I know very little about this subject, only that my premiums are about to shoot up by $200-400 per month for LESS coverage and I am not a happy camper. I figured this topic would evolve into a debate, and I’m really interested in hearing different perspectives on what exactly has caused this massive clusterfuck of a health-care system in the United States.
Some of my own, uneducated wild-ass guesses:
Lots of people using the ER for stuff that should have been addressed by primary care before it got that bad.
See above, add ‘‘and those people are too poor to pay ER bills.’’
I’m only getting that stuff from my attempt to help a nonprofit achieve status as a Federally Qualified Health Center – our grants contained a lot of information about how poor people in the neighborhood were putting off basic health care needs until it got to emergency status, to the detriment of the community, especially because so many were uninsured. This was our basis for the importance of primary care and chronic illness management at said nonprofit. This was BEFORE Obamacare. (We did get FQHC status - go us!)
Other guesses:
Doctors are charging more to cover their outrageous student loan bills (I kid)
Unmitigated greed by insurance companies**
I honestly thought corporate greed was the driving factor, until I learned that my insurance carrier was pulling out of the state because its individual health care plans were too cost-effective and they were losing money. I feel like we’re paying a lot with them… and now I’m finding out I was getting a good deal???
Anyway, discuss! I have no argument but I will try to learn something.
As I understand it - no transparency in the determining-the-cost process.
The ER could decide that the bill for repairing your broken thumb is $900. Or it could be $40,000. No transparency, completely up to the whim of the hospital’s financial department.
I don’t know the whole answer (I doubt anyone truly does) but I do know that doctor’s salaries are an insignificant part of the problem and the one that we couldn’t and probably shouldn’t do much about. Primary care physician pay is already so low that many areas, especially rural ones, are having trouble attracting and retaining them. That may sound odd for a profession that is high paying by almost any reasonable standard but you have to take into account the years of no to little pay, very high student loans, obscene hours in the early stages and the costs to set up a private practice if they choose to go that route. Most doctors eventually make good money but it may take until middle age to get there.
Malpractice insurance is a killer in some specialties. Many OB/GYN’s have had to drop the baby delivering part of their job because parents love to sue when their newborn doesn’t come out just right whether it has anything to do with the doctor at all.
The entire analysis is extremely lengthy but the high level summary is that that medical care in the U.S. consists of many completely separate bureaucracies stacked on top of one another and they all want their cut from the insurance companies to the hospitals (who have to use paying patients to subsidize the non-paying ones).
A major problem is cost transparency. Ask your doctor or nurse how much even something simple like fixing a broken finger or even just getting an unusual vaccination will cost before you agree to it sometime. They can’t tell you because they don’t know themselves. They don’t even have any idea how much they will be paid for fixing it for you. The insurance companies decide that and the tens of thousands of different plans out there are all different. The medical front office staff has to submit your claim to your insurance company, their computers throw out some rate based on formulas that only they fully understand and that is generally the end of it. Both you and the doctor’s office can fight with them if you don’t like the result but that is so time-consuming and confusing that most people just give up. Ten different people may very well receive 10 very different quotes for the same procedure even if their policies are with the same company because the plans are negotiated one by one with employers.
There is another very large piece that is unfortunate but it tends to help the rest of the world. Medical R&D is incredibly expensive and the U.S. tends to be a leader in both developing it and paying for it because we always want the most cutting edge medicine and the system is set up so that cost is no object for people that really need it. That means that that the thousands of biotech and pharmaceutical companies based in the U.S. have a captive domestic market for any new, approved treatments but they want their money back for developing them so they force U.S. consumers and their insurance companies to pay out the nose for them. However, the incremental costs of those new drugs and medical devices are not nearly as high so they can sell them for much lower in foreign markets at the same time just to earn even more money. That is an artificial condition created by the differences in regulations between countries.
In the Spring of 1637, the cost of a single tulip bulb was the same as ten years salary of a commoner … so everybody that could planted tulips … by Fall harvest the price had crashed to very little … many investors went bankrupt …
If a hospital can charge $150 for two aspirin, they will; and they certainly will try to charge $175, and if they get it; then they’ll charge $200 … with no end in sight as long as the people will pay it … what happens when the people stop paying this … well, things will change …
Insurance companies aren’t the cause of this, but they are complicit.
I believe that a large part of the problem is that most sickness simply cannot be fixed. We throw more money at the problem because we have more money to throw, and we probably get marginally better results in a lot of areas but, in the end, none of us lives forever. We’ll pay anything we have to stop time and there are plenty of people willing to aide us, good and bad, for a price.
What Velocity says is true as well. There is no way to shop around. In a country that loves competition in business it’s curious that this business, with all it’s government protections, can’t inform customers what something costs until it’s done. But then, they can’t figure out how to see customers in a timely fashion either, something else unique about the medical industry.
They’ve kind of got us over a barrel, then, because very few people are going to walk out of the hospital after hearing the sticker price of a life-saving operation.
But you’re right, the price always does seem like a total crapshoot. I was hospitalized twice in the last year. The second time, I went to the ER for two seizures, was sent home, and immediately had to return to a different hospital when I had a third seizure. I stayed in that second hospital for three days.
The ER visit where I basically sat in the hall for four hours was more expensive than the three days I spent in the other hospital! And we’re not really looking at the total costs of things, just our share of it. Like I don’t care if a procedure costs $30,000 if I’m only having to fork over $2,000 for it.
It’s not like you can go to the hospital after you get your bill and haggle over prices. When you’re haggling, it’s always with the insurance company.
So is it insurance companies setting the prices, or hospitals? Or some collaboration between them?
Byzantine bureaucracies, the profit motive, and the government doesn’t manage prices. Other developed countries have their own healthcare problems, but nothing like the scandal that’s America’s system.
That’s one of the reasons health care doesn’t fit the free market model. People needing medical care of any kind are very unlikely to “shop around” for the best price/service.
Also, no one cares how much the hospital charges, only what is coming out of their pocket. Do you think that other $28k just vanishes into the ether. No. At least a percentage of that is being paid by your insurance…using your inflated premium dollars and their investment dollars.
A hospital is a business. While Obamacare was an attempt at a fix, I wouldn’t consider it a rousing success. There’s absolutely no accountability with the system we have; however, I don’t have a plan for a better one.
It is both although large insurance companies tend to just tell the doctors and hospitals what they are willing to pay and they are free to either take it or walk. Some individual doctor’s offices do stop taking patients with certain insurance because it isn’t worth it to them but that doesn’t work well for emergency rooms because they are obligated to stabilize anyone that comes through the door. It is always better to get something rather than nothing.
That brings us to another problem related to cost transparency. Let’s say you have a rather simple problem like a small cut on your head that needs a few stitches. You don’t have insurance but you do have the money to pay for it. Most businesses would be happy to take your cash, fix you up and send you on your way but not hospitals. They have highly (sometimes absurdly) inflated “rack rates” that are much higher than the insurance companies actually pay. The main reason for that is so they can claim that all of the insurance companies are getting a steep discount for services.
An individual consumer without insurance will generally get a much bigger bill than an insurance company would for the exact same procedure. Of course they don’t expect most people to pay it and I suspect they get use those huge “losses” for tax advantages in the back-end accounting.
However, here is a tip for anyone because there is a flip side to this. Billing specialists at hospitals know that the bills to consumers aren’t real values. They are more like donation suggestions and they will usually take anything reasonable to clear your bill completely. I have done it many times with 100% success. Offer to pay 1/3 or 1/2 of the suggested donation right then and they will almost always take it. Some people can probably go lower than that if they are hard negotiators but I have always been happy with the reduced amount that they accepted.
Known reasons (by comparison with most of Europe):
-High administrative overhead in particular due to the complex insurance schemes, requiring on top of it administrative assistance for the doctors (FTR, here, a secretary for a cabinet of two-three doctors is pretty common here, and many doctors even dispense of that by using the service of call centers for taking appointment and such. There’s almost no work involved in billing/insurance).
-For profit insurers taking a cut.
-High income of medical professional by comparison with Europe.
-Very high malpractice insurance costs.
-Overequipment and overuse of this equipment (as opposed to a system where mostly public hospitals operate, allowing to rationalize and avoid redundancy), both because you need to amortize the equipment you bought and because you need to cover your ass by ordering probably unecessary tests.
-High cost of drugs that aren’t negociated at all.
-Complete lack of tranparency of the billing system, so that nobody knows who is paying how much for what.
-Insufficient preventive or early care resulting in higher expenses down the road.
Errr, sorry, but a lot of cutting edge medical research is done in the UK, and probably most of it. The land of the NHS. And lots of US Companies basically do no research at all,they buy the results of foreign companies. (This is not a bad thing, lots of foreign companies make an excellent profit basically doning R & D and selling results to Big Pharma).
Quite simply, there is no free market in health care, and there hasn’t been one for many decades. Insurance mandates, licensing laws, IP laws, Medicare/Medicaid, etc. That will give you a good start.
Health care is the only industry where people will claim that advances in technology make things more expensive. There is some really bad thinking going on in this area.
I am not at all suggesting you take a video bloggers word for it, but in that seven minutes are plenty of factual claims that are easy to verify and he lays out a substantial case.
This is factually incorrect, and it really annoys me. While the U.K. is no slouch in terms of medical research, it’s small compared to the United States, which produces both more (in dollar terms) and higher-quality research (in terms of study citations). The 'States spends about 40% of the global medical R&D budget, and runs about as many medical trials as the rest of the planet combined.
Your statement implies (incorrectly) that this is the US medical budget. While Big Pharma does often do this, it does not in any way change the actual R&D spending. Moreover, the Pharma companies themselves do not makeup all medical testing, which also includes major sectors of spending on new technology (i.e., computer tools, new tests, and so on) as well as new developments in treatments outside of drug development or “hard” technology. Also, the pharmaceutical manufacturers very often invest heavily during the development process, with a contractual option to license the product later, and most major pharma firms have many drug development labs they support. Even if they don’t, it’s simply because some other private firm invested first.
Britain produces good work, and has nothing to be ashamed of, but pretending it does “most of it” is ridiculous fantasy.
This is definitely an issue. The only way I know of to solve this would be a single payer system.
See above.
With the malpractice and tort reform that happened during the Bush years, malpractice insurance is not actually much of an issue, at least for family medicine and general internal medicine providers. I would put this very low on the list of things that contribute to high medical costs.
Maybe, but the issue is complicated. I’ll address that below.
Also a complicated issue, which I’ll address with point 4.
This is more a result of the problem rather a cause of the problem.
This is also only part of the problem, though definitely something that needs to be addressed.
The underlying problem is that medicine has reached a point where we’ve already grabbed the low hanging fruit. You have appendicitis, or a stomach ulcer, or uncomplicated pneumonia, or a boil? We can fix all those things at a reasonable cost. But then what? That person reaches old age, and develops heart disease or dementia or they have a stroke or get cancer or have osteoporosis and fall and break a hip or some other disease that is essentially caused by being old. Unless you die suddenly from trauma or a sudden major illness like a massive heart attack, you will eventually get one or more of the diseases of aging. These things are not fixable, but as a society we insist on treating them. I have personally treated hundred of elderly patients with end stage dementia who develop things like pneumonia, sever pressure ulcers, and other complications of being frail and old. It’s not uncommon to spend millions of dollars treating these patients with high dollar IV antibiotics, ventilator machines, surgery to try and repair pressure wounds that aren’t going to heal, and countless other treatment modalities. I’ve seen all these treatments used on patients that are end stage with no hope of meaningful recovery, and these are not uncommon occurrences. It’s politically incorrect to say so, but I think until a cure for aging is developed, we will probably need the infamous “death panels” if we ever hope to get medical costs under control.
WillFarnaby is correct that the “free market” in health care is not as free as right-libertarians would like. But I think this fact is less important than it looks. It is in fact true that it is very hard to get a medical license. But if we simply licensed chiropractors to act like M.D.'s, there’d still be a premium cost for the services of a physician with actual training.
The real way to get at the market problem is probably to increase supply by training physicians and physicians’ assistants. And that can usefully be done by public funding. When medical schools are turning half the applicants away, there’s some room to grow.
In other places, with nationwide programs and coverage, health care is run like police or fire services. NOT for profit. The cost to run your police service does not include a tidy profit, for a dozen or two middlemen.
If you have an uncoordinated system, and every middleman involved is taking a profit, well, costs will soar.
And continue to, unabated.
Profiting from providing health care to your citizens ought to be viewed the same as you would view any proposal to switch your police and fire services to, “for profit”. I’m pretty sure most people would find that unconscionable, I should think. Imagine withholding those services because someone didn’t have money or insurance.
Lost of countries have the kind of system the US has, a mix of private health care mixed with Government entitlements. What the US has is astronomical costs for basic healthcare. We had a thread sometime ago where it turned out that an ambulance ride could cost the person hundreds to thousands of dollars.
I’ve seen “profit motive” listed a couple times above, but that doesn’t hold up to scrutiny. Lots of places have profit motives and costs dont have double digit percent increases for years on end. There is a stark difference between the cost of something and the price. While the price can be mandated or restricted, that doesn’t do anything to the actual cost.
I’ve worked at a health care provider and it’s eye opening the level of complexity invovled in trying to maximize patient utility, bill in a way that supports the business, and encourage appropriate behavior. I see the high costs as a combination of many many things interacting. A few significant items:
[ul]
[li]Other people’s money spent on other people. A large part of health care spending is through programs like Medicare and Medicaid. That is using someone else’s money on someone else - generally the least efficient way to spend resources. Of the 4 quadrants of spending (your money on yourself, your money on someone else, someone else’s money on yourself, or someone else’s money on someone else), this way to spend is the worst.[/li]
[li]Health care is often a very inelastic commodity and the demand does not move with the price very well.[/li]
[li]Price transparency as mentioned above is virtually non existent[/li]
[li]The EMTLA created a mandate to spend money without hope of being repaid. This forces cost shifting to where there is actually money available[/li]
[li]End of life care is extraordinarily expensive - most people who plan ahead try to avoid it but if you don’t plan ahead, the default is to take herculean measures to extend life. That’s expensive.[/li][/ul]
Those are the biggest reasons I can think of off the top of my head.