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Question of the Day - Health Care
By JLP | November 2, 2006
I’m in the process of reading Health Care on Less Than You Think
I think that health insurance itself is responsible for a lot of the increased cost of health care because it takes the “cost” out of the hands of the consumer. When my wife and I first had health insurance I remember our co-pay for a doctor’s visit was $10. It made a doctor’s visit cheap and I’m sure we went more often than we would have had the co-pay been higher. Of course the downside of higher co-pays is that some people will not go to the doctor because they don’t want to pay the co-pay. Keep in mind that with a co-pay, you pay a portion and then the doctor sends a bill to the insurance company for the rest of payment (usually at a lower negotiated rate with the insurance provider). So, although you may only pay $10, the actual cost is something like $75 (or more).
Also, health insurance takes forever for payments to get settled. I took my son in March of this year for some x-rays of his arm after a fall. I JUST paid the balance on that bill last week! It took six months to get that bill settled.
Other factors that I can think of off the top of my head that have contributed to the increased cost of health care are:
1. Lawsuits. The book dismisses this but I think there’s no doubt that lawsuits have cause insurance carriers to raise the cost of malpractice insurance.
2. Overprescribed drugs. This is a big problem with older patients.
3. Personal choices. We eat processed foods and don’t exercise like we should. All of this adds up to poor health.
These are just a few that I can think of. What other factors am I missing? I would really like to hear your thoughts on this issue (let’s try to keep the politics out of this debate).
Topics: Question of the Day |
November 2nd, 2006 at 11:09 am
One of the excuses used in the Boston area is that we have so many high quality health institutions compared to other locations. I would say that would make sense if most people went to these hospitals for care rather than all the smaller medical centers.
Also I think part of the reasons costs are so high is because we mostly use the western philosophy of curing disease rather than preventing disease, and so there’s less of a push for people to be prevent health issues. Although I’ve noticed more health choices that are made for people that live a healthy lifestyle and so are cheaper.
November 2nd, 2006 at 12:36 pm
Funny you should bring this up, I actually just wrote a post today about how much I love my health care. I have Kaiser Permanente and I still have $10 copays plus low monthly premiums and cheap prescriptions (ususally $8-$10). I think their unique business model makes this possible. Everything is “in house” so I’m sure they can control costs much more easily that if they had a large network of physicians. They also focus heavily on preventative medicine. I’m sure there has to be a downside to this type of insurance somewhere, but I haven’t really found it yet. It is just perfect for me.
November 2nd, 2006 at 12:52 pm
I’ve thought long and hard about this issue as I struggle with it personally and politically. I’m a capitalist at heart and want the government out of everything. However healthcare is a very tricky issue as everyone well knows. I think the costs of heathcare is similar to “death by a thousand cuts” If the problem was simple it would have been fixed already. The biggest problem with the economics of healthcare is that you can’t put a price on human life, obviously this is not something we should ever do. Without the cold-hearted cost-benefit analysis your cost can in theory be infinite.
In my opinion I think the best solution is to treat healthcare similar to fire and police protection. Set up county wide clinics to treat common aliments as well as prenatal care with nominal fees paid for by consumers and the rest by taxes. As much as this goes against the grain of my capitalist being I see it as the only way give everyone equal access to healthcare. The more difficult part of this approach is how to you deal with medication as well as more complex treatments for more serious diseases.
Just my 2 cents
November 2nd, 2006 at 1:11 pm
3. Personal choices. We eat processed foods and don’t exercise like we should. All of this adds up to poor health. That’s the nail in the coffin. One of the reasons why its so high is because Americans are in such poor health. I guarantee Gold’s Gym employees have cheaper healthcare than Mc D’s workers
November 2nd, 2006 at 1:11 pm
I think that another reason that heathcare is so expensive is that we can treat so many diseases with new medical and technological developments. Of course, these cost more which increases the cost. Also, with more people having access to doctors and believing that whatever ails them can be cured they are more likely to undergo expensive treatments. I think that the major failing of health insurance is that it doesn’t pay for the expensive treatments very well. The idea of insurance implys that you are paying a little now to not pay a whole lot if something goes wrong. However, even if you have health insurance you’ll end up spending a huge fortune if something serious happens b/c the insurance only covers a portion.
November 2nd, 2006 at 1:42 pm
After months of trying to get individual health insurance (we’d been on expensive COBRA coverage after I left my “real” job to freelance last year; my husband is a contractor so no benefits for him), I dealt with six different big-name insurance companies. One of the most absurd situations I found was that each of them had at least three different offices that were involved in our applications. Three? Can you say duplicated efforts? I suspect a large part of every premium collected goes to support this multiple administrative overhead. I’m not wishing job loss on clerks or underwriters or whoever, but I bet there’s a lot of overlap that could be eliminated that would save everyone (if the companies would pass it along) a lot of money.
November 2nd, 2006 at 2:53 pm
I agree with Kay, the administration costs of health care add nothing but cost and red tape to health care.
I would also like to see a car-like “MSRP cost” for common medical services and procedures, which might actually force the medical profession to cut prices to compete for our business.
November 2nd, 2006 at 3:56 pm
I agree — hiding the costs of health care from consumers is a big contributor. A couple years ago I switched to an HSA (kind of like a high-deductible health plan, where I can contribute pre-tax dollars to an account which I use to pay for doctor visits).
Now, while I will go see the doctor for things I’m really worried about, I simply will not go for minor things. Earlier this year I fractured my shoulder in a bicycle crash. While painful, I knew that the doctor couldn’t do anything but prescribe painkillers. Pain is temporary, but saving money lasts forever
I’m a firm believer that the best health care is cheap. Making people bear the costs of their own health care will, hopefully, make them recognize the benefits of preventative measures. Even the best health care won’t fix the permanent damage we do to our bodies.
November 2nd, 2006 at 4:17 pm
Several reasons:
We are lawsuit-happy as a culture;
We do focus on the “fix” intead of preventive care;
We are the most obese nation on the face of the earth;
There are huge administrative costs associated with US healthcare;
Politics … the constituencies most affected by the state of health care coverage in this country (the poor and some of the elderly) do not have the means to influence politicians.
I agree with Sarah above; Kaiser was excellent when I worked in Oregon from ‘97-’04. Low co-pays and (usually) friendly service. My sinus surgery cost a total of about $75.00 … the actual cost of the operation based on the statements I saw afterward was around $18,000.
Now I am in NC and the legislature, for whatever reason, cannot come up with equivalent quality coverage for state employees. Our choices are pretty lousy compare to OR. It seems to me if you have 10 - 12,0000 securely employed workers, that would give the legislature significant leverage toward negotiating savings and low co-pays with some HMO. IF the legislature had a spine ……
November 2nd, 2006 at 4:20 pm
I read somewhere that there are companies out there where individuals can get a better price than in COBRA or many employer provided plans. I don’t remember the article or magazine, but I think that’s what it said. Anyone out there have any information about healthcare providers that are cheaper?
November 2nd, 2006 at 4:54 pm
My take:
1. We want to live forever.
2. Things that used to kill us now allow us to live long and expensively with chronic conditions.
3. We actually live more healthy lives than we used to, due to less physical work, less smoking, and lower pollution. So, more people get old and come down with expensive geriatric issues than they used to. Now that the baby boom generation is hitting its geriatric age, this stuff will explode.
November 2nd, 2006 at 5:11 pm
Some ideas that haven’t been touched on by other commenters are:
Special interests influence state and Federal legislators to require health insurance policies to carry coverage for a multitude of things that drive up the cost of a policy. States can (and do) prevent their residents from looking for lower cost policies in other states without those mandates.
Health insurance has become “prepaid health care”. Imagine what your car insurance would cost if it covered fill ups, car washes, and oil changes in addition to crashes - and left it up to you to decide how often the car got washed, and oil changed.
American’s demand high quality care and vote with their pocketbooks and feet. Private hospital rooms are unheard of in countries with national health systems, but Americans demand them (I would as well.) In other countries, what they got is what you get - take it or leave it.
November 2nd, 2006 at 6:31 pm
According to govt reports,47 million Americans have no insurance, but they do have medical coverage- free of charge. These 47m go to any emergency room or public clinic and get medical care. Guess who pays for it? The rest of us that have coverage.
I would like to see the govt employee FEHB plan be expanded to include all employees. The FEHB negotiates lower premiums with hundreds of insurance plans. The indivdual then choses the plan that fits his/her needs.
COBRA needs to be extended from 18 months to 5 years. It at least makes insurance available, if not cheap.
These two suggestions would not cost the govt or employers a penny more than it does now. It would force insurance companies and medical providers to stream line the admin procedures and expand benefits to be competitive.
November 2nd, 2006 at 8:45 pm
Originally I thought the ideas was great, but now I don’t buy that HCSA will save much money. They can only change the margins (10% or so). You don’t shop around for the other 90%, the expensive care - emergency and urgent care. Something else has to be done for that.
The current system seems inefficient. We argue monthly with our health insurance provider, the doctors have to hire workers deal with the insurance company who try to get the best deal for the doctor. Meanwhile, the insurance company routinely denies coverage to minimize their costs.
It almost makes me want to move to Massachusetts.
November 3rd, 2006 at 10:11 am
Although insurance payers may cover some of the cost of the uninsured, private hospitals generally provide a lot of care that they are uncompensated for. I’ve seen this amount be in the tens of millions a year.
November 3rd, 2006 at 5:00 pm
[...] 5. Take care of your health. JLP from AllFinancialMatters article on Health Care. [...]
November 4th, 2006 at 1:37 am
Unnecessary procedures drive up costs. The WSJ had an article about CT scans, and one person had 941 in 18 months I believe. Is it necessary? The article basically said no, it’s not. But, because insurance covers it, doctors prescribe it and people have it done (nevermind the fact that’s a lot of radiation, which is why a lot of doctors are trying to stop the CT scan everyone for anything movement. And I don’t blame most people because if a doctor says hey, you need this, they’re the professional, you trust their judgement. This carries over into prescriptions and other medical procedures. Do we really need to have it done? Does it make sense? I posted in the health insurance premium question of the day about my doctor wanting me to get a CT scan, and I told her no, I’m not doing it. There was a simpler solution (stop eating balance bars - and I told her it was probably my diet, the pain started after I began eating them) to curing my stomach pain that should have been her first suggestion, not the $1200 radiation bonanza. Also, when I had my wisdom tooth out, I had to foot the whole bill (even though I have dental coverage, long story). I have another tooth that may need to come out, but it doesn’t hurt and it’s not hurting anything, so I decided not to pay to have it out. If it didn’t cost me anything (but cost the insurance company) would I have had it pulled too? Hell yes, I don’t need the tooth and it might cause me pain later, so I’d have it pulled if I didn’t have to pay for it. Is that the best idea? No, because I’m having surgery that I may not need. This drives up costs.
November 4th, 2006 at 1:29 pm
There are so many problems in the health system, I cannot count them. My sister had a hip replacement–the bill was $60K. When she went to check on it, she was told the insurance company only sent $5K. The insurance company said the hospital needed to send in more info and they would pay the balance they owed. This never happened. So the hospital was actually underpaid–but I am sure they will bellyache about reimbursments. Hey–your fault!
Hospitals also employ special “hospital doctors” called (originally) hospitalists to manage you, even though they never met you and in my experience, don’t want to even talk to you because in some cases their English is not good or they just plain would rather look at the chart than talk with a sick person. How do you even know if this person is board-certified? In most cases, they decide on your treatment and have never even met your doctor.
Procedures in hospitals are not consistent–they can be sloppy about giving human blood products and things of that nature.
I could go on for hours.
We do our job–pay for this damn insurance–but then everyone drops the ball! The US is 78th in the world in health care and over the years, I have seen why!
If you think working out at Gold’s or eating 13 veggies a day will spare you a hosp visit, do it! Can’t hurt, as they say.
I run a health humor site…http://healthsass.blogspot.com.
You have to laff or you will cry. What the heck–let’s do both!