Why Health Care is a Disaster

Today’s Wall Street Journal had a must read story with an example of why health care costs are out of control, and why a significant overhaul is going to be needed to fix them. In 2007 a major study demonstrated that in most cases, inserting a stent (a $15,000 procedure) to help chest pain was no more effective than using drugs alone. The study laid out the circumstances in which this was the case, and made clear that performing a stress test to determine the cause of the chest pain was a good idea before inserting a stent. The head of the American College of Cardiology called the study a “blockbuster.” Awesome: fewer surgical procedures, cheaper health care, same outcome. Good news, right?

Wrong! The study made no change in the number of stent procedures in the US. Why? Well for one thing, cardiologists make $900 per stenting procedure, which is why the average interventional cardiologist makes $500,000 per year, up 22% over the last decade after adjusting for inflation. As the author of the study put it, “What’s going to continue to drive practice is reimbursement.” But if the only challenge was the greed of doctors (regular Thoughtbasket readers know how I feel about doctors who see their practice as a path to riches), that could be addressed. Insurance companies could just pay less.

But insurance companies face a competitive problem: if one cuts payment for stents, maybe customers will go to another insurance company that doesn’t. Plus, since insurance companies usually mark up the cost of procedures anyway, they often don’t have a great incentive to push down the price doctors charge.

When Washington state tried to use the study to change its Medicaid rates, and wanted additional data, the stent makers and cardiologists in the state (including the cardiologists at the University of Washington…employees of the state!) refused to cooperate. Washington had to give up.

And patients get some blame too: as one cardiologist put it, if your doctor says “let’s try drugs first, and then maybe we’ll stent later,” you are likely to just find a doctor who will stent immediately. Americans tend to expect an immediate fix from their doctors.

So doctors, insurance companies and patients all essentially conspire to have unnecessary treatments that cost about $5 billion per year. That is $5 billion, each year, or 5% of the total cost of the health care bill currently in Congress. If something so simple and so clear is so hard to fix, how do we expect to bring other health care costs down?

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2 responses to “Why Health Care is a Disaster

  1. This is more grafitti and distraction. Ridiculous games. Attack the corporation—stop trying to use government, it’s a pile of garbage. Attack the corporation—it is the source of misery and destruction. Burn it down. BURN IT DOWN!
    TOG

  2. I just posted the below on an older article, so considering that it might not be seen, I’ll post it again:
    There’s more to it than that, considering how the medical profession has control of how many doctors enter the profession and practice medicine in the U.S. Their biggest snafu actually occurred almost two decades ago and we’re all still paying for it. What happened was that they over estimated how much HMOs would restrict patient activity and thus restricted further than they had previously the numbers of new practitioners entering the field. They have tried to remedy this somewhat, but considering how long it takes to train a full-fledged doctor, much less open a new school, we are still behind. But guess what . . . this means that the AMA and related associations treat their profession as a Medieval Guild! This is not the free market. I am all for legal reform, but almost no one is able or willing to take on the doctors directly. Moreover, the vast majority of new physicians are specialists and of the 9 percent allocated to be general practitioners coming through the schools, 7 of the nine are foreign! The vast majority of U.S. doctors are in it for the money.

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