While the healthcare discussion makes it sound like we’re discussing actual healthcare, we’re really not. What we are discussing is healthcare insurance. And a bad reimbursement scheme, whether public or private, gives people lots of lucrative incentives, to goose the statistics. From an article about Medicare whistleblowers (boldface mine):
In 2010, while the investigation was under way, Sewell was moved to a different job at Freedom, in the Medicare-revenue-management department, where he reported to an executive named Mital Panara. In his new role, Sewell was exposed to a different side of the business, including the risk-adjustment department, which assigned Medicare Advantage enrollees codes that reflected their diagnoses. Certain codes and combinations of codes led to larger reimbursements from the government, and it was simple, with modest computer-programming skills, to figure out how to generate the most profitable codes based on the group of patients you had. Of course, companies were supposed to apply codes only to patients who actually had the corresponding conditions, as determined by a physician who had treated the patient.
Sewell quickly noticed many coding inaccuracies, almost all of which were in the company’s favor, resulting in higher government payments. Sewell believed that Freedom was committing risk-adjustment fraud—instructing its internal coding auditors to scour medical records for places where the codes could be amplified, a practice known as “capturing” codes. Sometimes, he later alleged, Freedom pressured doctors to schedule unnecessary appointments and to assign additional codes that the internal data miners thought would be more profitable.
This is not only expensive, but it also makes it much harder to figure out what procedures were performed, and what illnesses were treated. This makes it harder to assess what works and what doesn’t work in terms of healthcare–that is, not the insurance part, but the part where we treat sick people. A functional healthcare system wouldn’t encourage this sort of behavior.