Noah Smith has entered the debate:
So the fundamental reason your health care costs so much is not that the health insurance companies are lining their pockets. And it’s not that insurers are an inefficient mess. It’s that the actual provision of America’s health care itself just costs way too much in the first place.
The actual people charging you an arm and a leg for your care, and putting you at risk of medical bankruptcy, are the providers themselves. The smiling doctor who writes you prescriptions and sends you to the MRI and refers you to a specialist without ever asking you for money knows full well that you’re going to end up having to wrangle with the insurance company for the cost of all those services. The gentle nurse who sets up your IV doesn’t tell you whether each dose of drugs through the IV could set you back hundreds of dollars, but they know. When the polite administrative assistants at the front desk send you back to treatment without telling you that their services are out of your network, it’s because they didn’t bother to check. The executives making millions at “nonprofit” hospitals, and the shareholders making billions on the profits of companies that supply and contract with those hospitals, are people you never see and probably don’t even think about.
Excessive prices charged by health care providers are overwhelmingly the reason why Americans’ health care costs so cripplingly much. But they’ve outsourced the actual collection of those fees to insurance companies, so that your experience in the medical system feels smooth and friendly and comfortable. The insurance companies are simply hired to play the bad guy — and they’re paid a relatively modest fee for that service. So you get to hate UnitedHealthcare and Cigna, while the real people taking away your life’s savings and putting you at risk of bankruptcy get to play Mother Theresa.
So the way to make our health care system affordable is not to browbeat insurers, in the hope that they will be able to reduce their profits and pay for us to have cheap health care. Insurance companies simply do not have the power to do that, even if you threaten to shoot them. What we need is to reduce costs within the actual medical system itself...
He jumps in to the comments to add:
They [providers] don't know the exact costs, but they have a general idea, they know the costs are very high, and they typically don't talk to patients about those costs when prescribing services to them. This is understandable, given that talking about costs would make patients less comfortable while receiving care, and one of doctors' main jobs is to make patients feel comfortable. But there's basically no point in the process of receiving care at which patients could make a decision based on cost.
Incentives matter, and patients aren't automata who are unable to follow incentives, as much as some doctors would like them to be. They can understand pricing concerns/risk, and they're coming from a wide variety of financial situations. A recent NYT op-ed admits as much:
One of my first lessons as a new attending physician in a hospital serving a working-class community was in insurance. I saw my colleagues prescribing suboptimal drugs and thought they weren’t practicing evidence-based medicine. In reality, they were doing something better — practicing patient-based medicine. When people said they couldn’t afford a medication that their insurance didn’t cover, they would prescribe an alternative, even if it wasn’t the best available option.
As a young doctor, I struggled with this. Studies show this drug is the most effective treatment, I would say. Of course, the insurer will cover it. My more seasoned colleague gently chided me that if I practiced this way, then my patients wouldn’t fill their prescriptions at all. And he was right.
Of course, the op-ed is doctor-apologia, working as hard as possible to finger point at insurance companies and only admitting a possible problem of lacking clear and reasonable pricing when it comes to drugs; after all, patients and their insurance companies pay pharmacists and drug companies for drugs, not doctors. They can't see that there could be a similar problem for their own services (insert Upton Sinclair quote). But they admit that patients can and do make decisions based on their understanding of prices and risk. Yet, when it comes to their own services, this is absurd to them. Surely they know better than the patient, and the patient should just do what they say; cost doesn't matter.
But as Noah points out, they "know", but they don't know. They "don't bother to check". They give every excuse imaginable to avoid the topic. And some of this is understandable! As Noah points out, they just want to focus on the medicine; they want to make the patient feel comfortable with the medicine; medicine is sacred and money is profane, so never the two shall meet. Doctors don't want to know. They're happy to sit back and say that they're prohibited by law to consider their costs in providing recommendations, but conveniently forget to be patient-based, not remembering that patients can and do make such decisions. But patients can only do this in a reasonable way when they're properly informed before making decisions. Without information, it's generally fear that rules the day, be it fear of medical issues or fear of medical expenses. Some doctors want to not know so much that they can't even identify the names of the relevant numbers in the billing/insurance process that might be involved in the decision-making process. This is perfectly fine, of course; they shouldn't have to spend all their time becoming intimately familiar with the details of how each of their patients' insurance works.
It's hard for me to come to any conclusion other than that providers shouldn't be bothered to know those details. Instead, there is an extremely simple solution that takes one small step toward what Noah wants - providers just need to inform patients of what they know about the pricing for suggested courses of actions before those courses of action are taken. We need to create a point in time where patients can have the relevant information with which to make a decision that takes their own understanding of their own finances into account. I have suggested that providers simply provide the price that they will be billing insurance and their negotiated rate. The negotiated rate gives the patient a good idea of what to expect if the procedure is covered. Sure, the provider doesn't know the rest of the details of the insurance policy (deductibles, co-insurance, out-of-pocket max, etc.), which are important for estimating things like out-of-pocket costs - again, they shouldn't. But the patient can know these things. The only information the patient is missing is the information that the providers refuse to give them. In addition to the negotiated rate, it would be nice to have the full bill amount, so the patient can consider the risk of an insurance denial (and perhaps have a conversation about this risk or gather more information). Then, they at least have some idea of how much they could be nominally on the hook for if there is an insurance snafu.
I am generally anti-regulation, but the good doctors here at TheMotte have convinced me that there is no way that we are going to persuade them on this point with reason, so I am reluctantly throwing in my support for as minimally-scoped regulation as we can come up with, just as much as it takes to cast off the excuses and actually get numbers in front of patients at a point in time where they can use those numbers to make decisions. Hopefully, someone can get this idea to people like Noah, so they can consider advocating for something like this rather than tired ideas he gave like having the gov't "play hardball" to negotiate prices. He seems open to ideas:
There are probably other ways to foster competition and increase efficiency in the medical care system.
Indeed, there is, and it's right in front of your eyes. It's the natural conclusion of your request in the comments for what NYT would call "patient-based medicine".
Jump in the discussion.
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Notes -
It's a truism that if every single person even tangentiallly involved in health care- to not just the doctors and nurses but also the people making the machines and drugs and raw supplies- were to take a 50% pay cut, we could drop prices 50%. You could say the same thing about any industry. But (a) it's not clear, politically, how you'd ever accomplish that and (b) it's a little unfair to tell this one industry to just take it on the chin so the rest of us can live cheaper. Like, you could also bring back the McDonald's dollar menu by forcing all their workers to accept a lower salary (and not allow them to quit), but that would be pretty nuts.
I think we're all hoping that there's some big pot of money being totally wasted. Maybe there's a few people in particular raking it in, or some people doing a completely useless job that can be eliminated. But I'm not sure that's the case. Even if you made all the doctors and administrators take a big pay cut, from what I've seen that still wouldn't cut overall costs all that much. And while you can always debate over which particular treatments and regulations are necessary, nobody can point to any one in particular and say "oh yeah, just stop doing that one, we'll save $100 billion with no downside."
We could perhaps make an argument for cheaper, but worse, health care. Let the people on chronic life support die instead of paying millions to keep them alive. I'd be... open to a discussion about that, but it's ethically queesy.
It's never as simple as an obviously frivolous budget. However, here are at least two systemic issue that are large sources of inefficiency:
In the end, money is just "liquefied" work that people do for other people. Not all of that work is useful towards the goal of meaningful health care, and not all of these people are paid the same amount of dollars per hour of useful work, rightfully or wrongly.
Well, the fact that countries other than the US have health care systems which deliver comparable service, but at significantly lower cost indicates that a large chunk of money is spent ineffectively.
OK, but you can't just run a large organization with no administration. Some of those administrators do useful work! And this:
Checking unemployment benefits costs way, way less than universal basic income! UBI would be like $4 trillion a year. Total unemployment spending is like $10 billion a year, and that's mostly just benefits.
Likewise, you can't just approve any grant that a scientist asks for. It actually seems reasonable that scientists would spend a lot of time proposing different ideas, and then have a separate agency deciding which ones are worth doing.
most of the countries that do comparable service at lower cost are also countries with much lower salaries overall, so that goes back to the point about "just lower salaries." Generally the countries with more money, like Switzerland, also spend more on healthcare.
A quick google search shows that Holland(generally higher salaries) spends less than Germany(generally lower salaries than Holland but higher than elsewhere in Europe) and on par with France(generally lower than either), while AFAIK all three use a variant of the same healthcare system. So there's definitely room for efficiency(although maybe it's just rationing).
Is it more or less than 5%? Is it enough that an average voter would actually get excited by the difference? Is it enough to counter all the meriad other historical, cultural, economica, and geographical differences between those countries?
In general: don't treat social sociences like hard math. Alllow a big margin of error.
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Sure. But administrative costs can easily blow 10x for checking rule B that would be unnecessary if rule A did not exist.
Care to cite a reference for this? What percentage is spent on the administration of those $10 billion?
If you look at the source that I indicated, you will find ample evidence that the current system is dysfunctional, despite it "seeming reasonable". The gist is this: a) You need scientist time to check grants, which could be spent on doing science instead, and b) as science is inherently unpredictable, finding out which ones are doing is actually hard and the separate agency currently mostly fails at that task.
I once took a breadth test in Germany, and a breadth test in the US, close in time. The Germany one is 50 EUR, the US one was $1020. That's a 20x difference, and I don't think that this can be explained by salaries alone.
Apparently I was off, it's more like $36 billion (https://crsreports.congress.gov/product/pdf/IF/IF10336). It was much higher in 2021, but that was a temporary thing because of Covid. I can't find a definitive source for admin costs, but AI says $5.8 billion. It's not nothing, but it's still far, far smaller than what a UBI costs. I feel like that should be obvious from intuition? Of course a program that only covers a fraction of the population for a temporary period is going to cost less than one that covers everyone forever. It's like comparing the Rhode Island national guard to the US army.
What's your source for thinking that Administration drives costs up by a factor of 10? Doesn't that seem extreme?
Well, you know what they say about anecdotes and data. Germany spends about 12% of its GDP on healthcare, and that percent has steadily gone up over time. The US spends 17%, which is certainly higher but not massively so. It's roughly what I'd expect from a country that's wealthier, does more research, and lives more unhealthily than Germany. At the best, you could argue that adopting their system would save us 1/3 of health care costs, but certainly not 20x.
Of course our system isn't perfect and has many flaws... but so does every other system on Earth.
But comparing GPD is not the same as comparing prices.
Prices for medical procedures in Germany are regulated by the Gebührenordnung für Ärzte (GoÄ), which is publicly visible. For example, the typical cost of a duodenoscopy (optical inspection of the gastrointestinal tract just after the stomach) is ~ 200 EUR. This is the price that a person would pay if they decide to get this procedure out of their own pocket (I have friends who have done this).
I don't know a good source for prices in the US, but let me take this New York based thing as an example. They list an upper endoscopy at $975. That's a 4-5x price difference compared to the price in Germany!
In addition, in Germany, this price is almost always covered by insurance, which is mandatory for everybody. In Germany, it is unheard of for people to go bankrupt due to a health expense. In the US, that's very different — people regularly go broke due to medical costs and ask for monetary support online.
If your figures about GDP are correct, this implies that the US performs dramatically less procedures than Germany. This can be due to efficiency, which I doubt, or due to 4-5x reduced level of care.
I feel like you're still missing the key thing? The main reason that prices are lower in Germany is that German salaries are lower. That's true in almost every field, but especially true in the higher-end fields like medicine. Comparing random specific operations doesn't tell much of a story- you have to look at overall healthcare cost. Which is in the same ballpark, just higher in America because we're so much richer than those poor, beknighted Germans. OK that's sarcasm, but still... compare your salary (and take-home pay!) as an American software engineer to a German peer. When I did that, I was almost embarassed by how much more I made than my peers in Euroland.
No. Look, if you sit down and actually do the calculation, the combination of GDP, prices, salaries doesn't add up as you claim — and that's before asking the question of which quality of service you're getting.
EDIT: And the statement "salaries are higher, therefore prices must be higher" cannot even be a causation — if anything, it's the other way round: higher prices cause higher salaries (assuming that the workload stays the same). But why should prices for each specific medical procedure or diagnostic in the US be higher? Do they add magic sprinkles to it, so that the health outcome is phenomenally better than in Germany? Price and value are two fundamentally different things, and the question is whether the US offers a good price for the medicine stuff.
No, I don't believe that you have "sat down and done the calculation." It seems like your entire argument is based on a single anecdote of when you went to Germany and got a good deal on healthcare (which was paid for by the government there). You should read more about Baumol's cost disease.
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I was going to smugly point out that you forgot to account for EUR to USD conversion rates, but no, you didn't. Wow. It's been a bad decade for Europe...
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Oh, and here are more big issues for private health care, second-order effects:
The issue with health problems is that it is usually cheaper to fix them early and thoroughly, rather than spend money peacemeal and end up with a complex operation to save the patient's life at the end. It's more efficient to do a the stitches today, than to deny care only to amputate the entire arm in two weeks.
On the second point, when a medical insurer is forced to keep paying for a patient that was taken out of the workforce by their illness, the insurer has an incentive to pay for early interventions, because the patient can still contribute to the insurance while they are working. If the patient can't work, they don't generate income for the insurer.
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I do think we have some low hanging fruit. Tort reform would dramatically reduce the instances of expensive low value care and could be done while still allowing patients to sue.
I don't have the states on me at hand right now but administrative bloat is something absurd, like 1:1 (with physicians) 50 years ago to 1:16 now.
A lot of this is driven by bedside nurses being burnt out and wanting a different job, we also have a bedside nursing shortage right now. One fix fixes another.
I suspect that, 50 years ago, the physicians were doing a lot of administrative work themselves. Now that's seperated into a separate job. The real problem is that the number of physicians hasn't grown- thanks AMA and limited residency spots.
This is incorrect and has no relationship to the problem at hand.
Also 50 years ago physicians did considerably less administrative work.
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Tort reform is less low-hanging fruit than a buzzword that refers to a set of vague policy ideas that only have a tenuous relationship to actually reducing the number of lawsuits. The exception is that when it's done really aggressively, in which case it pretty much bars all lawsuits excepting the few that meet stringent criteria. Most of this is based upon a myth that what's driving these costs isn't just lawsuits but frivolous lawsuits. And yeah, any News of the Weird type publication can show you all kinds of examples of clearly frivolous suits, but these are a distinct minority, especially in medical malpractice litigation.
The thing about medical malpractice and most other personal injury suits is that they're already expensive to litigate. Plaintiff's lawyers aren't going to take a case unless the damages are enough to make it worthwhile. Just to start with, you're going to need medical records, which are going to cost hundreds and can easily run into the thousands if there was a lengthy hospital stay. Then you need attorney time to go through these records. You need to depose witnesses and order transcripts; you're looking at least at deposing the doctor you're suing, the Plaintiff (or other damage witnesses if the plaintiff is deceased), and possibly other medical personnel. Once you've gathered this information, it's useless unless you have an expert who can explain to the jury why the doctor's conduct deviated from the standard of care, so add another 10 grand or so to get an expert report.
And this is all just to get to the point where you can talk settlement with the defense. If the case actually goes to trial, tack on another $60,000–$100,000 in time and expenses to see the case through to verdict. The upshot is that very few plaintiff's attorneys are willing to take on "frivolous" cases. Ideas like imposing the English rule where an unsuccessful plaintiff has t cover the defense costs is ultimately irrelevant in a legal environment where 99.9% of cases are settled before trial. It may make some defendants more likely to take a chance on borderline cases, but there aren't many of those.
It is worth noting that England has abolished the English rule for personal injury cases (including medical malpractice) - we now have a system called QOCS (qualified one-way cost shifting) where the claimant can never end up owing the defendant money for costs. (In the case where a winning claimant has to pay costs because they failed to beat a timely settlement offer, the costs can be set off against the damages). This rarely matters, because the vast majority of personal injury cases are slam dunks against at least one defendant.
The reason for doing this was that ordinary middle-class personal injury claimants needed to insure against owing the defendant money, and the insurance industry and tort bar had worked out ways of turning these insurance policies into a total rort the cost of which ended up being collected from losing defendants.
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I've never actually talked to a lawyer (well, one who knew about malpractice) about this so I welcome instruction if you think I'm off base.
My two primary thoughts are:
The problem isn't the expense of lawsuits and the verdicts, it is the impacts the threat of those have on patient care and physician decision making. Doctors are already (generally appropriately) very risk averse. Lawsuits are scary and we all know somebody who lost a lawsuit for bullshit reasons or went through ten years of suffering before winning. Even a dropped complaint makes licensing and other stuff a huge fucking pain in the ass. Therefore we do things like order unnecessary CTs and spend twice as long on note writing in order to hypothetically ward off the threat of malpractice. Most of the time it doesn't do shit but that doesn't stop it from making things more expensive, time consuming and increasing the risks on patients. Defensive medicine is problematic than actual malpractice is.
I figure one solution is to make the results more predictable. All of these posted cases where somebody didn't do anything wrong and the jury still dropped a hundred million dollar verdict are terrifying. Have a non-jury resolution somehow. Expert panel. Doesn't need to be just physicians, can be industry or legal experts or whatever, just anybody who knows what they are talking about so when the expert witness lies about what happened nobody believes it. Or empower licensing boards to take away the licenses of expert witnesses who sell a pile of shit. That's a dangerous power that I'm not super comfortable with but we gotta do something. And I do want to preserve the power of people to sue if someone actually does something wrong.
Ultimately the root of the problem is that awards and verdicts are independent of actual malfeasance and deviation from standard of care.
Just as a preliminary matter, I looked up some statistics at work today on the issue, and they were surprising. The average malpractice settlement is around 350k, and the average verdict is around 1 million. I thought these numbers were low, but I saw them quoted in multiple sources, so I'm going to assume they're true. I practice product liability and toxic tort law, and while I don't know the total settlement average due to the number of defendants, we usually estimate verdicts in the 2 to 3 million range for someone with cancer, even if it's an older person in bad health. There are very few verdicts we can use for comparison, but they're almost all significantly larger than this. That being said, I saw another statistic suggesting that 80%–90% of cases with weak evidence resulted in defense verdicts, 70% of borderline cases did, and only 50% of good cases did. This suggests that juries really don't like awarding damages, but when they do, they go big. In my line of work a defense verdict is highly unlikely, so 1 million may be a reasonable amount if you consider that the modal jury award is zero.
I also learned that 29 states already have tort reform that limits non-economic damages, including some big ones like Texas and California. These caps range anywhere from 250k to 1 million, but they're still significantly smaller than what you'd expect from a jury. Without non-economic damages, it's pretty hard to get to these huge amounts, since they are by nature designed to put a dollar amount on what's priceless. For economic damages to get truly large you'd have to have something like a high-earning plaintiff who is totally disabled and needs to be in a skilled nursing facility for the rest of their life, and even then I can't see it getting above 20 million or so. To show you how we'd calculate that, say you have a 25 year old who makes 100k a year and is permanently disabled. That gives you 4 million in lost earnings assuming retirement at 65. However, if he's entitled to disability payments totaling $1500/month, you'd deduct that leaving you with about 3.2 million. If the skilled nursing facility costs 10k/month and he's expected to live an additional 50 years, that's 6 million, except medicaid is covering part of that cost so you have to deduct that. Add on the medical bills and other stuff and you might get to ten million, which is steep, but nothing like 70 million for pain and suffering alone. And this isn't something the plaintiff is just going to assert out of thin air; they have to show medical bills and hire an economic expert to estimate future earnings and costs. To address your points:
Like I said earlier, trials are rare. Something has to go seriously off the rails for a case to go to trial. While caps eliminate some of the tail risk of claims, they don't seem to eliminate the amount of total claims. It's worth remembering that most claims are going to settle well within any reasonable award cap. Even in states without caps, while plaintiff's attorneys may dream of huge awards, they're really a mixed blessing. A settlement offers cash almost immediately; a jury verdict means waiting months for a shot at a large judgment that may get appealed, keeping the money out of your hands for years. If you get sued as a doctor it's more likely to be the kind of case that settles for 200k than the kind where a jury awards a multi-million dollar verdict. The only thing I can conclude is that even if you were to make large awards impossible, as long as you're allowing any kind of malpractice suits the insurance companies are going to want to limit the risk, and if that means defensive medicine, that's what you're going to have to do.
Requiring arbitration isn't something you have to wait around for the state legislature to require; doctors and hospitals can and have put mandatory arbitration provisions in their patient care agreements. If the patient doesn't like it, they can choose another doctor or go to another hospital. But these provisions are actually becoming less common than they were a couple decades ago. Why? Because the average settlements are higher.
For whatever reason, arbitrators (and judges) love splitting the baby. With juries it's all or nothing. With arbitrators, it's like they calculate the damages and make the award based on how strong they think the case is. They aren't going to give out a bonanza in any circumstances, so the ceiling is lower compared to juries. But the floor is higher; a weak case that would result in a defense verdict at trial is going to result in at least some award in arbitration, even if the award is small. And since the process is significantly less expensive than litigation, the whole calculus changes. If I go to a traditional trial I'm going to spend a ton of my own money in exchange for, at best, a 50/50 chance of getting a favorable verdict. In arbitration, the marginal cost of going all the way is lower, and the chance of walking away with something is higher. There's less of an incentive to settle, so if the defendant wants to make the case go away he's going to have to offer something close to what he expects the award to be. Realistically, though, in arbitration the plaintiff has no real motivation to settle, so what you end up with is an arbitration award that ends up being more than you would have paid in a traditional settlement, and since the process is so frictionless for the plaintiffs, they're going to file more suits.
Now, you could say that you meant that this panel should include doctors and not lawyers, or maybe a combination of the two, or maybe that you didn't mean arbitration but a more formal system like trial but with an expert panel instead of a jury, or whatever. Just keep two things in mind. The first is that the system is designed to compensate people for injuries, not to make things easier for doctors. The effects of malpractice suits on medicine are unfortunate, but as long as we believe that people who are injured by malpractice are entitled to compensation, they will persist. You may think certain cases are bullshit, but the plaintiff is still suffering, and I'm saying this as part of the defense bar. The other thing to keep in mind is that there's no reason to believe that some alternative fact finder is going to do better than a jury. You can change things, but you may not like the result.
Wow.
First of all - thank you for writing this up, I imagine if I had asked for this in a work capacity it would have cost me, so I very much appreciate it (and I'm going to feel somewhat guilty about replying in a lot less words).
Second - I spend a ton of time here complaining about myths in medicine and so on so you bet your ass I'm paying close attention when a subject matter expert in something else is talking (again, thank you).
Third - Shit. I guess this means I have to drop this line of "here's the solution!!!"
To dig into some of the specifics you mentioned, those numbers don't surprise me. Supposedly (correct me if I'm wrong) damages in most cases are soft capped near the maximum the insurance will pay out because that's "easier" to get approved and would therefore result in lower numbers. Again this is all supposedly, but the numbers you tossed out line up with what I've seen a lot.
Ultimately physician decisions on this topic are absolutely vibe based - you see one colleague get nailed for something that wasn't even wrong and end up going through a five year trial and become a different, broken person... that changes what you do, even if it shouldn't. Or maybe we just say that's what we do and it's a meme? Hard to accurately study.
There are costs for settling though and we hate it even if it makes the most sense (or the hospital/our insurance forces us to). That's because it impacts all the hugely annoying paperwork we have to do for the rest of our career which sounds like a lame complaint but with the hoop jumping we have to do it adds up to a huge pain in the ass.
Fourth - Double shit. You are spot on, I was asking for arbitration - and I hate arbitration! I don't know if it is actually bad but my opinions on it are totally drive by the anti-arbitration memes.
I guess the next move would be to request the malpractice standards used in the VA and Prison, which are different. Not happy about that though because the care they give is awful typically.
Two sidebars:
Meddit has a running medmal blog poster. It's pretty instructive and you see a mix of "Jesus Christ fire that expert witness into the sun" and "fuck I hope I never make that mistake." Generally good discussion, if you develop any interest in this take a look!
OB malpractice can be absurd - as high as 150k a year (although that's the high end). On the low end Psych is like 5k. Darkly hilarious given that's the specialty with the most people who want to sue. That's an absolutely insane business expense though (for OB).
Is this for OB's who've already been sued, or is this some kind of adjustment for high risk markets(Louisiana...) or whatever?
That's the high end of the range, here's what google AI bullshit says on the matter:
"Obstetric malpractice rates are high, with OB/GYNs having one of the highest malpractice rates of any medical profession: Malpractice claims: More than 62% of OB/GYNs are sued during their career. Malpractice insurance: OB/GYNs have some of the highest malpractice insurance rates. Costly claims: Obstetric malpractice claims are among the most expensive medical malpractice claims. Birth injuries: Birth injury claims are the most expensive obstetric malpractice claims."
And from an article: "As a result, an OB in Chicago typically pays about $140,000 a year for med mal insurance, while the median premium for other specialties is $30,000 to $40,000."
Some key bits - OB gets sued a lot, OB patients are pretty much by definition healthier than most patients so that means bad outcomes are more expensive (compare 75 year old with kidney failure with 30 year old mother of two with no past medical history). If you injure a kid literally while they are being born you are like on the hook for everything that ever happens to them...
I think it's probably more of a practice environment issue than mistake issue, on average they get sued (62%) and there are states that are known to be hell holes for this (example: NJ).
Don't know for sure though.
I mean I've definitely heard whisperings about this- there's a pro-life canard that abortion doctors are mostly ones who can't carry insurance for a live birth because of this issue+being on the left hand of the bell curve for good doctoring- but the magnitude is a surprise.
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Why do you say that VA care is abysmal?
The classic example is that pretty much everyone who rotates through there has arrived in the morning to see a patient and found someone dead and cold but who was charted as alive by the nurses. The follow-up is "what's the difference between a VA nurse and a bullet?" "you can fire a bullet" "a bullet can only kill one person" "a bullet can draw blood."
The care quality is pretty bad. However the VA is actually pretty popular with veterans.
If you mean "why is it abysmal."
Well it is government run is probably most of the answer. However it is also a jobs program for vets instead of a health system so that may be a big chunk as well.
I meant "What about itis abysmal?" Your examples refer to hospitals, not clinics? I ask as it is my only source of care. All the horror stories (mostly undiagnosed conditions) I've heard were in the private systems.
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The anti-arbitration memes have given the practice an unfair rap, which has in a perverse way contributed to a self-fulfilling prophecy that was ultimately bad for consumers. Arbitration clauses were added to consumer contracts primarily as a means of preventing class-actions, not as a cynical way to rig the outcomes. We can argue over whether limiting class actions is all that noble a goal, but I can assure you that they aren't initiated by aggrieved consumers but by lawyers who figured out that if consumers were being biked out of 50 cents worth of Cheerios for every box sold, 1/3 or the total payout will be boku bucks. So they file a class action representing anyone who bought Cheerios during the year that their scales were defective and millions of consumers get dollar-off coupons while the lawyers take home a third of the total settlement value.
Anyway, studies came out that showed consumers lost a disproportionate percentage of arbitration cases as compared with regular court cases and people concluded that this must be because the companies choose arbitrators they know will rule in their favor and who have financial interest in not biting the hand that feeds, and since proceedings are secret they don't even have to face public scrutiny. This was a convenient explanation, but someone looked harder at the numbers and found that the study showing arbitration was a raw deal was flawed. It included all cases heard under consumer arbitration clauses, not just consumer-initiated ones. And the bulk of these cases were debt collection claims filed by credit card companies against people who didn't pay their bills. In other words, the numbers were skewered by claims that were vastly different than what one thinks of in terms of "consumer claims", and that would have had the same result in a regular court.
Actually, they would have had a worse result in regular court. In almost all of these cases the debtor has no real defense so they don't bother to fight the charges. In regular court this results in a default judgment. In arbitration, however, the arbitrators actually made the credit card companies prove their case. And they found that arbitrators rarely awarded debtors the full amount. So even in cases that would normally seem hopeless, arbitration was better for the consumer. And it was better for the consumer in other cases as well. I forget the exact numbers, but assuming that the odds of a satisfactory outcome are 50% in normal court, they were like 58% in arbitration. Not a slam dunk, but not exactly strong evidence that the deck is always stacked against the little guy. Nonetheless, companies started including arbitration clauses to guard against class actions. Eventually they became boilerplate, even in contracts that had little exposure to class action. People like Ralph Nader took notice and published studies saying that this was bad for the consumer. Consumers responded by assuming that arbitration claims were unwinnable, and stopped filing them. Companies started including more of them because they became a surefire way of preventing claims. That all of this was bullshit was lost.
It is thus that I present my own personal experience with arbitration, to show you how the process goes. In the winter of 2022 I was driving from Pittsburgh to Colorado to ski, and my right rear wheel started making noise around Kansas City. Suspecting that this may be a bad bearing, and having a long drive to get home, I decided to have it looked at in Denver. I used a shop my cousin's husband recommended (though I found out later that he only named it because it was close to his house). I explained the situation and that I needed it done that day and they quoted my $2400. Not having much of a choice, I agreed to having the work done. When I was driving back I called Subaru in Pittsburgh to get a quote for the work. $1200. From the dealer, with genuine Subaru parts. Needless to say, I felt ripped off.
But what to do? I had agreed to the price. But upon looking at my bill, I was only given a total without an itemized breakdown. Subaru had given me more information over the phone, without my even having to ask for it. So I began looking for something to use as leverage. According to the Colorado Auto Repair Code, the shop had committed several violations, for each of which I was entitled to statutory damages of $500. The most obvious one was that they didn't provide a breakdown of parts and labor costs. When I got home I called them, knowing it was futile. I told them that Subaru in Pittsburgh quoted me the job at half the price. They said things were more expensive in Denver. I asked them if they'd match a quote from Subaru in Denver. They said no. I asked them for the itemized breakdown. The labor costs were actually reasonable, but, for aftermarket parts, they charged me more than double the list price of the OEM equivalent and more than triple the list price of the parts they actually used. This markup over OEM plus the diagnostic fee (which is usually waived if you have the work done) was responsible for the difference between their price and the Subaru price. I explained the code violations. He said that every garage he ever worked at did it that way. I told him that the law is pretty clear and that they're in violation. He told me that if I was threatening legal action he had to end the call.
So I looked at my bill and immediately found the arbitration provision. You have to inform them in writing and wait 30 days before filing a claim. I sent a certified letter explaining the situation. I received no response. 45 days later I opened a claim with JAMS, and arbitration association. The advantage with JAMS over the American Arbitration Association is JAMS requires an in-person hearing in the consumer's county. Within a week, I got a call from the owner, who was very apologetic. I think the reality hit him that it was going to cost him somewhere in the neighborhood of 5 grand to defend this arbitration claim (in consumer arbitration, the consumer is only resoponsible for the initial fee). He offered me $500 plus a waiver of the diagnostic fee. I told him I wanted the difference between what Subaru quoted me and his price, plus $250 to cover my filing fee. He bristled at having to cover the filing fee, and I told him I had tried to resolve the issue with the service manager weeks ago and it could have ended there. In the meantime, it could end here, or we could take it to the arbitrator. Another weeks delay and he'd have to pay $1500 for his side of the initiation fee, which is about what I was asking. He agreed to charge back the amount I was asking for.
If it hadn't been for that arbitration clause I'd have had to go to Colorado and file suit in small claims court there. He wouldn't have had to pay any fees, and it would have been really convenient for him to defend the suit. I don't know if I would have won. I don;t know if I would have won the arbitration hearing either. I do know that a Pennsylvania arbitrator deciding a case involving a local tourist who feels he was swindled by an out of state mechanic who knew he was in a desperate situation is not going to feel too much sympathy for the mechanic. He's also not going to be familiar enough with Colorado law to offer a sophisticated analysis of the legal issues. I might not have gotten what I was asking for, but I would have gotten something. In any event, since the expense is borne by the merchant, there's a strong incentive on their end to resolve the matter quickly. It may not be great for malpractice cases involving hundreds of thousands of dollars, but for little shit like this it works much better than the court system.
Goddamn that's a huge confounding variable.
This is overall great teaching, you explain the issue and then tie it into a humorous and relatable anecdote that gives it context.
I appreciate you sharing and have updated my thoughts on arbitration.
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