Medic! (Or, Why does health care cost so dang much?)

There’s been a lot of buzz lately about the costs of medical care. I first noticed the trend with an op-ed by Steve Olsen in the Standard Examiner last month and the resultant follow-up from The Deseret Spectacle. Since then, it seems like everyone in the bloghive has an opinion on what to do to solve the problem. Now the United Way is getting in on the game by proposing a universal health coverage system a la Massachusetts. Just like the plan from back east, it doesn’t do a thing to actually make health care cheaper.

I’ve already written at length about what we can do to try and drive the costs of health care down. If we look at how Europeans with their “ ehic” have managed, maybe we can learn a thing or two and leave the heavy politics aside. A combination of patent reform (read: stop granting 20+ year government monopolies), greater HSA options, reduced educational requirements for low-level doctors, and doctor-run cooperatives for malpractice insurance would go a long way towards dropping the costs of medical care. Plans that simply subsidize the current high costs of medical care, like Romney’s plan and its sister plan from the United Way, do nothing but try and mask the true costs behind a mountain of tax dollars. An ostrich approach isn’t going to cut it on an issue of this level of import.

Even after we’ve cut down the costs of health care, it’s going to take more than just availability to get them used. After all, you pay $15 to see the PhD with 20 years of medical experience. Even if the visit to a lab tech was free, you’d probably still spring for the Cadillac treatment even though the insurer would save a bundle otherwise and you’d be getting the same standard of care. Simply put, we don’t feel enough of the cost difference to want to change our habits and end up being yet another drop that doesn’t believe he is responsible for the flood.

When I was without insurance and needed to see a doctor, I frequently paid a lot less than what I would have with an insurance policy. “Wait,” you might say, “that can’t be possible.” Not so fast, slick. If you only need to see a doctor once or twice a year, out-of-pocket visits will probably run about $150 without insurance and $30 with insurance. That, however, doesn’t include the cost of the insurance you aren’t even using. Add on the $120/mo that your employer withholds and now you’ve just spent nearly ten times what I spent out-of-pocket that year. It’ll go even higher when you figure in the portion of your health care costs that your employer covers which, in my case, adds about $6,000 per year. Holy wasted money, Batman. Paying $7,500 a year for $150 worth of use? That’d make anyone feel kind of scammed.

Even with CoolestWifeEver’s semi-recent health issues, we would have still saved a couple thousand a year in medical costs had we been free to manage all of that money ourselves. That’s taking into account an MRI, a spinal tap, numerous visits to a neurologist and a bunch of medication. Of course, we might have been able to get a better deal on medical care had we dropped a wad of Benajmins on the table. Every doctor I’ve ever gone to has done cash discounts. We probably would have also shopped around for places to fill prescriptions and checked out MRI pricing from a few different tech labs. Because pricing no longer mattered after the $500 deductible, what would we care if it was $1,500 or $2,500 for an MRI? It wasn’t our concern anymore.

And it’s not going to be our concern so long as our consumption of medical care is driven by grossly-deflated medical costs. I don’t like waste, but I have a hard time finding motivation to comparison shop medical services to save my insurer money. They don’t give me any special rates for picking cheaper doctors or service providers. Until I’m in charge of all of the money, I’m just another drop in the flood, albeit one that acknowledges that I’m part of the problem.

I like what Frank over at SUMP has come up with: get us on HSAs and put us in charge of pricing. Once we’re actually consumers of medical care and not consumers of medical insurance, we might get around to demanding some real and lasting changes that benefit all of us, not just a select few of us. Once you treat people like responsible adults, you’d be amazed what you end up with.

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7 Responses

  1. Bill Fox says:

    and that’s one of the problems, Once you have insurance it all becomes like Monopoly Money and loses it’s real worth. I am approaching retirement age and have some real decisions to make as far as coverage. I am now leaning towards a $5000 to $10000 deductable as the one thing I don’t want is for some catastrophe to wipe out the 33 years of work that it has taken to get to this point. The charges for even a short hospital stay are criminal and I guess a lot of that has come about because of the sue first mentality that we have developed. My wife and I saved up the money we needed to have our 1st child. A whopping $300 . By the time that #4 came along (she was expensive even at birth) the current cost including the same 2 day stay, was close to $5000. What we really ought to do is make law firms responsible to buy everyone health insurance . Talk about poetic justice.

  2. The United Way, I trust, has altruistic motives in their potential proposal. As did a fair number of Franklin Roosevelt’s New Dealers. The problem is, IT DOESN’T WORK. There is a litany of failed social experiments such as this. Two of the most visible and most ironic are our current Medicare and Medicaid systems. Social Security is even worse.

    Yes, we have a huge problem. And we need to fix it. But it’s probably wise to look at the history of what caused it. The problem with health care in America is spelled g-o-v-e-r-m-e-n-t.

    It is beyond me how a thinking person can really propose greater government involvement in a problem that government largely caused. (Bill Fox is correct that litigiousness has caused some as well, and you suggest some other reasons, too.)

    I can’t escape wondering that these people must be thinking with their hearts and not their brains. Whoever proposes such a scheme proposes to either tax America into oblivion or cause our debt to rise so astronomically that we will have next to zero economic respect from the nations of the world. Businesses are leaving Massachusetts in droves for the reason that Mass has a universal-type health care plan. (Mitt Romney was one of its cheerleaders, by the way.)

    The ONLY solution is to encourage Americans to exercise responsibility for themselves. Otherwise costs will rise, perhaps exponentially. HSA’s are a large part of the answer to the huge health care problem that we face.

  3. The problem with American health care is actually spelled g-u-v-m-i-n-t. 😉

  4. Bill Fox says:

    While I agree that forced health care is a big negative for business it is a bit naive to say the reason businesses are leaving Mass. in droves is health care. There is no place losing more businesses than Ca. and we don’t have health care (It looks like that will change). Regulations, forced benefits,(unemployment comp) taxes, housing & real estate costs are constantly causing a shift in business. With todays communications technology these shifts will do nothing but escalate. Yes insurance companies will need to make money but I cannot believe that if lawsuits were capped with any punitive damages going into a fund in which neither the lawyer nor the plaintive could benefit from that we’d see a dramatic drop in punitive damages and in health care costs. Any punitive damages could be used to help fund Medicare and thereby help with a reduction of the national debt.

    I also believe that illegal Immigration is a large factor in the rise in health care costs and hense insurance costs. As long as there are those getting a free lunch. Those of us that have to buy our lunches will pay more for lunch than we need to. Ca.’s new proposed program will even provide insurance for those not in our country legally. (I think I’ll move to Idaho or Montana as they seem less willing to confiscate their citizens money for illegal activity)

  5. Reach Upward says:

    I hear folks in favor of government-run health care frequently say that government programs don’t have to run inefficiently. Sorry, but that’s not the case. Study organizational behavior. Big bureaucracies are incapable of running any other way. Sure, you might get the right people elected and appointed that will run the bureaucracy at its best, but even that won’t cut it.

    The fact is that a bureaucracy is what it is. This doesn’t mean that the people in it are bad people or that they don’t care. It is simply a recognition of a fact. Even if you have a good trainer, a cat is still a cat. You might get it to do some things a dog does, but it will never be a dog.

    No matter how well you run a bureaucracy, it is still a bureaucracy and it is completely incapable of overcoming hurdles that prevent operating efficiency, evolution of new technologies, and meeting consumer’s needs and desires.

    The only way to achieve some level of operating efficiency in a large bureaucracy is to enforce military type discipline top to bottom. Let’s see how well people like that when it comes to health care. Not only will this not work for the consumers, we would never tolerate health workers having to work under those conditions.

    I’m sure that the people behind this latest push to create Massachusetts Jr. universal health care in Utah have the best of intentions. But that doesn’t mean that the tool they assay to use to achieve their goals will actually work. Evidence shows that it won’t work in the long run. As has been found elsewhere, the bureaucracy must eventually limit choice, reduce quality, and attract workers that will enforce these policies. It doesn’t happen all at once. It starts with the best of intentions and ends up going downward from there.

  6. Jesse says:

    I seem to recall there’s a saying about good intentions and roads. I just wish they wouldn’t make the use of their brains and their hearts mutually exclusive.

  7. Kristi says:

    Everything has pretty much already been said, but I wanted to chime in something about our plan. One thing I’ve liked that they do is offer refunds if you participate is these healthy living programs they have set up. It’s small, but worth getting a few hundred back. At any rate, it’s a step in the right direction, I think.

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