Healthcare Isn’t A Free Market, It’s A Giant Economic Scam

from the destroying-us-all dept

Not long ago, someone I know who had no medical insurance, but who had some serious medical issues, ended up in the hospital for a few weeks. Some procedures needed to be done, but nothing that most people would consider too “drastic.” Eventually, the bills showed up, and they were in the range of half a million dollars, for someone who did not have anything close to that. You hear stories about crazy medical bills, but what very few people realize is that the reality of hospital bills can often be orders of magnitude more crazy than what most people expect. Just last week, a friend of mine posted the following image to Facebook, noting that when his normal medical insurance billing statement has room for seven digits (i.e., millions of dollars) something is clearly screwed up.A few years back, the folks at Planet Money tried to dig in and demystify some of thesecrets of medical bills, but that only scratched the surface.Stephen Brill has a very long, but absolutely gripping, detailed analysis of the insanity of medical billing for Time Magazine. It’s a truly astounding piece, that hopefully will open many people’s eyes. It will take a while, but find some time to read it, just to get a sense of how totally screwed up the entire system is. I’ve been working on some other stories about some really sketchy activity on the pharmaceutical side of things, but this article really shines a light on the disgusting underbelly of the healthcare system. As Brill notes, so much of the debate about healthcare is really focused on “but who will pay for these things.” But what it tends to ignore is why are the prices absolutely insane.

When medical care becomes a matter of life and death, the money demanded by the health care ecosystem reaches a wholly different order of magnitude, churning out reams of bills to people who can’t focus on them, let alone pay them. Soon after he was diagnosed with lung cancer in January 2011, a patient whom I will call Steven D. and his wife Alice knew that they were only buying time. The crushing question was, How much is time really worth? As Alice, who makes about $40,000 a year running a child-care center in her home, explained, “[Steven] kept saying he wanted every last minute he could get, no matter what. But I had to be thinking about the cost and how all this debt would leave me and my daughter.” By the time Steven D. died at his home in Northern California the following November, he had lived for an additional 11 months. And Alice had collected bills totaling $902,452. The family’s first bill — for $348,000 — which arrived when Steven got home from the Seton Medical Center in Daly City, Calif., was full of all the usual chargemaster profit grabs: $18 each for 88 diabetes-test strips that Amazon sells in boxes of 50 for $27.85; $24 each for 19 niacin pills that are sold in drugstores for about a nickel apiece. There were also four boxes of sterile gauze pads for $77 each. None of that was considered part of what was provided in return for Seton’s facility charge for the intensive-care unit for two days at $13,225 a day, 12 days in the critical unit at $7,315 a day and one day in a standard room (all of which totaled $120,116 over 15 days). There was also $20,886 for CT scans and $24,251 for lab work. Alice responded to my question about the obvious overcharges on the bill for items like the diabetes-test strips or the gauze pads much as Mrs. Lincoln, according to the famous joke, might have had she been asked what she thought of the play. “Are you kidding?” she said. “I’m dealing with a husband who had just been told he has Stage IV cancer. That’s all I can focus on … You think I looked at the items on the bills? I just looked at the total.”

If we want a real fix to the mounting costs of healthcare (which are a massive drain on the economy), we need to start there. Unfortunately, those who are making out like bandits from this system have tremendous political clout, and they have no interest in letting the easy money go away….

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