The Current Healthcare Market

| Medical Cost Sharing

The Current Healthcare Market

US healthcare takes up 17.9% of GDP, over $3.3 trillion, as of 2016 per the National Health Expenditures report by CMS. The US ranks 29th globally for quality of healthcare despite spending at least 2-3 times more than countries that provide much better outcomes. US also ranks 53rd on the life expectancy scale, placing last when compared to the industrialized world.

These are not comforting facts and shows how we spend the most and get the least out of our current healthcare system. The status quo is unacceptable. Not only this but to tweak the current paradigm is unlikely to demonstrate any meaningful improvements. As a physician having seen the “business” of healthcare from both the administrative side and as a small business owner (entrepreneur), I have decided to share a series of blogs to openly discuss this endemic problem, and to generate a conversation for ideas that can get us to the right track.


Parameters Regarding Success Of Any Business Model

There are a few parameters that I believe are imperative to the success of any business model.

  1. We have to give people the choice and power to decide their course...any model that steers people in one direction, regardless of its outcomes or purpose is quickly met with resentment and lack of appreciation. The idea of having the power to choose is a one of the best forms of free expression and any sustainable solution must be in line with human nature.

  2. Solutions must be financially sustainable and profitable. This is not to say that the profit margins need to be ever expanding, but within boundaries of regulation businesses must be allowed to offer and experiment with venues to improve their cost and profit structure. We do not need to feed into the monoculture of ever growing and extractive profit lines but we must accept that any business model that does not generate a profit is not self sustaining and will not attract best talent.

  3. There needs to be transparency so businesses can compete for the consumer on cost and quality parameters.

  4. Though a free market solution with transparency and competition is ideal for consumer, regulatory agencies are necessary to create rules of conduct that are meant to safeguard the interests of the consumers.


Understanding The Healthcare Problems

Our current healthcare model is the most inefficient and complicated mess that cannot be fixed in its current paradigm. To understand the ridiculousness of the current system, assume you want to buy some pasta. In the current system, you would need to go to store that is in your “network” which is 25 miles away, even though you have 9 markets closer that carry the same pasta. Once you arrive at the “in network” market, there are a variety of pastas but you can only buy the one that is allowed under your policy even though there are perhaps better and cheaper versions available.

You decide that you are not going to agonize over the choice and just accept the pasta that you are allowed to obtain. Even though this pasta costs $1 and can be obtained for $2 from the market, when you take it to the checkout counter, you are charged $10 for it, of which you pay $2 now and the remaining $8 will be billed by the market to your insurance policy. The market owner has employed an army of office staff to fill out the proper paperwork to submit the claim.

You receive a letter about 6-8 weeks later that the pasta that you have already eaten has an in-network cost of $3 and since you have not met your deductible for the year, you have to send the $1 to the market. The market owner is sent a letter explaining that the pasta has an in-network allowable of $3 and since $2 was already collected, the business has to collect the remaining $1 from you.

This creates a new cycle of paperwork where adjustments can be made to the original bill, and attempts are started by the business to collect the $1 from you. Now if you think this confusing, please understand that this is an extremely simple reality of healthcare billing, most cases are much more complicated than this.

This raises two questions:

What kind of a business operates like this?

Why didn’t you just pay the $2 and be done with it?

Stay tuned to our next blog where we demystify the terminology of health insurance so you can understand what you are paying for, and so you can decide if the supposed “peace of mind” of having health insurance is worth the convoluted complexity.

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