Healthcare Revisited

The big news a few days ago was that the American healthcare system is broken, with waste amounting to 30% or $750 billion in 2009.  This comes as no surprise to those of you who have followed this blog over the past year.  In fact, a report from the Institute of Health echoed many of the criticisms I presented in the earlier postings.  Among the problems they cited are:  lack of consistency in treatment between different doctors or hospitals, poor record keeping, pricing secrecy, pricing variability from one provider to the next, pricing variability from the same provider depending on who is paying, and a lack of central coordination for complex procedures.  It takes just a little critical thinking to understand that efforts by our political leaders to figure out ways to expand insurance coverage is doing little to solve these core issues.  You don’t fix a broken system by giving more people access to it.

Let me remind you of some of my observations on this subject over the past several months.  Back on July 2, I used the analogy of buying gasoline to show how, for any other product or service, we would seriously question a process like the one we take for granted in healthcare.  On April 20, I discussed billing nightmares, the records and billing problems within our system.  After a visit to a doctor or hospital, you sit and wait while the individual providers, some of whom you didn’t even know were involved, send bills to the insurance company for approval.  Months later the Explanations of Benefits (EOBs) begin to trickle in.  The EOBs show what was billed, a contract amount, and what you actually owe.  Later your bills show up.  If there is a dispute, you have two or more parties to deal with.  You are expected to be an administrative wizard as you recover from your illness or procedure!  This setup is insane (and anything but user-friendly).  Furthermore, in early January I described how shopping for healthcare is inhibited by the inconsistency and the secrecy around pricing.

Finally, my posting on April 16 outlines eight reasons for high healthcare costs, describing two in detail.  A main point was that when you receive a service, and neither you nor the provider has a clear idea of the cost of that service, and additionally the provider assumes you will not be fully impacted by the cost due to the presence of an intermediary, the cost becomes a minor consideration at best.  No one cares about competitive pricing or cost tradeoffs.  Such a situation will inevitably contribute to the current climate of uncontrolled price increases.

Critical thinking leads us to the obvious conclusion.  The problems are deep in the design and assumptions of the system.  Figuring out ways to get more people access to a broken system only masks the real problems and encourages complacency.  I'm glad it's finally getting more coverage.