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?
Bron,
you need to re-read the linked articles above to see how much is paid by Medicare and how outrageous the charges by the so-called not for profit hospital was collecting and how much the doctors were charging. The free market that you are so fond of, is the same market place that sends thousands into bankruptcy every year. And with poor results when compared to the rest of the world.
Bron can run for office if he can find a workable solution to the Medicaid and Medicare Solvency Issue…….
Bron, I am on medicare. I don’t have money to pay for a private doctor, to pay even 250$ a night for hospital care. What do propose we do about those who are elderly/disabled/retired and reliant on medicare?
rafflaw:
no disrespect but no it does not. when a pulmonary specialist is reimbursed 30.00 dollars for a visit it is coming out of the doctors revenue.
What I would prefer is government out of medicine altogether and to let the free market decide. I am extremely confident that should it ever occurr, I will pay $50 for a visit and $250/night in a hospital. Aspirin and Tylenol will cost a buck and the food will be very good.
The history of Lazik surgery tells me this as does the history of the Hilton Hotel chain.
Competition is good, free markets are good, freedom is good. Those 3 things have done more for human beings in 200 short years than all the Marxist ever born or who ever will be born. And if we had more of it we would do even better. We have too much statism now and more of it isnt going to do anything but make matters worse.
mahtso,
most of the discussion that I can remember over a single payer plan was a national system. Maybe our other readers remember differently.
Bron,
Medicare is not making up the difference on the backs of the doctors. The system looks at the actual cost of the treatment or procedure and pays accordingly. Would you prefer the method noted in my article above where the non-profit hospital was charging huge markups on the backs of the patients?
A shortage of doctors?! Maybe being a doctor is too close to being a serf.
Waiting longer for elective surgery? In 2005 the Canadian Supreme Court wrote “Dr. Lenczner also testified that 95 percent of patients in Canada wait well over a year, and many two years, for knee replacements.” Maybe things have improved since then.
I am curious whether people are advocating for a system like Canada’s where each Province is the single payer (meaning that in the US it would be each State) or a nationwide system.
Elaine:
“Even the U.S. Medicare program has 80% to 90% lower administrative costs than private Medicare Advantage policies. And providers and suppliers can’t charge as much when they have to deal with a single payer.”
Our daughters pulmonary doc gets $30/visit from medicare [no I do not receive medicare]. No wonder it has lower costs. They make them up on the backs of the doctors.
Great link Elaine. You can’t argue with the results when the US is way down the list when it comes to health care.
A Canadian doctor diagnoses U.S. healthcare
The caricature of ‘socialized medicine’ is used by corporate interests to confuse Americans and maintain their bottom lines instead of patients’ health.
August 03, 2009
By Michael M. Rachlis | Michael M. Rachlis is a physician, health policy analyst and and author in Toronto.
http://articles.latimes.com/2009/aug/03/opinion/oe-rachlis3
Excerpt:
Universal health insurance is on the American policy agenda for the fifth time since World War II. In the 1960s, the U.S. chose public coverage for only the elderly and the very poor, while Canada opted for a universal program for hospitals and physicians’ services. As a policy analyst, I know there are lessons to be learned from studying the effect of different approaches in similar jurisdictions. But, as a Canadian with lots of American friends and relatives, I am saddened that Americans seem incapable of learning them.
Our countries are joined at the hip. We peacefully share a continent, a British heritage of representative government and now ownership of GM. And, until 50 years ago, we had similar health systems, healthcare costs and vital statistics.
The U.S.’ and Canada’s different health insurance decisions make up the world’s largest health policy experiment. And the results?
On coverage, all Canadians have insurance for hospital and physician services. There are no deductibles or co-pays. Most provinces also provide coverage for programs for home care, long-term care, pharmaceuticals and durable medical equipment, although there are co-pays.
On the U.S. side, 46 million people have no insurance, millions are underinsured and healthcare bills bankrupt more than 1 million Americans every year.
Lesson No. 1: A single-payer system would eliminate most U.S. coverage problems.
On costs, Canada spends 10% of its economy on healthcare; the U.S. spends 16%. The extra 6% of GDP amounts to more than $800 billion per year. The spending gap between the two nations is almost entirely because of higher overhead. Canadians don’t need thousands of actuaries to set premiums or thousands of lawyers to deny care. Even the U.S. Medicare program has 80% to 90% lower administrative costs than private Medicare Advantage policies. And providers and suppliers can’t charge as much when they have to deal with a single payer.
Lessons No. 2 and 3: Single-payer systems reduce duplicative administrative costs and can negotiate lower prices.
Because most of the difference in spending is for non-patient care, Canadians actually get more of most services. We see the doctor more often and take more drugs. We even have more lung transplant surgery. We do get less heart surgery, but not so much less that we are any more likely to die of heart attacks. And we now live nearly three years longer, and our infant mortality is 20% lower.
Lesson No. 4: Single-payer plans can deliver the goods because their funding goes to services, not overhead.
The Canadian system does have its problems, and these also provide important lessons. Notwithstanding a few well-publicized and misleading cases, Canadians needing urgent care get immediate treatment. But we do wait too long for much elective care, including appointments with family doctors and specialists and selected surgical procedures. We also do a poor job managing chronic disease.
However, according to the New York-based Commonwealth Fund, both the American and the Canadian systems fare badly in these areas. In fact, an April U.S. Government Accountability Office report noted that U.S. emergency room wait times have increased, and patients who should be seen immediately are now waiting an average of 28 minutes. The GAO has also raised concerns about two- to four-month waiting times for mammograms.
On closer examination, most of these problems have little to do with public insurance or even overall resources. Despite the delays, the GAO said there is enough mammogram capacity.
Elaine,
My Canadian friends do still complain about the shortage, but primarily as it relates to gp’s and wait times for appointment, specialists much less so. Once a determination a specialist is required, the wait times drop drastically. The lack of gp’s creates a bottleneck.
My husband helped establish a company up in Barrie, Ontario about ten years ago. He spent two to three weeks living there every month for an extended period of time. The business people he met liked the Canadian system because employers didn’t have to worry about insuring their workers–and workers didn’t have to worry about losing coverage if they changed jobs. He said one problem was the shortage of doctors. Evidently, some time in the 1990s, Canada began experiencing the shortage. I recently read that the problem was exacerbated when provincial health ministers reduced medical school enrollment. Since then there has been an increase in enrollment. I don’t know if the shortage still exists.
nick spinelli, no wait time at all for the broken leg, including follow-up physical therapy. I could choose the date for my gall bladder because it was not an emergency situation. I do usually have to wait for a couple of hours at my general practitioner´s, even when I have an appointment. I think it is because he is a good doctor who takes time with his patients. It could be that he lets privately insured patients go first (there is a private option here). But, this doctor has even phoned us on a Saturday night to make sure that everything was OK with our daughter´s leg.
Riesling, Thanks. The wait time is the biggest complaint from folks in Canada and UK. You didn’t mention wait time, was it noteworthy?
Bron, FYI: Germany has a social market economy. It works just fine for us. My story was anecdotal, not macro-economic. The politicians are always fiddling with the system but the fundementals will stay the same. In the meantime, I am free to plan my annual 6 weeks of vacation. We´ll be spending the money that we won´t need to spend on university tuition for our daughter, since it is already paid for by our taxes. Funny, I don´t feel like a serf.
Mike Spindell:
here you go:
http://www.tatsachen-ueber-deutschland.de/en/society/main-content-08/social-security.html
Mr. Fleischer
My first thought was that although I wouldn’t say the current system is failing us, I would agree that there are serious problems/issues and improvements could be made. But then I realized that the current system (the system under the Affordable Care Act) is untried (and not really even operational yet). Will the ACA make things better? I believe if will for me, but I don’t think that is the going to be the standard by which it is judged.
I am curious about the assertion that insurance companies practice medicine without a license. In the matters that I’ve been involved in, doctors employed by insurance companies or the government are making the decisions. (And government employed Medicaid doctors are denying services that privately paid doctors are requesting for their patients.)
I did not want to take the time to reread the Canadian case, but as I recall the doctor involved was alleging that he was being denied his basic rights because he could only work for the government (Quebec). I believe that the Court did not address that allegation because it found Quebec’s prohibition on the purchase of insurance violated the Quebec Charter. (There was also a patient who was a party to the matter.)
As to “working for the patient” rather than the government, that may be true, but I see it as immaterial to the point of my question. Under a single payer, if a doctor does not accept the conditions that that payer imposes, she will be out of work, whereas under the current system she could decline to accept some payers (insurance) but could stay in business.
Insurance companies really like the Obamacare….
Reblogged this on Jerry Welch and commented:
Prime example of dependency and exploitation: Corporacracy.
Orolee it is political if it saves 100billion over 10 years Obama might actually get credit and more since this president took office, party trumps anything and everything.