Medical costs in this country

[Mxylplyx]

I dont know if this has been discussed yet, but I read a pretty fascinating, and frankly infuriating article by Time magazine on healthcare costs in this country. It seems this countries health care debate has been dominated by "How" to pay for healthcare costs in this country, as opposed to "What" to pay for them. After reading this article, I'm not sure reform is the right approach, as opposed to a wholesale restructure. The system is clearly out of control, with profit takers essentially binging on our health dollars. I would love to hear an attempt at a rational defense of this system. I think Medicare for all is the only rational approach to be taken at this point. We will inevitably get there I think, as we have no other reasonable choice over the long term. This system is unsustainable. The sooner it crashes the better.

http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/print/

 

[Craig234]

I've heard good things about this article.

I saw the author interviewed and he was asked, 'everything in your excellent article makes the case for moving to single-payer, but you don't suggest it, why?'

The author responded that he was new to the 'advocacy' side of reporting and had been a bit naive about it that time, but next time he was likely to do better about that.

 

[Mxylplyx]

I've heard good things about this article.

I saw the author interviewed and he was asked, 'everything in your excellent article makes the case for moving to single-payer, but you don't suggest it, why?'

The author responded that he was new to the 'advocacy' side of reporting and had been a bit naive about it that time, but next time he was likely to do better about that.

Do take the time to read it. It is quite enlightening.

They list several examples of some of the itemized costs found in real world hospital bills. One patient had a $7 charge for "ALCOHOL PREP PAD". That is the little alcohol pad in a foil packet used to clean an injection site. A box of 200 can be bought online for $1.91, which is inevitably more than what a hospital pays given their volume purchasing.. They charged $7 for something that costs less than a penny. That is criminal.

 

[Screech]

I could come up with a solution to the cost fiasco but nobody would support it -- that's basically a given.

here's what to try:

Accept at face value that the costs that current hospitals are charging are often really absurd, and that only medicare can get decent costs because it will only pay for the actual cost of stuff.

Accept also that hospitals will generally spend absurd amounts of money on salaries for people at the top plus essentially unnecessary positions -- all those lobbyists in washington don't come cheap, after all.

Accept furthermore that there isn't any real competition here because this is the ultimate seller's market, and if you want competition that will bring down costs, it is unlikely to come from the existing market if the last few decades are any indication.

Given the above, here's my suggestion: try as a test case a government run hospital. The most important rule to follow is that it would not be allowed to have a negative (government paid for) cash flow as this actually could be damaging to the existing "private" industry; make sure that the hospital can function on its own dime.

The next few steps to keep costs down would be:
1) Use the medicare costs * constant for the cost to the patient for everything. I add the " * constant" to account for the fact that there will always be cases where someone doesn't pay (less with obamacare, but still) etc, so realistically let's say the constant is 1.25. If a procedure would cost $100 for a medicare patient, anyone can go into this hospital and pay out of pocket $125. Sure, it will be a bit above medicare but you have to make sure this hospital can survive without government money.
2) No salaries over $400,000, adjusted yearly for inflation.
3) Hospital (or hospital system) required to negotiate for lowest cost option for drugs. This is arguably one of the largest failures in medicare.
4) Significant tort reform essentially banning the ambulance chasing industry and the costs that come with it.

An important corollary to the above is
5) open more accredited medical schools to allow for the training of more doctors if supply is an issue. If the AMA starts to complain, take it out back and shoot it.

 

[nanette1985]

Interesting suggestions. Thanks!

More please!

 

[stormkroe]

No sane suggestions, but as a matter of proof for the craziness, I remember one of the itemized prices on my knee surgery from when I was a teenager.
1 sponge, $48.
Eight dollars plus forty more dollars. For a sponge.

 

[Charles Kozierok]

Thanks for the article.

I don't think the system "crashing" would be good for anyone. But I have to say that as someone who until now has not been an advocate of national single-payer, articles like this are changing my mind.

The right screams and howls about "socialist medicine" and wanting to preserve the "free market" when it comes to healthcare. But there is no free market in hospitals -- you use the ones you have to, and they effectively collude to raise costs to astronomical levels.

I'm not a fan of industries being nationalized, but I can't think of an example of one more deserving of that fate than our health care system.


In addition to the criminal markups:

“We use the CT scan because it’s a great defense,” says the CEO of another hospital not far from Stamford. “For example, if anyone has fallen or done anything around their head — hell, if they even say the word head — we do it to be safe. We can’t be sued for doing too much.”

That's a sign of a system that has become corrupt, unsustainable, and frankly, perverse.

 

[Pray To Jesus]

I don't know why people support the current system. It's clearly unsustainable. For the majority of people, even with insurance, one major illness and you're looking at bankruptcy.

 

[EagleKeeper]

while one can get a chemical wipe for $0.02 each in bulk. there are the costs that are embedded into the item from the hospitals POV.

One does not see costs itemized for staff and facilities.
Equipment is not cheap.
Extra test/equipment are needed because of the propensity of people wanting to collect money from the people/facilities that are presumed to have such.

One does not see the percentage that must be accounted for due to deadbeats

The high costs of consumables are a method to cover the internal overhead needed.

 

[Charles Kozierok]

The high costs of consumables are a method to cover the internal overhead needed.

Sorry, I find that very unpersuasive. The markups here are outrageous -- thousands of percent. No other industry requires such to cover "internal overhead".

Then there's the problem where they charge you 10x what they charge the federal government. How is that justifiable?

Our health care system is either the best in the world or a complete disaster, depending entirely on whether or not you have insurance.

 

[Theb]

while one can get a chemical wipe for $0.02 each in bulk. there are the costs that are embedded into the item from the hospitals POV.

One does not see costs itemized for staff and facilities.
Equipment is not cheap.
Extra test/equipment are needed because of the propensity of people wanting to collect money from the people/facilities that are presumed to have such.

One does not see the percentage that must be accounted for due to deadbeats

The high costs of consumables are a method to cover the internal overhead needed.

It amazes me that there's always someone willing to defend healthcare markups no matter how high they are. Most of the hospitals don't even try to defend or justify their chargemaster prices.

Why does it cost 4 x as much to perform a CT scan in the US than it does in Germany even at the very low medicare reimbursement rate?

 

[Mxylplyx]

while one can get a chemical wipe for $0.02 each in bulk. there are the costs that are embedded into the item from the hospitals POV.

One does not see costs itemized for staff and facilities.
Equipment is not cheap.
Extra test/equipment are needed because of the propensity of people wanting to collect money from the people/facilities that are presumed to have such.

One does not see the percentage that must be accounted for due to deadbeats

The high costs of consumables are a method to cover the internal overhead needed.

You have done nothing more than parrot the company line. If you actually read the article, that claim has been debunked. The charge master lists they use to determine what they charge are not grounded in any kind of logic or reason, and can vary wildly between hospitals in the same area. They claim it is the start of a "negotiating position", for which they can charge only a fraction of and still return a reasonable profit. Healthcare in this country costs multitudes more than other developed nations, with profit margins wildly out of line with other industries, even Apple, and yet there are people who simply chalk it up to capitalism as usual that doesn't warrant a second look. Is it bankrupting our country while the players in it are becoming fabulously wealthy. It is time to do something about it.

 

[Mxylplyx]

Why does it cost 4 x as much to perform a CT scan in the US than it does in Germany even at the very low medicare reimbursement rate?

It all really boils down to a simple question like this. WHY??

Defenders of the system will attempt to deflect and change the subject around this very simple question, because there is no reasonable answer. It's simply absurd and indefensible.

 

[Mxylplyx]

Our health care system is either the best in the world or a complete disaster, depending entirely on whether or not you have insurance.

Not just any insurance. You have to have good, comprehensive insurance to mask most of the systems faults, and I say "mask" because all your insurance is doing is hiding the cruel and arcane machinery of the system from you. You are still paying multitudes more than other developed countries for the same services. Sure, there are a few things we do better. More timely elective procedures and supposedly a slightly higher survival rate for cancer, but for the costs we pay we damn well better do a few things better.

 

[SMOGZINN]

One of the problems is that our country is subsidizing all those other countries by providing the high profits that make the risk and monetary costs of medical R&D worth it. If we socialize our medicine who will pay for continued medical R&D?

 

[Craig234]

One of the problems is that our country is subsidizing all those other countries by providing the high profits that make the risk and monetary costs of medical R&D worth it. If we socialize our medicine who will pay for continued medical R&D?

How about the government paying for R&D and/or providing tax incentives. Represent the interests of the people instead of just profits.

 

[Mxylplyx]

One of the problems is that our country is subsidizing all those other countries by providing the high profits that make the risk and monetary costs of medical R&D worth it. If we socialize our medicine who will pay for continued medical R&D?

I do not recall signing up for the role of subsidizing medical advances through my healthcare premiums and tax dollars so other countries can benefit. I do not buy this argument. The article I linked touched on this, and thoroughly debunked it. The R&D costs as a percentage of sales for drugs and medical equipment is very low.

 

[Mxylplyx]

How about the government paying for R&D and/or providing tax incentives. Represent the interests of the people instead of just profits.

Because if the government had to choose between funding R&D on a breakthrough cancer drug, and a 50th generation fighter jet to stealthily drop million dollar bombs on tents in the desert, I think you know which one would lose out.

 

[Fern]

I dont know if this has been discussed yet, but I read a pretty fascinating, and frankly infuriating article by Time magazine on healthcare costs in this country. It seems this countries health care debate has been dominated by "How" to pay for healthcare costs in this country, as opposed to "What" to pay for them. After reading this article, I'm not sure reform is the right approach, as opposed to a wholesale restructure. The system is clearly out of control, with profit takers essentially binging on our health dollars. I would love to hear an attempt at a rational defense of this system. I think Medicare for all is the only rational approach to be taken at this point. We will inevitably get there I think, as we have no other reasonable choice over the long term. This system is unsustainable. The sooner it crashes the better.

http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/print/

First, I'll confess to not reading the article. I'm just responding to your post.

Suggesting Medicare IS mostly focusing on "how to pay", not what to pay. There are only two ways of suggesting Medicare that I can see that focus on "what to pay":

1) Price Controls. From what I've seen, when Congress claims to cut Medicare it's nothing but mandatory price controls. Those rarely work out well. And you don't need medicare as the payee to do that. We've had national price controls before and it didn't require any type of Medicare program. the govt just mandated a price ceiling. I'm pretty sure Congress has kicked this can (cuts in medicare) down the road many times; too many physicians have threatened to to stop accepting medicare patients (many already have stopped) or stop practicing medicine altogether.

2) Letting the govt decide what procedures are necessary and will be paid for. This brings us right back to "death panels" and, IMO, isn't politically do-able, at least not now.

Fern

 

[Mxylplyx]

First, I'll confess to not reading the article. I'm just responding to your post.

Suggesting Medicare IS mostly focusing on "how to pay", not what to pay. There are only two ways of suggesting Medicare that I can see that focus on "what to pay":

1) Price Controls. From what I've seen, when Congress claims to cut Medicare it's nothing but mandatory price controls. Those rarely work out well. And you don't need medicare as the payee to do that. We've had national price controls before and it didn't require any type of Medicare program. the govt just mandated a price ceiling. I'm pretty sure Congress has kicked this can (cuts in medicare) down the road many times; too many physicians have threatened to to stop accepting medicare patients (many already have stopped) or stop practicing medicine altogether.

2) Letting the govt decide what procedures are necessary and will be paid for. This brings us right back to "death panels" and, IMO, isn't politically do-able, at least not now.

Fern

After reading your response, it is quite obvious you didn't read the article. The scale of Medicare does indeed give the government significant leverage in deciding what to pay.

 

[TheVrolok]

It's a good read. I'm only about half way through and at work right now, but I'll join the discussion when I get home.

 

[randomrogue]

Here's some other examples that I experienced before I moved:

$5000 for an MRI
$100 for one pill of Tylenol (was part of a $1600 bill for a sprained ankle)

 

[randomrogue]

Oh here's a couple more:
$100,000 for surgery on a broken leg with 4 days in the hospital
$45,000 for a broken foot with same day release.

 

[blankslate]

http://www.medicalnewstoday.com/releases/127893.php

The U.S. spends more on medical research than other countries but the link says that most countries spend a majority of their research on products for their own citizens.

Also one has to take into account the size of the economies in question.

http://en.wikipedia.org/wiki/List_of_countries_by_research_and_development_spending

The above link is total R&D spending by country (haven't found a link with just medical R&D) however you can rank them by total money spent or total percentage of GPD spent.

The U.S. is at the top in total dollars and near the top in % of GDP but the highest ranking country spends over 4% of GDP on R&D and we spend about 2.7%
Other countries that spend a relatively high percentage of GDP on R&D spend 2.2-2.5%

Additionally some R&D has to be state funded because sometimes if there is no profit for a promising drug/chemical Big Pharma may not fund it.

http://www.foxnews.com/health/2011/05/18/big-pharma-ignoring-potential-cancer-cure/

I remember reading an article in a science magazine about

discovered that a common, nontoxic chemical known as DCA, short for dichloroacetate, seems to inhibit the growth of cancerous tumors in mice

I couldn't find the article from the magazine online but I found a fox news news article that pretty much sums up the details I remember from the magazine. DCA disrupted the way a broad range of cancer cells formed in mice. And if it worked reasonable well in humans it could become another form of treatment.

Canada did research into it. Maybe it went nowhere, but even if it did Big Pharma wasn't interested in footing the bill.

Pharmaceutical companies are not exactly ignoring DCA, and they definitely aren't suppressing DCA research — it's just that they're not helping it. Why? Drug development is ultimately a business, and investing in the drug simply isn't a good business move. "Big Pharma has no interest whatsoever in investing [in DCA research] because there will be no profit," Michelakis told Life's Little Mysteries,a sister site to LiveScience.

As a final note we still spend the most out of other countries per capita on health care...

Sure some of could be accounted for by R&D but it's not as if the U.S. is the only country spending money on medical research.

 

[Mxylplyx]

$45,000 for a broken foot with same day release.

Half my yearly salary for less than a days worth of care for a routine injury at a hospital.

That is criminal.

This is indicative of an ultimate sellers market just like higher education has become. They are immune from market pressures because people don't feel like they have a choice. This is when the government must step in. There are some sectors of the economy that cannot be left up to pure market forces, and healthcare is at the top of that list. It's not really even debatable IMO given all the examples of other developed countries, and even many developing ones, that have been doing it as good or better for much cheaper for many years, and I heard their doctors hardly ever have to frequent the soup kitchen.