October 30, 2020

Why Are U.S. Healthcare Costs So High?


  • There are various reasons healthcare is so expensive: high drug prices are well known (so unethical, they should be criminal) and expensive services are over-utilized, but do you understand that specialists have a stranglehold on the U.S. healthcare system?
  • Last year, U.S. healthcare spending was $3.65 trillion. That’s $11,212 for every man, woman, and child in America. Unfortunately, our healthcare system, far-and-away the most expensive in the world, ranks 27th in quality of care. And that was before COVID.
  • Most Americans think that reducing health care costs should be a priority for the next president and Congress. In addition to higher and higher insurance premiums and co-pays, medical bills account for 62% of U.S. bankruptcies.
  • Parts of the healthcare industry, especially Big Pharma needs regulation aimed at increasing accountability and decreasing costs. And who you vote for this year matters!

I went into medicine in 1973, but I cannot remember exactly when medicine became the healthcare industry. This “industry” is not free-market capitalism. The healthcare market is never self-correcting. Prices only go one way: up!

Today, the healthcare system is a profoundly unaccountable economic black box, characterized and dominated by unethical behavior, monopolistic business practices, price-fixing, consumer fraud and political corruption.

Which Is More Important: Corporate Profits or Affordable Healthcare?

Last year, the healthcare industry spent almost $600 million on lobbying, more than any other industry, with many members of Congress receiving hundreds of thousands of dollars from Big Pharma. Lobbying works. Those bribes have consistently “encouraged” Congress to support the industry over the interests of the American people.

That is both corrupt and unethical. At some point, we as a nation need to address how to eradicate bribing of the politicians who represent us. After all, a bribe is a bribe is a bribe, there is no sugar coating that.

Reasons #1 & #2: U.S. Healthcare Costs for All Goods & Services Are Expensive & Over-Used

The first two reasons U.S. healthcare is so expensive are relatively well-known: prices for comparable (similar) drugs and services are much higher in the U.S. than in other countries.

The average cost of a CT scan in the U.S. was $896 compared to 97$ in Canada, $279 in the Netherlands, and $500 in Australia. The average cost for an MRI in the U.S. was $1,145 compared to $350 in Australia and $461 in the Netherlands. In addition, the U.S. performed around 50% more MRIs per 1,000 people than most developed countries.

As with CTs and MRIs, surgical procedures and drugs are virtually always more expensive in the U.S. For example, it costs $27,000 more in the U.S. to give birth to a baby then in the U.K. (The high costs of medications I will dive into more below.)

Also, in the U.S. there is massive over-utilization of expensive resources (e.g., CT scans, MRIs, sedated endoscopies, etc).

Reason #3: The Stranglehold of Medical Specialists

Another massively over-utilized and expensive resource is the medical specialist physician.

Over the last few decades, medical specialists increased their share of the pie (i.e. the Medicare dollar), which has simultaneously lowered reimbursement for the primary care physician (PCP), which also pushes out any sort of gate-keeper paradigm. See some thoughts from my New York Times Op-Ed, The Specialists’ Stranglehold on Medicine:

Most Americans mistakenly believe that they must see specialists for almost every medical problem. What people don’t know is that specialists essentially determine the services that are covered by insurance, and the prices that may be charged for them.

Physician specialty groups have created “societies” to provide education, establish clinical guidelines and handle public relations. They are also lobbyists, charged with maximizing the incomes of member doctors by influencing pricing decisions made by the Centers for Medicare and Medicaid Services. Those prices become the benchmarks for private health insurance companies, too.

There are so many specialty organizations because each develops authority over a niche market and vigorously guards its turf.

Imagine building a house by allowing each workman to do his own thing. The plumber would put a sink in every room. The electrician would install chandeliers on every ceiling. The carpenter would panel every room in luxurious wood. That’s how health care works.

Though they would vigorously deny it, entrepreneurial doctors often treat each patient as an opportunity to make money. Research shows that physicians quickly adapt their treatment choices if the fees they get paid change. But the current payment incentives do more than drive up costs — they can kill people.

Sedated endoscopy, for example, which is used by gastroenterologists to treat conditions like acid reflux and to perform colonoscopies, carries significant risks of adverse effects, including mortality. Joan Rivers’s death from the procedure was not a one-in-a-million complication. Reported death rates vary considerably, but one rigorous study suggests that the death rate is 1 in 9,000. Since approximately 18 million sedated endoscopies are done each year in the United States, “routine endoscopies” may cause 2,000 deaths a year.

And yet, for acid reflux, there is a safer, cheaper and equally accurate procedure available called transnasal endoscopy; unfortunately, doctors rarely employ it, presumably because it doesn’t pay as well.

The focus of my practice is acid reflux that affects the nose, throat and lungs, so-called respiratory reflux. By the time patients arrive at my office, most have already seen otolaryngologists, pulmonologists, gastroenterologists and allergists. They have undergone unnecessary CT scans, MRI’s, blood work, allergy tests, asthma treatments, endoscopies, and nasal and sinus surgeries. Each specialist performs the procedures that generate income for them, and then passes the patient along.

But when it comes to managing acid reflux, specialists offer no advantage over primary care physicians. Indeed, sometimes all a patient needs are basic changes in diet, lifestyle and sleep.

In a landmark article by Atul Gawandi, The Cost Conundrum, he points out, “The lesson of the high-quality, low-cost communities is that someone has to be accountable for the totality of care. Otherwise, you get a system that has no brakes.” In my experience, specialists are no good at taking care of common problems like reflux, chronic cough, and voice problems. And why should a patient with allergies, asthma, reflux and laryngitis have to see four different doctors?

Necessary Regulation

Neither the Affordable Care Act nor the Republicans’ American Health Care Act addresses the way specialists are corrupting our health care system. What we really need is what I’d call a Health Care Accountability Act.

This law would return primary care to the primary care physician. Every patient should have one trusted doctor who is responsible for his or her overall health. Resources must be allocated to expand those doctors’ education and training. And then we have to pay them more.

There are approximately 860,000 practicing physicians in the United States today, and too few — about a third — deliver primary care. In general, they make less than half as much money as specialists. I advocate a 10 percent to 20 percent reduction in specialist reimbursement, with that money being allocated to primary care doctors.

Those doctors should have to approve specialist referrals — they would be the general contractor in the building metaphor. There is strong evidence that long-term oversight by primary care doctors increases the quality of care and decreases costs.

The pharmaceutical industry is nothing if not greedy and unethical. Instead of bribed politicians maintaining the status quo, monopolies need to be broken up and discriminatory behaviors as well as price-fixing must be regulated.

I have Medicare and fairly severe psoriatic arthritis. The medicine that I need will cost me $17,000 a year. Here’s why. If you have Medicare and make more than $60,000, you get no help. Oh, and the expensive shots begin again every year in January, that is, the first two injections cost $3000 each. And all of the alternative medications, produced by other manufacturers, are similarly priced. I wonder how that happened?

Did you ever ask yourself why most of the television ads today are for specific drugs for specific diseases, from arthritis to diabetes or heart disease to cancer. Why are all these drug companies advertising on television for you? Because they want you to go to your doctor and ask about that medication, and if you “qualify” (financially), you might get it. This ensures that if your insurance is willing to shell out or you fit a certain profile (not making much money), you’re one of the lucky ones. Of course, they always welcome  rich people who don’t care how expensive it is.

Another example: Generic drugs used to be inexpensive because they can be produced in large volumes at low cost and, there was competition among manufacturers. That is no longer the case. Not long ago I prescribed erythromycin for patients. (Erythromycin used to be an inexpensive drug costing less than $10 a fill prescription.) When my patient went to pick up the prescription, he was told that it would cost $800. My patient was told that only one company is producing erythromycin now, and that they can charge whatever they want.   

What Can Change Re: The Ethics of Healthcare

Health is not a commodity and probably never should’ve been treated as such. And assuming that consumers are both ignorant and desperate (which they are), only a very generous philanthropic corporation would turn down big puffy profits like that.

The system is definitely rigged to take advantage of people, which begs the question of whether capitalism can solve the healthcare crisis. The key question: Is healthcare a right? Indeed, it is a right if you believe the American ideal of “life, liberty and the pursuit of happiness” demands access to health and healthcare.

Congress could pass a healthcare accountability act that would make it necessary to provide out-of-pocket cost information to patients before they have any service. There might be several components to this bill. Medicare and Medicaid could be expanded incrementally. Anti-competition and monopolistic corporations should be prosecuted. The list of possibilities goes on and on. If there ever is a Presidential commission (or Congressional) to examine healthcare reform seriously, I’d like to be on that commission.

Finally, I would like to see some way to limit the “bribes” that politicians receive from corporate interests through “lobbying.” Here’s a radical suggestion: a new constitutional amendment that says the maximum amount of money that may be given to a political candidate by an individual or corporation is $100, and lobbying (vote influencing) is illegal except by internet posting for all the world to see. For a long time, income inequality has been increasing, and the American people are screwed.

We need transparency across the system, which will lead to cost containment. Inevitably, we will need affordable healthcare for all after costs are contained.

It’s time for change. Fix healthcare and heal the nation.

Where to Get Information on Acid Reflux

If you’re reading this, but you were just looking for information on acid reflux, my bestselling book Dropping Acid is a comprehensive place to start. If you’d like an initial primer on reflux, this article is also wonderful.

If you’ve read at least one of my books and you’re following my guidance and you still need help, you can book a consultation with me.

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