1. Money-Driven Medicine: The Real Reason Healthcare Costs So Much
Jaira Burke
Healthcare inflation has become a harsh reality for Americans over the past few decades.
Insurance premiums are rising, healthcare accounts for a terrific 16 percent of GDP (Mahar 7), and a
shocking 41 million individuals were said to have been uninsured in 2013 (Key Facts About the
Uninsured Population). Families, employers, the elderly and young adults are forced to eke out what little
bit of health coverage their pockets can sustain. The culture of money driven medicine has become so
ubiquitous that politicians and constituents alike have grown apathetic to the exponential growth of costs
and have little political will, or the knowledge to even attempt to tackle the issue marginally. The
emergence of the Affordable Care Act has provided much needed coverage to some, yet still falls short of
addressing the skyrocketing costs of healthcare. The healthcare system is leading to a metaphorical doom
if the increasing rate of healthcare inflation that Americans have been experiencing for far too long is not
addressed. But is there a solution? And if so, what are the causes of the many inefficiencies of the
healthcare sector? Can they be avoided? Is universal healthcare the solution? What are other countries
doing that we are failing to do? Maggie Mahar presents an in depth investigation into this troubled
industry, presenting a refreshingly new, yet very valid argument that sheds light on the structural issues of
the healthcare system and explores the main question at hand - is there in fact a solution?
“Healthcare is not a commodity” (Mahar 3). The words blare off of the page in a defiant and bold
black ink. In these brief words, Mahar debunks the total healthcare system, exposing the root of its issue.
The discourse on the healthcare system typically rests on arguments regarding cost control, uninsured
parties, and even flirts with the notion of “socialized medicine” as a potential solution; however, many
critics fail to explore the “contradictions built into our current healthcare system” (Mahar XXI). I
specifically appreciated Mahar’s emphasis on the deep-rooted structural issues that encourage and
contribute to healthcare inflation. The current healthcare system is conducted in an essentially profit-
maximizing model. Suppliers compete for patients investing heavily into expensive “shiny” technologies

2. that are not necessary and patients are left to fend for themselves while struggling to afford the escalating
costs for what can be considered arguably one of the most inelastic goods/services – healthcare. This is
the fundamental issue from which the array of inefficiencies and issues of the current healthcare system
stem from.
In a typical market consumers are able to make informed decisions while making purchases,
however as Mahar notes, this is not the case in the market for healthcare. The principal-agent problem
causes consumers to depend heavily on information provided from healthcare suppliers. But, when the
information is skewed, risks and facts marginalized, potential benefits sensationalized, it is no wonder
that many patients don’t know exactly what they are paying for and what of it they actually do or don’t
need. In remarkably transparent interviews, doctors and other medical professionals provide firsthand
accounts of the prevalence of this practice in the medical field. With healthcare providers acting as profit-
maximizing, competing entities, unnecessary and costly procedures are often offered to patients. Mahar
notes, “In a corporate culture hooked on growth, waste may be a supply-side problem” (137). In
conventional markets, for just about every good in America,consumers are informed and empowered to
make decisions in their best interests, however, when consumers are subjected to having used car
salesman as doctors – impaired by an inherent veil of ignorance, consumers are unable to make decisions
in their best interest and can’t necessarily hold healthcare suppliers accountable like in any other
conventional free market. This is not a necessarily new concept, specific to Maggie Mahar’s research
alone, however it is worth noting.
In truth, supply and demand are caught in a widening gyrem with
rising demand leading to greater supply – which in turn stimulates
greater demand…in the health care industry, more than any other,
supply takes the lead, with the supplier playing a far more active role
in determining what consumers believe they want – or need. (Mahar
137)

3. Another key component Maggie Mahar stresses is the role third party insurers play in healthcare
inflation. Healthcare economist, James C. Robinson states,“health plans are not selfless sponsors
[operating] for social good. They wrestle with purchases for higher revenues, with providers for lower
costs, and with each other for brand name recognition, market dominance and profit leadership” (Mahar
34). In sight of this, it is in the best interest of insurers to see healthcare expenditure rise. Once again the
correlation between the essential flaw of the competition-driven, profit maximizing market for healthcare
is saturated not with practices that improve the quality of care, but with those that maximize profits. With
this being said, it is no wonder consumers pay more for not necessarily quality care,the principal-agent
problem once again reinforcing this dynamic.
Simply put, the issue is healthcare is being treated as a commodity – not a social service. This
leads the way for profit-maximizing practices that are not in the best interest of the consumer, but targeted
solely for the gain of the supplier. Mahar uses relatively common sense logic backed by personal
testaments of healthcare professionals and startling statistical findings in her argument that almost any
audience can comprehend. Although the ideology of healthcare being a right and not a luxury is still to be
debated and outside of the constraints of this tract,treating healthcare as a revenue generating service is
not in the best interest of the consumer. Everything capitalism encourages - competition, checks and
balances between demand and price control, ultimate consumer satisfaction, improved products/services,
has the inverse effect on the healthcare sector. Competition has always been believed to be the golden
ticket for cost control in the open market. However,we see this concept, like many others, does not
transfer to the healthcare industry. “While instead of lowering costs,competition seems only to make
health care more expensive” (Mahar XIX).
Yet, America continuously tries to force the healthcare sector into a capitalist, supply-demand
market structure in which it simply cannot fit. Capitalism is not a one-size-fits-all entity. Of course,this
notion strays away from everything “American” conceptually – America being the patriotic poster child

4. for everything capitalist. There is no feasible market solution for an industry that essentially should be
public sector and requires great governance and cost control. Fee for service medicine inexorably leads to
healthcare inflation, reinforcing the model – the more procedures performed the more profit. HMOs,
coverage providers, HDHPs, and Medicaid/Medicare have all failed to make the fundamental structure of
the healthcare market work. Does it work marginally? Yes. Does it work necessarily efficiently? The
alarmingly blatant answer is no. Yet still we persist, American flag in hand, trying to make an essentially
flawed system work.
Mahar notes, “A pill you take once is good; a pill you take every day is better.” This is the
essential flaw in collaborating the worlds of medicine and capitalism. Capitalism pushes for more. More
procedures, more appointments, more patients, more, more, more – healthcare only needs to meet
demand, not work to generate it. As Mahar puts it candidly, “the system invite[s] extravagance” (130).
Maggie Mahar provides a telling critique on how money driven medicine leads to wastefulspending that
does not necessarily benefit the consumer, hence the prevalence of higher costs for not necessarily better
quality care. Most arguments of the healthcare system simply touch the surface of the issue of wasteful
spending, the administration of unnecessary/unwarranted procedures,and other improvident practices that
lead to overall inefficiency. Mahar makes evident the substantial effect these harmful practices have on
the healthcare industry and identifies this as a central agent of healthcare inflation. Prior to reading this
book, many would not be aware of just how prevalent wastefulspending in the healthcare sector is.
Mahar notes, nearly one out of three healthcare dollars are spent on these aforementioned unnecessary,
superfluous practices and procedures.
Although Mahar provides a very compelling argument supported by a wealth of research and due
diligence, the book at times did become repetitive – reiterating core arguments multiple times.
Nonetheless, Maggie Mahar does a great job of providing an unbiased and logical exploration of the
healthcare sector.

5. Mahar calls for “patient-centered” medicine, not “consumer-driven” (346). However,leaves very
little information about how this could be made possible. However just pages earlier, Mahar toys with the
notion of “consumer driven medicine” (341) and at some points seems to support it as a potential solution
and at others dethrones it, essentially contradicting herself and leaving the reader confused. This was
undoubtedly the most disappointing and unappealing part of the work. It is a waste of time to site years
and years of groundbreaking research pointing to the plethora of inefficiencies and issues surrounding the
healthcare sector and then end the book with a “sort of-kind of” solution. Was I expecting Mahar to have
all of the answers,of course not? But what reads as a half-thought out, poor attempt at deriving an even
minimal solution does not parallel the great wisdom and knowledge presented on the leading three
hundred or so pages of the book. Even the half-hearted attempt at “consumer-driven medicine” as a
possible solution is not a marginally sound argument.
Mahar cites the infinite world of the internet as a source to cure the inevitably unbalanced
knowledge between doctors and patients, citing the vast internet as a tool of empowerment for patients.
This in my opinion is ridiculous and furthermore not viable. Realistically speaking, primarily - the
majority of people will not take the time out or initiative to extensively research generalcare for common,
less severe illnesses. And even when researched,not everything on the internet is credible. Furthermore,
as expressed earlier in the book, medicine is not a one-size-fits-all kind of deal. What works for one
person may not necessarily work for the other and no matter how elaborate or innovative the procedure,
medicine prescribed, or technology used is – there is still no guarantee of a person responding to
treatment and becoming miraculously healed. So while although it may at first seem tempting to site the
internet as the “cure” to money-driven medicine, this is not actually the case. While one could infer that
credible sights such as WebMD and MayoClinic.org, can definitely take great strides in lessening the
severity of the principal-agent problem, it definitely does not have the capacity to completely eradicate
this stigma altogether.

6. Regardless of what information is available, the healthcare industry will always be one of great
uncertainty. No matter how much research is conducted or money is spent on a procedure; there is simply
no guarantee for success. Perhaps,yes,a patient may be more informed while making decisions
regarding their healthcare by investing countless hours into independent research,however,in an ever
changing field poisoned by uncertainty and physician ubiquity – the only viable option is for the patient to
place some form of reserved faith in their caregiver. No amount of ‘google-ing’ can provide the sound
experience and reputable education of a seasoned healthcare physician. More specifically in the case of
care for chronic illnesses (arguably the most stigmatized segment of the healthcare industry) the
assumption cannot be made that patients will be so empowered from the internet that they somehow
become devoid of human emotion, especially fear,doubt, and uncertainty. Healthcare purchases are
unlike any other purchase, because it is an essentially emotionally driven decision. Emotion, a component
that was conveniently omitted from the equation in the fluffy, sensationalized depiction of the super hero-
esque “empowered consumer”, is the most driving force in consumer decision-making in the healthcare
sector.
While overall a highly informational and thought-provoking read, the conclusion of this work was
incredibly lacking in depth and direction. The close of the book leaves the reader with a misty fog of
confusion upon completion. The stark contrast between the profound content of the majority of the book
versus the seemingly hastily crafted conclusion substantially devitalized the read for me, nonetheless,
Mahar’s expertise and matter-of-fact knowledge cannot be debated.

7. Works Cited
Mahar, Maggie. Money Driven Medicine: The Real Reason Health Care Costsso Much. NewYork:
Collins, 2006. Print.
"Key Facts about the Uninsured Population." Key Facts about the Uninsured Population.Web. 1 May
2015.