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Is Your Healthcare a Rip-Off?

Your Healthcare and State Politics

One thing our experience with Obamacare to date has driven home is how differently each state in America deals with its healthcare system. It doesn’t begin or end with whether or not they set up their own health insurance exchanges or refuse to expand their Medicaid coverage as Obamacare anticipated. It goes much deeper than that.

Like politics, all healthcare is local. And the medical culture that dictates whether we get too much or too little healthcare is wildly variable. What follows illustrates the disarray of state-by-state regulation of our healthcare.

Anchored in Greed

In healthcare – particularly in less regulated states like Texas and Florida – it’s not hard for the greed element to take control and “anchor” medical behavior.

Indeed, system incentives encourage it.  When physicians’ incomes are enhanced when more procedures are performed – as they are under fee-for-service payments that continue to dominate in our healthcare – is it any surprise more procedures are performed?

When physicians are allowed to invest in hospitals, surgery, imaging, and radiation therapy centers, is it surprising they overuse those facilities with their better-insured patients and unload poorly-insured patients on the hospitals where they don’t get “a piece of the action”?

As unseemly as that sounds, these practices are common in our most unregulated states – and far more common than unsuspecting patients realize.

One honest Texas physician interviewed for an article in The New Yorker told it like it is – “Medicine has become a pig trough here” – as it has in virtually every unregulated, big-spending region of the country.

Those living in these areas need to be wary of any and all recommended treatments unless they’re able to find an exceptional primary care physician who refuses to participate in such medical corruption.

With reports in the same article in The New Yorker of physicians in even the Colorado county cited as a model for cost-effective healthcare complaining about “leaving money on the table”, it’s clear there’s something seriously wrong with our medical culture – and it’s not limited to Texas and Florida.  

Where Are the Good Guys?

That there are exceptions to such exploitation and defrauding of patients is a double-edged sword: Yes, there are good doctors and hospitals most Americans can choose among – if they’re willing and able to invest the time and energy to find out which they are.

But there’s also the fact that the “good guys” in healthcare have been unable to police their own profession so that rogue “physician-entrepreneurs” don’t become the norm rather than the exception.

As George Bernard Shaw once observed…

“Every doctor will allow a colleague to decimate a whole countryside sooner than violate the bond of professional etiquette by giving him away”.

Only in today’s world, “decimating a whole countryside” translates into “bankrupting a whole country”.

Keep this in mind the next time you hear anti-Obamacare critics carping about their alternative of less regulation and more free-market healthcare. There’s a reason free-market theory backfires with healthcare – as the evidence in this post demonstrates – and that’s because healthcare is unique.

In no other market do its suppliers determine demand for their own services as doctors do for their’s. That’s a formula for the kind of healthcare corruption we’re now witnessing in America’s least regulated states.

Kickbacks Without Conscience

Representative Peter Stark (Dem., Cal.) authored what’s now called the “Stark Bill” over twenty years ago to curtail abusive practices like physician self-referrals (doctors investing in services to which they refer their patients) and the financial “kickbacks” some doctors receive – even demand – for referring patients to a given healthcare facility.

There are many exceptions to that legislation, however, that allow this practice to continue. And many physicians and their lawyers are very aggressive in finding ways to get their “piece of the action” despite efforts to restrict them. 

You probably thought doctors were above such things.

These unsavory practices persist because of special interest lobbying in states where “physician-entrepreneurs” gravitate.

Is it coincidence these are the states that spend the most and have the worst quality results?

Shoddy Medical Practices

The Commonwealth Fund Scorecard[1] included some relevant findings that quantify the extent of regional under-performance in healthcare quality in America:

  • Hospitalizations could be reduced by 30-47% if all states had levels of preventable admissions and readmissions of the better performing states;

  • Hospital readmissions within 30 days varied twofold between the best and worst performing states;

  • Across all states, only 25%  of patients receive basic preventive care (e.g., cancer screenings);

  • Only one-in-three diabetics receive recommended “best practices” care;

  • Twice as many people die of preventable deaths before age 75 in the worst performing states compared to the best-performing states; and

  • Death rates amenable to treatment are twice as high for blacks as for whites nationwide.

If you don’t find these numbers shocking, you need to read this list again.

Up to HALF of hospital admissions and readmissions could be avoided with better medical care.  Moreover, two out of three diabetics aren’t getting “best practice” care and three of four patients aren’t getting basic preventive healthcare.

These are pretty damning findings by any standard. As the study’s authors conclude: “The gaps (between leading and lagging states) represent illnesses that could have been prevented or better managed, as well as costs that could have been saved or reinvested.” 

“Rip-Off” States 

Indeed, the evidence from the Dartmouth Atlas research combined with The Commonwealth Fund’s state rankings by multiple performance measures – including “Potentially avoidable use of hospitals and costs of care” (unnecessary care) – leads to only one conclusion: Some states tolerate, enable, and even encourage levels of excess spending for sub-par healthcare that clearly qualify as “rip-offs” of unsuspecting consumers.

These are listed below, with those also exhibiting poor (lower quartiles) performance on “Prevention & Treatment” highlighted in blue.


Worst performance combined with

worst avoidable Hospital Use and Costs









West Virginia

New Jersey

Washington, D.C.

New York


Source: Commonwealth Fund State Scorecard on Health System Performance, 2009

Note that most of the worst-performing, biggest-spending states are also poor in this quality indicator – further confirmation that more care is often worse care.

While the public is misled into naively believing that easy access to specialists makes our system superior, the truth is that this easy access is at the core of our healthcare over-spending and our excessive medical error rates.

“Watch-Your-Wallet” States

There’s a second category of states that post mediocre results, while still others have decent quality indicators but are big-spenders well above the national average.

These states are listed below as “Watch-Your-Wallet” states (those highlighted in blue have poor ratings for “Prevention & Treatment” as well).


      With Poor Rankings for Avoidable

       Hospital Use and Costs





     South Carolina





     Rhode Island




Source: Commonwealth Fund State Scorecard on Health System Performance     


Most Americans At-Risk

Along with other regional variation data, this suggests at least the 62% of Americans who live in these states are at high-risk of being “overdiagnosed and incurring unnecessary procedures, hospitalizations, and medical overspending. Of course, there are plenty more in the remaining states who are also vulnerable.

And the driving force behind which type of healthcare you receive – conservative or aggressive – isn’t your medical condition, but the type of doctor you have.

When there are 20-fold variations in rates of something as invasive, risky, and expensive as spinal fusion surgery – as The New Yorker article found – you should be pretty skeptical in listening to any neurosurgeon or orthopedist who wants to perform a spinal fusion procedure on you or your loved one.

The same goes for all procedures – and even most medications. Because, with few exceptions, we can no longer naively trust that our healthcare is being provided with our best interests at heart.

The stakes – physically and financially – are just too great to remain so naive.

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