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Curing Our Health Care Woes

In Michael Cloud

By michaelcloud
March 20, 2017 at 2:33 p.m.


If  you don’t ask the right questions, you will always end up with the wrong answers.

Such is the case in our nation’s decade long struggle to address America’s health care woes.  A cornucopia of false assumptions and wrong goals have left us with a law that is failing under its own weight — and a new proposal that puts a band aid on the symptoms but does not attempt to cure the illness.


Photo credit: The Silent Hospital by Ryan McGuire

For decades healthcare costs have been on a constant rise.  In 1980, the average price of a hospital room was an inflation adjusted $368 in 2015 dollars.[1]  Today it is over 3-5 times that.  From 1960 to 2014, healthcare spending per person went from an inflation adjusted $1,176 per person to $9,544.  As a portion of our GDP, healthcare spending has increased from 5% to 17.5% during that same time. [2]   Less esoteric is the fact that unpaid medical bills are the number one cause of personal bankruptcy in the US. [3]

There are a number of reasons for the rising costs of health care that include: greater consumer demand, cost of innovation, increased administrative and regulatory costs, lawsuit abuse and Medicare fraud (which alone costs each US household an average $487 per year).[4]

Legislative Malpractice

In an misguided effort to increase access to health care, lawmakers have instead added to the cost of health care by mandating that everyone purchase health insurance.  Even the new plan, which would remove the mandate, still operates from the false assumption that health insurance lowers the cost of health care — when in fact, health insurance increases the cost of heath care.  Sure there are individuals and families whose health insurance has protected them from devastating loss.  And it is wise for each American to at least maintain catastrophic health insurance.  But health insurance companies haven’t built a $660 Billion industry by paying out more than they are taking in.[5]

The goal should be "how do we foster an environment that allows people better accesses to health CARE?”  Instead, much of the focus has been on getting more people on — or by decree mandating — health INSURANCE.  This in spite of studies that suggest more health insurance leads to more health care spending that does not necessarily lead to better health.[6]

In a case of legislative malpractice, our lawmakers failed to diagnose the disease before prescribing the cure.  We failed to ask, “Why is the health care industry failing in a free market?”

One major reason is that we have all but removed consumer accountability from the industry.  From 1960 to 2014, the portion of US health care expenses paid directly by consumers decreased from 48% to 11%.  Meanwhile, the Government portion of expenses has increased from 24% to 49%. [7]

Because the vast majority of medical care is paid from through third party sources, the patient has little knowledge or interest in the price. [8]  An inquiring patient will often find it difficult, if not impossible, to find the cost of a procedure ahead of time.  This disconnect from medical pricing, leaves patients and care providers no incentive to choose economically efficient methods or service providers. [9]

Curing our Health Care System

In a free market, the ability of a customer to evaluate and compare products and prices is what keeps pricing in check.  Imagine how much a car or truck would cost if the auto industry operated like the health care industry.  Imagine your auto insurance company telling you where you can buy a car — the negotiated price being kept from you until you have agreed to purchase the car.  This is the lunacy we have come to accept as normal in the health care industry.

A good place to start, is returning accountability to the system by requiring service providers to publish their prices.  This would begin to return consumer accountability to the system and restore the patient-care provider relationship.  For many medical services, there is almost as much time spent performing paperwork as is in delivering medical care [10].  Limiting regulation and lawsuit abuse would go far to curb these expenses.

The issues are varied and complicated.  But if we want to provide greater access to health care, focusing on adding more people to the insurance rolls is not the cure.  Adding layers of bureaucracy and mandating unneeded or unwanted services only raise the cost.  We must look at how to bring the cost down and make health CARE more accessible to more people.


< visit Michael’s blog at michaeljcloud.com >


I am not able to continually monitor comments on this post.  If you wish to connect with me or comment to me directly you can reach me at michaeljcloud.com.




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