18% and Rising

Good News: healthcare costs are rising at 4% per annum, less than the 8% of just a few years ago, more folks are getting coverage and caps on total coverage and insurance denial or cancelation for preexisting conditions will soon be a thing of the past. End of good news. Costs are still accelerating faster than the rise in the cost of living, Americans spend 18% (Time Magazine, March 4^th, the New York Times, June 1^st, says 20%) of our GDP on healthcare (the highest percentage in the world and up from 16% a few short years ago), we spend more on virtually every medical procedure and every prescription drug than any other developed nation on earth and the variation of prices for common procedures within the United States can be multiples of each other. The aggregate cost in the United States is between $2.7 and $2.8 trillion a year!

When the Affordable Care Act was passed in 2010, except for a direct limitation on the percentage of administrative costs as a function of the total (and trade off with insurance companies in exchange for growing the number of people who would now be getting new policies), the bulk of elements dropped from the original bill were powerful cost reducers that incumbent hospitals and pharmaceutical companies wanted deleted. Stuff like allowing Americans to buy prescription drugs from places like Canada or allowing the government to provide directly high risk or affordable healthcare policies directly for those who couldn’t afford higher levels of coverage.

In a special report (Bitter Pill: Why Medical Bills are Killing Us) in the March 4^th Time Magazine, journalist Steven Brill slams the system, a proclivity of hospitals to impose massive mark-ups on common and cheap medical items, the widely disparate pricing policies of hospitals across the United States for the same procedure. More recent data from the government itself continues to support Brill’s findings. “The database released [in early May] by the federal Centers for Medicare and Medicaid Services lays out for the first time and in voluminous detail how much the vast majority of American hospitals charge for the 100 most common inpatient procedures billed to Medicare. The database -- which covers claims filed within fiscal year 2011 -- spans 163,065 individual charges recorded at 3,337 hospitals located in 306 metropolitan areas…

“When a patient arrives at Bayonne Hospital Center in New Jersey requiring treatment for the respiratory ailment known as COPD, or chronic obstructive pulmonary disease, she faces an official price tag of $99,690… Less than 30 miles away in the Bronx, N.Y., the Lincoln Medical and Mental Health Center charges only $7,044 for the same treatment… Within the nation’s largest metropolitan area, the New York City area, a joint replacement runs anywhere between $15,000 and $155,000. At two hospitals in the Los Angeles area, the cost of the same treatment for pneumonia varies by $100,000, according to the database.” Huffington Post, May 8^th. A recent routine colonoscopy in a Long Island surgical center ran up a staggering $6,385 bill. “That is fairly typical: in Keene, N.H., Matt Meyer’s colonoscopy was billed at $7,563.56. Maggie Christ of Chappaqua, N.Y., received $9,142.84 in bills for the procedure. In Durham, N.C., the charges for Curtiss Devereux came to $19,438, which included a polyp removal. While their insurers negotiated down the price, the final tab for each test was more than $3,500.” New York Times, June 1^st.

Comparing U.S. prices with those in developed nations makes the point even more clearly. “In many other developed countries, a basic colonoscopy costs just a few hundred dollars and certainly well under $1,000. That chasm in price helps explain why the United States is far and away the world leader in medical spending, even though numerous studies have concluded that Americans do not get better care.

“Whether directly from their wallets or through insurance policies, Americans pay more for almost every interaction with the medical system. They are typically prescribed more expensive procedures and tests than people in other countries, no matter if those nations operate a private or national health system. A list of drug, scan and procedure prices compiled by the International Federation of Health Plans, a global network of health insurers, found that the United States came out the most costly in all 21 categories — and often by a huge margin.

“Americans pay, on average, about four times as much for a hip replacement as patients in Switzerland or France and more than three times as much for a Caesarean section as those in New Zealand or Britain. The average price for Nasonex, a common nasal spray for allergies, is $108 in the United States compared with $21 in Spain. The costs of hospital stays here are about triple those in other developed countries, even though they last no longer, according to a recent report by the Commonwealth Fund, a foundation that studies health policy.” NY Times.

There a whole pile of “for profit hospitals” in the United States, and with pressure to reduce administrative costs as a function of total care, they have simply raised the prices for the underlying care. For non-profits, dealing with limitations from Medicare and Medicaid and making sure the indigent have some care and attention, it is often a question of getting paid from whatever sources they can.

Public and universal healthcare systems from all around the world succeed or fail as the society around them is willing to pay for staff and facilities. Try and get covered under the National Health System in a major city in the UK on a busy weekend, and you will probably think that they don’t have a system at all. Better in most provinces in Canada, France and other European venues, but we know two facts: 1. We only have the best healthcare system in the world for those with lots of money and 2. For the rest of the United States, mediocrity defines the system that they have access to.

Conservative politicians will eviscerate any attempt negatively to impact the profit-making ability of their… er… campaign contributors, regardless of the toll on the quality of life and life expectancy of the average American. The system is broken, and those with the power to fix it are sworn to return to the days of old by repealing what little change the system allowed. Keep the rhetoric flowing about how “Obamacare is destroying America” and make sure that hospitals can keep those costs as high as possible!

I’m Peter Dekom, and let’s keep on killing ourselves with one of least efficient medical care systems in the developed world!