[FD3SA]

The worst part about this set up is that increasing the number of doctors won't actually reduce healthcare costs, but paradoxically, increase them. This is because doctors in the USA make money through ordering tests and exams, rather than just spending face time with patients, as the article points out. There was an excellent Time [1] article on this phenomenon.

To make matters worse, Canada is suffering the effects of the American system. Doctors licensed in Canada are encouraged to go to the USA (particularly specialists), by the allure of much higher salaries. In order to prevent a vicious brain drain, the Canadian Medical Association must pay doctors as much as they can to stay and practice in the country. As such, Canadian healthcare costs have been skyrocketing due to specialist salaries soaring ever higher to compete with American rates.

Comparing physician salaries in the US and Canada with other commonwealth countries like Australia and the UK provides a clearer picture as to what is going on. The American healthcare system is completely and utterly FUBAR. It needs to be torn down and rebuilt based on a functioning healthcare system from another country.

1. http://time.com/198/bitter-pill-why-medical-bills-are-killin... (Unfortunately, it is now paywalled)

[msandford]

There's a million fixes for that. Ultimately it needs to be the patients that are in charge of the payment.

As it stands there are no published prices (or they're bogus, if your published prices are 3x what insurance companies pay it's not a real price) for anything so nobody can shop around. That means there is no competitive pressure on the non-critical, non-life-threatening things that are expensive-ish but possible to pay out of pocket. And that means that nobody can circumvent insurance. And that means that doctors have to keep spending $58 to process a form that will net them a $20 to $30 copay and maybe another $50 worth of reimbursement? So the doc nets between $30 and $40. Call it $35 and multiply by 5 (12 min per patient) and the doc is billing out at $175 per hour provided he teleports from one exam room to the next.

There are a great many people who could afford to pay $100 cash (or equivalent) for a doctors visit, for say 30 minutes with a doctor. So that's $200 per hour.

Major medical plans (for big stuff) coupled with health savings accounts will empower patients to ask "do I really need this" with a price sheet in hand and a real conversation about the benefits vs the costs. Right now that happens approximately zero.

[SapphireSun]

That's a popular theory, but it doesn't help much because a) we want universal access (poor people just won't use it if they have to pay) b) non-professionals don't review metrics critically and don't have enough knowledge to (and the metrics are hard to interpret for experts) and c) laymen just don't have enough knowledge to make good decisions with their money, they'll just use price as a signal of quality regardless of the underlying quality.

For some ordinary, understandable things, we can get people to pay if they have the means and understanding to do so, but we need to pay for outcomes (indexed for the base sickness of the population) for more complex cases. However, paying for outcomes forces the financial risk onto the doctor, so what we really need is some mixture of "pay for performance" and "fee for service" to keep them in business, but focused on adapting their practices to evidence and modernity over the decades.

One way to reduce bureaucracy and paper work is simply "Medicare for everyone" which reduces the number of forms, data links, and creates a massive negotiating position for the payer which is needed in an inelastic market such as medicine.

To give an example, if the patients are directly on the hook and grandpa is sick, they'll just send him to the "highest quality hospital" as determined by a mixture of patient reviews ("The rooms were well lit and people smiled!") and price ("This is the most expensive and therefore best hospital in the area!"). It might even have the best metrics (the sickest and (correlated) poorest will go to the cheaper hospital and tank their metrics). They'll then pay basically anything to keep grandpa alive regardless of what the hospital asks, maybe raising money if they need to.

Hence, inelastic complex market without where transparency can actually hurt.

The other thing to note is that if people of means pay $100 cash to obtain better healthcare and jump the line, it's kind of like paying more to get gas during hurricane Sandy. You're not creating more or better resources for the people, but merely rearranging them at high cost to the benefit of the affluent. This TED talk has some interesting points about this trend:

http://www.ted.com/talks/michael_sandel_why_we_shouldn_t_tru...

Aside: I used to work in the healthcare billing industry.

[msandford]

I agree that the emergency or otherwise time sensitive stuff is harder to fix up but it's still doable.

I am not suggesting that the rich be able to spend $100 to see a doctor and all the cattle should be left to fend for themselves. What I am suggesting is that it's not outside the realm of possibility for people to fund their own care.

Right now the way insurance is structured they lump together "maintenance" with "serious" and "catastrophic" all in a single insurance policy. That is unfortunate because most regular human beings can self-fund "maintenance" and many can even self-fund "serious" but only very wealthy folks have the capacity to pay for "catastrophic"

The reason we want individuals to pay for "maintenance" and even some "serious" stuff out of pocket is two-fold. First we want competitive pressure on doctors to not jack their prices up. Second, it will help encourage a culture of "do I really need this?" among patients and they will ask their doctors about more than "will it help" but more like "is it worth it" and while some doctors might lie to enrich themselves most that I have met aren't the type.

Why do we want competitive pressure on doctors not to jack their prices up? Because right now the way things work is that the insurance companies have a pretty good idea of what things cost and they negotiate doctors down very aggressively on that. They will of course let the docs make a little money, but nothing crazy. Let's say 10% as an example. If you can only make 10% on your costs then the easiest thing to do is to work on increasing your costs, which then makes a bigger pie for you to earn 10% of. Furthermore there is no incentive for doctors to come up with cost-savings because if they do, it simply reduces the size of their pie to earn 10% of. The unfortunate side effect is that even though medicine has more and more technology and that technology is getting cheaper and cheaper, the cost of medicine is rising.

I realize that I don't have the answers to everything but competitive pressure and rewarding innovation are sorely lacking in medicine today. Other forces are also necessary, like publishing outcome statistics in addition to prices. But I find it very difficult to believe that for the mundane stuff that makes up a lot of a person's exposure to medicine until something serious or catastrophic happens (or late in life) would go a long way towards reshaping people's expectations as well.