What is the dynamic that leaves student loans and the burden of health care out of our hands?
As a health economist, I spend my days working with incredibly innovative biotech and medical device companies that market their products in the health sector. As a result, I am obliged and inclined to think about the financial and economic problems that the field of medicine is facing. For seven years, I worked for an integrated distribution network, serving both payers and hospitals, which allowed me to know how all sausages were made. In those same years, I was under the burden of student loans that I had accumulated during my university studies and two master’s programs. The result has been 1) a fantastic education in neuroscience, bio-imaging and business and 2) a four-digit monthly payment for student loan managers who, without the grace of God, have almost torpedoed my wife and me every month. We were the epitome of the “student loan crisis,” which is so often discussed these days. Professionally, I found myself struggling with the ever-growing problem of the price of health care, while personally asking myself how my father paid $ 60 a quarter when he was at university, where I paid practically that amount daily in interest on student loans. Was there no other way to get the remarkable education I received, but for a fraction of the cost? Is there no other way for a patient to have a 30-minute colonoscopy for less than $ 1,500?
I invite you and your closest friends to choose the restaurant of your choice in which I pledge to pay 80% of the bill. You rightly choose the best 5-star place in the city to enjoy a fantastic meal. There is no price on the menu and you remember that “if I have to ask, I probably will not be able to afford it”. You will remember then that I will pay 80% of the bill and you will leave. The bill comes for both of you, and it’s an exorbitant $ 1,500 for which, of course, you are responsible for $ 300. You call me in a fit of confusion, anguish and heartache and ask how that could have happened. I tell you that after making the offer to pay 80%, I then called the restaurant and announced our arrangement. At this point, neither of them understands why the restaurant has raised the price so dramatically. the server does not work for me and therefore has no profit and loss management and you ignore the costs of the meal. You ask me the obvious question: “Why the hell did you call the restaurant to talk to them about the deal? Once they knew I could pay at any price, they would increase the fees! “
When the patient arrives at the hospital for a tonsillectomy, one of the simplest procedures known to medicine, he ignores the costs, the expense and the skill required to perform this task. In 1924, Roald Dahl, for the record, was removed without anesthesia and returned home with a frozen lollipop. My father had his doctor removed in 1945 at a cost of $ 10 by an old doctor with shaky hands, in the downtown street in Provo. No insurance requested or accepted. Our son had his dismissal in 2013 and the bill was $ 3,500. My wife and I did not know the price and if we did, we probably would not have made fun of it, the insurance covering most of the bill anyway. Why is a mammogram so expensive? Breast compression and 2D full-field digital mammography could be performed behind a 7-Eleven curtain for $ 5, the image being evaluated by a radiologist in India for $ 10. This is an Indian radiologist from Salt Lake City, in a metropolitan hospital, who is responsible for 200 dollars. The reason is that the radiologist does not work for the insurance company, they work for the hospital, just as the restaurant server does not work for me, but for the restaurant. Before the woman presented for her mammogram, the insurer had already told the radiologist that the bill would be covered. In other words, if the doctors worked for Aetna, Cigna or the BCBS (the “payer”) instead of working for the hospital, whose incentives are based on the treatment of the sick, the innumerable perversities of modern health care would be rectified. No doctor should work for “Saint Marks Hospital”. Aetna members should be treated by Aetna doctors in Aetna hospitals, not by “Saint Marks doctors”, who are then reimbursed by Aetna.
When I graduated from Mountain View High School, Utah, and graduated, I arrived at Purdue University, ready to learn behavioral neuroscience. The problem was that Sallie-Mae (now Navient) had already visited the school and told them I could pay at any cost. There was now little or no room for negotiation. At best, I had my high school diploma issued by the government and adequate training to just mow lawns or clean glassware in a laboratory. Yet, because Sallie-Mae had preempted me and told the professors, who work for the university instead of working for the Student Loan Management Officer, that they would cover me, they did like the restaurant and the hospital in the previous examples and took Sallie-Mae. on offer. Student loans are in fact student insurance, the bill of which is paid in full by the payer (Navient) and the premium is paid on the date of graduation.
When the user is not the primary payer, there is a misalignment of incentives. If you were the CFO of this hypothetical “St. Marks Hospital “and a payer told you they would pay 80% of the bill, what would you do? You would accept them on the market. If you were the financial director of a university knowing that thousands of kids were coming in August and could pay at any price, you would do what hospitals do and charge as much as you want. No doctor wants to work for Aetna and no teacher wants to work for Navient except to do the embroidery of “St. Marks “and” Purdue “, as well as re-releases of tweed blouses and” Aetna “and” Navient “thus reinserted, realignments of incentives and costs would decrease thereafter.