Health Care: Reality Check


I’m tired of the lies.  Including those of Peter Orszag, who was President Obama’s director of the Office of Management and Budget.  He said:

The vast bulk of health-care costs arise from an extremely small share of patients, whose insurance will inevitably bear a substantial share of their expenses.

That’s why competition in health care doesn’t work as well as in other sectors, and it’s also why the key to keeping costs to a minimum is to encourage providers to offer better, less costly care in complex cases.


In 1963 it cost $120.55 to have a baby in a hospital, according to one man who actually stroked the check.  There was no “insurance” for any such routineand expected medical procedures (have sex, child will likely follow if you do it often enough.)

This is great because the BLS says that the CPI was 30.4 in 1963.  Today it’s 229.104, or 7.54x as high.

So we’ll multiply $120.55 X 7.54 and we get $908.95, or what it should cost for everything, including the room for both baby and mother, drugs, the delivery room, circumcision (it was a boy, obviously) and lab fees.  This covered four days in the hospital, incidentally, not the less-than-24 hour “quickie” that is usually the norm today.

Now I’ll grant you this was an “uncomplicated” birth.  And?  Most births are.  Some are not, but a routine birth was, in 2012 dollars, under $1,000 in 1963.

And trust me, babies are born the same way in 2012 that they were in 1963; they are emitted out of the same place in the mother, the same labor and delivery process happens, the cord still has to be cut, etc.

Oh sure, things go wrong and when they do it can get more expensive — quickly.

But find me a hospital that will deliver a baby, with a four day stay for mother and child, for $1,000 cash anywhere in the United States.  You can’t because such a hospital does not exist.

Indeed, you can’t even stay for one day in a semi-private room at Northwest Community Healthcare in Arlington Heights, IL — just stay in the room, without any care being provided whatsoever — unless you spend $1,365.  Incidentally, you can stay in the Mariott downtown on the MagMile in Chicago for $209 a night, or $259 if you’d like access to the Club Lounge, roughly 1/5th of the hospital (and quite a bit nicer, I might add; I’ve been in the latter.)  The Renaissance Schaumburg, a few miles from that hospital for those who claim that using downtown Chicago prices is being “unfair” (compared to a Suburban hospital), is $219.

And remember, the hospital room is just for the room — no medical procedures, no drugs, no monitoring devices, no special facilities like an ICU unit, nothing other than the physical space.

We can talk about medical care cost escalations once we remove all of the cost-shifting, monopoly protections passed by government, EMTALA’s impact and outright frauds that the medical industry foists on all of us that cause costs to be 5, 10 or even 20 or more times what inflation says this procedure should cost.  A procedure that is functionally identical to the one performed in 1963 and is an utterly routine and ordinary process that humans have undergone for thousands upon thousands of years.

The point of this, my friends, is that for $1,000 you could write a check for your childbirth expenses; “insurance” would be unnecessary.  If you were not well-off you could hock your car’s fancy rims (which you had plenty of money to buy, right?)

Guess what?  Most of the rest of “common” medical procedures are likewise overinflated in price by similar amounts for exactly the same reason — cost-shifting, monopoly protections granted to these businesses, EMTALA and, of course, outright frauds and money-sucking off the government and private-sector teat.

The entire medical system is one gigantic scam.


There’s not a thing wrong with allowing people to buy really fancy medical care using really fancy equipment and procedures, decking out really fancy rooms in fancy hospitals, paying for it all in cash.  But there is something very, very wrong when utterly routine things like childbirth, hernia repair, gallbladder operations, an inflamed appendix, setting a broken leg or arm and similar wind up costing you 5, 10 or even 20x what the inflation-adjusted price is from, say, 1963.

Every one of these politicians needs to shut the hell up until they put a stop to this crap.  And make no mistake — absent the government protections that have been given to this industry there is not a snowball’s chance in hell that their pricing would survive 30 seconds in an actual competitive market where people had to write checks.

These politicians are all scam artists in bed with the medical shysters who are interested in exactly one thing — bleeding the entirety of this nation dry.

The proof is in the numbers.

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