1) Third party payments.
Imagine if everyone's parents paid for their cars and their televisions. The price of cars and televisions would skyrocket. That's because we would stop being consumers. Most folks would stop caring much about price and simply choose the most expensive car or television.
That is the inherent problem in health care and it comes in two forms. First, the majority of folks get their health insurance through their employer. Because they do, individuals rarely attempt to act as consumers in health care. Because the bill is usually paid for them, the individual doesn't do the kind of shopping they would for any other good or service.
Second, health insurance is far too inclusive. Imagine if car insurance included such things as oil changes, reallignments, and tire rotations. Car insurance would sky rocket and be unaffordable. Furthermore, the price of oil changes, car allignments, etc. would sky rocket as well. Health insurance is currently usually structured this way. Health insurance is far too inclusive. Insurance is supposed cover that which you can't pay yourself. Insurance is only supposed to be for those procedures that are beyond the means of the insured. By being all inclusive, patients stop being consumers for almost all medical procedures. John Stossel discovered the most fascinating thing about laser surgery, a procedure not covered by insurance.
Prices have fallen and quality has risen in other medical fields where most people pay for care themselves, like cosmetic surgery. Consumer power works -- even in medicine.
When government and insurance companies are kept away from the transaction, good new things happen.
A doctor in Tennessee I talked to publishes his low prices, such as $40 for an office visit.Most doctors would say you can't make money this way. But Dr. Robert Berry told me you can.
"Last year, I made about the average of what a primary-care physician makes in this country," he said.
Berry doesn't accept insurance. That saves him money because he doesn't have to hire a staff to process insurance claims, and he never has to fight with companies to get paid.
Because laser eye surgery is not covered by insurance, the patients shop around. They demand good service and they demand their money's worth. That's because it is their money. That's what needs to happen to more of medicine. It needs to be moved outside the insurance system so that patients become consumers again. More often than not a medical procedure is NOT so expensive that the patient can't afford to pay for it. So, why are they insured for it? Insurance is supposed to cover that which you can't cover on your own.
The solution is to offer as much incentive as possible for insurance outside the employer's system. This can be done through tax credits and Health Savings Accounts. Most importantly, patients must realize the role of insurance. They must only buy insurance that covers emergency procedures and act as consumers for all other medical procedures.
2) Lack of competition and a lack of choice.
There is an obscure amendment to the Sherman Anti Trust Act that has a terribly corrossive effect on health care. It gives health insurance companies limited immunity from the Sherman Anti Trust Act. One of the effects is that patients can't buy insurance across state lines. What this creates is state monopolies. In Texas for instance, Blue Cross Blue Shield insures one third of all patients. This happens in nearly every state with a different large provider dominating. This has several corrossive effects. First, patients have nearly no choice in insurance. Second, and a lot less recognized, the insurance companies take on significantly greater power. Imagine being a doctor in Texas and not being part of the network of BCBS. Talk to any private physician, a doctor with no salary, and they will tell you that the insurance companies are making it nearly impossible to do business. That's because their state monopolies allow them enormous new powers. Doctors, almost always, have no choice but to deal with the one company that dominates.
Both of these things must be removed. First, there is no reason for insurance companies to have limited immunity from Sherman. No doubt this came about strictly because their lobbies are so powerful. As such, they have created a system in which they enjoy enormous power and it also means higher costs for everyone else. Removing this immunity immediately also allows folks to buy insurance from any state. We aren't limited only to our state with any other insurance so why health insurance.
3) Corruption.
This is the dirty little secret of health care, but it is one of the most corrupt industries in the country. This corruption punishes good doctors, let's off bad doctors, and creates an environment for bad medicine. All of this corrodes the system and sky rockets costs. I spoke with a nurse who had been in the business for decades and they described the medical industry as something much like a mafioso. Grady Hospital, one of the largest hospitals in the country, is a microcosm of the deep rooted problem of corruption in health care. Corruption at County Hospitals is an all too common occurrence. State medical boards are often tools for nothing more than retribution, targeting, and looking the other way on corrupt medical practices. (I have scratched the surface on some of this corruption here, here, here, here, here, here, and here)
This problem is very difficult to resolve but it is the most vital if health care is to improve in the country. First, we need to tighten up Whistle blower laws. Often times, it is the whistle blower that is targeted by the corrupt medical system. Until this corrossive practice is dented we will continue to have detrimental effect on health care in America.
Second, the country, and mostly the media, must recognize the problem and begin to report on it. Oftentimes, you will find the media in bed so to speak with the corruptors. Many factors, including those that make the corruptors the ones that are the advertisers for the media play a role in the media's lack of interest in reporting the story. In the case of Grady Hospital, the main corruptor, Emory University, is the most powerful force in the Atlanta area and thus often influence the coverage, or lack thereof, on the matter. The public and media mainly must wake up to the reality that our medical system is penetrated by the cancer of corruption and until it is cleaned up health care costs will remain quite high.
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