The U.S. Medical Industry Is Controlled By 31 People
If you live in the U.S., you know healthcare is wildly expensive. Or maybe you don't. Because you're dead. From not being able to afford healthcare. Supposedly, this is all a natural consequence of the free market doing its job. Who can control that market? It is so wild. So free. Like a majestic Palomino prancing in a glade.
In reality, the price of medical procedures is almost entirely decided by 31 people, all sitting in a room together and throwing darts at a bingo card.
Rachel Murray/Getty Images for Baskin-Robbins
Above: an artist's impression of the room.
The American Medical Association Specialty Society Relative Value Scale Update Committee (nicknamed RUC, because AMASSRVSUC is an abominable Elder God summoned to our plane by successfully pronouncing his unwieldy name) consists of a mere 31 physicians, each representing one of the different medical specialties, but all tasked with deciding what literally everything they do should cost. You might have heard of this practice before, but using different words -- in basically any other industry, it's known as "price fixing," the culprits are called "cartels," and the whole thing is incredibly illegal. In the case of American medicine, it's standard government-approved practice.
Here's how it works (or rather, "works"): The committee assigns every medical procedure a number of relative value units (RVU), which account for the amount of work a doctor performs, the costs to the practice, and malpractice liability.
The ARM (arbitrary random markup) is built into each value automatically.
And though the RUC technically only makes "suggestions," the Centers for Medicare and Medicaid Services (CMS) accept the committee's recommendations 90 percent of the time. Private insurance companies in turn base their negotiations on whatever CMS pays through Medicare. In a healthcare system dominated by fee-for-service payment models, physicians' pay is based on how many RVUs they produce. Three types of specialist -- orthopedic surgeons, neurosurgeons, and general surgeons -- are members of the "Two Million Club," meaning each type of physician makes, on average, more than $2 million a year for their hospital, based on their RVUs.