Insufficient outrage: is health care about helping people or enriching providers?

The NY Times has been running a series of articles on the cost of health care, which presumably have engendered anger and frustration in many, if not most, readers. I discussed one of them,  “The $2.7 Trillion medical bill”, on Jul 28, 2013 (The high cost of US health care: it's not the colonoscopies, it's the profit). It used colonoscopies as an example of why we have such high health-care costs. A more recent piece on the cost of delivering a baby, Paying Till It Hurts: American Way of Birth, Costliest in the World (July 1, 2013) documents the cost of that procedure. Many letters followed, most irate and some discussing the conundrums; for example, our expectation of every birth and baby being perfect, backed up by the threat of lawsuits, requires the presence – and frequently deployment – of enormously high-tech resources for every normal delivery.

One particularly articulate and irate response came in an Op-Ed by H. Gilbert Welch, a professor of medicine at the Dartmouth Institute for Health Policy and Clinical Practice, “Diagnosis: Insufficient Outrage”, published July 4, 2013. Welch states that he is “…not talking about a violation of federal or state statutes, like Medicare or Medicaid fraud, although crime in that sense definitely exists. I’m talking instead about the violation of an ethical standard, of the very “calling” of medicine.” He goes on to carefully describe both the incredible increase in prices for medical care and the excess use of the procedures that cost the most. He adds that the prices are only partially felt by the end-user (people) because Medicare, Medicaid and commercial insurers pay far lower amounts than the posted prices, but that the portion paid by people is going up, and of course the uninsured are charged full price. He notes that “They are largely young and employed (albeit poorly) and have little education,” although in fact many are older, and unemployed (remember Medicaid insures only poor people, but far from all poor people).

His description of the huge prices ($108 for a $5 tube of ointment, etc.) has become familiar, and is reminiscent of the $100 hammers bought by the Defense Department several decades ago. Less familiar, but at least as scary, is the increase he describes in charges that come solely from the purchase of physician practices by hospitals, which allows them to charge the higher fees that Medicare allows hospitals, called facility fees. In one place where this was done, the amount paid by Medicare for an electrocardiogram went up from $200 to $471, and for a colonoscopy from $2000 to $8000, in one year for the same procedure in the same location.

Welch says that “The word ‘crime’ is awfully strong. Many prefer to call all this a problem of perverse incentives: good people, working in a bad system,” but it is pretty clear that he has not convinced himself, not to mention me. And yet, I know the pressures that physicians and hospitals are under to make more money. After all, hospitals are run by businessmen, and buying up all those physician practices and having to pay the doctors does not come cheap, especially when insurers, particularly Medicare, are focusing on saving money by reducing their reimbursements.  It is a fascinating, if not encouraging, situation, where I can read all these exposes of medical excesses and then go back to work and hear from our own hospital leaders what strategies that they are going to need to employ to continue to make money in a challenging and competitive environment.

Welch says that “Medical care is intended to help people, not enrich providers.” I agree, and maybe you do too, but there is an enormous industry built around medical care and lots of providers (doctors and hospitals and owners of various for-profit facilities, not to mention the pharmaceutical and device industries, and insurance companies) who are indeed getting very rich. And many of them are running very scared that their riches will decrease. If we want a medical care system that is indeed intended to help people rather than enrich providers, there needs to be a major change in the way that it is paid for. We need to devise a system that encourages the provision of high-quality, appropriate care to everyone who needs it. And does not provide unnecessary or potentially harmful care to anyone. And is not so complicated that it encourages work-arounds to cherry-pick profitable patients or do more profitable procedures.

For starters, we need to have one payer, a single payer for everyone so no people are “more desirable” or “less desirable” based upon their insurance coverage (or lack thereof). That system needs to have a component (not the RUC, see Changes in the RUC: None.. How come we let a bunch of self-interested doctors decide what they get paid?, July 21, 2013) that evaluates what a reasonable cost is for that care, including a reasonable profit margin for the provider. It needs to have a component that evaluates new technologies to assess whether they offer benefit over existing diagnostic and treatment modalities, and to whom, and to not encourage over-proliferation of expensive technologies (such as the proton-beam accelerators Welch describes) because  “if we don’t have one, they’ll go to the other guys”. Incredibly expensive technologies, such as proton-beam accelerators, should be purchased by the single payer system, regionally administered, and available to everyone. 

The profit-making competitive marketplace works for many goods and services. It has no place in our health care.