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Why America's Healthcare (Sickcare) System Is Broken And Unfixable

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Here's a two-word summary of why the American healthcare system is fundamentally broken and cannot be fixed with policy tweaks: perverse incentives.

If you type sickcare in the custom search box on this site, you get 10+ pages of articles. I have covered healthcare/sickcare in depth for many years. I have many correspondents within the sector (doctors and nurses), and have paid the unsubsidized costs of insurance as an employer or as a self-employed worker for 30+ years.

Here are two charts and three stories of many I've published over the years:

ObamaCare: The Neutron Bomb That Will Decimate the U.S. Economy (November 21, 2013)

Greed + Cartels = U.S. Sickcare/ObamaCare (February 13, 2014)

Obamacare is a Catastrophe That Cannot Be Fixed (December 6, 2013)

The unsubsidized cost of Obamacare for two 60-year old healthy adults ($23,244 annually) for an inferior plan to what we had before exceeds the cost of rent or a mortgage for the majority of Americans. Please ponder this for a moment: buying healthcare insurance under Obamacare costs as much or more as buying a house.

Here's a two-word summary of why the American healthcare system is fundamentally broken and cannot be fixed with policy tweaks: perverse incentives. Physician Ishabaka provides a telling example of how perverse incentives operate beneath the surface of what patients (and clueless politicos) see:

Today I saw a 16 year old boy who weighed 310 pounds - the wave of the future - will have type II diabetes by his 20's, probably have at least one leg amputated by his 40's.

I got home - and there was a fax in my fax machine. It was from a medical device company, promoting their new machine which is used to test for peripheral autonomic neuropathy (a disease of the nerves). There was NO MENTION of how this device would help patients.

What WAS mentioned was that insurance and Medicare pay for this test, and that no pre-authorization is required. It was stated the average Medicare reimbursement is $200. The "C.P.T. code" - the code doctors use for billing insurance - for the test was included, and a statement that the device would return its initial cost within 3 months was included - also a statement that the test takes THREE MINUTES.

Now, $200 for three minutes work is pretty sweet. In all of medicine "doing things" pays more than "thinking". That's why surgeons on average earn twice or more the income of primary care doctors. Surgery isn't hard - if you can do carpentry, you can do surgery. The thinking is the hard part - but it doesn't pay.

 

Now - here's the crux of the matter - peripheral autonomic neuropathy is very common in diabetic patients - and we are having an explosion in the population of people with diabetes. Therefore there are a LOT of patients with peripheral autonomic neuropathy, and a lot more coming down the pipe. Seeing an established diabetic patient, going over their blood sugar results, other tests, diabetes medications, diet, and exercise takes 15 - 20 minutes and pays FAR LESS than $200 - but actually HELPS patients. This benefit has been scientifically proven.

 

As a general rule, medical tests should only be done if they are likely to HELP a patient - either due to the fact that they may guide treatment, or give the patient useful information - an example might be a test that shows a patient has incurable cancer with a life expectancy of three months (I have had to tell a guy this at least once, based on the results of my physical examination, which suggested cancer, and a CT scan, which revealed that the cancer originated in the pancreas, and had spread to the liver) the information doesn't affect the patient's treatment, but does help him arrange his life - i.e. that he should make sure his will is up to date, say goodbye to family and friends, etc.

 

Here is the deal - for 99.9% of diabetics there is NO TREATMENT for peripheral autonomic neuropathy, and NO BENEFIT for the patient to know if they have it or not. In other words, almost all the time - this test is completely and utterly useless. There are a small amount of diabetic patients with serious, treatable peripheral autonomic neuropathy - but in them, the diagnosis is best made by physical examination and symptoms - not by this test.

 

So there you have it - a worthless test that apparently Medicare and other health insurances WILL pay for, that I could use on a whole bunch of patients to make a LOT of money, in very little time.

 

In fact, Medicare pays about $50 - $60 for the established diabetic patient visit I referenced earlier - or about one quarter what I'd make from doing this worthless test. Not only could I test all my diabetic patients - if they tested negative, I could re-test them at yearly intervals, keep making my $200 a pop, all for no benefit whatever to my patients.

 

I thought this was the most crystal clear example of mal-investment in the health care field I've come across in some time. The fax is in my re-cycling bin, waiting to be picked up by the city today. I'm not buying one of the testing machines. Oh well - I'll never own an Porsche Turbo - and I love fast cars!

 

In conclusion - there are plenty of doctors who jump at this kind of profit-making opportunity - I know several. One in particular does an echocardiogram on EVERY SINGLE patient he admits to the hospital - he gets paid to read the results of the echocardiogram - which takes little time, and is very lucrative. An echocardiogram CAN be a very useful test in patients with certain heart conditions, or in who certain heart conditions are suspected (can confirm or refute the clinical suspicion - which can dramatically change the patient's treatment) - but an echocardiogram on EVERY patient is a rip-off, plain and simple.

I don't know how he gets away with it, but he does - he's a multimillionaire. I'm not. Sometimes I wonder who is the smarter doctor.

Meanwhile, elsewhere in the world, equivalent care is affordable. Since the advanced, developed nations of Taiwan and Japan both provide care for one-third of what the U.S. spends per person, we already know that fully 65% of what we spend on sickcare is waste, fraud, defensive medicine (i.e. medically worthless tests given to stave off future lawsuits), profiteering, racketeering and paper-shuffling.

Consider this report from correspondent Barry P.:

I've been visiting the Philippines and came down with an ear infection. I tried to allow my immune system do the work, but after 3 days of no improvement my wife dragged me to the hospital, Makati Medical Center (MMC). MMC is one of two-or-three hospitals that the well-to-do go to when the need arises. Just as modern as the average US city-hospital. I have no health insurance in The Philippines.

The doctor spoke excellent English. The tools and technique used was pretty much as I expected (having had a history of ear infections in life). The US dollar cash price (after the exchange rate) I paid was $18.44 for the office visit and $30.54 for one weeks worth antibiotics, a vial of ear drops, and five pills for pain (as needed). A week later, I'm OK; no infection, no pain.

 

So for less than $50, the amount around the "US-sickcare" co-pay, I'm done.

 

Let that sink in.

 

The US medical cartel has a racket, eh? But we know that.

I have direct experience of similar costs in Thailand and China for care that was as good or better than in the U.S. (i.e. minimal waiting and paperwork, caregivers were polite, care was efficient, test machines of the exact same type and brand as in the U.S., etc.).

Correspondent M. submitted this report on the change in U.S. healthcare from a non-profit community-based hospital system to a centralized profit machine:

I reviewed this same topic with 3 different MD practitioners in recent months and ALL said the same thing!... namely, that medical care transitioned from local community MD non-profit run, into psychopath MBA profit run (at the hospital level) starting in the 1970s. They emphasized or gave examples of how the effective local non-profit MD run community hospital was taken over by for profit MBAism, typically with huge buyouts of the previous MD non-profit operators. Medical care became just another avenue for system wide racketeering via transition from local to larger system (i.e. racketeering).

The solution as you say: return to local community.

Large-scale rackets like sickcare cannot survive without a Central State that collects taxes and funnels the proceeds to the racketeers, who of course have bought political influence with their plundered profits. This is a self-reinforcing system that cannot be reformed in any meaningful way. It will bankrupt the nation and then we'll have a chance to start over with an affordable, efficient, fair system that is focused on prevention and health rather than profiting from disease, fraud and lawsuits

 

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Wed, 07/16/2014 - 12:05 | 4962840 Headbanger
Headbanger's picture

What about personal responsibility for one's own health?

Big pharma is also to blame for their obscene advertizing of the latest drug to cure the latest fad illnes.

Wed, 07/16/2014 - 12:11 | 4962865 COSMOS
COSMOS's picture

Its broken because its for profit, should be nonprofit, also its broken because we have a massive MIC

Wed, 07/16/2014 - 12:13 | 4962877 quintago
quintago's picture

What about personal responsibility for one's own wealth?

Wed, 07/16/2014 - 12:15 | 4962882 Manthong
Manthong's picture

The ACA was designed to enrich the insurance and medical cartels and to collapse the system so that the sheep would be screaming for single payer and the state could take total control.

Wed, 07/16/2014 - 12:15 | 4962888 midtowng
midtowng's picture

If the economy wasn't rigged against the working class you would have a good point

Wed, 07/16/2014 - 12:18 | 4962899 NOTaREALmerican
NOTaREALmerican's picture

There's also the unfortunate fact that 50% of the human population are below average and don't make very intelligent decisions.  Something the Libertarians and Socialists can't admit.   

Wed, 07/16/2014 - 13:06 | 4963192 thadoctrizin
thadoctrizin's picture

Uh, no matter how intelligent a population is, 50% will always be below average.  That's what the statistical term "average" means.  You've clearly defined where your IQ falls relative to the average.

Thu, 07/17/2014 - 15:58 | 4969722 Abbie Normal
Abbie Normal's picture

Yup, even 50% of Mensa members are below average.

Reminds me of what a friend heard in their welcome to medical school speech:

What do you call the lowest graded member of the graduating class?

DOCTOR

Wed, 07/16/2014 - 12:35 | 4963012 DOT
DOT's picture

Your analysis is backwards. Follow the money; qui bono? Is it not the Nanny State in its relentless expansion of power? The corporations are only tools of the centrallized control long wished for by the "working class" who thought it would somehow empower them.

Wed, 07/16/2014 - 12:38 | 4963026 midtowng
midtowng's picture

Since corporations buy politicians and write the laws, I am convinced that you have it backwards.

Wed, 07/16/2014 - 15:57 | 4964057 JR
JR's picture

The American middle class did not seek socialism; it sought capitalism. And one of the outstanding characteristics of middle-class America was to better itself by pulling its own weight, growing it own estate and becoming more financially independent.

That’s not a definition of the wave of immigrants, primarily from Mexico, legal and illegal, now sweeping over America or what you refer to as the “nanny state.”

The nanny state’s dominant characteristic is to support a stronger centralized government that can provide support when needed and redistribute the wealth by political means. It is not capitalistic; it is socialist.

That’s why the Democrats, who keep saying they want to help the “middle class,” really mean they want to help the welfare class that’s going to vote for them.

America’s now disappearing true middle class wanted less government, less regulation, less welfare and more freedom of opportunity.  It was a middle class family that would like to see its children grow up to have summer jobs and develop a work ethic whereby they could become financially independent as soon as possible and built their own families and life estates.

The new nanny-state welfare class has no such goals.

In short, it is not America’s former “working class” that longed for centralized control; rather it is its newly-arrived Third World socialist welfare and working class that longs for centralized control that will instantly confer upon it middle-class status from a centralized government top down.

This is not the old American philosophy of our parents, of moving bottom up on one’s own initiative in a land of equal opportunity.

Self-described Communist George Bernard Shaw said in 1901 that ”the working man respects the bourgeoisie and wants to be a bourgeoisie; Marx never got hold of him for a moment. It was the revolting sons of the bourgeoisie itself, like myself, that painted the flag Red. The middle and upper middle classes are the revolutionary element in society; the proletariat is the conservative element.”

Applying the Keynesian philosophy of Fabian Socialism in America, however, required the recruitment of the current on-going wave of Third World immigrants as the chief supporters of a stronger socialist society. This was achieved through the 1965 Immigration Act, subsequent blanket amnesty provisions, and widespread acceptance of waves of Mexican illegals year after year.

California with a 2014 population of 37,253,956 has now categorized its white race as minority status with just over 38% of its population, with a dominant Democrat Legislature and Governor and budget and policy programs the most socialistic in the state’s history, i.e., the “nanny” state.

Wed, 07/16/2014 - 16:44 | 4964224 mc225
mc225's picture

corny

Wed, 07/16/2014 - 17:26 | 4964444 JR
JR's picture

Hard work, high standards, Christian values, aspirations for greater independence and freedom... love of country -- I expect the president of the United States also considers these things "corny." But then the signers of the Declaration of Independence,  the early patriots, never counted on people such as yourself - who consider the opportunities they cherished and for which they pledged their lives in order to regulate their own affairs for themselves and their descendants... "corny."

You, to whom Sam Adams would say:'

“If ye love wealth better than liberty, the tranquility of servitude than the animating contest of freedom, — go from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains sit lightly upon you, and may posterity forget that ye were our countrymen!"

And if anyone wants to know where Americans' right to regulate their own affairs went, perhaps they should get a record of your vote.

Wed, 07/16/2014 - 21:48 | 4965376 sonoftx
sonoftx's picture

Thank you JR for being quite eloquent and concise. I've been in healthcare for 16 years now and like everything else that government gets involved in it is extremely screwed up. Still some very good people working in the field but this will diminish drastically in the coming years. Like everything else in our society healthcare needs a reboot. I just hope the pain and suffering comes soon enough that there are still enough people such as JR around to fight the good fight of liberty and justice; no matter what the cost.

Wed, 07/16/2014 - 12:17 | 4962893 NOTaREALmerican
NOTaREALmerican's picture

Unfortunately,  "profit" is the only way to non-judgementally (non-politically) measure the efficiency of organizations run by normal duplicitous assholes (aka humans).

Wed, 07/16/2014 - 13:37 | 4963363 Radical Marijuana
Radical Marijuana's picture

Inside of a fundamentally fraudulent financial accounting system, all "profits" are being measured with a bent rubber ruler. The Profit From Disease System is one of the major components of the overall ways that special interests have captured control over the government, in order to create runaway systems of legalized lies, backed by legalized violence, whereby the privatization of the "profits" is able to operate through attitudes of evil deliberate ignorance towards the socialized losses.

It all tracks back through the vicious spirals of the funding of the political processes (including paying for illegal activities, like the assassination of politicians who could not otherwise be bribed or intimidated.) The final result is as BACKWARDS as it could possibly become, since everything ends up being almost completely corrupt, as well as inconceivably crazy, especially the destruction of the natural world is orders of magnitude worse than the destruction of the health of individuals and the society as a whole.

Wed, 07/16/2014 - 12:22 | 4962926 orangegeek
orangegeek's picture

so called non-profit is profit, but for the unions only - endless increases in personal tax rates follow to pay these unions and their workers above market fees/salaries

 

what's broken is the industry

 

treat symptoms

 

cure problem

 

get the difference??

 

but when you cure a problem, revenues and profits tank - gewbamints and unions don't like this - private sector innovates and moves onto something else - you know, those guys that make profits.

Wed, 07/16/2014 - 12:37 | 4963019 Boris Alatovkrap
Boris Alatovkrap's picture

MIC = "Medical Industrial Complex"?

Wed, 07/16/2014 - 18:07 | 4964609 Miffed Microbio...
Miffed Microbiologist's picture

Sorry, but I've worked for profit, non profit and public hospitals, all had difficulty with solvency especially the profit because they could not get the government subsidies. The insurance model is all fucked up as well because we have socialized medicine though we don't officially call it such. Insurance works if you spread the risk over a large healthy population. We do not have this today.

It is broken for a number of reasons. An unhealthy population living on corporate garbage food. A pharmaceutical industry that is pushing pills for any ailment for income stream( their pills cause other conditions so they can develop pills for more illness they themselves have produced). People who do not connect with one another but through electronic devices breaking down society and adding mental stress, alienation and loneliness. Children who can't go outside for creative play because of the fear of molesters and only can do organized sports. Fanatical fear of germs resulting in sterilized environments that are detrimental to immune system development. Antibiotics permeating the environment due to CAFOs to provide cheap food.

Gosh, there must be more...I've drawn a blank. Oh yeah, fluoridated water that was shown to cause mental retardation by the natzis yet promoted to prevent cavities though no research can be shown this is true.

Miffed;-)

Wed, 07/16/2014 - 12:15 | 4962884 midtowng
midtowng's picture

Are you honestly claiming that everyone who gets sick is to blame for getting sick?

Wed, 07/16/2014 - 13:08 | 4963207 Bastiat
Bastiat's picture

It's fair to say that more than most could have avoided it with lifestyle (diet and excercise) changes.  But most people passive and depend on their social history and day to day social norms reinforced by advertising.  "Blame" is not the word I'd choose.  How capable of choice are those who have been trained to passivity? Truth is many can change but they need alot of support.   Generally our system is set up for pills and procedures, not prevention.  A 15 minute interview with the doctor is not going to get most people to change how they have lived for 40 years, even if their life is at stake. 

Wed, 07/16/2014 - 14:33 | 4963638 toady
toady's picture

I'll try anything to lose weight, expect dieting & excercise.

Wed, 07/16/2014 - 12:47 | 4963078 vulcanraven
vulcanraven's picture

It should be mandatory that everyone watch the documentary "Food Matters"

If you haven't yet understood the correlation between the "food" producers and phamaceutical companies, this documentary is sure to pry your eyes wide open. 

Wed, 07/16/2014 - 15:11 | 4963851 doctor10
doctor10's picture

They're starting to trot out the "clamoring for single payer" meme now. What that menas is that 6-8 BIG insurance companies will get the Federal  Contract to administer the USA regionally.  They really hate being forced to sell individual polcies to the lttle guy.

 

Basically means they can screw over more enrollees with less work?

Wed, 07/16/2014 - 16:32 | 4964189 ultramaroon
ultramaroon's picture

Perhaps the best scene in Full Metal jacket.

https://www.youtube.com/watch?v=5NP8y63Ms4o

At the end is a parable of those who "can do" paying for the indiscretions of those who munch on jelly donuts.

Wed, 07/16/2014 - 17:16 | 4964378 armageddon addahere
armageddon addahere's picture

"  What about personal responsibility for one's own health?"

 

You are still going to get sick and you are still going to die and it is still going to cost you or your heirs a fortune. You can't cure a crooked overpriced system by jogging and eating broccoli.

Wed, 07/16/2014 - 12:15 | 4962858 yogibear
yogibear's picture

The pharma companies own the channels now. Their the largest sponsors.

They advertise drugs all the time. You would think you should be popping drugs all the time. One to make you feel good, another to make you sleep. Another to give you a hard-on.

It never used to be like this. It's out of control.

Take enough of them and with side-effects you need more drugs to solve the other drug problems. Then you ruin your kidneys and your liver.

I knew of an elderly person on 12 medications. He just dropped dead after being on those meds for a short time.

Wed, 07/16/2014 - 12:10 | 4962861 jimbos world
jimbos world's picture

They poison us then bill us for "treatments".  

Wed, 07/16/2014 - 12:29 | 4962975 worbsid
worbsid's picture

"They" don't poison us.  "We" poison us.  One can eat healthy and exercise (etc.) but one has to be able to read and understand that "They" are out to get the lazy. 

Wed, 07/16/2014 - 14:52 | 4963753 vulcanraven
vulcanraven's picture

Truth in this statement. Getting your health under control requires dedication and discipline, both of which your average American are in short supply of. A culture of convenience has created a country full of mentally, physically, and spiritually soft human beings. I made a lifestyle change this year, and as I approach 40 I am looking to be in the greatest shape of my life—on all fronts.

Prevention, people. Learn it, live it, know it. 

Wed, 07/16/2014 - 12:13 | 4962872 JustObserving
JustObserving's picture

Some believe that it is GMO foods and their associated herbicide, Glyphosate, that is responsible for the current epidemic of diseases associated with the Western diet (note that a human has 10 trillion cells and 100 trillion gut bacteria that keep you healthy) :

http://www.youtube.com/watch?v=h_AHLDXF5aw

Wed, 07/16/2014 - 13:09 | 4963105 Bastiat
Bastiat's picture

There is very robust evidence on a number of causes, including:  refined carbs (white flour, sugar, high fructose corn syrup);  not enough fruit, veggies, legumes; sedentary lifestyle.  Do a search on "metabolic syndrome" called by Dr. Hyman "Diabesity."  Virtually guaranteed ticket to a sick, pill-filled, medically costly and miserable last 1/3 or so of your life. 

Wed, 07/16/2014 - 12:13 | 4962874 kurt
kurt's picture

Umm?

What about the greedy bastardi that has the political power to be able to continue to RECEIVE these continual increases?

For once look at the other side of this issue. Who built this ever increasing expectation? What fuckin' Svengali power do they have... just stop giving them more, carve off the fat, fire some people, arrest some others. REVERSE the expectation of increase...well?

Wed, 07/16/2014 - 12:15 | 4962883 bigrooster
bigrooster's picture

My mom had peripheral autonomic neuropathy test and was positive.  She is convinced that she is dying now and I am sure that her doc put her on more meds.  At one time she was going to two different doctors to get "extra" pain meds.  The crazy part is that both bills had to go to Medicare but there is no system and checks and balances to prevent this fraud.

Wed, 07/16/2014 - 12:48 | 4963090 lasvegaspersona
lasvegaspersona's picture

In most states there are now close system checks for duplicate narcotic prescriptions.

The pendulum has now swung to the other side. It is becoming hard to see that chronic pain patients get adequate meds.

In Nevada I'm told they actually restrict how much comes into the state regardless of need.

There are HUGE problems of medicine shortages already here.

Normal saline, the basic bag of solution in most IVs is now simply not to be had!. I can only get small bags for single infusions.

This is not easy to explain as the product is just salt and water. It implies a massive error in production control. I blame the federal government that has taken control of every aspect of medical care.

Wed, 07/16/2014 - 15:00 | 4963791 ILoveDebt
ILoveDebt's picture

There is, and has been controls in place that prevent pain pill duplication by every major insurance provider (including those that service Part D since it's inception) since at least the early 2000's when I actually worked in a pharmacy.  The problem is that pharmacies had basically become like fast food shops at that point and they are all volume driven.  

 

There would always be an initial reject on duplicate pain pill medications or even ones in the same class.  EVERY SINGLE INSURER allowed for override codes to be entered that would allow the patient to get the meds though.  A typical store doing 500 prescriptions a day would have 2 - 3 pharmacists thoughout that day "checking" them for correctness, interactions, etc.  As said, this is more of a fast food conveyor belt though, especially in the afternoon.  Most pharmacists don't care as long as the insurance goes through, especially if it isn't a strong narcotic.  Most of the places I worked allowed the techs to enter the override codes themselves so that the pharmacist would see the interaction warning, but the initial pay rejection was never really a concern for them.  

And if all the interaction approval override codes failed, there was always the lost prescription code that could be used every few months that also would allow payment.  

IN any case, systems do exist to prevent the problem, it's just easy to overide and typically not worth the hassle of dealing with pain pill seeking customers because they are always the loudest and angriest of customers when they dont' get what a doctor prescribed them, whether they need it or not.  Golden rule -- don't question it if it wasn't forged or they weren't going to die.  

Wed, 07/16/2014 - 12:15 | 4962886 kurzdump
kurzdump's picture

Obesity is quite expensive...

Wed, 07/16/2014 - 12:16 | 4962891 youngman
youngman's picture

In Colombia ...they have great hospitals..all the latest machines....great Doctors and Nurses....but 1 tenth the cost....no lawyers down here...very professional...in the future when Obamacare destroys the US Health system...many people will come down here and elsewhere to get treated....IMHO

Wed, 07/16/2014 - 12:28 | 4962968 MachoMan
MachoMan's picture

no lawyers down here...

It certainly must be that simple...  no other explanation for differences in health costs than that...

Wed, 07/16/2014 - 12:42 | 4963054 lasvegaspersona
lasvegaspersona's picture

youngman

Thailand too has a very good system (at least in Bangkok where I toured the biggest hospital 3 years ago.)

India too has a thriving 'medical tourism business. Good medicine cannot really be commoditized as doctors skills come into play. Good medicine is however possible to provide at reasonable cost to much of the world. The problem of US reserve status drives most of these imbalances. When that gets 'fixed' I see better times ahead in medical care.

Wed, 07/16/2014 - 12:17 | 4962895 yogibear
yogibear's picture

The plan is fatten people up with junk food and then make more money on the drugs to counter the ailments.

 

Wed, 07/16/2014 - 12:24 | 4962937 Reaper
Reaper's picture

The costs of free care is passed in part to the paying customers. Swarms of government, hospital and insurance leeches take their bites out of healthcare spending. Our healthcare is a government/crony middlemen racket.

Preventive medicine is another of their promises/rackets. Yes, morbid obesity, drug addiction,and the like have healthcare consequences. But, wellcare visits are just another feel good government racket, which takes doctors away from treating the ill and injured and wastes money. All this government intervention has a high cost with little improved benefit.

Wed, 07/16/2014 - 12:26 | 4962950 MachoMan
MachoMan's picture

Finally, fucking touchdown Charles.  This is the gorilla in the room that no one wants to talk about.  Healthcare is expensive (and insurance is expensive) because doctors run unnecessary tests for profit.  The reason that it is not necessarily fraud is that a plausible explanation can often be made for some type of medical reason for a particular test.  The likelihood of the additional procedures actually helping is nil, but so long as there is someone saying there is a "need" for it due to the "possibility" (not probability) of an issue, then it will be done.  In fact, many institutions actually have protol that requires additional procedures and testing in many instances (regardless of the particular circumstances).  In short, the medical industry's continuity requires them to turn a blind eye.  With 20%+ of our economy bootstrapped to it, no one dares speak of it. 

Further, your example is a particularly troubling one for the medical industry.  It is the industry's stance that these additional tests and procedures are run solely because of tort liability.  However, in your example, there is no risk whatsoever of a lawsuit.  The tort issue is a convenient scapegoat for people who are dancing with fraud.

The fact of the matter is that the most financially successful healthcare providers are the ones who can adapt their practices the quickest to the most lucrative reimbursement rates.  Entire organizations of thousands of employees are dedicated to simply exploiting whatever wage arbitrage they can find, starting with the largest and working their way down.  Generally, it is found in all of the ancillary services that medicare/medicaid will pay for, e.g. case workers and on down the line.  If a payer source will reimburse them for the service and they can make a spread, then prepare to have someone billing for it, regardless of whether it helps patient outcomes. 

Wed, 07/16/2014 - 13:33 | 4963353 HastaLaVictoria...
HastaLaVictoriaSiempre's picture

I can tell you from experience that the patient is often the one requesting the useless expensive imaging study. Also, the risk of lawsuit in the US does distort test ordering. I trained in both the US and Canada. Canadian MD's are often self-employed, own clinics and sometimes radiology suites. They don't order nearly as many CT's and MRI's; the culture is completely different there.

As long as Americans want to win the jackpot when a medical error occurs they will have to pay a lot more for their healthcare. The fees get passed on, it's simple but for some reason the average voter does not seem to get it.

 

 

Wed, 07/16/2014 - 15:27 | 4963516 MachoMan
MachoMan's picture

Of course, that's the issue.  If the doctor says, patient x, your insurance will pay for test y, would you like it?  What's the answer 100% of the time?  Compare and contrast this with, you will have to pay for this test 100% out of pocket, and I think the difference will be startling.  The problem though is that the doctor is a steward of the public's trust in that the doctor is accepting public monies for services.  The determination of medical necessity is up to the doctor, not a layperson patient.  This is the perversion of incentive referred to in the article...

Could you please articulate what you mean by "winning the jackpot"?  You mean compensatory damages?  Punitives are almost never awarded (and are prohibited in many states, despite the fact that med mal insurance premiums don't actually materially decrease because of it).  As someone who actually sees the amount of the awards, I'm curious as to your perception.

Wed, 07/16/2014 - 20:01 | 4965035 HastaLaVictoria...
HastaLaVictoriaSiempre's picture

Millions of damage for loss of limb or life, not based on loss of earning. For example, death of a newborn. While a very tragic event, there is no financial loss being compensated by those millions. Anywhere else in the world, in any other country, this would not happen. In many foreign locales there is a professional tribunal where a judge with medical knowledge would award a modest fee based on a prespecified schedule. Here in the US a jury can award a 10 million $ jackpot to the famliy. Then young couples are up in arms because it costs a fortune to give birth in the hospital...

 

Wed, 07/16/2014 - 20:24 | 4965111 MachoMan
MachoMan's picture

First, it's called compensatory damages.  Loss of life, consortium, you name it.  As a society, we decided that a rich man's life wasn't worth more than a poor man's...  Thus loss of earnings is one of many factors to be considered in awarding damages.  Further, we have a right to have our grievances put forth to a jury of our peers...  I concur.

As for the millions, probably not on a generic loss of limb case, but definitely possible in a loss of life case depending on the circumstances.  Also, in the case of a child, the award will likely be smaller given the little bugger could turn out to be a piece of shit.  Now, a pillar of the community in the prime of his life with a huge earning potential, you got something.  $10m is basically a completely unheard of verdict in virtually all locales (it would require a busload of people to die for some gross negligence/reckless behavior).  Actual, paid out damage awards in the millions are very few and far between.  They're the only ones you'll hear about on the news, but they're a small fraction of the ~3% of cases that make it to trial.

Wed, 07/16/2014 - 15:08 | 4963834 ILoveDebt
ILoveDebt's picture

I actually had a recent experience that is completely contrary to what you typed.  I had some kind of back injury that was making it excruiatingly painful to do anything for over a week.  Finally, my wife took me to the ER (urgent care line was 2 hours long) and all I wanted was for someone to tell me what was wrong with my back.  

 

Instead, they did some quick physical examinations, concluded there was no immediate risk to my spine and thus policy stated no diagnostic tests could be ordered for me from the ER as I was not having an actual "emergency".  They sent me home with pain killers, muscle relaxants and anti-inflammatories and told me to contact my primary physician if I wanted tests run.  

I finally got into my primary a week later and asked if they could do an MRI and they said they could -- but they didn't suggest it as the treatment would be the same either way -- don't move for a few days.  Start doing exercises to strengthen your lower back when you're better.  Stay on anti-inflammatories until then.  

So in the end, no MRI and two different doctors either refusing expensive imaging or not recommending it, despite the fact that my insurance would cover it.  

Wed, 07/16/2014 - 15:22 | 4963906 MachoMan
MachoMan's picture

Ok...  and if every doctor was the same, then the system wouldn't be bankrupt and need reform, right?  Are you arguing the exception or the rule?

Wed, 07/16/2014 - 12:26 | 4962951 DOT
DOT's picture

The newly mandated upgrades to medical record keeping are not to improve your health. The companies marketing said applications to the medical practices and hospitals are forthright in telling their prospective clients that getting more money from the same procedures is the main benefit. Thousands of new codes are coming online this September. Our government has now centralized control of housing, food production, education, medical care, and of course, the conduct of commerce on every level. Corporations are used to deflect the blame for problems and reward the politically connected- they are no more than strawmen and easily replaced.

Wed, 07/16/2014 - 12:28 | 4962969 Liquidation
Liquidation's picture

Monopolistic practices.

Wed, 07/16/2014 - 12:36 | 4962991 Oscar Mayer
Oscar Mayer's picture

The problems are manyfold,

1) Credit/debt as currency.

2) Insurence interference in the price discovery mechanism

3) Government interference in the price discovery mechanism

If government must interfere then may I suggest they supply the infrastructure, and the maintenance thereof, for "health care" then rent space to the doctors and their staff cutting overhead, so doctors can more easily charge according to what their patients can pay instead of basing their charges on what they can get from the insurers and government.

I know this doesn't fix the systemic fraud of bankster created credit/debt issued as currency but hey, one step at a time...

Wed, 07/16/2014 - 12:35 | 4963000 lasvegaspersona
lasvegaspersona's picture

As a physician of 40+ years I know there are some crazy things in the economics of medicine. Drug companies seem to be flush while primary care physicians (like pediatrics) barely subsist.

The real problem in medicine is part of the greater problem of the American economy...there has been too much easy money and politicians have used it in a way that distorts good usage.

I first saw this in the 70s when suddenly a few cardiac surgeons demended and received huge increases for their services.10 times what most docs would have charged on a good day. Blue Cross was at the heart of the problem and I just could not understand how a system could survive with 2 doctors, both well trained, with enormous disparity in income. Now the problem has changed to disparity, not between doctors but between parts of the industry with connections and those without connections. Big Pharma seems to be doing well. Your local internist is thinking of folding up shop.

This problem cannot be easily fixed.

Wed, 07/16/2014 - 13:01 | 4963154 ebworthen
ebworthen's picture

The mammon lusters got inbetween the Paitent and Physician.

Corporations took over from the Doctors.

Do you feel like a janitor sometimes?

Wed, 07/16/2014 - 14:30 | 4963611 MassDecep
MassDecep's picture

Case in point. My father in law, (85) had two nickle size holes in his skin by his right elbow. MRSA infection. The doctors spent a year placing him on Antibiotics to no avail. The infection grew worst and 5 doctors stated they would just wait and see. They wanted to take his arm off, but he was so weak by their treatments, they had to wait. I called Scott, a natural medicine guy I knew, and he prescribe him Invive Silver, http://www.dr-johnson.com/ . He started the regimend Oct 2013. By January, the MRSA was totally gone. His hair was turning black, (from grey), and he had a voracious appetite.Cost was about 800.00 total. The establisment does not deal with natural, because they cannot patent natural, thus no money. There are tons of natural cures out there.

The dostors ask him what he did, and he told them. They were not interested once they knew it wasn't "Big Pharma"

 

Wed, 07/16/2014 - 15:04 | 4963810 MachoMan
MachoMan's picture

You don't get paid for fixing people...  they want to know what he did so they can be sure not to tell anyone else about it (and probably discredit it as much as possible).

Wed, 07/16/2014 - 19:45 | 4964973 TheAnswerIs42
TheAnswerIs42's picture

Yes, Silver does work for a lot of bacterial/viral problems.

Have used it for many years.

Google Mesosilver.

Particle size does matter...

 

Wed, 07/16/2014 - 15:19 | 4963885 Chief Wonder Bread
Chief Wonder Bread's picture

Agreed the problem cannot be easily fixed. The costs of U.S. healthcare are embedded in the lifestyle adoption and maintenance decisions of healthcare providers, the profits and subsidies of Big Pharma and are even related to the architecture and layout of hospitals.

The genesis of this healthcare structure lies in government policies which date back to the 1940s. A succession of policy decisions since have only exacerbated the problem.

Wed, 07/16/2014 - 12:34 | 4963007 gdiamond22
gdiamond22's picture

Looks like a chart of Central Banks Balance sheets...Hmmmmmmmm

Wed, 07/16/2014 - 12:56 | 4963134 SilverFish
SilverFish's picture

Medicine is NOT broken because it is for profit. If that were true, nobodys cell phones would work. The problem with medicine is the fact that it's not a "pay as you go with cash" system. Think about it for a minute. If insurance suddenly disappeared and everyone had to pay for their health care right out of their pockets, the price of all medical procedures would drop almost overnight. It would have to. If they charged more than someone was able to pay out of pocket, nobody would be able to afford it and the result would be, as a doctor,  to drop your prices for said service, or go out of business. People seem to forget that medicine is just a business, just like any other.....and it should have to follow the same supply/demand/affordability forces that govern everything else in a free market.

Wed, 07/16/2014 - 13:21 | 4963276 HastaLaVictoria...
HastaLaVictoriaSiempre's picture

Correct

The problem is not that it is a largely privately owned healthcare system, but that it is also publicly funded. Privately funded, privately owned and publicly funded, publicly owned are OK. In the first case prices are limited by capacity to pay of the consumers and in the second they are limited by rationing from the government.

 

Wed, 07/16/2014 - 13:35 | 4963369 SilverFish
SilverFish's picture

Yep, pretty much.

 

Unfortunately, it takes a really brave man with health problems to say "Nope, your prices are too high. I don't want your service." to a hospital and just walk away, but the fact is, that if everyone did exactly that, just for a few weeks,  prices would suddenly be fairly affordable.

Wed, 07/16/2014 - 15:07 | 4963829 MachoMan
MachoMan's picture

Not really.  The issue is much more complicated due to legacy capital costs.  The fixed costs of the largest players (and most politically connected) demand a price level in order to keep the lights on.  While I agree that the proper medicine for the health industry is to be a pay as you go system (private), this would almost certainly bankrupt virtually all the material players.  Further, many of the doctors are spendthrifts and well...  if they have a decrease in pay then it means a shit sandwich.

Wed, 07/16/2014 - 12:57 | 4963141 ebworthen
ebworthen's picture

My Sister pays over $1,400 month with something approaching a $10,000 deductible.  Family of 4, all healthy.

It isn't insurance nor healthcare, it is an asset confiscation scheme.

Wed, 07/16/2014 - 13:06 | 4963183 junction
junction's picture

Currently, New York University Langone hospital is busy doing two things: buying physicians' practices and saturating local New York City TV broadcasts with ads.  Once NYU Langone buys the physician's practice and makes him or her a hospital employee, the doctor now funnels patients to NYU Langone for most tests and minor surgery, no more in-office activity that cannot be more profitably done at the hospital.

Wed, 07/16/2014 - 15:11 | 4963847 MachoMan
MachoMan's picture

Same everywhere...  regardless if it's NYC or BFE, consolidation is the name of the game.  The physician will often take a pretty penny up front for the practice (some idiots are so desperate to sell they'll give it away), but that is quickly removed with demands from his/her new boss as well as pay cuts...  I get to work for a few folks who are flipping the bird and doing their own practices and I'm doing my best to keep them in the game.  They're generally very successful and well ahead of where they would be had they sold out.  Most are cash only with a smidgen of private insurance (usually only aetna or bxbs).

Wed, 07/16/2014 - 13:23 | 4963291 chomu
chomu's picture

NO price elasticity of demand from the sick care consumer (patient)

 

How can you descirminate based on $price$ when there are NO F*#KING PRICES????

 

The wife is a M.S.R.D. Clinical Dietitian at a local non-prof hospital. The shit I hear at the dinner table would blow your mind...

 

 

Wed, 07/16/2014 - 13:50 | 4963449 IMACOINNUT
IMACOINNUT's picture

MSRD - master of science registered dietitian ?

Yes definitely a frustrated group if there was ever one. During my many years as an RN, I have found that patients rarely if ever adhere to or listen to advice to improve their health behavior. People are interested in doing one thing and that is in increasing their enjoyment of life. If that includes eating, drinking and acting in unhealthy ways so be it.

Every day I work there is one topic I stress more than any other and that is to stop drinking the most destructive fluid anyone could put in their body, soda. Some patients are so defensive of their soda they actually complain and ask for another caregiver the following night.

I see alot of the problems stated above but in my small cell, they are out of my control.

Drink Kangen Water

Wed, 07/16/2014 - 14:06 | 4963515 Matt
Matt's picture

"Surgery isn't hard - if you can do carpentry, you can do surgery."

Thanks, Dr. Nick!

Pretty sure you need much steadier hands for cutting into people with a scalpel than in using a framing hammer or nail gun.

Wed, 07/16/2014 - 14:48 | 4963722 swmnguy
swmnguy's picture

"You need much steadier hands for cutting into people with a scalpel than in using a framing hammer or nail gun."

Tell that to Richard Talley.  You know, the CEO of American Title Services who supposedly committed suicide with a nail gun.

Wed, 07/16/2014 - 14:43 | 4963688 Duude
Duude's picture

Multiple problems with our healthcare system.

1) We pay doctors according to the number of tests, treatments, and procedures done. This is the wrong incentive. The best incentive is the number of happy patients you treat. Unhappy patients will find a doctor that meets their needs----whether it be effectively treating them, listening to them, or seeing them in a relatively prompt manner.

2) Little cost transparency----doctors sometimes abuse their authority by overtesting and ordering different procedures that aren't necessarily effective but cost a bundle.

3) the threat of civil litigation leaves many doctors following a defensive medicine protocol just to show they covered all bases. More often than not it uncovers nothing while running up the expense.

4) we need to push disincentives to individual patients to not lead reckless lifestyles. This is especially important while patients are still young and too stupid to realize they really aren't indestructible. People that smoke need higher premiums, obese people need higher premiums.  All people ought to be given time to change their lifestyle but if changes don't happen, the penalty premium will come into play even if you're unable to pay. A penalty premium could be a higher premium or a lower quality healthcare plan.  You're free to live your life as you choose, so long as everyone else doesn't have to pay for it.

Wed, 07/16/2014 - 15:18 | 4963884 MachoMan
MachoMan's picture

Multiple problems with our healthcare system.

1) We pay doctors according to the number of tests, treatments, and procedures done. This is the wrong incentive. The best incentive is the number of happy patients you treat. Unhappy patients will find a doctor that meets their needs----whether it be effectively treating them, listening to them, or seeing them in a relatively prompt manner.

Definitely agree on the wrong incentives.

2) Little cost transparency----doctors sometimes abuse their authority by overtesting and ordering different procedures that aren't necessarily effective but cost a bundle.

"Sometimes" :-)...  Those expensive lifestyles don't pay for themselves...   

3) the threat of civil litigation leaves many doctors following a defensive medicine protocol just to show they covered all bases. More often than not it uncovers nothing while running up the expense.

Compare and contrast this with #2 above.  If it's not going to uncover anything, then why do it?  (hint: because they make money from it, see #2).  Further, there's a simple solution, get the patient to sign a document stating they don't want the test/procedure run...  simple as that.  Aside from the fact that failure to diagnose cases are shit.  A good med mal case is one where they saw off the wrong leg.  Do you really think a judge or jury is going to give a shit when the doctor treats you for something consistent with your symptoms and you choose not to have him run any more tests?  The fear of litigation is a convenient scapegoat to cover doctors' asses who are milking the shit out of the system.  Many doctors are lead astray by insurance companies to justify large premiums... 

4) we need to push disincentives to individual patients to not lead reckless lifestyles. This is especially important while patients are still young and too stupid to realize they really aren't indestructible. People that smoke need higher premiums, obese people need higher premiums.  All people ought to be given time to change their lifestyle but if changes don't happen, the penalty premium will come into play even if you're unable to pay. A penalty premium could be a higher premium or a lower quality healthcare plan.  You're free to live your life as you choose, so long as everyone else doesn't have to pay for it.

Touchdown

Wed, 07/16/2014 - 15:55 | 4964043 Dingleberry
Dingleberry's picture

Docs order a shitload of tests to keep from getting sued, not to make $$. 

Most work for places (HMOs) that reward for NOT ordering tests. I was just talking to my doc about this last week.  He is so fed up about it he is quiting his practice next month.

If a doc misses a relatively rare diagnosis that could have been found with an expensive test, he's up shit creek.

Wed, 07/16/2014 - 17:17 | 4964405 MachoMan
MachoMan's picture

If a doc misses a relatively rare diagnosis that could have been found with an expensive test, he's up shit creek.

That's nonsense...  quit talking in innuendo...  what exactly is "up shit creek"?  Please quantify it.

Could you also be more specific about his employer rewarding him for not ordering tests?  So he works for someone else who doesn't want him to make more money?  That makes sense...  

If doctors did not want to make money from the additional tests, then ask them why they keep the money...  simple question.

Wed, 07/16/2014 - 14:58 | 4963779 wwxx
wwxx's picture

That $1400/ month insurance premium mentioned has been in existance well before Obamacare, I was quoted $1500/month 11 years ago, for basic major medical insurance/high deductible for 1 person. 

 

I was against Obamacare ever since Max Baucus raised his ugly head, but I've always been against the quoted $1500/month insurance premium because it is unrealisticly unaffordable.

 

Can I just pay cash, and compete with the overpriced medical services market?... that is what I've been doing for 30+ years, by rarely if ever interacting with it.  Luckily I have never had need of anything expensive.  Now that I'm 50+ years old, and quit looking for work 5 years ago...the Medicaid card (obamacare for poor people) comes in handy if I ever get around to using it.  No dental, no vision services are provided, it is bare minimum medical coverage...cost me nothing/ month, my 'new normal'.

 

The funny thing is...when I was working, I would actually ask the new employer: leave me out of 'their insurance scheme', and pay me the difference from 'their insured employees' and the non-insured/self-insured employees...the employers never once opted to take me up on the offer.  They required I join 'their insured' or if I did not, they refused to pay me any portion of their savings in the premium cost.

 

Insurance has always been a clever racket...ever since it was invented, Obama & Congress opted to support the 'new normal', and all the insurance related middle class people that work within that industry.  Insurance is probably now the fastest growing industry in the U.S., that sustains the 'new normal middle class'.

 

Don't teach your kids a viable trade...urge them to learn how to sell insurance! hahaha

 

wwxx

Wed, 07/16/2014 - 15:29 | 4963941 luftmensch
luftmensch's picture

Obama's biggest promise was that he would attack the powers holding the health system hostage.

Instead, he quickly became their bitch, and his attempt to improve was simply use government funds to enable more people to take part in the current FUBAR system.

Destroy the insurance companies -- I mean it almost may require an act of war to get rid of these types.  They are complete parasites.  The government creates an insurance system in all the other countries mentioned in the chart with lower healthcare costs.

Then destroy the system enabling big pharma to charge whatever they want and that makes it illegal for the US Government to even negotiate w them, as does every other soverign nation.  This currently causes the same drugs to sometimes cost 10x more in the US.

Then destroy Monsanto and their ilk, anyone who is decieving about labels or health education essentially.

Bottom line is, as others have said here, certain areas of life are not best served by those trying to make only the highest profit.  Religion is one such area, as is health-care.

 

Wed, 07/16/2014 - 15:51 | 4964030 Dingleberry
Dingleberry's picture

I did not read the whole thing, but he obviouly forgot to put the biggest expense (aside from lack of personal responsibility) in his "circles":

Lawyers.

Lotto-style lawsuits are mostly unique to the US. It costs a ton to do "defensive" medicine,  estimated at up to 20% of the entire medical cost.

 

Guess who the #1 or #2 campaign contributor usually is to the democrats, who want free shit for everyone?

Wed, 07/16/2014 - 17:36 | 4964439 MachoMan
MachoMan's picture

This is a pervasive untruth...  Could you please articulate "lotto-style lawsuits"?  And, in so doing, please explain the concept of the burden of proof, especially when it comes to damages.  Further, please explain tort reform in the U.S. from the mid 1800s to present.  Let me guess, the old lady that poured mcdonalds coffee on her lap? 

Here's the scenario.  Insurance companies fill doctors' heads with the threat of the legal nightmare in order to justify larger med mal premiums.  Doctors in turn run additional (lucrative) tests to stave off the threat of a lawsuit [despite paying for insurance that covers a failure to diagnose].  Each provides plausible deniability for the other.  Doctors fraudulently bill (some being idiots with a clear conscience) and insurance companies skim the take.  As doctors make more money, they pay more insurance premiums.  It's really this simple.

Wed, 07/16/2014 - 15:54 | 4964048 Chief Wonder Bread
Chief Wonder Bread's picture

Look up 'commodification' on Wikipedia (not 'commoditization', a different concept). [yes, 'commodification' is a Marxist concept; nevertheless still useful in understanding the issue.]

At one time in the U.S. the 'healthcare' system was partly private for-profit and partly charity (i.e., it hadn't been fully 'commodified' in the Marxist sense; that is, part of the MDs' practice was outside the market system.) Then .gov got involved, offering a range of subsidies to the patient base. The private for-profit component of the field began to be more and more affected by the perverse incentives offered by these subsidies. Then later, as mentioned here, the Bean Counters noticed that by commodifying the charity component of this mixed model (the private for-profit component now heavily subsidized by .gov) into a fully private for-profit system, they could reap huge rewards. 

Hard to believe, U.S. healthcare has degenerated into the worst of all possible systems. The patient encounters a predatory system designed to extract as much of their wealth as possible; the healthcare providers encounter a govt regulatory nightmare and a relatively few 'financial engineers' and big corporate interests enjoy a govt-subsidized bonanza. 

Wed, 07/16/2014 - 16:11 | 4964115 Gyoza Mimi
Gyoza Mimi's picture

This article goes contrary to the entire notion of Zero Hedge's preaching: capitalism untamed by evil Governments works the best.

 

Here, capitalism without meddling of governments is at its best:

- For-profit healthcare companies focus on increasing profits by raising prices when product is in demand and finding ways of offer more products (here is your handful of pills for today, here is a bucket of pills for tomorrow)

- Food producers maximize profits by giving masses what they want – best value food (a lot of it and cheap, quality is not in demand in America)

- Construction, auto, oil and many other industries maximize profits by building low-rise, low-density towns spreading far and wide

- And a lot more along the profit maximization notion

 

So we have an example of Zero Hedge completely contradicting its own core platform.


Wed, 07/16/2014 - 16:32 | 4964187 Zerozen
Zerozen's picture

You'd be right, if you weren't so completely wrong ;-)

I got a good laugh out of your statement that the U.S. gov't doesn't meddle in healthcare or food production/agriculture. Where the hell have you been for the last 40 years?

ZH isn't contradicting itself at all, it's right on target.

Thu, 07/17/2014 - 11:03 | 4967430 sam site
sam site's picture

You're right - there is no reforn possible.  Particularly from the toxically injured and captured public.  Just like with our toxic money system, our toxic monopolistic food and medical system will have to collapse to emerge later as a competitive lean, healthy system. 

Hopefully the masses will rise up against our Jesuit banker masters and sieze their stolen Vatican gold and vast corporate empire, that is the source of their power so they can't enslave the masses again.

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