This article was originally posted on the American College of Emergency Physician’s Blog, The Central Line ( on March 20th, 2013.

As I recently finished another year of working shifts in the Emergency Department, I reflected on the health care reform pros and cons from the up-coming, wide-ranging implementation of the government’s Affordable Care Act (ACA).

As a whole for Emergency Physicians, from a financial standpoint the year 2014 will bring us many reasons to cheer: millions who were previously without some form of health insurance will now have coverage and thus the ability to pay. This is a win as any emergency department is required by law to see and treat anyone regardless of their ability to pay; those without means will now have means. But, if one digs deeper several flaws become apparent. The two most notable is the fact that the ACA maintains the outdated link of health insurance to employment (after all, what does being healthy or sick have to do with being employed? The two are independent of each other) and it shields the healthcare consumer from the real costs of services, leading to overconsumption.

To elaborate on the second point, let’s take a step back. The healthcare industry is the only business in this country where access to basic, routine services requires insurance coverage. If you need on oil change, you don’t call your automotive insurance carrier, but go to the mechanic of your choosing and then pay for the aforementioned services. There is no middleman, just you and the automotive shop. Your insurance only kicks in, let’s say, if you’re in an accident or if a major component of your vehicle breaks down and requires a costly fix. This is a valid, functional model. But, when this model is applied to all encounters, problems arise. Costs will inevitably have to go up, because the scope of services the insurance covers is vastly larger. This inescapably puts the cost of basic care out of reach for an expanding group of people. The fact is, the very existence of health insurance is what’s pushing rates into the stratosphere and causing costs to skyrocket.

How can this be so, you ask? Very simple. In a normal “insurance” circumstance, you, the payee, is given a fixed sum in the event of a catastrophe. So, if your 5-year-old car gets smashed in half by a falling tree, you get a check for a fixed sum. For this benefit, you would be required to pay a fixed annual fee. In the healthcare industry, instead of the insurance company paying a fixed rate for a service, guess who sets the price? You got it, the doctors and hospitals do. Hence, demand (the price of a service) is set by the doctors and hospitals, which is a perversion of normal economic principles.[1] This allows healthcare personnel to increase prices without any limits, causing an exponential increase in healthcare costs. This is so because the patients are shielded from the real costs, and the third parties (insurance companies) pick up the tab. Moreover, any system that is fee-for-service incentivizes doctors to do the procedures that yield the highest insurance reimbursement (and as often as possible). Therefore, something that should be aimed at making people better has transformed into a business transaction where physicians have become “providers” and the patient’s “consumers.” The ubiquitous use of said language is not accidental.

Let’s say you walk into Jiffy Lube and the clerk tells you an oil change is $10,000. Any sane person would walk out and find a better price at a reasonable shop. But, what if everyone had automotive “insurance” and no matter what you had done at Jiffy Lube, you would only pay a “co-pay” of $10. Now, the shop charges your insurance company $10,000 and perhaps “only” receives $3000, for a “cost-saving” of $7000. And guess what? The poor old schmuck who has no coverage better learn how to change oil for himself or fork over ten grand. From this example it is clear to see that since you don’t have to pay the full cost of service, you have an incentive to go to this shop as much as possible and have as much done as possible.

Accordingly, I wholeheartedly support physicians in the medical establishment and all the work that they do. After all, it is the diligent and meticulous work of these fine individuals who assist in the care of the nation as a whole. A mobilized legion of doctors, each attempting to “do no harm” forms the backbone of a healthy society, and no one can deny that without physicians and their know-how we would all be living in the dark ages when it comes to health and well being. I specifically have to tip my hat to everyone who provides emergency medical care, for these exceptional individuals serve on the front lines and provide for the acutely ill and those patients who are most in need.

However, that being said I will be blunt: the financial process described above has the potential to corrupt us, the doctors. It’s the natural consequence of a flawed system. We are incentivized not to deal with the patient and their problems but to maximize every encounter from the standpoint of billing for our own economic gain. If an admirable doctor refuses to obey this perversity, he will certainly write his own fate. Most people don’t know this, but every time a patient sees a doctor, the interaction is boiled down to a series of billing codes, referred to as ICD (International Classification of Diseases). So, if John Doe visits Dr. Brown, the office visit results in a series of codes dependent on Mr. Doe’s diagnosis and the procedures performed. The more codes and the more complex the codes, the higher the billing (The art of billing has now become so integral to the practice of medicine that medical schools offer courses whose sole purpose is to teach how to bill more efficiently and effectively. For instance—did you know physicians are paid more the more body parts are examined?). In the emergency department for example, all encounters are broken down into levels 1 through 5, and each has a corresponding five-digit code. If you jam your pinky finger, that’s a level 1; if you’re having chest pain and need blood work, an ECG and a chest x-ray—that will be a level five. People who are terribly ill and require even more attention have even more extravagant codes assigned to them called “critical care”. Now, let’s think about this realistically: if the doctor has a patient’s chart and can dress it up to a higher level of billing, what is he incentivized to do?

Ironically, the government has pushed, and even paid for, the use of Electronic Medical Records (EMRs), and created requirements for documentation (the doctor’s chart) that can only be met by using an EMR. This has forced some physicians to direct energy away from patient care and hire individuals and consultants whose sole purpose is to master the EMR in order to maximize billing. The government, then, has subsequently turned around and penalized doctors and hospitals when they ask to be compensated for caring for patients! Essentially, the harder you work and the more productive you are, the greater chance of scrutiny and penalty.

There’s another side to this issue. There are millions of family practitioners, general practitioners, pediatricians and internists who perform an invaluable service as the primary gatekeepers in the delivery of medical care to their patients: wellness management. They spend countless hours counseling, obtaining histories, education and many other things of the sort that equip patients with the tools they need to actually get better. But guess what? All of these wonderful services are not procedures, so these docs are reimbursed peanuts or not at all. Case in point, my wife is a pediatrician who spends countless hours counseling young girls on what to, and what not to do in order to place them on a path towards wellness. If she spends 60 minutes for each patient going over eating habits, sleep habits, medication counseling, social support networks, contraception management, general education, safety in the home, nutrition, drugs, exercise routines, depression screening—guess what she gets? Next to nothing. Now, if the same young patient were to have an echocardiogram (ultrasound of the heart) or a broken bone fixed, then the dollars start coming in.

Alas, this entire bureaucratic system had mechanized the entire doctor-patient relationship by adding a layer of complexity that consumes time and takes away from the physician’s real purpose, which is to sleuth out a problem and initiate the appropriate treatment. With his energies focused elsewhere, the physician will spend less time actually caring for the patient.

At the end of the day, the ACA should be renamed the pay the healthcare industry act, because now millions of uninsured will have their bills paid by the government, and line the pockets of doctors, hospitals and pharmaceutical companies. Remember, the main goal of the ACA is to provide coverage, which has nothing to do with promoting health. I could also “create jobs” by paying people to dig a hole to nowhere in my backyard, but that does not increase wealth or produce anything of value.

And let us not hide the truth: can any rational person expect a bill that increases the size of the healthcare industry to make people healthier? Absolutely not. If people aren’t sick, there’s no market for the medical field and no money to be made. Realistically, the medical field is very good at disease management but not wellness management. If you walk into my emergency room, I can do many things to make you better but have little to offer if you ask, “How do I stay well?”

The single greatest factor that determines whether we go to see a doctor is if we have health insurance. A little more than half (57%) of adults 18-64 who don’t have insurance will not go to see a doctor. Compare that with 10% of Medicare recipients and 6.5% of private insurance carriers. One can now see what will happen when millions more people have coverage and the number of physicians remains relatively the same: rationing of care, longer wait times, ER overcrowding, and a redistribution of wealth to the healthcare industry. If anybody thinks healthcare is pricey now, wait until it’s free.

The solution you ask? End the government’s subsidization of the healthcare system, allow patients to be directly responsible to pay the cost of routine care subsequently having the market drive costs down, allow the allocation of pre-tax dollars into Health Savings Accounts (HSAs) for a rainy day fund, and leave “insurance” for what it was meant for—extreme and unexpected circumstances in the untimely illness of yourself or a family member. In the end, we all live in a so-called free society, but my freedom should never infringe upon anyone else. As such, no one has the right to healthcare, just as no one has the right to a Mercedes or a beach house in the Florida Keys. What we all have is the responsibility to ourselves and families to keep the end in mind and to lead healthy lifestyles; to act wisely by engaging in behavior that promotes longevity, and destroying the self-destructive and immature concept that someone else should take care of us all. That is how we can do no harm.


 C. H. E. Sadaphal, MD, FACEP


[1] Say’s Law (Jean Baptiste Say) states that there can be no demand without supply. In this perverse example, the supply (doctors and their services) remains the same while demand (cost) increases on a whim of the providers.

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  1. Health Services Researcher says:

    This is a persuasive post – in plain English, for a non-medical reader. It would be even better with some citations.

    I must admit, I was with you almost to the end. I agree that the ACA is probably not going to help much, although there are some provisions that may nudge things along, and I think it was probably the best we could get in a crazily partisan environment.

    I figured surely you’d be advocating a single-payer system by the end (single-payer, risk-adjusted capitation is what I favor). Your approach might actually be more appealing to a lot of Americans.

    Unfortunately, when you make people responsible for the cost of care, lower-income people will tend to avoid getting preventive care. Also, you seem to forget that lots of people hate going to the doctor — it’s embarrassing, it’s uncomfortable, and you often have to through some painful treatment. If people also have to PAY for primary care visits, then lots more people will stay away and not get the potentially lifesaving preventive care they need.

    • CHE Sadaphal says:

      In the quest to do no harm, I agree that there is always room to help and assist the economically depressed, I just disagree with the current paradigm on HOW to go about doing it. That being said, in the ED, I never have to make the choice of “not taking insurance” or shunning people away because of the lack of ability to pay. The beauty of any ED (although not meant to replace primary care) is that access is guaranteed 24/7/365.

      But your point about people not wanting to pay is the exact problem at hand. Once we use insurance as the vehicle to secure access to routine care, that’s when costs skyrocket. Furthermore, as adults we all bear ultimate responsibility for our own health and well-being. If access to routine preventative care is established and also made economically attractive, at the end of the day it takes the adult decision of John Q. Public to come in and see the doctor. If he elects not to pursue that option, he has a right to do so, but as with anything else in life there will be consequences.

  2. James says:

    Very thought provoking. The Obama administration recently stated that they now estimate the premiums on the young and healthy to go up in order to subsidize the cost of all the new older and sicklier patients on the pipeline to be enrolled. One of the first steps on the downward spiral…

  3. CHE Sadaphal says:

    Thanks to Oscar for pointing me in the direction of this article by Steven Brill of Time Magazine (incidentally the longest piece in the history of the periodical):,9171,2136864,00.html. The thought-provoking article goes into explicit detail behind what exactly is fueling the ever-expanding black hole of healthcare spending and the perilous path that lays ahead if drastic action is not taken. It’s worth a discerning read by all but here are some highlights: (1) In the US, we spend about 20% of GDP on Healthcare, compared to about 10% in most developed countries (2) We spend more money on healthcare than the next 10 biggest spenders COMBINED (3) Since 1998, the group spending the most money on lobbying was the pharmaceutical/healthcare industry at 5.36 billion, dwarfing the runners-up of defense (1.53 billion) and big oil and gas ($1.3 B) (4) The approximate $800 billion dollars that the gov’t will spend (2013) on Medicare/Medicaid is the largest contributor to the federal deficit; this figure is exponentially growing faster than inflation and the GDP (6) Chargemasters, or the internal catalogs hospitals use to determine their prices for products and services, often quote figures far exceeding their real costs. This happens because such prices are set internally and have no legitimate market or economic foundation. Hence, a tablet of Tylenol that costs a few cents in the drug store can be billed for $104 at Hospital XYZ.

  4. CHE Sadaphal says:

    Another tidbit of information for all you curious readers (and best of all its a video) so sit back and enjoy:

  5. Shelby Dandridge says:

    Awesome post.

  6. Ann Kempton says:

    The only people who have a positive outlook for America’s future are financiers who want to sell you a dream and individuals that come from repressive regimes abroad.

  7. Kyle M. Burka says:

    Thanks for all the helpful infor. I will be discussing some of these issues in an upcoming lecture …

  8. bobet says:

    Either you’re right and the healthcare system goes bankrupt, or you’re wrong and in 20 years all Americans become healthy and look like models.

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