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Healthcare Costs

A story in today's LA Times describes in rare detail why US healthcare is insanely expensive.  It's not due to malpractice lawsuits, patients who expect too much, high-tech medicine or burdensome regulations. No, it's the result of insurance industry bureaucracy and greed. While many consumers have long suspected that, hard evidence has been elusive.  Now, an investigation by the Los Angeles Times has turned up that hard evidence.

Photo credit: "Healthcare Costs" by H/T to Images of Money @Flickr Creative Commons

Evidence shows that healthcare costs are arbitrary and capricious.

The LA Times article, "Healthcare's High Cost: Many hospitals, doctors offer cash discount for medical bills," provides data showing that healthcare costs are neither realistic nor consistent. Americans purchase insurance with the expectation of getting reduced out-of-pocket healthcare costs, but instead pay more than they would if they just paid cash--sometimes, much, much more.  Example:

Los Alamitos Medical Center, for instance, lists a CT scan of the abdomen on a state website for $4,423. Blue Shield says its negotiated rate at the hospital is about $2,400.

When The Times called for a cash price, the hospital said it was $250. [LATimes]

Similar cost disparities exist at other hospitals, according to the Los Angeles Times and Dr. David Belk, MD, and insurance companies pocket the difference.

Healthcare reforms passed in the Obama administration require hospitals to disclose  their standard charges, i.e., list prices.  But, only a sucker pays the list price. The real cost of medical procedures remains hidden to most consumers.

The insurance industry can make exorbitant demands because it has full control of healthcare

Dr. Belk gives free talks around the country about the true costs of healthcare. The following video of one such talk is available on his website, along with a treasure trove of related information.

In his video, Dr. Belk counters insurance industry propaganda with facts and figures, concluding, "Every price is jacked up...we're looking at 10 times on average." There is no reason, he says, why a CT scan should cost more than a plane ticket or a transmission overhaul.

"How many of you use your car insurance to pay to fill your gas tank or change your oil?  How many of you use your homeowner's insurance to pay your electric bill? Why is it that healthcare is the only industry in which we use our insurance for absolutely every expense, no matter how mundane? And, in a sense, we're forced to because if we say, "I'd rather pay for it myself," you're're fined ten times the actual value of the service you're getting." Moreover, the system limits what the physician can do even when a patient offers to pay cash.
"We're both stuck in this system where the insurance companies dictate everything we do. They control every dollar that goes into medicine--and not only do they control every dollar that goes into medicine, they can have complete control of the message. They can tell us whatever they want, and who are we to argue with them, because we have no understanding of what these costs are."
Thus, "They have us all looking in the wrong direction, and all talking about the wrong thing."  

Overpriced healthcare undermines health and the economy

One of the implications of exorbitantly priced healthcare is that many people do not receive needed care, and some die as a result.  Another implication is that huge expenditures on healthcare reduce our ability to pay for other things.

The average healthcare cost for a family of four is $20,728 a year.  The same amount of money would buy a new, mid-priced car, the LA Times points out--or a year's college tuition. No wonder many college students rack up massive student loan debt.

Were it not for the high cost of healthcare, the average American could purchase vastly  more non-healthcare goods and services. By co-opting consumer dollars, over-priced healthcare destroys jobs in other parts of the economy.


With new evidence in hand, consumers are empowered to demand a better healthcare system. That might be a private system combining high-deductible major medical insurance with patient direct pay for routine expenses, or a "single payer" government program, or something else entirely. In any case, the healthcare casino must be shut down. But, that will not happen until Americans demand it, insisting that politicians address it in their campaigns and pass reforms in their terms of office.

The time for change is now.

Originally posted to Deep Harm on Sun May 27, 2012 at 11:18 AM PDT.

Also republished by Single Payer California.

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