Why No One Wants to Crack the Health Care Walnut

American Thinker ^ | March 28, 2007 | Geoffrey P. Hunt

[neverdem]

A few days ago I had dinner with friends from a boutique actuarial services firm. After some chit chat, we soon turned to health care costs, health insurance and, as one would expect in the small talk lexicon of actuaries, mortality tables.

Soon enough we all agreed that the notion of health care insurance these days is both misleading and a misnomer. Because life expectancies are now in the 80s-in fact someone with average health at age 65 can expect to live until age 90-the probability that any one of us will die without having at least one prolonged expensive disease-cancer, heart disease, diabetes, arthritis-is virtually zero.

We are all familiar with the usual insurance underwriting risks-a boiler explosion, a house fire, car accident, crop failure.  Insurance underwriters routinely calculate the probability of an infrequent but potentially catastrophic event to price the reimbursement for the accompanying unwelcome financial loss.   They will even price happy probabilities, such as hole-in-one insurance, paid by a charity golf outing sponsor, for that one chance in a zillion where the proud owner of a lucky stroke could win a new Cadillac.

But as the probability of having an expensive or catastrophic event approaches certainty, the insurance premium quickly approximates the actual financial cost of a claim. This is what has happened to health care cost and why the talk of health care insurance is silly. The economics of health care are no longer a matter of "who"  "if" and "how much". Instead it is about "when" and "who will pay".

Despite all of the attempts at managed care, consumer driven health care, variable usage pricing and other failed schemes-- benefiting only the health care consultants who conjure up such ineffective cures-- costs are still climbing at double digit growth rates, resistant to any and all broad spectrum antibiotics. The health care Don Quixotes still cling to the noble but elusive whim that reducing probabilities through behavior modification can drive down claims and cost.  

Fat chance.  For all of the blathering over tax deductibility, health savings accounts, single payer systems, employer mandates--it's the same chatter: either budgeting the inevitable costs that can't be avoided or shifting the cost burden from one gored ox to another.

Why is this health care walnut so hard to crack? Well, the answer is pretty obvious. We don't want to crack it. Consider the four non-negotiable demands we insist be in place for our health care system:

• 1) Health care is run by a semi-private monopoly where little or no competition is allowed.
• 2) Only a few will modify their personal habits; the rest expect medicine to remedy the pain from their self- indulgences.
• 3) Everyone expects the very best in medical technology and pharmaceuticals, the latest diagnostics and the most expensive and best trained medical practitioners available on the planet, now-all paid by someone else
• 4) No one is denied care, not even illegal immigrants or criminals on death row.

Any chance on the horizon to dismantle at least one of these four health care mandates?  Not before an asteroid parks itself along Hollywood Boulevard. And so we might as well accept the reality that health care has become a de facto right, a public good to be enjoyed by all and should be financed just like every other public entitlement.  Oh, and don't expect health care costs to behave any better either. As P.J. O'Rourke quipped,

If you think health care is expensive now, wait until it's free."

Who has the political muscle and the willpower to take a nutcracker out of the drawer and use it?

Geoffrey P. Hunt is a senior executive in a multinational electronics company.

[Liberal Bob]

HillaryCare

http://video.google.com/videoplay?docid=-6760676182513210949

[speekinout]

I never did get the reason why we should all get the finest health care free. After all, I can't have the finest housing (just what I can afford) or the most expensive food (just what I can afford).
Why should I expect better medical care than I can afford? (Except for life-saving emergency care; I think all of us want to give that to those who need it)

[Gritty]

...either budgeting the inevitable costs that can't be avoided or shifting the cost burden from one gored ox to another

He left out the real tiebreaker and ultimate fix to the medical cost burden... euthanasia.

But that will come later, after socialized medicine is completely entrenched, we all are trapped in the web, and costs must be kept down or the system goes completely bankrupt!

[William Terrell]

This is what I notice. It seems to be true from my experience.

The cost of the insurance is high because health care, especially hospital care, charges are high.

Doctor visits are usually not so bad, unless lab tests are ordered. It is the lab tests that are high.

Doctor visits are usually not so bad, unless he must do a procedure or make a decision that can land him in court. It is the cost of the malpractice insurance that is high.

Hospital, labs and other businesses that process medical data and tissue in some way, and even the medical insurance industry itself, are the reason health care is so expensive.

The question seems to be, just what are a hospital's cost of labor and materials that justify charging $4.00 for something you can buy at the PDQ for two and a half cents?

Or, if the raw materials used by these businesses are costly, exactly what costs the manufacturer or jobber so much? How much could it cost to make a 5-0 suture?

[originalbuckeye]

I have lived in Britain with the NHS. People who think that socialized medicine is a good idea should have to live under it for a year. I made a very low wage (due to my qualifications not transferring there) and was taxed at 50%. People who can afford private insurance carry it. There are loads of private doctors that actually take appointments. You can see them when you need to, no waiting all day for whichever doctor happens to be in your local clinic any given day. When people tell me they'd love to see nationalized health care I always ask them 'how would you feel about the Gov't setting your income?'. They never want that! But they always think it is perfectally acceptable to want the Gov't to set medical incomes.

The NHS killer??? No one can sue the Gov't. Do you honestly think the people ( and the lawyers!!) in this country would stand for no lawsuits against the medical industry??

One more thing. Most people don't realize that THEY are the ones whose taxes will skyrocket for socialized medicine. They look it as if someone else is paying. Very naive.

[daviddennis]

Or just look at the room rate.

Should it cost $680 a night to spend time in a room that resembles a Motel 6, shared with one other customer with only the feeblest attempts at providing privacy?

And a shared phone and cable TV that cost amounts that would make your larcenous cable operator blush in admiration?

Seems to me that hospitals should be cleaning up, and yet everyone says they're losing money like crazy.

And this is true even in areas with few to no illegal aliens, so I don't think this is the problem here.

Anyone know what is?

D

[Fairview]

It isn't that the suture or the box of tissues really costs the hospital so much; they're just charging you, and/or your insurance carrier, if you have one, a lot because in that way they recoup the cost of treating all those indigent cases. If you don't have insurance (and Medicaid counts as insurance) you will be charged even more, since the insurance company has negotiated a lower rate.

The high charges also cover the cost of building that new wing and buying the fantastic new equipment in the radiology suite, which is the biggest expense in any hospital. And the new imaging equipment is costly because hundreds of millions of bucks in corporate research funding went into developing it. Those aren't Brownie cameras they're taking pictures of your brain with.

[JoeFromSidney]

The point is a valid one. Once some catastrophic illness (cancer, etc.) becomes a certainty because we're living longer, then there is no way to spread out the cost over all the people involved. If none of us can afford medical care individually, then we can't all afford it collectively either.

Start saving up when yoiu're young is the only answer. We really need Health Savings Accounts.

[Spyder]

Should it cost $680 a night to spend time in a room that resembles a Motel 6, shared with one other customer with only the feeblest attempts at providing privacy?

You're leaving out several factors. First, the "what if?" factor. Hospitals have sicker and sicker patients now as the ones who used to stay longer are sent home earlier. They have to be prepared for someone to go south at any minute, have the staff to handle it (even if over half the time there are too many), AND pay for the insurance to cover a lawsuit in case someone sues them because they were a nurse short on the day their dad died.

Then there's the employee unions. Nurses have the hospital over a barrel. Pay and benefits have gone way up.

Then there's all those transcription costs, new software to keep up with all the new code costs, and so forth.

Okay, now take your Medicare and Medicaid patients, and that the government doesn't even cover the costs in most cases. It then forces the hospital and doctors to accept what it says they deserve and no more.

[daviddennis]

My gross bill was over $8,000. The bill insurance paid was about $3,000.

The net total of care I got was a patch to decrease my blood pressure.

They ran a bunch of tests and I probably spent a total of half an hour with doctors.

I have never paid so much for so little in my life. I don't want to support the medical establishment because frankly, I just think it's an awful deal.

If I ever need a major operation, I'll have it in India, the Philippines or some other country that has lower medical costs.

In the Philippines, I could hire my own full-time doctors and nurses, a whole hospital's worth of medical staff, for a month, and it wouldn't cost what one night of stay costs in a US hospital.

D

[frposty]

Good article. I'm not worried. As health care costs gobble more of our income, we will make adjustments. There's plenty of room for cost saving adjustments. The motivation's not there yet.

[freeandfreezing]

Seems to me that hospitals should be cleaning up, and yet everyone says they're losing money like crazy.

The health care industry has structured itself to guarantee high salaries to its participants. Everybody, from the doctors to the management to the vendors they choose are making plenty of money. Since they don't face the competition a typical business faces they are free to set prices as high as they want, except with a few major "customers" like Medicare and Medicade. They get the discount price, so instead of cutting costs internally everybody else has to bear an inflated price.

If there was a true, open market for health care services the prices would fall quickly. But first you have to end the monopoly on providing services that the medical community has created for itself -- a near impossibility.

[Spyder]

Their "bunch of tests" probably included use of machinery totally hundreds of thousands. They probably didn't have to run that many, but if you stroked out the next day and your lawyer came after them, they'd be the ones in deep water for not running anything. How many doctors spent how much time with you? What specialties? Don't forget there are doctors behind the scenes interpreting thoses tests (if the lowly GP misses something on an x-ray that a radiologist could have seen, the GP goes down).

You're not supporting the medical establishment so much as you are the trial lawyers.

The reason it's cheaper in India, the Phillippines, and the like is 1) fewer lawyers, 2) fewer lawsuits, 3) topnotch care in some centers... you're on your own in others, 4) the unions here, and 5) did I mention the lawyers... not to mention all the clerical folk that are required to be sure your healthcare folk have jumped through the right hoops for their paperwork, not just as lawyer repellant but also to maximize reimbursement.

[Spyder]

Oops - totally hundreds of thousands should read "worth hundreds of thousands of dollars."

[randita]

2) Only a few will modify their personal habits; the rest expect medicine to remedy the pain from their self- indulgences.

There are a few, like Tony Snow, who through no fault of their own develop a serious disease. But so many serious illnesses AND accidents that are self inflicted or at least exacerbated by harmful lifestyle choices. And we all have to share the cost of treating those.

It takes a lot of discipline to commit time to exercising regularly and eating a healthy diet without foods full of fat and sugar. That doesn't guarantee you longevity free of health problems, but it certainly increases the odds.

Sometimes I wonder why I bother, except for my own self image because I just end up paying for someone else's health problems due to their being a couch potato and eating like a pig.

[B-Chan]

And so we might as well accept the reality that health care has become a de facto right, a public good to be enjoyed by all and should be financed just like every other public entitlement.

And thank you for backing up what I've been saying on FR for ages now: we already have universal free medical care in the United States. That decision was made long ago, and there is no further point in debating the merits of "socialized medicine". The people of the United States have decided that everyone in America is entitled to health care regardless of ability to pay, and that is that. The only question that remains is how exactly we as a nation are going to provide that care. Right now the health care provider of last resort in the local hospital ER. But is that the best way, the most cost-effective, fair way, to provide universal free health care? Or can we organize a system that works better?

[B-Chan]

Because no one is going to squat under a toadstool and watch their kid die from some illness just because they do not have the money to pay for his or her doctor bills.

Look, health care isn't free, but we have to act as though it is free if we are going to keep society together. It is not fair to require the haves to pay for the have-nots' health care, but the alternative is to allow the have-nots and their kids to die in the streets, and we have decided that isn't going to be allowed to happen here in the U.S. Therefore, we have to develop a system to spread the unfairness around as evenly as possible. Right now we do that by requiring hospital ERs to provide indigent care regardless of cost ; they in turn either eat the expense (and eventually shut down) or they pass the expense on to the customers who can pay (and/or their insurance providers).

There may be a better way to provide free universal health care services. The only way to find out is to have a rational discussion of the issue. But arguing over whether or not we are going to provide free health care to all Amercans is pointless. We have already decided that we are. Therefore, let's debate the merits and disadvantages of various socialized medicine options instead of bickering over whether or not it should exist.

[William Terrell]

That's some of it, but my friend was in the hospital for 6 days and the raw charges were over $11,000. Not all that much was done.

Hospital costs were high before the illegals started to access it wholesale, and the vast majority access emergency services.

Equipment may cost a bunch but the depreciation is also a bunch. It pays for itself quickly, after which the cost remains the same.

I talk to nurses and staff. Of course hospitals and other medical service sources are businesses, not eleemosynary organizations. But, regardless, they are the root of fantastically expensive health care insurance, and they don't have to be.

[gbs]

Social Security and The Department of Education out spend the Department of Defense. Guess where free health care will be on that list and which of those will get hacked to death. Do you need help guessing, hmmmm? Follow this clue to any European country or our neighbor to the north.