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Fixing American Healthcare: The Primary Cause of Rising Costs

In Fixing American Healthcare, Dr. Rich explains that the major cause of rising costs in healthcare is an aging population that requires more resources. Though some have proposed that fraud and waste/inefficiencies are the primary sources of costs spiraling out of control, the truth is that they likely play a minor role compared to the tremendous costs of providing cutting edge treatments to an older and sicker US population. Dr. Rich argues that we don’t hear that much about the escalating cost of caring for older Americans because it makes us squeamish, so we instead focus on curbing costs due to fraud and waste. However, when fraud and waste are not the primary cause of increasing costs, enhanced attempts to quash them do not actually move the savings needle. Since certain groups are tasked with reducing escalating costs due to fraud (in particular), and their work does not result in savings, they must strive harder to find and punish those accused of fraud, perhaps even seeing fraud where it doesn’t exist.

Dr. Rich argues that true fraud is fairly rare, and that the majority of “fraud” cases involve people not complying with rules they had no knowledge of (in many cases even after asking about the rules from the people who made them). Other cases of “fraud” involve retroactive application of rules and then fining hospitals for not being in compliance before the rules were made. His assessment of the PATH audit debacle is quite interesting.

Now, obviously we want to decrease fraud and waste as much as possible – but in the midst of our desperate attempts to curb healthcare spending, we’ll need to have some honest and frank discussions about the elephant in the room: America is sicker than ever before, and we have developed expensive ways to cure/treat those sicknesses – ways that we can’t afford to offer everyone.

What should we do? Dr. Rich suggests that we come together as a nation and decide on some rationing rules. He argues that we’re already rationing our healthcare dollars in covert ways – let’s bring it out into the open so that it’s fair to everyone. Now, I doubt that this will sit well with Americans – but our current “system” is so dysfunctional that maybe the time for a rationing discussion has come?

In this climate of unlimited treatments and limited resources, the best option is to stay healthy as long as possible. That’s why I believe in preventive medicine, healthy lifestyle changes, and doing all that we can to avoid getting sick. In many cases (but certainly not all) eating healthy foods, exercising regularly, controlling our weight, getting our vaccines, and sleeping well each night can go a long way to keeping us out of the hospital. It’s not easy to get Americans to take care of themselves in this way, but I’d rather spend my efforts trying to get us fit than to have to debate rationing rules. In the end, however, we may need to do both. What do you think?This post originally appeared on Dr. Val’s blog at

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5 Responses to “Fixing American Healthcare: The Primary Cause of Rising Costs”

  1. richnf says:


    Thanks for reading my book, and especially for posting these thoughtful reactions to it. I’d just like to elaborate on a few points.

    First, rationing healthcare (i.e., withholding at least some useful medical services from at least some patients who would benefit from those services) is an economic imperative.  We can’t avoid it, and we’re not avoiding it. We’re just doing it covertly.

    Second, covert rationing is extraordinarily destructive both to individual Americans and to American culture. To individuals it brings morbidity and death. But, possibly more importantly, it demands the steady erosion of the foundational principle of American culture – the autonomy of the individual. The systematic destruction of the doctor-patient relationship (leaving patients largely on their own in an increasingly hostile healthcare system, and leaving doctors bereft of their professionalism) is merely the most obvious example of this latter.

    Third, while my book spends a chapter elaborating on the construction of a new healthcare system in which the necessary rationing is decided openly and transparently, I am actually a realist. I don’t entertain any delusions that we’ll be doing anything like this, at least not in my lifetime. But having railed against covert rationing for 6 chapters, I felt obligated to describe in some detail how a workable alternative is at least possible to imagine. I actually do believe that if we did it correctly, such a system would be far more equitable, effective and efficient than the one we have now. (So much more efficient that we’d end up doing less actual rationing than we are today.)

    Finally, the real message of the book is not to stir political leaders to right action (talk about pipe dreams!), but instead it’s to make individual Americans aware of covert rationing and its manifestations – and of how that covert rationing is directly affecting them and their loved ones. Because individuals who understand what’s really happening can take steps to protect themselves – to immunize themselves against covert rationing. (The book and my website describe how.) And if enough individual Americans simply begin acting in their own enlightened self-interest, without any thought of perpetrating healthcare reform, that very reform (Zen-like) will become almost inevitable.

    Thanks again for having a look at the book, and for the attention you’ve drawn to it.


  2. ValJonesMD says:

    Thank you, Rich, for your important clarifications and additional thoughts. I knew at the outset that I would not be able to capture the most important features of your book (partly because my blog platform is not suitable for an exploration of political issues – as much as I have opinions on them), so I am thrilled that you’re chipping in to get the ideas across. They are critically important – and I hope everyone reading this will go get your book so we can further the discussion!

  3. John Ware, PT says:

    I disagree with Dr. Rich’s premise that the aging, sicker population is the cause of the current health care delivery crisis. It’s certainly exacerbating the problem and accelating the system towards bankruptcy , but I don’t think it’s the cause.

    In Porter and Tiesberg’s book “Redefining Health Care” an expert accounting by these two PhD economists (Harvard and Darden business schools)provides the most thorough and accurate explanation of what’s gone wrong in health care delivery in the US and other western, industrialized countries.

    Their thesis boils down to this: there’s a pervasive lack of results-based outcomes for the multitude of chronic medical conditions that afflict modern societies. The authors spread the “blame” among all the stakeholders, including providers, third-party payers and government. Furthermore, they suggest and describe how the stakeholders will have to get together to come up with a solution. More importantly, they provide the blueprint to achieve this.

    I think Dr. Rich’s thesis assumes wrongly that the health care business is an inherently “zero-sum” enterprise, which is why he suggests that rationing is a solution. Porter and Tiesberg explain why and how it doesn’t have to be this way. If patients receive value throughout the course of care for a medical condition, then patients and their 3rd-party payers will seek out and find the practitioner who are providing excellent care. The marginal providers will either improve their practice, or they’ll go out of business.

    Free market principles in health care? What a concept!

  4. I agree. There are many people who abuse the system, and it really effects everyone. It's sad but true.

  5. I agree. There are many people who abuse the system, and it really effects everyone. It's sad but true.

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