Why Healthcare Is Broken In The US (Comprehensive Guide)

by | Nov 16, 2022 | Health Education

The $20,000 Bill I Avoided

There was a phase in my life when I was still battling Crohns, where I ended up in the hospital needing some IV fluids.

I had ordered the concierge service to the hospital as well – no need for Uber Black when you can get lay-down transport via something called an ambulance.

Long story short, I was there for about an hour (if that) and I initially felt the most important thing to the hospital was ensuring that I had insurance. I don’t want to make up how many times I got asked and how concerned the staff was about insurance, however, I’ll just note that it was clearly front and center of my interactions when I got there.

This is neither here nor there as a standalone insight, the real kicker was the bill I got after leaving the hospital, which I’m going to paraphrase looked something like this:

  • ambulance $5000
  • needle attached to tube $150
  • tape to keep needle in arm $75
  • tube attached to needle $350
  • wheelchair used to carry me to and from ambulance $1000

This list goes on and on.

The final bill was over $20,000.

As a new entrepreneur who had just failed at his first business, I did what any reasonable person would do in this situation: I moved back to Canada and told the hospital I don’t have funds to pay the bill and to please write it off.

To my delightful surprise, they did – 99% of me believes it’s because I’m not a US citizen and they didn’t want to bother with me. Had I been a US citizen I’m not so sure.

How exactly is this a problem?

On the surface, one could look at the scenario I wrote out above and reason that the hospital provided me a service and I got the care I needed. This is true and I wouldn’t argue that – delighted I could get the IV and feel better.

The odd part was looking at things like a piece of tape that was on my arm costing $75 when in reality it costs less than $0.001.

This is where we start to unravel the healthcare issues… so let’s dig in.

Snapshot of How healthcare is broken:

The US healthcare system is expensive, complicated, dysfunctional, and broken. Its burden is increasing in cost yearly:

I’ve compiled a list of 10 of the most pressing matters that cause it’s dysfunction.

Cost Structure

Pay The Most To Receive Subpar

Although the US spends more on healthcare per capita than any other country, it delivers poorer health outcomes in several key areas. These include life expectancy, preventable hospital admissions, suicide rates, and maternal mortality. In addition, Americans are relatively dissatisfied with their current healthcare system compared to residents of other high-income nations.

Huge Financial Burden

If you develop a severe illness and don’t have insurance, you risk bankruptcy because of high medical costs. It’s tough to compare the quality or cost of healthcare options since prices vary so much,  and it can be hard to predict how big your bill will be.

Even if you ask lots of questions in advance and stick with recommended doctors in your health insurance network, you could still get a surprise bill. For example, the hospital and the surgeon that operates on someone can both be in-network for their Insurance company but the anesthesiologist who assisted may not have been.

Scattered & Fragmented Access

Employer-provided health insurance

Since there were few other options for employers during World War II, healthcare was offered as a way to attract workers. At that time, hardly anyone had private insurance, but now if you lose your job, you also lose your health coverage.

Unfair differences in healthcare

Healthcare disparities are a side effect of the US healthcare system’s tendency to delay or deny high-quality care to those who need it most but can’t afford it.

Necessary care is discouraged to save costs

Although some may argue that this process of making patients fill out copious insurance forms prevents them from spending money on unnecessary procedures, it also puts a rift between the doctor and patient.

More often than not, the physician is recommending care they believe to be important for their patient’s well-being, but restrictions by insurance companies cause countless delays in service.

Poor coverage decisions can have detrimental consequences. For example, if an individual with rheumatoid arthritis is prescribed an expensive medication, their insurance may not cover the costs unless a cheaper option is chosen–even though it’s less likely to be effective.

A survey found that 78% of physicians reported this led people to abandon recommended treatments;92% thought it contributed to care delays.

Not only does this cause needless suffering for patients, but in the long run, delaying treatment by opting for a cheaper yet ineffective course of action ends up costing insurance plans and patients more money due to preventable joint replacements down the line.

Healthcare investments go down the wrong path

Always reactive & Specialty care

The system puts more emphasis on disease, treatment, and technology instead of preventive measures. Doctors going through medical training barely learn anything about nutrition, exercise, mental health, or primary care– despite those things being important preventative measures.

The majority of their instruction come from inpatient care units and different subspecialties like cardiology and gastroenterology. Doctors working in specialties with complex technologies (like anesthesiology or surgery) usually earn a lot more money than those working in primary care.

Always pushing procedures and drugs

This is best explained by an example, for instance, health insurance typically covers a cortisone injection for tendinitis in the ankle but not necessarily a shoe insert that could serve the same purpose.

The kicker here is that the injection won’t fix the issue and the person will have to get more of them vs. the shoe insert could be a long-term solution.

Killing innovation

Inflexible payment structures from both private and government health insurance companies prevent innovative healthcare delivery methods from becoming widespread.

Some home-based treatments, such as geriatric care or cancer care, may be more cost-effective than traditional hospital visits and preferred by patients. But because insurance coverage for these at-home services is not yet common practice, telehealth has flourished out of necessity during the pandemic to demonstrate how effective it can be in bringing medical care to those with poor access previously.

Few Connections

A distinctive feature of US healthcare is that people usually receive care from a variety of disconnected sources. This often leads to repeated tests and procedures, improper management of medications, and increased expenses. For example, a physician may prescribe a medication that reacts poorly with other drugs the patient is already taking.

Blood tests are often repeated needlessly because earlier results from other doctors are not accessible. Similarly, patients may continue indefinitely on medicine prescribed long ago by a now-uninvolved doctor, since later physicians do not know why the original prescription was given.

Mitigating Lawsuits

The defensive medicine that US doctors offer to their patients in order to avoid getting sued is costly, rarely beneficial, and sometimes decreases the quality of care.

Malpractice lawsuits are so frequent in America that for some specialists, it’s not a matter of if they will be sued but when. Though quantifying the effect of defensive measures is challenging, at least one study shows that it is significant.

Path Forward

The last note to point out here is that even insured Americans spend more money out of pocket on healthcare than people in other wealthy nations. In fact, some people resort to buying medications from other countries where prices are way lower.

The status quo might be ok for healthcare insurers, pharmaceutical companies, and some healthcare providers who get rewarded extremely well because of it. But our current system is not sustainable.

My co-founder Ravi has written about some idea’s on how we can go about changing the healthcare system which you can read about here.