Is Private Health Care Squeezing the Life Out of Us?


Respectfully submitted by Lawrence E. Rafferty(rafflaw)-Guest Blogger

If you have had any medical procedures lately, you may already be aware of the enormous prices being charged by hospitals.  What you may not be aware of is just how expensive this medical treatment is and how relying on private health care may just be reducing our lifespans.  I apologize in advance on the length of the following examples, but they are necessary to understand the enormity of the issue.

“Brill’s article begins with the story of a 42-year-old Ohio man named Sean Recchi, who traveled to MD Anderson Cancer Center in Houston for treatment of non-Hodgkin’s lymphoma. He and his wife Stephanie had paid $469 a month, or about 20% of their income, for insurance that covered $2,000 per day of hospital costs. His financial troubles started when MD Anderson told him, “We don’t take that kind of discount insurance.”  But he had to go to the hospital. His wife recalled that he was “sweating and shaking with chills and pains. He had a large mass in his chest that was..growing. He was panicked.”

Stephanie asked her mother to write a check for $48,900.  Sean waited for 90 minutes while the hospital confirmed that the check had cleared. He was also required to advance MD Anderson $7,500 from his credit card. The total cost for the initial treatment and chemotherapy was $83,900, including a $15,000 charge for lab tests for which a Medicare patient would have paid a few hundred dollars, $283 for an x-ray that Medicare categorizes as a $20 charge, and $1.50 for a generic version of a Tylenol pill.”  CommonDreams 

Those charges were just the start of the enormous costs that Mr. and Mrs. Recchi would be subjected to while dealing with his illness.  His total bill for the beginning of his treatment for cancer was $83,900!  If Mr. Recchi had been treated under Medicare for the same procedures and blood tests his cost would have been much less.  “Had Recchi been old enough for Medicare, MD Anderson would have been paid a few hundred dollars for all those tests. By law, Medicare’s payments approximate a hospital’s cost of providing a service, including overhead, equipment and salaries.”  Time

The hospital in this example is a non-profit division of the University of Texas, but its profits are enormous.  ‘ “The hospital’s hard-nosed approach pays off. Although it is officially a nonprofit unit of the University of Texas, MD Anderson has revenue that exceeds the cost of the world-class care it provides by so much that its operating profit for the fiscal year 2010, the most recent annual report it filed with the U.S. Department of Health and Human Services, was $531 million. That’s a profit margin of 26% on revenue of $2.05 billion, an astounding result for such a service-intensive enterprise.1

The president of MD Anderson is paid like someone running a prosperous business. Ronald DePinho’s total compensation last year was $1,845,000. That does not count outside earnings derived from a much publicized waiver he received from the university that, according to the Houston Chronicle, allows him to maintain unspecified “financial ties with his three principal pharmaceutical companies.” ‘   Time

Not only is this hospital reaping huge financial windfalls on the backs of its patients and their insurance companies, the compensation of the hospital’s CEO, as noted above, is astronomical.  And that compensation does not even include the “unspecified financial ties” with pharmaceutical companies.  Does that mean that the CEO is allowed to receive kickbacks from some of the companies that his hospital may be using for their medications?

This is just one example, but the Time magazine article linked above delves into other examples of this type of outrageous medical costs charged to patients.  If the patients noted in the examples were able to take advantage of a Medicare for all  plan, the costs would be a small fraction of what Mr. Recchi was subjected to.  It is interesting to note that the Administrator of Medicare for the entire country made a small fraction of what this one hospital CEO took home.  “The Medicare administrator made a base salary of approximately $170,000 in 2010.”  TheNation

Just what do we get in terms of service and results for these extraordinary charges?  “Our private health care system has indeed failed us. We have by far the most expensive system in the developed world. The cost of common surgeries is anywhere from three to ten times higher in the U.S. than in Great Britain, Canada, France, or Germany.” Common Dreams  Our expensive private health care system does not even produce better medical results than the results achieved under Medicare.

“We now have a shorter life expectancy than almost all other developed countries. A National Research Council study placed the United States LAST among 17 high-income countries.

It wasn’t always this way. Since 1960 there has been a close parallel between worsening life expectancy and increased health care costs as a percentage of GDP. Most disturbing is our growing infant mortality rate relative to other countries. A UNICEF study places the U.S. 22nd out of 24 OECD countries in “children’s health and well-being.”  In startling contrast, Americans covered by Medicare INCREASED their life expectancy by 3.5 years from the 1960s to the turn of the century.”  Common Dreams

That last factoid on life expectancy is amazing.  We are paying far more than any other country in the world for our private health care system, but we are not getting the world-class results for those high prices.  Why do we as a nation continue to allow the medical industry to charge these exorbitant rates?  The answer is the lobbying money spent on our politicians in Washington and in state capitals all over this country.  We have to take over the for profit health care system and replace it with a Medicare for all type system or we will continue to overpay for less.  Will Obamacare help this situation?  It may, but we won’t know for a few more years if costs are controlled and results are improved.

Will Obamacare start us down the road to a single payer system?  One can hope, but I am not holding my breath.  Does it make sense to cut Medicare services and push back the eligibility age in light of the huge national costs incurred in the private health care system?  What do you think?

234 thoughts on “Is Private Health Care Squeezing the Life Out of Us?”

  1. Gene,
    the numbers don’t lie. The American public is paying for CEO’s and not health care.

  2. “Decades of data have shown time and again that the U.S. has the costliest health care system in the world by a variety of measures.

    Still, a report released by the International Federation of Health Plans (i.e., health insurance companies) today provides a striking reminder of just how much more expensive health care is for Americans.

    The report compared prices in the U.S. with prices in 11 other nations. It found that average prices in the United States are higher for most medical services cited in the report, but at the top end of the range, U.S. health care prices can be staggering compared to what citizens of other nations pay.”

    See the rest with pretty charts at:

  3. Gene:

    Script for CEO job interview.

    HR: “Question number one, Mr/Ms applicant. Do you have a conscience?”

    CEO applicant: “Um, yes, I do have a conscience.”

    HR: “I don’t believe we have any more questions. Don’t call us, we will call you. Thank you for your time.”

  4. OS,

    That can be remedied structurally as well in how the organization is set up, however, you’ll get no argument from me that CEO are in general overpaid and under producing for their generally overblown salaries. I’ll go further than that: it should be law that a CEO’s pay package – including bonuses – be indexed to whatever the lowest paid employee for the company makes. But unless you’re an artist or inventor or designer or something where your personal skills produce a unique product? No one’s time is worth $6K/hour. No one. And even then, their value is tied to market demand, not self-evaluation. Every single CEO (aside from inventors) that I’ve ever met could be replaced. Easily replaced. Greed is not only stupid, it’s vain and childish. If I were a CEO making 700 times what my lowest paid employee was making? I’d be embarrassed. Then again, I have a conscience.

  5. Gene,
    Even “non-profit” companies find ways around it. That is why we see the CEOs of non-profit health insurance companies paying themselves eight figure salaries. That money came from somewhere. Try to convince me why somebody with an MBA is worth over six thousand an hour.

    Convince me one cannot find a competent person to run a large corporation for less money. The pay of the Chairman of the Joint Chiefs of Staff is $20,587.80 a month. That comes to $247,053.60 per year. Of course, there are perks, including housing, uniforms, travel on military aircraft and free medical care, but even adding all that up, it does not come anywhere near eight figures per year.

    Now let’s see, how many corporations are worth more than the combined forces of the US military? How many have as many employees? How many corporate managers have as much personal responsibility? BTW, psychological studies show that military generals, air traffic controllers and airline pilots have the most stressful jobs. None of those jobs pay as much as a CEO of large “non-profit” health care companies.

    Sort of makes you go, “Hmmmm…..”

  6. Also, I guess I just have to ask, how exactly do you define expensive? Because it sort of implies that there’s a way to do “thing that government does” that isn’t expensive, and like Gene, I’d love to know how you go about providing a service to everyone (even poor folk who can’t afford it) for less money than a government would need.

  7. “Everything government does is expensive.”

    That’s sort of the point of a good chunk of what governments do, pooling resources together to work towards a goal that individuals all benefit from, but can’t afford on our own.

    1. Gyges,

      Ya think? Kind of amazing how some of the truest, most obvious concepts seem ungraspable to some. When public policy is faith based in some minds, denial is the only refuge.

  8. “Everything government does is expensive.”

    A blanket generalization and it can be engineered to operate on a not-for-profit basis. Where you run into waste in government is primarily in military spending. A single payer health care system can be set up in such a way as to force suppliers to the bargaining table. That is why Canadians don’t pay $45 dollars a pill for a med that costs $4 a pill to manufacture and that is why Big Pharma and the hospital corporations like Humana fight against single payer tooth and nail – it cuts into their profiteering done at the expense of patient’s lives.

    “I know there is a way to insure everyone receives health care without government control.”

    Really. Do tell. And I don’t want to hear the word “for-profit”. Because profit taking inherently takes money from patient care.

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