American health care at times seems to be living proof of the adage that it is possible for two competing ideas to be simultaneously true. Among the paradoxes inherent in our unique health care system is the observation that American health care is the best in the world, and also the most complicated and costly.
Nowhere but in America, with our still somewhat-free market medical system, will you find the swiftness of access, quality of care, or level of innovation in medical treatment that we are accustomed to. And yet it is inescapably true that the same system that delivers the best health care in the world is also unnecessarily riddled with red tape, bureaucratic overhead, and millions of misdirected dollars.
There is no question that health care in this country is expensive and getting more so. The U.S. spends more on health care than most other industrialized nations, and American taxpayers and working families across the country are bearing the brunt of that financial burden.
And where does all that money go? Sadly, less and less is going towards actual medical care; administrative costs are taking up an ever-larger share of the healthcare pie, as the industry is increasingly being dominated by large insurance companies.
Their zeal to account for the billing of every aspirin and band-aid adds both costs and paperwork to providers, who are already undercompensated for care they are mandated by the government to provide. In 2023, American hospitals spent a staggering $23 billion simply managing insurance claims. Add in the costs of malpractice insurance to shield against the litigious appetite of the trial lawyers who generally see doctors and hospitals as lucrative targets, and we find that tens of billions of dollars are routinely being spent on health care that have nothing whatsoever to do with keeping people healthy.
Those administrative costs are greatly exacerbated by consolidation within the insurance industry, and the advent of government in healthcare has a great deal to do with that. Years of coverage mandates and other government interventions at both the state and federal level 鈥� many of which the biggest insurers have been at least partially complicit in bringing about 鈥� have made it all but impossible for smaller insurance companies to make it, forcing them to either leave the market or merge with larger companies.
Some states, like Colorado, have pursued the establishment of a 鈥減ublic option鈥� insurance scheme 鈥� en route to a full-blown single-payer system 鈥� putting even more pressure on smaller insurers and driving yet more consolidation. More consolidation means greater concentration of market power for the insurers. Over time, the health care industry has become less about providing health care than about supporting the insurance industry on pillars of forms and questionnaires.
And of course, with more of the health care market concentrated in the hands of a diminishing number of insurance companies, comes the inevitable temptation for those few companies to wield their muscle 鈥� generally in the form of prior authorizations, denials, and superfluous document requests, lest they pay for an aspirin or Band-Aid that they might otherwise not have to.
All of which adds up to hospitals and other providers directing more of their scarce resources away from treating patients and towards servicing insurance companies. The fact that studies show 70% of denied claims are eventually paid after exhaustive rounds of review simply demonstrates the absurdity of the whole process.
In a system as complex as American health care there are few simple answers or easy fixes. Government intervention created many of the problems brought on by insurance industry consolidation and excess bureaucracy, and more government will not solve those problems. But there are some prudent reforms that the federal and state governments can pursue immediately that will help restore some order to the system.
The first would be instituting standard rules for prior authorization so that everyone 鈥� patients, providers, and insurers 鈥� are on the same page from the beginning. It should not be a spin of the roulette wheel every time someone goes to the doctor or the hospital, guessing whether a particular treatment will be covered or denied.
Second, the establishment of clear timelines for insurance companies to make decisions regarding coverage, so that patients are not left wondering, and so that delays are not open-ended.
Third, limits should be placed on duplicative reviews, especially on services that are routinely approved on appeal. Transparency and public disclosure of denial and overturn rates would be helpful in eliminating these unnecessary reviews.
These are not magic bullets; untangling the mess we created in the health care system will take time and careful application of well-thought-through policy aimed at reducing the administrative burden created by insurance industry consolidation. But decreasing bureaucracy is a necessary first step to making health care more affordable, and ensuring American health care remains the best in the world.
Matt Soper represents House District 54 in the Colorado state legislature, and is chairman of the Delta Health Hospital District.
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