Health care costs: government financing the big culprit; malpractice premiums much less so
Today’s Missoulian printed an article by two Heritage Foundation scholars that contains two useful points those of us concerned about “Obamacare” need to consider. ( I couldn’t find the Missoulian verson online yet, so here’s another, and more complete, version from the Salt Lake Tribune.)
The first point is the overwhelming role of the “third party payer” system in driving up American health care costs. From 1965 (when federal involvement in the system was greatly expanded) to 2005, government and insurance company payment to providers rose from 48 percent of health care dollars to 85 percent. Since that time, “inflation-adjusted per capita expenditures have increased approximately sixfold.” (We are now seeing this phenomenon repeat itself in Massachusetts in the wake of expansion of government medicine there.)
The other point is the contribution of malpractice premiums. The direct cost of malpractice amounts to less than two percent of health care spending. “Defensive medicine” to protect against malpractice suits amounts to another ten percent. Of course, some of the two percent — possibly most—is completely legitimate, because genuine malpractice does occur. And the ten percent probably would be much less, if so much of the defensive cost could not be passed onto third-party payers.
Many conservatives argue that the federal government should (1) reduce amount of federal dollars that go into health care but (2) override state tort systems.
They are right about the first: Federal financing has caused the crisis. But they are wrong about the second: Like federal financing, a federal takeover of the tort system likely would have unintended consequences that would make things worse in the long run.
The article also explains why “technology” is NOT a fundamental reason for the cost increase: “In most fields, such as computers and cell phones, new technology usually increases quality and reduces prices. Health care prices, though, often go the opposite way. Not always; drug prices drop when generics replace brand-name drugs, and expensive drugs sometimes replace even-more-expensive surgical interventions. But often, new health technologies increase prices. Why?” [The article then notes the third-party payer system’s perverse incentives.]
The Missoulian omitted the language in quotes, but you can find it in the Salt Lake Tribune version.
Dan Rather has captured Obama’s skill in selling health care reform: http://www.youtube.com/watch?v=KD9uG-ManrY&feature=player_embedded
So, then, if I read you right Rob, you are correct about this, and have been from the beginning, and you have found yet more information, after a careful search, that affirms yet again that you are yet again right about another thing.
You should write for the Onion. You are the classic “area man.”
“government and insurance company payment to providers rose from 48 percent of health care dollars to 85 percent” This is odd considering that I have Government run Health Care through a private insurance company (Tricare) and just reciently recived a report of payment from an emergency room visit. Benefis charges about $258.00 for an emergency room visit, the insurance paid them $58.00 and they had to write the rest off. Some of the problem is the high prices the hospitals charge, not to mention the private insurance company premium folks have to pay. Whereas I agree folks should have a choice that choice should not have to include high prices for services or insurance premiums
Rob,
what is so wrong with government provided health care? Why not allow folks to have a choice of insurance companies and at the same time also have the choice to have a government form of health care insurance? Although it did require me to serve 21 years on active duty I have government run health care. The government contracts out to an insurance company that wins or several companies that win the contract depending on the locations. I pay a whoping $385.00 per year for my complete family for the coverage. If I have to use the emergency room I pay a (I believe) $39.00 co-pay, all other visits and supplies are $12.00, the insurance pays the rest according to the set prices agreed to with in the insurance-hospital agreement, the hospital must write-off the rest. Now if the hospital and insurance company can agree that a reasonable cost for an emergency room visit is $58.00, why in the hell does the hospital try to charge others $258.00? When was the last time you sat in the emergency room waiting area for two hours with a sick child throwing-up and crapping all other themself, then waited another 1 1/2 hours in the room before the doctor can to see your kid? You tell me is that worth the $258.00 charge just for the emergency room, not including the doctor fees or any supplies? Hell if I had to pay thousands of dollars a year for insurance I would have sent them a dam bill.
So I ask you, What exactly is the cure to folks being overcharged for medical care and health insurance. All you scholars can throw everything into the fire of why it is so bad, but I have yet to see any of you put some water on the fire with properly researched cures to this problem.
(PS) I still have a choice of what doctor I see under my health care and what the proper treatment is going to be. Yes I have to see the family doctor first and if needed get a referral. I have a young son who was born with an eye condition that required surgery in both eyes and still requires two more surgeries. He has to wear contact lenses (special ones for children) that cost $240.00 total per month with annew pair required each month, times that by 5 years. Now take $12.00 per month and times that by 5 years, that is my portion of the payment. My government run health care (Tricare) has always been there for me and my child. Can you come up with something better? Here is my challenge to you, present us with your idea for health care coverage where folks are not getting shafted in medical care costs or insurance premiums.
Mark J
I pay $7,500 per year for my health insurance for one person (not family) coverage. What’s the difference between what you pay and what I pay? – The taxpayers aren’t subsidizing my plan. You ignore the part of your health care costs that I’m paying for on your behalf.
Mark J
You can’t possibly think that $58 is a reasonable charge for an emergency room visit.
Anonymous 10:32, subsisized by you and I and every tax payer, remember just because I retired after 21 years of service does not mean I do not pay taxes, to a tune of $4,126.00 this year. (remember however, you call it subsidized, I called it earned through 21 years, and at times seeing things that I only wish I could get out of my mind). Ask yourself this, why is it that you are paying $7,500 per year for just one person, I cannot explain it.
Anonymous 10:36 do you think that $258.00 is a reasonable charge for the emergency room visit, not including the doctors fee and medications or supplies used? What is it that the emergency room supplies that is worth $258.00? The room and the folks who check you in, oh yes and lets not forget about the person to takes your temperature. Can you reasonably justify that this is worth $258.00?
The vast majority would agree that they do not want the government involved or suppling their health care, but then what do you propose or are you happy paying that $7,500.00 plus what ever co-pay or cost share you have?
Anonymous 10:32, in order for anyone to claim that the $258.00 for the mergency room visit is a reasonable price, we would need to break down the cost factors that make up the $258.00 to see if those costs are fair and reasonable.
For example, when was the last time you had a plumber come to your place of residence? What did they, or the company, charge you per hour for labor fees, around $55.00 to $60.00?
You pay it and think, this is the common charge, but is the charge reasonable? The company is also adding profit and overhead charges to the total overall bill. The average wage of a plumber in Montana is around $25.82 add the 56% employer burden and the fair and reasonable labor rate you should be paying is $40.27. So is the $55 to $60 fair and reasonable or are you getting ripped off because that is the so called going rate that everyone thinks is fine?
So going back to the emergency room fee, I bet if we were able to get the break-out of associated costs it would not total $258.00.
Mark J, your analysis fails to include that the company would also add in bad debts from other customers.
Craig,
whereas that may be true, would you consider it fair and reasonable to be charged for someone elses bad debts? Personally I say BS to it, but in the medical field they pass on the bad debt or loss to those who have the ability to pay, for those who do not they just keep passing on the debt. So is the price fair?
Mark J, I don’t think fairness has anything to do with the costs a business must retire or face going out of business. A hospital is no different. When that hospital must admit all comers for treatment, they have that issue. A plumber can be more selective.
hmm id love to see more of this subject ahaha