Inside the system that’s costing health care billions every year

KevinMD December 31, 2024
Howard Smith, MD

It all begins with a political movement for national health in the 1970s. There are no “health systems,” just doctors and hospitals. Fee-for-service is determined by conventional principles of cost accounting, in which payment for services compensates for overhead and leaves enough profit to remain in practice and enjoy the American dream.

There are health insurance companies. The purpose of health insurance is to protect patients against medical expenses, not to manage care.

Doctors are reimbursed the UCR (usual, customary, and reasonable), which is determined by competition in the free marketplace.

Indeed, there is medical malpractice, and there are medical malpractice insurance companies, but, relative to today, the risk of a lawsuit is low, and so is the premium.

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