Hari Seldon wrote:In the healthcare sector, the chokehold of the AMA (amrikhan med assoc) on trained med worker supply allows the profession to extract monopoly rents and raises the floor on all manner of subsequent costs in the system. Fighting the AMA isn't even talked about much less planned for.
AMA's behavior is no different than a union, but very few of the union-bashers will ever criticize organizations like AMA (or US Chamber of commerce). They are there to protect the interest of doctors and maximize their earning. Unless US moves to a mayo clinic model where doctors are paid a fixed salary instead of "pay for service", healthcare costs will continue to escalate. If nurses and pharmacists and other healthcare professionsals can work on a fixed salary, so can the doctors.
There is plenty of healthcare fraud happening in US healthcare from providers(doctors, hospitals you name it). I would like to use a simple example that I recently came across to show how ridiculous the whole system is (which many americans foolishly think is helping to provide the best care in the world).
A friend of mine recently went to an "urgent care facility" for an ankle sprain for his son recently(because it happened around 6 pm when doctors are usually unavailable). His visit lasted barely 20 minutes (not counting the nearly 1 hour wait time) and he received 3 bills - one from doctor, one from facility and another from a radiologist totalling $400+ after insurance adjustments against his $500 deductible (yup, one minor incident consumed his entire deductible for a year). Some of the facility charges were ridiculous - $60 for a splint(which he later found for $20 at wal-mart) and $85 for showing how to use a splint(it took about 2 minutes to show how to attach to the velcro on the other end) that he never needed and a a five minute examination by the doctor charging $70. The radiologist who checked the x-ray a day after he went to the facility also charged $40 (after his son was diagnosed to be okay by the doctor who already read the x-ray, so the charges from the radiologist was totally bogus). To top it all, there was nearly $150 charged for using the "facility". A week later, his son still had some pain, so he tried to contact the "urgent care facility" and they told him that they don't keep any records at the facility and he should take him to an orthopedic specialist, as they couldn't offer any more help!!
Now 3 bills from 3 "providers" means 3 times the paper work for a single incident, as each of these bills come from 3 different provider entities. The whole paprework process took about a month for all the bills to be sent to the insurance and then adjusted according to the contract so that the final bill can be sent to the patient (which may be intentional, otherwise patient/insured may get a heart-attack on top of the ankle sprain
All his kid probably needed was $5 ace bandage from corner drugstore and all he wanted to confirm was there was no fracture to the ankle.
Now contrast this with India, where the whole visit would have been billed together on the same day as the incident and processed on the same day with the patient paying about Rs. 400 out of pocket. There is hardly any administrative overhead introduced by insurance.
On the other hand, health insurance companies love (provider)healthcare costs increasing higher than average inflation because that means that their overhead(administration costs, salary etc.) can rise at a faster clip which translates to higher salaries and bonuses, since overhead is typically 20-25%. So if the medical premiums increase at 10%, overhead can increase at that rate too. These insurance companies have the worst bureaucracies that you can imagine. I bet govt organizations like IRS is probably function much better than the claims processing shops at these insurers, not too long ago, 38 states (out of 50) fined the largest insurer, united healthcare for their claims processing practices.
I don't see health insurance companies adding any value as an intermediary. They just add to the cost side of the equation by forcing a myriad of forms and contracts on providers and then there is this constant battle between the provider and third party payor to eek out the maximum money. A single payor system that provides only catastrophic insurance coverage(probably based on income, since $1000 treatment may not mean the same for a teacher and a CEO) is the only way to bring down the costs. If your car insurance doesn't pay for your regular oil change, why should health insurance pay for regular your doctor visits and anti-biotics? That alone will force market competition around pricing and make the pricing more transparent which will bring down the costs. Then no one will dare to charge $150 for a splint when the same can be found for $20 elsewhere.