Why is Medicine So Expensive?

If you are one of the 255 million Americans WITH health insurance you probably have seen an EOB or Explanation of Benefits. What is shocking about and EOB is the difference between what a doctor charges and what insurance actually pays. For example, I recently had an allergic reaction to an antibiotic prescribed by my doc, actually he's a Physician Assistant. To treat my hives the EOB show the doc billed, my copay and the plan allowance:



the strange thing about the charges is that I was never given IV Therapy. The PA mis-coded a procedure. As a health care consumer, with insurance, I have little knowledge of the true cost of health care. Does an injection of steroids to treat an allergic reaction really cost $75.60? Why is the plan allowance only $6.36 and I only have to pay .64¢? What happens to the other $68.60? And, what about the mis-coded treatment. The receptionist asked why I care... She said I only have to pay $2.37 for it and my insurance picks up the rest so what's the big deal...

Doctors are paid by a scheme called Fee For Service The idea of a government-run health-insurance plan made doctors nervous, and Lyndon Johnson's administration was worried that doctors wouldn't take Medicare patients. So Joseph Califano, Johnson's adviser for domestic affairs, made what seemed like a small concession: Medicare would pay doctors whatever they thought was reasonable. This concession cause health care costs to spiral out of control. By 1967 the Johnson Administration knew Fee for Service would soon bankrupt the country with spirally health care costs But doctors, who had a lot of sway with Congress, found they liked the payment system. So the system stayed in place for decades, as medicine got more expensive.

By the mid-1970's health care costs were growing faster then anticipated. By capping what doctors would be paid it was thought costs could be contained. Unfortunately Docs found a loop hole by ordering more tests and more procedures. Many time Docs pit patients against insurance companies knowing that we intrinsically trust our doctors and not the faceless insurance giants. Instead of thinking of our doctors as finance managers on car dealer lots trying to talk us into buying extended warranties; we blindly follow their advice even if it involves treatments and test that have no value.

Another reason health care costs are so expensive might be due to the fact that most new doctors start their profession $150,000 or more in debt. The cost of medical school is so expensive that doctors will take 50 years to pay off student loans.

I think the system is so broken that it will take a total overhaul to fix it. Single payer will end the bureaucratic nightmare that is currently health care billing. Student Loan forgiveness programs for Docs will change the mindset and encourage more medical student to consider Primary Care instead of Specialties. The end of the Fee for Service model and adoption of a salary system will trim cost too. Finally. reigning in big Pharma and controlling costs of prescription drugs needs to happen. But it will never happen. It's too much. There would have to be a populist revolt.

Jefferson and Washington

There is a great, probably apocryphal, story about Jefferson and Washington discussing politic of the new republic and at some point Jefferson asks Washington why we even need a Senate. Washington noticing that Jefferson poured his steaming hot coffee into a saucer asked Jefferson why he did so and Jefferson answered "to cool it." Washington said that is why we need the Senate to cool the legislation. Whether it is true or not the story does a nice job illustrating why we sometimes become so angry at the ineffectiveness of the upper house. Much of what comes out of the House of Representatives is a knew jerk reaction and the Senate does tend to temper it.

Over the past 2 weeks I've written some inflammatory posts about the Democrats being pussies and ineffective even with majorities and maybe that's a good thing. I really want to see change in the health care and it would be nice if it was boiled down to a few key ideas:

1. get rid of pre-existing conditions clauses
2. allow price negotiations on prescription drug costs
3. make health insurance companies non-profit
4. change the fee for service structure

The last 2 will never happen but they are at the heart of what is wrong with health care in the U.S. Physicians and insurance companies blame each other for the spiraling costs and the physicians are winning. Doctors love to create a scenario that they are fighting for your health care rights against the mighty dragon of insurance. I just had a battle like this and felt all warm and fuzzy about my doc. He wanted me to get a prescription that my plan would not pay for and tried to fight 'em. What I didn't think about were the kick backs my doc was getting from the pharmaceutical company. There was a little noticed settlement in September: Pfizer did not admit guilt to kickback charges, but instead paid $1 billion to settle the civil case. Pfizer just happens to make the drug my doc was fighting my insurance company over. I guess it's unfair to assume that my doc was getting a kickback but the Pharmacist told me there are other, safer, generic versions and thought it was "silly" to push for one drug in particular... I ended up with a generic and it works fine and cost me $10 instead of the $289 I would have had to pay out of pocket.

Well, that's a long way from Washington and Jefferson but it illustrates the point that we have a long way to go and there will be a lot of coffee cooling in saucers.

Please comment with what you would like to see your representatives do with health care.