A Look at the Issues That the U.S. Health Care System is Facing

Last updated on August 10th, 2014 at 05:08 pm

Read the biggest developments from Michael Cohen's testimony.

I worked in Health Care Administration for 11 years. I was a claims examiner, then auditor, compliance specialist, and Manager/Asst. Director. I helped administer Worker’s Compensation, traditional insurance, Medicaid, and both long and short-term disability claims. In those 11 years I saw the advent of Pre-Certification, HMO’s, PPO’s, PHO’s, and self-funded programs.

All were intended to restrain the rising cost of health care. All were ‘private sector’/market-driven solutions. None worked. Not one – the closest any came were probably SSO (Second Surgical Opinion) and Pre-Cert requirements, both of which had demonstrable negative side-effects like discharging pregnant women within 24 hours of giving birth, often too this discharge was too early.

I’ve also witnessed the impacts of Medicare on the private market of delivery of health care for older patients. While Medicare has helped to prevent poverty among the elderly by absorbing much of the cost of health care for our older fellow Americans, it has not prevented inflation despite spreading the burden shared more broadly among the entire population. In fact, health expenditures are rising fastest in the over 65 crowd. Of course, that is attributable to having many more seniors than in the past, but it is clear that the negotiated rates from Medicare cause most physicians to chafe terribly at what they see as depressed reimbursements.

Following my time working for two of the largest insurers, I also spent time doing claim arbitration work for friends and family for another couple of years. It wasn’t full time, but it also taught me a few things about how insurance companies (in general), react to non-standard types of care.

In an outstanding analysis of the demographics of health care – Research in Action in its June 2006 edition notes:

Nearly half of all expenditures are spent by the top 5 percent of health care spenders

15 illnesses account for 44% of all health care costs

The top 5% of spenders on health care spend nearly 17 times as much as the lowest 50%

And finally – that nearly 34% of the top 5 percent of spenders spend MORE than 10% of their annual income on health care co-pays, deductibles, medication, etc…

http://www.ahrq.gov/research/ria19/expendria.pdf

As the articles points out, the bottom line it seems is that we have escalating costs for four specific reasons:

1. We have an aging population which is increasingly taking advantage of more effective end-of-life and acute geriatric care. The estimate is that 36% of the health care costs are for those over 65. This cost tends to be highly concentrated in the final year of life.

2. We do very poorly in preventing obesity and other chronic ailments follow – diabetes, heart disease, even cancer. A person with multiple chronic conditions spends several times what someone with one chronic condition does. A few specific conditions account for a huge amount of expense. 15 specific conditions account for 44% of all health expenditures.

3. As costs increase, more people fall out of the system. As more people fall out of the system, those who remain in insurance programs directly have to pay a higher fee for their services to help offset lost revenues to providers from unreimbursed care.

4. As people became less able to afford care, they skip care. They wait until they are truly in-trouble, not just sick, and then they go to Emergency Rooms for care. ER’s are the least cost effective delivery method imaginable. First, it’s a hospital, so it has high overhead. Second, ER’s are heavily staffed for emergencies, and so there is that simple burden, but probably MOST impactful, ER’s feel compelled by law, risk of litigation, etc… to run tests on many patients far more heavily than would have been done in a clinical setting with a more healthy patient who’s problem was caught much earlier.

This is the current state of our health care system, and these are the issues that any effective health care reform legislation must address. In part two of this series, I will tackle the false solutions that are being offered in the name of health care reform.

Jason Easley

Jason is the managing editor. He is also a White House Press Pool and a Congressional correspondent for PoliticusUSA. Jason has a Bachelor’s Degree in Political Science. His graduate work focused on public policy, with a specialization in social reform movements.

Awards and  Professional Memberships

Member of the Society of Professional Journalists and The American Political Science Association