Why Health Care Is So…Chargely
Last post I detailed the enormous amount it cost a woman to be treated at a Dallas ER, for a simple cough.
Cost? Hardly. It’s all about them charges. In fact, a more accurate description would be that health care isn’t “costly.” It’s “chargely.”
And for all things health care, Americans get charged a much higher price than any other people on Earth.
Which is the only reason why we spend more every year on staying “healthy” than the entire economic output of many nations. Simply put, we spend so much on health care because – we make health care expensive. Chargely.
But by blaming the Great American Health Care Dilemma on the elderly, malpractice insurance, or the uninsured, attention gets shifted away from the real culprit. And what a huge success this tactic has been! From the Left to the Right, from Chris Matthews to Glenn Beck, the media has bought it.
So the real question becomes, why is health care so expensive?
Let’s peek behind the curtain and see who’s been stacking this house of cards. That answer, is easy – health insurance.
OK, I will admit that this is only partially correct.
I mean, it isn’t that health insurers have been directly manipulating the charges; on the contrary those companies are no more interested in paying $580 for a few breaths of air than I would be.
But, forty years ago when they inserted themselves into what should have always been a natural economic relationship, health insurance companies indirectly caused the prices to skyrocket. Allow me to illustrate:
In every economic transaction you have a seller, and a buyer.
For our first example, let’s look at bananas:
We’ll call the seller John the grocer, and the buyer Joe the Consumer.
John wants to sell as many bananas as possible, but he knows that he has to compete with other grocers in the area.
Joe wants some bananas, and is looking for the best price he can find.
These two diametrically opposed forces somehow manage to find a sweet spot, when Joe visits John and hands over some cash in exchange for the bananas he needs.
A simple, pure, everyday example of how humans should interact with one another.
And the colorless, odorless, tasteless, shapeless and featureless force that guides and produces this result is one of the most beautiful creations ever, even without any of the aforementioned attributes. It’s one of the founding principles of the American economy – The Free Market.
Under this awesome system, buyers like Joe can get all the bananas they want at a reasonable price, and sellers like John can make a living and stay in business.
The effects from these transactions spread out, like ripples in a pond, and everyone potentially benefits. This is the most basic definition of an economy.
Now let’s talk health care.
None of the above applies.
We have Doc the doctor, and Joe the patient.
But we also have an intrusive, obstructive, restrictive, and pervasive third-party known as the ACME health insurance company. ACME contracts with Doc and insures Joe, so ACME has a say in every transaction that occurs between the buyer and the seller.
Doc wants to sell office visit consultations, but she has to renew her contract with ACME every year or two, revise her fee schedule, accept their terms, document her charts to their standards, and bill correctly before she can receive “reimbursement” (more on this later) for providing services. Sometimes the claims get denied and she has to resubmit them. Which means she has to hire extra staff to keep up with her day-to-day billing as well as changes in regulations, coding, and changes made to her contractual relationship with ACME.
Joe needs to see Doc for a prescription refill, but he has to make sure she’s still in-network with ACME so his care will be covered. After Joe pays his co-pay and any co-insurance amounts, that is. Oh, and that’s also assuming that Joe has met his yearly deductible. Unless of course this is a well-visit, which is covered at 100 percent by ACME. Provided that Doc’s billing staff put the correct codes on Joe’s bill before they submit it to ACME for reimbursement. In which case if the claim is denied and Joe hasn’t met his deductible then he’ll be responsible for the entire amount of the visit.
Now, once all these various stars align, then Joe can see Doc and get his prescriptions renewed.
All of this for some bananas, excuse me, for a routine, 10 minute office visit with Doc.
It’s enough to drive anyone bananas.
It’s also enough to drive the price of that office visit through the roof, when it should just be a cash transaction. Like buying bananas.
This is what drives the insanity of our healthcare system: When health insurance companies contract with providers to pay for their services, a crucial element of any economic transaction gets left out: the patient.
After all, patients are the ultimate consumers of healthcare goods and services.
And without consumer-driven, free market forces that create competition and keep prices down, it’s no wonder that the price of air can go up, and up, and up…
It’s not the COSTS of health care that are outrageous…it’s the CHARGES.