It seems like every time a doctor pops in for a brusque, cold 15-second visit it winds up costing $500. It’s woe to you if that doctor ends up doing anything — for that, you’ll probably end up paying $1,500 for a few stitches. How on earth did this happen?
The good folks at MedicalBillingandCoding.org created an infographic laying out many of the exact reasons why costs are so insane in the American medical industry. But maybe the best part is the myths it helps dispel. For example, it’s all too easy to blame costs on malpractice awards. And on old, fat people. And on smokers and alcoholics. But these are all false:
Point being: When conservative demagogues go on and on about fixing health care by addressing malpractice law, they’re not being honest about what’s required.
The true causes are a bit more subtle. It’s here that the infographic breaks down a bit — among the causes of blame, it cites doctors who make too much and an over-reliance on out-patient care:
These are shadows cast by a greater problem. The real beast is hinted at in the first reason laid out above: The fact that providers charge more because they can.
Our insurance system sets up perverse incentives and blinds consumers to costs.
It’s actually not so simple. Rather, our insurance system sets up perverse incentives and blinds consumers to the true costs of health care. Doctors get paid on a fee-for-service basis — meaning they have every incentive to do more procedures. Need a test? Get five! Have a cold? Run an EKG! I’ll bet you’ve experienced this yourself: How often do you go to the doctor for some minor ailment, and end up undergoing a barrage of tests and appointments? Likewise, health insurance companies aren’t exactly incentivized to lower costs — one of the simplest ways for them to grow their absolute profits is to grow the overall numbers of billings, which allow them to justify increases in premiums.
Moreover, in our medical system neither the doctor nor the patient ever knows how much anything costs. Unlike almost any other goods we buy, we make health care decisions with no recognition at all of cost/benefit. When you’ve got an insurance company footing the bill, it’s all too easy to go for some cutting-edge treatment that might be 1% better but cost 10x more. (Also: Doctors are constantly be marketed to by Big Pharma, as this infographic lays out.)
So what’s the solution? Well, we could pay doctors for providing health care results rather than just providing health care procedures. That’s politically radioactive, but doctors are starting to recognize that the pay-for-service system is on the verge of collapse.
As to the crazy incentives, it will eventually come to some form of rationing: We’re going to have to realize that sometimes the more expensive procedure or medicine isn’t always better. Problem is, when “rationing” gets mentioned at all, someone always trots out some hideous mistruth like “death panels.” (For more on that, check out this interview.)