What we pay for in healthcare is the real question
Year after year, the problem of how we pay for healthcare continues to dominate the public discourse. But for all the discussion around the future of the ACA or its alternatives as a method to reduce out-of-control healthcare spending, the powers that be are focusing our attention on how much we pay for insurance without similarly acknowledging what we pay for and how much those individual pieces cost are equally, or perhaps, even more important, since those are what drive the cost of insurance in the first place. As in manufacturing, you cannot get the final product cost down if you cannot reduce the costs of the parts that go into it.
To influence the cost of insurance we must focus on something called value-based reimbursement. Value-based reimbursement, or paying for outcomes, is an about-face from the “fee-for-service” way Americans have paid for healthcare over the past several decades. With every new technological advance, new medication, and medical device, healthcare costs have risen.
Patients believe having “more” procedures, treatments, and care will lead to better outcomes and healthier lives. The more expensive the care, the higher quality it is assumed to be—even when there’s evidence to the contrary. In the fee-for-service model, hospitals and physicians are paid based on how many procedures or treatments they provide. Because treatment practices are haphazard across the country, performing true apples-to-apples price and quality comparisons of providers, hospitals, devices, and therapies is nearly impossible.
Whether a treatment, medication, or surgery works or not, the provider (and hospital) get paid for delivering care. Combined with the erroneous belief that higher quality costs more, the fee-for-service model has contributed to escalating healthcare costs without a commensurate improvement in patient outcomes.
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