I have two significant points to make regarding the costs of healthcare in the United States. First, citizens of this country pay far more than those in other countries, and that payment is for care ranked 37th in the world according to the World Health Organization. Second, hospitals in the United States have no idea of the real cost of their services. The combination of these two aspects of U.S. healthcare is devastating, particularly to those of limited means. I’ll discuss the national healthcare quality and expenditures issue first.
From the pbs news hour: “How much is good health care worth to you? $8,233 per year? That’s how much the U.S. spends per person. Worth it?
That figure is more than two-and-a-half times more than most developed nations in the world, including relatively rich European countries like France, Sweden and the United Kingdom. On a more global scale, it means U.S. health care costs now eat up 17.6 percent of GDP.”
The following is a tabulation of the top third of the World Health Organization Ranking of the world’s health systems. I have added a column showing the percentage of GDP these nations spent on healthcare in 2013 according to the World Bank. The WHO has actually ranked 190 nations. I have abbreviated their list to the top 64. Most of the countries in Europe and North America are in that top third, with some exceptions, mostly of countries not considered to be wealthy.
Rank Nation % of GDP Rank Nation % of GDP
|27||United Arab Emirates||3.2|
Note that there is one country, Tuvalu, that spends a higher percent of its GDP (19.7%) on healthcare than the USA’s 17.1%. The Marshall Islands is third with 16.5%, and the Netherlands is fourth with 12.9%.
I could make many judgmental observations about how a country that has been the world’s leader in many fields for quite a long time has fallen so far behind. I could observe that the citizens of that country still insist that they lead in virtually everything. But I’ll let the data speak for itself. That country, the United States of America, is falling rapidly behind and failing its citizens. I guess, however, that the good news is that many large insurance companies are making huge profits from the illnesses of those citizens.
I’ll start by identifying three articles from the Internet on this topic, and then add my own comments and experiences. I was unable to obtain direct links to the first two articles. However, if you will search on the titles of those articles you should be able to access them online. It’s well worth it.
In an article on Forbes.com by Contributor Dan Munro, October 12, 2014, entitled “Hospital Bill For $292,643 Is All Math And No Accounting,” a patient received a billing “announcement” from Cedars-Sinai for $292,643. After insurance discount, the bill was $121,447. Presumably, if the patient were uninsured, he would have had to pay the full amount. More likely, he would have been bankrupted.
In an article on Businessinsider.com by Lauren F Friedman, December 30, 2013, entitled “This $55,000 Bill Is The Perfect Example Of Our Broken Hospital System,” a Reddit user confessed he never understood how much U.S. healthcare costs until he received a bill for $55,000 after a one night stay for appendicitis surgery. Insurance adjustments and payments covered $44,000, so he was “only” personally billed $11,000.
From the same article:
The hospital has been sued for overcharging for various billing events and agreed to pay $46 million in an out-of-court settlement.
Also, charges for the same procedure from different hospitals varied widely. As an example, “after an appendectomy, patients received bills varying from $1,500 to $180,000. The average was $33,000….” for “only uncomplicated cases with hospital stays of less than four days”.
Finally, “’Today’s hospital bill is a symptom of a broken payment system,’ Rich Umbdenstock, president of the American Hospital Association, told ABC News. ‘It’s an example of the fragmented nature of our delivery system, in which hospital bills often reflect just one aspect of care.’”
From an International New York Times article by Barry Meier, Jo Craven McGinty and Julie Creswell, May 8, 2013 entitled “Hospital Billing Varies Wildly, Government Data Shows”
Charges to implant a pacemaker, varied from $70,700 to $101,945 at two hospitals in the same area of New Jersey.
In Florida, a hospital billed approximately $40,000 to remove a gallbladder while another charged $91,000.
Treating simple pneumonia cost $14,610 at one Texas hospital, but another charged over $38,000.
Medicare has been charged “sometimes 10 to 20 times what (they) typically reimburse for the same procedure.”
Okay, now it’s my turn
Either hospital billing offices in the United States have no idea of the costs of their products and services, or they are driven by the requirements and possibilities of contracts their business offices have negotiated with large scale payers: insurance companies, Medicare and Medicaid. It is probably a combination of the two. In any case, they bill for any possible item and at very high rates. The large-scale payers pay only a fraction of the billed amount. An example is the charging for a recent set of my tests. The bill was for about $1100. Medicare paid in the neighborhood of $250 and told me I might be billed for another $49. Presumably my secondary coverage paid the $49 because that charge never came to me.
Another example is the billing of my partner, Annie, for a visit to the Neurological department of the University of Colorado Anschutz medical campus in Denver. The Neurological department scheduled the appointment for the visit, and we believed that it was in response to Annie’s request to participate in an Alzheimer’s disease study. We discovered later that it was not. The bill for approximately one hour with the leader of that study, plus a blood test, was between $1800 and $1900. The negotiation by Medicare and Humana with the University of Colorado medical facility reduced that billing by approximately $1400. Annie eventually paid $67. Anyone without medical insurance would have been stuck with the full bill of between $1800 and $1900.
I’m going to do some purely suppositional thinking now, because I really don’t know. It might be that, because of negotiations with the payers (insurance companies, Medicare and Medicaid), the billed amounts are amazingly high in order to ensure that the actual payments, after negotiated reductions, will keep the hospital solvent. Individuals with no insurance or Medicare are billed the full amount. Possibly, what they do end up getting from these uninsured patients is enough to cover costs. But many uninsured individuals cannot pay and many go bankrupt trying to pay. When the hospital can actually get these bills paid in full, it represents gravy. My point is that the hospitals are still there, apparently solvent, with insurance companies, Medicare and Medicaid paying a fraction of the billed costs, and some individuals driven into bankruptcy trying to pay the full amount charged. Wow! What a deal for the American citizen. They get screwed at all levels while managing to keep the insurance industry pulling in huge profits. To top it off, Medicare isn’t even allowed to negotiate drug prices with drug manufacturers.
If we are to ever have an effective and economical healthcare system, then everyone must be charged what his or her care really costs. If hospital costs are that elusive, then a gross method needs to be applied, perhaps the total bill charged using only average patient-day rates with outpatient visits charged at some fraction of a patient-day.
As to those individuals who do not have coverage, they must have a public option available. I am ignoring the existence of the Affordable Care Act, but I am considering the reasons why it came into being. There are problems with the Act that need to be fixed, but the political system has a problem with any bill that would diminish the grip that insurance carriers have on medical billing. These carriers donate large sums to politicians who then vote against bills providing a rational public option. Actually, these politicians are largely responsible for the weaknesses in the ACA. An available public option should not force people to purchase coverage from for-profit insurance corporations. These businesses have often caused people problems by denying or terminating coverage. For that matter, those that currently have coverage should be able to switch to the public option if they are dissatisfied. Insurance companies are making extreme profits and their executives are raking in huge salaries, bonuses and separation packages. All this money is a tax on the miseries of individuals who must hope that the insurers will decide to settle the bills presented, often after initial denials. Bankruptcy is not limited to those without coverage; it can also afflict those with insurance. Marketplace gaming is not appropriate when human welfare is concerned.
You know what? Insurance companies should have NO role to play in healthcare. We ought to have Medicare for all, and Medicare should be able to negotiate every cost. Then it wouldn’t matter to us how screwed up the hospital billing is. And then we might have healthcare equivalent to other developed countries, and insurance companies would have one less way to fleece the public. Let’s think about the total costs of such care. If Medicare were for all, then there would have to be charges to the individual to support it, more or less equivalent to Medicare B. But this would replace what people now pay for their insurance. Actually, it would be less because the insurance company profit would not be part of it. Hospitals could continue to charge a few times their costs and be negotiated down, as now, but NO ONE would be charged the full charged amount. Perhaps the hospitals would get a handle on what their costs really are.
I have good healthcare insurance. Over 10 years ago, when I was preparing for retirement, I researched which of the available supplementary insurance plans would mesh best with Medicare and switched to that plan. Most of my medical bills are paid either by Medicare or my supplementary insurance. Of course I do pay for Medicare Part B and that supplement. I can afford this. However, I know of nothing I have done in my life that should entitle me to better healthcare than anyone else.