Healthcare Reform: Are Insurance Companies and Drug Companies the Culprits?

2019.07.06 US_Senator_Bernie_Sanders_in_Conway_NH_on_August_24th_2015_by_Michael_Vadon_(20715416790)

We are at the mercy of the private insurance and pharmaceutical companies, whose greed dictates the cost of healthcare,” railed Democrat Presidential candidate Senator Bernie Sanders in a recent campaign blurb.

Are insurance and drug companies really the ones to blame for our healthcare problem – unsustainable costs and millions without access?  If so, are they the only culprits?

Fixing U.S. Healthcare has claimed that the whole system has been coopted to produce revenue, not health. This Fixing blog claims that rising costs throughout the system are the Real Problem. The total spending for all healthcare in the U.S. reached $3.5 trillion in 2017. Healthcare spending amounted to 17.9% of GDP.

In fairness, Sen. Sanders seems to agree with Fixing’s  claim:  “The current system is completely dysfunctional, and [is a] profit-driven health care system.” 

This post will look at where blame lies, and whether a “blame game” will fix the problem.

Insurance and Drug Companies Are Part of the Problem

Certainly, insurance and drug companies are part of an ever-increasing healthcare cost spiral. Commercial insurance covered $1.18 trillion in healthcare spending in 2017 (34% of total). Insurance companies reported $16 billion in profits (Their profits climbed to $23 billion in 2018). Drug costs amounted to $333 billion (9.5% of total).  Drug companies’ profits were an astounding $131 billion in 2015 worldwide, half of which accrued from U.S. sales.

This blog has argued, however, that insurance companies and drug companies are not the root of the problem. They are simply behaving rationally within a screwed up system.  And their profits, although a catchy rhetorical metonymy for greed in the system, are a miniscule slice of the bloated health spending pie.

Two previous posts named the culprit to be healthcare prices that are double those in other developed countries. Two other posts showed that U.S. health spending is growing one-and-a-half times faster than in other developed countries. The original video series that launched this blog explained the complex factors contributing to relentless healthcare cost increases.

Whole System is Rigged

Fixing U.S. Healthcare concludes from this evidence that the whole system is rigged.  Here are some other culprits:

All of this results in trillions of wasted spending, that is, dollars spent that add neither an ounce of prevention nor a pound of cure.

Who Rigged It?

With Steven Brill, this blog has argued that there is no single culprit. The original video series traced the history of how our health system evolved. Originally well-intentioned professionals and health system innovators were trying at first to make the world better.  They gained wealth and power, and assumed that this was a natural reward for their achievements. But along the way, these visionaries lost sight of their original focus on health and the common good.  They slipped little by little toward defending their own advantages, eventually to the actual detriment of the common good.

Who Else?

Brill’s new book, Tailspin, reveals how over the last five decades a new “best and brightest” meritocracy rigged not only healthcare, but also the entire American financial, legal, and political system to build “moats” of protection to perpetuate their wealth and power.

And, in truth, all of us colluded.  Americans blithely adopted a cost-is-no-object approach to healthcare. We did not question whether spending more and more had a diminishing marginal benefit. And we uncritically consented to medical testing and treatments since they were “free” (covered by our employers’ health benefit policies).

Will Naming and Blaming Fix It?

So, let’s be honest. We’re all to blame, each in our own way. Some of us directly as health professionals or healthcare employees.  Some of us indirectly as legal, academic, financial, administrative or corporate facilitators of the healthcare industrial-complex. And all of us as patients.

“Novel idea”:  Instead of blaming each other, why not all accept responsibility for our role in contributing to the mess?  And why not all commit to being part of the solution? Some of us may need to change jobs. Some of us may need to forgo testing and treatment that has little or no benefit. Some of us may need to challenge our underlying political beliefs. Some of us may need to accept a pay cut. Some of us in leadership roles may need to creatively innovate ways to mitigate the turmoil caused by retooling one-sixth of the U.S. economy, especially for those most directly affected. Politicians will need to bring us together into a grand bargain, not pit us against each other for fleeting partisan advantage.

I’ll go first.  See my very first You Tube video that started the video series and Fixing U.S. Healthcare blog project“We Doctors Make the Healthcare Cost Problem Worse.”

The Vision

Fixing U.S. Healthcare’s vision is this: Equitable access by all to good costworthy care. All paying their fair share, in turn given protections from the financial risks of illness and frailty. Preservation of the best aspects of competition to stimulate honest research, efficiency, collaboration, and customer service, and to reward altruistic professionalism. Balancing healthcare with other high-value economic priorities such as education, infrastructure, and environment. Personal responsibility for health. Solidarity with fellow Americans for their mutual wellbeing.

This vision would be a new Declaration of Independence, Constitution, and Gettysburg Address rolled into one! It could bring American’s together for life, liberty and pursuit of happiness. And it could help us form a more perfect union, establish justice, insure domestic tranquility, . . . promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.

Now, Take Action.

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Image Credit

Title: US Senator of Vermont Bernie Sanders in Conway NH on August 24th, 2015

By: Michael Vadon [CC BY-SA 2.0 (]


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