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.
This entry was posted on Sunday, May 22nd, 2005 at 8:34 am and is filed under Government, Health, Life, Politics, Reform, Social Programs, taxes.
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May 22nd, 2005 at 6:40 pm
The second paragraph made me feel my age. I can remember a couple of doctors I’ve been to in the past. They seemed to care more about their patients than todays doctors do. One of them would take no money from you until you felt you had been cured. I think you got it when you mentioned greed.I hope you will stop by to answer the Question Of The Week.
God Bless America, God Save The Republic
May 23rd, 2005 at 6:05 pm
My sister works as a drug rep for a big firm here in the UK. I am constantly stunned by her ‘expenses’ budget and the gifts she gets to hand out to GPs. All of that money could be going in to research or schemes to help people who can’t afford the high prices of the medication elsewhere in the world.
May 23rd, 2005 at 8:29 pm
Hi Ken, I just wrote a whole comment and then blew it up! Geez, I’ll try again.
I think that the reforms that you have suggested for the failed health care system we have in the states are very good. Maybe, that is because you have based your ideas on “care” instead of profit. We have had more than enough experience with the HMO based medical system in our family. Going back to 1991, when our daughter as a little girl had to have life-saving surgery, and forward again, to the last several years when we lost of several elderly family members, we have just about seen it all.!
One tiny thing disturbed me back in 1991 and it seems, no one ever mentions this type of financial padding. The copy of the final medical bill forwarded to us by our HMO, listed the cost of a Q-tip at $2.00 and the cost of a single dose of Tylenol at $2.00! Hospitals buy such supplies in bulk at reduced wholesale prices. What would the cost of a tongue depressor be in today’s medical market? No wonder no one can afford medical care! Keep writing…KWW
May 23rd, 2005 at 10:56 pm
Ken,
Another fine and thoughtful post. Capitalism works in strange and mysterious ways. Also, when you involve the insurance companies, the cost of things escalate.
It does seem to me that medical costs have unduly become extravagent to subsidize the lifestyles of the rich and famous. Makes me wonder why education/teaching hasn’t been able to capitalize on the same kind of metrics to generate more cash to pay teachers what they are worth, but I digress.
I had said this before, but if the Canadians can buy the same drugs by teh same makers for substantially lowe costs, why can’t we replicate the metrics that get them there, here?
Of course our example is that if you can’t afford the treatment, you don’t get it. Even if it means death. Which is exactly your point.
May 24th, 2005 at 1:45 am
I am looking forward to see where you are going with this.
I am iffy on the tuition ideas and the administrative ideas. Someone is going to eat it on the tuition idea and I worry that the admin idea is too complicated. I like the malpratice ideas and the advertising ideas.
I am surprised that you didn’t cover the FDA, though. I am sure that is the root cause of our drugs being so much more expensive.
May 24th, 2005 at 6:01 am
(responses)
David- I think the paradigm shifted when the medical miracles we take for granted today revealed an easy path to riches. Slowly, as new doctors replaced retiring doctors, this mentality enshrouded all aspects of medicine and its periphery to bring us to today’s mess.
Thanks for dropping by again.
Ally- Insane, isn’t it, how they will ply the peddlers of their product to increase the peddling? Drugs should be measured for their curative powers and proscribed for specific ailments. Too bad that our culture has placed such a high value on money that the responsibility one should have for the patient is replaced for one’s own self enrichment.
Thanks for the comment.
Kitchen Window Woman- Don’t you just hate it when that happens?
Yes, care is really the central point of medicine, and it’s time we returned to that ideal.
And you mention a great point about the outlandish costs of common items. I can gett 500 cotton swabs in a box for 50 cents. They charge $2? And they say there’s not enough money in health care….Hope to hear from you again.
Windspike- Don’t even get me going on insurance. (I’ll get there soon enough!) There certainly is a hypocrisy in the manufacturers claims that only the drugs they make here and sell here should get to Americans because the other drugs that they make here and sell abroad aren’t really regulated. Does that mean that the rest of the world is getting substandard medicines? If so, we should all stop buying their crap and demand consistent standards, developed and monitored by medical scientists not on any pharmaceutical payroll. Give us all a break!
Ashley- Welcome back! Tuition at public schools for medical degrees have risen 387% since 1960. Don’t tell me that there isn’t enough profit built in there…..
As for the administration concept, computer technology is always getting cheaper and more powerful, If we can spend all the time and money developing realistic looking, sounding, feeling video games, I think we could develop a simple database management system fairly economically. Especially if we put our minds to it.
I would have to agree that the FDA’s inconsistency and red-tape shenanigans do inflate the costs of our health care system, but it alone isn’t responsible for the high costs. Regulations are necessary, especially in medicines, so that more harm than good is not done. However, I am sure that they can be streamlined, more focused, and better managed. Thanks for bringing them up.
May 26th, 2005 at 11:12 am
Health care — the whole system of medicine is flawed and in ruin largely because share holders want a profit now. Health care is not about the well being of a patient but rather it is about profits. So we pay through the nose for less and less; however, what we do get is living proof that it is the best in the world.
May 27th, 2005 at 4:39 am
You sure have a positive outlook. The Health care system here in Canada may be public but it sure aint perfect with long long waiting lists and trouble throughout.. Not to mention the brain drain of studends heading to the states to make money..
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May 27th, 2005 at 6:37 am
(responses)
Abraham- Yes, it is about profits, and that’s not what health care should be based on. And while we may theoritically have the best care available, said care is often out of reach due to the bottom line of the HMO’s and is reserved for those with enough spare change to pay for it themselves. What is the point of all the medical advances if they can’t help everyone?
Thanks for the comment.
JBG- I think that a positive outlook is more valuable is solving problems than a negative one. Combativeness and belittling solves no problems, but constructive thought can cause changes.
In my latest essay, I do address the problems of access and offer some ideas on how to make availability the norm instead of the exception. And if Canada is losing their doctors to the states simply because of profit, tie their education into service at home and maybe we can do something about returning medicine to care instead of just cash on our side. If your doctors have as much to gain at home as here, I doubt they’d be headed this way. Seems like we all have some work to do. Thanks for the comment.
May 23rd, 2006 at 8:58 pm
Appreciate your blog,i have a victims support page against Eli Lilly for it’s Zyprexa product causing my diabetes.–Daniel Haszard http://www.zyprexa-victims.com