Why is health care so expensive in the United States?

CNN recently posted an article online, asking this very question.  It was posed in the guise of our leading mega-billionaires, Warren Buffet, Jeff Bezos, and Jamie Dimon, “fixing” our broken health care system.  In actuality, these three industry giants announced plans to combine resources to create their own insurance system for their combined 850,000+ employees.  A nice gesture, to be sure, but not really a panacea for a nation of 323 million and counting citizens.  In any event, the idea of “fixing” health care’s spiraling out-of-control costs is always a useful topic to revisit frequently.

This is obviously not a topic to be solved in a brief essay, but there are key problems and issues that just never seem to get better.  More often than not, they just get worse, which is always unsettling to those of us who pay attention and follow such things.  Like most businesses, health care expense is simply the sum of profits and losses.  If profits are greater than losses, you make money.  Simple, right?  To extrapolate to the overall picture, more “profit” for health care would ultimately equal lower costs for everyone.

So why are we failing so badly at this in the United States?  Going back to the basic two points, it’s actually easy to see.  The solutions are not as easy, as some of these problems have deep-seated schisms between the proverbial left and right of our political process.  Others involve private entities and duty to stockholders over the well-being of the system at large.  But let’s try to re-identify the basic points so we all can once again not lose sight of the issues.

The profit side is simple.  Most private health insurances are profit-driven monstrosities, dealing with dollar amounts that are difficult for we mere mortals to comprehend.  UnitedHealthcare, the nation’s largest insurer, posted recent quarterly revenue in excess of $50 billion.  With the median family practitioner salary being a bit below $200,000, it is clear the overwhelming majority of that $50 billion is not going to doctors.  But what about single-payer government health care, you say?  Not so fast.  Even with the abysmally low reimbursement rates of Medicare (which no doctor can support a practice solely on), Medicare expenditure was $523 billion in 2010, and is projected to balloon to over $1 trillion by 2022.  Where is all that money going?

The loss side is much more multi-faceted, and here is where the political murkiness of our current fractured society plays a big and unfortunate role.  As a practicing OB/GYN, I am painfully aware of the ever-increasing malpractice costs on the system.  In Western New York, which is on the lower side of costs, typical malpractice insurance is over $50,000.  In urban areas like New York City, it is well over $100,000.  Tort reform is no closer to being realized now as it was 18 years ago when I started residency.  In fact, I submit that it is worse.

We now live in a society where a 100 percent perfect outcome is the expected outcome, and anything less than that is clearly someone’s fault, and thus we must sue.  Well, those trials cost a fortune, with countless hours of attorney billable hours.  Even when you “win” a lawsuit as the defendant, you still lose.

Another large loss for health care is regulations.  The Joint Commission has leveraged itself as the required accreditation of any hospital wishing to provide services.  Mind you, accreditation is voluntary; but you would never know that as a layperson outside observer.  The number of rules and regulations is astounding.  The number of worker-hours spent on preparing for a visit, not to mention the product waste incurred on trying to avoid getting “dinged” during a hospital’s survey, is sad to behold.  A small, community hospital will discard tens of thousands of dollars in durable supplies that have magically “expired.”  These items are usually made of materials that will outlive cockroaches in our landfills, but we will nonetheless remove these dangerous, spoiled things from inventory.  In fact, we will even throw stuff out several months in advance, just to avoid the potential violations!  Madness.

Corporate medicine has become much more ubiquitous lately, as physicians accept their fate at not being able to compete, and sign on as employees.  While these organizations have many benefits, they also typically come with many layers of expensive administrators, and have their own laundry list of onerous policies and expensive regulations.

There are clearly many other sides to this complex story.  However, for something this important, it would be nice if just once, we could ask not what are the problems that face us, but how can we solve the ones we’ve known about for so long, but just continue to ignore?  I, for one, would love to hear solutions proposed from any side of the proverbial aisle.

Scott Treutlein is an obstetrician-gynecologist.

Image credit: Shutterstock.com

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