By James Fieseher, M.D.
Foster’s Daily Democrat (Dover, N.H.), April 1, 2022
Our current model of healthcare was conceived in the late 1960s and launched during the Nixon administration as a not-for-profit, managed care system. Wealthy entrepreneurs saw an opportunity to make a fortune and by the Clinton administration, U.S. healthcare was managed by for-profit companies.
The exceptions were the VA system, Medicare and Medicaid.
The argument used for turning healthcare into a for-profit industry centered around competition. For-profit health insurers insisted that competition would foster innovations in health and keep rising prices in check.
So how has that worked out?
According to the World Health Organization (WHO), the United States ranks first in health expenditures by almost twice as much per capita as the next closest country (Switzerland). But in terms of outcomes, we rank 37th overall out of 191 countries surveyed. That ranking is by far the lowest of the 11 most advanced industrialized nations and doesn’t fare well against many third world nations.
That 37th place ranking has been unchanged since the WHO first started the comparisons in the year 2000.
So, what went wrong? Where was the competition to innovate and lower prices?
Since managed care went into effect in 1970, the number of doctors in America has risen approximately 200%. But the number of healthcare managers (administrators) has risen over 3,800%. In the same time frame (1970 to 2019) healthcare costs have risen 3,100% or on a per-person basis, from $353 in 1970 to $11,582 in 2019 (the dollar amounts have been adjusted for inflation). See healthsystemtracker.org. There are now 10 administrators for every physician in the United States.
Ironically, competition and innovation are the reasons that prices and the number of administrators has risen.
In turning healthcare into a profitable business enterprise, insurance companies have used competition and innovation to reduce their expenses. Since a health insurer’s expenses are sick patients and their medical claims, health insurers have innovated ways to cut down on the number of unhealthy patients that they cover while aggressively denying as many medical claims as possible. They don’t compete for lowering prices, they compete for a larger percentage of healthy patients (fewer medical claims), innovate new ways of denying medical claims, and innovate methods of dropping their medically neediest patients from their insurance panels!
To accomplish this, they have hired more and more managers or administrators to find ways to deny requests from doctors and patients to pay for tests, services, and medications. The added cost of hiring additional managers is more than offset by the money saved by paying out fewer medical claims. The for-profit system of health insurance is designed for people who don’t need a lot of medical care.
Responding to the denial of medical claims generates needless paperwork for all parties involved: hospitals, doctors/clinicians, and patients. Those medical claims denials have prompted doctors and hospitals to hire their own army of administrators to respond to the additional paperwork generated by the insurers. This further drives up the costs within the system. Many patients have faced the complexity of that paperwork and have simply given up or given in to the insurance companies and accepted the denial of services, tests, and medications they needed.
That accounts for some of the WHO’s ranking. But the sheer expense of health care in the US has prevented millions of Americans from having health insurance in the first place. The uneven distribution of healthcare accounts for the majority of that 37th place ranking. Most of us know at least one person who died prematurely or developed severe medical complications from a lack of access to some form of health care (a health provider, adequate testing, or medication).
The enormous number of administrators (non-medical personnel) remains the single biggest expense in our medical system. But drug prices come in second.
Americans spend more money on medications than in any other country. It’s not that we use more medications per capita than in other countries, in fact, we tend to use less. It’s that the medications we buy are priced so much higher than in other countries.
We can thank the lobbying efforts and large political contributions of the pharmaceutical industry for that. Where other countries have put limits on the amount of profit a company can make on a life-saving medication, the US has left that up to each individual pharmaceutical company. Instead of lowering prices, these companies have offered gimmicks and coupons. Even with those discounts in place, we still pay more per medication than citizens of other nations.
The business of medicine has changed the profession of medicine in the US. Doctors, nurse practitioners and other medical clinicians often must balance the quality of care with the patient’s ability to afford the proper treatment. Additionally, they’re paid on how much they do, not how they do it. For example, two doctors can successfully treat the same medical problem, but one doctor can do it in two visits while the other doctor needs four visits. Since reimbursement is based upon the number of visits, the system rewards the doctor needing more tests and more visits.
None of these problems would exist under a universal system of healthcare. Since every person would need to be covered, competition would be geared towards finding ways to preventing people from getting sick in the first place and then minimizing the number of hospital or medical office visits needed to maintain a functional lifestyle.
Both the VA system and Medicare work this way to some degree, but because of Congressional restrictions, neither has reached the full potential that a true universal system can achieve when it comes to prevention, access to care, and extent of services offered.
New Hampshire doctors have expressed concern and frustration over the limitations that managed care has placed on their ability to effectively treat everyone in the Granite State. In a recent poll conducted by the New Hampshire Medical Society, an overwhelming majority of physicians indicated support for a universal style system of health care.
The medical society poll indicates that across all medical disciplines (primary care, surgery, specialty care, etc.), New Hampshire doctors preferred a system of medical care that would allow all Granite Staters equal access to providers and hospitals regardless of income or amount of care needed.
For the enormous cost of medical care in the United States, we shouldn’t have a 37th place medical system. The highly profitable pharmaceutical and health insurance industries have pitched false promises of better care and lower prices. After 52 years, it’s time to change the narrative. We deserve a better healthcare system.
Dr. James Fieseher, of Dover, is a recently retired family physician.