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Saturday, December 5, 2009

Why We Need Health Care Reform - A Real Example

I recently underwent a major surgery which I knew was going to be a huge cost (to somebody). I didn't know if it was going to be $1,000, $10,000 or $100,000. This is because, unlike most every other good or service in our mixed economy, health care does not operate via posted prices. Costs are guesstimated by consumers and are often not even in play in consumer decision-making. In that sense, there is no true 'market'.

One of the downsides I have personally experienced regarding our system is the huge amount of waste (monetary, labor, and natural resource-wise). I went to a hospital for one singular surgery. Since then (so far!) I've received 7 separate notices from my insurance company and about 5 unique bills all related to sub-costs I incurred from my overall visit. I got one anesthesia bill, one diagnostics bill, one consult bill, one surgeon bill... the lack of communication and consolidation of services, in such a technological age, is ridiculous.

Yesterday, I received my surgeon bill in the mail (post-insurance payout):

So from an original cost of about $17,000.00, I have to pay less than $800. If I didn't have this insurance, like 20+ million Americans I would either be provided this service for free - thereby skyrocketing the premiums of those that do have insurance and that do pay into the system, or, I would not even attempt to seek this service knowing I wouldn't be able to afford it, and I would be dead in a few years.

In a modern, advanced, society, neither scenarios should be ok. Everyone who is not classified as 'poor' that complain about the short-term increased government spending or marginal potential increases in short-term premiums... you should feel ashamed. I'm thankful that I am paying pennies on the dollar for my healthcare. I recognize the more people that pay into the system the better. I recognize that millions don't have the luxury of health. I don't mind my government investing in fixing a system that is broken. I don't mind if my taxes and/or premiums rise a little in the short-run, because I know I am helping millions of fellow Americans get something that they need to live. Besides, premiums will surely fall in the long-run as we bring others into the system, and as we actually create market exchanges, and as we begin to pay down long-term debt.

So, if you don't like particular aspects of the health care bills (I certainly take issue with parts as well), fine.... I recommend you do what I do and view these bills as a starting point of dialog. We need to pass a starting point so that we can fix the major problems. The tweaks can be done later.

13 comments:

Ken Houghton said...

Good thing you came out of it fine.

The most notable item on that is the "contract adjustment." The two top items (BC isn't paying for the second one separately) total $17.057. The adjustment is $12,486.

So the actual cost of the surgeon is around $4,500. With a follow-up visit of about $115.

If we assume economic theory to be accurate--always a slippery assumption, but let's--that amount allows for the surgeon to be fully compensated at the rate s/he would accept.

Compare that to the "deadweight loss"/"moral hazard" studies that show people spending 10-15% "too much" on health insurance.

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Anonymous said...

This is something I really don't understand- It seems like the real benefit of insurance is the price reductions. If you have insurance the procedure costs approximately $4,600, if you don't, and chose to have the procedure, they bill you $17,000.

Where can I sign up for just the discount plan, where I pay 100% of my bills at the negotiated rate? This should cost $15 - $25 a month for administration fees. While it would not fix the uninsured problem, it would be a step in the right direction. (as long as it was not misleadingly advertised)

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