What People Don’t Understand about Our Broken Health Care System

The discourse after the assasination of the UnitedHealthCare CEO Brian Thompson has proved how little Americans understand the root causes of our broken health care system. Instead of using this moment as an opportunity to explore and discuss the issue, the masses are blindly praising the shooter, Luigi Mangione as a hero–a David-eque figure overthrowing the evil capitalist Goliath and taking a step to liberate the people from greedy health insurance agencies.

Exorbitantly expensive health care costs are, indeed, a very real problem in need of a solution. But celebrating a man’s murder, which has left two children fatherless, will do nothing to lower health care costs. On the contrary, it serves as a distraction, misdirecting people to focus all the blame on the health insurance industry while ignoring other factors

Who Sets Health Care Costs?

Health insurance companies are in the unfortunate position of being the perfect scapegoats in this story. And why shouldn’t they be? When we visit a doctor, we know that they have sworn an oath to give us care regardless of our finances. They tend to our needs, and ideally cure our ailments, and then send us on our way. They aren’t around, however, weeks later when we get the bill and discover that our insurance company denied our claim. And in these unpleasant moments, it’s not the hospital or doctor’s office we spend hours arguing with on the phone. 

The insurance companies are truly easy to hate but our astronomical medical bills are not their fault alone. Health care providers arguably play an even bigger role in setting the costs of care.

When we go to a restaurant and order off the menu, we know exactly what we are paying for each item. When the bill comes, we already know what the cost will be. Go to a hospital for a broken arm and ask how much it will cost to see the doctor, get X-rays, and have the arm put in the cast and you won’t get a clear answer because there isn’t one. 

Hospitals and other health care facilities have no incentive to set fixed prices because they know they can haggle with an insurance provider to get the highest price possible–a price that is not based on market signals. In fact, the free market plays little role in the negotiations of health care costs. In turn, the health insurance provider wants to pay the lowest price, because they are a business operating within price constraints. 

Eventually, a made-up number is either agreed upon or rejected by the health insurance provider and you get the bill in the mail. But before we curse the insurance companies, we need to ask ourselves the question: why aren’t health care costs transparent? No other service industry could get away with providing a good or service without first telling you what it cost. Why are health care providers exempt?

In cost comparisons made by the Kaiser Foundation, it actually found that the reason for medical care excess costs did not arise from insurance companies but from providers, which includes pharmaceutical companies, hospitals, and tech suppliers. 

It wasn’t always this way. Doctors used to have a personal relationship with their patients that existed outside of insurance companies and health care facilities dictating. In fact, many doctors made house visits as opposed to operating out of a medical practice where you get 10 minutes with the doctor at best. As a result, health care was more accessible and more affordable. And when you have a personal relationship with your doctor, there is more freedom to discuss payment without going through third parties. A close friend loves to tell the story of the time her doctor father treated a patient who could not afford to pay, and instead of money, the doctor accepted a sack of potatoes as payment. 

There have been attempts to return back to this era. There are direct pay models and concierge care models that do not work with insurance companies. This allows them to set their own fixed prices and list them like a restaurant does on a menu and keep costs transparent and lower. Concierge care also utilizes set yearly or monthly subscriptions where everything under the umbrella of primary care is covered under that cost. There are no surprise bills showing up in your mail and no frustrating calls to insurance companies.

Then of course there is the massive role the government plays in regulating care. Certificate of need laws, for example, have given government-appointed medical boards, composed of hospital administrators and health care providers, the power to regulate the supply of care. If the board decides there is no need for a new hospital, new MRI machines, or specialized ambulances for infant care, then these new services are denied. Keep in mind, the board members have a vested interest in squashing any new competitors from entering their field–as they often do. As a result, supply is limited, costs soar, and worse, people die. 

Then of course there are the strict regulations, also created by medical boards, that dictate the scope of practice for nurse practitioners and physician assistants, keeping the supply of qualified medical professionals limited and blocking patients from affordable, quality care options.

While it would be impossible to touch on every issue with our system in the space of one article, I would be remiss if I did not mention the crippling costs and limited access to prescription drugs that are the result of a behemoth of government regulations. And then, of course, the government does not allow people the right to try potentially life saving treatments that are not first subject to the gauntlet of government red tape. Also worth noting is our health care system’s complete disregard for preventative care. Instead of emphasizing healthy lifestyles that stop illness and disease before the need for medical intervention.

There is so much wrong with our system and only a small fraction of it is due to insurance companies. Posting memes praising a murderer and calling for the heads of other health insurance CEO’s detracts from the real issues and squashes any substantive conversation on how to solve the problem.