America’s system to fund and reimburse health care is broken

The brazen assassination of UnitedHealthcare CEO Brian Thompson outside of a hotel in New York City last week was senseless, horrible and completely unwarranted, no matter what justification the killer thought he had. Since the event, there has been an outpouring of anger on social media — directed towards payors in general and UnitedHealthcare in particular. Clearly, many people believe that a big problem in American health care is that payors in America are limiting care in order to maximize their profits.

The problem is not Brian Thompson. The problem is not UnitedHealthcare. The problem is not payors trying to maximize profit. The problem is the American system to fund and reimburse health care is broken.

So how do we fund health care in America? Health care represents about $4.5 trillion worth of spending in America, just under 18 percent of U.S. GDP. A little over $3 trillion of that does not come from patients, the people that use and benefit from the system, at least not directly. So where does this $3 trillion come from? About 60 percent comes from the government via Medicare, Medicaid and other programs and about 40 percent comes from private insurance, most of which is through employer group health plans, which employers pick on behalf of their employees.

There are many participants in the health care system, but simplifying it greatly, we have providers that are responsible for delivering care to patients and payors that are responsible for distributing the $3 trillion out to those providers. Patients, although trying to pick the best provider for their particular ailment, are often very unaware of which services their insurance covers or the cost of the services, nor are they always incentivized to care about that cost.

Further complicating this, health care costs have been rising faster than inflation and faster than the U.S. GDP for the last 30 years. Virtually everyone in health care believes this is unsustainable, particularly as the number of Medicare recipients is expected to increase over the next eight to 10 years.

Because of these rapidly growing health care costs, the system has made these payors responsible for limiting the amount of money that goes to providers. They do this by negotiating lower prices (or in the case of the government, setting prices that are significantly below what commercial payors pay) and limiting the services that are delivered to patients.

On the other hand, we have the providers. As both a physician and the founder and prior president of the largest radiology practice in the United States, I am one of those providers. Virtually all of the providers I have worked with strive to provide the best possible care for their patients, and I applaud them for that.

Unfortunately, there are many examples of providers that have developed strategies designed to increase revenue per unit of service delivered without necessarily increasing service levels or quality to the patients they care for. These include differential pricing, aggressive billing practices, and coding practices designed to ensure the most money is received for any given service or patient.

Compared to the payors, the fact that these provider practices don’t cause patient harm gives me some solace as a physician, but they are not helping the cost issue I described above.

So what are we left with here? One: a $3 trillion pool of money funded not by those that are actually using it (at least not directly), but by employers and the government. Two: a group of providers that are trying to maximize the amount of the pool they can get. Three: a group of payers that are trying to limit how much of that $3 trillion pool goes out. They do this by negotiating prices, setting prices or limiting access.

We have created a system where the primary business goal of providers is getting as much of the pool as they can and the primary business goal of payors is to limit access to the pool. Notice, that I said nothing about patient care, which has become incidental only so that providers and payors can play this multi trillion-dollar game.

Despite what has been posted on social media, I believe that the intent of payors limiting access to services is to reduce spending on low value care that is not effective in caring for certain conditions. However, when you have a large organization where employees are incentivized to save money by limiting access (even if it is intended to be appropriate limiting), it is inevitable that at times it will limit care that actually is effective, sometimes even life-saving.

I do not think that Thompson was gunned down in New York because he was an evil man nor because he worked for an evil company. It seems likely that someone feels that he or his company intentionally limited care in a callous, terribly profit-hungry way. In reality, he was simply doing the job that the system we have created for funding and reimbursing health care demanded he do.

If there can be any positive benefit to come from this senseless murder, it hopefully creates some serious action towards reforming this broken system. There are ways that we can begin to change this without going to the extreme limits in choice and access that a single payor system would require.

These changes include shifting away from employer group health model of funding towards more patient directed purchasing of health insurance, better aligning patient spending decisions with payors, and greatly simplifying pricing by bundling more services and creating more transparency on pricing. These are massive, massive changes and will require tremendous work, but I believe they are worth it. Brian Thompson’s killing is symptomatic of a sick system; let’s resolve to heal it before it claims additional lives.

Anthony Gabriel is a physician that practiced in California for approximately 10 years. He worked in health care management for nearly 30 years. He founded what is now the largest radiology practice in the United States.