The Health Care Cost Crisis

American health care is at a crossroads of sorts.  We all know it.  But do we know how we got here and who is responsible?  Probably not.  I have talked to some of the brightest minds in the health care industry over my 25+ years as a physician and surgeon, and I remain bemused and befuddled by the things I hear, and the so-called experts whom I hear it from.

First off, we do not have a health care crisis.  We have a health care "cost" crisis.  There is a big difference.  If we were, as a nation, spending 9% of GDP on health care like we did in 1980, then it wouldn't be destroying the national budget.  Instead we are now spending and astounding 18% of GDP!  It cannot go on.  If we could get it back to 10% or less of GDP, the economists, who know about this kind of stuff, say that level is ""sustainable" over time. The savings from bringing health care costs back to 1980 levels, would balance the budget.  Imagine no budget deficit.  Wow!  What would politicians have to argue about?  Suffice it to say that health care costs are wrecking our economy.  And Congress has more or less finally agreed to this fact.  When one sector of the economy doubles its percentage of that economy, in a generation, something has got to give.

Now if we assume that health care is our primary economic issue, then who is to blame?  This is where things get tricky.  The preponderance of opinion on the matter, is that most of the blame falls squarely on the doctors.  Why is that you may ask?  Well as I said before, roughly 90% of that spending requires the authorization of your doctor in one way or another, so it's easy to lay blame there.  But of course, that is pure propaganda and misdirection from the real truth of the matter.  The fact is that the medical industrial complex wants you to believe that doctors are the problem.  They also want you to believe that doctors are wealthy and arrogant, and that the only way to control health care costs is to own them, and control them to their own advantage.  The thing is, the public is buying into that propaganda.  So lets explore this assertion.

First, lets really look at how much doctors get out of that 18% of GDP pie.  You may be surprised to find that the physician piece of it is shrinking steadily.  One trick of accounting is that they love to lump all of the doctors in with the rest of the "providers".   But doctors take the blame, so let's look closely at the numbers, but just for doctors. There are about 800,000 MD's and DO's (full time equivalents) practicing in America today. These are the "real doctors" you hear about.  You know, the Mercedes driving, golf clubs in the trunk, Country Club going types you always hear about.  This gang makes (on average) $200,000 in gross wages, and $50,000 in benefits yearly. If you multiply $250,000 by 800,000, you see that all of the real doctors garner about $200 billion.  Not bad, but when you divide that by the $2.7 trillion in total health care spending annually, you find that it amounts to a whopping 7.4 pennies on the dollar.  That's right, less than 7.5 cents of your health care dollar goes to the real doctors.  And, it is less and less every year.  Physician wages are a deflationary part of the overall health care cost crisis, so in that sense, we are already doing our part to solve the problem.

The next thing you hear about, is that doctors practice in a way that over-treats patients.  The data for this is based on regional variations in the numbers and types of expensive tests and procedures.  But that data is extremely biased and flawed because it is based on availability, not on the validity of the treatment.  If you have an arthritic hip, and a good hip replacement surgeon is available locally, you are more likely to have it done, rather than continue to take pain medicine.  It's a quality of life decision.  It doesn't mean the treatment is inappropriate.  Besides, it's the patient that makes the decision.  The doctor just offers the treatment.  So who is to blame?

I've heard it said again and again, that doctors should not be paid fee-for-service.  Fine, but will that make any difference in costs over time?  No.  Back in 1980 the vast majority of doctors were paid fee-for-service and, as noted, health care costs were half of what they are now, as a percentage of GDP.  Also, if you look at a mature managed care system like Kaiser Permanente, where the physicians are paid a salary, and there is no incentive whatsoever for them to treat, or test patients excessively, you will find that their insurance premium costs are no lower than the competition.  Further, they do it with the lowest administrative fees of any health care organization in the country, spending only 5% of the premium dollar on paperwork, and 95% on actual health care for their members.  If putting all of your doctors on salary led to lower utilization and lower costs, the entire health care system would be one big Kaiser Permanente by now, because nobody would be able to compete.  Obviously this has not happened, and that is because what you are hearing about doctors being the culprits, simply isn't true.

Doctors are the scapegoats in all of this, and we also are the target of a smear campaign by the true perpetrators of this economic disaster that is the US health care system.  Doctors put patients ahead of politics, and try to rise above vitriol.  It is more from the lack of guidance by physicians, that we are in the situation we are in.  If you want to fault the physicians, fault them for being silent for too long, and for allowing themselves to be gagged by signing employment contracts that won't let them speak out about the real cause of runaway health care cost inflation.

No, physicians are not blameless, but their shrinking piece of the action speaks volumes about whom is really profiting from all of this.