Government regulation does not raise the price of health care. Government regulation increases the costs of doing business to the standards of the regulation by forcing every service provider to meet those standards.
"Government regulation doesn't raise the
price of healthcare. It just raises the price of
providing healthcare" OK, sure, if you like semantics…..but what do you think happens when the cost of providing a service increases?
The American Hospital Association has said that the cost of compliance with the 380 or so federal regulations (not counting CMS requirements or insurance regulations) that affect acute care hospitals cost nearly $50,000 per year PER BED, on average. That's just the direct costs that can be easily measured like the cost of expensive software, IT departments to manage it, compliance offices, and educators who spend as much of their time making sure staff members are up to date with the latest reporting requirements as they do best clinical practices. It does not account for the time that nursing and clinical staff spend on this stuff. It is very significant.
CMS compliance is a whole other ballgame. Notwithsanding the fact that healthcare spending makes up over 30% of the federal budget and growing (with little positive impact on health outcomes, at least in the case of medicaid), compliance with CMS requirements absolutely eclipses compliance with other federal, state, and insurance regulations, in terms of what it takes to make sure you get at last crumb that CMS pays. Most people would be absolutely shocked at how much of modern medical care is dictated directly or indirectly by the bureaucrats at CMS. Even those with good private insurance are indirectly affected to a very significant degree.
Since the 1970's, the number of providers in the US has increased by about 150%. The number of healthcare administrators, however, has increased by something like 3700%. Why is that? Does the healthcare industry naturally value the contributions of bean counters more than clinicians? I doubt it. It's another result of the massive cost of compliance with federal, CMS, state, and insurance requirements.
At the same time, physician career satisfaction is at a record low and 90% say they would not recommend medicine as a career, and most cite the increasingly complex administrative requirements constantly being added to their list of responsibilities. I can tell you anecdotally, that many of us providers are also increasingly disenchanted by a sense that there are just so many people in line to profit from the care that we provide to patients.
Rural hospitals are closing left and right, and the ones staying open are cutting important services because they simply can't afford to provide them considering the pittance paid by CMS and how difficult they are to keep happy. The only way to make money on CMS patients (which are a very large percentage of many rural hospital's clients) is volume. As long as that is that case, the efforts to switch to a value-based reimbursement scheme will fail.
The cost of healthcare was supposed to fall after the ACA was passed in 2010. It was supposed to be this miraculous piece of legislation that all the really smart people supported because it would reign in costs, make healthcare more available, and make us all healthier. It was supported by the insurance industry because it protected them from competition. It was supported by states and hospital systems because the federal funding they rely on would have been slashed without it. What really happened? The cost of healthcare and healthcare insurance has risen even faster than it did before the law went into effect, and dozens of rural hospitals have closed.
Meanwhile, more and more practices and surgery centers are opening that refuse any type of insurance. These make private payment arrangements with individuals or their employers. Because they avoid the incredibly complicated mess of CMS and insurance billing and compliance, they tend to have very transparent pricing, cost WAY less than traditional providers, and have outcomes that are as good or better. That's right: the only part of the healthcare industry that is actually thriving and lowering costs is the small corner of the industry that has managed to shield itself from as much government involvement as possible.
If I ran a business or an entire industry and it did poorly, no one would question that it was my responsibility. Once things started doing poorly, if I doubled down on the same strategies that caused it to do poorly in the first place, people would say that I was stupid and that it was completely my fault when it continued to fail.
Well, make no mistake, the government absolutely runs the healthcare industry, and things have gotten worse and worse every year for decades now. But for some reason we give politicians and bureaucrats a pass when it comes to the actual effectiveness of their programs. It's as if intentions are more important than actual results. We haven't even talked about the VA, which is an utter national embarrassment and is a perfect prequel to what British-style completely government-run healthcare this country would actually look like.
The healthcare system is absolutely imploding and lots of people are really suffering, and so many people just want to do more of what has clearly not been working. I wish I could say I'm surprised.
