To Control Healthcare Costs We Have to Start with a More Honest Conversation About Costs |
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Coverage for All won’t directly impact rising healthcare costs, however it will provide tools and structures that could eventually result in reduced costs. However the starting point has to be a more honest conversation about why costs are so high, why we have the most expensive healthcare in the world. As much as they have been demonized, it’s not the insurance companies. It’s our for profit healthcare system and our desire as healthcare consumers for ever more care and treatments.
It’s Not the Insurance Companies
We spend approximately $4 trillion on healthcare every year; the $90 billion in profit for insurance companies is about 2% of our healthcare spending. It’s not this 2% that is making healthcare unaffordable. Yes, filing insurance claims increases bureaucracy and costs. But it wasn’t the insurance industry that chose our fee for service model. It was us, the patients, and the care providers themselves. We shouldn’t blame insurers for the approach that we consumers, in conjunction with our doctors, selected.
What’s Really Driving Costs – For Profit Medicine
More than anything else, it is our For Profit, Fee for Service Provider Model that is driving up our healthcare costs, in many different ways. Doctors make more money when they recommend more care. Pharma Companies and Medical Technology companies have an incentive to introduce new or improved drugs and procedures. We as consumers want to try these new drugs and procedures. In comparison to every other health system in the world, the U.S. health system introduces far more new treatments and drugs and spends far more on these new treatments and drugs. Part of this is driven by the profit motive, but a part of it is our view of healthcare as a consumer good, and our desire to have the latest treatments and drugs promising new, better outcomes.
Because of the vast number of ways to spend money on healthcare, and our approach of paying doctors and care providers by service, we have a vast, complex coding and billing system. Our legal tort system and approach to medical liability also drive up costs. Doctors and care providers in the U.S. face far more lawsuits than anywhere else in the world, and this concern for liability also leads to more care and tests being ordered.
We Don’t Evaluate Cost
While it’s starting to change, we do not evaluate cost in deciding whether or not to approve new drugs or procedures. We evaluate medical outcomes, and if the new procedure is different and achieves a medical outcome we give it a medical code. These new codes allow providers to ask for new, increased reimbursements. We regularly add new, more expensive treatments with only marginal improvements over existing treatments. And it’s about to get a lot worse. We are starting to see the approval of a new generation of gene therapies that will cost, and this is not a typo, millions of dollars per treatment.
The Reality of the Insurance Pool
Sometimes in the national conversation it seems as if “society” or “government” are entities that pay for healthcare so we don’t have to. The reality is we all pay into a healthcare pool, and that pool is what pays for our care. Usually, most people in the pool pay in more than the cost of the care they received, with most of the money in the pool used to pay for the care for the unlucky people that get sick. But when costs go up because of these new and more expensive treatments, we all pay for it.
The Hard Truths of Healthcare
There are four immutable truths about healthcare, regardless of the system or country:
The Reality of Rationing
This, ultimately, is why the Coverage for All approach will eventually transform healthcare and yes, rein in costs: it forces us to confront the hard question: how do we ration care?
Sometimes it seems as of proponents of the different approaches to healthcare believe their preferred approach doesn’t ration care. However, EVERY healthcare system rations care in one form or another. Coverage for All will change how Americans think about their healthcare and its costs, making them more aware of healthcare costs, and the possibilities of reducing their healthcare costs by accepting explicit rationing and liability protection.
How Coverage for All Enables More Transparent Rationing
Coverage for All would enable insurers, HMO’s and other healthcare payors to offer lower-cost plans with defined rationing and limitations on liability. All are tradeoffs, and all will impact care, however all have a chance to bring down healthcare costs.
It’s Not the Insurance Companies
We spend approximately $4 trillion on healthcare every year; the $90 billion in profit for insurance companies is about 2% of our healthcare spending. It’s not this 2% that is making healthcare unaffordable. Yes, filing insurance claims increases bureaucracy and costs. But it wasn’t the insurance industry that chose our fee for service model. It was us, the patients, and the care providers themselves. We shouldn’t blame insurers for the approach that we consumers, in conjunction with our doctors, selected.
What’s Really Driving Costs – For Profit Medicine
More than anything else, it is our For Profit, Fee for Service Provider Model that is driving up our healthcare costs, in many different ways. Doctors make more money when they recommend more care. Pharma Companies and Medical Technology companies have an incentive to introduce new or improved drugs and procedures. We as consumers want to try these new drugs and procedures. In comparison to every other health system in the world, the U.S. health system introduces far more new treatments and drugs and spends far more on these new treatments and drugs. Part of this is driven by the profit motive, but a part of it is our view of healthcare as a consumer good, and our desire to have the latest treatments and drugs promising new, better outcomes.
Because of the vast number of ways to spend money on healthcare, and our approach of paying doctors and care providers by service, we have a vast, complex coding and billing system. Our legal tort system and approach to medical liability also drive up costs. Doctors and care providers in the U.S. face far more lawsuits than anywhere else in the world, and this concern for liability also leads to more care and tests being ordered.
We Don’t Evaluate Cost
While it’s starting to change, we do not evaluate cost in deciding whether or not to approve new drugs or procedures. We evaluate medical outcomes, and if the new procedure is different and achieves a medical outcome we give it a medical code. These new codes allow providers to ask for new, increased reimbursements. We regularly add new, more expensive treatments with only marginal improvements over existing treatments. And it’s about to get a lot worse. We are starting to see the approval of a new generation of gene therapies that will cost, and this is not a typo, millions of dollars per treatment.
The Reality of the Insurance Pool
Sometimes in the national conversation it seems as if “society” or “government” are entities that pay for healthcare so we don’t have to. The reality is we all pay into a healthcare pool, and that pool is what pays for our care. Usually, most people in the pool pay in more than the cost of the care they received, with most of the money in the pool used to pay for the care for the unlucky people that get sick. But when costs go up because of these new and more expensive treatments, we all pay for it.
The Hard Truths of Healthcare
There are four immutable truths about healthcare, regardless of the system or country:
- No society can afford to spend an unlimited amount of money on healthcare
- No system can afford to spend an unlimited amount of money to keep any one person alive
- The rich will always get better care than the poor
- The responsible will always get better care than the irresponsible
The Reality of Rationing
This, ultimately, is why the Coverage for All approach will eventually transform healthcare and yes, rein in costs: it forces us to confront the hard question: how do we ration care?
Sometimes it seems as of proponents of the different approaches to healthcare believe their preferred approach doesn’t ration care. However, EVERY healthcare system rations care in one form or another. Coverage for All will change how Americans think about their healthcare and its costs, making them more aware of healthcare costs, and the possibilities of reducing their healthcare costs by accepting explicit rationing and liability protection.
How Coverage for All Enables More Transparent Rationing
Coverage for All would enable insurers, HMO’s and other healthcare payors to offer lower-cost plans with defined rationing and limitations on liability. All are tradeoffs, and all will impact care, however all have a chance to bring down healthcare costs.
- Annual limits on costs. Allow insurers and other providers to put an annual cap on the amount of money they will spend on the care of any one person.
- Alternative resolution of Liability claims. Allow insurers and care providers to offer plans with limitations on participant’s ability to sue for malpractice.
- Consider cost of new drugs and procedures. Allow insurers to include costs when evaluating whether to cover new treatments and drugs.
- Negotiating Leverage for Payors. Allow insurers, HMOs and other payers to form a buying collectives to negotiate with large providers and pharma companies.