Category Archives: Healthcare Reform

Why Is Healthcare So Expensive in the U.S.?

U.S. healthcare needs to be resuscitated

The U.S. has a presidential and other federal elections later this year. So we’ll be hearing more talk about healthcare reform. Mostly talk, not much action. Healthcare is an issue because it soaks up 18% of GDP (Gross Domestic Product). Many of us think that’s way too much and we can’t afford it anymore. Most other fully developed Western nations spend 9–11% of GDP on healthcare. Are we in the U.S. getting our money’s worth? Probably not, if you look at things like longevity, infant mortality rates, and overall disease burden.

When I aim to cure a disease, it helps immensely if I know the cause of the disease. That determines the treatment plan. If we want to fix over-spending on healthcare, we need to know the causes. With the right treatment plan, we might get healthcare costs down to 5% of GDP.

Here are the causes of overly-expensive healthcare:

  • Lack of price transparency
  • Third-party payer between patient and provider (they must be paid). Third party may not care about cost; just pass it on via premiums, or insulate themselves via high deductibles.
  • Defensive Medicine: excessive testing and consultations, malpractice insurance premiums, time away from patient care
  • Excessive regulation
  • Government essentially mandates Emergency Department care regardless of ability to pay
  • Excessive administrative costs (bureaucracy) of a byzantine system: providers’ office, healthcare insurance, hospital administration, regulators
  • Lobbying protects insurers, doctors, hospitals, Big Pharma at the expense of consumers
  • Low or no deductibles (no skin in the game)
  • Little incentive for patient to get or stay healthy
  • Government and insurers pay lousy docs the same fee as good doctors, so no incentive for great care or innovation. If you want to improve healthcare, you must financially reward competent and successful competitors. 
  • Providers are incentivized to provide services: provide more services, earn more pay
  • Greed
  • Insurance mandates
  • Inadequate competition among providers
  • Un-enforced anti-trust and consumer protection laws 
  • Excessive drug costs
  • Over-utilization of specialist care instead of primary care
  • Laws prevent importation of drugs by patients or providers from cheaper markets
  • Insurance companies prohibited from selling across state lines?
  • Pharmacy Benefits Management Co’s?
  • Insurance pays for too much, instead of only catastrophic care?
  • Waste and fraud?
  • Monopolies or near-monopolies (e.g., dominant hospital systems, insurance companies)?

If I’ve missed anything, please leave it in a comment below or email me at steveparkermd[at]gmail[dot]com.

Steve Parker, M.D.

PS: Below are some interesting links I found while researching this post.

From Investopedia in 2019:

“Even with all this money being spent on healthcare, the World Health Organization ranked the U.S. 37th in healthcare systems, and The Commonwealth Fund placed the U.S. last among the top 11 industrialized countries in overall healthcare.”

 From CNBC.com March 2018:

“The real difference between the American health care system and systems abroad is pricing.”

From JAMA Network March 2018:

“The United States spent approximately twice as much as other high-income countries on medical care, yet utilization rates in the United States were largely similar to those in other nations. Prices of labor and goods, including pharmaceuticals, and administrative costs appeared to be the major drivers of the difference in overall cost between the United States and other high-income countries.”

Yale Insights 2016 report focusing on hospitals:

“This study tells us that insurance premiums are so high because healthcare provider prices are incredibly high. The way to rein in the cost of healthcare services is by targeting the massive variation in providers’ prices. We can do that by making prices more transparent, making these markets more dynamic, and really blunting the monopoly power that a lot of large healthcare providers have, which has allowed them to raise prices.” Interviewee says the hospital industry is 8% of GDP.

PPS: Why not do everything you can to get and stay healthy, hopefully keeping you out of the Medical-Industrial Complex? If you need weight loss and exercise, I can help…

Steve Parker MD, Advanced Mediterranean Diet

Click the pic to purchase at Amazon.com. E-book versions also available at Smashwords. com.

 

Bureaucracy Accounts for 1/3 of Healthcare Costs in U.S.

 

One of thousands of billing clerks

Sure, you’re gonna have some bureaucracy, but one-third of total cost? Ridiculous!

From Reuters:

U.S. insurers and providers spent more than $800 billion in 2017 on administration, or nearly $2,500 per person – more than four times the per-capita administrative costs in Canada’s single-payer system, a new study finds.

Over one third of all healthcare costs in the U.S. were due to insurance company overhead and provider time spent on billing, versus about 17% spent on administration in Canada, researchers reported in Annals of Internal Medicine.

Cutting U.S. administrative costs to the $550 per capita (in 2017 U.S. dollars) level in Canada could save more than $600 billion, the researchers say.

Source: More than a third of U.S. healthcare costs go to bureaucracy – Reuters

The U.S. can slash healthcare costs 75% with two fundamental changes 

 

View from first part of the Romero Canyn trail near Tucson, AZ

From Sean Masaki Flynn at Market Watch:

As the Democratic presidential candidates argue about “Medicare for All” versus a “public option,” two simple policy changes could slash U.S. health-care costs by 75% while increasing access and improving the quality of care.

These policies have been proven to work by ingenious companies like Whole Foods and innovative governments like the state of Indiana and Singapore. If they were rolled out nationally, the United States would save $2.4 trillion per year across individuals, businesses, and the government.The first policy—price tags—is a necessary prerequisite for competition and efficiency. Under our current system, it’s nearly impossible for people with health insurance to find out in advance what anything covered by their insurance will end up costing. Patients have no way to comparison shop for procedures covered by insurance, and providers are under little pressure to lower costs.

The second money-saving policy links health insurance (with an annual  deductible) to a health saving account (HSA).

Look, people. We gotta do something. There’s no way that healthcare in the U.S. should devour almost 20% of Gross Domestic Product. We can get it down to 5%. I know how.

Source: The U.S. can slash health-care costs 75% with 2 fundamental changes — and without ‘Medicare for All’ – MarketWatch

Steve Parker, M.D.

PS: Reduce your need for healthcare via diet and exercise!

Steve Parker MD, Advanced Mediterranean Diet

Click the pic to purchase at Amazon.com. E-book versions also available at Smashwords. com.

 

Denninger Predicts Severe Economic Contraction in 2024, Thanks to Uncontrolled Healthcare Spending

U.S.A in 2030?

If Karl’s right, you’ll find good deals in real estate in a few years. If you have any money left.

You must expect that no medical care will be available for anything currently paid for by “insurance” or the government.  This is likely too pessimistic but if you count on it and are wrong you die, so being pessimistic by a bit over what’s likely is good rather than bad.  If you can change a chronic disease outcome with lifestyle you better do it now.  If you can’t then get your affairs in order, make peace with God if you believe in him, and then figure out whether you want to settle some scores when the bad stuff starts, because it’s going to and you’re going to have a very bad time of it.D

You must also expect that state, local and federal governments will all get very aggressive in trying to increase tax revenue.  If you live in a large metro area where embedded costs are high you need to get out now.  There is a very high probability that either through internal rot and collapse (e.g. they can’t pay for infrastructure repairs and they fail) or due to either an external actor or an uncoordinated and thus impossible to interdict group of Americans who decide they’ve had enough of the Blue “steal it all” crap infrastructure collapse is initiated and the large Blue Enclaves go feral within days.

If you lose this bet you will die fast and nasty.  If you stay and “win” you still lose; you’ve already seen property tax ramps in most of these places of 100% or more.  If you look at the discounted inflation-adjusted value of your house you’ve lost half of its value over the last 20 years not including the taxes already paid and thus forever gone!  That is, even if you “win” and there is no mass collapse due to either disgruntled Americans or some external actor you will still lose in that the value of your holdings will be destroyed over the next ten years.  It will be gone.  For most people not in the 1% who “own” houses their real estate holdings are more than half of their net worth and for many people it’s essentially all of it.  Get the **** out now or you will lose all of that value.  That much is assured and that’s if you win the bet; lose it and it’s not just money you lose, it’s your life as well.

RTWT.

Steve Parker, M.D.

Steve Parker MD, Advanced Mediterranean Diet

Click the pic to purchase at Amazon.com

Denninger on Price-Fixing In the Drug Marketplace

All Karl below:

Time to stop being nice.

America, you’re being raped.  Flat-out raped.

15 USC Chapter 1 makes clear that price-fixing is illegal.  When it comes to drugs, which are physical commodities, Robinson-Patman (15 USC Chapter 1, Section 13) also makes discriminatory pricing illegal for buyers of like kind and quantity.

(a) Price; selection of customers It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them

It is illegal for a pharmacy to charge you $10 for a drug and someone else $100.  Or, for that matter, to charge one person $2.15 million and another a $100 copay.

It is illegal for a hospital to do the same thing.

Things like “GoodRX” and similar are flat out facial violations of the law.

So are “varying” co-pays for the same drug in the same quantity.

So, for that matter, are bribes on a differential basis for the same thing (Section 13 c, d and e)

So, for that matter, are inducing such practices or benefiting from same (Section 13 f)

An insurance company is never a consumer of the drug.  A person is.  Such practices as conspiring with pharmacies and hospitals to vary the price you pay is illegal and has been since the 1930s.

Never mind the first few Sections of 15 USC Chapter 1 which make any scheme to fix prices or lessen competition irrespective of upon whom the price injury falls, or even whether it occurs (proof of same is not required in the statute) a criminal, 10 year in prison, felony.

Drug prices in particular, since drugs are commodities, fall under Robinson-Patman.  There is no exception found in the statutes for drugs.

Source: Prison Or Gallows: Pick One – The Market Ticker

Well worth your time to read the whole thing.

Steve Parker, M.D.

Steve Parker MD, Advanced Mediterranean Diet

Click the pic to purchase at Amazon.com

 

Discover a “Fair Price” For Your Upcoming Medical Procedure

…at Healthcare Bluebook.

I don’t know if the site above is legitimate or not. But I like the idea behind it. Check it out and see what you think.

 

 

Is There a Premium Increase in Your Future: Health Insurers Are Vacuuming Up Details About You

From ProPublica…

“Before the conference, I’d seen a press release announcing that the largest health actuarial firm in the world, Milliman, was now using the LexisNexis scores. I tracked down Marcos Dachary, who works in business development for Milliman. Actuaries calculate health care risks and help set the price of premiums for insurers. I asked Dachary if Milliman was using the LexisNexis scores to price health plans and he said: “There could be an opportunity.”

The scores could allow an insurance company to assess the risks posed by individual patients and make adjustments to protect themselves from losses, he said. For example, he said, the company could raise premiums, or revise contracts with providers. It’s too early to tell whether the LexisNexis scores will actually be useful for pricing, he said. But he was excited about the possibilities. “One thing about social determinants data — it piques your mind,” he said. Dachary acknowledged the scores could also be used to discriminate. Others, he said, have raised that concern. As much as there could be positive potential, he said, “there could also be negative potential.” It’s that negative potential that still bothers data analyst Erin Kaufman, who left the health insurance industry in January. The 35-year-old from Atlanta had earned her doctorate in public health because she wanted to help people, but one day at Aetna, her boss told her to work with a new data set.

To her surprise, the company had obtained personal information from a data broker on millions of Americans. The data contained each person’s habits and hobbies, like whether they owned a gun, and if so, what type, she said. It included whether they had magazine subscriptions, liked to ride bikes or run marathons. It had hundreds of personal details about each person. The Aetna data team merged the data with the information it had on patients it insured. The goal was to see how people’s personal interests and hobbies might relate to their health care costs. But Kaufman said it felt wrong: The information about the people who knitted or crocheted made her think of her grandmother. And the details about individuals who liked camping made her think of herself. What business did the insurance company have looking at this information? “It was a dataset that really dug into our clients’ lives,” she said. “No one gave anyone permission to do this.”

Source: Health Insurers Are Vacuuming Up Details About You —… — ProPublica