The Truth about Costs in Health Care

Now that the Affordable Health Care Act is set to go into its actual, real-world  administration, we are about to learn the true meaning of cost.  The cost, unfortunately,  will be America losing the best health care in the world.  Maybe it's too late to bring this up, but costs in medical care that led to a justifiable panic are explainable.  Fortunately for us, cost issues can still be ameliorated in a reasonable way.  We must acknowledge the factors that drive up costs and address them.

Not that many generations ago, doctors and hospitals were not that well-paid.  Indeed, not that long ago, doctors had little to offer the sick in terms of treatment, justifying their poor remuneration.  Nurses were much more valuable to the sick and dying.  Then something dramatic and unintended happened.  In an effort to avoid inflation, the federal government set wage controls in the 1950s.  Businesses, in an effort to attract good employees, began offering health care benefits.  Our population was relatively young, our habit of going to the doctor for any illness didn't yet exist, and insurance companies became flush with cash.  This led to a "cost is no object" attitude in the attempt to discover new treatments for all of the world's maladies.

A brave new world of medical evaluation and treatment options opened up that continues to this day.  The pay for doctors that are specially trained skyrocketed, and justifiably so.  Cure rates for previously incurable diseases increased proportionally.  Hospitals were now a place where you didn't just go to die; you had a great chance of surviving and returning to a functional life.  American pharmaceutical and medical equipment manufacturers, with their innovation and resultant success, became the envy of the world.  We have benefited tremendously as a society as a result.

Now, with our population aging and our new habit of going to the doctor for even trivial illnesses in full throttle, we are faced with all the problems of affordability.  We have overreacted and ill-advisedly decided that the giant health care conundrum is just too big for markets to fix.  Even though our health care system is the envy of the world, and most people are getting great care, the inequities of the system led us to throw the baby out with the bathwater.  How soon we have forgotten where this system was and how fortunate we truly are.

Throwing away the insurance industry, which ObamaCare ultimately will cause to occur, is not the way I would approach the problem.  Reforming the insurance industry by taking a close look at mandates, state by state, and allowing out-of state competition seems a better option.  Insurance pooling, something the law has poorly addressed in its legislation, is a great free-market idea.

One way that ObamaCare has decided to cut costs is to weed out high-cost providers.  On the surface, this seems to be a no-brainer.  Why not get out the old fiscal clippers and prune off the branches that are disproportionately weighing down the tree?  Indeed, some physicians and hospitals may have gamed the system, and gotten rich by doing so.  But there is a greater truth concerning cost -- one that is not immediately evident to those not involved in patient care.

Early on, in the new world of HMOs, back in the '90s, our surgical specialty group attempted to prove to the insurance companies that we were the best-value option.  We looked at the costs involved with care, individualized to each practitioner.  A surprising result of our research led us to abandon this task.  One of the members of our group was an "outlier."  His costs were higher.  He ordered more specialized, expensive tests.  He performed more costly procedures.  Strictly financially, he was a good reason not to come to our practice for treatment.

But this physician was the primary reason people sought our services.  He was the doctor other doctors relied on for referral when their treatments failed.  Without him, our true value was significantly diminished.

When you think about it, it is easy to explain why he cost more.  When a treatment fails, sometimes more testing is necessary to explain why.  More investigation, more procedures, more lab and radiological data is generated.  And the funny thing is, those of us in the group thought of him as being the least costly element in the grand scheme of care.  After all, it is vastly more expensive to make the wrong diagnosis and prescribe the wrong treatment, and then have to go back and correct the whole problem.

A patient presents to his physician a set of issues that he wants addressed.  The art of medicine is in eliciting from that patient, both during questioning and physical exam, an accurate diagnosis and treatment.  This is much harder than a layperson can imagine.  The more of an enigma the problem presents, the more expensive testing and investigative procedures ensue.

Counterintuitively, the subspecialist may prove to be the most cost-effective treatment option.  He may know the one best question to ask.  He may know the best test, even if it is an expensive test, that would cement that diagnosis and thereby lead to accurate treatment.  Inaccurate diagnosis, to restate, is the most expensive option in care.  The para-health care professionals that ObamaCare requires would add another layer of high cost and ineffective care, as they are more likely to make inaccurate diagnoses.  I know this, because even highly trained, ethical, excellent physicians refer to me with inaccurate diagnoses.  And I have made many mistakes myself, even with my specialized equipment and years of troubleshooting.

Weeding out high-cost providers is not the option that I would take.  Prosecuting the illegal activity of those who game the system, using laws already on the books, is much more reasonable.

Legal issues are not only the elephant in the room in the problem of escalating costs in health care, though they may be the biggest anchor on growth in business in America today.  Malpractice costs are huge.  The costs associated with trying to avoid malpractice are huge.  Settlements in malpractice frequently look like misprints.  Most physicians are well aware that each patient encounter is a potential lawsuit.  They gear their practice patterns accordingly, and costs skyrocket as a result.

And physicians are usually small businessmen.  As such, they are susceptible to the  insanities of the  EEOC laws.  Have you ever fired anyone for what you felt, as his boss, was a justifiable reason without first thinking of the EEOC?  Of course not, especially if that employee was a woman or a minority.

The so called "American Rule" of both sides being responsible for the costs incurred in a lawsuit came out of the War of 1812.  The Treaty of Paris allowed English creditors access to sue for debts owed by Americans.  The states in America responded by requiring that the British pay their own court costs when pursuing payment.  Hence, no more "loser pays" in the courts of the U.S., as it was, and still is, in the rest of the civilized world.  And how well this system has paid off for lawyers is shocking.  Bringing a viable case to trial is now so expensive that settlements in six figures are considered a bargain.  So that little bit of "spitting in the eye" of the Brits, that weaseling out of paying our debts, has permanently screwed us as a nation of businessmen.

Everyone knows that our Legal-Lotto system is costing us too much.  Yet ObamaCare does nothing to address the problem.  I believe that it would be reasonable, especially given the dire issues related to costliness in medicine, to finally face true tort reform as a means of bringing down these costs.

Many other reasons for high cost exist, not the least of which is practitioners who think nothing of an 80-hour work week, but we must keep in mind that doctors are valuable.  They are in school and training often up to thirteen years after high school.  When faced with a life-threatening illness at three in the morning, we Americans would rather have someone there who is happy to take care of us.  Do you see that scenario in ObamaCare?  Pharmaceutical companies are valuable.  Who else will bring us the next miracle cure?  Now it costs over a billion dollars to even try to bring a new drug to market, primarily because of medico-legal issues.  This is ridiculous.  Medical equipment manufacturers are valuable.  Hospitals are valuable.

Tom Price (R-GA) tried to introduce Bill 3000 in 2009.  It lays out a groundwork for a workable solution to cost and access.  Docs4PatientCare has similar information on its website.  Even though I think that ObamaCare, as written, is poorly thought out and unworkable, adoption of a few major changes could salvage it.