Medical costs

As most of the nation argues about Obamacare, a fair number of people are still getting sick. They still see a doctor and they still go to the hospital. Fewer people have insurance, with millions of policies cancelled only a few hundred thousand have been able to sign up for insurance through state exchanges and the national program.

Beyond all the discussion about what Obamacare might have done, there are a number of things it was never supposed to do. All Obamacare was supposed to do, if the dust ever settles, was to make insurance available. The point that gets argued is whether that insurance will actually be “affordable”, not whether it will cover all medical expenses.

Sure, these new insurance plans will have to cover you if you have a pre-existing condition, and they’ll cover a minimum of basic services, and with any luck, premiums will go down because everyone will be required to have insurance. The math doesn’t work, the influx of newly insured could never have offset all the new required coverage, but that’s how it was sold. Caveat emptor.

Anyone who’s ever had an insurance claim knows that insurance doesn’t pay for everything. Anyone who’s ever dealt with a government program knows that they never deliver what’s promised. So it appears that the great issue in Obamacare is expectations versus reality. Most of us know there is no way these new plans are going to do what they’re expected to do, and that we’ll be paying for the expectations of people who didn’t have insurance before, while risking the benefits we have today.

Presently, no one can be turned away from an emergency room due to lack of insurance, so that won’t be changing. Presently, some people don’t access healthcare as much as they should, that will change for a while. Until the bills start showing up. So for a while, emergency rooms and doctors offices will be packed, because nothing in Obamacare provides for more medical professionals.

I suspect there will be a large number of angry people, who, having spent hours waiting to see a physician, will not understand why they receive a bill. The concepts of deductibles and co-insurance will need to be absorbed by a large sector of society who have never heard of them before.

Nothing will change about billing procedures. An aspirin will still cost $125.00, a bed for the night $8,000, in addition to all those little extras like nurses and doctors, bandages, imaging, tests, and one use medical equipment like an IV, tubing, needle, tape to hold it in place, and a specialist to start the IV. And of course, the non-existent extras. When my daughter was four years old and needed a CT scan, the bill included $400.00 for a “prep and shave kit”.

Emma’s bills were high, but my insurance covered almost all of it. The hospital had procedures to make sure they collected as much as they could anyway. A week after Emma was diagnosed, we received a call from the billing department offering to assist us in applying for welfare. Not that welfare would have covered anything, but we would need to show that we had been turned down when we applied for bankruptcy. They had done this before and knew which boxes to check.

The bill for Emma’s first stay in the hospital came to $30,000.00. Two nights. That was just the hospital. Over the next few months we received bills from various departments, all based on that stay. That was one of the more annoying tasks, coordinating all the bills for the days of service. In just over one year, the total amount billed by the hospital was in excess of two million dollars.

The “incentive pay” for the CEO of the hospital was slightly more than that amount that year. This is another thing that will not change under Obamacare, and what I believe is the driver of excessive medical costs. Executive pay. Switzerland has just voted on a law that will limit the pay of executives to twelve times that of the lowest payed worker. The CEO can’t make more in a month than the lowest paid worker makes in a year (A CEO with employees earning $8.25/hr is limited to $198k a year). I’m sure that the lowest paid worker in the hospital made much less than a quarter of a million dollars that year.

Of our two million dollar bill, insurance paid about half a million dollars. I paid about ten thousand. The rest was written off. So the next time you hear about hospitals losing hundreds of millions of dollars each year to unpaid bills, remember that number is “potential” income, what the hospitals would make if bills were actually paid in full.

I can’t feel too bad for the healthcare industry, whose CEO compensation rates have risen more rapidly that healthcare costs. While the CEO of Emma’s hospital only made just over three million, the CEO of the insurance company made over twelve. Quite a few healthcare CEOs are in the top ten highest compensated, with the number one spot held by John H. Hammergren of McKesson, who made over one hundred thirty one million dollars in one year. Under Swiss law his lowest paid employee would earn almost eleven million dollars a year. Four times as much as the Hospital CEO.

Our “Health Care Reform”, AKA “Obamacare”, AKA “The affordable care act”, just gave these people millions of new customers. We are required by law to give them money, and they in turn are required to take it.

If we really want to reform healthcare, perhaps we should start a program like the Swiss. Of course there’s no way we could do it overnight, but maybe sliding introduction. Start with not for profit entities, like hospitals, and make insurance companies not for profits, maybe start out with a fifty two to one ratio rather than twelve to one, so that the CEO can’t make more in a week than his lowest paid employee makes in a year. That would still put the CEO of an operation that had minimum wage employees at around a million a year.

Capitalist that I am, I just can’t justify the individual incomes at the top of the scale. The contributions these people make to society don’t justify them and our economy can’t justify either. This is a cost we can address that will have direct impact on all the other costs down the line.