The cost crisis: An existential threat to our health

The assassination of UnitedHealthcare CEO Brian Thompson in December 2024 sent shock waves across the country and through the health care industry. The subsequent public outpouring of anger and frustration, vitriol, and negative commentary about Mr. Thompson's employer specifically and the health insurance industry in general was unprecedented but not surprising. It once again reminded us that there is something terribly wrong with the business of ensuring the health of the American people.

How is it that a single health care CEO can make tens of millions of dollars a year, while millions of Americans lack health care? How is it that an individual speculator can buy rights to a life-saving medication and raise the price five thousand-fold, imperiling the lives of scores of vulnerable patients? How is it that a surgeon turned CEO can walk away with a huge fortune and leave behind the ruins of a nationwide health system, imperiling the health of entire communities? Nothing excuses the violence that occurred, yet it is perhaps predictable that the public is outraged by some of those they feel may be at the center of what they perceive as their exploitation.

The larger question is, how did we get here? A century ago, there was no “United Healthcare,” no “big pharma,” no “health systems” or hospital chain mega-corporations, and of course, no Medicare or Medicaid. Health care was truly retail—between the doctor and the patient. Since then, we have seen an exponential growth in service providers and vendors, with a concomitant rise in cost. The entry of insurance companies and the federal government into the market has been paralleled by the growth of big pharma and medical device manufacturers, massive, consolidated health systems, venture capital and private equity firms, and a petri dish of a “vendor ecosystem” offering services such as billing and EHRs.

This universe of agencies and organizations has been wedged between the physician and the patient, and as the bureaucracies have multiplied, so have the administrative and non-health-related burdens on physicians and health care professionals. These conditions also created new careers for those in nonmedical roles such as billing and coding, who now overshadow and maybe outnumber physicians and nurses. Big money, big business, and the government's participation as a payor have yielded a singular result: an assured increase in costs where even the simplest intervention is unaffordable for most patients. This is juxtaposed over patients' expectations of receiving care once they are “covered” through their employer, private insurance, or the government via Medicare and Medicaid.

What we now have is a very bizarre “market,” where the service providers such as hospitals and drug and device manufacturers do not actually do business with the doctor or patient. Instead, business is done between the service providers and the paying intermediaries through negotiated contracts and agreements. Rarely are hospital bills itemized, and the true cost of a prescription medication is often unknown to the doctor or patient. This exclusion of the patient from the cost side of the equation (other than premiums, copayments, or co-insurance) leads to a lack of price transparency for health care products and services, with a predictable upward spiral in costs. The “payors” in response try to make up for rising costs by increasing premiums, disincentivizing use through copays, or implementing utilization management, service restriction, or outright denial.

This “Hunger Games” competition between the payors and the vendors leaves the patient in the middle of a dysfunctional system, where health care premiums are inexorably rising while covered services dwindle and health outcomes deteriorate. Despite spending an order of magnitude more than our nearest peer countries, the United States ranks dead last in major health outcomes. In negotiating our complicated cost/care system, our patients are forced to wade through a bureaucratic morass, reminiscent of the struggles of “K,” the central character in Franz Kafka's “The Castle,” as they try to penetrate a wall of bureaucracy. The end result is that the patient has become a mere bargaining chip in negotiated contracts and, as some have described, the conduit through which money can flow from the payor side to the vendor side.

As we think about improving the health of our people, I cannot think of a bigger existential threat than this upward cost spiral. Many lifesaving medications such as cancer chemotherapy are completely inaccessible without insurance. Previously simple interventions like a normal delivery, knee arthroscopy, or appendectomy now cost tens of thousands of dollars, while a critical illness can be a financial death sentence. We must wake up to the reality that people are at the end of their tether, and something needs to be done about the increase in health care costs that is passed on to patients as an increase in premiums and reduction in services.

The College has long advocated for measures to bend the cost curve, such as lowering prescription drug prices by allowing Medicare to negotiate, enacting price caps, enforcing price transparency, and ensuring streamlined billing and insurance processes. On the physician side of the equation, value-based payment models can promote high-quality care and disincentivize billing for “widgets” as in the current fee-for-service scheme. High hospital and procedure costs can be addressed through site-neutral payments and transparent pricing.

These measures, however, are only a starting point toward solutions for a very complex problem. There are larger societal questions such as the entry of venture capital profiteers into health care, the economic effects of health system consolidation, and the death of independent practices and primary care services. These events are directly traceable to the cost/care equation and threaten to further alienate the patient from the health care system.

True solutions will require a rethinking of many conventional assumptions about the care we provide and receive. Why do we need insurance for a simple well-person clinic visit? Is health a right, or is it a choice? Why is our auto repair bill itemized, but not our hospital bill? Why does a medication manufactured by a U.S. company cost 10 times less in another country? When we start to ask these questions, we will begin to think of answers and hold our leaders accountable.

As we usher in a new administration, we must lean forward and continue to press for answers and action on the cost/care equation. We cannot have a functional health system where primary care is nonexistent, hospital systems are collapsing, private equity is thriving, and patients and physicians are left in the lurch. The College will continue to beat the drum and advocate for practical solutions and evidence-based policy for public health. We said it five years ago and will say it again: Better is possible.