US Healthcare: Why the System Will Remain Broken

 Samuel Schradin

I find myself in a bit of a moral quandary while writing this. I come from a family of four doctors, most of them with their own independent practices and businesses. All four strive to help others and have a passion for the betterment of their patients. I, being a biomedical engineering major, share the same enthusiasm for advancing the overall health of our society. Under the current system, those who operate in the medical field, willing or not, are not in the healthcare industry, they are in the money industry. I will once again reiterate that there are phenomenal healthcare practitioners who, like my family, genuinely care about their patients' well being. Unfortunately, the parasite that is the oligopoly of insurance companies, greedy corporate hospitals, and lack of equality within patient treatment reduces the morality of medical professionals to a non factor in the face of this money printing machine.

Under the watch of a mostly capitalist system, the US healthcare industry overall has converted into a medical-industrial system. An easy way to see how broken the healthcare system has become is to look at a major perpetuator in rising patient costs: insurance companies. Insurance companies have gone unchecked in their ever-increasing price hikes and limits to care. They are built on risk assessment and expensive premiums, both of which encourage profit over proper care. These companies are able to place those who buy their plans into groups through a process called “risk pooling.” Risk pooling is when insurance companies “pool” a large group of purchased premiums together, most of which belong to healthy people. This practice can also contribute to the limiting of patient care, which has seen significant uptick in recent years.

According to an article published at UNC Pembroke, “Stringent utilization reviews and excessive claims denial processes — even for correctly coded claims — are among the strategies to limit or delay healthcare usage and payment.” These companies can often deny claims due to “insufficient coverage” within the patient's policy. Patients will often have to pay out of their own pocket to compensate for what their premium does not account for. The money not being used for claims can be redistributed into short term CD’s and corporate bonds to earn safe money with high returns in the long run. Insurance companies do this in the time period referred to as the tail, the time period in between when a premium is purchased and a claim is made.

Figure 1: Investment Revenue explanation

The redistribution of gross income has helped companies such as UnitedHealth Group to generate over 200 billion US dollars in revenue over the past year. This revenue has helped to propel UnitedHealth group to the top of a multitude of other health insurance companies who practice similar methods to earn more and more revenue. Due to the increase in profit, hospitals will often take advantage of how much insurance is willing to fulfill a claim for. According to an article written by Trinity College journalist Kristen Cole, “an economist at Trinity College found evidence that two patients getting the same procedure at a hospital are commonly charged different amounts depending on whether the patient is paying cash, or the patient is covered by health insurance.” This fact leads to a massive domino effect involving the patient, the hospital, and the health insurance provider. Due to the increased prices of care that hospitals charge insurance companies, insurance companies must then outpace the growth in price and raise the cost of premiums. At the end of it all, the patient is the only one suffering as they have to pay more out of pocket for coverage and treatment while hospitals and insurance companies increase their profit margins. 

This all begs a couple questions: why hasn’t the government stepped in? Why has no one done anything to regulate the medical system? Can anything be done? The simple answer to all of those questions is that the system is too profitable. Not just for the companies directly involved, but for the entire economy as well. As stated above, insurance companies can reinvest their profits into other companies, real estate properties, and bonds. Most of the top performing health insurance providers are publicly traded on the stock market as well, with UnitedHealth group making up 15 percent of the market share of its sector as of 2024. Under the current system, hospitals also make a very pretty penny from their patients as well. This is especially prevalent in the case of patients diagnosed with long term degenerative diseases such as cancer. According to science writer John Horgan in his article, The Cancer Industry: Hype Versus Reality, “Costs of cancer treatments have vastly outpaced inflation, and new drugs are estimated to cost on average more than $100,000/year. Patients end up bearing a significant proportion of costs; more than 40 percent of people diagnosed with cancer lose their life savings within 2 years, according to one estimate.” There is simply too much money in too many places for the government to step in. 

Figure 2: A breakdown of the total contributions of health providers in the 

US during the 2020 election cycle (Open Secrets)

To make matters even worse, health interests donated almost 127 million dollars to political campaigns and parties during the 2020 election cycle. Both President Joe Biden and former President Donald Trump received upwards of 7 million dollars in donations from companies such as Ryan Specialty Group, Blue Cross/Blue Shield, New York Life Insurance, and many more. Congressional groups received similar investments from these companies during that time period as well. The people we elect will not change the system because they are being actively persuaded not to by special interest groups and investments to get them reelected. 

The only conclusion to draw from the reality we face is to try and stay healthy, or make a lot of money. Exercise, a proper diet, and sleep seem to be the only way US citizens can save hundreds of thousands of dollars in medical debt. Even then, some things simply cannot be avoided, and those predisposed to serious medical disorders are at a natural disadvantage when it comes to saving money on health care. The grim reality is that as long as healthcare remains tied to profit, true systemic reform may only come when we challenge the foundations of the economic system that perpetuates this inequality.

References

[1] Cole, Kristen. “Study: Hospitals Often Charge More to Insured than Uninsured for Same Services.” Trinity College, www.trincoll.edu/news/hospitals-often-charge-more-to-insured-than-uninsured-for-same-services/. Accessed 23 Sept. 2024.

[2] Cpatete. “Discover How Insurance Companies Influence Healthcare Policies.” Uncp, 1 July 2024, online.uncp.edu/degrees/business/mba/healthcare-administration/insurance-influence-on-policy/#:~:text=Stringent%20utilization%20reviews%20and%20excessive,delay%20healthcare%20usage%20and%20payment.

[3] Horgan, John. “The Cancer Industry: Hype versus Reality.” John Horgan (The Science Writer), John Horgan (The Science Writer), 18 Apr. 2024, johnhorgan.org/cross-check/the-cancer-industry-hype-versus-reality.

[4] “Insurance Top Contributors.” OpenSecrets, www.opensecrets.org/industries/contrib?cycle=2020&ind=F09. Accessed 23 Sept. 2024.