Maggie Mahar: 1/3 of Medicare Spending is Wasted

Yves here. Maggie Mahar’s post focuses on a pet peeve of mine, namely, the way treatments and procedures are overprescribed in the US. She includes a favorite example, that of colonoscopies. The US is the only country in which doctors recommend colonoscopies for everyone over 50, as opposed to people in high-risk groups.

Another source of waste is the way insurers and the government allow Big Pharma to introduce minor reformulations of drugs as “new drugs” (“new drug applications” or NDAs in Food and Drug Administration-speak) and use those to extend patent lives and keep prices high. Given that the US already massively subsidizes the drug industry via NIH research, it’s unconscionable that the government does not push back, as is the norm in other countries, by negotiating prices and restricting access to pricier drugs unless a clear benefit is shown. By contrast, in Australia, the Therapeutic Goods Administration reads the research on various drugs, picks one or two in each category that it deems most effective (which often isn’t the newest) and uses the fact that it has concentrated its buying power to secure better prices.

However, I take issue with Mahar’s conclusion, that waste in Medicare means that Medicare for all should not serve as a way to get to single payer (even assuming that issue can be opened up again in the next decade). The US healthcare system is massively wasteful, and it will inherently be most wasteful in populations that consume more in the way of medical services than the country at large. The elderly is far and away the biggest cohort that fits this description. Moreover, my limited sample of older people dealing with doctors (elderly relatives and their friends) strongly indicates that they are very deferential toward doctors, and are thus not inclined to reject suggestions for aggressive (as in costly and possibly unnecessary) treatments.

Even worse, as we’ve written in older posts, when family members try to intervene on behalf of aged relatives who aren’t capable of making their own decisions, they are often threatened by the hospitals that if they don’t back off, they’ll be denied any decision-making role. I am not making this up. And Mahar clearly knows about this issue, since she wrote about it at length. From her must-read post in May:

But “in an era of advanced medical technology,” Katy Butler soon learned that, “having legal and moral rights was not the same thing as having power. . . . Those who knew my father best– Dr. Fales my mother and I –wanted to let him die naturally. Those who knew him least and least understood his suffering were eager to prolong his life, and had the know-how and power to do it.”

Katy Butler was advised that she “should not be rude or threaten a lawsuit. When family members become agitated or disruptive, “hospital bioethicists. . . may decide that the surrogates lack ‘decision-making capacity’ and the medical team may simply ignore them, or go to court and ask to have the troublemakers removed from the job. If that happened, my father’s medical proxy wouldn’t be worth the paper it is written on.”

Mind you, the Butlers’ plight might look to be a Medicare problem if (as one can probably assume) the procedure that led to a life-prolonging pacemaker being unnecessarily implanted happened happened while Katy’s father was on Medicare. But unnecessary procedures are a staple of the US medical industry, whether the patient has insurance or not.

Thus while Mahar is correct in her description of the problem, she mistakenly treats Medicare as a cause, as opposed to a symptom. My concern with Mahar’s recommendations is that they can and almost certainly will be used to support corporatization of medicine as a vehicle for creating the standardization that she desires, except with the objective of increasing profits, as opposed to improving care (see this post for a much more detailed discussion of how advanced this trend is and how Obamacare accelerates it).

By Maggie Mahar, a financial journalist who wrote for Barron’s, Time Inc., The New York Times and other publications. (Her first book, Bull: A History of the Boom and Bust 1982-2003 (Harper Collins, 2003) was recommended by Warren Buffet in Berkshire Hathaway’s annual report. For more on her books, click here. Originally published at Angry Bear

Urban Legend—

You write: “That claim that one-third of Medicare spending is wasted sounds pretty questionable to me.”

This is your opinion. If you had spent the last 20 years working as a medical researcher investigating unnecessary treatment, your opinion would be of great interest to all of us; but, I’m assuming you have not done so.

Thus, you might be interested in some facts . . .

Dr. Donald Berwick, who headed up Medicare and Medicaid during the 1st half of the Obama administration has said, repeatedly, that at least 1/3 of Medicare dollars ware wasted on unnecessary tests, procedures and drugs that provide no benefit for the patient. He is only one of dozens of health policy experts who have made the same statement. (Google “Health Affairs” the leading medical journal that focuses on health policy and “unnecessary treatments” Over the past 30 years, researchers at Dartmouth have provided stacks of evidence documenting unnecessary care in the U.S.

You also write: “I doubt that treatment protocols in the U.S. are all that different from other countries.”

Again, this is your opinion. Unfortunately, you are wrong.

In other countries, doctors and hospitals tend to follow evidence-based guidelines. In the U.S. a great many doctors object to the idea of someone telling them how to practice medicine (Even though “someone” is “science”). They value their autonomy and prefer to do things the way they have always done them. Of course, this is not true of all doctors. But even when you look at protocols at our academic medical centers, you find that the way they treat similar patients varies widely.

Here , I’m not talking about how much they charge for a procedure (which also varies widely) but how many tests they order, how often they prescribe spine surgery for someone suffering from low-back pain, how often they tell a woman she needs a C-Section . . .

One big problem is that our doctors and hospitals are paid “fee – for service;” in other words, the more they do, the more they are paid.

As Dartmouth’s Dr. Eliot Fisher points out: “U.S. patients are not hospitalized more often than patients in other countries; but in the U.S., a lot more happens to you while you’re there.”

In addition, traditionally our medical schools have trained doctors to practice very aggressive medicine. The resident who orders a battery of tests is praised. Students are told “Don’t just sit there (and think). Do Something!”. Traditionally, our medical culture has been a very macho culture and it is just beginning to change.

Finally, Americans tend to think that “more is always better”. Larger servings in a restaurant, bigger cars, bigger homes, etc. And when it comes to healthcare, patients in the U.S. tend to think that “more care is better care.” They are wrong. Every medical product and service carries some risk. If it provides no or little benefit, the patient is exposed to risk without benefit.

When medical protocols in the U.S. are compared to how medicine is practiced in other countries, researchers have found: —- Much unnecessary spine surgery. The rate of back surgery in the U.S. is five times higher than in the UK. Studies have shown little difference in long-term outcomes for patients who undergo back surgery compared to those who select non-surgical treatment.

The U.S. does more testing than other countries. For instance, the number of MRI and CT tests for every 1,000 people in 2010 was double the average in other OECD countries. Comparatively, there were also more tonsillectomies, caesarean sections and knee replacements. Regardless of how much more nearly every procedure, scan and drug costs; it’s nothing compared to how out-of-whack the medical heroics thrown at Americans in the last stages of life The Cost of Health Care: A Country-by-Country Comparison

Colonoscopies are prescribed and performed more frequently than medical guidelines recommend and are given preference over less invasive tests that screen for colon cancer. Those less invasive tests are not only routinely performed in other countries, they’ve also been proven to be just as effective by the U.S. Preventative Services Task Force.

“We’ve defaulted to by far the most expensive option, without much if any data to support it,” said Dr. H. Gilbert Welch, a professor of medicine at the Dartmouth Institute for Health Policy and Clinical Practice.

In the U.S. many more patients die in ICU’s getting futile care. This is a painful, lonely way to die. In other countries, more patients are treated in hospices or allowed to go home where nurses and even doctors visit them.

Half of all heart surgeries (using stents) do no good. We know which half! But stent-makers and other providers have turned this into a big business.

– Our drug companies enjoy 20% profit margins.

– Our device-makers boast 16% profit margins.

We are over-medicated (particularly older people), and undergo too many surgeries that involve very expensive devices. Medicare covers virtually everything (even drugs that have been shown to be dangerous–until they are taken off the market). If it does not cover all of the newest treatments and products lobbyists would howl– and Congress makes sure that heads roll.

This is one reason why we don’t want to give everyone 40 to 65 a chance to enroll in Medicare. No one could afford it. (This idea was considered in the late 1990s. Do you have any idea how much 40-65 year olds would have to pay for our extraordinarily inefficient and wasteful Medicare system? On top of that and like people over 65, they would have to pay hefty sums for MediGap to Medicare advantage — private insurance plans that cover all of the things that Medicare doesn’t.

Medicare is now beginning to cut back, and over time it will refuse to pays for unnecessary surgeries (heart surgeries, unproven prostate cancer surgeries, and some hip and knee replacements, unless the patient has tried physical therapy first–and losing weight, if possible. (Some people just can’t lose weight, even under a doctor’s supervision.)

Medicare will also stop covering every new drug that comes on market, setting up a formulary and only paying for drugs that are effective — and cost-effective. The same will be true of devices.

Then — and only then — we might talk about letting people 40-65 sign up for Medicare, though in many cases, research on quality of care suggests that they would be better off with the best of our non-profit insurers: Kaiser, Geisinger, etc.

Medicare is a highly politicized bureaucracy and inevitably, Congress dictates what it can and can’t do. Medical guidelines should be set by medical researchers and doctors who have no financial interest in the outcome.

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  1. Gerard Pierce

    It’s considerably more complex than what is described here. My wife is dead after four or five years of what I considered substandard medicare care. (We were separated and she controlled her own treatment.) The co-pays for many of the medical tests suggested were beyond her income.

    When after a month of serious illness (2 collapsed lungs and heart-attacks in the emergency room) she was beginning to gain ground in the rehab program of a skilled nursing facility. Then the allowed number of medicare days ran out. Her application for Medicaid was “pending” when she had to leave.

    The only program that would give her any help was home hospice. She had been gaining ground in rehab. In hospice, she lost ground and died within a few months. Even some of the hospice people stated that her eligibility was borderline — but by dying she proved that she was eligible.

    Medicare is filled with “gotchas” – unless you can afford supplemental insurance. As a separate issue, when we tried to get me power of attorney, I found out that in Nevada, if you are in a hospital or skilled nursing facility, you cannot sign a power of attorney. By the time I did get power of attorney, it was to late to accomplish anything.

    Short and sweet – the current system is a mess, and unless you are caught by some of the gotchas, you will never know the difference. And by the time you do know, you may be dead.

    1. tongorad

      Condolences for your loss, and I was saddened to read of your unjust mistreatment. Your story reminded me of my family’s own dreadful experiences with our country’s health care system. I think most people can relate similar stories of woe and injustice. Why is has to be this way, I’ll never understand.

      At their most vulnerable moments, American families face a vicious gauntlet of gotchas.

  2. Art Eclectic

    Like everything else in America, health care is a commodity. Treatments are sold to the customers most likely to pay (those insured) and the upsell is always present. We at the consumer level treat health care as a service and a right but those in the business treat it like what it is: a business.

  3. RUKidding

    Interesting confirmation of my own long-standing, anecdotal beliefs/observations. Well US sheep, uh. consumers have been led down the garden path – being good little authoritarians one & all – into believing absolutely in Big Daddy/Mama doctor and kowtowing to what they say & tell them to do.

    I don’t have the research, but we all know very well that Doctors are influenced by the drug peddlers in BigPharma, plus I do have some sympathy with how they over-prescribe procedures like colonoscopies & mammograms bc of fear of a big Med Mal suit. That said, if good little do-bee citizens took some responsibility for their health and health care – which we are firmly NOT encouraged to do – then some of this waste would go away.

    Case in point: my blood work numbers starting showing a rise in overall cholesterol levels as I aged, despite the fact of my mostly vegetarian diet + lots of ongoing exercise. My doctor – who does work with me in terms of finding optimum solutions – started to say the work “statins” and I firmly said: NO. We did a few more intensive, specialized blood tests, plus a sonogram of my carotids, and hey presto! No real problem with cholesterol and I had the carotids of (really) a 27 year old.

    Who knows what today or tomorrow will bring. Anything can happen, but really if I hadn’t had the willingness to do some of my own research and the desire to avoid drugs at all costs (some say that statins may increase the possibility of dementia/Alzheimers; not proven; possible), then I could have easily been ingesting statins for the past 4 years or so… needlessly! I’ve also made some slight dietary changes, which did end up reducing cholesterol numbers anyway.

    My goal is to continue avoiding as many drugs as possible for as long as feasible if not until the very end of my life. I have cared & continue to care for some elderly relatives. The amount of drugs they take is staggering. Some may be needed, but I question the amount.

    1. MyLessThanPrimeBeef

      At the end, we are on our own, after spenidng however many hours at work, to keep up with what to eat, how to live, what not to do, what medical treatment to decline, in order to avoid getting sick.

      Who has time afterwards to look into financial crimes?

      Just leave them to professional politicians

      Here, have a soda. You will feel better.

  4. RUKidding

    On a slightly different note: I wonder how much longer the medical establishment will fight care givers in terms of providing all sorts of invasive treatments for the very elderly – such as the story about Katy Butler and her father, where the hospital forced the dad to have a pacemaker installed. Although the Med establishment functions ineffectively & often inefficiently on pay-for-service, with the advancing age of Boomers, I’m wondering if the system isn’t going to go bust?

    I am wondering if there will be less of that dogged insistence on keeping the elderly alive against everyone’s best wishes and insisting on invasive treatments for those who are weak and infirm, where said treatment will do little good. Time will tell. Anecdotally, there seems to me to be a turning tide against prolonged, invasive treatments to prolong life at all costs, no matter what. Time will tell, I suppose.

  5. Dennis Byron

    Boy would I love to have my health entrusted to something called the Therapeutic Goods Administration! I could write a long rebuttal to many of these lefty goo-goo positions — particularly vis a vis colonoscopies and the insanity of Medicare for All — but you just made the message much clearer.

  6. dw

    little wonder that those in their last days will push for more help, and that doesnt mean just the elderly. as that can apply to any age. but we cant imagine a way to look at it realistically. and those at the top dont even have to worry of the insurance or medicare will pay for it. they can pay it for them selves if they so desire. course we also over look that one of the biggest advertisers is the pharmaceutical companies. who will advise you to ask your doctor about their medicine. wonder how many other countries allow this practice. and unless i am wrong. almost no one i know wants to go to the doctor unless they ‘need’ too. and there certainly isnt any financial gain for patients. in fact there usually more pain than gain. so you wonder why some seem to think the opposite? and while there used to be a ‘defensive’ medicine. not sure that it happens any more. as some states (Texas and California for example) have ‘tort reform’ that restricts what patients can recover. and so far it doesnt seem to slow down the cost all that much. and given that insurers gave testimony under oath that their costs for this was barely 2% of all costs. doesnt seem like a big part of the cost issue. and expecting patients to be able to pick treatment for conditions, is similar to letting them fly an airplane with out any training. seems like a prescription for disaster. not that we dont do it, by just not going to the doctor until we absolutely have too. course then there are some states where they dont bother to really control who has a doctor’s license. cause in some, even if the doctor has had a few hiccups (like a few that are maimed, or killed) it takes a long time to pull their license. and they can from state to state, and repeat this.

    1. John Zelnicker

      New Zealand is the only other country in the world that allows direct-to-consumer advertising of pharmaceutical products.

  7. John

    An unspoken area of concern is medical devices. Everyone knows the FDA takes a long time for certification before a device a can be put on the market so medical device companies have set up shop in Europe where the approval process is much quicker. The imported devices come in partially assembled, then re-assembled in Europe and are re-exported to global destinations. Monthly and quarterly results matter big time for the CEOs. Keep in mind some products have profit margins as much as 75% or more.

    You can imagine what happens when things get rushed to market.

      1. Maggie Mahar


        Yes, when the doctor owns the imaging equipment, we know that it used–and overused.
        This is why Medicare has cut fees for tests done in a doctor’s office, with the doctor using his own equipment.

  8. McMike

    Waste, fraud, upselling, unnecessary procedures, perverse incentives, opacity, lack of accountability, conflicts of interest, profiteering – it all runs rampant in health care…

    Yet I remain certain that every single vaccine recommended is essential to the continuation of life on earth.

  9. susan the other

    I’ll just say this about that. As soon as I turned 65 the local docs started to pay attention to me. I wondered, “Why so nice? I’m hardly different than I was last year.” Then I got annoyed with all of them and just quit going. I blew off my mammogram for 4 years; discovered a breast lump; and streaked to the clinic. Long story short, I got the works. Very good care, in fact. Had two lumpectomies, one for each breast and two “you do not have cancer” results. That was nice. But still. I’m still getting the red carpet. It really blows me away. My back went out from mopping the kitchen – really – and they treated me like royalty. MRI, prednisone (wish I’d discovered that sooner – you can drink wine with prednisone!) and etc. Then my regular doc almost recommended spinal injections. I said no way. Remembering that compounding lab in Massachusetts (?) last year that was so filthy it gave 300 people spinal meningitis with a deadly fungal contaminant. Right. I’m not gettin’ any spinal injections, thanks anyway. But if I did it would most certainly be all expenses paid!

    1. Lambert Strether

      The idea that you should get the red carpet at 65 years plus one day, and the usual hell-hope at 65 years minus one day… Well, if you were a Martian, you’d think that was crazy pants. But we live in America, the greatest country on Gawd’s Earth, and everybody assures me that I’m the crazy one. So that’s alright, then.

      1. John Zelnicker

        I will take the contrarian position of assuring you that you are most definitely NOT crazy. The idea the being covered by Medicare makes a difference in how you are treated is most definitely crazy.

    2. Marcie

      Don’t be so happy you had an MRI especially if it was with a gadolinium based contrasting agent. Gadolinium is a highly toxic metal and GE’s product, Omniscan is worse than all the others. In fact it came out at GE’s trial that 25% of the gadolinium from one injection of Omniscan is retained in the body and it is assumed that if gadolinium is retained it is in its free toxic state.

      Bet you didn’t know any of this right? That is by design. Omniscan, I repeat, the worst of all of them, even though all of them are black-boxed by the FDA is still on the market.

      I was also hoping someone would bring up compounding pharmacies. Recently my insurance company has stopped paying for compounded bio-identical hormones. Regarding the dirty compounding pharmacy out of Massachusetts, this is one instance and yet the FDA has decided to regulate the rest of them out of business. This has worked out very well for the pharmaceutical companies. I wonder why?

      Basically insurance companies will only pay for what they absolutely have to pay and in my mind that is better than paying for procedures with considerable risk as in with Medicare.

      Another observation is I too have forgone mammography but I’m someone that really, really ought to be checked because I’m a carrier of a BRCA mutation (think Angela Jolie and her recent surgery). But there are/were blood tests that are less invasive and more accurate than all the scans, however, the FDA refused to approve them and classified them as medical devices, the first time in its’ history they decided to regulate a lab as a medical device. The company Correlogic went bankrupt and this too worked out nicely for radiologists, radiological equipment, surgeons and chemotherapy drug manufacturers. Why, because if you catch cancer early, though a blood test, it would decrease most screening scans, surgical biopsies and chemotherapy drugs. We can’t have that now can we?

      1. Maggie Majhar


        If we had a single-payer system there is a real danger that lobbyists representing the Christian Right and right-to-life movements would persuade Congress to refuse to pay for hospices that allow patients to decide to
        stop eating and taking liquids (under doctors’ supervision) toward the end of life.
        This is only one of many aspects of hospice (and palliative care) that conservatives who like to talk about
        “death panels” would object to.

      2. pepsi

        The nurse told me I drank the contrast faster than anyone she’d ever seen. I have experience with bitter drinks from my time abroad. Free gadolinium for me! Or not free, since the entire procedure cost me 6,665.66 no kidding.

        1. Marcie

          You don’t drink a gadolinium based contrasting; it is injected. You may have dodged a bullet but my understanding is other contrasting agents are also nephrotoxic. Many times these scans are not needed. Gadolinium in its free state is highly toxic and it is anything but free $$ wise. My breasts cost the healthcare system over $50,000 and at one point the radiologist couldn’t visualize the clip due to so much gadolinium. Now that is a lot of gadolinium in its’ free toxic state.

  10. Jess

    Having watched my father die from prostate cancer that spread to the colon, and with other cancers such as stomach cancer, pancreatic cancer, and non-Hodgkins lymphoma in my family tree I have what is called a “familial tendency”. Therefore, I gladly take my tri-annual colonoscopy, thank you very much. Thanks to one such colonoscopy nearly twenty years ago we discovered lesions in my large intestines, traceable to use of aspirin as a heart-attack prophlyactic, that were potential pre-cursors to cancer. Stopped the aspirin, lesions went away. But without that colonoscopy, I might not be here today. And I like being here. Like it so much, I plan to stay as long as I can.

      1. Ditto

        It is not always clear who is high since it can be based on family history

        So if you are the first if which people aware you would be out if luck

        Among other issues with my mothers chance the risk factors were not clear until it was too late

    1. Marcie

      I’m high risk for cancer as I am a carrier of a BRCA mutation. It makes me high risk for colon, melanoma, pancreatic, ovarian and breast cancer. However there are now blood tests that will do what all of these scans will do and more accurate and less invasive. But they are being suppressed by the FDA and its’ paymasters, the pharmaceutical companies.

      Do check it out and help me to force the FDA to stop suppressing science.

      1. Banger

        Those of us at high risk of various diseases due to our DNA need to be aware of a few things. There is some evidence that is increasingly accepted–that these tendencies are triggered by stress and, incrasingly, almost all diseases are thus caused by stress. We do indeed have the ability to die of a broken heart.

        It’s like the fact we have multiple viruses in our bodies just waiting for the opportunity to attack–what causes that attack is stress on the system. Why do some people get cold and others do not? In my experience it seems to have everything to do with stress and things like meaning in life. If you have to you overcome a cold. My wife insists that when she feels any flu or cold symptoms that could lay her up she simply orders here body to not get sick–it seems to have worked for her for most of her life–it doesn’t seem to work for allergies though.

        1. Marcie

          Yes I agree. It’s why I didn’t have a bi-lateral mastectomy, an oophorectomy and a total hysterectomy. At one time in my life I let down my guard. My sister was diagnosed with stage 2 breast cancer and found out she had the mutation. I allowed myself to be fear mongered into getting annual MRIs with the very toxic gadolinium-based contrasting agents and it has taken my quality of life. One oncologist wrote in my file that I was rather fond of my breasts. And one year I started missing my scans and it was written in my medical records (what a joke) that wasn’t in compliance. This wouldn’t have bothered me however it made its way into my long-term disability insurer’s file. Liberty Mutual ultimately denied my benefits.

          This is one sick system and I do mean Medicare and Obamacare.

        2. McMike

          I would add to stress the holy trinity of diet, rest, and exercise. Good diet, plenty of rest, and exercise in moderation.

          Try this the next time as soon as you feel a cold coming on: low carb/low sugar meals, take it easy, think good thoughts, go to bed early, gargle with salt water. I have pulled myself back from the brink several times this way.

          It is my own observation that often when a person cannot “afford” to get sick, they do not get sick. But then once the moment is passed, they end up sick after all. This has happened often enough to be notable.

          1. John Zelnicker

            I have anecdotal evidence that zinc lozenges and/or nasal sprays can be helpful for some people. They work best when started with the first symptoms.

        3. Ditto

          Lord thus s site invites a lot of crazy ideas

          cancer is not a byproduct of stress
          Really dangerous thinking along with the anti vaccination crowd

          Its typical thinking about how much control you actual have


          1. McMike

            Are you suggesting that there is no link between disease and stress & diet? Sounds like you are the dangerous one.

            And you don’t read well either, Banger specifically referred to opportunistic viruses and stress, not cancer.


            Funny you would mention “control” in the negative. Because one attribute that fervent vaccine advocates always have in common is this: an intense belief that they can (and should) control disease, and more so, without consequence.

    2. Maggie Mahar


      Because your risk of developing colon cancer is “above average” you would be a good candidate for a colonoscopy.

      But that doesn’t mean that millions of Americans who are average risk should automatically be referred for
      colonoscopies. This is why evidence-based guidelines describe appropriate treatment for patients who Fit A Particular
      Medical Profile.
      Evidence-based medicine is Not one size fits all.

      1. Marcie

        Correlogic developed a non-invasive blood test for colon cancer that was highly accurate. However the FDA in its corrupt state decided to regulate it as a medical device setting back the technology by over a decade. Proteomics promised to revolutionize diagnostics as the technology could be used to detect any disease in its earliest stages. My guess is the FDA wouldn’t approve it because it would have decreased the revenue of several special interests but mainly Big Pharma.

  11. impermanence

    If it was a priority, the US could have a national health care system second to none. We have the best of everything, except the will to control the crooks that are stealing us blind.

  12. trish

    I don’t understand how she sees the the concept of government Medicare as a cause.

    These healthcare failures (to put it mildly- scams could be more appropriate) are so obviously driven by capture. A government single payer system could be driven by research and cost-control and the desire for humane treatment. Nothing about the present system suggests it can’t be.

    And the public mindsets of think big, more care is better care, haven’t just materialized out of the ether. What’s driven the development of these mindsets?
    And the physicians’ mindset. Sure, some of that isn’t corporate or profit-driven. But big pharma’s already out there pushing in the halls of medical schools. And medical schools get a lot of corporate funding. And surely the students, if not aware early, learn quickly what drives higher income.

    Any government policy intended to protect the public’s interest didn’t create any of these problems.

    1. McMike

      The GOP has spent the last couple decades trying to kill Medicare, along with the USPS.

      Taking away is ability to defend itself is right out of the playbook.

    2. Maggie Mahar


      How would you insure that “a government single payer system was driven by research and cost-control and the desire for humane treatment?”
      Ours is a capitalist society. Under our laws corporations are supposed to put shareholders’ interests first –ahead of
      consumers’ interests. This is actually the law. This is why consumers are always told “Caveat Emptor”–buyer beware.
      In a truly socialist country it would be much easier to set up a government-run health care system that put patients’
      interest first. Sweden has done quite a good job. But Sweden is a far smaller, more homogeneous country. The
      majority of the people share the same values.
      This can not be said of the U.S. Many Americans genuinely believe that anyone should be able to make as much money as he possibly can–even at the expense of patients. Many physicians honestly believe that medicine is a
      business and that they should be able to practice medicine as aggressively as they choose–making as much money as they can–without warning patients about the risks involved in many treatments. This is why they perform so many unnecessary mastectomies, C-sections, back surgeries, etc. etc.
      Under our laws, it is very, very hard to charge a doctor (or a hospital) with malpractice when they over treat.
      There are many conservatives in this country who would like to abolish malpractice altogether– and put the attorneys who bring malpractice suits out of business.
      When I become czarina, I might issue an executive order that creates a humane single payer system driven by research and cost-control with no interference by Congress or anyone else.
      But I don’t see that day coming anytime soon.

  13. The Infamous Oregon Lawhobbit

    The American medical system continues to fascinate – and utterly dismay and horrify – my Taiwanese wife. Things like “networks,” “primary care physician,” and ZOMGWTFBBQ!!!!! the COSTS. Despite the fact that we have Obama-Approved health insurance, our co-pays and out-of-pocket expenses will still allow us to – for other than very routine preventative care – save money by indulging in medical vacations in Taiwan.

  14. Banger

    The whole American medical model of the human body is mainly insane. We are not machines that is less than the sum or our parts. Nearly all disease in the U.S. is caused by a culture that directly and maliciously encourages stress so that oligarchs can more easily control us. Every sort of public and private policy that comes from large and powerful institutions is geared to hurt people as much as possible. The medical industry exists to make money not heal because really healing people would be bad for bidness–they want to keep you alive and full of drugs, of course, but not heal. This is true of the police and the military–they exist not to maintain peace but to increase chaos so that they can earn an ever increasing share of our money.

    We need to see these truths and understand that we need a new system and the old one cannot be reformed to any good effect without.

    Medicare is better that Obamacare it is, in part, rational whereas Obamacare is just very bad. The problem with these systems is they feed resources to institutions that should be eliminated. We need to work for deconstruction not reform.

  15. Jack Parsons

    Ms. Mahar,

    Please address whether the capitation model (HCC, Commercial Risk) changes this calculus.
    An aside: “capitation” means that the Medicare patient is funded per year, with a base value and then additions for various chronic diseases. Treating the patient is not funded directly, the survival of the patient gets the hospital paid next year.


    1. Maggie Mahar


      Yes, capitation can work. This is what “accountable care” is all about: hospitals and doctors are paid lump sums
      (that the hospital and doctors divide) when they provide better care at a lower price.
      But the problem is how to measure “quality”– what counts as better care?
      We are working on this. And under Obamacre we will continue to reform how we measure quality.
      But the fact that “the patient survives” is not a good way to measure it.
      What if the patient survives the surgery and spends the next 10 years in a nursing home in a semi-vegetative state?
      Is that better than cases where the patient doesn’t undergo surgery–and dies?
      IN addition, when the patient dies there are other questions to ask: was it a good death? Was he in pain?
      Was he treated with dignity? Was he allowed to share in decisions about what treatment he would and wouldn’t
      have toward the end of life? Did he have palliative care?

      I favor capitated payments, but just want to point out that it’s not a magic solution. We must do much more work in terms of creating guidelines based on medical evidence–and persuading doctors and hospitals to follow them.
      (Not to mention persuading patients that “more care” is not always better care.)

      Health care reform is a process that will take many years. There are no simple solutions to complex problems–and anyone who tells you there are is lying to you.

      But Obamacare is a start. and I’m hopeful that in 10 years, healthcare in the U.S. will be much better than it is today.

  16. maggie mahar

    Susann the other-
    I found your comment extremely interesting. I received a very similar comment on this post when it was published on
    “Angry Bear.”
    The reader also said that when she turned 65, suddenly she was getting a lot of attention from her doctor–much of it unwanted. His staff insisted that she make an appointment and come in to hear the results of every test–one by one.And there were many more tests But she was no sicker than she was when she was 64.
    One can only suspect that the doctor (and his staff) knew that they could charge Medicare for the visits and they
    would pay “no questions asked.”
    I also have to wonder about your lumpectomies. It turned out that you didn’t have cancer. This makes me wonder,
    was the procedure really necessary? As you know mammograms often lead to “false positives”. The screening
    reveals a tiny cancer in situ that is harmless. In your case, you felt a lump. So it couldn’t have been that small.
    But still, I wonder. . . Couldn’t they have kept an eye on the lump (watchful waiting–which we now realize is the
    best approach to early-stage prostate cancer–rather than going in with a knife?? Maybe not. . .
    I admire you for turning down the spinal injections.
    If a patient is uneasy about a treatment he or she should never just say “okay”. Ask ;questions: What are the risks?
    What are the benefits? Ask for specifics (numbers, percentages. Ask what will happen if you wait, go for
    physical therapy and see what happens? If your doctor is not forthcoming, find another doctor who is willing to
    “share decision-making.”

  17. maggie mahar


    I am very sorry to hear about how your wife died. We all die, of course, but the American way of dying can be cruel.

    One of the problems with Medicare is that it doesn’t pay for hospice unless two doctors certify that the patient is within six months of dying. For this reason, many patients wind up spending only 10 days in hospice before dying.
    Ten days is not enough to do what hospice can do.

    Meanwhile, many for-profit hospices are defrauding Medicare by having two doctors sign that the patient is about to die The hospices then keep the healthy patient on their rolls for six months, and Medicare pays them by the day.
    I don’t know how many private sector insurers are defrauded by for-profit hospices, but in general they are much
    better at detecting fraud. They spend more than Medicare does on investigating fraud. (This is one way that their
    administrative costs are justified. I would like to see them do far less advertising, and spend more on fraud investigation.
    Finally, some private sector insurers (including Aetna) will let patients go into hospice and continue receiving treatment. They also don’t wait as long before approving hospice care. They have found that this saves money
    (hospice care is not as expensive as an ICU, or more chemo) and sometimes the patients live longer even as they taper off from aggressive care.
    Medicare is thinking about changing its hospice rules, but this is an example of how it is slower to innovate.

    1. Marcie

      Maggie Mahar, I’m a huge fan of yours. I just started reading your book, Profit-driven Medicine. I learned about you through research. I was looking for an author that agreed with my thinking and it took me a while but I found your work in line with my experiences. I used to audit for the DHHS/OIG/OA so I learned about profit-driven medicine early in my career.

      I also belong to ProPublica’s patient harm group. Most of the victims on there have been injured in horrific ways. However, they miss the connection between profits and their injury.

      1. Maggie Mahar

        Thank you so very much. It always makes me happy to hear that someone out there is reading the book.
        (It took me three years to write it, working 7 days a week. )
        It will never be a best-seller. (For one thing, it’s long. For another it’s a story many people don’t want to hear.
        My publisher’s sale-force called it “depressing.”
        But it’s good to know that after 8 years , some people are still reading it. This is how we make progress–
        incrementally, one person at a time.
        Unfortunately, you are absolutely right. Preventing “adverse events” that hurt patients are just not a top
        priority in the minds of many hospital CEOs. Too many of them are businessmen who think that their main
        job is to “grow revenues”.

        Good to know that you’re out there working on this. Pro Publica is an excellent organization.

  18. maggie mahar

    Art Eclectic–
    Healthcare should not be treated as a commodity–or a business.
    (This is the theme of my book “Money-Driven Medicine”
    But not all doctors treat it that way. Here are two stories:
    I have a fairly deep “frown line” in between the top of my nose and my left eye.”
    I asked a dermatologist who I see for another condition whether she thought I should try Botox
    (Normally I wouldn’t do anything to my face. But I hate to look like I’m perpetually worried.)
    She explained that she could use Botox on it, but it wouldn’t come out perfectly (it’s pretty deep) and it
    would be very expensive. She said “IF it really bothers you I’ll try it . . .but”
    I greatly appreciated her candor and, of course, didn’t do it.
    Story #2– For many years I went to a very expensive eye doctor who treated me for Glaucoma. He insisted that I come in to see him three times a year. IF I didn’t he yelled at me: ‘Do you want to go blind???!!
    He also prescribed very expensive eye drops.
    And of course, he didn’t take insurance. New York Magazine named him bone of the best doctors in Manhattan, and
    patients flocked to his very well decorated office.
    Finally, I just couldn’t stand dealing with him any more. So I asked a friend who is a hospitalist to recommend an eye doctor. He sent me to a youngish doctor from India. After examining me he said “I don’t think you have glaucoma.
    If you had been suffering from glaucoma for as many years as you say, I would be seeing much more damage . . .
    I”me not a glaucoma expert but you should see someone you is.”
    So I found a glaucoma expert, and she agreed: it was very peculiar that there was so little damage.
    She proposed tapering off the eye drops, which we did over the course of a year. I saw her every six weeks, then
    every two months.
    That was about 8 years ago. Guess what: I don’t have glaucoma.
    The two stories show that not all doctors view healthcare as a commodity or a business.
    Or maybe women doctors are less likely to be money-driven?

  19. Maggie Mahar

    RU Kidding–

    I (and my husband) are with you on avoiding meds unless absolutely needed.
    His doctor insisted on statins. He tried them, didn’t like the way they made him feel, and stopped
    taking them. That was years ago. He’s fine.

    He grew up in a first-generation Sicilian family where food was always fresh, purchased the day it was eaten.
    Home remedies were as close as his family came to American medicine. (When the boys broke their arms his
    grandmother would whip up a cast using egg whites and gauze.)
    Remedy for a cold: fresh orange juice with a little whisky. The children were then put to bed, with a second pari of
    pajamas laid out for them so that they could change during the night. (They would wakeup soaked in sweat–and be much better in the morning.)

  20. Chris Herbert

    Read the NYT bestseller ‘Wheat Belly,’ by William Davis, MD., if you want to get really bullshit. The worst food you can eat is wheat. You know all the ‘heart healthy’ grain carbs doctors advise their overweight patients to eat. This genetically modified to a fare-the-well grain spikes your blood sugar higher than pure cane sugar. And that sets up a series of biologic chain reactions that produce visceral fat (wheat belly), triglycerides and small LDLs which give everyone atherosclerosis and heart attacks. And this new wheat is addictive, just like cigarettes! It’s the closest thing to pure poison in a food. And doctors prescribe it to their patients who are obese! Unbelievable incompetence. I get why ethically challenged food/antibiotic/pesticide/herbicide companies love wheat–its a money machine. But why are MDs going along?

  21. financial matters

    “Medicare is a highly politicized bureaucracy and inevitably, Congress dictates what it can and can’t do. Medical guidelines should be set by medical researchers and doctors who have no financial interest in the outcome.”

    Even better I think would be a ‘lay’ panel with medical advisors. Single payer can certainly have abuses but I don’t think we should look to private insurance companies to patrol these problems. Too much conflict of interest. (as there is with doctors completely running the show.)

    As Yves pointed out guidelines can lead to increasing profits rather than increasing good care. Medicine is an art as well as a science but doctors need to be able to justify themselves if they step outside well thought out guidelines. Putting the patient first resonates well with first do no harm.

    As has been pointed out with new drug development, a lot of public money often goes into developing these and they shouldn’t generate private profits. I think we can afford good medical care as a society but as Maggie points out we need to clean out the waste and abuse.

    1. Maggie Mahar

      Financial matters-
      I agree that, on the whole, insurance company executives should not be trying to develop evidence-based guidelines for best practice. They have a vested interest in the outcome.
      Though doctor who work for places like Kaiser Permanente and Group Health Cooperative in Seattle could be
      on such panels because they are on salary– their income would not be affected by the guidelines.
      Retired doctors also could be on such panels, along with nurse practitioners, pharmacists, and physical
      Patients also should have a voice, but we need to remember that medicine is extraordinarily complicated: by definition it is as
      complicated as the human body and the human mind. For this reason, “lay people” should have a more limited role.
      I have ideas about medical ethics and how we could better care for patients, putting more emphasis on “care”
      rather than “cure”. But it would be irresponsible of me to try to decide whether a particular drug would be good for a patient who fits a particular profile. I just don’t know enough.

      1. financial matters

        Thanks for the response. I think medicine works best as a social issue which is why I think lay people are so important. Death and dying, end of life care, provision of free clinics for prenatal care, experimental treatment with limited effects are probably too complicated for physicians and others in the medical field.

        They know the technical issues but applying them to a population seems to be more of a social issue. What level of care do we really want for ourselves and others? Should it be dependent on whether or not we have a job?

  22. Ditto

    I find the anti science fringe that these sorts of articles invite a little scary

    Law for the topic at hand the issue is a complex one with certain tests

  23. Seal

    I agree totally about the waste AND I have 2 hip replacements from one of LA’s top orthos (Yun) and hike 20-40 miles/week in the SM mountains.

  24. Bobito

    The anti-science fringe are not a fringe. Ignorance is widespread. Lots of healthy well-educated people take their multivitamins every day. The intrusion of politics and ignorance in the allocation of medical resources is minimized by a singular system that makes healthcare universally available. It provides the basics, the fringe can consult specialists and quacks as they like. The difficulty is to sell such a system to a population convinced of the evils of anything that smells of socialism and convinced of the benefits and virtues of private control versus government control.

    The problem is that the correct solution, universal public health care, puts a lot of big businesses out of business, and cuts into the profits and earnings of lots of people in the medical industry. Imagine the howls from surgeons when their salaries are brought to reasonable 5 figure levels comparable to those of teachers. Putting insurance companies out of business is more than a minor social problem in its own right.

  25. LAS

    The Medicare Payment Advisory Commission (MEDPAC) has done excellent research into system incentive problems and been sending these reports to Congress for years, including therewith solutions about how to fix Medicare incentives and cost proliferation. These reports are publicly available. But MEDPAC recommendations don’t seem to get enacted and vigorous gov. response is rare. Private industry responds to MEDPAC recommendations sooner than US gov, either to adopt the idea for themselves or to devise a loophole/exclusion. The government pays for this research and then sort of drops the ball on the implementation. Almost as if they’re identifying opportunities for private business, rather than serving population needs directly with public funds collected in taxes. It may be neo-liberal policy to avoid the welfare state role. There’s a lack of will.

    1. Maggie Mahar


      I’ve been reading MedPAC”s reports for years, and they are outstanding.

      And you’re right, sometimes the private sector implements their recommendations and government doesn’t.
      This is because it is much, much easier for non-profit company to decide to do something based on what would
      be best for patients. It doesn’t have to persuade Congressmen (many of whom know nothing about medicine–many of whom know nothing about many things). And it doesn’t have to persuade shareholders.

      This is why I am such a fan of non-profit, private sector medicine.

      Finally, here is the good news: The Patient Protection and Affordable Care Act actually includes many of MedPac’s
      recommendations. I have read the legislation more than once, and it is filled with policy that comes from the MedPAC
      reports. This is because many of people who led reform– Ted Kennedy and his staff, Jay Rockefeller and his staff,
      Nancy Pelosi and her staff, etc. etc. etc. were very familiar with the reports, and listened to advice from folks like the
      researchers at Dartmouth who have been writing about waste for decades (led by Drs. Jack Wennberg and Elliot
      Fisher). The Affordable Care Act builds on what people who worked on the Clinton’s health care plan understood, which in turn built on what Ted Kennedy (and even Richard Nixon) understood about what we needed to do. (Kennedy and Nixon almost had a deal to put forward a good health reform law back then– but then Watergate
      exploded, and Nixon no longer had the political capital to do anything.
      In other words, the ACA wasn’t something that politicians dreamed up over a couple of years. It reflects decades of
      clear thinking about health care policy. And that is why it is so long and complicated.
      The reformers did not get everything they wanted. For instance, Jay Rockefeller really wanted a provision that
      would let Medicare negotiate with drug makers for much lower prices (the way every other government int eh
      developed world does.)
      But I think that will happen–though probably not for another two or three years.

      1. LAS

        Thank you so much, Maggie. You are absolutely right about the ACA having some very good provisions beyond the insurance mandate. The difficulty is that while some of ACA’s great stuff is passed and authorized, it is cut off at the knees from proceeding by conservatives on the appropriations committee, starving the provisions of allocated funding. Also, I think ACA was much too ginger in its Medicare reforms. The provisions are actually low cost but some Congressmen don’t want to cooperate. Allocated funding is a great thing to have achieved but legislation doesn’t come to pass unless the appropriations committee follows through. The public needs to insist to legislators that we need DEDICATED funding for cost saving and health quality measures to be fully implemented, so that we don’t have to watch these measures wither to nothing from lack of appropriations committee support.

  26. AT

    The flip side of incentive to do procedures is incentive not to. As a Kaiser trainee I remember the frustrated families who knew we should be more aggressive treating their parents, but in large part due to cost, were not. Partners there received a bonus ordering fewer tests, and for withholding therapy. I was on salary, but the peer pressure for senior partners who ordered “too many labs” was obvious and spoken freely of. It fostered a culture among the doctors of doing as little as possible to treat the patients in order to get the best paycheck. The term used was “therapeutic nihilism”. Some withdrew passively into that reverse incentive, leaving most of the work to interns and residents, just co-signing our notes without comment, but intervening quickly if we tried to order too much or veer from the cheapest therapeutics. Most did try to fight the system and care for their patients appropriately, but it was always against a headwind. When I finished training and left the HMO to fee for service private practice, one of my colleagues dismissed me only half jokingly as a “shark”.
    Don’t be naive about incentives and be careful what you wish for. The system must be designed for the best and most durable results. Sometimes you need to incentivize aggressive interventions to avoid future problems, other times withholding them.

    1. Maggie Mahar

      I have known and talked to many doctors at Kaiser. I have never heard anyone claim that Kaiser doctors do
      as little as possible in order to make more money.
      I also have read Consumer Reports ratings of insurers and HMOs. CR uses AHRQ data as well as patients
      reports on “patient satisfaction” Kaiser comes out on the top of the heap every time (CR publishes these reports
      Patients who sign on with Kaiser tend to stay with KP for decades. And turnover among doctors is very low. I also have known patients who had Kaiser and were very happy with it.

      Clearly you were not well suited for Kaiser. But you are in the minority–most doctors who train there want to stay.
      Is this because they enjoy watching patients die? I doubt it.

      A great deal of medical research shows that our style of practicing medicine is too aggressive. And our outcomes are, by and large, no better than in countries where medical practice is more conservative.
      Of course, there are always families who want doctors to do more—everything possible—for patients when they are dying. But when palliative care specialists talk privately to the patient, the patient himself often doesn’t want
      “everything possible” But he fells under pressure– from his family, from his oncologist, whoever. . .
      Palliative care specialists then spend a great deal of time talking to families, explaining that it is the patient’s
      decision. He or she is the one who is suffering.
      Why do families tend to want more aggressive care?
      Research shows that especially when a parent is dying, middle-aged children are struck with a keen sense of their own mortality. When you mother and father are dead, the last barrier between you and death has fallen.
      You know that at some point down the road, your turn is next.
      Death becomes a reality.
      Americans are so very afraid of death that, too often, we urge doctors to torture our loved ones, just to keep them

      1. AT

        Perhaps they have dropped the reverse incentive. It was no secret at the time. The more tests they ordered the lower their salary. A friend of mine works at Kaiser and I’ll check if this is still operative. At the time, it was obviously just unethical. But I want to emphasize the majority tried to do the right thing. It is the outliers who cause the problems, both doing too little in HMO’s and too much in fee for service. That’s why the conspiratorial tone in this thread is so annoying. The majority strive to do the right thing.
        Kaiser patients were happy in part because they paid nothing once they received care. It was getting in the door that was the problem for them. And in real life, once I left there, the cacophony of complaints I heard on morning rounds just disappeared in my new fee for service job.
        One reason MD’s stayed with Kaiser was the generous pension. If you went directly from training and came on board you got credit for much of the time you already worked there as house staff. It was a military style pension; put in your 20 years, less if you trained there, and retire with a nice lifelong salary. But I was not suited for that. I also left Kaiser to get back to my rural roots, but admit it seemed distasteful turning in charge cards after training there.
        And of course no one talks about how great the VA system is anymore in these discussions. It was the same propaganda about how happy patients were and how cheaply they could do it. It’s simple: withhold therapy and it’s much cheaper to deliver care. Although trying to gag doctors who are whistleblowers, I don’t remember that happening at Kaiser.
        Give you an example of the house staff’s lack of respect for the reverse incentive system: at the last graduation party I attended with house staff and attendings, a first year class member got up on stage, asked rhetorically what the big K on the ads meant, held out his arms and legs in a K shape, threw his arms up in the air, saying “NOT MY PATIENT”!! Trainees were amused, but stunned he would be so blatant. Attendings, not so much amused.
        Again, don’t be naive. It is just as pernicious to pit the doctor against the patient with incentives to do less as it is to do more. I’m struck by the complete sense of denial on this thread and others I have read about doctor’s incentives ability to be a double edged sword. And as for end of life discussions and trying to ram procedures down dying people’s throats…I’m sure there are a few real sharks out there but the real problem is getting the family to accept doing less, not the other way around.

  27. Yellowrose

    If one third of Medicare spending is waste – then by extension at least 75% of spending by the rest of the health insurance industry is wasted – because they don’t get the reduced pricing of Medicare (paying at least 25% more) and they have the massive marketing overhead (est. between 25-33%).

  28. Maggie Mahar

    Yellow rose-
    Your numbers are totally wrong.
    Most insurers are publicly traded companies.
    If you look at their annual reports who can see how much of your premium dollars are spent on advertising,
    how much goes to doctors, hospitals, etc. to pay for your care, what precent of premiums are spent on billing, what percent of premiums are spent investigating fraud, etc. etc. etc.
    You can also see what percent of premiums are “profit”– on average, it’s about 3%. That’s right, just 3 cents out of
    a premium dollar wind up as profits.
    For a great many many years, I worked as senior editor at Barron’s and read many of these annual reports.
    This is one reason why I would never buy a health insurance stock. These companies just are not very
    profitable—except when the bond market is strong and they invest the premiums in bonds until they have to
    pay out the money
    Unfortunately, a great many single payer advocates either don’t understand math (or the basics of profits, losses,
    and business) or they lie about the numbers. I know that “lie” is a harsh word, but I have known a couple of
    very bight, honest people who are involved in PNHP and agree that too often PNHP supporters just don’t seem to
    understand–or don’t want to understand–the math.
    Compare insurers’ 3% profit margins to the drug-makers & device-makers profit margins. That’s where the money is.

    Finally, under Obamacare, insurers must pay out 85% of premiums for healthcare when they are insuring a large group, 80% when they are insuring a small group. (Administrative costs are much higher when insuring a small group.) And “healthcare” is strictly defined. For instance, insurers wanted to count the $$$ they pay brokers to sell their insurance as part of the cost of “healthcare.” Reformers said “NO” (Insurance companies were very unhappy about this.

  29. pepsi

    This is a little off topic, but my good friends work in research. And the stories they tell me about clinical trials would make your hair stand on end. At least 50% of studies that go to trial are fudged to give positive results. And once the trial is ongoing, all stops are pulled out to make sure it turns out the right way. There’s no wonder why no study seems to be repeatable in neutral conditions.

    1. pepsi

      And they tell me the entire institution of american medical research is broken. That it could be fixed, but right now it’s broken, and everyone, from the government, to people donating to medical charities, are getting fleeced.

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