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Confessions of an Old Man

“The worst of capitalism and socialism”

July 25, 2020 – Health insurance companies have centralized control of how, when, and where a patient will receive medical services. Hospitals charge whatever they consider to be reasonable, regardless of the outcome. Drug companies maintain a virtual monopoly on prescription drug prices and exercise undue power over lawmakers through lobbying. Even Medicare, the largest buyer of health-care services, cannot negotiate better drug prices. The American public has been conditioned to delegate their personal healthcare decisions to insurance and drug companies, hospitals, and the rest of the health-care providers. Therefore, the health-care discussion is always around access to health insurance rather than the cost of medical care, which makes it anything but affordable.

The bottom line is that members of the MI generation are expected to foot the bill. They are required to pay 1.45 percent in taxes from their wages to cover Medicare costs for senior citizens. However, they may not get quality care when they become old and will really need it. As the father of a cancer-surviving son who is paralyzed, I have seen the best and the worst of the American health-care system. The fundamental issue with the American health-care system lies in the health-care narrative and public discourse.

The American health-care system has morphed into a beast that empowers health insurance companies, drug companies, hospitals, doctors, and everyone but the patients. Having health insurance coverage is defined as having access to health care. In the same vein, affordability of health care is translated as having lower-premium health insurance. However, there is no public discourse on the ever-rising cost of medical care that makes health care inaccessible and unaffordable. Medical care costs include hospitals, prescription drugs, doctors, diagnostic tests, and medical malpractice expenses.

The concept of insurance has been turned upside down when it comes to the American health-care system. We do not expect auto insurance companies to pay for oil or tire changes or routine maintenance of a car, nor do we expect home insurance companies to pay for leaky roofs or broken garage doors or landscaping. By definition, insurance is supposed to provide coverage for any unforeseen or unplanned situations by charging a premium to a cross section of subscribers to even out the risk. However, we expect health insurance companies to pay for routine checkups, tests, or even a sore throat—the cost of taking care of our bodies. In return for those payments, all Americans end up paying higher premiums every year.

If anything, the cost of health care should be going down because of technological advancements and the digital revolution. The American health-care narrative is flawed because medical care costs are the primary reason that health care is inaccessible and unaffordable, not access to health insurance. Almost every decision made by the Beltway Beast politicians depends on having health insurance coverage to make health care accessible and affordable, which has not reduced medical care costs at all. It has not reduced the health insurance premium either, as promised by the Affordable Care Act (ACA).

The first underlying issue is accountability. In our everyday lives, we are held accountable for our performance, whether it is a job, a service, or the quality of products sold. It is a common business practice that if you purchase something and find it to be unsatisfactory, you can return the product for a refund, get a replacement unit, or have legal recourse to resolve the dispute. The same holds true in the case of services to repair a car, air conditioner, or computer. Surprisingly, that factor does not exist in the American health-care system.

In addition to the lack of accountability by health-care providers, Americans have transferred the responsibility for their personal well-being to the health-care industry. They appear to spend much time and energy maintaining everything else, such as a car or home, but not their health. Anywhere from 50 to 70 percent of health-care costs can be attributed to unhealthy lifestyles and more than 70 percent of Americans are considered overweight, a major cause of health problems. We have been conditioned to think that insurance companies should pay for our regular medical checkups—the maintenance of our bodies. However, we have no problem paying for the checkup or regular maintenance of our car, home, or appliances.

The third-party payment system has taken the patient, the receiver of health care, out of the payment equation. This increases the potential for fraud. It is estimated that health-care fraud costs the nation anywhere from about $68 billion to as high as $300 billion annually. Insurance companies and Medicare are billed directly by hospitals, doctors, and pharmacies without the approval or concurrence of the patient, who can attest to what kind and quality of services, were received. A good example of the flaws in this system is the potential for up-coding, where a health-care service provider bills for a higher level of services than what was actually provided. For instance, a doctor examines a patient for a simple sinus infection but bills the insurance company or Medicare for an hour-long complex visit. Similarly, a pharmacy bills for a brand-name drug but provides a generic version to the patient. Up-coding sometimes occurs by mistake, but other times it is motived by greed and the desire for profits. Another flaw of this model is that patients lack the incentive to demand accountability for the costs because they are not personally invested in paying the bill.

The fee-for-service model incentivizes health-care providers to perform more tests and procedures regardless of the outcome. More tests and procedures mean more income for them. In all steps throughout the health-care supply chain, a patient is required to go through duplicitous tests and diagnostics. The patient goes to his or her primary care doctor, who requires the patient to have certain tests done, whether they are blood tests, X-rays, or computed tomography (CT) scans. Then, in the case of a referral to a specialist, that patient has to go through some of the same tests again. In the case of hospitalization, the same patient has to go through the same tests, followed by even more tests, all of them resulting in thousands of dollars in costs to the patient and income to doctors, laboratories, and hospitals, among others. Sometimes those tests are harmful, as in the case of unwarranted X-rays or CT scans. The net result of these unresolved underlying issues is higher health-care costs, to the tune of billions of dollars, for society at large.

Washington keeps on reforming the health-care laws and making the health-care system more complicated rather than focusing on the root cause of the problem: the cost of medical care. The key unanswered question is:

Why are health-care costs continuing to go up at a much higher rate than inflation?