Modern Medical Morass

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I had a very interesting discussion with my orthopedic physician a while back (as I age, I seem to collect more and more physicians of different specialties). He was helping me to decide a course of action to take with my balky knees that have deteriorated over the course of my lifetime, and as we discussed the specifics of my knees, we diverged and ended up discussing a wide range of topics concerning the US health care system.

He was of the opinion that the current system we have for health care is incredibly inefficient, and shared an anecdote to illustrate his point. A woman came into his office complaining of leg pain and weakness. She had been to multiple physicians in the past but had found no relief. As his assistants were taking her history, and conducting an initial assessment, they sensed that her problems were not in her legs, but were caused by back problems. They discussed this with the doctor, and he agreed that an x-ray of the back was justified.


The x-ray revealed that the patient had significant arthritis in the back, resulting in bone-on-bone contact for at least one set of vertebra. This had caused impingement on nerves going down the legs, accounting for her symptoms. The normal progression of the diagnostic process would call for a MRI exam to confirm the extent of the back issue.


But. The insurance company response to this type of diagnosis is firm and consistent. No MRI will be authorized until the patient has exhausted all other options. In this case, it means that the patient was referred to physical therapy for a 6-week course of treatment. So the insurance company was willing to spend $3,000 on a course of therapy in order to avoid a MRI expense (I have no idea what an MRI costs), with its potential diagnosis of a need for back surgery at much greater cost.


The doctor had referred the patient to therapy, and the course of therapy had not yet been completed. He said that he fully expected that the patient will have no improvement from this expensive course of treatment, and then he will be able to get the approval for the diagnostic tool he knows is necessary for this patient to finally find relief through treatment. He speculated on the reason why insurance companies would go this route – refusal to fund an expensive diagnostic tool but approve an even more expensive course of treatment. His speculation is that actuarial analysis shows that if even a few patients do receive help from physical therapy, or a few patients die during the course of therapy, or a few patients give up on the process and just keep suffering with their ailment, then the avoided surgeries more than offset the cost of the therapy.


My doctor was very generous with his time with me. We did discuss my options, and my preference for lower levels of intervention. Right now I am receiving periodic injections of cortisone. More intrusive means of treatment are available if I don’t have relief from this level of treatment, up to and including knee joint replacement. I am very grateful that my doctor has allowed me to have enough information to make an informed decision and to be an active participant in my treatment.


We discussed the problems that the current insurance-based systems impose upon doctors being able to provide options to patients. He presented a hypothetical case where a patient with a high-deductible insurance policy, but with a health savings account, would come in with symptoms that indicated a need for further investigation. The two choices would be an MRI (expensive, but comprehensive), or an ultrasound (less-expensive, but not as sensitive and potentially could miss rare issues that an MRI would pick up). The current environment would indicate that the standard of practice is to insist upon an MRI, and if the physician should ever be in the position where he / she went with an ultrasound, and that patient happened to have that obscure condition that only an MRI would detect, he / she would be liable under malpractice litigation for not following the standard of care.


But if the doctor and the patient could enter into an agreement where the patient accepted the risk of a potential for a missed diagnosis for a rare condition, in exchange for a lowered payment for the test, then overall costs for the medical industry would be reduced. That is just not possible right now, but with the huge increase in insurance deductibles, it may be coming back. No, my doctor said that at present, he has the need to reduce his liability risk to zero by over-prescribing diagnostic tests since there exists no mechanism to transfer the risk for a missed diagnosis to the patient. This is where my doctor says that the malpractice industry has raised medical rates, by insisting that all illness can be detected or treated if only the patient is tested for all potential conditions related to their symptoms, regardless of the likelihood of a rare condition. Thus a huge cost results from the excess diagnostic tests required to detect the condition that afflicts a few tenths of a percent of the population.


My doctor expressed hope that a single-payer system would emerge out of the morass of the current health-care system. He acknowledged that any such system could have its own set of problems, but he seemed to be comfortable to accept standards such as Medicare has established for treatment to be extended to the population at large. Insurance companies would still have a role in administering claims, but the ability of doctors and patients to have a say in the treatment protocol would be greatly increased.


During the uproar with the Affordable Care Act, much was made of the imposition of “death panels” who would represent government imposing life and death decisions upon poor helpless upright citizens of the US. What opponents of the Affordable Care Act have always refused to acknowledge is that the “death panels” they feared have always existed, and they belong to the faceless bureaucracy of the insurance companies, doing their darnedest to increase both the complexity and costs of the medical profession, and actually harming patients in their insistence to adhering to rigid and often obsolete standards of diagnosis and treatment.


But what do I know? I’m only a consumer of the medical industry, with very little input on treatment options and zero input on the cost of the approved treatment. I am very thankful for physicians like my orthopedist, who is treating me as a full partner in my own treatment, and who is willing to share his thoughts on the medical system.


Posted first on my blog at


Leroy Added Jul 24, 2018 - 12:12pm
One thing my former company requires is that the internal theraphy group approves the MRI, else you pay at least $500 regardless of whether or not you have reached your out of pocket maximum.  They will attempt to treat you to avoid surgery as well.  They are very good.
I haven't had a back MRI, but I had a chest MRI, which is about the equivalent, I would say.  If you are a schmuck without insurance, it would cost about $3,800.  If you have insurance, about $1,800.  In China, it would cost about $160.  If I went to a VIP hospital, $650.  If I go to an International Hospital, $5,000.  Typically, it is the same doctor and hospital regardless.
We do have a highly inefficient medical system, much of it driven by the lawyers.  We would be better off having no insurance, then we would care more about the cost.  My biggest complaint is that you never know the cost of a procedure.  No one can tell you.  The doctor has its bill.  The surgery facility has its bill.  The anesthesiologist has his bill.  Any doctor who stumbles into your room and asks how you are feeling has his bill.  You are billed for the room, for the liner in your trashcan, someone to empty the trashcan...
Katharine Otto Added Jul 24, 2018 - 2:55pm
As I commented on Opher's blog, doctors in the US work for the insurance companies and gear diagnosis and treatment toward procedures insurance will pay for.  Insurance companies have armies of doctors on staff whose job is to deny claims.  The insurance companies get paid either way, so every claim they deny keeps money in their pockets. 
That's why malpractice insurers want doctors to settle claims against them rather than fight.  However, doctors who settle get a black mark on their record which haunts them the rest of their careers.
That's why I oppose the ACA.  It institutionalizes insurance (but not health care) such that insurance companies have a captive market who must play their games to get any reasonable care at all.  I might add that insurance not only raises the price of health care, but it encourages doctors and hospitals to "treat people to death," if they can get insurance to pay for it.  It also encourages individuals to run to the doctor for every runny nose and crowds doctors' offices with minor problems while the more serious ones get short shrift.
Glad you have a good orthopedist.  There are alternatives to allopathic medicine, but you won't hear about them from even the best doctors.  I don't know about that lady's degenerated discs, but you could potentially get some relief for your knees.  Your insurance probably wouldn't pay for it, though.
Jeffry Gilbert Added Jul 24, 2018 - 10:16pm
So very happy to not have to deal with the nonsense that permeates everything you do back in the land of the formerly free. 
Rah rah rah sis boom bah! 
Neil Lock Added Jul 25, 2018 - 6:51pm
So, that's what you get when governments and corrupt "businesses" - the left and right hands of the political beast - work together. Everyone who isn't part of the cabal gets screwed.
opher goodwin Added Jul 25, 2018 - 6:52pm
There is an insanity involved when profit comes before care. A health system should be one that cares, not one that makes people rich.
Even A Broken Clock Added Jul 25, 2018 - 8:29pm
Leroy, I'm not surprised at the wide discrepancy you will find in pricing. That is one of the few advantages of being insured even with a large deductible, because the insurance company will assure that you pay the negotiated rate rather than the list price for a procedure, even if you have not exhausted your deductible.
Having been in the hospital for a week about 5 years ago, your definition of the billing process is spot on.
Even A Broken Clock Added Jul 25, 2018 - 8:36pm
Katharine - in my own analysis, I place the excess costs that our system imposes at about 25% of all health care spending. That is the minimum of what the health insurance overhead / profit, the costs for medical coding staffs on both sides of the medical divide, the costs for overtesting in order to prevent malpractice claims and/or maximize billable costs, all of these excess costs add up. Take a look at the per capita costs for the developed nations and we are an extreme outlier.
I think there is an argument to be made that if a single-payer system were to be imposed, and that those who have health insurance have those premiums converted to payroll deductions like Medicare is, we could pay for health care. Then the issue is how to assign premiums for those who are currently covered by Medicaid, or through the ACA, or are lacking coverage at present. Then you have to look at how to administer the first dollar of coverage. It can't be "free" to the participants - they need skin in the game beyond the premium payment, but having to clear thousands of dollars in deductibles before the insurance kicks in is a horrendous mess.
Even A Broken Clock Added Jul 25, 2018 - 8:37pm
Jeffry - there's certainly something to be said for those countries who have kept it simple.
Even A Broken Clock Added Jul 25, 2018 - 8:47pm
Neil and Opher - I'm not sure that the best solution is total nationalization like the NHS. Certainly that has some advantages, especially for the person receiving treatment. But there's got to be some balance between free-wheeling capitalism and outright government control, and I hope we can find it. Even with single-payer, I don't think anyone is arguing for government employment of health providers.
Where I do object is the ability in the US system to force US pharmaceutical patients to pay for the entire development and marketing costs of the drugs. Other nations fight back on pharma pricing, but we roll over and ask "Please sir, may we pay you some more?" That to me is a real outrage, especially with all of the marketing we see for pharmaceuticals.
In Great Britain, are pharmaceuticals one of the main advertisers in print and in televised media? Are you inundated with adverts for pharmaceuticals to correct a bent penis during an erection?  Do you see commercials for products to fix:  narcolepsy; osteoporosis; psoriasis; Crohn's disease: ad infinitum? We spend so much time going over the side effects of pharmaceuticals, but the advertising must be effective since there is so much of it. And we pay for it all in the cost of drugs, and even worse like the marketing for things like Oxycontin, which led to horrendous opioid addictions.
A. Jones Added Jul 25, 2018 - 10:29pm
During the uproar with the Affordable Care Act, much was made of the imposition of “death panels” who would represent government imposing life and death decisions upon poor helpless upright citizens of the US. What opponents of the Affordable Care Act have always refused to acknowledge is that the “death panels” they feared have always existed, and they belong to the faceless bureaucracy of the insurance companies
Let's see.
You're equating government's restriction on 1) its payment of care, and 2) the patient's actual ACCESS of care (irrespective of his or her willingness to pay (as occurs in the UK all the time) with a private insurance company's restriction on what it covers and what it doesn't cover?
You're obviously not serious.
If the "XYZ Insurance Company" won't pay for my wife's Avastin to treat her breast cancer I can still acquire it privately from some other doctor even if I have eat peanut-butter and jelly sandwiches for 6 months and take out a 2nd mortgage to afford the cost: the XYZ Insurance Company cannot prevent my ACCESS to any drug, medical device, or medical procedure; it can only say, "Yes, we cover it" or "No, we don't cover it."
Hello!!! That's entirely different from the UK, where 1) Avastin (to take one example of many) is not available because the NHS bean-counters claim the "cost-effectiveness ratio" doesn't warrant making it available to cancer patients. No matter how desperate for the drug, or how willing you are to incur its cost, you can't have it. The NHS in effect is telling the patient, "Leave the country and find the drug elsewhere." Which is precisely what many patients do (it's called "Medical Tourism").
All treatments in the UK under NHS are determined by an algorithm called "QALY" (Quality Adjusted Life Year) and by "ICER" (Incremental Cost Effectiveness Ratio). The patient and the doctor have little final say in the matter.
Look up QALY and ICER and research how they are used by the NHS's "NICE" (National Institutes for Health and Care Excellence). This last acronym has a particularly sinister, Orwellian sound to it. It's a body of non-elected officials who ultimately determine whether or not you're worth being treated, yet they call themselves "NICE."
Be afraid. Be very afraid.
Even A Broken Clock Added Jul 26, 2018 - 10:10am
A. Jones - nowhere did I mention in this piece that the doctor I was talking to was in favor of a single employer system to serve as a giant bureaucracy governing all health care choices. If you read the piece instead of reflexively believing it advocated for a NHS solution, you would have seen that the doctor I talked to was in favor of a single-payer system to eliminate the immense middleman of the insurance providers.
As far as your choice being available to purchase something that the insurance companies refuse to pay for, it is true that you have the ability to do that - if you can pay for the price of the drugs. With more and more drugs costing upwards of $10,000 to over $100,000 for a course of treatment, that option only applies to those with independent means. In a case like that, where the insurance company denies payment for the only treatment that has a chance of working, and you are not independently wealthy enough to afford the medicine, then yes, the insurance company serves as a death panel. I stand by my statement.
Dino Manalis Added Jul 26, 2018 - 1:40pm
 Health insurance shouldn't make decisions without talking to doctors involved and taking the appropriate action.
Thomas Napers Added Jul 27, 2018 - 3:55am
I’m not defending our healthcare system, but the reason the patient was ordered to go to physical therapy is because it saves money.  You see, too many doctors are ordering unnecessary MRIs.  An MRI basically tells doctors what to operate on, so once an MRI is ordered, in addition to its cost, an insurance company can expect to pay for an expensive operation.  An expensive operation that might be unnecessary or avoided thanks to PT. 
Because PT can be physically difficult and requires the patient to show some responsibility, many patients don’t go through with it.  Perhaps your doctor was wrong or perhaps the surgery to repair the back doesn’t go well and the patient ends up worse.  Either way, in the interest of saving money, I think it’s an outstanding rule and we should have more rules just like it.  If the patient doesn’t like it, she should have paid for a better insurance plan or paid out of pocket for an expedited MRI. 
Even A Broken Clock Added Jul 27, 2018 - 10:05am
Thomas, what you are saying is in effect, the insurance company knows better than the physician who has spent 20-30 years in the profession as to what is indicated for a patient who is clearly showing a problem with an x-ray? The doctor was concerned for this patient because he had clear diagnostic evidence that the problem in the legs was due to the issue in the back. But the RULE based criteria from the insurance company has removed the physician's expertise from the equation, thus this to me constitutes a faceless bureaucracy overruling the relationship between a physician and a patient.
You're ok if it is a middleman who objects to the diagnosis and insists upon inserting itself in the treatment process, but not ok to unleashing a doctor to act upon his or her knowledge. Sounds like you love inefficiencies in medical care.  And your canard about paying for a better insurance plan or paying cash for an expedited MRI shows just how out of touch you are. Any more folks are glad for any insurance at all even though the out of pocket deductible is in the thousands. And you try to negotiate directly with a medical provider on the cost of a diagnostic procedure. I'd like to see your success rate.
Thomas Napers Added Jul 27, 2018 - 4:36pm
The insurance company knows what costs money and what saves money.  It’s not in a position to determine which doctor knows best.  So the insurance company comes up with a set a rules.  These rules make it so that it can sell policies at a lower price than if the rules weren’t in place.  If you don’t like those rules you’re free to purchase insurance from another company, just be prepared to pay more. 
As for the doctor, it makes no difference to him how many MRIs he orders, as he doesn’t have to pay for it.  If the doctors bore some of the financial responsibility for the cost of an MRI, you can be sure they’d order less of them. 
Essentially the system we have is a system where the user bears almost none of the cost.  There are almost no market forces at play which makes these users think twice about deciding to get an MRI. I We should thank the insurers for being the only adult in the room by saying “no.”
The one that’s out of touch is you for thinking a system without rules won’t be abused. 
Even A Broken Clock Added Jul 27, 2018 - 5:16pm
Thomas there is nothing wrong with guidelines. However, once those guidelines crystallize into hard and fast rules with no ability to modify them based upon clinical indications, then yes, I have a problem with death panels administered by insurance companies.
Let's not even consider one of the reasons why MRI's cost so much is due to hospitals using MRI facilities as profit centers. In fact the trend towards building free-standing imaging facilities, often run by physician groups, is due to the arbitrage effect from the true amortized cost of imaging vs. the hospital charge.
Here's where insurance could provide a useful service. If they provided a list of preferred providers for services where the costs had been negotiated and were significantly lower than the average in the market, and worked with their physicians to draw traffic to the preferred option, then I would say that the insurance was performing a valuable service that would help to minimize overall costs. But to divert mindlessly people to a course of physical therapy that may cost as much as a MRI, is poor policy and negates physician's expertise.  
Stephen Hunter Added Jul 28, 2018 - 7:37am
Great article Even. This personal example highlights the major challenges of a system where you do have a single payer, for those on Medicare or Medicaid. However most of the rest is managed by Insurance Companies. The US system is highly inefficient as the World Health Organization shows. (The US pays twice as much as most developed countries, on a per citizen basis)
Thomas Napers Added Jul 28, 2018 - 9:16am
A guideline is something one has the option of following or not following.  I’m talking about rules which will actually limit the amount of MRIs people receive and the amount of surgeries they end up needing.  Rules that will do something about the cost of medical insurance in this country.  
As for the rest of your response, I don’t think it’s at all relevant to the discussion we’re having.  However, I’ll provide my thoughts.  Someone needs to decide when the cost of medical care isn’t worth the benefit.  Do you propose spending oodles of money on a surgery for a 90-year old who already needs assistance feeding himself? 
The profit incentive is what has allowed all of us to live such a high quality of life.  Removing the profit incentive ushers in higher costs and crappier service. Those for-profit MRI facilities dramatically reduced the cost of MRIs versus the cost of an MRI conducted in a hospital.  Accordingly, they are a great example that disproves your theories about profit. 
Most insurance companies do provide a list of preferred providers.  See an out of network doctor and be prepared to pay a lot more. 
Even A Broken Clock Added Jul 28, 2018 - 11:11am
Thomas, I think we both agree that the inefficiencies that exist within the medical - insurance complex need to be addressed. It appears that you would address them by maintaining the current system of insurance-governed access to medical procedures, leading to the current war between the providers and the insurers, where both sides have wasteful expenditures aimed at providing the exact code that insurers will pay for, while simultaneously looking for errors in the submission, causing an escalating war of escalating costs. As Stephen notes, this results in US costs being roughly twice what medical care costs in the rest of the developed world, and those countries we are compared to have universal health coverage.
I do not understand why you are saying that the for-profit imaging centers disprove my theory. I stated that since hospitals are charging way too much for imaging services, there was an opportunity for physicians to build brand new imaging facilities and make money by undercutting the hospital charge.
And as for the high quality of life, all metrics show that within the US we have the ability to pay much more for health services and insurance, while achieving statistics like average life span that is significantly worse than many nations who have universal coverage. That's a very expensive privilege for poorer results.
Thomas Napers Added Jul 28, 2018 - 1:47pm
We agree there are inefficiencies in the current healthcare system.  The insurance industry is doing the best it can given these inefficiencies.  Should we ever go to single-payer, there will be no need for an insurance industry, but that’s a suggestion nobody but the far left is proposing.
The insurance industry is not to blame for our high costs.  If it wasn’t for the industry, you can be sure costs would be higher costs.  This post being an excellent example as to why.
You made it sound like for profit imaging centers are what has driven up the cost of imaging.  My point is that if those for profit centers brought down the cost and you now seem to agree with that assertion.
As for the status quo, let me remind you that I don’t support it.  We simply need to find a better way for users to pay for their care.  We should also not be over-charging young, healthy people, so that we can provide free or subsidized insurance for everyone else.