November 06, 2003
On health care costs
Kuro5hin.org is currently listing an article entitled "What's really wrong with the United States' medical system?" It's a sizable essay (just shy of 4000 words) but worth the read.
However, the author has missed a critical point. The reason that HMOs are able to dictate the prices that they do is because the Federal government has done it for them. Medicare/Medicaid only pays about 33 cents on the dollar of hospital bills. The rest is basically written off. HMOs have no incentive to pay more than that, and will frequently pay a point or two less. So when hear talk of the spiraling costs of health care, know two things: First, advanced care and new technology actually is really expensive. Second, the hospital only really expects to receive about a third of what it bills - provided you have insurance. That's why billing figures are so high. If the cost to a hospital for a procedure is $30k, it's probably going to bill in the neighborhood of $100k or more.
There are stories of doctors who are currently refusing all forms of health insurance. The Wall Street Journal had a front page article on that very subject today. The real problem is not that health insurance companies are forcing hospitals to engage in reverse price discrimination, as the author of the Kuro5hin article suggests. The problem is that the Federal government has created a system in which they can.
Amen. It's kind of like if the government gave each citizen a coupon for a free Big Mac each month. Everyone would be overjoyed! No one would care where that money was coming from, they'd just be happy that they could get a free Big Mac each month. Problem is, it would a matter of no time before McDonald's started charging $50 for their Big Macs. So if you ever wanted a Big Mac more than once a month, you'd have to shell out 50 bucks. The problem's not that McDonald's is a greedy and faceless corporation trying to exploit people, it's that the government's only giving them 50 cents for each Big Mac and otherwise they can't be profitable.
BTW, my dentist is one of these doctors that refuses health insurance. What happens, is he charges me the full price for a procedure, and then my dental coverage sends me a check for so much of that. So I end up paying the difference (which is like $25 instead of the typical $20 copay). This seems like a much better version of health care than what we currently have. It's simple: you get coverage for what you use.
Posted by: Ben at November 7, 2003 03:48 PM