More Money, More Problems: How Profit Hijacked U.S. Health Care [Archive.org URL]

Patients are and should be the focus of this endeavor we call medicine. But more and more, it’s the business incentives that has become the primary driver. As someone who trained as a physician, and my dad was a doctor, I found it really disturbing. It’s fine for me if people make profit, but they should make profit out of doing things that are good for patients and the best for patients. Instead, what we see is often profit without regard to whether there’s actual medical benefit, and that’s a sad state to be in. That’s a big part of why our costs are so high.

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We like to say we have a market-based system, but it’s such a flawed market that even the most conservative economists look at it and go, “This isn’t a market.” As buyers, we don’t know prices of the choices that are put before us. Even the doctor doesn’t know the price. And the price can vary from block to block by a factor of 100. How can you possibly expect wise consumer decisions to totally solve this problem?

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I think this is a horrible burden to put on patients, especially when they’re sick, to say, “Oh yeah, shop around. Ask your doctor how much it’s going to cost. Say no if you think you’re not getting good value.” No other country puts that kind of burden on patients, frankly. But this is the reality we face right now. Before I dug into this system and understood what levers I could push, I would just throw up my hands and write the check and think, “Oh my God, this is crazy. But what can I do?”

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You could argue the original sin of our crazy health care system was the creation of insurance. That doesn’t mean insurance is bad. In an age of high-priced medical care, people need insurance. Remember in the good old days, insurers pretty much covered everything and your employer paid for the premium, so you didn’t even know what it was. What happens when you don’t feel like you’re paying? Americans become very price-insensitive. And what do you do if you’re a for-profit business, as most of the providers and device makers and pharmaceutical companies are? You say, “We’ve always charged $10 for that when someone was paying out of pocket. But now they’ve got insurance, so it kind of feels like nobody’s paying.” Maybe that $10 becomes $50 or $100.

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We developed this fiction that insurers are on our side, they are in our corner, which is kind of crazy. We don’t think our car insurer is in our corner. But we have this notion that health insurers promote, that “we’re here to help you.” No, they’re just pass-throughs. They take in premiums and they pay out claims. As long as they can raise premiums and deductibles, their response to paying out claims that have higher and higher prices is mostly just to pay it. They don’t care.

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Medicare has its problems, but it is the one part of our system that does a little bit of price control and price setting. They can’t do it for drugs, which is partly why we see these crazy pharmaceutical costs. But they do it for hospital stays, they do it for doctors’ visits. We’re going to have to look towards some kind of solution with a real way to control pricing as our population ages.