How Zigzag Is Undermining America’s Health Care

Healthcare in the United States is in financial trouble, and patients are feeling it. Nearly 90 million Americans (more than 1 in 4) have Medicaid, the public health insurance program for low-income people. Health care costs are a leading cause of bankruptcy, as 100 million Americans still have medical debt. All of these spend 18% of their GDP on healthcare, almost twice as much per capita as any other country, while achieving the worst health outcomes among the 12 richest countries in the country. in a country where

Given this frustrating delay in medical progress, I remember the day I left college in Boston and entered medical school in New Haven.

Two friends helped hook up the U-Haul trailer to the car and load it. When it came time to get out of the crowded parking lot, I knew I had no choice but to back up. So I checked my rearview mirror, put the gear in reverse, and turned the steering wheel to the right. U-Haul jiggled left. Then I turned the steering wheel left. The trailer meandered to the right.

In today’s healthcare system, hospital administrators, pharmaceutical CEOs, and doctors alike are focused on the rearview mirror, zigzagging and unable to move forward. The difference between their situation and mine is that they are choosing to zigzag. Here are three ways their behavior hurts patients:

1. Hospitals are failing to streamline care

On January 1, 2021, the Hospital Price Transparency Rule came into effect. The law requires hospitals to publish consumer-friendly price lists they charge for goods and services.

The council’s goal was to make hospital pricing transparent so that patients know how much a hospital stay and routine procedures will cost. Before hospital selection.

But two years after the rule went into effect, patient advocacy groups report that only 1 in 4 hospitals are fully compliant.

Hospital industry leaders argue that making pricing information easily accessible to the public is very difficult and expensive. The reality is different. Hospital administrators just don’t want the public to see how hospital pricing works.

That’s because hospitals raise and lower rates based on who pays, sometimes five times as much. Uninsured patients receive the highest bills, while public payers such as Medicare write checks for a fraction of that amount.

Medical bills weren’t always so complicated. For most of the 20th century, hospitals have aligned their fees with the actual cost of providing care. Private insurers paid similar fees to government-funded programs.

However, in 1997, the Balanced Budget Act was enacted, changing the calculation method for all payers. To cut healthcare spending, the government cut Medicare payments to doctors and hospitals. This was because hospitals hoped to take advantage of opportunities to improve the efficiency of care through innovative measures.

It didn’t happen. Instead, hospital leaders began zigzagging.

To make up for lost income from Medicare, hospital leaders disproportionately raise rates for employers each year. As a result, private insurers now pay twice as much as the government for the same procedure (Zig).

As companies began to shoulder more financial burden, corporate leaders transferred excess medical costs to their employees through expensive deductible health insurance plans. More than half of American workers now have plans that require their families to pay $5,000 a year before health insurance kicks in (Zag).

To bring down rates, employers and private insurers are now threatening to exclude expensive hospitals from coverage networks. In response, inpatient facilities have stabilized their prices, but added a new “facility fee” to the patient’s bill for every service provided (clinical tests, radiation treatments, etc.).

None of these constitute innovation or progress. It just zigzags.

2. Pharmaceuticals Companies keep raising prices

U.S. drug prices have risen 35% since 2014, making pharmaceuticals the fastest-rising healthcare sector in the last decade (and even faster than hospitals).

Last August, President Biden signed the Inflation Control Act into law, allowing Medicare for the first time to set “fair price caps” on pharmaceutical companies. However, the law will not come into force until 2026 and will only cover 10 Part D drugs in the first year. And despite these modest scrutiny of the pharmaceutical industry, Big Pharma is fighting back with tens of millions of dollars in lobbying, campaign donations and legal challenges. Pharmaceutical companies have already increased the prices of hundreds of drugs to offset potential future price cuts.

Historically, US pharmaceutical companies have invested heavily in research and development (R&D), leading to the development of many highly effective medicines. These silver bullets have helped patients fight infections, prevent heart attacks, treat cancer and reduce the risk of stroke.but by the 21st Since the turn of the 20th century, Congress has passed several laws that benefit pharmaceutical giants, including extending the term of patent protection, allowing direct-to-consumer drug advertising, and banning generics and competitors.

From then on, the zigzags started. As drug prices skyrocketed, insurance companies hired pharmacy benefit managers (PBMs) and negotiated price cuts directly with drug companies to find alternatives to many of the most expensive drugs. In response, the manufacturer issued a rebate to his PBM, who pocketed the money and in return (even if there were cheaper options for insurance companies and patients) many overpriced drugs. was included in the prescription.

As costs continued to rise, insurance companies forced patients to pay more out-of-pocket costs in an attempt to force them to make cheaper choices. Pharmaceutical companies responded by distributing coupons to patients to cover their out-of-pocket costs. The insurer then refused to credit the deductible if the patient used the pharmaceutical company’s coupon.

As a result of these zigzags, more and more Americans are facing a choice between poor health and financial ruin.

3. Not being able to pay the doctor’s fees

For patients, figuring out whether diagnostic tests and treatments are covered and how much they cost can be very confusing and time consuming. It wasn’t always like this. For most of the 20th century, patients saw doctors directly, received treatment, and paid a small percentage (usually 20%) of their doctor’s bill.

For decades, this redemption approach has worked well. But as more complex new treatments were introduced, doctors started charging more and more. A series of zig-zag operations was initiated to curb medical inflation.

First, insurance companies have strict pre-approval requirements. In response, doctors refused to sign deals with insurance companies, created jaw-dropping bills, and threatened to send collectors home if they didn’t pay their claims.

In response, the government stepped in, forcing the two companies to settle the price dispute through arbitration. To make up for lost revenue, primary care physicians began charging patients a “concierge fee” for using their services. And the experts struck deals with private equity firms to force insurance companies to pay higher fees for proceedings.

solve high medical costs

Not only did the zigzag impede progress in healthcare delivery, it also allowed for rapid increases in healthcare costs. The United States currently spends $12,914 per person per year, equivalent to $20,000 and $30,000 per household, or one-third of the median household income ($70,784).

If industry leaders moved forward instead of stubbornly staring in the rearview mirror, we could make healthcare better and more affordable.

To reduce costs and improve quality:

  • Hospitals could adopt a more efficient approach to providing inpatient care, eliminate weekend delays, and potentially cut hospital beds by a third nationwide. As part of that process, they plan to move many of their services to ambulatory care facilities, where outpatient care can provide the same or better results at lower costs. And it will close small hospitals that lack sufficient patient numbers to provide high-quality, cost-effective care.
  • The U.S. could follow most European countries in pricing drugs. In countries such as France, Germany and the United Kingdom, governments negotiate prices for prescription drugs on behalf of patients based on efficacy and research and development costs. Governments could force drug companies to set drug prices similar to those in other developed countries to ensure that patients can afford the drugs they need.
  • Physicians unite to replace current fee-for-service payment methods with “capitation” (annual fees paid to groups of physicians and hospitals to care for the medical needs of a particular population of individuals) at the delivery system level. could be replaced. next year). Capitations reward the value of care (prevention of medical problems and excellent clinical outcomes) rather than quantity (of examinations, treatments, services). This shift will encourage providers to find innovative ways to treat patients, maximize patient safety, and avoid medical problems in the first place.

Instead of making such improvements, sectors of the healthcare industry prefer to zig-zag, slowing progress, frustrating patients, and harming public health.

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