Why is it no matter what we have done, healthcare costs/expenditures continue to rise?

Here are my thoughts...

Unfortunately, most cost saving ideas in healthcare (reduced payments, disease management, utilization management, wellness programs, etc) have been tried and found in the short run to be equivocal at best, in reducing healthcare expenditures. In the long run, no strategy seems to have worked. Health care costs continue to rise...that’s a fact. No one in the healthcare business wants to make less or receive less. And anything you do to affect cost usually shifts things about and in the end, costs increase. Who was it, who purportedly said "doing the same thing over and over and expecting a different result" defines insanity. One fact that seems to be overlooked is that the vast majority of people with chronic illness will consume healthcare resources at a rate directly proportional to the length of time they have had the illness. We perhaps can slow the progression but the costs will eventually rise. Another fact is people are living longer because of the health information management services they receive. Given this situation, the basic issue here are the relationships and incentives within the payment part of the system to the healthcare economic process. The person who orders the service (Dr.) gets paid for ordering the service; the person who receives the service (patient) doesn't pay for or order the service and the person who pays for the service (employer/insurer) doesn't get to order the service or receive it. Substitute food or any other any item in place of service and you will see what this really means. This is not a situation where the use of classical economics of consumer/product/supply can be used to solve the equation. This kind of system does not respond to classical economic drivers. Unless the consumer has some major skin in the game (spends his own money), costs will continue to rise.

Answers

I have written numerous comments on this very topic and I agree with your comments. The disconnect that the healthcare industry has created between the patient and the true consumer of healthcare (i.e. government or employer paid health insurance) is a key driver of the unrestrained costs of these services. However, this disconnect goes a bit deeper:

Not only is the patient not ordering (or paying for) the services they consume, they are completely unable to make any meaningful assessment of the cost vs quality of the care they receive. In most cases, it is impossible for a patient to obtain or even understand the actual costs associated with their care. Imagine the difficulty that a patient would face in determining what the total cost of any given procedure might be. For example: What is the cost of a total joint replacement? Given that such a procedure will require the services of a surgeon, hospital, PT, lab, DME, etc. our system makes it virtually impossible for the consumer to understand cost. In fact, in many cases, the provider is completely unable to provide a patient with even an estimate of the costs of the services they provide. Therefore, as patients we tend to consume healthcare based on the cost of our copays, not based on the true cost of care. Further, as much of our health insurance is government of employer paid, we really don’t even understand (or feel) the full cost of our insurance coverage.

The other half of the equation is quality. In any other industry, the consumer can generally compare both the cost and quality of a good or service. Not so in healthcare. In general, there exists no widely accepted and uniform means or measuring the quality of healthcare services rendered. Therefore, as patients we are forced to assume that the healthcare provider is competent and well equipped to provide the required services. Further, as individuals, we will tend to assume that we have received the "highest quality care" if our personal outcome is favorable. In the event of an unfavorable outcome, the assumption may be that the “quality” of care was somehow at fault. Such a system leaves us generally in the dark with respect to this important question.

In conclusion, as you pointed out in your comments. If such a disconnect between cost and quality were applied to any other industry, the results could be disastrous. Imagine this scenario the next time we were to purchase any other good or service (automobiles, clothing, etc.)!

This is a common phenomenon. I believe it happens in all developed countries.

Overhead costs, new technology costs, rising populations, aging populations, salary demands, research costs and the beat goes on.

I honestly do not see the costs decreasing in my lifetime.

It was Albert Einstein that gave that famous quote.

What you are describing is in your last few sentences is the disconnect from a free market function to a managed market function and what is lost is the motivation anywhere in the chain to be efficient. You are correct that the consumer must become involved in the process but I doubt our politicians or managed health care providers would face up to that (too much money involved).

Uninsured patients. These patients come in, utilize (incredibly over priced) services that they can't afford and simply don't pay. Hospitals then pass that cost on to patients who can pay by increasing costs. emr companies then raise their minimum payments for certain drugs or procedures based on the rising hospital costs. And then more uninsured patients use hospital services and the whole process begins again.

And, of course, there are the pharmaceutical companies. They aren't in existence to help people, they're there to increase profits for their shareholders. That's business. And part of that business is to increase end use of their products and charge as much as they can to do that.

Realistically speaking this cannot be changed, and here's why - the people that benefit from the service don't pay for it and therefore have no motivation to change it. And if you try to change the system to make them pay for it themselves, or take on more of the financial burden themselves, they will rebel against such change. People don't want to think about helathcare, they just want to know they have it. It is the inner five year old that wins out - I'm fine and healthy until I'm not and then mommy will take care of me.

What about government legislation you may ask... again, this is the people (at least here in the US) and saw how long it took to get universal health coverage (right or wrong solution as it may be.) They were trying to get that passed for at least 50 years, different iterations of course but in principal the same.

You're absolutely right, it is a crazy and backwards system but given that most in society have no desire to think beyond what is directly in front of them I'm afraid there is no getting away from it.

Every day new treatments are introduced, an these do not entirely replace old ones, so there are more to be managed, therefore each one has a cost of development to recoup, and a smaller market share therefore less volume savings, so is more expensive.

My thoughts are very similar to yours. There is a disconnect between the consumer and the product. Seems to be only two potential answers (I don't think they can be termed solutions). One, a single payor system, and two, direct consumer payment. Both have short comings and neither addresses the looming 800 lb gorilla, the ever aging population. Net is I don't think there is a solution. I'm a fairly optimistic individual who has worked in the health care field for 27 years. What is currently proposed is guaranteed to fail in my opinion, if universal coverage and lower cost are the goal. Ain't going to happen with Obamacare, which can charitably be compared to sausage-making at its worst. I think the system will ultimately collapse under its own weight. Hopefully the disaster of total collapse will force us to rebuild a system from the ground up that will have a chance at success.

I agree with you that there is a disconnect between the consumer and the service provider in terms of cost, unless you read through the insurance statements and can understand them. The costs outlined there are mind-boggling; one six hour visit to the ER for me cost approx. $17,000 according to the insurance statement. I will say that if one has to continue utilizing the healthcare system and pay the co-pays for doctor's visits and medications, it does effect the pocketbook.

I think also there is a lack of collective thinking in our culture. It's often about what is good for ourselves or the small network of individuals surrounding us. For instance, after 9/11 when the nation was united with compassion and care for those who had been killed and injured, people rallied to help. Why weren't we asked to help when we went to war? Even just $5 or $10, e.g., war bonds. We were told that shopping would help. I think a tiny part of the complex problem in our healthcare system is this sense of entitlement, lack of compassion for others (instead of how can I make money on the back of those who are suffering with disease), and realizing we will have to contribute - as much as we are able. It's not easy to swallow, I realize. It's a paradigm shift. Thank you for letting me share my thoughts. There is no easy solution, as has been stated.

I hope this is not a question that we will continue to seek answers for in the long term. Where to start? I have worked in this industry 23 years in various environments like home health, hospitals, private physician practices, HMOs, clinical research, and physical/sports/cardiopulmonary rehab. The one factor that stands out to me, currently, is the control insurance providers have on calling the shots. At various times in my career, I've exposed areas in a patients' insurance policies that did not support standards of care which created more costs for medical providers and patients alike.

My current practice attempts to provide the actual costs for services provided as well as an outline of the patient's out of pocket expense. Granted, we may charge the insurance/patient $250 for an office consultation. Yet, we are only reimbursed half or less than half of that fee. A few years ago I had surgery with a total bill of $6500 billed. I paid my deductible to the hospital of $1500. Upon receipt of my EOB, it was noted that the insurance company paid nothing. So how does a hospital recover the actual costs of a procedure?

Additionally, there are insurance providers who employ medical directors that often make the final decision as to whether a procedure/medication/admission will be authorized. At times, our physicians are told by the medical director that other tests must be performed before the recommended test will be authorized. Mind you, this is a medical director that has never laid hands or eyes on the patient, or viewed the patients chart. In many instances, the tests are unnecessary and inconclusive and the patient must end up having the initially recommeneded test to provide answers. This puts a strain on the patient and the provider.

The insurance providers are in massive control. As new developments in treatments, testing, and pharmaceuticals are realized, benefits in insurance plans are being dropped and excluded. Thus, patients may not be able to afford tests, treatments, or medications needed and end up sicker than if the insurance company had paid for all or a portion of the cost.

There are so many restrictions placed on providers and patients that proper care is almost impossible. Employers do the best they can by hiring benefits administrators that know minimally how to interpret what coverages their employees are being offered. Today, many patients take the role of the provider for granted. 20 years ago, patients were required to file their own claims and ensure reimbursement from the insurance. Responsibility for interpreting and implementing coverages in a patient's plan is falling upon the provider. When patients do take the time to learn about their coverage, or seek answers as to what is and what is not covered, they can call the same number 10 times and get 10 different answers. What is worse is the patient calling the insurance company and getting the incorrect information stating a service is covered, utilizing the service, and then finding out later that the service was not covered and the patient information received incorrect information from his own insurance company.

It's a vicious cycle. A long, contemplating look must be focused on how insurance companies impact the industry as a whole, how patients can become better informed and educated, and how providers can concentrate on quality patient care.