This is the first article of another new series about the problems that modern healthcare creates for both the economy of a western country like the US and the citizens who ultimately foot the bill for this healthcare.  I have been frequently asked my opinion of the healthcare reform plans the Obama administration has sponsored.  I cannot answer this kind of question adequately in a brief discussion, it is way too complex.  If it is properly answered, the answer also applies to every modern healthcare system, not just that of the US.  So, here is the first article of this series.  This series will be different, though.  I plan to cover most of the important points over the next few weeks with a series of sequels, one after the other until my points are fairly well presented.  Here goes:

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For many years, healthcare inflation has outstripped the inflation rate for the rest of the American economy.  When “managed care” first gained a foothold in the US, it seemed to promise substantial decreases in the healthcare inflation rate.  Over time, though, this impact has been fairly minimal compared to early expectations.  Some of the reasons have become obvious.  For example, managed care has greatly increased the amount of paperwork and phone time that medical providers must financially support in order to receive payments from insurance companies which follow the managed care model.  In my own practice, I would estimate that we employ at least one more clerical worker per physician than we employed fifteen years ago, just to handle the increased paperwork and billing procedures due to managed care policies that have been widely adopted.  I would expect the situation is much worse in some parts of the country where managed care penetration is much higher than my area of the country.

An even more significant cost is not as obvious, but probably more important.  It is managed care’s penchant for trying to save short term costs that often end up resulting in much higher long term expenses.  A significant proportion of all that extra paperwork is due to managed care’s requirement that many diagnostic procedures, surgical procedures and medications be “prior approved” before payment is allowed.  This would seem to make a lot of sense; it would be a way to ensure that only those expenditures that were really needed would be paid for.  A problem develops in a big way, though, when you develop a method to make these decisions.  One of the most common ways to accomplish this is to provide a worker with a book of approved procedures and approved medications based on sets of written guidelines.  This results in fairly common, yet ludicrous, situations, such as when a person with a high school education, and what amounts to a medical cookbook, decides how a neurosurgeon with over eleven years of highly specialized medical training should evaluate his patient’s neurological problems. It gets even worse: the same cookbook may then be used to decide whether that surgeon can operate on the problems he has diagnosed.  Is this not absurd?  But scenarios like this happen many, many times every day in this country.

Even when the managed care company provides a physician to help make these decisions, those physicians are usually not in the same field of specialty as the physician whose treatment plan they are evaluating and, in addition, the physician making the final decision does not have any chance to examine the patient nor have much of a feel for their overall medical history.  What this all amounts to is a guarantee that poor decisions will be made based on inadequate training, inadequate information and lack of essential contact with the patient involved.  This process does block out the payment of many costly procedures and medications.  Some of these undoubtedly are not really necessary.  Many, however, were ordered for very good reasons and these are the situations where very high costs and unnecessary suffering can and do result.  Easily measured short term savings result in very difficult to measure and much higher long term costs.  I see this sort of thing happening every day.  To believe that we are actually saving anything by these strategies is an illusion, especially if you look at the total cost to our healthcare system over time.

Part of the reason for me to be presenting this is that I believe that the current administration’s healthcare reform strategy is predominantly based on this kind of mistaken approach to healthcare cost savings.  I believe the assumption behind the currently enacted healthcare reform package is that managed care strategies will be much more effective if more widely implemented, and in a much more cohesive manner.  It is more of the same as our current managed care methods, but on a much bigger scale.  I believe this means that the problems it will create will be that much more acute.

My other reason for writing this article is introduce a topic that is far more important to consider.  I believe it is absolutely impossible to control health care inflation using the kinds of strategies discussed in this article, because they do not address the most important driver of rising costs in healthcare: our modern technological approach to illness and disease, as well as the treatment techniques they indicate that we should employ.  The forces at work that I will be discussing are extremely subtle and they form a very complex set of relationships.  They are not simple to explain.  To even briefly develop this explanation would make this article far too long.  I will continue this analysis in the sequel to this article entitled:  American healthcare in crisis.  Part 2: The main driving force behind healthcare cost inflation.  I suspect the sequel to be of interest to everyone and not just applicable to the US.  It is a world-wide phenomenon.

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What are your thoughts on these topics?  I would love to have you contribute to this conversation by leaving a comment below!  And if you liked it, share it!  If you found this of interest, there is much more to come.  If you haven’t already done so, you might want to get future posts emailed to you by selecting from the tabs to the right.

Chuck