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?
GMason:
I want a K Street lawyer, I dont want an overworked pro bono lawyer. I want access to the same lawyers as Bill Marriott or Bill Gates.
Gene H:
that is true but an ER doesnt wait for months to treat someone.
I have never been denied any equipment or drug or procedure which has been prescribed and neither has my daughter. My daughter is alive because of our health insurance companies and we have had more than one in the last 20 years and all have paid, sometimes they quibble about a charge but they have all paid. And it has been millions of dollars and we have never once had to go to a lawyer, the most we have had to do is get a case manager provided by the company. I cannot say enough about our experience with private health insurance.
If they have done that for my daughter, they have done that for everyone. I dont believe that insurance companies kill people on a regular basis by denying coverage. I am sure there are instances but who would use their service if they did that regularly? Why would I design a building that fell down? It would be all over the paper and I would never work again.
This is a very good post, except for one small problem. It is anecdotal and only one data point is discussed. Still, it is a very worthwhile read.
May I suggest also reading the following: The Cost Conundrum – The New Yorker
http://www.newyorker.com/reporting/2009/06/…/090601fa_fact_gawande
Dr. Gawande has a lucid style which makes his small study a joy. In addition, the good doctor practices what he preaches. St Jude is an example of positive medicine but I think that the Mayo Clinic practice should be the standard for medicine. Everyone at the Mayo works for a salary, and none of those salaries are outliers. Physicians are evaluated with metrics that include teamwork and patient care, among other more common metrics. The point at The Mayo is to summon all relevant medical specialities to focus on a patients care. It is their method and the culture of the clinic. Dr. Gawande has written about the Mayo Clinic as well.
I believe everyone would benefit from Dr. Gawande’s writing.
Frank Hammerstrom
Not just Mayo but Cleveland clinic:
http://www.nytimes.com/2009/07/25/health/policy/25doctors.html?_r=0
http://www.slate.com/articles/news_and_politics/prescriptions/2009/07/hold_the_mayo.html
Bron if you cannot afford a Lawyer one will be provided for you
nick:
you know what I want? I want legal services paid for by government, I have a right to affordable legal services, why should I have to pay $250/hour for a lawyer? Why should they have fancy offices and cars, they should get $30/hour from the government when I need a lawyer.
Apparently the concept of triage is lost on some people. Sickest people first, people needing band-aids, the line starts there. This is how ER’s everywhere work and how critical care is administered in the most dire circumstances of war. The point is that under single payer everyone gets treatment. Without having to declare bankruptcy. Without having to deal with the bullshit from the hospital the poor man in Larry’s story is forced to deal with. Without people dying because they couldn’t afford to underwrite some insurance company executive’s salary and bonus and perks.
In almost every Western country, health care is considered a basic human right and it is heavily socialized where it isn’t universal. This leads to the benefit of having healthier citizens/workers and reduced costs on doing business in general. The only people “hurt” by a single payer/socialized system? Are health care insurance companies. The kind that regularly deny treatment because it is profitable for them to do. They are in the premium collection business, not the paying claims business. That is the simple reality of for-profit insurance. People die so they can profit. That is a death panel for profit. It is not medical triage. They aren’t doctors. They have no business in determining who gets what care based on their quarterly reports regarding profit only and not medical necessity. Screw ’em.
America is nothing but utter corruption now. Make of it what you will.
Nick, I am so sorry for your loss.
Years ago I changed pharmacies and they thought I did not have pharmaceutical insurance coverage. I was told I owed them something like 500$. When I said wait I have insurance and that is not the charge for the med that I am usually charged I was astounded to find that without insurance the charge is higher then if you have coverage.
It is the ridiculous charges too. I have to get a eyelash pulled every once in a while. I usually do it myself but on occasion, because they sometimes grow in white and fine I cannot. It takes maybe a minute, usually done by the fellow not the attending, nothing special in terms of instrument, just a tweezer. It is charged as “surgery” for $125.00.
I do have some docs who have ‘eaten’ my deductible, they know my situation which is precarious, but it is very very rare.
To have to put up thousands to even get the care is absolutely obscene.
rafflaw:
because it is true.
Thanks, raff, for showing us once again that greed is the most lethal disease of all.
Are the majority of people in the US not screaming about all this because they a) don’t read and didn’t see the Time article, your blog and others? b) because they don’t require hospitalization or know anyone who does? c) they don’t question anything? I’ve lived w/ cancer since ’07 and my insurance company has denied testing needed to determine the current extent of the spread of the cancer. I “get it” – I don’t want to pay the exhorbitant costs either. I’m Medicare-eligible and hadn’t done so bec. I have health insurance through my spouse. I guess it makes sense to get it so that I can be tested and treated, eh?
How does St. Jude do it? They treat all their patients for free including housing them, providing activities, etc. I know they depend on contributions from corporations and individuals. Yet, the doctors and nurses, specialists and others have to be paid. Are they making less? Does St. Jude, because of how it operates, control its costs so well that it costs less to be treated there?
There have to be solutions or it all becomes a “death panel” when one can’t be tested and treated for anything.
Mike,
Thanks. Your personal perspective is important.
nick,
Thanks, but I am sorry about your sister. If only your brother in law could charge the hospital interest for the delay!
On what basis are you claiming that the single payer system will make you wait “months for basic healthcare”?
Single payer. The solution that allows you to wait months for basic healthcare. Yeah, where do I sign up??
Larry,
Great blog on a most important subject. All my life I been extraordinarily lucky to have great health insurance and now medicare. Considering my heart issues this has been a boon and is the reason I’m alive. Through the years and with my many hospitalizations I always was interested in the bills, althoough I was covered. The charges are uniformly excessive and not at all in line with actual costs. This must change! Health care shouldn’t be available to just those lucky enough to be covered with insurance. Sinle payer is the only way to go and most civilized nations know this.
Thanks so much for your important report. I thought the situation was bad from articles and personal accounts of friends and acquaintances. But I was totally ignorant of HOW bad it had become. This is in keeping what so many corporations and industries are doing: going for profit irrespective of the cost to the consumer. To contradict Gordon Gecko, in this situation in particular,”Greed is NOT good.” I concur with Dredd. We need to empower Medicare … and put a true universal healthcare system in place.
It is time to take profit making organizations and fake non profits out of the health care business and put a single payor system in that that would stop price gouging and out right fraud in medical billing. It is also time that the government insisted that hospitals start practicing what we should have learned since the late 1800s that germs cause disease and that failure to clean medical instruments and require all health care professionals and other hospital workers to clearn their hands and ensure that their clothing is clean causes institution wide infections, many of which are resistant to drugs, cost lives and money every single day. It is now more dangerous to go to a hospital in terms of infections than it was in the 1950s. Health care is too focused on profits. Patient care is suffering thus causing more costs to patients and the government and perversely more profit to the providers.
rafflaw, Good post. I just read the Brill piece. My sister died @ MD Anderson. Make no mistake, the care is second to none. However, the “pay up” now was something my brother-in-law had to endure as he watched the woman he loved slowly die. Four years later they still owe him 15k that he had to “put up” pending insurance review. The insurance company eventually paid the hospital but my brother-in-law still awaits reimbursement from MD Anderson.
Hopefully no Hitler references will ensue this time.
Thanks Dredd.
“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?”
No, it makes more sense to strengthen the Medicare / Obamacare systems before the private orgy of money for nothing takes it all down.
Great post.