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. I forget at this point who wrote that the government would be there for those who did not have the funds to buy insurance. One way or the other the government will be involved. At the state level, for instance in Pa, there is an insurance board that is supposed to the watchdog over insurance premium rates and yet they rarely, if ever, deny the premium rate increases that are requested.
    There has to be a watchdog somewhere so at some level the government will be involved and have a place.

  2. Gene:

    and that is part of the problem, employers pay and the insurance companies pay and so people dont really think about what they want or the cost involved. It is forced on them, they have no control or very little.

    This isnt about greed for me, it is about the most effective way to provide low cost, good health care to people.

    Everything government does is expensive.

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

  3. And how exactly is private for-profit health care insurance putting people in control of their own health care money, Bron?

    It’s worked out so well up to this point to contain costs.

    If by “worked out” you mean denied coverage and colluded with suppliers and providers to keep prices artificially high because, hey, where else are people going to get it, eh?

    Yeah, I read that self-serving greed manifesto when it was first posted and I consider the source. The Objectivist Standard is hardly a place to go for a discussion of ethics that isn’t in favor of the greed first/me first ethos of Rand. There is nothing of value to be gained there. Unless, of course, you’re invested in health care insurance companies.

  4. And if you think it’s coming any time soon?

    You underestimate the power of graft.

  5. Bron,

    The end result will be reigning in price gouging by suppliers and providers like that which you pointed to above.

  6. Just found this in my email:
    “The key findings are as followed:
    • A lack of price transparency has led to dramatic price variations for identical
    medical procedures in similar geographic markets
    • Attempts by state and federal bodies to address the issue of price transparency
    have been highly fragmented and have done little to nothing to truly address
    the problem
    • Chapter 224 of the Acts of 2012 established a first of its kind governing board to
    look deeper into the problems associated with price variations
    • The current political climate in which the United States Congress works makes it
    such that prospects of passing federal legislation to address this issue are slim
    • As of now, no piece of legislation on the state or federal level have actually
    proven to decrease costs through increased price transparency”

  7. rafflaw:

    the end result of all of this is a single payer system which the government will manage.

    As Gene pointed out above, that is socialism.

  8. Bron,
    I have to chime in here. How is sending 40 Million new customers to private insurance companies socialism?

  9. someone is paying Bron, I am every month as is every other policy holder. When I am sick you pay for me thru your premiums when you are sick I pay for you. I have had over 12 brain surgeries for my trigeminal neuralgia (and getting my face washed under general anaesthesia (really) and other treatments, etc). I am sure it cost in the high 6 figures if not 7, I was always thankful for the healthy who had BC/BS. Now it has been years and I do not begrudge my premiums paying for the ill right now.
    It makes me think of taxes and I think this analogy is apt. I do not have children. I have heard those whose have grown up or have none who think they should not pay taxes. I disagree, not my kids getting educated but they will be my doctors, lawyers, engineers, workmen of the future so I pay my taxes willingly because at the end of the day it effects and helps all, including me.
    (Thanks Rafflaw)

  10. Well, Bron, once again you’ve shown you have no idea what socialism is let alone how it works. If you did, you wouldn’t equate Obamacare – which is a crutch for the private for-profit health care insurance industry with a couple of cookies to appease the masses like forbidding those companies from denying coverage for pre-existing conditions – with socialism. Obamacare is corporatist fascism, not socialism and – no – fascism and socialism are not the same thing. A single payer system where health care insurance is nationalized and payed for from taxes would a socialized system. Obamacare isn’t even close to that as it sits. As it sits, it guarantees private profits upon certain conditions of provision.

  11. leejcaroll:

    exactly what I am talking about. right now someone else is paying [the insurance companies] so people dont care and the sky is the limit for health care providers.

    prices will come down as people take control of the purse strings, always happens, always will. it is also why Obamacare is doomed to failure.

    socialism is a wonderful system, until you run out of other people’s money.

  12. Anon,

    I agree with you that Obamacare is a giveaway to the healthcare insurance industry; it was devised in large part by the Heritage Foundation several decades ago. I also think it’s woefully inadequate to improve many of the issues it purports to address.

    I also agree that Obama is not a liberal, but then again he’s not exactly claiming to be one either. I believe he sees himself as a centrist, veering slightly left or right depending on the issue, while often cloaking himself as a Progressive. In my view, generally speaking, he’s essentially a Friedmanite, allowing social policy to develop as a result of, and in response to, market forces; he recognizes that corporate investment is a main driver in society and favors it over government spending. Again, that’s a broad generalization but that’s what the preponderance of evidence will show.

    But while Obama may not be the one of the best presidents or even a particularly good one, he is far from being one of the worst, not even since the end of the dead ball era. There’s nothing concerning the healthcare law that would constitute an impeachable offense and to call for his impeachment is one of those impotent hysterical responses that are frequently heard from the Tea Party ILLiterati. There are many reasons to criticize this president, but you can’t remove a president during his term of office every time he does something you don’t agree with, just like you can’t go around shooting people you don’t like. It’s called taking things into perspective, and unfortunately it’s something too many people in this country are unable to do.

    Get a grip.

  13. “chip in” means very different things to different people. He still wants government involvement. (I have met the guy and was not impressed so I may not be objective and overanalyze.)

  14. leejcaroll:

    Carson said we as a society could chip in for people who could not afford it.

    I think people need to be in charge, checking the pennies. A huge insurance company doesnt care about $50 but I do.

  15. Found this reply to an article about Carson;s beliefs re health care:
    Catastrophic health insurance and medical savings accounts are not a solution to the health care crisis, unless you’re a high enough wage earner to pay the very significant expenses should a family member become ill. I don’t say this as a liberal. I say it as an self-employed independent who has been in the private health insurance market sice 1983, and opened a health savings account when the first MSA’s became available around 1998. I presently pay $12,000 a year in premiums for a catastrophic policy with a $7,500 deductible for each family member – or $22,500 exposure each year – and no prescription drug coverage. And, I put the maximum allowable in my account, whih at my age is $7,450. My total outlay then is $19,450. $7,450 sounds like a lot, until you pay for glasses, dental checkups and annual physicals for three family members – if just one family member has a medical event – and our daughter has had two surgeries since 2007 that required me to pay the full $7,500 deductible plus a couple of grand in post-surgical prescriptions – the money is gone.

    There will always have to be government involvement (and one story re Carson I read had him talking about the government still being the provider for cartastrophic – closed window so no longer have the link)
    What about those who cannot work. I became disabled at age 25, where would I get my health care money from to grow a savings account?
    What about disabled children?

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