Sic Semper Tyrannis - Post details: US Health Care: Still Biting the Big One

US Health Care: Still Biting the Big One

Posted on 09-27-2006 at 09:58:35 am by Aaron

, 527 words, 244 views

The Kaiser Family Foundation finds more generally bad news about the state of health care/insurance in the US of A Tuesday:

The average cost of health insurance premiums climbed just 7.7 percent over the past year. That was the slowest rate of increase since 2000 -- down from 9 percent the previous year and a far cry from the nearly 14 percent jump three years ago, according to the annual benchmark survey released Tuesday by the Kaiser Family Foundation.

The flip side: Premiums to cover a family have vaulted 87 percent since 2000 -- more than four times the rate of inflation and the growth of wages -- a trend that is forcing millions of Americans to go without insurance coverage.

In pure SST form, here's how the situation is even worse than it might appear at first blush:

Experts say premiums would be rising even faster if employers, workers and insurers weren't making health care trade-offs. Many employers are restricting which family members are covered and are forcing workers to pay more before their insurance kicks in. Workers are paying more for checkups, to buy drugs or visit the emergency room. Insurers are limiting the choices that patients have by dropping the priciest hospitals, doctors and labs.

...

Added Richard Bank, who heads the AFL-CIO's collective bargaining department: ``All this puts ever-increasing pressure on employers to try to cut benefits. This is creating a race to the bottom. If I were to generalize, this is the pre-eminent problem at the bargaining table, and it has been for four or five years.''

...

But some experts say the most ominous finding is that the number of employers offering health coverage is steadily eroding. Notably, just 48 percent of employers with three to nine workers offered health coverage -- down from a peak of 58 percent as recently as 2002.

All of this will continue to get worse until we return to a free-market system. Kaiser even suggests we implement market-based reforms, and Hewitt Associates noticed in a separate survey:

A survey of 18,000 workers by the consulting company Hewitt Associates released last week found that just 34 percent track their health care bills, and less than half bother to estimate how much they're likely to spend in the coming year. And of those enrolled in high-deductible plans, 40 percent said they wouldn't re-enroll.

Hmm, costs for something where its not uncommon to ignore costs are getting out of control? There's a shocker. I bet the numbers are even worse when you look at how many don't consider cost until after receiving the care.

The high-deductible point is also important. These plans are almost unambiguously losers compared to managed-care plans that cost about the same amount but give you ongoing care. This situation will continue until employers are actually forced to contribute to Health Savings Accounts--or the entire system is decoupled from employers (as I've written).

I think one of the most ruinous things the government has done in the past decade is the destruction of the health care system. Truly breathtaking.

Update: Dean baker has some brief but incisive points on this topic, in response to another David Leonhardt piece of pravda, where he claims we're actually getting what we pay for. Hah!

Categories: government, economics, health • 1 comment

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Comment from: js290 [Visitor]

Here's an email I sent to the Cato Institute back in April regarding my experience with a local ER. I'm not attaching the email correspondences that's referenced below.

---------- Forwarded message ----------
Date: Sun, 9 Apr 2006 00:30:03 -0400 (EDT)
Subject: Scam Artists That's the Healthcare Industry

please allow me to share with you my recent experience getting four
stitches from the ER that illustrates the fundamental problems with the
healthcare system in this country. I'll give some background info here and
leave the details to the attached emails.

I suffered a laceration from a faulty speed bag at the gym in February. I left
the gym after the bleeding stopped and drove myself to my local hospital. The
whole time I was there, I kept asking the staff how much
this procedure was going to cost me. Nobody there could tell me. As I
was leaving to pay for the procedure, I asked the billing department
how much it would cost me out of pocket, again they didn't know. They
took my $150 ER co-pay. Ultimately, they sent a bill to my insurance
company for $938 (for four stitches)! My insurance company paid the
hospital $450, for a total of $600, for four stitches. They sent me and
adjusted bill for a balance of $113. So, after adjustment, they're
expecting to be paid $713 for four stitches.

The ER could not tell me before hand how much the procedure was going to
cost. If I had known they were charging $250/stitch, I would have gone
home. Even after the procedure was done, they still couldn't tell me
how much the bill was going to be. Is this even legal? What other
service industry can get away with this?

Their collections department called me early (for me) in the morning
this past Saturday asking if I was going to pay the balance, and threatening to
report me to the credit rating agencies if I didn't. IIRC, The woman
claimed that they were required by law to charge the median rate of the
other hospitals in the area. This sounds like government sponsored collusion
to me. I'll have to figure out how I'm going to deal with this. On
principle, I feel like staging a personal consumer revolt since they've
already been paid $600 for four stitches. On the other hand, I'm not
sure that $113 is worth the hassle of standing up for principle.

Why does the healthcare industry appear to be immune to market economics? It
seems like the third party payer distorts the natural market forces.
Healthcare consumers have no economic incentive to behave in a healthy way --
the doctors will fix me up, and I don't have to pay. Healthcare providers are
essentially encouraged to milk the magical pot of insurance money --
$1000 for four stitches sounds reasonable. Why is insurance used for
routine maintenance?

I know Cato rejects the "bashing of rich people," but at the same time
the rich should not be allowed to use the government to protect their
status quo. And, the problems in this country seem to be exactly caused
by those with influence using state intervention to protect their
positions at the expense of everybody else. And, healthcare is no different.

Please note how the last email from the hospital representative finishes their
circular argument: You're charged for services rendered, but we
can't tell you how much those services cost. Anyway, I won't bore you any
longer. It seems like diplamcy with Iran may have a better chance than
healthcare reform based on laissez-faire. Thank you for your time.

Permalink 09-27-2006 @ 23:04