Health care costs are the fastest growing expenses for businesses and families. Even those with health insurance can find themselves in serious debt after one medical emergency. Office visits, treatment and medication costs, co-pay’s and monthly premiums add up to thousands of dollars each year, yet the covered care options lessen. What drives the costs of health care through the roof? The answer is…everything. From the cost of medical training to the facilities and equipment to the pills we take to soothe us, the erupting costs of health care comes from all corners of the industrial-medical complex that we have in place today. What drives these costs up though is something pretty basic, something known simply as greed.

Once upon a time, medicine was about healing people, or at the very least, easing their suffering. The role of doctor was a respected position in a society, and the doctor could always be counted on to come to ones aid any time, day or night. Sometimes you would heal, sometimes you would die, but always, the doctor would be doing what he could to help. Many doctors were not rich people, for the people that they served were not rich people. Money and medicine were not incompatible; they were just not synonymous. There were no pharmaceutical companies, no hi-tech equipment, no real overhead at all. You went to the doctor, told him your ailment, and he fixed you up with what you needed right then and there. Quick, cheap, and sometimes it even worked.
As such, a doctor’s payment often depended on two things: the effectiveness of his cure, and the relative wealth of the patient. In many cases, in-kind trades often replaced cash payments, which the doctor kept or sold for cash, as he needed to.

But the advancements in both medicines and knowledge merged with an increasing, then aging population. As our ability to actually cure diseases or operate on injured people became more adept, and as procedures became more standardized and effective, medicine shifted away from a service-oriented industry into a profit driven industry. It was discovered that people would pay good money for a treatment that really worked. Doctors could now heal more people with less effort, prescribing the perfect pill to fix your ill. And when there’s money to be made, everyone wants a piece of it. So let’s look at some of the costs of our health system, and see if we can cut those down using the service-oriented mindset and a healthy dose of Common Sense.

Let’s start with the costs of medical school. In 2004, the average debt a medical school graduate received with their diploma was between $105,000 and $140,000, depending on whether you went to a public or private university. Compare that to the graduating class of 1985 whose debt was $22,000 to $26,500. This debt represents the unpaid portion of their education only, with total 4-year costs of medical school topping out at $225,000 for a private university. With costs like these, it’s no wonder that doctors now try to get in as many patients per day as they can. There’s just no time for personal care when you’ve got a loan balance that large hanging over your head. The result of such high costs is a decreasing number of practicing physicians in this country. The solution? For starters, put a cap on public university tuition for doctors. Then offer a tuition trade-off program that would allow qualified students to receive free medical training. In return, the student would sign an agreement requiring them to work as a primary physician, at a greatly reduced fee, for the same number of years that they received training. For those students not taking advantage of the free tuition program, we could institute a graduate mentoring program that provides an opportunity to reduce costs of support staff at schools by pairing recent graduates with upcoming students and reducing the amount of their school loans proportionately. Finally, we develop national training and licensing standards for both general and specialized physician degrees that ensure a consistent level of knowledge and care. This would also have the effect of standardizing licensing fees paid by doctors, reducing the overall costs of becoming a doctor.

The costs of medical training are only the first drop in a very large bucket. Consider malpractice insurance premiums for doctors and hospitals. One of the unintended results of our increased medical knowledge is our assumption that doctors can cure anything. But for many diseases, doctors can only try certain treatments, offering no predictable or promised outcomes, only doing the best they can. In cases where there is no proven treatment, it is incumbent on a doctor and patient to have a clear understanding of the course of action, along with the possible outcomes, and as long as that plan is followed, no suit should be brought against a doctor. In instances of actual incompetence though, lawsuit awards should be commiserate with actual harm, meaning that non-life changing mistakes do not always amount to million dollar judgments. Mediation should precede any court activity, leaning towards non-cash restitution as often as possible. Again, if these or other measures result in decreased insurance costs for doctors, those savings can be passed along to the patients, lowering the costs for all.

What about administrative costs? Doctors and hospitals spend a whole lot of time and money keeping track of patient records, dealing with insurance companies, processing billing forms, and the like. Eliminating medical insurance as we know it would save millions in reduced manpower alone. Simplifying billing procedures through the adoption of a new way of funding health care will save even more. (In a coming essay, I’ll present my idea for funding medical care.) We could also adopt computer technology to manage the problem of keeping patient records private while eliminating the need for a large paper database. Imagine an encrypted computer disk in two parts. The patient keeps one of the pieces and the doctor keeps the other part. The patient’s piece would contain all of their personal medical history in an encrypted form that could only be decoded with the doctor’s piece. The doctor’s piece would be like a universal code breaker. Both pieces would have a randomly encrypted pattern to prevent accidental data exposure, but upon joining together would become readable to both doctor and patient. To further protect the patient’s information, the system could even require a biometric indicator, like a fingerprint or DNA sample before proceeding with the decoding. The information would remain private and in the hands of the patient, preventing any kind of data theft. With the increase of computing power coupled with the decreasing cost of computer technology, such reduction in administrative costs would further streamline the whole system, again reducing overall costs of health care.

Another way to reduce the costs of health care is to control the price and advertising methods of medications. Pharmaceuticals are among the highest costs seniors face with regards to their health care. Profits are so great on these drugs, that four of the biggest makers of pills (Pfizer, Merck, Eli Lilly, and Bristol Meyer) had revenue in 2004 of over $100 billion. Only $17 billion of that profit was recycled into research and development of new products. And another chunk of change was diverted into liability accounts to pay for the inevitable lawsuits that come when a promised new drug fails to perform up to standards or start making people worse than they started out. The fact that these drug manufacturers push their pill on everyone for every possible ailment isn’t lost on many, but our own gullibility rewards their efforts by gobbling up whatever they peddle, often without regard for the long-term consequences associated with the latest magic pill. Instituting a minimum and maximum price range for prescription and over the counter drugs may reduce drug company profits, and restricting advertising o
f drugs to the medical industry instead of the untrained consumer may result in drug manufacturers spending more time and money in R&D to ensure safer products. Their reward for better products, though not realized directly in financial gain could come in the form of tax credits or special government grant programs. And they’ll still be making plenty of money to boot.

I know that cutting expenses up and down the chain is only one of the ways that we can reduce overall health care costs. There are other areas to look at too, from aggressively prosecuting fraud to allowing patients to rent or borrow equipment like crutches or wheelchairs instead of purchasing them at high prices. But even with the reduction of these structural costs, we won’t completely solve the problem of how each person pays for their health care or how we, as a nation, dispense our health care services. Those topics will be addressed in the next few posts.