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Thursday, February 28, 2013

Here's why healthcare costs are so high

 We've reached a point in our cultural evolution where the clueless dominate, where low-information, uneducated, who think they know everything, by the way, dominate. This is exactly what is wrong with the healthcare system, and exactly why healthcare costs are so high.  

When you have people who have no business making laws about health care making laws about healthcare, there lies the problem.  When you have people who have no idea about how economies work, and no idea how the health care system works, making laws regarding healthcare, there is going to be a problem.  Period.

The purpose of any business is to make money, and I don't fault that.  If the government is only going to pay $20.44 for an x-ray, and insurance companies are allowed to  band together to petition for lower prices, the hospital has no choice but to charge people with no insurance $283.00 for that same x-ray.  Because ignorant people decide who pays and how much, the rest of the good folks get screwed.  

And those numbers I got from Stephen Brills Time magazine article, "Bitter Pill: why medical bills are killing us." And the same can be said of a breathing treatment.  Where I work a patient is charged $120 for a breathing treatment.  In order to meet CMS criteria for reimbursement many patients are ordered on treatments they don't need, so the hospital has to charge people $480 a day for treatments they don't need.  And if a patient stays in the hospital for 10 days, that charge is up to $4,800 for no reason.

Another example Brills gives is laboratory testing.  Medicare only pays a few hundred dollars, but if you have no insurance, you will be charged $36 for every poke, $23-$78 for every lab test, and total this up for the entire stay it will be something like $15,000.  Yet Medicare only pays about $1-2,000.  

At one of the hospitals I used to work for an EKG costs $40, and doctor reading it costs $60.  An EKG takes about 2 minutes to do and costs nothing other than the overhead of the machine and paper.  Most doctors can read an EKG in mere seconds, and it's not nearly $60 worth of effort, more like $1.  

At another hospital I worked for I actually took my daughter into the emergency room for asthma, and she got a breathing treatment.  I didn't want her to get the treatment because I have those at home and can give her one for free.  Yet even though I went to the ER just so she could get a prescription for steroids (it was the weekend and my doctor was not on call), but the ER doctor insisted she get a breathing treatment.  

When I got the bill I was stunned: $125.  The doctor only gave us the treatment because she didn't know what else to do.  Most doctors order breathing treatments because they think they are going to cure all annoying lung sounds and all that wheezes.  Many times doctors give the treatments just so the parents or patient feel like something is being done, when the doctor doesn't know what else to do.  And the charge for this ignorance is $125 a pop.  The truth is, most people get more than one treatment.

And do you know what a nebulizer costs the hospital?  That's right, a mere $1.75. So they basically charge $123 to have a respiratory therapist baby sit you during the treatment you could do by yourself, or you probably didn't even need.  And you wonder what's wrong with health care?

Now you can't fault the hospital because they have to make money somewhere, and since they can't make it from insured patients, and they can't make it from Medicare patients, they have no choice but to screw everyone else. 

And the funny thing about this is few patients ever question what a doctor orders.  I go into a room and tell a patient who is not short of breath and never has been that he will be getting treatments, and he tells me he's not short of breath.  But very seldom to I have a patient question the order and tell me to go stuff my breathing treatment up my ass.  It happens, but maybe once out of every 100.  

The truth is that most people, not just politicians, are ignorant about healthcare.  There's even people in healthcare who are ignorant about health care (as this 2 minute movie purports to show), and that's reaffirmed to me every time I get a stupid doctor order because a nurse observes a wheeze and the doctor caves and writes the stupid order.  Most people remain ignorant about health care, it's a simple truth. 

The fact that people are ignorant about healthcare is not a big deal, because most of us have no need to become experts until we are sick.  The fact that some of us -- i.e. those guys in Washington -- pretend they are experts is a big deal.  There in lies the problem.  And that the ignorant think they know that of which they know not was observed first by an ancient philosopher named Socrates, and for making light of this he was killed.  So it's for this fear (not of being killed but of being fired) that most people who see it -- like yours truly -- are afraid to make light of it. 

Then there are those who think people should get healthcare without any cost.  And what happens when a store gives something away for free?  That's right, people are unrestrained to take it.  If you give healthcare for free people have no incentive to think twice about staying home for that simple every day common cold or that wart on the penis that's been there fore 20 years.  These people don't need emergency services, but there's nothing to stop them from going, because it's free.

And what happens when you give something for free to some people and the rest have to pay full price?  The price goes up for those who have to pay.  It's economics 101. When demand for services goes up, and the supply (nurses, RTs, doctors, equipment) stays the same, the price has no where to go but up.

Another issue here is a third party payer system.  You get sick, you see the doctor, and the bill goes to your insurance company.  Your insurance company pays the bill.  You get sick, you get $10,000 worth of breathing treatments, and your insurance company pays the bill, and maybe making you pay $100 of it. No big deal. Yet even if you did make a deal of it you have no control because it's out of your hands. 

Yet if you saw the bill, if you had to pay that $10,000, you might question: why am I getting this breathing treatment? Why do you need to draw my blood for the 10th time today?  Why do I need a 15th EKG? You might even have an incentive to educate yourself. For example, if you were going to buy a car you go on the Internet and study cars.  If you want to go on a cruise you study cruises.  Then you make an educated decision based on cost.  You see the sticker price, you negotiate, you get the price you can afford.  In healthcare none of this happens because there's no incentive for you to care.  

In healthcre you have no incentive to educate yourself, and no incentive to care about the high cost -- unless you have no insurance.  And I can tell you by experience that the only patients I have ever seen ask if an x-ray, EKG or breathing treatment is really needed are those patients who have no insurance.  

And it's not people who don't have insurance, as Obama proposed with Obamacare, who are responsible for the high cost either.  They are healthy people who are smart, and the risk that they will get sick is low, so they decide to make the tough decision to buy a $10,000 motorcycle instead of healthcare they probably won't need.  This is good for the economy.  But Obamacare took away that right.  Obamacare will fore that healthy young person to pay a $10,000 tax on healthcare, or pay a fine of $2,000 or whatever it will be.  Personally, I'd pay the fine and buy an $8,000 car or cruise or whatever).

So there are a variety of reasons why healthcare costs so much in the U.S. 
  1. Most people are clueless about it
  2. The clueless think they can make it better
  3. The clueless in healthcare let them
  4. The clueless patients don't question their doctor and let them do whatever they want
  5. When something is free people want more of it, not less. 
  6. When you give something away for free or severely discounted to some, the people who pay will pay more (economics 101)
  7. When someone else pays the bill for you, you have no reason to care about it
Obamacare was not needed.  What was needed was to get rid of ignorance.  A 5,000 page bill wasn't needed, what was needed was less government, not more confusing government.  Most hospitals I know had to hire 30 or more people just to do the paperwork for Obamacare, and so that's another reason to spike the bills, or, worse, to under staff nurses and respiratory therapists to offset the cost of all these superfluous workers.  

Think of it this way, if every patient paid an equal amount of the bill, if every patient was paid the same (fairness), your healthcare bill, even if you had to pay it yourself, would be significantly less than what it is now, and that includes if you have insurance.  If we went back to a system before DRGs, and before Medicare, where people paid for the medical services they got, you could pay by simply pulling some bills out of your wallet on the way out the door of the emergency room.

Add into this mix that doctors are not going to take a pay cut in all this, and shouldn't have to.  Yet then you have Matthew Yglesias who proposes that to pay for healthcare doctors and hospitals should not make a profit because health care is supposed to be a humanitarian effort.  He proposes, in his article for Slate, "Amerian doctors are overpaid," that doctors should not make a profit, that they should be in it just to help people get better.  

Yet if doctors don't make a profit, why would anyone want to be a doctor.  The way it is right now, the medical industry is one of the most respected industries in the world, and it should be.  There is a lot of ego and esteem behind being a doctor.  There's a lot of money.  And that's a major incentive to be one.  So doctors definitely deserve every penny they make.  

If any worker gets screwed out of this whole deal it's the respiratory therapists, the nurses, x-ray techs, EMTs, and the like.  These are the good people who do all the real work, and they are taken advantage of with low pay and benefits just so the hospital can break even.  EMTs get the worse shaft, because they have the hardest job out there in the elements.  EMTs have the ability of a doctor to make quick and stressful medial decisions, and they get paid like a nurses aide.  This occurs to offset the cost of giving healthcare for free, and for the government refusing to pay market costs for services rendered.  

Yet usually in Washing ton it goes like this.  Politician A proposes to fix Medicare, get rid of DRGs and nix Obamacare.  Politician B says: "You mean you want grandma's healthcare costs to go up so she can't afford treatment.  So Politician A is made out to be a selfless person who doesn't care about the needy. The ignorant among us buy the scare tactics, and politicians are afraid to fix it for fear of losing their jobs.

Now you know that the opposite is the truth.  If we all payed out of pocket for healthcare (and that includes Medicare, because I know there are people who need help paying medical bills) the costs would significantly drop so most of us could afford it.  But the man who proposes this will be made out to be an evil, wicked person.  And there in lies the problem: the rest of us buy into these lies (or ignorance, because it's only a lie if you know what you're doing).  It's all due to the fact most of us, myself included, are ignorant about healthcare and economics.  

Have you ever heard of the holy grail.  One you create a flawed government program you can never get rid of it because once people get something they perceive as free they don't want to give it back. That's exactly why politician A is made out to be the evil villain when he's probably the smartest of us all.  

It's bad enough that ignorant doctors think breathing treatments will somehow do something for pneumonia, yet it's worse that patients don't say anything, and even worse that insurance companies and CMS encourage it.  So you wonder what's wrong with healthcare?  Well, WE ALL ARE!!! 

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Chris said...

How do you then explain why virtually free healthcare, as in Canada and the UK, has lower costs and better results than in the US

Rick Frea said...

Healthcare in Canada is not free, as Canadians are forced to pay for it by paying a higher tax rate than they otherwise would. Whether Canada has better results is speculation.

Anonymous said...

I like your blog, but not when you get political. Stick to Respiratory Therapy and away from "Obamacare." Using that term just shows your ignorance.

Rick Frea said...

Unfortunately, politicians have put their foot into the door of medical care. Much of what I see as wrong with healthcare starts with that foot, which is actually more like half a body now. Many politicians over the past 40 years have tried to fix healthcare, only to make it worse. So long as this is going on, it must be debated in the arena of ideas. My opinion is just a start of this debate, so as always, I challenge you to continue the discussion.

JSage said...

If you disagree with an opinion it doesn't make the other persons ignorant. Consider this wisdom from a Sage, and Co-Worker of your humble author. Hmmm, maybe it's time I write another guest post. Any suggestions?