The price we pay for maintaining our unique private pay healthcare system is financial insecurity. Financial class is the most critical determinant of healthcare.
The poor can’t afford to pay for their medical care. Yet they cannot be turned away from hospitals. They get mostly emergency and disaster care rather than preventive care, but care is most expensive. Preventive care is more available but rarely availed of. More of the financially disadvantaged are covered by Medicaid after the Obama expansion. The poor and the old have the most illness. Although health systems superficially take a loss with inadequate reimbursements, hospital systems get a break from paying taxes based on “charity care.” Nursing home care for the poor in Americans is inhumane. Nursing home employees are overworked, repressed, and underpaid and often take it out on patients.
The very wealthy will have enough money to pay for medical care and can comprehensive coverage. Public employees such as teachers and other unionized workers have held a knife to the throats of local and state governments via strikes. They have expensive Cadillac health insurance from public coffers. Both the wealthy and public workers I have spoken with are very jealous about preserving their health advantages they feel they have earned.
But the majority of Americans in the middle class, either employed in private businesses or owners of small establishments, worry about paying ginormous medical bills. In the worst case, a person may have a sick child with leukemia or chronic illness. Parents saddled with these bills may have no alternative but to declare bankruptcy, or begging over the airwaves, Good Morning America or Go Fund Me.
The majority of Americans paying for insurance have high deductibles. Private insurance is expensive only because care is expensive, and most persons have no choice but to elect out of pocket costs. Deductibles end up leaving the decision about whether to have treatment, tests, drugs to the patient because the patient has to decide if he has enough to pay out of pocket. The very rich and the poor don’t worry about this as much. For example, the best way of following multiple sclerosis is to monitor MRI scans once every year or two years. In recent years the scans are so expensive $2000 and out of pocket costs may be $1000 or more if the person has not reached their yearly limit so that many MS sufferers elect not to monitor these scans. The same applies to disease suppressing drugs which run in the range of $70,000 a year and may have prohibitively high deductibles. With drugs, some pharmaceutical companies very wisely write off the copay having set the basic price of the drug at such a high level, their profits are so incredibly large. This problem would be eliminated by lowering the cost of tests and medicines.
We fear cancer where out of pocket payments can run into the hundreds of thousands of dollars. If you are in the middle class, you will lose everything you’ve worked for and will devastate your finances, either paying for drugs or longterm care. Elder lawyers and accountants exist to hide wealth from medical billers. Why should this be? Are you liable for your own breast cancer?
When I attended the World Congress on Health partly sponsored by the Wall Street Journal, I was struck by the near absence of physicians. The conference was crowded by non-provider entrepreneurs hoping to make millions running doctors and other providers. Anyone who has practiced medicine for decades as I have, is struck by an explosion of management in medicine. Managers do help us navigate through red tape and development of whole regulatory bureaucracies such as HIPAA. Doctors are flummoxed managing their own practices. Hence we have the profusion of experts. For every doctor in practice, there’s an army of employees and managers. Not only MBAs and accountants but secretaries are now the doctor’s boss. No wonder many of us feel like automata following orders often from computer algorithms. Doctors don’t control our own and our patient’s futures. I can tell you from personal experience, the loss of autonomy and control among physicians is the whole cause of so-called “burn out,” which is a total misnomer. Although doctors do work hard, hard work is not what causes physicians to burn out. But that is a different topic.
Even worse, the whole purpose of vast teams of support personnel supposedly helping physicians attend to patients is about one thing – maximizing profits. Profits, not outcomes, keep giant medical machines financially afloat. Each and every manager, like the modern American physician provider they have made in their own image, is peering like busy bees into their little personal computers. I attended a conference with nurse managers from the hospital who were responsible for a hospital floor. We had to take a long drive from the airport to the hospital. While I drove, I sought to engage them in conversation. Nothing doing. All four of them was buried in her iPhone trying to balance nursing hours for each shift against patient occupancy. They were scared to death their own supervisors might find found some minor inefficiency.
Managers are pressed by persons in the hierarchy above. Managers want what they always want, to minimize financial outlays, while maximizing customer perceptions and won’t shirk deception if they can get away with it. Patient, often scantily educated and misinformed, are the very worst judges of quality. Yet patients are regularly queried by managers, who care only about return customers and word of mouth reputation. Even worse, managers are incentivized to generate higher charges for the same level of care the surest road to increasing profit. Thus we see higher charges and bills ever. Patients care not at all unless they pay themselves. Everyone knows how medical costs increase many times faster than inflation. The rapid increase in medical bills is due to perverse incentives all around.
I had hopes for Elisabeth Rosenthal, a non-practicing physician hired by the New York Times when she published her 2017 book: An American Sickness. Rosenthal identified collusion between medical insurance companies and hospital systems, which increases medical bills. You would think insurance companies who pay bills would want to decrease medical bills, but it is just the opposite. Insurers are in bed with hospitals. Individual managers running these conglomerates stand to make more when more money flows through their sticky fingers. Doctors, not all of them well-meaning, have jumped to the Dark Side of management in droves. As providers, they have lost all autonomy. By going over to management, they become the bosses, have no on-call provider worries, and can make a better living.
I saw a report on BBC and NPR about a woman who had an operation for tethering of her spinal cord. The patient was worried she might be presented with a bill from a non-participating provider for electrical monitoring of her operation. The issue was non-participating providers who could stealthily bill you for something insurance doesn’t cover. No one thought the $94,000 charge for monitoring was outrageous. I did. As someone who had done spinal monitoring myself, I thought the charge, not the non-par status, was the issue.
I had an epiphany. It’s the charges, stupid. Most of the problem providing medical care in this country can be reduced to excessive charges. Not everything of course but an awful lot can be blamed on the bill for medical care here, which is a multiplier of what it is for similar comparable services done in other countries. We could do much better for patients, provide medical care for a lot more persons if we could simply cut those outrageous bills.
The simplest method for this to be accomplished is to establish price controls. Let our Federal Government become a single payer taking over the whole health care system and taking each and every procedure such as a hip replacement and enforcing price by fiat. You could say, hip replacement in Belgium is $12,000 and thus we ought to be able to do a hip replacement here for the same. To that, I would say HL Mencken’s, “There is a solution to every problem: simple, quick, and wrong.” applies here in droves. I’m not an economist, but we have seen how price controls made by government fiat always result in skyrocketing prices. The fact that price controls don’t work does not even take into consideration restricting freedom and innovation. No way do I consider this solution acceptable.
Instead, I put in a plug for honesty and transparency. The only way I know for prices to go down is competition. Like any shopper, you compare prices and value. But doctors and health systems can’t compete if the prices are not available to the consumer. Every system ought to be publishing their own price for encounters, an internist physical or office visit, a mitral valve, an abdominal aortic aneurysm repair, total hip, heart cath, etc. But how can you measure quality, the other side of the equation? Simply the number of procedures done at an institution correlates well with quality measures and is an excellent start. The University of Pittsburgh does the most liver transplants. You won’t go wrong going to Pitt. There are also health systems you can count on to give the best care. Generally, you aren’t going to be disappointed at the Mayo Clinic. This data, specific charges, and as far as possible quality measures, needs to be available to you and your insurer. This is a great first step. And your insurer should send you not to participating hospitals with whom they have done backroom deals, but to the place with the best reputation and lowest real cost. Low cost also correlates with good care. It’s cheaper to do surgery with fewer complications caused by things like diagnostic bungling over testing and infection.
The cost of medical care may be drastically reduced by eliminating bureaucracies, like red tape and federal rules such as HIPAA and armies of bureaucrats and managers, and non-qualified health entrepreneurs. The purpose of management shouldn’t be to maximize charges, what we have today. in fact we need to do the opposite, post the lowest charges to compete for a particular procedure.
I make the following recommendations:
1. Eliminate rules and bureaucracies like HIPAA. More rules means more managers and computers to achieve compliance, which kills innovation and private practice.
2. Lower prices for all medical encounters. To do so eliminate incentives, managers have to maximize charges.
Increase competition by publishing accurate price lists for all encounters.
3. Separate insurers and hospital entities to allow payers and consumers to shop for the best deal. Patients should never be made to accept care based on backroom deals between insurers and hospitals. The exact same principle should apply to drug insurance like Silver Script tied to brokers like CVS. It shouldn’t be allowed.
4. How do you guarantee the best outcomes? Quality measures start with the numbers of procedures. The institution or surgeon doing more heart vascularization is generally doing them better and with fewer complications, enabled to do a particular procedure at less cost. Other outcome measures can be devised and published as they become available.
5. America pays far more than everybody else for pharmaceuticals and medical care. High-cost medical care will certainly be available to fewer people. Lowering cost per encounter is job one in America. A single payor and economic fiat will not accomplish this. Our best hope is transparency and competition.