Health Care: Why So High?

In our class, the Economics of Healthcare, the topic has often come up as to why health care is so expensive. One of the issues we brought up in class was that malpractice suits were forcing physicians to charge higher and higher prices, which either drives up insurance or direct out of pocket costs to the consumer. The Kaiser Family Foundation, a non-profit organization that studies health care issues, and the Harvard School of Public Health conducted a survey to determine what a sample of the population considered the most important health care issues. Surprisingly, at least to me, was the placing of malpractice suits - 11th out of 12. Of course, 1st place went to lowering the cost of health care and insurance. It doesn't make sense to me to list the symptoms of a problem as most important rather than the source. Yes, the costs are high, but the real question is: what is making them high? A majority of people do agree that malpractice needs addressed and would be for a reform (if the industry as a whole would accept it). The Bush administration stands firm that malpractice suits are indeed a main source of the hgih priced health care. "Bush is seeking a $250,000 cap on non-economic damages that compensate for pain and suffering, saying large malpractice awards are driving up the costs of business and insurance and forcing doctors to give up their practices."
However, a Congressional Budget Office analysis found such malpractice costs are actually less than 2% of all health care spending (2002). I feel that this office, just like the surveyed people mentinoed earlier, are looking at symptoms rather than the source. Actual malpractice suit costs probably are less than 2%; the real costs come when doctors and insurance agencies raise prices in response to malpractice costs. A deeper analysis of the issue is required to determine exactly why health costs as much as it does.
The source for the information found in this post can be found HERE .