Healthcare Costs Are Completely Absurd in America


The chart above should have completely melted your brain by now. I’ll give you a minute to allow it to cool off so we can continue. Better now?

Over the weekend I had a very interesting conversation with the Chief of Staff of a Texas hospital, and this chart matches up nicely with what he told me. Currently, the incentive structure of Medicare and private insurance is such that it encourages procedures. Lots of procedures. He told me that his hospital’s ER policy to to give anyone with abdominal pain a CT scan, regardless of other risk factors. There are patients who have been given 40 CT scans in 3 years.

He also told me that, in his opinion, no 85 year old dementia patient should die in the Intensive Care Unit, because they should never be admitted in the first place. ICU beds are incredibly expensive, and should not be used for people who they cannot care for. In these cases, the failure to allow people to die with dignity is costing us immense amounts of money.

Now, no one can tell me there is not immense waste in the American system of medicine. Look at the chart again. All the other nations studied spent between $5,000 and $10,000 per senior. Why do we spend $45,000? Waste. Pure and simple. We should focus a bit less on, “private insurance vs. single payer,” although that is important, and focus more on how we incentivize medical institutions. The doctor I spoke to said the best system he ever worked for was the Army medical corps. They pay doctors a flat salary, and have managerial accountability mechanisms to ensure that appropriate procedures are carried out, not excessive ones.

We should expect doctors to be good healers, not good businessmen. When you create a system that incentivises volume of procedures instead of quality of outcomes, it turns rational doctors into rational businessmen. To deny that incentives do not color their medical decisions is to deny human nature itself.

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6 Responses to Healthcare Costs Are Completely Absurd in America

  1. Pingback: Forbes: Why Rating Your Doctor is Bad for Your Health « Real Talk

  2. Pingback: Our Healthcare Problem IS Our Spending Problem | Reason and Politics

  3. Newsweek had written about this a couple years ago. One of the many absurdities of our system.

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