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.

[speekinout]

Health care isn't free, agreed. But many people abuse that notion. There is no real reason why healthy people should go to the ER (esp. in ambulances) for minor illnesses. But they do, and we all pay.
We all should have to take some responsibility for our use of the health care system. Saying that poor people have no responsibility is making our problem worse, and it really isn't helping them.

[Fairview]

. . .my friend was in the hospital for 6 days and the raw charges were over $11,000. Not all that much was done.

You think not all that much was done. You have no idea what was done, and neither does your friend. Behind the scenes, tests are being run, consults are taking place, and if you saw an itemized billing statement from the hospital and were qualified to interpret the procedure codes on it, it would reveal that a lot was done. If your friend was in the hospital for six days, something pretty significant was wrong with him because nowadays you don't get admitted as an inpatient unless they're going to give you a brain transplant.

[Fairview]

There is no real reason why healthy people should go to the ER (esp. in ambulances) for minor illnesses. But they do, and we all pay. We all should have to take some responsibility for our use of the health care system. Saying that poor people have no responsibility is making our problem worse, and it really isn't helping them.

Thank you!

[goodnesswins]

My ONE HOUR visit (my husband timed it) to the emergency room last summer for a slash (3 stitches) between my thumb and forefinger (durned avocado seed!)....cost $1300 - my husband's company got it negotiated down to about $1100, and then the insurance paid about $900. When I got the bill I had a question about some of the items (I had requested an ITEMIZED bill).....they ended up telling me they would forgive the $240 I was supposed to pay (they had ignored my letter for a long time and I sent THEM a BILL for my time in responding to their stupid bills and trying to send me to Collection.) Anyhow....ONE HOUR at the rack rate was $1300. But, they must have a lot of profit margin built it, because ultimately they got paid about $900 - plus a fee for the Physicians Assistant.

Oh, and I saved myself about $75.....I took the stitches out myself a couple of weeks later, using the kit(scissors, tweezers, etc) we TOOK home with us from the Physician's Assistant who had put the stitches in. (He said we were paying for it, and my husband asked if we could have it - he thought the scissors would be great for fly fishing). NO, I never saw a REAL Doctor.

LESSONS LEARNED:

Everything is negotiable
Always ask for itemized bills - even if you have insurance
Take everything in the room that a nurse/doctor opens with you - it's yours.
And, of course, have insurance.

[Jacquerie]

Thanks for the insight. Comments like yours, from inside the national health care systems of other countries will never see the light of day in the old media. Once the nominating conventions are over, and the beast or obama get their general election campaigns fired up, we'll only hear how great socialized health care will be. I predict the people will embrace it and the courts will find it constitutional. My two cents.

[Jacquerie]

Formal, socialized health care will never work as envisioned.

Demand will be near infinite, supply will be finite. Health care will have to be rationed by availability of services. We have all heard the stories of year long waits for otherwise routine dental care in Britain, or Cat scans in Canada.

Health care is too complex to be solved by government. Only the free market can possibly provide something remotely close to reasonable care for a reasonable price.

[originalbuckeye]

I have lots of stories. My sister-in-law spent her first night, after giving birth to her first child, in the hallway of the hospital. This was in the 70's. My husband's cousin waited 2 years to have her gallbladder out.....elective surgery. I could go on and on. That will be for the next thread here on a possible NHS.

[Publius Valerius]

(Except for life-saving emergency care; I think all of us want to give that to those who need it)

I think the problem with this theory is that if you're going to give everyone life-saving emergency care, you might as well give everyone ALL care, because it's a heck of a lot cheaper.

For instance, someone who is poor has strep throat. Strep throat, if left untreated, can develop into rheumatic fever, which can cause heart failure and death. For the price of four dollars in penicillin, the strep throat could have been treated, but now we--as taxpayers--are stuck treating a patient who could have heart failure, which is a much more costly scenario.

I'm not saying that we should treat everyone. In fact, I don't think health care is a right at all; if you can't pay, you shouldn't get treatment. That said, if you're going to treat emergency cases, seems to me like it's a lot cheaper in the long run to treat everyone universally.

[William Terrell]

I know exactly what was done. She was in for observation and had two blood tests and got one drug. That was all.

I think a cost accounting of any hospital would be interesting.

[Fairview]

So what exactly was on the itemized billing statement she received? Billing statements are quite exact and show every last pill, injection, and gauze pad. What added up to $11000?

[B-Chan]

As I said, the debate over whether or not we are going to have a system of free, universal health care is over. The only thing left to argue is how best to implement the system.

[daviddennis]

I'm sure the machinery totalled in the millions, but I only spent about an hour all total in the rooms where it lived.

So if you have a $1,000,000 machine and the things last well over ten years, that machine is worth only about $273 a day. They appear to run them 24/7, but for the sake of simplicity let us say the machine is used ten times a day. This means it should cost me about $ 27 to use it. If the person who ran the machine for me is worth $50 an hour, and she does two tests in an hour, then that should cost me $25. Mark that up by 100% for overhead and the test could be reasonably worth $100.

Of course if utilization is higher than I say - and I'm sure it is, since there were patients stacked up like cordwood waiting for it, as I was - this figure would be way, way, too high.

The actual bill for the test was $1,200!

Do you see now why I am so puzzled, and outraged, by this?

So some poor homeless guy with no money comes in and would be charged that. Because I have insurance, they fought down the bill so the test probably cost me only about $400. That still seems like at least four times more than the fair value of the service.

I don't understand why a cost structure like this is tolerable. Do you know of any cost breakdowns that show where the money goes?

Oh, it's cheaper in the Philippines because people are cheaper. Doctors make about $300 a month. I could afford to run my own hospital over there, with one patient -- me -- if it proved necessary.

I guess I can do that because I know in advance that I won't sue myself ...

D

[Spyder]

Oh, it's cheaper in the Philippines because people are cheaper.

You said more in that sentence than you realize. Think about it.

[Spyder]

My ONE HOUR visit (my husband timed it) to the emergency room last summer for a slash (3 stitches) between my thumb and forefinger (durned avocado seed!)....cost $1300

Question - was your own doc or whoever covers after hours unavailable? Do you have a Doc-In-the-Box nearby?

The ER is meant to handle whatever comes in - they have to be prepared to run a gazillion tests should you pass out while you look at them stitching you up. If they don't and you do have a heart irregularity, you can sue them.

You got out in an hour? Wow! They must not have been that busy that day. Nonetheless, they had to have sufficient staff available to cover an onslaught of 5 or 10 patients at the same time (or more, depending on the ER).

[Spyder]

I think the problem with this theory is that if you're going to give everyone life-saving emergency care, you might as well give everyone ALL care, because it's a heck of a lot cheaper.

Yes and no. One of the big problems with a lot of the uninsured and Medicaid-type patients is noncompliance. Some is understandable (lack of reliable transportation to whatever facilities), some ignorance/inability to understand complex directions, and some just downright laziness.

I'm sure there are statistics somewhere, but the failure rate (patients who don't show for appointments) is huge for those getting the care for "free."

[goodnesswins]

It was a Sunday morning......and NO they weren't busy....and I asked if I should go to an immediate care facility....they said "No" - we have two tracks....you're going into the immediate care track.....plus, I would NEVER call the "doc in a box" for getting stitches....they'd just charge me at least $75 to refer me to someone else.....We consider ourselves in charge of our own healthcare, and make our own choices....this was the choice we made that morning.

[Spyder]

plus, I would NEVER call the "doc in a box" for getting stitches....they'd just charge me at least $75 to refer me to someone else

I don't understand - that's exactly what every urgent care facility I've seen is set up to handle. Something that needs attention fairly quickly but isn't a life-saving emergency.

[daviddennis]

I don't think so; it was not meant to be a value judgement, simply a statement of fact about the cost of hiring people.

In no way does that mean that the people there are less intelligent or capable. Their dysfunctional economy is what makes them cheaper to hire, not anything intrinsically bad about them.

I met a very nice doctor over there and felt she was as capable as anyone I met in the US.

Thing is, I'd rather die than pay $100,000 for a lifesaving operation. It just feels like giving in to an extortion plot, not buying a service.

D

[Spyder]

In no way does that mean that the people there are less intelligent or capable. Their dysfunctional economy is what makes them cheaper to hire, not anything intrinsically bad about them.

I realized your intent, but the words mean a lot more. I'm not disparaging Filippinos in any way. Check out my profile - I live in a primarily Filippino neighborhood, and they're the most wonderful patriotic people that Hawaii has been blessed with.

I had a Filippino boss in one job. She was awesome, though I never could understand how folk could send their kids back to grandma and grandpa half a world away and not see them for a year or two or 3 at a time. My boss confided in me that she was torn between two completely different cultures. In America she had any appliance she wanted, accessibility to art, theater, etc., but the stress level of her job was huge. In the Philippines she could stay home a day or two if she felt like it, more of a mañana philosophy. She wouldn't have the lifestyle though. Overall she decided the stress was worth it. I would imagine that's the impetus behind many of our neighbors. It's a cinch they work twice as hard as most others here.

No, by "cheaper people" I meant that they don't have our conveniences, our demands. My question - do you expect to live your lifestyle as is while expecting your doctor to live as a Filippino in his own country? Want him to be working mowing lawns on the side to make ends meet?

[daviddennis]

I don't think any doctors mow lawns on the side, not because they are not poor but because mowing lawns pays even worse than medicine. Baseline labor is about 200 pesos (US$ 4) a day plus 50 pesos ($1) for lunch.

My doctor or any other professional lives his own life and has his own income and expenses. As his patient I would pay whatever his fees were. If I hired him fully time, hypothetically, then I would pay him the going wage, whatever it is.

A single female friend of mine over there lives a lifestyle that compares to a US middle class lifestyle with the exception of not owning a car. Her expenses are about $1,000 a month. She makes her money halfway through her job and half from a side business she runs. She has a beautiful house on which she was her own contractor. She has a $300 cellphone that contracted an annoying cellphone virus I had to fix for her. I'm just glad I was there to help.

So you can see doctors are not paid well at all. They are paid better than laborers and that's about all you can say.

I really loved the hospitality and warmth of the Filipino people, which is why I mention that country as an interesting benchmark. It also seemed to be easy for me to meet and get along with people there, while that has not proven nearly as true in the US.

D