The healthcare system has become a symbiotic relationship where providers and insurance companies work together to funnel money from just about every business in the US into their pockets.
Hospitals increase staff to justify billing more, then insurance companies use increased costs to justify raising rates. Internally, hospitals and insurance companies are also in a tug of war over their slice of the pie. These conflicts introduce even more people-hours into the treatment of patients, in the form of revenue cycle managers, lawyers, medical coders, etc.
Each new layer added to the cost onion of healthcare results in the pie growing, since most insurance providers can only take in some percentage of what is spent. So they need to spend more to make more.
Incentives. There is no incentive for a doctor that sees a patient to provide a favorable outcome for the patient. Whether the patient stays sick or not, the doctor still gets paid. But here's the kicker: The doctor gets paid even more if the patient has to come back. The payments come from the insurance company.
Take this concept to the level of a very large health care network (but non-HMO). Patient has early signs of serious but uncommon condition, goes to doctor. Doctor checks for common, obvious things. Finds non-specific symptoms, refers patient to a specialist or three, and the patient is diagnosed with "Not-My-Problemitis".
Disease progresses and the patient is now able to tell the majority of the symptoms are vascular in nature, not muscle or bone as previously thought. More referrals are given. The specialist orders a battery of tests, but they yield false negatives as the symptoms are not occurring at the time of the test, and the patient was not advised that the symptoms needed to be occurring during the test for it to be valid. Patient is again diagnosed with "Not-My-Problemitis" and possibly referred to a research institute, where they'll have quite a long wait time.
By this point, the patient may have lost their employment due to the frequent sick time and time off for appointments, and generally being frustrated in general. They can qualify for Medicaid but will have to start the process over again, but much slower as providers have to tread carefully with care received under Medicaid supervision, as if they were treading on thin ice. But oops, the patient has now gone into critical condition and is sent to the ICU, which is statistically likely to be owned by the same health organization that had their hands involved in the patient's earlier care.
Due to the patient's hospital visit, regardless of whether the patient survives, a payout of Six or even Seven figures is rewarded. Ka-Ching! Insurance companies are hesitant to deny those kinds of claims now, if they involve life or death. Too much bad PR. Thanks, Michael Moore! Of course, it doesn't work out as well for the hospital if the patient had lost their job and is back on Medicare, as there isn't much profit to be made there, if any. That's just the collateral cost of doing business.
I would like some evidence of this. I've read and heard many people confidently pin the high cost of health care on: too much administration, greedy doctors, undocumented immigrants, over use of tests, over prescription of drugs, too much paperwork causing inefficiency, and probably others I'm forgetting. They can't all be the primary cause.
[ and before someone replies, it is a mix of those, of course ]
In competitive markets, competition will keep costs and profits from ballooning.
What kind of market conditions are required for spending to increase in all sorts of directions? I can immediately point to education as an example where both lenders and colleges both have a vested interest in growing eachother's businesses, paid for by the customer.
