By Lee Russ
You know what’s really hard to do? Solve a problem when you ignore all the facts about that problem. Which leads me to the unmitigated disaster that we call “American healthcare.”
There’s near universal agreement that our current health care system costs far too much, really doesn’t work that well and certainly doesn’t work for everyone. Our crazy quilt of commercial insurers and government programs is far too expensive: healthcare spending amounted to $11,582 per person in 2019, 17.7% of GDP. Just the amount of money that people paid “out of pocket”—on top of any premiums—amounted to over $400 Billion. And still many people are unable to obtain the medical care they need when they need it.
When such an expensive mess affects us all in one way or another, shouldn’t the country be diligently searching for the best solution? In fact, shouldn’t we have found a far better solution to healthcare by now, after all these years of expense and misery?
Obviously we haven’t found a better solution, and we really haven’t been diligently looking for one. What we have been diligently doing is trying to find an answer that is politically acceptable, one that won’t unduly upset the people and businesses who profit from the current system, and won’t run afoul of our nation’s faith in “the free market.”
This strictly constrained search has produced a politically palatable answer: stop compensating medical providers the way they have always been compensated, based on the number and types of services they perform. Why? Because this supposedly induces doctors to do a lot of unnecessary things in order to make more money. This idea that “fee-for-service” (FFS) compensation is the driving force behind America’s outrageous healthcare costs is now running the healthcare show in many places.
Vermont is one of them. It’s why our state has adopted an “All Payer” program, in which doctors and other providers agree to be compensated through an “Accountable Care Organization” with a lump sum per patient, no matter how many or how few services are actually provided.
But there’s a slight problem. The widespread belief that fee for service is the culprit in US healthcare has virtually no real world evidence to support it. So where does the widespread belief come from? It seems to be an article of “faith.” Someone long ago seems to have simply decided that if doctors could profit by providing unnecessary medical services, surely they would. Proof? None needed; it just made sense. You can take it on faith.
Now the idea that FFS is the high cost culprit is everywhere. It’s common for people to simply state it as a fact, as one recent commentator did in Vermont: “fee-for-service … is the reason health care in the U.S. is the most expensive, but not the most effective.” No reference to any evidence, just the conclusion stated as fact.
I spent some time trying to find factual support for the idea and failed. I’m not the only one. Back in 2012 Dr. Steven Kemble wrote an article titled “Fee-For-Service is Not the Problem,” concluding that “it is extremely unlikely that this is the root of our health care cost problem.”
Unlike the dearth of evidence that FFS is causing our nightmare, there is evidence aplenty that the cost of administering our current commercial insurance crazy quilt is the biggest piece of the problem. Canada, for example, largely continues to rely on fee-for-service within its single-payer health care system, yet has considerably less expensive health care.
A 2019 article about waste in American healthcare in JAMA, the AMA’s medical journal, reported that administrative complexity wasted $265.6 billion a year.
U.S. insurers and providers spent $812 billion on administration, amounting to $2,497 per capita versus $551 per capita in Canada, according to the Annals of Internal Medicine.
Medscape’s 2020 survey of physicians’ reports that “paperwork and administration” took up 15.9 hours per week for family medicine doctors, while both cardiologists and neurologists spent 16.9 hours per week.
A 2011 study reported that while US medical offices spent 20.6 hours a week on billing issues for each physician, the figure was a mere 2.5 hours for Quebec medical offices.
The role of administrative costs has been known for a very long time. Way back in 1991, the General Accounting Office reported to the House Committee on Government Operations that if we implemented a Canadian-style system here, “the savings in administrative costs alone would be more than enough to finance insurance coverage for the millions of Americans who are currently uninsured … [with] enough left over to permit a reduction, or possibly even the elimination, of copayments and deductibles.”
Single payer advocates are frequently derided as having a religious faith in SP. But just like with the role of administrative costs, there is a ton of actual, real world evidence that single payer lowers prices, provides care for everyone, and relieves people of the immense fear and worry that they suffer in our commercial system.
It’s too bad the misplaced faith is blotting out that fact.
Lee Russ is a retired legal editor living in Bennington. He was the lead editor/author of both the third edition of “Couch on Insurance” and the Attorneys Medical Advisor for a major legal publisher.