Why Does Health Care Cost So Much?


The United States consistently ranks as one of the lowest advanced nations when it comes to health care.  To add further to the poor ranking of the US is the fact that we spend so much more money on our medical care than do other nations.  In terms of GDP, we outpace most, if not all, nations in the world.  We simply spend too much money.

The cost of medical care is one of the driving forces behind the call for this reform.  And for the most part, I’m all for that.  Generally speaking, reducing the amount of money we spend for a service or product is a good thing.  A good thing with one caveat:  Unless spending more on that thing is reported incorrectly.

For instance, suppose I enjoy minor league baseball.  And I spend $200 this year but will end up spending $400 next.  That can sound like a bad thing.  Unless, of course, it really means I went to twice as many games, in which case it’s a GREAT thing!

So, what are we spending all this money on and how can we fix it?

Well, we can start with the fact that we sometimes over subscribe to services:

Hospitals Performed Needless Double CT Scans, Records Show

Long after questions were first raised about the overuse of powerful CT scans, hundreds of hospitals across the country needlessly exposed patients to radiation by scanning their chests twice on the same day, according to federal records and interviews with researchers.

Set aside the implications of being exposed  to the extra radiation, the fact that we are subjecting our patients to a CT scan twice in one day is something that should be looked at.  For example, is there an added cost to this?  Or is it buy one get one free?

Medicare paid hospitals roughly $25 million for double scans in 2008.

Hardly a significant amount of money when compared to our total expenditure, but it is illustrative.

So, let’s say that you have been assigned the task of reducing the spend on health care and that specifically, you have been asked to focus on procedures that are redundant or not required in the first place.

Would you:

  1. Force everyone in the country to share an insurance policy?
  2. Regulate the use of redundant or unneeded procedures?
  3. Something else?

Consider Option 1

Suppose I have an insurance policy and go to the doctor for some symptom.  As a result of that visit the doctor feels that 2 CT scans are required.  And, she tells you, it’s because:

Officials at hospitals with high scan rates said radiologists ordered the extra chest scan figuring that more information is better. In rare instances, the two scans might help a doctor distinguish between tangled blood vessels and a tumor, Dr. Pentecost said.

I like that.  More information is better than less information.  And, I think, that the radiation exposure, while serious, is a l ow risk if this double exposure isn’t a common thing.  However, I like lot’s of things that I’m not willing to pay for, so I do the math.  I’m on an insurance policy.  So, if I’ve hit my deductible, the procedures are free, so I’ll go ahead and agree to both.  Or perhaps I haven’t yet hit my deductible but have met it each of the past 8 years and expect to again this year; I go ahead with the procedure.

Only when I’m not yet over the deductible AND I don’t expect to exceed it this year will I question the doctor.  I’m spending my own money.

Consider Option 2

This is a horrible option.  No one likes being told that their care is being rationed and there is the chance that the extra procedure will catch something that was missed in the first one.  No one’s gonna wanna have to explain why only 1 CT scan failed to accurately diagnose the trouble [which, by the way, may be a reason doctors order two to begin with – but I digress]

It would seem that option 1 and option 2 aren’t optimal.  Certainly option 1 would create a scenario where people who weren’t covered before would now be covered and be able to have the procedure[s], but that doesn’t seem to limit cost it seems to add to the cost.  And the idea of a government official deciding which procedures you can and can’t have is, well, it’s like a death panel.

So what’s a guy to do?

Consider Option 3

Expose the patient to the full cost.  Let them decide on risk and on gain.  It’s the last scenario under Option 1.  The one where I’m stuck in the deductible thing.  Where I bear the cost of the procedure.

In this case, people will be careful with their money.  They take the information and they’ll come to a decision that works for them.  Most likely a CT scan doesn’t have to be done real time, it can be scheduled giving the patient time to ask around and see if 2 are really required.  Further, because the doctor now understands that her patient is carrying the cost totally, she may not even propose the scan at all.

Think it can’t happen?  My car had a flat tire Thursday.  I called the tire joint 3 blocks away and asked them to come and repair the tire [i was working at the time and was busy and dressed in slacks and shirt].  She convinced me that the added charge of remote repair wasn’t worth it, that I was close enough to put on the spare and drive over.  She lost money, but gained a customer.

Anyway, the point is, when faced with spending their own money, the patient will give more thought to pending the money.  And often won’t.

By the way interesting stat.  Which patients were being subjected to double scanning the most?

Performing two scans in succession is rarely necessary, radiologists say, yet some hospitals were doing that more than 80 percent of the time for their Medicare chest patients, according to Medicare outpatient claims from 2008, the most recent year available. The rate is typically less than 1 percent, or in some cases zero, at major university teaching hospitals.

The government run mandatory insurance racket is responsible for the highest rate of double scanning.

I know, I’m shocked too!

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