The Secret of Great Health Care
Chapter 1: Health Care is Expensive
Extra: How to Get a Health Insurance Quote
Health care in America is the most expensive in the world. In 2006, the United States spent $7,421 in per capita health expenditures, which is over 50 percent more than any other country (1). Contributing to high health care cost in the United States are cost of medications, top rate medical technologies, the extensive use of diagnostic tests, salaries of doctors and hospital administrators, government regulations and increasing life expectancy. Sadly, many people do not have health insurance to absorb some of the costs.
Medications are expensive to develop and drug companies want to turn a profit. Incorporated into the price of a medication are many things above and beyond the drug itself. The science behind drug development is expensive and medications must cover the costs of producing new compounds that become established drugs. Those compounds that scientists work on for years that do not become drugs are also included in the cost of drugs. New medications need to go through a rigorous and long process to get approved. The process takes years and requires passing several strict governmental regulations. Heatlh insurance is paying less and less for medications.
Advertising - including commercials, drug representatives salaries, perks to doctors such as pens, continuing education courses and meals - are included in the cost of medications. Drug companies must also turn a profit to keep their stockholders happy and the profit makes sure that the company continues to have money to develop new drugs for the future.
Similarly, the development of top medical technologies is expensive. Like the cost of drugs, technologies cost money to develop and use. Medical technologies can make tremendous improvements in patient care and outcomes but places a financial burden on the health care system.
The reliance on expensive diagnostic procedures defines the American health care system and contributes to the increased health care costs. For example, chest X-rays are commonly preformed on patients with cough. While many times this is a necessary diagnostic exam to rule in pneumonia or a flare of congestive heart failure, the test is often ordered when it is not necessary.
Multiple reasons –including doctors not spending adequate time performing a history and physical exam, fear of litigation and patient demand – account for the over reliance on diagnostic tests. A complete history and physical exam done by a health care provider can sometimes replace the need for many diagnostic tests but many health care providers feel more comfortable ordering a diagnostic test instead of spending the time to perform a good history and physical exam.
In addition to the direct cost of the tests, many tests discover abnormalities that turn out to be a false. When tests turn up with a positive result, but the results are wrong they are called false-positive results. In order to determine the significance of the abnormalities, the physician needs to run more tests and sometimes initiate treatment.
Doing unnecessary tests based on the results of these false-positives contributes to not only increased cost, but also increased risk for the patient. Many tests have risks and can lead to complications that not only lead to more cost but may harm or kill the patient.
Today’s health care system focuses more on diagnostic tests than on clinician knowledge not only because doctors are more comfortable with this approach but also because it reimburses better. Procedures are grossly over-reimbursed by insurance companies and the financial responsibilities are removed from the doctor and patient.
Defensive medicine is another factor driving up the cost of medical care. The litigious society that we live in makes it necessary for doctors to cover all of their bases – by practicing defensive medicine. Delay in diagnosis is a common reason physicians are sued. Because of this, doctors are more prone to order expensive tests to rule out any possibility that a diagnosis can be missed. The practice of defensive medicine costs the American medical system billions of dollars a year.
Malpractice, another malady of health care, is driving up costs. Medical fees are higher partly in response to doctors having to pay higher malpractice premiums. Lawsuits are on the rise for a number of reasons such as unrealistic expectations of the patients, few patients are completely informed of all possible outcomes, and the more predatory efforts of lawyers. Lawsuits in health care are necessary to keep doctors practicing safely but, nonetheless, there are many frivolous lawsuits.
Doctor’s salaries are increasing especially among specialty doctors such as cardiologists and gastroenterologists. Oversupply of specialists contributes to the rising health care costs. These specialists are eager and enthusiastic to carry out expensive medical procedures because these procedures result in good payments to the doctor.
A variety of other facets of the American health care system increase costs. Competition for patients’ health care dollars contributes to the health care systems participating in advertising – which increases costs. Large hospitals employ many administrators with salaries topping 100,000 dollars with these costs being passed on to the consumers. Insurance plans and government regulations increase the amount of paperwork and administrative costs. Health care institutions have to pay employees to complete this paperwork and other administrative detail.
The use of the emergency room as a primary care service is a costly form of care. Emergency room physicians do not know the patients and are more prone to ordering expensive tests and treatments.
Health care costs are increased in older patients. Older patients are sicker than younger patients and are higher utilizers of the health care system. Older patients have more chronic diseases; which translates into more dollars going into the health care system. Chronic disease contributes to health care costs by increased doctor visits, hospitalizations, medications and treatments.
Greed
Greed has inundated the health care system. Doctors seeing 6-8 patients an hour have replaced the old image of Dr. Marcus Welby sitting down and spending thirty minutes with each patient. Unfortunately, economic incentives are built into our current medical system and the American medical system is more of a business model than a caring model.
The business aspect of the medical system is disturbing. Doctors are often limited partners in the hospitals or clinics that they work at so they can help keep a financial eye on the system. Administrators are offered lofty bonuses to turn a profit. Methods used to make a profit often involve cutting staff that are front line workers directly responsible for patient care. This creates more stress on the already overworked staff resulting in a decreased quality of care.
Fewer primary care doctors practice today. Primary care doctors - family practice physicians, internists, general practitioners and geriatricians - are responsible for handling basic health care concerns of their patients. Primary care doctors are essential gatekeepers to controlling health care costs. Due to the lower reimbursement to primary care providers, many physicians are going into specialty practice. Specialty procedures and surgeries are better reimbursed than routine follow up care. The average specialist commands a salary of one hundred thousand dollars a year more than the average primary care doctor.
Doctors want to be rewarded financially for the years of hard work they put in including four years of college, four years of medical school and 3-5 years of residency. Medicine is not as lucrative as it used to be – due to decreased reimbursement and increased malpractice premiums. Doctors have to see more patients to make the same amount of money.
Insurance Companies
Insurance companies have changed the face of medicine. Due to the extreme expense of medical care in the United States it essential to have health insurance. Unfortunately, over 45 million Americans are without health insurance.
Health care is expensive even with health insurance; the deductibles and co-pays can add up to tens of thousands of dollars per year. While insurance is necessary in today’s health care system it does limit the care many people receive. Insurance companies are business venues and are out to make a profit. Consequently they put limits on what medical personal can do to care for the patient. Most insurance companies limit hospital stays, determine which medicines and services they can receive and even which doctor patients can see.
People with the intention of making a profit run insurance companies. Insurance brokers are highly motivated by high commission rates and caring for patient’s medical needs are often not the top priority. Insurance company administrators, who often do not have a medical background, are making medical decisions. Insurance companies often preclude potential clients based on pre-existing conditions. Managed care companies have changed the way that medicine is practiced. Doctors are often very frustrated in being limited in the testing they can perform because of reimbursement issues. The goal of managed care is to keep costs down by focusing on preventative services such as immunization and health screenings. While managed care has saved the health care system money, there are many justified concerns with the system. Physicians working for the system have less control over what can be ordered. Extensive paperwork is often involved in getting certain procedures and referrals approved. Capitation is a system that saves a lot of money. It involves giving the primary care provider a set amount of money for each patient in the health care plan. Spending more than a set amount of money on the patient results in a depletion of the primary care provider’s salary. Spending less than the set amount provided by the insurance company results in a profit for the primary care provider. Under this system there is an incentive to control costs and limit the amount of care each patient receives. This forces the primary care provider to heavily consider the cost when ordering a test. This reduces the number of expensive tests or procedures ordered. This system will bring out a new type of greed: the doctor and health care administrator withholding care to turn to profit. Debt from health care is a common cause of bankruptcy. It is estimated that 45.8 million Americans will die early or suffer because of lack of health insurance (2). This happens because people may wait to obtain health care - for fear of not being able to pay - until the last minute. This can occur in patients with adequate health insurance. Due the high co-pays and deductibles many insured patients wait until the last minute or avoid necessary follow up care. On the other hand, over utilization causes insurance companies to increase co-pays and deductibles. Many doctors refuse Medicare and Medicaid insurance if they can get enough patients on other insurance plans. Health care is expensive. Many of us avoid health care because it costs too much money. None-the-less we need health care to function. This is a major problem in today’s health care setting. Government officials and health care policy leaders are aware of the problem and are trying to fix it, but this will take time. References
