Archive for the ‘Hospitals’ Category
You may have already read or heard about Steven Brill’s excellent, long article in Time magazine, called “Bitter Pill: Why Medical Bills Are Killing Us.” If you think it doesn’t concern you, don’t be so sure. Brill documents how a trip to the emergency room for chest pains that turn out to be indigestion can exceed the cost of a semester of college, how simple lab work done during a few days in a hospital can be more expensive than a new car, and how a drug that requires $300 to make and that the manufacturer sells to a hospital for $3,000–3,500, can cost the patient to whom it is prescribed $13,702. He looks closely at the outrageous prices on itemized hospital bills and finds that individual services listed on them have been priced at double and triple what those same services cost separately—for reasons neither the patient understands nor the hospital can explain. And he recounts the horror stories of people reduced to penury after a brief hospital stay, even though they had some health insurance, money in the bank, and suffered from only minor ailments.
Put simply, Brill says, these bills tell us there’s no free market in our healthcare system, that hospitals set their rates knowing that someone in pain or in fear for his or her life is not going to ask to see the price list first before agreeing to some test or treatment. It’s no wonder that 60 percent of our fellow Americans who file for personal bankruptcy each year do so because of medical costs.
Charles Simic started out well with these two paragraphs. But then he immediately descends into the common lefty shibboleths that, unfortunately, are false when it comes to health care.
What makes articles like this so outrageous is that the facts are available to anyone who cares to look. The data on health expenditures via the Federal Government, for example, are easily found in the Monthly Treasury Statements (MTS), public documents available going back for a very long time — as they are, after all, public.
This is where one finds the $1 trillion in total federal health spending, which incidentally is about $100 billion more than is counted in the various budget documents, even the so-called “as-spent” ones.
The argument that somehow Medicare is a “solution”, that is, a “government option”, is one of those common lefty shibboleths that is utterly devoid of factual basis. The fact of the matter is the Medicare and Medicare are federal government medical spending — nearly all of it in fact — and it is rapidly driving the federal government into insolvency!
This is “restraint”?
That may sound harsh. But Brill’s article makes one comprehend not just the talk in Washington about the supposed absolute necessity of replacing Medicare and Medicaid with “market-oriented” health care, but also the full human cost such a change would bring. If the elderly and the poor are stripped of the few protections these government programs give them, they’ll be left at the mercy of a medical industry and insurance companies whose already huge profits, so they imagine, will then get even bigger. Despite the claims that these are high-minded proposals that will fix our national debt, and despite their veneration as such by the political establishment and the media, what is being offered to the American people is nothing more than thinly-disguised money-making scams.
Well, in that Charles is right, but for the wrong reasons. And when you’re right for the wrong reasons then your prescription for change is wrong too.
The reality of the health situation in the United States is that cost escalation is driven by a few rather simple facts, all of which happened and continue to happen specifically due to government protectionism and intervention, not the market and not “sadism” or “the profit motive.”
It is the cartel-like behavior that causes this problem. Hospitals buying out independent imaging centers (think MRI) and then tripling their charges would be an utterly stupid act but for the ability to stop someone from setting up another one next door, undercutting their price by 90% and instantly putting them out of business. To prevent this you haveCON laws in a significant number of states and where those are not present you still have active interference with the market, including forcible licensing and inspection routines along with subtle (and not-so-subtle) threats of refusal to allow doctors who are not “affiliated” presence in these hospitals.
Then there is the blatant “in your face” game-playing with drugs. A drug made in Mexico and available over the counter for $100 is sold to a hospital here in the United States for $4,000 and is then marked up nearly 10x to almost $40,000 when sold to a patient. Not only is it illegal for you to possess that drug without a prescription, which of course you can’t get without a member of the medical cartel writing it, but it’s also illegal for you to go to Mexico and buy it over the counter for $100 and then bring it back to the United States and undercut the hospital by selling it for $200 to anyone who wants or needs it.
Note that nowhere is an element of forgery, counterfeiting or misrepresentation present — this is simply collusive cartel behavior that is specifically enabled and given legal force (without which it would instantly collapse) by an industry who lobbied government to get special laws passed that prohibit the forces of the market from working.
Likewise, anti-gouging laws prohibit me from selling gasoline for $3/gallon every day of the year, except when there’s a hurricane coming, at which point I charge $6. I can make a clean argument that such “anti-gouging” laws are wrong, in that the market price for gasoline in a hurricane might well be $6, and if it’s $3 instead everyone who drives by will buy up all my gas — which means the guy who really needs it will get none since I’ll run out!
But that’s not what happens here. In the gasoline example there are 4 gas stations on pretty much every exit on the highway and they all have signs up posting the price before you pump the gas. And these “anti-gouging” laws don’t require collusion — a singular and unjoined decision to boost your price is enough to get in trouble.
In the medical example not only is there no posted price anywhere, with the price being retroactively determined after the service is provided but there is active collusion between providers and overt acts to remove lower-priced competitors by buying them out or, if they refuse to cooperate, freezing them out of their practices through various means. These sorts of actions in virtually any other line of work are rank violations of the Sherman and Clayton acts — laws that proscribe such anti-competitive behavior and attach felony criminal penalties along with treble-damage civil liability to violations.
The final shibboleth is that there was something immoral about what Ron Paul said in Tampa, when he made the comment that taking your own risk might mean that someone who is uninsured because he accepted his own risk might die as a consequence for lack of the ability to pay and obtain care. What’s left unsaid by Ron Paul or anyone else for that matter, including the author of this piece, is that the reason everyone considers such “insurance” mandatory is because of the cartel behavior that leads prices to be FIVE TIMES what they would be in a free market.
The Oklahoma Surgical Center points this out quite clearly. There prices are posted before the procedure is undertaken and they are quite-typically one fifth of what is often charged uninsured people in “conventional” hospitals. For the same procedures.
The solution is not to further ensconce cartel behavior into the government and then try to “restrain” it while leaving the basic structure alone that led to the problem in the first place.
Rather, it is to first remove all such special protections from this industry en-masse and then prosecute any and all medical providers, irrespective of whether they are doctors, hospitals or drug and device makers who act in an attempt to restrain the market, de-capitating the medical cartels and imprisoning all involved from doctors to CEOs.
THAT will solve the problem.
Trying to place a cartel inside the government, which is what Charles proposes, is not only ethically bankrupt it will financially bankrupt our nation if we don’t cut that crap out.
The article below clearly illustrates how unsustainable our health care system has become. The government-mandated cost-shifting began far before the Affordable Care Act (ACA). The insidious, opaque shifting of costs for medical care began in earnest with the McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, which exempts health insurance from anti-trust laws that are applicable to every single other area of commerce. Where else do you have to literally purchase goods or services FIRST before you can find out how much it costs? This allows price-fixing within the industry, opaque kick-backs and worst of all, monopolies for the health insurance companies.
Just as bad, we have EMTALA. The Emergency Medical Treatment and Active Labor Act (EMTALA) enacted by Congress in 1986, under the guise of ‘need’ to provide free health care to indigent people. The thing is, it was a lie that people couldn’t get health care treatment in hospitals if they couldn’t pay. There were charitable facilities all over the country, not to mention most hospitals reserved plenty of resources to treat people with little to no income. The fearmongering at the time claimed that ‘critically ill or injured people were being turned away at hospital doors!’ This was just not true, but it certainly tugged at people’s heartstrings. So, what was the real purpose of EMTALA?
You see, EMTALA traps hospital corporations in to accepting money from the federal government, which in turn, gives the federal government power over them. The government made it very impractical for a hospital not to participate in this ruse. But you see, the government doesn’t really fund the care require to be provided by the hospitals, it merely requires them to maintain a ‘non-profit’ status, whereby losses are reimbursed by the government. Suddenly losses become profitable. The more the hospital loses, the more money they get from the government. Sound like a responsible way to run a company? Not so much. It incentivizes the spending and wasting of money, which behavior is then rewarded. Sound like another industry we all know and love?
This created a literal stampede to non-profit status, which by the way, only requires that 2% of overall services be provided at low or no cost. Prior to this ‘requirement,’ hospitals provided, on average, substantially more than 2% of their services at low or no cost. ’Non-profit’ doesn’t mean a hospital doesn’t make a profit. To the contrary, they make enormous profits, especially a profit on losses, which comes straight from the US taxpayer. All ‘non-profit’ means is that they cannot distribute profit to their board members. It doesn’t however, keep those board members from making very lucrative salaries.
THIS is where the majority of the US deficit lies. In fact, last year, government spending on health care rose 9% from the year prior, and by 2016, health care costs are on track to be 80% of the annual US budget! This dwarfs all other budget spending, including the military and Social Security. These two legislative Acts, for the most part, have given us our distorted, unsustainable health care system. Hospitals get rich by racking up losses and perpetually being reimbursed for those losses by the US taxpayer, and insurance companies are given a lawful monopoly, which then allows for price fixing and opaque, insidious cost-shifting of the price of care, to which you are not entitled to know. These two things working together is what is keeping the average person from affording medical care or insurance or from evening knowing the price of the care you are purchasing! With the addition of ACA, it is now beginning to destroy our jobs.
Part-time America: How we increased our part-time for economic reasons workforce by 4 million people since the recession began. Healthcare costs encourage low wage employers to hire more part-time employees.
The rise of part-time employment in the United States is part of the low wage system that is spreading throughout the country. Part-time workers are cheaper to hire and easier to fire. You also avoid paying benefits from a healthcare system that is seeing skyrocketing costs. Prior to the economic crisis, the number of Americans working “part-time for economic reasons” was roughly at 4 million. Today, in this supposed recovery it is up to 8 million. While the stock market is taking off many companies have figured out that it is cheaper to have a large number of at-will workers instead of bringing on full-time employees and providing additional costs. As we have discussed, the recession has been used as a cover to slash middle class wages and inflate profits that have filtered to a very small portion of our population. Part of this problem is structural and we are seeing the impact of higher healthcare costs hitting the employment market.
The number of Americans working part-time is still near a peak level:
The recession caused this figure to jump by over 100 percent and it has largely not fallen back down. Combine this with the vast number of Americans on food stamps, over 47 million and you start seeing the growing ranks of the permanent poor. These changes of course are hitting many lower wage service sector workers:
“(WSJ) Some low-wage employers are moving toward hiring part-time workers instead of full-time ones to mitigate the health-care overhaul’s requirement that large companies provide health insurance for full-time workers or pay a fee.”
So of course when employers examine lower waged service sector workers they are very likely to balk when it comes to paying the high cost of healthcare premiums. Let the government (aka society) cover these high bills. The margins are squeezed when this occurs and since we are hollowing out the middle class, we are starting to get a preview of what our economy will look like. Our economy will have a top quintile of highly paid professionals, a larger class working poor, and a shrinking middle class.
You have to examine the above chart carefully and see how consistent the gains in medical care costs have become. Costs in the medical field are so outrageous that a one day stay in the emergency room can cost you up to $10,000:
“(HP) We have followed the health care debate over the past few years and, as a result, know that ER visits are expensive, so we figured my wife’s visit would cost, oh, $2,000 or so. Well folks, we “mis-underestimated” the cost by a factor of five. I just received the bill from our insurance company and the grand total was $10,203 (or about $2,000 an hour). I called the hospital and received an itemized statement. Most of what was done was incomprehensible to me (I’m not that kind of doc!): CMP Pane ($510), Level 4 ($715), but an Internet search helped explain things a bit.”
Think about the impact of something like this on the median household income that pulls in $50,000 a year, gross. The outrageous costs in healthcare are completely unsustainable. But here we are with subsidies to housing, colleges, and healthcare with no checks and balances so it is no surprise that prices are completely disconnected from actual incomes.
The growth of part-time employment stems from not only the avoidance of covering medical insurance but also the ability to cut workers at will. The Fed has followed a similar path to the Bank of Japan and it is no surprise that Japan now has an incredibly large part-time workforce. It doesn’t seem like the press is concerned with the disappearance of the middle class but obviously the millions that are being thrown into the working poor will be.
We must tear down the entire medical system in this nation and imprison virtually all of the financial folks involved in it — especially Hospital-affiliated entities.
That’s a strong statement. But it’s supported by reports like this in the NY Daily News, which illustrate nicely what I’ve talked about on The Ticker for a long time in relationship to health care, how it’s broken, and what we must do to fix it.
The charges, in fact, were mind-boggling. A statement the hospital sent to my insurance company, Aetna, showed that Good Samaritan billed $22,214.92 for a four-hour emergency room visit that included a physical exam, sedation, endoscopy and extraction of the stuck food.
Even more astonishing, Aetna agreed to pay only $2,885.67 for the services — just 13% of the bill — and the hospital settled for that amount.
This sort of game-playing, where the intent is to catch “uninsured” people and “gotcha” them into bankruptcy, would be felonious in virtually any other line of business.
Services contracted without a price? Billing someone for services where they are in no position to negotiate before service is provided at nearly ten times what you later accept — from certain “favored” people — while you chase everyone else for the “full” price?
Let’s assume that you ran a gas station. Your gas station posted no prices. Further, the same gas was sold to different people, all of who were similarly situated at the time they pumped the gas, at different prices depending solely on who their employer was, and nobody would know the price of the gasoline until after they pumped it. And if that wasn’t enough insult the price would be $3/gallon for most people who worked for a long list of companies but if you were a passer-through in town and didn’t work for any of those firms as a consequence the price would be $25/gallon.
This would run afoul of deceptive trade practices legislation virtually everywhere in any State. You’d never get away with running a grocery store this way, or a cellphone company, or for that matter a hair salon.
It would be bad enough if the pricing was “just” 10x as high. But in some cases it’s even worse.
As but one example of what I discovered, consider Ondansetron HCl, an anti-nausea medication that both hospitals administered to my son. Good Samaritan charged $439.90 for the drug; Aetna allowed $77.63. Somerset charged $6.52; Aetna paid $3.26.
Medicare pays 17 cents per dose.
Oh really? That’s a factor of 2,582. No, not 2,582% — that would be outrageous!
It’s actually charged at 258,200% of what Medicare pays.
And I’m willing to bet $1,000, right here and now, that the hospitals in question did not disclose (1) what the drug would be billed and cost before being administered and (2) what consequence, if any, would occur if you did not accept administration of that drug.
In this case the consequence could be that you vomit.
So to avoid puking you get overcharged by 258,000%.
THAT is enough to make you vomit all on its own.
The entire medical system in this country is a racket. It is a scam designed to play on your fear of mortality or morbidity to rob you. In any just society where the rule of law meant anything this sort of “billing system” and “practice” would lead to felony criminal charges and everyone involved would be sitting in a prison cell finding out all about the proper uses for anti-nausea medication to avoid throwing up as they were repeatedly instructed in the joys of gay prison sex.
If you want to know why our government is going broke and our financial system is headed for collapse within the next several years the reason is found right here. This entire portion of our economy has become so imbued with graft, cost-shifting and scams that it is literally bankrupting everyone.
This is what the article claims Aetna said:
The driving force behind all this, according to Aetna, is the way hospitals and the government do business.
The rates that insurance companies pay are negotiated based on what they believe a hospital’s true costs are. But then those rates are jacked up an average of 30% to 50% to make up for money that hospitals lose in treating patients who don’t have private insurance — which is the majority of them. So to make up the difference, they overcharge patients who are insured. This practice is called cost-shifting.
This sort of collusive behavior by entities that have market power is illegal in virtually every line of business under the Sherman Act, among others.
So why haven’t these firms all been prosecuted?
Oh you know the answer — they went to Congress, “lobbied”, and got special dispensation to be able to screw you blind in both eye sockets through business behavior that would land you or I in prison for 20+ years were we to try it — including the collusion required to enforce this sort of ridiculous differential in billing — in essentially any other line of business.
Tear it down.
All of it.