Why is healthcare so expensive in America?

You went to the doctor expecting to owe $50 and ended up owing $500. You pay thousands a year for insurance and still have a deductible. Your bill shows four different numbers and none of them seems to be the price.

In the first episode of Medicine Unplugged, Dr. Bukola Okoro — board certified in internal medicine, obesity medicine, and lifestyle medicine — and Tochi Okoro, an engineer and healthcare operator, take on the question almost everyone asks: why is healthcare so expensive in America?

No sensationalism, no unnecessary jargon. Healthcare explained in plain English by two people who work inside the system.

IN THIS EPISODE

• Why your medical bill has four different numbers on it — charged, allowed, paid, and what you actually owe • Why an Explanation of Benefits is not a bill • How many people are involved in a single doctor's visit (it's more than you think) • What you're really paying for in a 15-minute appointment • Why the same procedure costs wildly different amounts at two facilities • Why your prescription price changes from pharmacy to pharmacy • Prior authorization: when your plan overrules your doctor • Whether we're running a healthcare system or a sick care system • Five things you can do right now as a patient

CHAPTERS

00:00 Everyone has a healthcare story 01:26 A restaurant with no prices on the menu 02:10 What an Explanation of Benefits actually shows 02:56 Billed vs. allowed: why the numbers never match 03:38 How many people touch one healthcare transaction 04:46 What you're really paying for in a 15-minute visit 06:18 Why hospitals cost what they cost 06:52 Same procedure, two very different prices 07:42 Prior authorization and prescription pricing 08:34 Healthcare system, or sick care system? 09:17 What you can actually do as a patient 09:52 Reading your EOB line by line 10:45 Where technology could help — and where it won't 11:26 There is no single villain 11:52 What Medicine Unplugged will cover

READ THE FULL BREAKDOWN https://mytruehealth.us/why-is-healthcare-so-expensive-in-america/

YOUR HOSTS Dr. Bukola Okoro, MD — physician, triple board certified in internal medicine, obesity medicine, and lifestyle medicine. https://mytruehealth.us/authors/dr-bukola-okoro/ Tochi Okoro — engineer, entrepreneur, and healthcare operator.

Medicine Unplugged is produced by True Health. New episodes cover insurance, medications, medical myths, preventive health, AI, and the business of medicine. Subscribe wherever you listen: https://mytruehealth.us/medicine-unplugged/

This podcast is general health education, not medical advice, and is not a substitute for care from your own physician. For questions about your coverage, contact your plan. For questions about your health, speak with your clinician.

Transcript

Speaker 1 0:01

Every one of us has a health care story. Maybe it was a medical bill you didn't understand. Maybe you went to the doctor thinking something would cost $50 and somehow ended up owing $500. Or maybe you pay thousands of dollars every year for health insurance. But when you actually need care, you still have a deductible. So today we're going to talk about a question almost everybody asks. Why is healthcare so expensive? I am Tochi Okoro. I am an engineer, entrepreneur, and healthcare operator.

Speaker 0:37

And I am Dr. Olubukola Okoro. I am a physician, both certified in internal medicine, obesity medicine, and lifestyle medicine.

Speaker 1 0:48

And this is Medicine Unplugged. This is where we have real conversations about medicine, health care, insurance, technology, and the system behind the care you receive. No sensationalism, no unnecessary medical jargon. We want to explain health care in plain English from people who actually work inside the system.

Speaker 1:17

And hopefully help people become better informed patients and better advocates for their own health.

Speaker 1 1:26

Let me give you an example. Imagine walking into a restaurant. There are no prices on the menu. You order dinner, and at the end of the meal, the restaurant gives you a bill for $500. But then somebody says, Don't worry, your dying insurance company negotiated the price down to $180. Then the insurance company pays $100 and you get the bill for the remaining $80. At that point, you'd probably ask, what did the meal actually cost? And that is basically American health care.

Speaker 2:10

And this is exactly what patients experience. They receive an explanation of benefits. The provider charged one amount. The insurance company says the allowed amount is something completely different. Insurance pays another amount, then the patient owes another number. And understandably, they are confused.

Speaker 1 2:34

Because almost nowhere else in the economy do we buy things this way.

Speaker 2:56

Usually, no. What a healthcare provider bills and what they actually receive can be completely different. Insurance companies negotiate contracted rates with doctors, hospitals, laboratories, pharmacies, and other healthcare providers. So a provider might submit a charge for $300, but the insurance company may say our contracted rate is $130. And depending on that patient's deductible, copay, or coinsurance, some of that amount may be paid by insurance. And some may be the patient's responsibility.

Speaker 1 3:38

Which immediately makes health care pricing very different from normal consumer pricing. Everything with insurance is complicated. Now think about it this way: how many people involved in one health care transaction? There's the patient, there's the physician, there's the hospital, there's the insurance company, sometimes a pharmacy benefit manager, about a lab, a radiology company, an employer, and then behind all of them you have bill and departments, prior authorization teams, credentialing, compliance, and administration.

Speaker 4:24

And every additional layer creates more complexity. As physicians, we would love for healthcare to be simple. See the patient, figure out what's wrong, and treat the patient. But modern medicine has an enormous administrative component. What it costs to run a medical practice.

Speaker 1 4:46

This is another part patients don't always see. When you pay for a doctor's visit, you're not just simply paying for the 15 or 20 minutes you spend sitting with the physician.

Speaker 4:58

Exactly. There are nurses, there are medical assistants, front office staff, electronic medical record systems, medical malpractice insurance, rent, equipment, supplies, billing, credentialing, compliance, and before you even walk into the room, someone may have verified your insurance. Someone may have reviewed your medications. Someone may have obtained a prior authorization. After you leave, someone may review your laboratory results, send prescriptions, respond to messages, document your visits, and coordinate follow-up care. All of that is part of delivering health care.

Speaker 1 5:52

So when someone says, My doctor saw me for 15 minutes and charged $200, there's a much larger infrastructure behind those 15 minutes. Now let's talk about hospitals. Because once you enter the hospital system, the economics become even more complicated.

Speaker 6:18

Hospitals operate twenty-four hours a day. They need emergency departments, operating rooms, intensive care units, laboratories, imaging, pharmacies, nurses, physicians, respiratory therapists, technicians, and enormous amounts of equipment. And much of that infrastructure has to remain available. Even when every bed isn't occupied.

Speaker 1 6:52

But there's another issue: pricing. You can have the exact same procedure performed at two different facilities and see dramatically different prices. That lack of transparency is one of the biggest reasons patients feel frustrated with the healthcare system. Now let's talk about prescription drugs. You prescribe a medication, the prescription goes to the pharmacy. And somehow the amount a patient pays can depend on their insurance company, their pharmacy benefit manager, their deductible, the pharmacy they chose, whether there's a manufacturer's coupon, and sometimes even which version of the medication is covered.

Speaker 7:42

And sometimes the medication we believe is medically appropriate isn't the medication the insurance company wants to cover. We may prescribe one drug and receive a message saying, try these two medications first, or prior authorization required. So now another layer has been inserted between the doctor and the patient. Another major issue is that a huge amount of healthcare spending happens after people are already sick. Conditions like diabetes, high blood pressure, heart disease, kidney disease, obesity, these are conditions that may require treatment for years, sometimes decades.

Speaker 1 8:34

Which raises a bigger question. Are we really running a health care system? Or are we running a sick care system?

Speaker 8:48

But identifying problems earlier, managing risk factors, and helping people build healthier lifestyles can prevent or delay many of the complications that become extremely expensive later.

Speaker 1 9:01

So let's make this practical.

Speaker 9:17

Know your deductible, know your co-pays, know your co-insurance, know your out-of-pocket maximum. Before non-emergency care, ask whether your doctor, your laboratory, your imaging center, or facility is in network. And when possible, ask about expected costs beforehand. If you receive a bill you don't understand, ask questions. You have every right to understand what you are being charged for.

Speaker 1 9:52

And here's another important one: an explanation of benefits. It is not necessary a bill. Look at what the provider charged. Look at what the insurance company allowed. Look at what the insurance company paid. And then look at what the documents say is actually your responsibility. These numbers are often very different. Now, this is the part that interests me as an engineer. Healthcare generates enormous amounts of data, but much of that data lives in disconnected systems. Hospitals have one system, doctors have another system, insurance has another system, pharmacies have another system, and half the time those systems don't talk to each other very well.

Speaker 10:45

And physicians feel that problem too. Better technology could reduce documentation, improve communication, identify high-risk patients earlier, help coordinate care, and hopefully give doctors more time to actually practice medicine.

Speaker 1 11:04

And artificial intelligence could eventually help patients understand their medical bills, compare costs, navigate insurance, and understand their health care choices. But technology alone won't fix health care. You still have to fix the incentives and the underlying system.

Speaker 11:26

Healthcare is expensive for many reasons. There isn't one single villain. There are physicians, hospitals, insurance companies, pharmaceutical companies, government programs, employers, administrators, and patients. All interacting inside an incredibly complicated system.

Speaker 1 11:52

And that complexity is exactly why we created Medicine Unplugged. There are so many things people experience in healthcare every day that no one really explains. So we're going to talk about them: insurance, medications, medical myths, preventive health, artificial intelligence, the business of medicine, and what is actually happening behind the scenes in healthcare.

Speaker 12:24

Yes. Our goal is simple. Give you good information, explain the signs, and help you make better decisions about your health.

Speaker 1 12:37

If you enjoyed this conversation, subscribe to Medicine Unplugged because we have a lot more to talk about.

Speaker 12:46

Until then, stay informed.

Speaker 1 12:48

And stay plugged in to Medicine Unplugged.