[Updated after passage of the healthcare reform law, March 2010.]
While payment for basic healthcare services comprises the bulk of the cost considerations in healthcare reform, there are other cost problems which need to be addressed.
Healthcare Fraud
The National Health Care Anti-Fraud Association estimates that 3 percent of the more than $2 trillion spent on healthcare each year is lost to fraudulent activity. Other organizations estimate fraud to account for up to 10 percent of all costs. Medicare fraud is legend, and most of the time it goes undetected, costing all us taxpayers billions of dollars each year.
Costs of Drugs and Devices
Experts in healthcare reform will tell you that Americans pay more for pharmaceutical drugs and medical devices than patients in other countries.
There are a several reasons for this. First, Americans are not allowed to purchase drugs from outside our borders. The government claims this will protect you from counterfeit drugs manufactured and sold outside the United States. That may be true, but it also causes the pricing to be higher.
Second, in countries with a single payer system, and in some with universal care that is a public-private combination system, prices for pharmaceutical drugs and devices are negotiated to keep costs low. That also takes place in the United States through insurers and government payer programs. However, in many of those programs, patients may reach a cap on what is allowed (such as the Medicare donut hole) which means the patient will need to pay full price, potentially thousands of dollars. The healthcare reform law of 2010 does address this gap, and over time seniors will not be responsible for the same large amounts of out-of-pocket expenses.
Third, the money spent on promotion and advertising of drugs and devices in the United States. If you have watched TV or opened a magazine or newspaper in the past several years, you have seen drug commercials and ads which cost manufacturers, and ultimately patients as consumers and taxpayers, billions of dollars each year.
Drug advertising also costs us in the increased number of doctor visits. Seeing commercials for drugs that they believe may help them, patients make appointments for doctor visits at an increased rate.
Payments from Drug and Device Companies to Physicians
One reason the costs of drugs and devices are so high in the United States is because pharmaceutical and device manufacturers provide many types of incentives to doctors to prescribe their drugs or use their devices. These incentives run into the millions or billions of dollars, and some doctors make millions of dollars each year speaking on behalf of pharmaceutical or device manufacturers.
Use of Technology
New, more complicated technology can be a real advantage for improving someone's health, or it can be simply a drag on the payment system.
A good example is an MRI machine. Magnetic Resonance Imaging creates a much clearer picture for a doctor to diagnose a patient. But sometimes it just isn't needed for a diagnosis. For example, when a patient falls and breaks an arm, it can easily be seen on an X-ray which may cost only $100. Using an MRI for that picture costs the insurer $1000. The doctor who owns the MRI machine will want to use it so he can bill for it, and make his monthly lease payment (plus some extra). But in the bigger picture, when multiplied by the millions of MRIs done every year in the United States, it is costing patients and taxpayers far more than is necessary.
Doctors will justify their purchase of the latest technology by figuring out how they can bill for it. And yes, many patients will benefit by its use. But the overuse of technology is like using a cannon to swat a fly. And the damage to our healthcare wallets, too often with no additional benefit to the patient, is excessive.
One aspect of technology is generally agreed upon in theory. The use of electronic medical records will play an important role in both keeping costs controlled and improving the quality of care. There are issues in implementation that must be addressed.
Development of New Types of Healthcare Facilities
You've probably seen new healthcare facilities spring up in your area. Specialty surgery centers, walk-in drug store clinics, urgent care centers; these specialized clinics are both a blessing and a curse for the cost of healthcare.
On the one hand, they provide a real service to patients who may find convenience in accessing them instead of an emergency room or waiting hours or days for a doctor appointment. Also, studies show that the smaller surgery centers are safer; they cut down on hospital acquired infections and other dangerous medical errors. Walk-in clinics make it easy to get quick treatment for routine check-ups or even a child's ear infection.
However, from the larger picture standpoint, the existence of these specialized facilities makes care in the hospital more expensive. Hospitals end up with only the most dire of medical problems and the sickest of patients. They are also required to treat uninsured patients who show up in the emergency room due to EMTALA, the emergency treatment act. They often receive no money for treating those patients. Healthcare reform will encourage all patients to get primary care instead of showing up in the emergency room, curtailing some of those more expensive, emergency costs.
