support and carefully researched priority systems for end-of-life health care are probably the best that can be developed. They substitute objectivity for irrationality in a minimally intrusive way. If someone wants to do "everything they can" out of guilt feelings, they are free to do so - with their own money - a return to free-market health care. Doctors with mainly financial motives will find nothing to appease these motives and so may be inclined to be more objective. Religious fundamentalists would remain free to raise money for patients' medical bills.

Section (6-C) ~ The Exploding Costs of Alzheimer’s Disease ~
In 2010, 14.9 million family and friends provided 17 billion hours of unpaid care to the 5.4 million Americans who are living with Alzheimer’s and other dementia. By 2050, as many as 16 million Americans will have the disease – 3 times the current number. The economic value of the unpaid care provided to those with Alzheimer’s and other dementias totaled $202.6 billion in 2010. The rest of society lives in constant dread that they may some day be diagnosed with Alzheimer’s disease and find themselves living 4-8 years in a state of utter meaningless (Some live as long as 20 years.) Even worse, on average, 40% of a person’s years with Alzheimer’s are spent in the most severe stage of the disease – longer than in any other stage. This most severe stage involves living in a purely vegetative state. Of Americans 65 and over, 1 in 8 has Alzheimer’s. Nearly half of the people aged 85 and older have Alzheimer’s disease. As life spans continue to increase, Alzheimer’s disease seems certain to be one of the most serious afflictions of mankind. The costs of dealing with Alzheimer’s seem certain to become far greater than any health care system could possibly support. (In 2010 the cost of Alzheimer’s was $183 billion. Living in a nursing home in a vegetative state for 2-10 years costs between $200,000 and $1 million.) There is no known cure for Alzheimer’s - and no way to slow its progression (based on National Institute of Health studies data). Americans spent $91 billion caring for Alzheimer’s patients in 2005. By 2015 the cost of Alzheimer’s is expected to rise to $189 billion. By 2050 it is projected to rise to $1 trillion (inflation-corrected). This is double what Medicare cost right now (11B1).

The table below tells us a lot about the future of the cost of Alzheimer’s disease:
Change in Number of Deaths between 2000 and 2008 for various diseases:
Breast Cancer –3%
Prostate Cancer --8%
Heart Disease –13%
Stroke –20%
HIV –29%
Alzheimer’s Disease +66%
Sooner or later Americans are going to get desperate enough to consider final stage Alzheimer’s disease (essentially a vegetative state) equivalent to being brain-dead and treat it as such. 

Conclusion: Medical decisions riddled with hidden agendas, irrational feelings of guilt and vague religious concepts should be replaced by far more objective analyses. If just a quarter of late-in-life (last 6 months) health care costs can be eliminated (presumably the least justifiable of these costs), total US health care costs could be reduced by about a sixth, i.e. by about $280 billion per year (2003). Political issues have largely prevented pursuing this issue in the past. But as health-care costs grow to ever-larger fractions of the GDP, and the futility of stop-gap measures like government subsidy increases become ever clearer, and as frustrations and anger mount, the tide will likely turn.

NOTE: Savings in late-life care overlap savings in direct labor costs, direct capital costs, and prescription drug production costs and prices enumerated above. So simply adding all anticipated savings listed above would exaggerate anticipated savings in US health care costs.

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Bruce Sundquist. 1979. "Capital Utilization Efficiency Vs. Leisure: An Accommodation", Finalist paper in the Mitchell Energy Foundation's international competition for economics papers on "The Management of Sustainable Growth" presented at the Third Biennial Woodlands Conference on Growth Policy, (Oct. 28-31, 1979).
(97L1) Lucette Lagnado. 1997. Wall Street Journal (1/13/97).
(99R1) Uwe Reinhardt. 1999. Wall Street Journal (11/17/99).
(01F1) U.S. FDA. 2001. "NDAs Approved in Calendar Years 1990-2001 by Therapeutic Potentials and Chemical Types", Dec. 31, 2001. http://www.fda.gov/cder/rdmt/pstable.htm.
(01M1) Richard Manning and Alison Keith. 2001. "The Economics of Direct-to-Consumer Advertising of Prescription Drugs", Economic Realities in Health Care Policies, 2(1) (June, 2001) 20 pp. www.pfizer.com/download/about_ERhealthcare.pdf
(02B1) Dean Baker, T. K. Chatani. 2002. "Promoting Good Ideas on Drugs: Are Patents the Best Way? The Relative Efficiency of Patent and Public Support for Biomedical Research," Washington DC, Center for Economic and Policy Research, <http:www.cepr.net/promoting_good_ideas_on_drugs.htm>.
(02C1) Congressional Budget Office. 2002. "Testimony on Projections of Medicare and Prescription Drug Sending", (March 2002) Testimony before the Committee on Finance, U.S. Senate, Congressional Budget Office. http://www.cbo.gov/showdoc.cfm?index=3304&sequence=0>.
(02H1) HCFA (Health Care Financing Administration). 2002. National Health Care Expenditures: Available at http://wwwhcfa.gov/stats/nhe-oact/.
(02M1) Neal A. Masia. 2002. "Pharmaceutical Innovation: Lowering the Price of Good Health", Economic Realities in Health Care Policy, 2(2) (April 2002) 20 pp. www.pfizer.com/download/about_er22.pdf.)
(03B1) Dean Baker, John Schmitt. 2003. "Growing Pains: The Expense of Drugs for the Elderly", Center for Economic and Policy Research, (February 10, 2003), 13 pp. http://www.cepr.net/Issue_Brief_Growing_Pains.pdf.
(03C1) Elena Cherney. 2003. "Universal Care Has a Big Price: Patients Wait", Wall Street Journal (11/12/03.).
(03L1) Laura Landro. 2003. "Six Prescriptions to Ease Rationing in US Health Care", Wall Street Journal (12/22/03).
(03M1) Alan Murray. 2003. "Drug Makers Hand Democrats a Target on Prescription Bill", Wall Street Journal (11/25/03)
(04L1) Laura Landro. 2004. "Net Benefits", Wall Street Journal, 1/26/04.
(04M1) Alan Murray, 2004, "Trade Group's Fight Against Drug Review is Self-Defeating," Wall Street Journal (11/30/04) p. A4.
Sara Schaefer Munoz. 2004. "US Health Care Spending Rose 9.3% in 2002", Wall Street Journal, 1/9/04.
(04M3) Laurie McGinley. 2004. "State and Local Programs Seek to Aid Uninsured", Wall Street Journal, 1/9/04 (reporting on a Health/ Human Services report in the journal Health Affairs on 1/8/04).
(04P1) Robert Pear. 2004. "Health Spending takes 15% of GDP", New York Times (1/9/04) (reporting on a Department of Health and Human Services report published in the journal Health Affairs on 1/8/04).
(04R1) Rhonda L. Rundle. 2004. "WellPoint to Pay $30 Million for Doctors' Computers", Wall Street Journal, 1/15/04.
(04U1) Unknown. 2004. "Lawsuit Challenges Charity Hospitals on Care for Uninsured", Wall Street Journal (6/17/04) p. B1.
(04W1) David Wessel. 2004. "Health-Care Costs Blamed for Hiring Gap", Wall Street Journal (3/11/04).
(04W2) Jeanne Whalen. 2004. "Russia's Health Care is Crumbling", Wall Street Journal (2/13/04).
(06S1) Bruce Sundquist. 2006. "Large-Scale Computerization - The Cure for the Health Care Crisis" Edition 4 (May 2006) on http://home.windstream.net/bsundquist1/hci.html 
(07T1) Clarence Thomas, 2007. "Everybody dies," Pittsburgh Post Gazette (1/24/07) p. B7.
Bruce Sundquist. 2008. "Globalization: The Convergence Issue", Edition 16, April 2008, 80 pp. on http://home.windstream.net/bsundquist1/gci.html
(09R1) Roni Caryn Rabin, 2009 "Religious patients often seek aggressive care at life's end," Pittsburgh Post Gazette (3/18/09) p.A2.
(11B1) David Brooks, "The debt crisis is mostly about death." Pittsburgh Post Gazette (7/17/11).