Saturday, July 31, 2004

Doctors have the Wrong Target

I don't know Kevin Hennosy, but he wrote a column for today's Kansas City Star that really hit the nail on the head. He writes:
In my experience, when consumers feel that they pay too much for insurance, they get mad at the insurance companies. Doctors are a different breed.

Rather than use the considerable financial resources and professional credibility of the medical profession to seek insurance regulatory reform that would benefit providers and patients, the doctors' lobby has picked up the insurance industry's banner.

The doctors' approach to this issue makes no sense. Insurance companies raised their rates across the country, but the medical lobby refuses to break ranks with insurers. It appears to me that the doctors have rewarded bad behavior.


In MY opinion, the task of identifying the biggest problems with the American health care system requires attention to the distinction between the symptoms and the disease. The symptoms are many. The U.S. has higher health care costs expressed as percentage of GDP than any other industrialized nation, yet our results place us in 37th place in the world, according to material presented in our class. As a nation, we are not getting the return on our investment that other nations receive. Our expenditures for medical care continue to rise, and the end is nowhere in sight. At the same time, our doctors are staging walk-outs, and pointing the finger at attorneys. Drug companies are encouraging law enforcement to arrest bus loads of senior citizens returning from Canada with life-sustaining drugs in their suit cases. Poor people go without check-ups, while the Super Bowl is interrupted with expensive commercials promoting drugs for erectile dysfunction. (Was America truly more shocked by a glimpse of Janet Jackson’s nipple than by the warning a few minutes before that patients experiencing four-hour erections should seek medical attention?!)

A listing of the symptoms could go on for pages, but the disease that permeates our health system is the power of insurance companies. At virtually every turn, the hand of the insurance companies is diverting money from the health care system to its own pocket.

The doctors so furious at rising malpractice insurance costs ignore the fact that the invoices are on the letterhead of insurance companies, and accept the proposition that their premiums are going to a horde of sharks in nice suits. They blame attorneys rather than looking at the evidence that malpractice insurance in the states with the most anti-consumer “tort reform” legislation is also rising in cost, because the underlying cause of increased premiums is the poor performance of the insurance companies’ portfolios over the past several years.

Insurance companies are also behind the failure of the market to correctly address the increase of cost. In a normal market, the increased overhead cost of malpractice insurance would simply be passed on to the consumer through increased charges for services. But, in the American market, the oligopoly of insurance companies controls how much doctors can charge for their services.

At the consumer level, prices for health insurance continue to rise, causing unrest in labor markets. Who is raising those costs? The insurance companies are the ones sending the bills.

In most investigations, the best advice is to “follow the money.” Doctors and consumers are both sending larger checks to the same entities, but almost nobody is following the money. The biggest problem in health care today is the pervasive power of the insurance companies to control the prices charged and the prices paid.

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