Our current model of healthcare was conceived in the late 1960s and introduced during the Nixon administration as a not-for-profit managed care system. Wealthy entrepreneurs saw an opportunity to make fortunes, and by the Clinton administration,
Exceptions were the
The argument used to turn healthcare into a for-profit industry focused on competition. For-profit health insurers insisted competition would fuel innovation in healthcare and keep rising prices in check.
So how did that work?
According to the
The ranking at number 37 has remained unchanged since then
So what went wrong? Where was the competition for innovation and lower prices?
Since managed care came into force in 1970, the number of physicians in America has increased by approximately 200%. But the number of healthcare managers (administrators) has increased by over 3,800%. Over the same period (1970 to 2019), healthcare costs have increased by 3,100% or per person
Ironically, competition and innovation are the reasons that prices and the number of administrators have increased.
To make healthcare a profitable business venture, insurance companies have used competition and innovation to drive down their costs. Because a health insurer’s expense is sick patients and their medical claims, health insurers have found innovative ways to reduce the number of unhealthy patients they cover while aggressively rejecting as many medical claims as possible. They’re not competing for lower prices, they’re competing for a larger percentage of healthy patients (fewer medical claims), inventing new ways to decline medical claims, and inventing ways to eliminate their most medically needy patients from their insurance plans!
To achieve this, they have hired more and more managers or administrators to find ways to decline requests from doctors and patients to pay for tests, services and medication. The additional cost of hiring additional managers is more than offset by the money saved by paying out fewer medical claims. The for-profit system of health insurance is designed for people
Responding to medical claim denials creates unnecessary paperwork for everyone involved: hospitals, physicians/clinicians, and patients. This denial of medical claims has prompted doctors and hospitals to hire their own army of administrators to respond to the extra paperwork being generated by insurers. This further drives up the costs within the system. Many patients have faced the complexity of this paperwork and simply given up or given in to the insurance companies and accepted being denied the services, tests and medications they needed.
That makes some of them stand out
The enormous number of administrators (non-medical personnel) remains the largest single item in our medical system. But drug prices come second.
Americans spend more money on drugs than any other country. It’s not that we use more medicines per capita than in other countries, on the contrary, we tend to use less. It’s because the medicines we buy are so much more expensive than other countries.
We owe this to the lobbying work and the large political donations from the pharmaceutical industry. Where other countries have limited the amount of profit a company can make from a life-saving drug, the US leaves that up to each individual pharmaceutical company. Instead of lowering prices, these companies have been offering gimmicks and coupons. Even with these discounts, we still pay more per drug than citizens of other nations.
The medical business has transformed the medical profession in the United States. Physicians, nurses, and other medical clinicians often must balance the quality of care with the patient’s ability to afford the right treatment. Also, they get paid for how much they do, not how they do it. For example, two doctors can successfully treat the same medical problem, but one doctor can do it in two visits while the other doctor needs four visits. Because reimbursement is based on the number of visits, the system rewards the doctor who needs more testing and more visits.
None of these problems would exist in a universal health care system. Since every person would need to be covered, the competition would aim to find ways to prevent people from getting sick in the first place, and then minimize the number of visits to hospitals or doctor’s offices required to maintain a functional lifestyle.
The medical society survey shows that in all medical disciplines (primary care, surgery, specialty care, etc.)
For the enormous cost of medical care in
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