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Don Jacobs
Don Jacobs
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The cost of health care and malpractice

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As we debate how to fix the health care mess, one thing is clear. America’s health care is far and above the most expensive care in the world. The debate in the nation’s capitol has two goals. One is to get everybody covered by health insurance. The second is to try and get a handle on out of control health care costs. An interesting article about the mess appeared in the June issue of the New Yorker magazine. The article pointed out that the money we spend on doctors, hospitals and drugs consumes more than one of every six dollars we earn. The author noted the financial burden has not only bankrupt families and destroyed small business; it’s hurt our ability to compete on the global market. The article described the scene in McAllen Texas. It seems McAllen has some of the highest priced health care in the nation. In McAllen, Medicare spends over fifteen thousand dollars per enrollee. This amount is two times the national average. And it isn’t like McAllen is a wealthy area. The per capita income is only twelve thousand dollars. That means Medicare is spending three thousand dollars more per person in McAllen than the average person earns. So why are the costs of health care so high in McAllen? “It’s malpractice,” a family physician was quoted as saying. A cardiologist quoted in the article agreed. He said doctors order unnecessary tests just to protect themselves. But the author brought up the fact that several years ago, Texas passed a malpractice law that capped pain-and-suffering awards at two hundred and fifty thousand dollars. He asked if lawsuits went down afterwards. The cardiologist admitted the number of lawsuits went down to practically zero. Which is what lawyers and consumer groups were warning would occur should the law pass. No one can justify bringing a malpractice lawsuit. The cap is set so low that none of the serious injury cases are brought. And the cost of bringing a malpractice suit is so high the smaller cases never get pursued. The result? Now no doctor ever gets sued, no matter how egregious the mistake. And no victim ever receives compensation. The article quoted a general surgeon who heard the claim about malpractice driving up health care costs. His response? “Come on, we all know these arguments are bullshit. There is overutilization here, pure and simple.” Doctors, he said, were racking up medical costs with extra tests, services, and procedures. The surgeon had moved to McAllen in the mid-nineties, and since then, he said, “the way to practice medicine has changed completely. Before, it was about how to do a good job. Now it is about ‘How much will you benefit?’ ” Doctors seem to own a portion of the laboratories and hospitals in McAllen. The more tests they ordered and the more hospital admissions they prescribed the more money in their pocket. Then there are the physicians who see their practice as a way to make more and more money. They do things like instructing their secretary to have patients who call with follow-up questions schedule an appointment, because insurers don’t pay for phone calls, only office visits. They figure out ways to increase their high-margin work and decrease their low-margin work. The article quoted a local hospital executive who said he was approached by doctors demanding kickbacks for sending patients to his hospital. The requests were for over a hundred thousand dollars per year. One asked for five hundred thousand. After all, the more patients they see the more money the hospitals make. Competition for high paying procedures is stiff among hospitals. But one thing is puzzling. Why does the public still believe the high cost of health care is due to defensive medicine. This is one of those myths that doesn’t seem to go away. Consumer Reports magazine did an expose on this last year that came to the same conclusion. Defensive medicine is a myth. A myth used by people and entities to try and pass laws to benefit their bottom line. But it is an enduring myth. One that will probably hang around forever because consumers have been brainwashed by hearing it so many times.

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  1. Mike Bryant says:
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    Interesting inside look at the “successes” of the Texas law change.