Your medical bills will keep going up…

Why your medical costs will keep going up...

Supporters of the Affordable Care Act have argued that its reforms will help bring overall costs down—but in practice, a large share of those on Obamacare health plans are seeing higher out-of-pocket costs. According to many students of the Obamacare system, the reform effort’s main focus was and is increasing access to health care. However, they say the high cost of health care, and who’s responsible for it, should really be the nation’s proper focus.

A number of reasons have been given for high U.S. spending on health care: poor health habits of the population along with systemic waste, to name a couple. But one key element that often gets ignored is the lack of consumer pushback that’s been built into the system. Under most health-plan models up until now, insurers paid the medical bills and patients often didn’t know how much a procedure costs, nor did they care. They didn’t have to.

It’s what Ed Schoonveld, a health-care consultant and former drug company executive, likes to call a “dinner for three,” a party that includes the doctor, patient and insurer.

“One person is ordering the meal, one person is eating the meal, and one person is paying for it,” he said. The first two are oblivious to what the meal costs.

This dynamic gives doctors, hospitals, drug makers and medical device producers a virtual blank check to charge whatever they want, and to keep raking in more revenue at a rapid clip year after year. The U.S. has decided it wants a free-market health care system, unlike the so-called single-payer systems in Canada, Japan and throughout Europe where the government pays the health bills. So, in practice, there’s no single buyer with enough leverage to pressure sellers to moderate their pricing.

Most doctors and hospitals continue to raise prices at a rapid pace, says Dr. Peter Bach, who oversees health policy and outcomes at the Memorial Sloan Kettering Cancer Center in New York. The consumer does not have the leverage or the incentive to control costs.  “Prices are just pulled out of thin air,” he said.

Providers disagree, contending their pricing is justified. Doctors say they factor in malpractice insurance and medical school debt when they tabulate their charges. Hospitals say they have considerable overhead to deal with, as well as regulatory compliance and charity care to account for in their bills. Some hospitals and virtually all insurers also are for-profit businesses that answer to shareholders and need to generate revenue beyond the costs of care.

For decades, though, taking costs into consideration when visiting the doctor was considered taboo. Doctors, hospitals and patients agreed a price couldn’t be put on health. This ethos created a mentality among doctors and hospitals that readmissions weren’t only profitable, but acceptable.

Bach says that’s one area where habits are changing. Insurers are starting to put a lid on readmissions via penalties, as is Medicare, and hospitals are responding. Many are realizing that spending more money doesn’t guarantee better results.

Habits, though, are dying hard. Long under pressure to keep their policyholders healthy, insurers often went along with whatever providers wanted to charge, experts say. They simply passed their costs on to consumers in the form of higher premiums. Even when premiums have grown at a double-digit clip percentage-wise, consumers have gone along with the increases.

Take Obamacare, for example. Consulting giant PricewaterhouseCoopers says exchange coverage premiums under the program will rise an average 6% for 2015. Some rates will drop as much as 22% but others will jump nearly 35%.

It’s all been adding up. The U.S. spends nearly $3 trillion a year on medical care, accounting for nearly 18% of its gross domestic product, according to a report last year from the health-care analysis group the Commonwealth Fund. Over the past few years, health-care costs haven’t risen at the same feverish pace they once did, but they remain well above the rate of inflation.

Experts believe the bulk of providers continue to resist the notion that the high cost of health care can’t be sustained, and so they keep their pricing concealed.

Peter Ubel is a former general internist who gave up practicing medicine four years ago to become a professor of business and public policy at Duke University. He spends a considerable amount of time advocating more transparency in health-care costs and recently wrote a paper calling for physicians to help in this effort for the New England Journal of Medicine.

Ubel says unless a doctor is part of a network, there aren’t any mechanisms to keep that physician from charging whatever he or she wants. There often are huge disparities in pricing for even the most rudimentary procedures, he adds.

“[What’s] real common are these tenfold differences in prices–$200 vs. $2,000—that’s just a common kind of variation for anything from getting your tonsils out to a colonoscopy to getting a knee replacement. There are absolutely gigantic variations,” Ubel said.

Doctors who don’t join insurance networks are able to charge whatever they want, he said. That kind of markup also is common when patients go to a hospital for care instead of a clinic or doctor’s office, says Karen Ignagni, chief executive of America’s Health Insurance Plans, the trade group for insurers.

Ignagni says it’s not uncommon to pay $275 for an echocardiogram, or ultrasound for the heart, in a doctor’s office. Go to a hospital and the price often is $1,600 to $2,000.  “The hospitals will then add a significant amount for administrative costs on top of that fee,” she said.

[from an article published by MARKETWATCH]


NORM ‘n’ AL Note:  The medical delivery system in the US continues to believe that the best care can be had only in a free market. Naturally, this is a system that allows doctors and hospitals to charge whatever they think the market will bear. Obamacare focuses on access to medical care, not on its costs, and it has no real leverage to lower costs. In this market environment, those people who are paying for elective procedures are the ones who are going abroad where the costs are much lower.  Gradually, as US medical costs continue to escalate, we will find that at some point, no one will be able to afford either the ever-higher insurance premiums or the prices doctors charge for their medical procedures. When it’s substantially cheaper to fly to Italy or even Japan and still pay for elective surgery, than it is to have just the surgery alone here in the US, a different kind of free market will be driving modern medicine. Many people are arguing (with their wallets) that we are at this point already.



As always, posted for your edification and enlightenment by

NORM ‘n’ AL, Minneapolis




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