The Costs of Medical Care - The Future of Medicine

The real reasons why health care costs are rising so much are rarely discussed. Here are some key reasons

The High Cost of New Technology

The cost of new devices such as pacemakers, defibrillators, stents, ventricular assist devices, insulin pumps, laparoscopic surgical instruments, etc. are high. Just like in the development of drugs, our patent policy allows the company to recoup its expenses and then some for a good idea that benefits mankind. Are the costs too high? Maybe, but to me the real culprit is using a device or a drug that is not needed or indicated. Or using one that is not substantially better than the former, now cheaper, model or drug. A drug example comes to mind: We see every day on TV advertisements for heartburn remedies. "Ask your doctor for a prescription for XYZ." What we do not know from the ad is that essentially equal drugs off patent are available over the counter. Indeed, available at Wal-Mart for less than 10 percent of the cost of the prescription drug in the ad! We need an educational campaign to inform physicians and patients of the facts so that reasonable decisions can be made. As to devices, let's use laparoscopic surgery as an example. The instruments used are much more expensive than a scalpel but the result is a much smaller scar on the abdomen, out of the hospital in a day instead of a week, back to work in two weeks rather than six. So the surgery costs more but the overall cost of care is way down. But with the total cost down and the procedure so much more tolerable, more people are having surgery for, say, gall bladder disease than ever before. Presumably they need it and benefit from it, but it means that the total cost of care to the population is rising even with a reduced cost per individual. It's sort of like cell phones. They cost much less than ever before but now everyone has one and uses it for calls, photos, texting, e-mails, checking sports and Wall Street - so the total cost is way up.

The Cost of an Aging Population

We are all getting older and like an old car our parts start to wear out. That will not change but we as individuals can delay the effect of aging with physical and mental exercise. Our organs lose some of their function at a set rate each year. For example, bone mineral density goes down about 1 percent per year beginning about 30, and so does lung function, heart function, muscle mass, etc. Good data shows that exercise slows the rate of loss of bone mineral density, heart function, lung function, muscle tone, and improves mobility, strength and a sense of well-being. Similarly, there is suggestive evidence that exercising the brain slows down memory loss and may delay the onset of dementia. Add good nutrition, a sensible diet and maintenance of normal weight and watch what happens to one's sense of self health. But eventually, even with the best of attention, our age related malfunctions will catch up with us. Very few of us will die in the middle of the night of "old age." Rather we will develop heart disease, have a stroke or be struck with cancer. Its treatment will be expensive unless we are at that point in life where we make the conscious decision to request only supportive or palliative care and otherwise let nature take its course as it did for generations before our time.

It is also instructive to look at a significant shift in medicine that has occurred. There has been a major change in the diseases that are prevalent. Until recently, acute diseases such as pneumonia, appendicitis, gall bladder disease and others were the major problems encountered in medical practice. Today it has changed to be chronic diseases such as diabetes, heart failure, chronic lung disease, and many more. Indeed it has been estimated that by 2030, 6 out of 10 people over the age of 65 will be coping with more than one chronic condition. And there will be three times as many people living in the USA in 2030 who are over the age of 65 than there are today so there will be plenty of chronic diseases. But it is not just the numbers of people with chronic disease but the costs of caring for chronic disease. Caring for a heart attack is expensive what with the diagnostic procedures and the new approaches to care. But for the patient who progresses on to heart failure, the costs are not only high but remain high for the rest of the patient's life time. Same for chronic lung disease, diabetes, kidney failure, and osteoarthritis. Add to that those diseases that we call autoimmune diseases like diabetes, rheumatoid arthritis, multiple sclerosis, Crohn's disease, lupus, and many others. These autoimmune diseases are increasing at a rapid rate, some would even say an epidemic rate and no one really knows why. But they are and all of these chronic diseases require intense, long term, expensive treatment.

The High Cost of Not Taking Care of Ourselves

Excessive Weight, Lack of Exercise, Poor Nutrition and Diet and High Stress - We are a country of people who are overweight --one-third are overweight and one-third or more are frankly obese --, under-exercised, poorly fed from a nutritional perspective and highly stressed. And it gets worse each year. This is the major reason that medical costs will rise in the future. Diabetes will accelerate to epidemic proportions, heart disease will follow, arthritis will be exacerbated by obesity, life spans will be shortened and along the way there will be enormous medical bills to pay. We need a government that encourages good health, regardless of the economic interests that such a program will affect. It will mean less fatty food, less red meat, less whole milk and cheese on our pizza, less sodas [and everything else made with high fructose corn syrup], less prepared and take out meals and more home cooking, more whole grains (whole wheat, brown rice, oatmeal) and a real change in the cereals sold in supermarkets. We need to shop the periphery of the supermarket and leave the aisles with all the prepared foods alone. But the supermarkets are getting wise to that as well and placing many prepared foods in the peripheral aisles now. We still smoke in high numbers with all too many teenagers picking up the habit. They will incur the wrath of lung caner, heart disease, lung diseases and others in the years to come. And we must finally come to accept that weight gain is a function of the number of calories consumed minus the number expended by exercise. That's so simple but apparently so difficult that we try all sorts of diets that ultimately don't work but cost lots of money and frustration.

America's High Cost of Pharmaceuticals Compared to Other Countries

Some, including many of our political leaders, advocate for re-importing drugs from Canada that were made in America. But we need to focus on the real issue and deal with that. Drugs are very expensive to bring to market. The pharmaceutical industry estimates that the R&D costs including the costs of obtaining FDA approval approach nearly $1 billion. That's a lot of money and the drug company needs to recoup its expenses. Patent law helps by giving the company 17 years of freedom before any other company can market the same compound. So the cost per pill is much higher than the actual [marginal] cost to produce that individual pill. But other countries essentially have price controls and they dictate that the company must accept a lower price per pill in order to sell in that country. The pharmaceutical firm agrees and sells for much less than what it charges in the United States. So in effect, Americans subsidize the cost of research and development. That is inherently unfair to Americans. Rather than allowing re-importation, which would create havoc for testing to ensure the drug was what it was supposed to be, the federal government should simply rule that it will purchase drugs only at the price that all other countries pay [with an exception for some developing countries that cannot afford full tilt.] If a company lowers prices in other developed countries, then it will not be allowed to sell to Medicare, Medicaid, the Department of Defense or the Veterans Administration, i.e., about 50 percent of the marketplace. The result will be some reduction of price at home and an increase in other countries so that all help to pay for the R&D expense.

But we can't let physicians off the hook here. Physicians all too often offer a drug for a problem that could and indeed should be dealt with by changes in life style. Lose weight [eat less, exercise more], reduce stress [meditation, adjust activities], exercises are not emphasized by doctors when they should be; pills are prescribed instead. Frankly, it is easier and the patient expects it. And most unfortunately, the insurance company will pay for the often expensive pill but does not pay the doctor to spend the time needed with the patient to deal with the real issues. Our insurance tends to pay for pills and procedures but not time to deal with promoting wellness or preventing disease.

There are wide variations in care expenditures from geographic region to region. One might assume that those regions with higher expenditures reap better health but that is simply not the case. Unfortunately, much of medical care is not delivered based on evidence of efficacy but rather on long standing practice, tradition or training many years before. For example, it is known that patients that suffer a heart attack are benefited from treatment with certain drugs but many patients leave the hospital after a heart attack without being placed on these drugs.

A Malpractice System That Does Not Improve Care But Costs Far Too Much

Today's system is a disaster. Our system of malpractice does everything wrong. It encourages secrecy, it slows the payment, it discourages apology, and it does nothing to prevent the same error from occurring in the future. In short, it is the opposite of what is needed to reduce harm and promptly support and compensate the patient who was harmed. Without question, anyone who is injured during medical care deserves, first, a sincere apology by their caregiver and then appropriate compensation. Doctors should be quick with the former and the insurer should be quick with the latter. There should be little or no need for a lawyer who expects a third of the take and looks to drive up the settlement. Equally important, the whole concept of injury compensation needs to change so that it drives needed improvement in systems to prevent a similar mistake in the future. This will only happen when errors can be discussed openly without fear of retribution; when doctors feel comfortable talking with their patients and appropriately apologizing after a mistake is made; when hospitals evaluate errors for their root cause and implement constructive actions to prevent their recurrence. This means a non-punitive but accountable environment.

Unnecessary Procedures, Drugs, Hospitalizations and Other elements of Care

Physicians and patients (and their loved ones) need to accept sometimes that death is inevitable. None of us want to die and certainly not just now. But sometimes that is what is going to happen no matter what modern medical miracles are tried. Sometimes it is best not to try another heroic measure but rather to have a frank and honest discussion and then allow for death with dignity in an appropriate setting, such as home or hospice, with comfort, drugs and family nearby. Physicians also need to recognize that just because a procedure is available it need not necessarily be used. We have this driving need in medicine to cross every t and dot every i even when it may not really be necessary. Some say it is defensive medicine because of malpractice. I don't think so. I think it is just the way we are trained. If a test can give an answer, we do it, no matter if the test will only tell us about very rare events. "When you hear hoof beats, think of horses, not zebras." The pain of "heartburn" needs a careful history to see what the cause might be. An expensive endoscopy may rule out esophageal cancer - an unlikely cause in a relatively young person- but only the inexpensive but careful history will pick up the possibly of wheat (gluten) sensitivity.

Our Broken Insurance Industry

The idea of insurance, like fire insurance, is to spread risk over a large number of people so that when an unlikely catastrophe, like a house fire, occurs there will be a source of payment. But we now have a medical insurance system where we don't spread risk and we don't insure just for catastrophes. It is really just prepaid medical care. Better we go back to a system where we pay out of pocket for routine care - our annual physical, our infant's well baby care and shots, our life style drugs such as birth control, heart burn from poor eating habits and erectile dysfunction from stress. Save our insurance for when we really need it - a hospitalization, a surgical procedure, an expensive drug for heart disease or cancer radiation or chemotherapy.

And we need systems established by state/federal governments that insist that everyone be placed into large risk pools so as to spread that risk. Do not let the insurer or a corporation cherry pick for healthy individuals and leave the less well to find more expensive insurance. That said, we also should have risk adjusters. If you want to smoke, fine, but you will pay more for your insurance. If you enroll in a program at work or in the community to improve diet, exercise, nutrition and stress, then your insurance costs go down. But you should not be denied coverage because of a pre-existing illness or because you lost your job or moved to a new employer.

And the insurers need to stop the extremely expensive process of reviewing and often denying every submission by the doctor or hospital. It is done, they claim, to prevent fraud or to prevent payment for a non-covered event. Fine, but it is often a smokescreen for finding an excuse not to pay or to delay or reduce payments - sort of like "justice delayed is justice denied." The result is that doctors and hospitals must hire large numbers of clerks and nurses to review charts, process claim forms and then deal with the denials that inevitably arrive from the insurer weeks or months later --an unnecessary expense. We need fewer reviewers and more caregivers.

Mandates are a real problem in medicine. Each has been created to affect a real or perceived need but the sum total is strangling effective and efficient medical practice. They slow down real work, create a lot of effort by doctors, nurses and others and the result is that paperwork rather than bedside care takes up all too much time. Doctors need to be sure that their notes are complete enough to withstand Medicare scrutiny for payments. Claims submitted to insurers are routinely rejected for minor reasons only to have them reworked in the doctor's office or hospital accounting department. Case managers are walking the halls of the hospital looking for patients that are staying too long, no matter that Mrs. Jones needs an extra day to equilibrate from her surgery.

Inadequate Numbers of Primary Care Physicians

Most countries have about 70 percent or more of their physicians in primary care settings whereas the United States has about 70 percent working as specialists. This gradual transition over the past 50 years is largely because of our insurance system, which better rewards doctors for doing procedures. We need a system that compensates the generalist in an appropriate manner. Today, the average general internal medicine practitioner earns about $150,000. Not a bad income but consider that he or she only got started at about age 32 (after college, medical school and residency and possibly extra training in a fellowship and usually over $100,000 of debt), has long hours and a very high level of responsibility (your health!). That doctor's salary has been stable for the past few years despite the need for raises for the office staff, the rent and the utilities. And a starting internist or pediatrician or family medicine doc can expect to earn about $80,000 - $100,000. No wonder they prefer to consider a specialty practice, where the income is higher but hardly "high" by Wall Street standards.

Equally important, the generalists that are in practice are not in the areas most in need - the inner cities and rural areas. Incentives, by which I mean greater reimbursement, are needed to get new graduates to select primary care and then further incentives to entice them to practice in rural or inner city areas.

So what should be done? Patients need to accept a level of responsibility for their own health. Exercise, nutrition, appropriate weight, dental hygiene, seat belts, no tobacco and alcohol in moderation should be the order of the day. Patients, their families' and doctors need to accept that a time in life comes when no more heroic measures are appropriate but that good supportive care, palliative care and hospice are appropriate. Insurers need to drop their excessive methods to reduce costs by reducing care and increasing everyone else's work load. Malpractice needs to be changed to a system that encourages reporting errors; patients are apologized to immediately and then compensated fairly in short order. Excessive mandates for documentation must be reduced so that care givers can give care rather than fill out forms. Everyone should take the needed medications but no one should be prescribed a medicine where life style changes are what is really needed. And when a drug is prescribed, there is no reason not to prescribe the least expensive, often generic, drug available.

These are some of the issues that need to be addressed to reduce the cost of health care. These issues will not go away unless and until there's a real effort to address them directly and honestly. It will mean changes, real changes, by state and federal government, by physicians, by hospitals, by insurers, by employers and by us - the patients or potential patients. We need to take more individual responsibility for our own health, accept when enough is enough, and recognize the ultimately (very) high cost of not caring for ourselves.

Last Modified: June 11, 2010

Copyright (c) Stephen C. Schimpff, MD