James Fieseher MD, FAAFP, of Dover is a recently retired primary care physician.
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 website (WHO), the U.S. 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.
So, what went wrong? Where was the competition to innovate and lower prices?
Ironically, competition and innovation are the reasons that prices and the number of administrators have 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.
Since managed care went into effect in 1970, the number of doctors in America has risen by approximately 200%. But the number of healthcare administrators has risen by 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 U.S.
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 U.S. 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.
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 life-saving medication, the U.S. has left that up to each individual pharmaceutical company. Instead of lowering prices, these companies offer coupons, which keep medication prices beyond what many Americans can afford.
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 prevent 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.
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 U.S., 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 fifty-two years, it’s time to change the narrative. We deserve a better healthcare system.