Should we not pay for health care?

Great Debates
1

Boy isn’t THAT a line to get people to read…

Try this then…

Health care costs too much. God knows. The lovely Mrs Chance and myself just had a baby girl. Total cost: about $7000. Total amount we had to pay: about $250.

Also…

My father in law just died. Two weeks in ICU. Yuck. Total cost: about $24000. Total cost to my mother in law: about $1600. (I’ve helped her organize things.)

Without insurance that’s one HELL of a lot of dough for either of those cases. Let’s just admit that up front. The birth required nothing special. Just two nights in a hospital for a normal vaginal delivery. The ICU case required a great deal of supportive care.

My question is this

Insurance took care of most of the bills in both of these cases (one extreme and one not). Would the cost of health care be so high if insurance did not cover it? That is if everyone in the United States suddenly decided to drop their insurance would hospitals and doctors suddenly drop their prices to adjust to the new market conditions?

Possible supporting evidence…

#1 I had my teeth pulled last year. Oral surgery (except in reconstructive cases) is not covered by my insurance. The surgeon I went to bargained the price out with me. It was still high ($1200) but not so high that I lived with a broken tooth rather than pay it.

#2 My father in law was seeing a nephrologist (kidney and dialysis specialist). While going over the bills remaining after his death I discovered that the doctor had set up my father in laws pay schedule in such a way that his insurance paid its (large) part of each invoice and the doctor forgave all remaining parts of the invoice. That is to say that the doctor found my father in laws deductible waivable as long as he got the insurance amount.

#3 Lasik. Am I the only one who’s noticed the raw and rampant market forces at work in the field of laser eye surgery? When they started advertising a year or so ago the process was being advertised as $3000/eye. Then it began dropping. $2500…$2000…$1500. Lately I’ve been hearing a doctor advertising that he’ll do the job for $1000/eye as a special rate. This seems to be the market at work for a procedure that is NOT covered by most insurance companies.

So…do we stick it to the doctors by all of us dropping our insurance at once? Would the price decline? Would services decline? What would be the impetus in the market to invent cheaper means of providing high quality healthcare?

My first GD post so I await word with eager eyes…

2

I doubt if the existence of health insurance per se is the reason for items you mentioned. The existence of auto insurance and homeowners insurance hasn’t thrown the price of auto or home repairs out of whack.

What skews the market for health care in the US is that some fortunate people have paid health benefits through their employers, and some don’t. Until there is a more uniform system, ie, either everybody has paid health care through their employers or no one does, that isn’t likely to change. And I don’t look for anyone who has subsidized health care through their employer to willingly give it up anytime soon.

3

One aspect that you’re overlooking is that doctors and hospitals charge those of us with insurance coverage more, to make up for the people who can’t pay enough.

Hospitals treat a large number of indigent patients, and can’t get any money for it. To stay in business, they have to charge us more, and the amount is significant.

Doctors treat a large number of medicare patients whose insurance pays less than the docs need to stay in business, so they have to charge us more.

But I think the main problem with health care prices is that we expect our insurance coverage to go to extremes, even with slight chances of positive results. We want low insurance rates, but we want millions of dollars of services to extend aunt Ethel’s life by a couple of weeks. There is a fundamental problem here that will have to be addressed, I hope by the free market. With medical knowledge advancing, it could come to a point where the entire GDP of the United States could be spent to save one child’s life.

Advances in technology work both ways, both to reduce the cost of existing procedures, but also to push the frontiers into newer and more expensive ways of healing.

I agree with you, that insurance plays a part. Out perception that our insurance is a bottomless bucket of money is key - there will eventually have to be an understanding that our insurance has limits in what it covers.

My mother, who’s 71, views the introduction of Medicare as the primary thing that caused health care prices to take off. She thinks it was a bad idea. She’s partly right IMHO, but near-universal insurance coverage has played a big part, and advancing technology has played a part.

4

According to the Libertarian Party’s platform on health care:

How? Here’s one example, from the Citizens’ Council on Health Care

And here’s another:

In general, the argument can be made that government interference in any commerce, beyond suppression of coercion and fraud, causes market disequilibria. And here’s one example of that, How Government Solved the Health Care Crisis. It says, in part:

5

What we probably have here is an example of price discrimination, which is an economic concept that holds that you can make more money if you can charge different prices based on willingness to pay.

Let’s say you are selling chocolate bars. Because it’s a mass retail sales industry, it’s logistically impossible to price discriminate; you have to charge one price. You set your chocolate bar price at what you assume will result in the greatest marginal return. If you charge $1 for your bars, you can assume that people who don’t think it’s worth $1 won’t pay it, but anyone who does will. If you charge less more people will buy but you’ll make less per bar. If you charge more, fewer people will buy bu you make more per bar.

What happens with a uniform price, however, is that you lose potential revenue where potential customers WOULD pay more than $1 if only you could charge them that. If Snacky McJunkfood wants to pay $3, it would be nice if you could charge him $3, but charge other people $1 if that’s all their willing to pay.

If it is possible to charge $3 to people willing to pay $3 and $1 to people willing to pay $1, you can make more money than if you charged everyone $1, since you’d have the best of both worlds; Snacky McJunkfood pays his $3 but the $1 customers are buying the product, too.

Thsi method of pricing is usually impossible, for most routinely bought products. You can’t logistically do it in msot cases, and it would seriously piss off the Snacky McJunkfoods, who would feel ripped off. But in some cases it can be done. Car sales are like this; they’ll give you a better deal if you absolutely won’t buy otherwise, but if you’re willing to pay more they won’t give you the bargain.

It is possible, then, that in a health care market that cagters to both mass insurance deals AND the private dollar, we have price discrimination; they charge insurance plans more because they’re willing to pay more, and they charge the individual less because they won’t pay otherwise.

In Canada, regular medical procedures are paid by government insurance, and the bills mount up; the government’s running out of dough. On the other hand, a lot of stuff isn’t paid; dental work, for instance, is entirely privately paid or privately insured, as are pharmaceuticals. My dentist’s bills always seemed reasonable.

6

There are a couple of other factors that I am suprised no one has mentioned yet.

  1. Gov’t agencies like the FDA. It costs a bunch of money to do all the testing and trials to bring a drug or procedure to the US. I am not saying that this is a bad thing, as it protects us against products that have not been tested, but it still costs a bunch of money that has to be passed on to the consumer.

  2. Lawsuits - Doctors and hospitals have to pay huge insurance premiums to protect themselves from lawsuits. Then the costs of these premiums and the lawsuits must be passed on to the payor.

Sure technology plays a big part. Also paying for those without coverage plays a big part.

Personal example, my daughter just got out of 12 weeks in the Neonatal Intensive Care Unit. As you might can imagine, the total bill is outrageous. The total bill is more than my gross salary for the next five years or more. Yet, all it is going to cost me is my $100 co-pay. But what if I had not had insurance. Would the hospital have kicked us out? Nope. Kimberly would have still gotten treatment and the bill would have been the same, but Medicaid would have had to cover it or the hospital would have had to get as much as they could from me and write the rest off.

So malpractice suits, gov’t controls, and bad debt write-offs all cause medical costs to be higher. So, no everyone dropping insurance would not change the costs, it might actually make them higher, since there is no negotiated charge and more bad debts.

If all the frivolous malpractice lawsuits were dropped, costs would come down and the price of medical care would go down, but it ain’t gonna happen.

Jeffery

7

[hijack]

Great to hear Kimberly’s home now, Jeffery. :slight_smile:

[/hijack]

8

I have often wondered about this. I am not a doctor, but if I was, I think I would like to hang up a shingle and run my office with no malpractice insurance. Then I would drop rates significantly and ask all patients to sign a release waiver before treating me.

I mean, doctors are pretty much the only profession from which we, as a society, demand total infallability. Sure, what they do is important, but everybody makes mistakes, right? The current situation requires all doctors to pay for a few doctors’ mistakes.

Let’s just let them run their shops like mechanics. You don’t go to a mechanic that has a reputation for doing lousy work. I won’t go to a mechanic that has a reputation anywhere below “fantrastic.”

Why can’t medicine work in a similar way?

9

Libertarian quoted the Libertarian Party as saying:

after Jonathan Chance had said:

There’ll always be healthcare rationing. It’s just that in some systems it’s done by the insurance provider, in others it’s done by government and in others it’s done on the basis of the individual’s ability to pay.

10

Because if my Chevy doesn’t start the day after a tune-up I can take it back or to another mechanic and expect it to be repaired. If the surgeon amputates the wrong foot, I’m screwed. Medical mistakes are often irreversible, crippling, and/or fatal. Plus, no matter how bad off your car is, you can always put off taking it to the mechanic. If you are hit by a car, you gotta go to wherever the care is immediately, without taking time to weigh the reputations of the facilities around you. To top all that off, there are still a lot of rural areas that have only one doctor for miles and miles around. How would you care to live in a situation where there was a single de facto choice for care, but no legal protections afforded you?

As for getting rid of malpractice laws, thanks, but no thanks.

11

One reason why health care is so expensive in the USA is because of shortages in health care professionals. Some claim that this is because the medical industry restricts access to medical education and imposes high costs on training. Some say this is what the medical industry gets for their heavy subsidizing of American congresspersons. Regardless of the reason, the USA has a very supply of doctors per capita compared to other industrialized countries.

What congress should be doing instead of increasing H-1B visas for high tech workers (an area where there is vast supply of works contrary to media and industry opinions), is increasing visas for doctors and recognizing comparable foreign medical education.

From what I hear there are a lot of foreign doctors, dentists, etc. who would love to work in the USA for $40,000 / year.

12

Ha haaa haaaa haaaa. That is a good one.

I used to be a medical malpractice adjuster. surgeons always have patients sign a waiver. IT doesn’t matter. I once knew a doc who geot hit for a med mal suit without coverage. He was stillpaying off the verdivct at age 70.

I will say this. In 3 years handling med mal cases I saw one, ONE, case where the doctor actually made an error. But I had to pay out millions.

13

Another reason why health care is expensive is because the medical industry understands inelastic demand. Why charge a patient a reasonable price for health care, when you can charge 100 times that amount and only loose a small fraction of your customers?

And competition doesn’t help here because of industry price fixing.

14

According to some econimist whose name I can’t recall, there are four ways to spend money:

  1. you spend your own money on yourself. You look for the best product at the best price.

2)you spend your money on someone else. You still look for the best price, but you don’t care about quality

  1. you spend someone elses money on your self. You don’t care about price, but quality is very important

  2. you spend someone else’s money on someone else. You don’t care about price or quality.

Socialized medecine falls in category four. HEalth insurance falls in category three.

Obviously the best result comes from category 1. but concerning the OP, since health insurance is a category 2, prices should be as low as possible. And if you look at current staffing levels and doctor pay, you will find that they have both gone down.

I have a friend who is an eye surgeon. He says that for insured patients, he gets 50% of what he bills. For his Lasik patients, he gets about 95%. he is thinking of dropping his costs and doing nothing but Lasik from now on.

So what is goig on with price: 1) write offs for un[aid bills 2) more, and more expensive diagnostics and treatments. A doc has to try everything in teh book or he is open to a med mal suit. 3) entitlement mentality of the people. People demand to get as much treatment as they can because they feel it is a “right” the patients are usually in category 3, meaning they don’t give a shit about cost.

If you were to eliminate all employer sponsored healthcare you would see medical costs plummet.

15

Someone has to pay the bill as I don’t see pharmaceutical companies, doctors, nurses, or myself working for free anytime soon.

The distressing thing is that health care costs will continue to rise here and there as our respective populations age and require more services. Health care personel deserve to be paid well due to the nature of their work. Your mechanic makes $30.00 an hour to work on your car while the person who watches your kids here might make $9.00/hr. Warped values huh?

We (Canadians) are used to paying much more in taxes to support social programs including health care. We also bitch more than most about what we have even though it is a good system. I have worked in countries with no social programs, have seen rampant poverty, and talked to people who wished they had what we do here, Americans included. I have never heard someone here say they couldn’t afford to see a doctor when they or their child was ill. Despite all this I have health care coverage through my employer that covers what the government doesn’t. A trip to the dentist won’t clean out my bank account and my son can get his glasses free. My prescriptions are covered 80%. This extra coverage costs me very little and I pay $45.00 a month for general health care coverage for my family. I hear what people without any coverage pay and I shudder.

I work in Rehabilitation and the funding for our services to the handicapped come primarily from tax dollars. There are clients who are well off enough to go without funding but they are few in number. Not everyone has a massive trust fund or insurance settlement with which to obtain treatment.
We don’t get paid a lot in this field and are actually paid less than our government counterparts, I work for a private non-profit agency and steps are being taken to equalize the pay scales.

So what if you have a child or family member that needs 24 hour care or outside supports? Are the extra taxes going to matter all that much? The amount I pay in a month in addition to my taxes still seems like a good deal to me.

16

Mr. Zambezi said:

Mr. Zambezi brings up a point I think bears some explanation. I have seen almost everyone throught this thread making aone major, and totally incorrect, assumption: Doctors charge insurance companies a lot because they will pay more than the normal uninsured person would have to pay. This just isn’t true.

Sure, if the world was fee for service health care plans, that would maybe be true. But, in today’s era of managed care plans, it doesn’t work that way.

Say Bob goes into the hospital for a gallbladder operation. The service would normally cost $20,000 (I’m just making up numbers here). Now, if Bob has no insurance, or has a fee-for-service plan, he’ll probably get charged $20,000, or a little less if he is willing to bargain, or his insurance will do an 80/20 split with him, or, if he has one of the last great American health care plans, his insurance will pick up the entire $20,000.

But, say Bob has Medicare. His doctor (actually, the hospital as a whole) will see only about 30 percent of that total.

And if, God forbid, Bob lives in California and has PacifiCare, the hospital will see even less. It used to be that doctors hated Medicare patients, because of the low returns. These days, Medicare in some cases pays more than other HMOs.

So, I guess the whole argument here is moot. No, doctors wouldn’t carge less if insurance companies weren’t willing to pay the whole cost. Or, rather, that whole downscaling of costs has already gone on. Do you see the savings being passed on to consumers? Of course not.

The end result is: People pay the same or more. Doctors get paid less. HMOs return records amounts of profit to shareholders.

17

Feynn,

I find it interesting to read your post, and remember the conversations with acquaintances who came to the US from Canada to have surgery performed, since the waiting list in Canada was a bit long. It’s also interesting to know that you pay (per your post) the higher taxes to get the health care, and then pay for coverage on top of that. I have no doubt that most people would be happy to pay for health coverage, the question is who to pay: Goverment, Insurance Company, Hospital/HMO, or Doctors directly for service. Solve that one, and you can be president (not that you would necessarily want to…)

18

Originally posted by Pthalis:

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Originally posted by Mr.Zambezi:

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Look - I know that. I’m not a total moron. At least, not today. :slight_smile:

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I just erased the rest of this post. I was going to try to make a case defending my idea, but you know what?

You’re both right. It’s a stupid idea.

Thanks!

19

I recently had to go to emergency here in Canada due to a possible ruptured disk.

I was there for an hour. During that time, I was attended to for 5 minutes by a nurse, another 5 minutes by a doctor, and a lab tech took an X-ray. The X-ray was processed, and I spent another 5 minutes with a doctor going over the results. No ruptured disk, just a muscle pull. Here’s some painkillers, go home.

The bill was $800. This being Canada, it was covered by Alberta Health Care. But a foreigner would have had to pay up.

So why so much? Assuming the doctor makes $100/hr, and the nurse makes $30/hr, I used up about $30 worth of labor. The X-ray was taken with a machine that looked like it was built in the 1950’s, and has to be paid off by now. No amortization costs there. Film and processing, call it $50.

I used no hospital resources. I wasn’t checked into a room or anything. I just sat in the waiting room until it was my turn to be X-rayed.

So how come? Part of it is the administrative overhead. Canada’s health care system is a morass of regulation, and I wouldn’t be surprised at all if my 1 hour visit generated 5 hours of paperwork.

Part of it is uniform pricing. Doctors here charge ‘per visit’, and not necessarily for how long it actually took. As an analogy, what if lawyers had to charge the same amount for every divorce, no matter how complex? Great deal for the guy with a gigantic estate, seven children, and a bitter divorce where every piece of property is contested. But the guy who divorced amicably after one year get shafted, and pays much more than he should.

Part of it is liability insurance. Not only do doctors have to carry malpractice insurance, but the cost of every medical device on the market is much, much higher than it needs to be because of liability insurance costs built into the price. That translates into higher fixed costs.

Another part is poor allocation of resources. Because medical care is government-run, resources get allocated for political reasons and not necessarily by market forces. My hometown of Lethbridge had two large hospitals serving 60,000 people, and recently built another huge hospital. On the other hand, the city of Edmonton has 4 or 5 large hospitals, serving 10 times the population. It makes no sense, until you look at which cities have more political clout.

Write-offs: While I was in emergency, the place was full of people, almost all indigent. A lot of them were drunk, and a lot were regulars that the staff knew by name because they fake an injury on a regular basis to get a nice warm cot to sleep on, rather than sleeping in the street. A lot of these people don’t even have Health Care numbers, so the hospital can’t bill anything for them.

Even with these factors, it’s hard to figure out why health care has to be so expensive. Sure, doctors make a lot of money, but their salary is typically only a tiny part of the cost of treatment.

20

It depends who “you” is. If “you” is the “the government”, then you’re right. If “you” is the people, who elect the government, pay the tax and use the service, then it falls into category 1.