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The high health care cost is due to a lot of unnecessary procedures being performed. This can happen in two ways.

First, there are a lot of tests and procedures ordered by doctors that only have some, but very small, benefits for the patients [0]. Doctors are incentivized to do this because each procedure has a set price (negotiated with insurance companies and Medicare / Medicaid) and the only way to get more revenue is to perform more procedures.

Second, patients themselves order a lot of procedures out of fear. Arguably, they can be better off without these procedures. A prime example is end-of-life care, where patients and families often want to "do everything possible" even if those intrusive medical procedures bring nothing but a few weeks of miserable living [1]. Those end-of-life procedures are extremely expensive while having questionable benefits in terms of bringing a "happy" life rather than just a longer life [2].

[0] https://www.scientificamerican.com/article/unnecessary-tests...

[1] https://www.npr.org/sections/money/2014/03/05/286126451/livi...

[2] https://www.amazon.com/Being-Mortal-Illness-Medicine-Matters...

Third, doctors order unnecessary but "by-the-book" tests to document things that they already know in case of a malpractice lawsuit.


Insurance (including Medicare and Medicaid) can and do push back against things they identify as inappropriate treatment. There are many problems with this system -- too restrictive in some places, not restrictive enough in others -- but in theory this could be improved to act as a reasonable check on rogue doctors.

Another relevant effect worth noting here is CYA medicine: doctors order tests aimed at catching highly unlikely conditions to protect themselves against the hypothetical lawsuit that asks "why didn't you test for that?" Whatever the truth is about malpractice suits, the perception in the industry seems to be that these cases are overwhelmingly biased against doctors if even one question can be raised about the course of treatment.

Sure, but then the 'bad actor' is the provider, not the health insurance company.

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