# An American Sickness  ## Metadata - Author: [[Elisabeth Rosenthal]] - Full Title: An American Sickness - Category: #books - Summary: The text discusses the high costs and profit-driven nature of the American healthcare industry, highlighting how patients are often unaware of the inflated prices they are charged for medical services. It emphasizes the need for transparency in pricing and the importance of doctors and hospitals prioritizing patient health over profit. The industry's focus on generating revenue through unnecessary tests and treatments is also brought to light. ## Highlights - In the past quarter century, the American medical system has stopped focusing on health or even science. Instead it attends more or less single-mindedly to its own profits. ([View Highlight](https://read.readwise.io/read/01hxndk0mqyh81nyvzpnqvj7pe)) - “It’s now so dysfunctional that I sometimes think the only solution is to blow the whole thing up. It’s not like any market on Earth,” says Glenn Melnick, a professor of health economics and finance at the University of Southern California. ([View Highlight](https://read.readwise.io/read/01hxndm8qk8k5m1fz40n4pw0ke)) - the United States [spends nearly 20 percent](#EndnotePhraseInNotes0) of its gross domestic product on healthcare—more than twice the average of developed countries. ([View Highlight](https://read.readwise.io/read/01hxndmr9x9nnere04vqktjkj0)) - That’s how the healthcare market works. In no other industry do prices for a product vary by a factor of ten depending on where it is purchased ([View Highlight](https://read.readwise.io/read/01hxndr3w6r05vrsyam2tzj5fe)) - the United States spends nearly one-fifth of its gross domestic product on healthcare, more than $3 trillion a year, about equivalent to the entire economy of France. For that, the U.S. health system generally delivers worse health outcomes than any other developed country, all of which spend on average about half what we do per person. ([View Highlight](https://read.readwise.io/read/01hxndscbvn0bg2m8dj1fnk0g6)) - Who hasn’t puzzled over an insurance policy’s rules of co-payments, deductibles, “in-network” and “out-of-network” payments—only to surrender in frustration and write a check, perhaps under threat of collection? ([View Highlight](https://read.readwise.io/read/01hxndtj7gs6x1mhzsjt41tfx5)) - These days our treatment follows not scientific guidelines, but the logic of commerce in an imperfect and poorly regulated market ([View Highlight](https://read.readwise.io/read/01hxner1dd33xmcpejdbm7kb27)) - After endless compromises with the medical industry to enable its passage, the ACA was mostly a bill to make sure that every American could have access to health insurance. But it didn’t directly do much, if anything, to control runaway spending or unsavory business practices. ([View Highlight](https://read.readwise.io/read/01hxnet431tkrpz7ks11esxrk4)) - ECONOMIC RULES OF THE DYSFUNCTIONAL MEDICAL MARKET 1. More treatment is always better. Default to the most expensive option. 2. A lifetime of treatment is preferable to a cure. 3. Amenities and marketing matter more than good care. 4. As technologies age, prices can rise rather than fall. 5. There is no free choice. Patients are stuck. And they’re stuck buying American. 6. More competitors vying for business doesn’t mean better prices; it can drive prices up, not down. 7. Economies of scale don’t translate to lower prices. With their market power, big providers can simply demand more. 8. There is no such thing as a fixed price for a procedure or test. And the uninsured pay the highest prices of all. 9. There are no standards for billing. There’s money to be made in billing for anything and everything. 10. Prices will rise to whatever the market will bear. ([View Highlight](https://read.readwise.io/read/01hxngwvqb1q51wknt1gjf44dk)) - health insurance is a relatively novel invention, one whose mission has changed dramatically in recent decades. ([View Highlight](https://read.readwise.io/read/01hxq3tmb6dsthexhjfjd0rzrr)) - The people who founded the Blue Cross Association in Texas nearly a century ago had no idea how their innovation would spin out of control. They intended it to help the sick. And, in the beginning, it did. ([View Highlight](https://read.readwise.io/read/01hxq5qnp9zsdyph7p53q4khw7)) - A hundred years ago medical treatments were basic, cheap, and not terribly effective. Often run by religious charities, hospitals were places where people mostly went to die. ([View Highlight](https://read.readwise.io/read/01hxq5rk3g846k0h48amtdeedt)) - The earliest health insurance policies were designed primarily to compensate for income lost while workers were ill. ([View Highlight](https://read.readwise.io/read/01hxq5spn9dsn88tgads4zj2zj)) - Three million people had signed up by 1939 and the concept had been given a name: Blue Cross Plans. The goal was not to make money, but to protect patient savings and keep hospitals—and the charitable religious groups that funded them—afloat. Blue Cross Plans were then not-for-profit. ([View Highlight](https://read.readwise.io/read/01hxq69ay5rsbr4qsj8n3fqx0k)) - Between 1940 and 1955, the number of Americans with health insurance skyrocketed from 10 percent to over 60 percent. ([View Highlight](https://read.readwise.io/read/01hxq71ekhvckvs979w95er8nf)) - According to their charter, the Blues were nonprofit and accepted everyone who sought to sign up; all members were charged the same rates, no matter how old or how sick. ([View Highlight](https://read.readwise.io/read/01hxq71w1c9ny95f829a936qdt)) - Aetna and Cigna were both offering major medical coverage by 1951. With aggressive marketing and closer ties to business than to healthcare, these for-profit plans slowly gained market share through the 1970s and 1980s. It was difficult for the Blues to compete. From a market perspective, the poor Blues still had to worry about their mission of “providing high quality, affordable health care for all.” By the 1990s, the Blues, which offered insurance in all fifty states, were hemorrhaging money, having been left to cover the sickest patients. ([View Highlight](https://read.readwise.io/read/01hxq75j4cd7kavhks9ked3bf0)) - WellPoint, it is the biggest of the for-profit companies descended from the original nonprofit Blue Cross Blue Shield Association; today it is the second-largest insurer in the United States. ([View Highlight](https://read.readwise.io/read/01hxq78412v4z0sk4vg9c7kmrq)) - In 2010 WellPoint had intended to hike premiums in California by 39 percent, before an attorney general effectively nixed the plan. ([View Highlight](https://read.readwise.io/read/01hxq7c501kn33brxdzamnftbm)) - Why did EmblemHealth agree to pay nearly $100,000 for each of Jeffrey Kivi’s infusions, even though they cost only $19,000 at another hospital just down the street? First, it’s less trouble for insurers to pay it than not. NYU is a big client that insurers don’t want to lose, and an insurer can compensate for the high price in various ways—by raising premiums, co-payments, or deductibles. ([View Highlight](https://read.readwise.io/read/01hxq7sj5yafwg52f2cqeb4yjd)) - The average hospital cost per day in the United States was $4,300 in 2013, more than three times the cost in Australia and [about ten times the cost](private://read/01hxnb0yt5gs9ter1gzwfk2chs/#EndnotePhraseInNotes11) in Spain. ([View Highlight](https://read.readwise.io/read/01hxq93mr5dvp321e7275r16wk)) - There is an army of consultants running around hospitals. A whole phalanx of firms is there to improve revenue, improve compensation, and get a piece of the pie. Ten to 15 percent of revenue goes to billing and collection companies and contractors to do things like claims and preapproval—those jobs don’t even exist in Europe. And hospitals go to Wall Street for bond issues to build new wings, so the bankers are at the trough, too. ([View Highlight](https://read.readwise.io/read/01hxq9dakjwne9rry97trp0gjg)) - a huge conglomerate like Providence Health & Services can throw its weight around in insurance negotiations. ([View Highlight](https://read.readwise.io/read/01hxqbp530x23j4fjr555wrfm1)) - In the 1980s she watched as “head nurses” morphed into “clinical nurse-managers” who were adept in fields like compliance or quality assurance and attuned to the business of medicine. ([View Highlight](https://read.readwise.io/read/01hxqbrdc2tfmbhxxxhjpvmw3m)) - . The CMO was also a physician, but his primary allegiance was to the executive suite, and his mission was to use his professional influence to make the ad hoc practice of medicine by the army of doctors at the hospital function as a profitable business. ([View Highlight](https://read.readwise.io/read/01hxqcjf2yzddp3zn4c190jvw1)) - if Medicare or a powerful insurer wouldn’t agree to pay a big enough proportion of the rate they wanted, they had the leverage to insist that smaller insurers—and people with no insurance—pay more. ([View Highlight](https://read.readwise.io/read/01hxqctq8vabk86h4ypxmts339)) - For the business departments of hospitals and doctors on staff, the discovery was transformational. The billed price of an item could be completely decoupled from its actual cost. ([View Highlight](https://read.readwise.io/read/01hxqe9kgs7bt34571w7f9jyc8)) - Today just about every hospital employs strategic billing, which is enabled and supported by consultants and healthcare advisory firms, large and small. [Deloitte is ranked number one](private://read/01hxnb0yt5gs9ter1gzwfk2chs/#EndnotePhraseInNotes36) by revenue in all areas of healthcare consulting—life sciences, payer, provider, and government health. In 2014 it announced record revenues of $34.2 billion, [fueled by more than 17 percent](private://read/01hxnb0yt5gs9ter1gzwfk2chs/#EndnotePhraseInNotes37) growth in the sector. ([View Highlight](https://read.readwise.io/read/01hxqejepwh8jdegkagsk2xfpq))