Number one in cost, number 11 in quality

American health care is expensive, yet mediocre in terms of measured results.

What exactly is wrong with America’s health care system, and how can it be fixed?

ACCORDING TO THE COMMONWEALTH FUND, a private foundation that seeks to promote a high-performing health care system, the U.S. ranks last among 11 industrialized countries on health care quality and access, with the United Kingdom being first overall even though its per capita spending on health care is less than half that of the U.S. So, four years after the Affordable Care Act (ACA) was passed and through decades of considering the problem before that, just why is American health care so expensive, yet really mediocre when measured in terms of results?

My perspective on the answer to that question is based upon 35 years of practicing emergency and family medicine in the U.S. system, plus some 15 years as a part-time physician practicing internationally, giving me the opportunity to see firsthand how other countries and, more importantly, their citizens differ from us in how they think about health and medical care. The differences are really not that difficult to understand and I believe explain why the U.S. is in this situation. Understanding them also offers some insight on how probable it is that the ACA, as currently written, will solve the country’s problem.

So why is American health care so expensive, and how did it become that way? By my observation, four primary differences exist in how health care is paid for and delivered between the U.S. and the other Western, or industrialized, nations referred to in the Commonwealth report. In no particular order they are as follows.

Procedural versus cognitive reimbursement

The fees doctors get paid by insurance companies in the U.S. are mostly set by an office of the federal government called the Center for Medicare and Medicaid Services (CMS). CMS is the only such standard-setting agency in the Western world that pays doctors who do procedures (for example, colonoscopies, cataract surgeries, MRIs and CT scans) more than 400 to 500 percent (on the basis of time spent) than it pays doctors who practice in specialties who do “cognitive” medicine (for example, most primary care doctors such as pediatricians, family physicians and general internists).

As a result, a family doctor must work all day to try to see 40 patients to produce the same gross revenue that a gastroenterologist can produce in less than two hours doing colonoscopies. With the longer hours, the family doctor also has higher overhead for a given amount of revenue, so his/her take-home pay is proportionately even less.

In the area I practice, the Pacific Northwest, most independent cognitive medical practices have simply gone out of business over the past 10 years because of this reimbursement problem. That is, there is just not enough income to cover overhead, let alone pay the doctor. Yet these types of doctors are obviously needed, so when their practices go “out of business,” they are usually taken over by large institutions that “hire” those previously independent physicians as employees. The physicians so employed then help the institution make money by directing a stream of patients who need profitable procedures. Those procedures in turn are done by specialists also hired for that purpose.

It does not take a genius to figure out in a system with those kinds of financial incentives, getting an MRI, CT scan or hip replacement will probably be a lot easier than if those incentives did not exist. Conversely, finding a family doctor or general internist to manage high blood pressure or type 2 diabetes can be a real challenge in this country.  As a result, a lot of good and necessary preventive care is simply not done.

Most of Europe simply does not do it this way. In fact, to the contrary: The rest of the Western world pays cognitive care doctors reasonably well compared to those who do procedures, and pays rather poorly for specialty procedures like MRIs. In England or Germany, for example, it is pretty easy to see a family doctor about high blood pressure or diabetes control, but not that easy to have a CT or MRI if you are considering, say, knee replacement surgery. In turn, because physicians who do primary care are equitably paid, there are a lot more of them on a per capita basis than in the U.S., and they are much more highly regarded and respected. In the end, this results in better preventive care, which in turn keeps people healthier and vastly reduces the amount and number of expensive “after-the-fact” medical interventions or procedures.

It is pretty simple. Due primarily to the fee structure set by CMS, procedural medicine in the U.S. pays quite well, while cognitive medicine (which does a lot to maintain health), does not even pay overhead. In a free society, you get what you pay for, and if you pay for it well enough, you will get it with overflowing abundance — needed or not.

According to the international Organisation for Economic Co-operation and Development, Americans spend more on health care, don’t live as long, die of diseases that don’t have to be fatal, are more likely to end up in the hospital (and even die there) with certain treatable diseases, and spend very little time with their doctors compared to people in other developed countries. Can this broken system be fixed?

Defensive medicine

The U.S. is the only country in the Western world that allows lawyers to sue doctors for supposed malpractice on a contingency fee basis. That is, the lawyer gets at least one-third of the settlement. America is also the only country in the world that allows this to happen at absolutely no risk to the person doing the suing (the plaintiff).

In the rest of the industrialized world, if you hire a lawyer to sue someone, it is illegal, without special court approval, for the lawyer to get paid based upon a percentage of the award. In addition, if you sue someone and lose, you can expect to pay for all the defendant’s legal cost. As a result, malpractice lawsuits are much more carefully considered before they are filed, and there are very few unjustified lawsuits against doctors. Europeans simply are astounded that the U.S. legal system works the way it does, and they cannot believe Americans allow it to continue.

Because of this legal situation, doctors in the U.S. get sued all the time, whether they actually did anything wrong. This sorry state of affairs has resulted not only in very high malpractice insurance premiums, but more expensively also a change in the very way American medicine is practiced. When doctors (or their employers) are forced to always face the possibility of a lawsuit, to preclude that eventuality, they quite reasonably alter what they do and how they do it. As a result, if there is any question about whether a given test might be warranted, a U.S. doctor is much more inclined to order it regardless of cost. After a while, this becomes the “standard of care.” In contrast, doctors in Europe — being relatively free of this concern — can concentrate more on the practice of “good” medicine rather than “defensive” medicine.

The other problem is that because of the way medical care is paid for in the U.S., defensive medicine is actually more profitable to the institutions that increasingly employ physicians, even without considering the legal threat component. In addition, when doctors are employed by “big businesses” concerned with the bottom line, the employer has all kinds of ways to influence how its doctor-employees practice.

As an example, in the U.S., giving a CT scan to a patient after even minor head trauma is now the “standard of care” in most community emergency rooms. In the rest of the world, a careful history and neurologic exam by the doctor, and some instructions to the family to return if certain changes occur, would more than suffice. Cost difference, about $1,500 — and nearly every small American hospital now has a CT scanner.

Patient expectations

Doctors and lawyers aren’t the only ones to blame for problems in the U.S. health care system; so is the culture itself. Compared to Europeans, Americans generally are very technologically oriented and impatient for its use. This is why companies such as Ford back in the Model T days, or Microsoft and Apple more recently, always seem to start here. That orientation can be good, but when it is directed toward health care, it means Americans demand and expect the latest diagnostic and therapeutic procedures. And they want them all right here and right now.

After you have been in practice a while, you realize that in medicine the “latest” – while almost always being the most expensive – is not always the “best.” When new tests, diagnostic machines or drugs are invented, often the wisest thing to do is wait to see how effective they really are and whether their overall cost to society is justified. Europeans seem to understand this concept a lot better than Americans do. They are usually quite willing to wait for an older (and less expensive) remedy or diagnostic measure recommended by their family physician to work before they jump in for some new test or “specialized” treatment. In fact, where Americans commonly show up at their doctors’ offices and impatiently demand a specialty referral, Europeans say, “You don’t have to send me to a specialist, do you?” The difference in expectations is dramatic, and the cost savings even more so.

Finally, America is a youth-oriented culture and always has been. We worship being young and do our best to deny aging and its ultimate outcome, death. This probably at least partially explains why, unlike Europe, we spend something on the order of 90 percent of our total lifetime health care costs in the last 24 months or so of life, often resulting in a needlessly miserable, degrading and painful last few years.

Europeans and their health care providers are much more comfortable with the notion that everyone will at some point die, and as that time approaches the less done about preventing the inevitable, the better. This alone results in a huge cost savings to society, and some would say also a much more respectful, dignified and humane treatment of the elderly in their final years.

Health insurance companies

Health insurance companies extract between 10 and 30 percent of every dollar spent on health care in the U.S., and under the ACA our entire system (with the exception of Medicare and Medicaid) for the most part mandates their use. This is not the case in the rest of the Western world, where most citizens are provided basic health care through a single payer system (similar to Medicare in the U.S.). Citizens in Europe who want additional coverage or special treatment are free to buy additional health insurance at their own expense, but the majority find their basic system adequately meets their (admittedly lower) expectations.

Although a single payer system does not result in a 100 percent savings, as that system itself has administrative and other costs, it does vastly reduce other expenses, such as duplication, advertising, multimillion-dollar CEO bonuses and so on. When the ACA was passed four years ago, it was a telling prognostic indicator that, for the most part, it was endorsed by the health insurance industry.

Why the Affordable Care Act will probably NOT fix America’s health care problem

The ACA was passed four years ago in a well-intentioned attempt to deal with several very real health care problems in the U.S., including a significant portion of the population being uninsured, pre-existing conditions that made some Americans uninsurable, the possibility of a catastrophic illness causing personal bankruptcy and costs beyond what most of the population could afford. Unfortunately, in an attempt to pacify the lawyers, health insurance industry, procedurally based organized medicine, and to some extent the public, the ACA did not deal with the simple basic underlying causes of the American health care problem. All it did, in a sense, was approve an already profoundly flawed system, and then attempt to control it via even more government regulation. That is not at all the same as “fixing” it.

What it will take to fix America’s health care problem

If the U.S. indeed wants to improve the quality of health care so that it at least matches what exists in the rest of the Western world, and also reduce its cost so the country can afford it, far more fundamental changes will be required. They must include altering the current procedurally based fee for service system (a system that a great many physicians benefit from and favor) and paying a lot more for primary or preventive medical care.

It will require a fundamental change in the tort system, something that would be highly opposed by one of the most powerful lobby groups in the country — trial lawyers. It probably will require switching to a single payer system for most Americans, something the health insurance industry will vociferously oppose.

Finally, and probably most importantly, it will require a change in the expectations of Americans in their thinking about health and how medical care should be provided. In a democracy ruled by votes, political parties and lobby groups, this will not at all be an easy task.

Kevin Ware, D.O.'73

After logging 25 years of full-time emergency room and office-based medical care, Kevin E. Ware, D.O.’73, ABFM, AAFP, continues to practice part-time while also working as a professional pilot. He resides in Mount Vernon, WA.

Scroll to Top