In a new article, Bitter Pill: Why Medical Bills Are Killing Us, Time Magazine delves into why medical bills are so high. 

I had a fibrous cyst creating a boil on my neck several years ago. After a round of antibiotics, a doctor performed a 15 minute outpatient surgery, assisted by a nurse, in an examination room. It wasn't even an operating room. Local anesthetic was used. The incision was about 3/4", and I was given a prescription for Vicodin I really didn't need before I left. 

The bill was about $850. I was shocked. I might have expected $250, but $850?

Well, $850 is nothing in today's medical world. 

Time describes instances of non-life threatening household accident injuries that run up bills in the five figures. More serious problems like treating cancer can run up bills in the six- and seven-figure range with ridiculous line items described in excruciating detail in the article.

What makes the pain of high healthcare costs worse is that the health care providers seem to be profiteering with markups that are as outrageous as they are unjustified. So-called "nonprofit" hospitals are actually profit-making institutions. Have you noticed how your local hospital is adding on new additions like crazy while the rest of the economy is slow. It's a boom economy in healthcare, forcing unjustifiable costs on a public suffering in a totally separate economy.

The article argues something I've already written about here: the healthcare industry isn't a normal market and doesn't really operate in the normal economy the rest of us have to live in. It doesn't compete for the business it gets and there's very little operating to restrain their costs. Yes, your insurance company probably gets a discount of 40%-50%, but even with that discount it's hard to justify the line items on the bills. 

Of course, there are people who can't pay their bills and become write-offs and they become part of the high cost of healthcare, but not such a large part that bills need to be as high as they are. Likewise, insuring themselves against lawsuits filed by people who can't accept that (a) shit happens or that (b) some people's conditions are terminal no matter WHAT care they get is a costly problem.

Putting some controls on the legal problems the industry faces is an obvious need, and one that can be addressed. However, the reasons for high healthcare have mostly to do with greed—getting whatever the traffic will bear—rather than providing the best service possible at a reaonable price. It's an industry that has forgotten that its primary purpose is to provide a service, not to break the back of those it serves with unjustifiably high expenses.

Look, I like capitalism, but I've come to decide that there are places where capitalism doesn't work. We don't want police and fire departments, libraries, and parks to be run on a "what the market will bear" basis. I would think that we especially don't want our healthcare system run that way.

You have no better argument for socializing medicine than the system we have now.

Tags: care, health

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Mike,
8 stents? You need to see the video Forks over Knives right away. Based on solid research ( not woo) by a heart surgeon at the Cleveland Clinic. I met one of his patients that had 17 stents and tgey told him he didn't have room for more. He had 6 months to live in 2008, but is alive today and is heart disease free .

I don't see your point. Sounds like you're saying my 8 stents is something to worry about but 17 stents is a good thing. Could you rephrase, please?

As far as I can tell at this early stage, I too am heart disease free. 

No, I'm saying that he could have avoided further problems. Pick it up at your local library or you can stream it from Netflix or other sources. The basic premise is that the "western " diet is the primary cause of heart disease.

A few apparently disconnected observations.

I can personally attest to the fact that the uninsured get slapped with a bigger bill than those with insurance; it makes no sense.  I saw a bill of mine get reduced 90% because I was insured albeit with a high deductible (my choice, I am not griping about that); my insurance barely had to pay anything in fact.  Had I not been insured, I'd have had to pay ten times as much.

One thing I noticed--at least in the parts of the article that I read, is that there doesn't seem to be any actual accounting for the labor costs; they will say such and such test costs 38 dollars, but does that include the labor of the (very highly trained and compensated) people doing the work?  If the test takes an hour's worth of labor to perfrom (even if its six people for an average of ten minutes apiece) I can guarantee you the true cost of the test is a LOT more than 38 dollars.

One bit of entirely parasitic overhead in our system is the armies of people in each doctor's office whose sole job it is to bill the insurance company!  They will do this of course even if you haven't hit your deductible yet.

Is it insurance when routine maintenance is paid for by the insurance company?  If auto insurance worked like this, Geico would pay for oil changes--and they would genuinely cost twice as much, because some guy at the oil change place would have the job of filing the paperwork with the insurance company, and he needs to be paid.

We have a model in the US where not only does "insurance" pay for routine work (not just disasters), but we for the most part don't even pay for our own insurance!  It's chosen for us by our employers and it's often the case we can't get the plan we want because either a) said plan is illegal due to some government reg or b) the company just doesn't offer it.  Then of course many dare not leave a shitty job for fear of losing that insurance. This situation is in large part the result of a tax code that allows employers to write off the cost of their employees' health insurance but we as individuals, cannot (at least not until that cost exceeds 7.5% of our income, and then ONLY the portion that does).  The result though, is that you do NOT have effective control over your own health coverage.

So we have parasitic drains on a system where the actual customer usually (but not always) has little to no incentive to control costs, after all someone else is paying for it.

To repeat the first part, I am not sure why the uninsured get socked for such huge bills--I know in many cases they simply end up not paying (it's the law in the US that no one can be refused care in an emergency room even if it's obvious they have zero money); I would have to consider the possibility that they are hoping some percentage of people will pay the huge bill and make up for the rest.

Unfortunately, the healthcare system works poorly both in a privatized and socialized setting. The private sector use the price mechanism to discriminate, the public sector use queuing. A running joke here is that we may have free abortions, but they have a 10 month waiting period. 

Since we use personal anecdotes I can use my parents as examples. Around 15 years ago my father started having problems with his hip. He went to his doctor which scheduled him for a specialist appointment, which had a waiting period of 4 months. When he was seen he was immediately scheduled for a hip replacement. a few weeks after seeing the specialist he could barely walk and was in so much pain he had to go into sick leave from his job. From the specialist referral to the operation there was an 8 month waiting period, and he ended up being away from work and in excruciating pain for almost a year. About 5 years later it was the same story with the other hip, but that time the process had sped up somewhat, and the process took less than a year and he was away from work around half a year.  

My mother had a botched back operation in the early 80ies. It took her almost 20 years of fighting the bureaucracy to get the maximum compensation, around $10k, and receive disability insurance as the surgeon fought her all the way until he retired. 

There have been some improvements since my parents' ordeals, the waiting period for hip replacements are today 5-6 months as far as I can tell, and the compensation authority has become a bit more workable. Still, there are 281.000 people in the queue currently, in a population of 5m in a country with substantially higher GDP per capita than the US. Blown up to be US comparable it would be a minimum of 13m people waiting, not unlikely many more. Not exactly a panacea as you may just feel forced to spend the equivalent amount of money to pay your way out of the queue. 

I'm in the U.S and there is at least 4 months for hip replacements here as well btw

@Gallup

Re-anchoring thread from http://www.thinkatheist.com/xn/detail/1982180:Comment:1263940

The US tax/GDP ratio is very deceiving.  By privatizing prisons and medical care, entire sectors considered 'social expenditure' in other countries are counted as GDP in the U.S. - which is fucking ridiculous.  The U.S. is the only country on the planet that improves it's "production" numbers when more people are sick and/or in prison.

Add to that the arms producers being counted in GDP even though they are being paid directly out of public funds - and American GDP has absolutely nothing to do with 'production'.  Essentially American 'GDP' reflects the 'production' of their 17 TRILLION dollar debt.

Why not just toss the output of the Federal Reserve debt notes into the GDP numbers and be done with it?

@arcus

My 5/20 rates weren't intended to reflect base rates but more to reflect the problem that those born into big capital are continually revealed to be paying a far lower percentage in tax than the working poor.

And this is a problem exactly why?

Firstly, they will probably pay on par with a poor person, but lower than a middle class person. Secondly, a rich person hardly use more of the government's resources than a poor person. If a 5% tax rate means $2m in the government coffers, that person will probably contribute 100x more than consumed while a poor person at twice the tax rate will probably only contribute 1/10th of what that person consumes. I'm a more absolute than relative numbers person. Lastly, you dodged the point that you distorted your rhetoric to make a point, either by making a bullshit argument (in case you didn't care to know the CG rate) or you were caught in a lie (if you knew the CG rate). 

A rich person also requires less of their earnings for survival than a poor person.  The problem I'm trying to address here is that the flow of wealth to the top has become exponential - and the reason is because too much wealth is there already.

Those who primarily earn from their capital have lobbied for so many loopholes that they can sometimes get their marginal tax rate down into the single digits.  Those who primarily earn from wages can't keep enough of their salary to save the sort of capital required to access those sorts of loopholes.

If you are more about absolute than relative numbers then please stop using percentages.

Of course they require less of their earnings for survival, but their money is still primarily their money, and not a common resource. Globalization has certainly made the potential for vast returns possible. To illustrate, if J.K. Rowling had written 200 years ago her market may have been 1m Britons paying £1 each (in today's money), with globalization it's 2b world citizens at £1 each. Now, lets say an investor had given her £50k for a 10% stake in '95... Point is, world GDP has more than doubled in 10 years, and investors who hit it big will become fantastically wealthy, and rich people tend to be the best at picking investments (or hiring investment pickers).

I don't think their marginal tax rate (the rate on the last earned dollar) is in the single digits, however the effective rate may be. And loopholes should be made away with, specifically the interest deduction rate, which encourages debt and property speculation. Another major loophole that could at least be capped is charity deduction. The remainder of the major loopholes (pension contribution, health care, min. income, etc) is generally supporting the weakest members of society and should stay in place, and other loopholes don't really bring in any revenue.

As I previously stated, I don't think taxes on income is a good idea in the first place, and especially not on low incomes. I also think minimum wages should be at least $15, as most of those jobs are non-exportable anyway.

I did use absolute numbers, you neglected to comment on them.

And this is a problem exactly why?

It's a problem because we live in a democracy, not a plutocracy, in which large majorities think the tax code unfairly favors the wealthy. Even most of the richest Americans themselves think they should be paying higher taxes.

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