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In Episode 143 of Hidden Forces, Demetri Kofinas speaks with Vivian Lee, President of Health Platforms at Verily Life Sciences (an Alphabet company) about America\u2019s broken health system, how to fix it, and why it\u2019s been so difficult to do until now.\xa0

According to an Institute of Medicine 2012 study, we waste 30 cents of every dollar we spend on health care. That\u2019s over $1 trillion per year. Nearly one-fifth of the US economy goes to pay for health. That\u2019s two to three times more than other high-income OECD nations where health coverage is universal. And yet, our life-expectancy statistics place us 26th out of 35 among those same OECD countries. How is this possible?

What you are going to learn today is that while the solution to America\u2019s broken health system is complicated, the problem is rather simple: our incentives are totally \u201cout-of-whack.\u201d Our fee-for-service system rewards action, not better health outcomes. It encourages overtreatment and specialty care at the expense of prevention and primary care. This is the fundamental flaw of American health care. But this isn\u2019t the entire story. How we pay for healthcare is equally important.

Most Americans don\u2019t buy health care. They buy health insurance. This incentive structure often puts insurers and doctors at odds with patients\u2019 interests. Insurers who pay doctors and hospitals for care are incentivized to spend as little as possible on a patient\u2019s health. The less they payout, the more profit they make. Conversely, in a pay-for-action model, most doctors and hospitals are incentivized to spend as much as possible. This means patients (or more precisely, their premiums) are the rope in an annual trillion-dollar tug of war. Doctors and hospitals pull by ordering more tests and operations; insurers yank back by denying those services or adding restrictions like \u201cprior authorization\u201d paperwork for expensive medication and tests. When hospitals or doctors charge more than insurers are willing to pay, patients can get caught in the middle and be asked to pay the difference, leading to those so-called \u201csurprise bills\u201d that we all love so much. Normally, we could expect market forces to drive costs down in such a highly inefficient system, but the model of buying insurance (not health care) means not only that customers are price inelastic, but that they are actually incentivized to consume as many services as possible since they have already paid for them in the form of a monthly premium. Everyone is shooting in a different direction.

In today\u2019s conversation with Vivian Lee, you are going to learn how America\u2019s health system became so dysfunctional (e.g. defensive medicine, poor primary- and self-care, astronomical end-of-life costs, etc.) and what we can do to fix it.

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Producer & Host: Demetri Kofinas

Editor & Engineer: Stylianos Nicolaou

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Episode Recorded on 06/24/2020