Insurance companies are often used as the punching bag for healthcare costs. In reality, insurance companies are just a payment method for the true cost – enormously expensive doctors. Insurance companies are portrayed as having crazy profits, but in reality the insurance company Cigna has a profit margin of 6%.
The American Medical Association realized a century ago that medical care demand is inelastic… Basically if you need medical care, you will pay any price to get it. Doctors took advantage of the situation by passing laws and regulations limiting the number of new doctors allowed each year, who can practice medicine, and the types of businesses that can compete. This greatly limited the supply of doctors. There are not enough doctors to fully meet demand. The basic laws of economics say that when you have strong and inelastic demand, and a limited supply then prices will go through the roof.
I propose we remove these artificial limits that are grossly enriching doctors. If you allow anyone to practice medicine, just like we allow anyone to prepare and serve food or distribute goods then you will end up with a lot more competition. This will result in far better patient outcomes at a far lower price.
The AMA will argue that without limits on who can practice medicine huge numbers of people will die. This is false. Our lives rely on many businesses that if they screw up would kill us. Everything from farming to distribution to food prep to construction needs to perform and deliver for us to survive. The AMA is self serving and greedy. There is no reason an individual surgeon should make hundreds of thousands of dollars. There is no reason certain business types should be legally prevented from competing. Imagine if you had the efficiencies of a business like Amazon or Google in healthcare.
Imagine if you could see statistics on the performance of every doctor and hospital in the country, then decide where you wanted to get treated.
Allow competition in healthcare by removing limits on the number of doctors each year and by allowing new business types that can take advantage of scale and specialization. This will drive down healthcare costs a hundredfold and allow everyone in America access to top healthcare at reasonable prices.
I do believe most individual doctors are very good people, it is the system itself I disagree with.
I don’t think it should require $320k in student debt to become a doctor. I think that traps people who may switch careers later into a career they dislike. The only reason the prices are that high is that a limited number of schools control a monopoly on healthcare education.
I am curious – you said you only receive 11% of the payment for the cost of the surgery? Where do the other percentages go? Is this just for you personally or is this a statistic for all doctors?
I saw that insurance companies are legally capped to only keep 20% of each dollar spent on healthcare. A competitive insurance company could keep less of course. I also saw that out of each dollar spent on healthcare, 23% goes to prescription drugs, 22% to doctors, 20% to office and clinic visits, 16% to hospitals. https://www.ahip.org/health-care-dollar/
Prescription drugs should not be as expensive as they are either. This is due to overly strong patent laws preventing competition and stifling innovation. Each new drug is the end result of an avalanche of human work through centuries and the one little idea that advances things slightly should not be long term locked up by a patent. This greatly slows the creative avalanche. I think we would see far more new drugs at a far lower cost if we did away with patents. Science should not be owned by any individual or group.
The cost of healthcare is ballooning and is out of reach of many people and bankrupts many more. The number one cause of bankruptcy in America is medical bills. Healthcare costs as a share of GDP have grown from 5% in 1960 to 18% in 2018. This shows that the cost itself is the problem, not just insurance companies. https://www.statista.com/statistics/184968/us-health-expenditure-as-percent-of-gdp-since-1960/#0
How can we solve healthcare’s cost while improving outcomes and getting face time with medical professionals for patients? I am proposing we allow many more people to enter the field by removing artificial regulations preventing competition. This is a standard approach suggested by economists… https://www.investopedia.com/university/economics/economics3.asp
As an entrepreneur, I would like to see doctors innovate with new business models in healthcare… Unfortunately business models are strictly regulated in this industry just as supply of medical professionals is regulated.
What are your thoughts on how to solve the problem of the very high cost of healthcare?