PDF Summary:An American Sickness, by Elisabeth Rosenthal
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1-Page PDF Summary of An American Sickness
American healthcare is commonly known to be in a deplorable state, costing 18% of GDP while underperforming in quality among developed nations. Changing the situation systemically also seems intractable—passing new regulation is a political landmine, and costs continue to rise without a clear winning strategy.
American Sickness unpacks how US healthcare got to this state. It examines the competing interests of the major blocs in healthcare - hospitals and doctors, pharmaceuticals and devices, and insurers. Written by a Harvard-trained doctor and New York Times reporter, this book clarifies how deeply entrenched the interests are and why it’s so difficult to change anything.
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- Even the FDA benefits from fees for each application for a drug, incentivizing more me-too drug applications.
A Dysfunctional Market
The maximization of incentives is true of any market, but several factors make healthcare an especially dysfunctional market.
- Consolidation of healthcare providers has led to functional monopolies in certain geographies.
- Massive health systems consolidate and become the only game in town. If you have the only maternity ward in the local region, all the local patients want access to you.
- Patients want insurance that covers this big player, and they reject narrow-network insurance. Thus employers are pressured to get insurance with good coverage.
- Therefore, large health systems with a local monopoly have massive leverage over insurers in setting prices and favorable policies.
- Given the complexity of medicine, most patients cannot be fully informed about the tradeoffs of medical treatment. Thus they are swayed by pharma marketing and providers, who have their own competing incentives.
- The recipients of healthcare (patients) are not paying directly for the service—insurers are. This leads to moral hazard problems, where patients tend to opt for the highest-priced care if they’re not paying for it.
- Doctors are often ignorant of prices and thus can’t serve as effective advisors for the patient on cost-effectiveness.
- Prices are opaque and often discovered only after treatment. Often this is because of confidentiality agreements between insurers and providers.
- High regulatory barrier to entry for getting drugs/devices approved (FDA trials) limits open competition for generics.
By now, all the major blocs are so deeply entrenched that any zero-sum change is strongly opposed. For example, lowering compensation to doctors might mean cheaper costs for the system, but doctors will staunchly oppose this.
Fragmentation makes it difficult to change anything systemically.
- Much of healthcare is regulated on a state-by-state basis instead of nationally.
- Employers are fundamentally competing with each other for talent, impeding collaboration between employers.
- Even within each bloc, there is further fragmentation.
- Providers are divided into specialties, and they battle for a fixed pie of Medicare RVU reimbursements.
- Different blocs of patients want different things (eg AARP vs millennials)
- Other countries have a single payer (the government) that can negotiate prices and reject treatments not proven to be cost-effective. However, much of the US is philosophically opposed to the expansion of federal government and allergic to structures resembling “socialism.”
What You Can Do
Even if you can’t change the healthcare system yourself, what can you do to reduce your own price of care? The book recommends these actionables:
Question your doctor and hospital about fees before you get treatment.
- How much will this treatment cost? Then compare with online prices for your local area.
- How will this test/exam/surgery change my treatment? If there’s no reasonable justification, pass on treatment.
- Are there cheaper alternatives that are equally good?
- Can you send my testing to an in-network lab?
Wait before getting treatment.
- Many symptoms resolve themselves.
- Unnecessary scans and tests get insignificant findings that might prompt unnecessary care.
If admitted to the hospital:
- When admitted to the hospital, you’ll be asked to accept financial responsibility for charges not covered by your insurer. Write in “as long as the providers are in my insurance network.”
- If you’re put in a private room, ask “will insurance cover this private room, or will there be a supplement fee?” If there is a fee, ask how much it is, then consider asking for a shared room with no fee.
- Ask to know the name and role of every person appearing at your bedside, as well as what they’re doing. Write all this information down.
- You can refuse care from any provider. This includes less useful interactions, like the physical therapist who helps you out of bed and the dermatologist examining a harmless rash.
Dealing with bills
- Negotiate large bills. Hospitals more or less expect you to do this, which is why they have high sticker prices.
- Request complete itemization of hospital bills to see what the breakdown of costs is.
- Check the bill against your notes in hospital. Over 50% of bills contain mistakes.
- Protest bills in writing, not by phone.
Look at all the costs of your health insurance.
- Premiums
- Figure out what % you have to cover. If it’s deducted automatically from your paycheck, you don’t feel the full extent of the cost.
- Deductibles
- Are these calculated per person or for the whole family?
- Are there separate deductibles for in-network vs out-of-network care?
- Co-pays
- These are now often a % of the bill.
- For doctors, are the copays different for generalists vs specialists?
- For medicine, does the co-pay differ depending on whether it’s in the formulary or not?
- Out-of-pocket maximum
- Does this include drug costs?
- Will you be asked for co-pays even after meeting this number?
- Find the insurance with the lowest total cost for your typical needs.
Lower your costs of drugs.
- Find good substitutes for your medicines.
- Find cheaper formulations that you can still use for equivalent treatment, such as higher dosages that you can split into smaller pills.
- Avoid fancy formulations without clear benefit. This includes combinations of two generic medicines (like Duexis), extended-release tablets, and creams.
- Shop at GoodRx.com for out-of-pocket cash prices of medicine. It may actually be cheaper than your copay.
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